After a painful downturn last week, most stock indexes in Asia and the Pacific region began this week with significant increases. Optimism prevailed among investors after the United Arab Emirates (UAE) said they would support their banks, which fell into difficulty because of the insolvency of the investment fund Dubai World. Most local currencies rose, and risk premiums on corporate bonds fell. The regional index MSCI Asia Pacific, which monitors the securities markets in ten Asian countries plus Australia and New Zealand, rose 3.5 percent to 117.85 points. This is the strongest measure of stock market growth since the beginning of April this year. Today, the UAE central bank said it stands behind the credit companies in the seven Arab Emirates, and the government of China confirmed that it will not hurry to withdraw its measures to support the economy. The financial companies in the composition of the MSCI Asia Pacific contributed most to the strong increase of the index today after last week suffered the most along the news about the financial problems of Dubai. The main stock index fell in Dubai with a record 7.2 percent last year, and the Abu Dhabi stock slid more than 8%. Today was the first business day of the exchanges in the UAE, which closed late last week because of holidays in the Arab world. The Japanese Nikkei 225 rose by 2.9 percent to 9345.6 points. Shares of exporting companies rose, although the rate of the yen against the dollar increased by 0.7 percent today. This increases the cost of Japanese goods companies abroad. In India, the BSE Sensex 30 rose 1.7 percent to 914.1 points to 16 after the country’s economy grew more than expected by 7.9 percent for the period July-September compared to last year.
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The quotes of the Asian oil trading today remained just below $ 77 a barrel and stopped fall, which at the end of last week saw prices of raw materials, but the stock players after very careful how I move the other two markets – equity and currency. Especially careful they will be in today when the market actually works in the U.S. after official Thanksgiving holiday shopping craze and “Black Friday.” Then I will make clear how the threat reverberated from Dubai, said Reuters. The agency reminds that at the end of last week provoked emirate markets, announced unavailability of the government investment fund Dubai World and its subsidiary development company Nakheel to pay its obligations. According to Bloomberg agency stabilization of oil prices is mainly due to the promise of the other 6 Emirates to help and first decision of the Central Bank of the United Arab Emirates to financially support local businesses if the crisis in the Dubai World overtake them. U.S. light crude oil increased marginally by 0.14 percent to 76.16 a barrel. On Friday last week with quotes for oil delivery in January fell by 2.5 percent and stopped to $ 76.05 a barrel. Bloomberg calculations show that oil notes monthly decline 1.3 percent in November compared to October.
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Most large U.S. banks will soon have to take public offerings if the Treasury require repayment of funds lent to them by the program to buy troubled assets (TARP), Reuters said banking analyst Richard Bouv. Earlier this month asked the Federal Reserve Banks, subject to “stress test” to come forward with plans to repay the amounts allocated in exchange for the issued preference shares in them. “In fact, all banks can easily redeem these securities of its cash balances, but only 3 of the top 30 banks would be left with adequate Tier if they do,” explains Bouv. It is believed that the Treasury aims ratio Tier assets to 12 percent, which means that banks will be forced to raise capital without government assistance before they are allowed to repay the funds under the program continues Bouv. “It stirs the thought that some banks would rather have public offerings, although their profits are in doubt.” Rochdale Securities analyst said that the swell of the U.S. budget deficit, which is expected to reach 9.5 percent of GDP in this fiscal year and the drop-down dollar, forcing the government to obtain funds where possible. Collection of funds awarded through the TARP program is one of the possible sources, according Bouv. Many banks want to return the funds received under the program, which was worth 700 billion dollars as participation in it is associated with restrictions on expenditure on salaries, dividends and redemptions.
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The Dubai’s credit problems are “trailing effect” from the global credit crisis shows that governments should be more active actions to prevent such a new crisis. Such is the opinion of Mohammed El-Erian, chief executive of one of the most influential investment funds in the world – PIMCO. El-Erian points out that the center of the policy of the United States and other countries should stand in job creation and change of fiscal policy. Only thus could the world to return to growth. “The global economy should achieve higher growth, higher employment,” said El-Erian to CNBC. “If she does so, then we will have to undergo serious balanced economy, multi-redistribution,” said the specialist. According to El-Erian irresponsible fiscal policy, which is used in high leverage and low collateral attacks are caused by economies such as Dubai.
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