Equity markets in the Middle East have been quite sensitive to the news on lifting sanctions against Iran. “Today we have achieved Implementation Day of the joint comprehensive plan of action,” Iran’s foreign minister Mohammad Javad Zarif, and the EU foreign policy chief Federica Mogherini said in a joint statement in Vienna for the world media. So Iran is hailing a “glorious victory” after full sanctions termination by the EU. Later, US Secretary of State John Kerry confirmed lifting of all nuclear-related and trade sanctions imposed by the US. Iran’s upbeat stance caused a crash in equity markets of Saudi Arabia, Qatar, Kuwait, the UAE, and Bahrain, all Iran’s geopolitical rivals.
The diplomatic relations between Iran and the Saudi-led Sunni coalition have always been strained. The Saudi-Iranian crisis was worsened by the execution of 47 prisoners in Saudi Arabia in early 2016. Among the convicted was sheikh Nimr Baqr al-Nimr, a cleric and leader of the Shia minority in Saudi Arabia. As a result, Iran and Saudi Arabia broke the diplomatic relations. Gulf experts note that the equity markets crash was not triggered by fears about a flood of new Iranian oil exports to the global market. Market participants’ sentiment was badly affected by the fact that the West had already put in place the legislation for lifting sanctions, so painstaking talks had born fruit.
Meanwhile, the Tadawul All Share Index of the Saudi Stock Exchange (TASI) has plummeted 7% below 5,500. Other countries of the Persian Gulf are also facing a slump in stock indices. Qatar’s equity market has sunk 7.2%. The UAE stocks have fallen 4.2%. Kuwait-traded stocks have dropped 3.2%.
