The shock wave propagated at the speed of lightning Thursday in the Gulf as the rest of the world. The near collapse of the emirate of Dubai, obliged to ask its creditors for a moratorium of six months for two of its major companies, Dubai World and Nakheel, unable to repay the 59 billion they have borrowed, shook all financial markets.
Asian stock markets continued their decline Friday. Tokyo has fallen by more than 3.0% in closing, while Hong Kong fell by 3.45% in mid-session. Shanghai posted a decline of 1.05% in mid-session. Seoul ended a slump of 4.69%."The last thing you would see is a domino effect, alarmed investment bank EFG-Hermes, which fears the deferred payment of debts of other firms, notably in emerging countries.
Not surprisingly, the rating agencies Moody's and Standard & Poor's has downgraded six of the largest groups of Dubai, including DP World, a subsidiary of Dubai World, the company's water and electricity, and the giant of the Real Estate Emaar Properties. "Although Nakheel is not rated by Moody's, this is an important precedent for a leading company facing difficulties to pay its debts and relying on government for support, accuses the agency.
Snowball effect
The risk of a snowball effect is real.Dubai, which has more particularly on its neighbor Abu Dhabi to come to his aid, can undermine the confidence of investors in the Gulf. Investors including many Westerners are. Among the creditors of Dubai World, one finds the British banks Barclays, Lloyds, Royal Bank of Scotland, but BNP Paribas and Credit Suisse. According to the latter, the exposure of European banks, however, does not exceed 13 billion euros.
In 2008, the emirate has attracted to itself for 21 billion dollars of foreign investment. Today, these investors may be concerned not only the financial health of Dubai, but also the countries of the Federation of UAE and the entire region.
For its part, Dubai, symbol of easy money, won, lack of oil, the real estate and finance, has a huge portfolio of foreign assets.It is the largest foreign investor in Tunisia and has launched many projects in the Maghreb, although some of them have been frozen because of the crisis.
He is a shareholder in several large companies in Asia, including Sony, the United States and Russia, where he acquired a leading electricians. It also has holdings in Europe, particularly in EADS. If decided, as feared, some investors to sell off its pay its debts, the consequences could be catastrophic for the financial market confidence. And they are equally if Abu Dhabi was to withdraw from Daimler, which owns 9% to help. Closed Thursday, Wall Street will give his ruling on Friday.
"The emirate of Dubai on the brink of bankruptcy