Nov

30

Dubai debt fears to hit UAE stocks; Asia rebounds

Posted on: November 30, 2009 at 1:12 pm | 95 views




DUBAI/HONG KONG: Investors braced for a 10 percent fall in United Arab Emirate stocks on Monday as the market reopens for the first time since Dubai called for a delay in repaying billions of dollars in debt, spooking global markets.

Asian stocks rallied, however, recouping some of last week’s heavy losses after the UAE offered the region’s banks emergency support and Dubai’s wealthy neighbour, Abu Dhabi, said it would provide selective support to Dubai companies.

That helped ease concerns that a looming debt default by two flagship Dubai companies could trigger the kind of knock-on effect that the collapse of Lehman Brothers caused at the height of the financial crisis last year.

“Investors are likely to hold on to their shares after a sharp sale last week as worries over the ripple-effect of Dubai’s debt eased over the weekend,” said Eddy Chen, a vice president at National Investment Trust Co Ltd in Taiwan. “There’s a gradual realisation that Dubai was an exceptional case and does not reflect the global economic situation.”

In the Gulf, investors wanted more information about conglomerate Dubai World and its main property subsidiary Nakheel, and reassurance that close to $60 billion in debt, most of it owed to local lenders, would be repaid.

-The Economic Times.

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