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Qatar's biggest bank expects Gulf detente to boost companies, lenders

DUBAI, Jan 6 (Reuters) - Qatari companies including banks are forecast to get a boost from a deal to end a more than three-year row between Doha and some Gulf states, which was announced by Crown Prince Mohammed bin Salman on Tuesday.

QNB Financial Services Research, part of Qatar’s biggest bank, said in a note that Qatari banks are set to benefit from the GCC resolution agreed at a Gulf summit on Tuesday “based on general investor optimism as domestic banks had immaterial exposure to the blockading countries”.

The Qatari stock index closed 1.4% higher on Tuesday, leading other Gulf markets and was up 0.1% on Wednesday, although Qatar’s international bonds were little changed by news of the deal, while credit default swaps, used to bet against the risk of a default, were unmoved, IHS Markit data showed.

“Qatar Airways and consequently Qatar Fuel could benefit from increased air traffic between KSA (Kingdom of Saudi Arabia) and Qatar,” QNB said in the research note, adding that real estate firms will also benefit from demand longer term.

Qatari banks have significant stakes in banks in United Arab Emirates (UAE) and Egypt, while Qatar National Bank was seeking to expand its business in Saudi Arabia, where it opened a branch just before the embargo.

Qatari banks also had a total of 6% exposure to regional lenders, which fell to 3% after the embargo, the note said, adding that Qatari companies have largely eliminated its impact by diversifying supply channels, as well as their customers.

Investments in Qatar could be bolstered by new projects related to the expansion of LNG production and projects, as well as an expected new law to open up more sectors to 100% foreign ownership, it said. Qatar is a top LNG exporter.

The securities firm said Baladna, which heavily invested in cow milk-based dairy, was unlikely to be affected from a possible increase in imports from Saudi Arabia.

It also rated Commercial Bank, which has a 40% stake in Sharjah-based United Arab Bank, “outperform”, saying it should post strong earnings in 2021 driven by recoveries, lower cost of risk and reversal of provisions. (Reporting by Saeed Azhar and Davide Barbuscia; Editing by Alexander Smith)

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