Stock markets in the United Arab Emirates and Qatar dropped in early trade Monday because of a sharp drop of Asian bourses and rising geopolitical tensions in the Gulf after Saudi Arabia cut diplomatic ties with Iran. MSCI's broadest index of Asia-Pacific shares outside Japan was down 2.5 percent in response to weak Chinese manufacturing data and the Chinese central bank's decision to fix the yuan at a 4-1/2-year low. The Dubai stock index fell 1.3 percent in the first 70 minutes in a broad sell-off; nine of the 10 most heavily traded stocks were lower. Real estate blue chip Emaar Properties was down 1.8 percent and Air Arabia, which some investors hope will benefit from increased regional traffic if trade and investment with Iran increase, dropped 1.5 percent. Abu Dhabi's index was down 0.3 percent and real estate shares there were also weak. The UAE is Iran's fourth largest trading partner and the International Monetary Fund has estimated the lifting of economic sanctions on Iran early this year could add 1 percentage point to the UAE's gross domestic product growth between 2016 and 2018 through trade. There have also been hopes of increased Iranian real estate investment in the UAE. Dubai, with its sophisticated trading infrastructure, could grab most of those benefits - but any benefit could be reduced or delayed by political tensions. Qatar's bourse sank 1.2 percent as foreign investors sold shares across the board. Aamal Co and Ezdan Holding Group led declines, slumping 6.4 and 3.4 percent respectively. Source: Reuters
