DUBAI Dec 15 Stock markets in the United Arab
Emirates and Qatar fell early on Thursday after the U.S. Federal
Reserve raised interest rates and hinted at the risk of a faster
pace of tightening next year, but Saudi Arabian banks bucked the
As expected, the central banks of Saudi Arabia, Kuwait,
Bahrain, the United Arab Emirates and Qatar followed with their
own 25 basis point rate hikes while Oman, which has been raising
its repo rate gradually in recent months, is expected to
continue doing so.
But since market interest rates in the Gulf have recently
been influenced more by oil price and their impact on banking
system liquidity than by official policy rates, the latest
increases may not have much negative impact on economies.
In Dubai, where it is more vulnerable to foreign fund flows
than its regional peers, the main index pulled back 0.5
percent. Heavyweight Emaar Properties and its retail
affiliate Emaar Malls Group were each down 1.1
Dubai depends heavily on tourism and a stronger U.S. dollar,
which is linked to the UAE dirham via a peg, could slow that
Qatar's main index was down 0.6 percent, pulling
further away from a two-month high hit earlier this week.
Telecommunication shares listed on the MSCI emerging market
index were down with Ooredoo declining 1.1 percent.
In Saudi Arabia, however, bank shares gained, leading the
main market index 0.5 percent higher after 50 minutes of
trade. All of the 12 listed lenders climbed with heavyweight Al
Rajhi Bank adding 2.0 percent.
The 25 basis point rise in Saudi Arabia's reverse repo rate,
used when banks deposit funds with the central bank, could boost
their income modestly. At the same time, the central bank kept
its repo rate, used to lend money to banks, flat in a sign it
does not want liquidity to tighten further.
(Reporting by Celine Aswad; Editing by Andrew Torchia)