Global financial market on 26-27/11 /2009 were shocked after the Government announced Dubai-owned investment group named Dubai World requesting its creditors for six months delay of some account debts worth several billion dollars.
Analysis of international concern, dynamics of Dubai could trigger a new wave of financial crises.
Declaration of the Government of Dubai is seen as a market shock, and an expression that raging financial status of the country. Although the U.S. market closed last night to catch Thanksgiving, enough information was submerged in the stock market's key European identity in the red. Session in Asia today, a drop point with large amplitude was recurring.
Some analysts reassure markets that, despite the bank for Dubai World loan losses can be significant if the company is insolvent for some or all of the 59 billion debt is brought, the efforts worry about debt and the government of Dubai owns the other Gulf oil resources is a huge base. However, the market despite the reduced strengths reassure some experts.
"This is a new wave of financial crises. Dubai may be considered a typical example of the excessive debt. The country has an average literacy rate of debt per capita as the world's highest moment. I think this is not an economy in normal status, "said Christopher Davidson, a specialist in Gulf politics, of the University of Durham, England, said.
According to experts, the shocking information about the Dubai World may be negative impacts to the reputation of the Gulf region in general. "The case will do little more chipped the prestige of the Gulf, and will certainly make investors more cautious about emerging markets," Mr Davidson said.
Like consumers in other Western countries in economic time should I eat out, Dubai has strong hands to promote debt rushing the development of real estate. Depression broke out, the flow of capital dried up, housing market here as a working slope inevitable consequences.
Last year, the financial crisis escalated strong, European countries have a rate of excessive debt, such as Dubai is also miss Iceland to announce the status of national default. However, despite not own oil resources as important as the other neighbors in the Gulf, Dubai has been fortunate to receive the backing of other countries together in the unified Arab emirates (UAE), special Abu Dhabi is special.
However, shocking information about the Dubai World Dubai Government announced today 26/11 has made many people become skeptical about the ability of countries in the UAE will continue to support Dubai and Dubai World.
Therefore, the thermometer of the key stock market London, Paris and Frankfurt on November 26 bulk working on 3% slope. Session this morning in Asia, the markets from Tokyo to Shanghai and slide down 2-4%.
Meanwhile, U.S. Treasury bonds - investment channels are considered "bay to avoid storms" before the financial instability - has relatively strong price increases on international markets, pulled by the recovery of the USD exchange rate.
Ability to long-term instability when the company also increased the level of the world's leading computer yesterday dropped the class type of confidence of many bank loans have more constrained in Dubai with Dubai World.
The review draws class level of confidence has led to the debt guarantee fee of Dubai issued on international markets has increased 4 times. Also, banks Gulf Interntional Bank of Arabia, other Gulf country, have postponed a round of bond auctions planned organization this week.
There is not anyone predict the consequences will be serious if Dubai World default. To this, banks have not announced a specific amount of money they have borrowed for this company is how much.
However, according to Reuters news agency that the information collected from sources close, the international banks are the Dubai World loan about $ 12 billion. If compared with the predicted loss of 2.8 trillion U.S. and European banks during 2007-2010 due to financial crisis that the International Monetary Fund has launched, it is just a numbers too modest.
As a large corporation-owned, Dubai World include many branches, including Nakheel - the company the construction of artificial islands the famous palm leaves, which is considered a symbol for the development of rushing Dubai property sector.
Dubai World's debt is up to 59 billion, more than two thirds of the total debt of 80 billion Dubai Government. In particular, estimates, two thirds of this debt because investors in the holding.
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