Is there one more balloon in Dubai

Viliyana Filipova — Thu, 03 Dec 2009 14:06:37 +0000

Which balloon will burst after Dubai? How the threat of credit echoed Arab Emirates? Is it an isolated phenomenon or a debt crisis heralded a new wave of bankruptcies? These are questions that are trying to find solutions to two analysts from New York Times. So far, investors do not succumb to panic, but the big banks have granted loans to fund state the investment – Dubai World and its subsidiary development company Nakheel anxiously assessing their potential vulnerability to a possible chain reaction of bankruptcies if Emirates not fulfill their promises to help. Does not happen, which was declared by the common central bank of the United Arab Emirates (UAE) to give money to the fund and the construction company, not to fall into a liquidity crisis, with huge debts may prove to be not only individual corporations and banks, but governments and objectives. All creditors from the Baltic to the Mediterranean looking for money, although theirs is the blame for the unprecedented credit boom. Already are piling up deficits in the budgets of not a few countries that drew money for anti-crisis programs. Government debt is growing even in a country like Germany, which has long been a bastion of strict fiscal policy. The external debt of Bulgaria, Hungary and the Baltic countries grew as part of GDP, say the authors of the New York Times. However, they believe that it can be expected similar to the Dubai situation in other countries of the world. But that does not mean that nations will go to save individual companies from bankruptcy.
The refusal of the official authorities in Dubai to ensure the repayment of indebtedness of the state fund Dubai World could create a precedent and make other governments to throw lightly arbitrariness of the fate of companies that are expected to receive any such guarantee. Unlikely to repeat what happened before a few months in the U.S. when they were bailed out banks, insurance companies, automobile giants. However, analysts predict the New York Times that if it comes to a wave of bankruptcies that can happen soon after two years, when governments will be should abandon its anti-crisis program, because you will need to look at social problems of its citizens. According Harvard economist Kenneth Rogoff, who cites New York Times, this time in the developed countries which are burdened by the accumulated credits will refuse to help emerging markets. Only in 2010 these emerging markets will have to find about $ 65 billion to pay its debts. Dubai And just suggested that it most likely will happen. On the indebtedness of corporations, the American daily newspaper analysts believe that the managers of these corporations have to seek fresh capital to be repaid over $ 200 billion over the next two years. Estimates show that half of that amount accounted for by companies from Russia and the United Arab Emirates. According to data from JPMorgan Chase in the period from 2006 to 2008, Russian companies have taken loans from banks or shares are listed for $ 220 billion, representing about 13 percent of the GDP of Russia. Loans to companies in the UAE account for 53 percent of GDP ($ 135.6 billion), and companies of Kazakhstan are debts for 44% of GDP ($ 44 billion). In Russia the most worrying situation in the aluminum giant Rusal, which has debt of $ 16 billion. Finally, analysts from New York Times noted that after it became clear that there will be a restriction of credit debt of Dubai World, the value of loans to Russian companies have risen.

Asian markets with the strongest growth since April this year

Viliyana Filipova — Tue, 01 Dec 2009 07:47:00 +0000

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.
The Indian rupee also become more expensive relative to the U.S. dollar. South Korean won rose by 1.1 percent to 1 162 won per dollar, which is the strongest currency growth for the last month. Finance Ministry of South Korea announced today that local banks have limited investment in the emirate of Dubai. After news of the main Kospi index in Seoul ended with an increase of 2% to 1 556 points. The Chinese Shanghai Composite Index rose further by 3.2% to 3 195.3 points, while Hong Kong’s Hang Seng added 3.3% to 21 821.5 points. In Australia, index of blue chip S & P / ASX 200 is increased by 2.8 percent to 4701.3 points, supported mainly by good performance of the banking sector. The four biggest financial companies in the country said today that they did not expect material losses from the eventual failure of the Dubai government investment holding company Dubai World, which has commitments for 59 billion dollars. On the New Zealand Stock Exchange main index NZX 50 Date added 1 percent to its value at 3125.5 points.

Financial Communique » UAE

Is there one more balloon in Dubai

Asian markets with the strongest growth since April this year