Dubai (UAE) Stock Exchange Crisis After Recession Hits The World
- Dubai (UAE) Stock Exchange Crisis After Recession Hits The World
One of the most influential aspects of the global financial crisis, which has taken many forms around the world, is the shrinking and increasingly risk-averse global capital pool. As investors around the world began to experience heavy losses in the wake of, and partially triggered by, the U.S. subprime crisis, capital around the world began to dry up.
Fears of a dangerous new phase in the economic crisis swept around the globe yesterday as traders responded to the shock announcement that a debt-laden Dubai state corporation was unable to meet its interest bill.
The United Arab Emirates Central Back on Sunday, announced that it would stand behind the foreign and domestic banks in Dubai and also offered additional money in a move to calm the regional markets have been remained closed since last week because of an Islamic holiday. The Asian stock markets which had s great fall last week, rebounded back on Monday after the United Arab Emirates moved to contain the fallout from Dubai’s debt crisis. The markets moved up by 2 per cent after tumbling on Friday.
During the boom, Dubai World and other fast-growing companies from the emirate invested heavily in companies and projects across Asia, building ports in India and Pakistan and taking stakes in Chinese banks. There is a fear that those projects and firms could suffer if Dubai authorities are forced to sell some of their holdings or put off investments to raise cash to repay their large debts.
David Riedel, founder and president of the Riedel Research Group, said the crisis in Dubai would probably cause some aversion to risk in the short term. However, he said it did not diminish the high hopes foremerging markets.
“It will cause people to think about the strength of the financial markets rally, which in many cases has outpaced the fundamental recovery,” he said. “But it doesn’t change anything about theemerging markets story, which remains very much intact.”
Vikas Bajaj, Matthew Saltmarsh and Bettina Wassener contributed reporting.
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