While Western bankers say they believe damage from the crisis can be contained and the UAE will ultimately bail out Dubai, investors are shaken. Already today the main stock markets in Dubai and Abu Dhabi have closed sharply down – 7.3 per cent in the former, the biggest loss in a year, and 8.3 per cent in the latter, a record-breaking one-day fall.After todayâs falls in stocks, brokers believe the fall-out from the affair could taken months or years to pass through the financial system. On Friday, Dubai triggered the biggest stock market slump in three months in Asia and Europeâs worst drop since April.
“I’m not desperately worried that we’re going to go into some death spiral,” Nicholas Field, a stock manager at Schroders, told Bloomberg. “This is not going to turn into some sort of major prolonged move downward.”
Still, British banks are Dubai’s most exposed non-Gulf lenders (a combined $49.5bn of loans outstanding, according to an RBS report) and there will now be a period of introspection over lending standards to a development model dependent on the idea of a limitless demand for luxury, branded lifestyles, celebrity chefs, fashion, gambling and Russian prostitutes.
See the full article from “First Post”
Leave a Reply