Lucky our stock market never open today... phew... Let's
see if there are better news these next 2 days...
Investors are worried that a default by a government investment
company in Dubai over $60 billion in debt payments. Talk about they
have $500 over billion but can't pay $60b?
$60 billion is a lot of dough, its like 5x of Roman's total
savings... lol
DUBAI, United Arab Emirates – Debt-burdened Dubai insisted that
it took into account market fallout from its appeal to delay paying
creditors, but offered no specifics and did little to ease worries
that dragged down global markets for a second day Friday.
Sheik Ahmed
bin Saeed Al Maktoum, the chairman of Dubai's Supreme Fiscal
Committee, stressed that the call to defer for at least six months
at least some of $60 billion owed to creditors by Dubai
World, the emirate's chief investment arm, was "carefully
planned" and aimed at taking decisive action.
But the announcement appeared to reinforce worries that Dubai's
rulers are fueling a crisis of confidence from world markets with
their policies of keeping tight control over information on their
fiscal standing and deal making. The timing of the announcement
worsened the concerns, since it came ahead of a three-day Islamic
holiday.
Some analysts believe the Dubai debt mess could bring demands
for more financial transparency from Dubai
and across the Gulf, which has become a magnet for international
investment in the past decade.
"It touched investors' sensitive nerves," said Cai Junyi, an
analyst for Shanghai Securities. "The world is watching whether
that will have any substantial impact ... Dubai World is just like
a small window that might reflect another financial tsunami."
World markets reacted in shock to what some analysts indicated
amounted to a default by Dubai World, the city-state's key engine
of growth with interests around the world ranging from ports to
real estate.
Oil prices dropped near US$74 a barrel in
Asia on Friday as investors curtailed their
risky bets on commodities amid uncertainty over the extent of
Dubai's financial woes.
Asian stocks slumped for a second day with Hong Kong's
Hang Seng closing 1,075.91 points, or 4.8 percent, lower at
21,134.50. South Korea's benchmark plummeted 4.7 percent to
1,524.50.
European stock markets appeared to be stabilizing
after a heavy sell-off a day earlier that saw bank shares take a
pummeling over possible exposure to Dubai debt.
Ahmed's statement, issued late Thursday, came a day after the
Dubai government announced a restructuring of Dubai World and said
it would ask creditors to delay debt repayment until at least May.
The announcement came Wednesday, on the eve of a three-day Islamic
holiday, apparently aimed at blunting the impact of the move in the
region.
The sharp reaction in equity markets worldwide apparently forced
the taciturn rulers of Dubai to come forward with a bit more
information.
"Our intervention in Dubai World was carefully planned," Ahmed
said in the statement. "The government is spearheading the
restructuring of this commercial operation in the full knowledge of
how the markets would react."
"We understand the concerns of the market and the creditors in
particular," Ahmed also said.
Ahmed called the Dubai World's debt freeze request a "sensible
business decision" and said Dubai's leadership had to intervene
when it did "because of the need to take decisive action to address
its particular debt burden."
He insisted that claims Dubai overreached during the good times were unjustified,
saying unprecedented growth over the past decade "helped lay the
foundation for what is now a broad-based sustainable economy."
Dubai's infrastructure and economic fundaments will ensure it
"remains an attractive regional market," he said.
A year after the global downturn derailed Dubai's explosive
growth, the semiautonomous city-state known for its man-made
islands, the world's tallest tower and
indoor ski slope has been grappling with its
debt load, issuing bonds that have been bought up by both the
United Arab Emirates' central bank and, most
recently, two banks majority owned by neighboring Abu Dhabi, the
oil-rich emirate home to the UAE's federal government.
The announcement of the debt delay request appears to have
largely eclipsed any assurances by the emirate's ruler,
Sheik Mohammed bin Rashid Al Maktoum, who had
continually dismissed concerns over the city-state's liquidity.
The sudden debt announcement unsettled investors, unsure over
which companies were exposed and how much money they might actually
lose. There were also fears that the Dubai's debt troubles could
lead banks to reevaluate and scale back their lending.
That could make it more difficult for companies to borrow money
and hold down a world economy still emerging from the throes of its
deepest recession in decades, analysts said.
Emerging markets in the Middle
East and elsewhere have attracted massive amounts of capital
in recent years amid investor enthusiasm for regions with
rapid economic growth. This year, financial
markets in Asia and Latin
America have vastly outperformed ones in the U.S. and
Europe. But Dubai's woes could bring a temporary end to the
promiscuous buying behind the boom, analysts said.
"I think it will make investors realize they need to be more
discriminating about emerging markets," said Arjuna Mahendran, head
of Asian investment strategy at HSBC Private Bank in Singapore. "In the longer term we have no doubt that
things are going to recover."