WRAPUP 2-Qatar buys banks in morale booster, Gulf shares leap
October 13th, 2008 | by admin |(Adds quotes, detail, background)
By Thomas Atkins
DUBAI, Oct 13 (Reuters) - Qatar launched a $5.3 billion planto purchase bank shares on Monday in the most dramatic move todate by Gulf Arab states to shore up confidence in their banks,sending stocks across the region soaring.
Middle Eastern policymakers have joined Europe and theUnited States in combating a financial crisis that has batteredbank stocks and threatened a five-year boom, and more moves bythe cash-rich states to fortify capital defences are likely.
It also marks an acceleration by sovereign wealth funds –the state run investment agencies that control trillions ofdollars — to invest at home instead of abroad, a sour turn forWesterners who had once counted on rich Gulf investors to bailthem out of the financial crisis.
In the plan, the Qatar Investment Authority, the Gulf Arabstate’s sovereign wealth fund, will buy 10-20 percent of banks’listed capital on the Doha bourse based on Sunday’s closingshare prices, the state news agency said on Monday.
The announcement sent shares rocketing across the Gulf, withDubai’s main index .DFMGI marking a 10.5 percent gain — itsbiggest ever. Qatar’s .QSI leading index rose 8.5 percent.
“People are starting to have confidence in the market,”said Adel Nasr, a local brokerage manager at United Securities,in Muscat.
In another sign of relief, credit tensions eased in the UAEand Saudi Arabia, where the interbank lending rates in bothcountries <AEIBOR=> <SAIBOR=> edged lower in one of the clearestsigns of easing tensions since interbank rates began climbingmarching higher in June.
