(Updates Qatar's performance)
DUBAI, May 28 (Reuters) - Qatar's bourse fell sharply on Thursday, driven by profit-taking in Ezdan Holding, which had previously surged on its inclusion in MSCI's emerging index, and poor sentiment following the launch of criminal investigations against FIFA officials.
The Doha index slid 2.6 percent by midday to 11,916 points, a five-week low, taking its losses to 4 percent since the announcement on Wednesday of high-profile arrests and corruption probes at world soccer's governing body.
It is unclear if Qatar's right to host the 2022 World Cup could eventually be revoked because of the investigations; Doha has denied any wrongdoing in its successful bid for the Cup.
Even if the right were revoked, there would be little damage to Qatar's wealthy economy. The country could end up wasting billions of dollars on building stadiums and lose tourism revenue, but it could easily afford that.
However, the FIFA debacle is a potential blow to Qatar's image, and local retail investors reacted badly to the news.
"Clearly news about the FIFA officials is impacting sentiment and has pushed the market lower. but on generally weak volumes," said Akber Khan, director of asset management at Al Rayan Investment in Doha.
"The spotlight is on Ezdan Holding which, ahead of the MSCI index rebalancing tonight, has already traded more than 1 billion riyals ($275 million) today representing more than 70 percent of the total exchange volume."
Ezdan, which had previously surged on the decision to include it in MSCI's emerging index at the end of this month, tumbled its daily 10 percent limit. The jump in trading volume indicated that passive funds tracking the index were already moving into the stock. Despite the plunge, Ezdan is still sitting on gains of 8.9 percent since its inclusion was announced on May 12.
Another newly included stock, Qatar Insurance, was up 1.3 percent on Thursday. (Reporting by Olzhas Auyezov; Editing by Andrew Torchia)