An accord signed between Qatar and a number of Gulf Cooperation Council (GCC) states is likely to bring an end to a three year economic and political blockade against the country but the market should not expect a surge in trade or investment, according to fund managers and economists.
On Tuesday, the UAE, Saudi Arabia, Bahrain and Egypt signed a declaration to fully restore economic and diplomatic ties with Qatar.
“We are extremely pleased with having been able to achieve this very important breakthrough that we believe will contribute very much to the stability and security of all our nations in the region,” said Prince Faisal bin Farhan, Saudi foreign minister, following the summit in Saudi Arabia.
He added that diplomatic relations and flights “will go back to normal”.
However, while the agreement has been welcomed as a signal of improving relations in the region, some fund managers have warned that it is unlikely to lead to a surge in trade between Qatar and its neighbours.
“There was limited intra-Gulf trade anyway,” says Nick Wilson, chairman of Gulf Investment Fund, a London-based fund that invests in GCC equities.
“Qatar has very effectively found new sources of supply and forged new trade links in response to the blockade. Even with Covid, the Qatar market is trading 17% above where it was when the blockade was imposed in 2017. Qatar has good reason to maintain its current trade arrangements.
“Trust is not completely restored – particularly between UAE and Qatar – but this news removes one barrier for investors who have had the Gulf on their ‘avoid’ list for the last three years,” added Wilson.
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