AMMAN: Arab stock markets rallied last week following the Abu Dhabi government’s decision to come to the aid of the Dubai World conglomerate with a $10 billion bailout package, financial analysts said Friday.
However, they pointed out that the bailout plan provided only a “temporary solution” for the problem, pending the outcome of negotiations between the Dubai conglomerate and creditor banks.
“I believe the bailout plan provided only a temporary solution for Dubai World’s multi-billion-dollar indebtedness,” Wajdi Makhamreh, chief operating officer at the Amman-based Sanabel International Holding, told Arab News.
Dubai World is due to open talks with its creditors on Monday for the rescheduling of $22 billion of debts, according to the United Arab Emirates daily newspaper, The National.
The UAE Foreign Minister Sheikh Abdullah Bin Rashed Al-Nahyan said Friday that the Dubai World debt crisis was “over” after the bailout plan. “The UAE government is committed to addressing all spillovers of the global financial crisis on the federation’s seven emirates,” he said.
The Dubai government used $4.1 billion of the bailout money for repaying the Islamic bonds, sukuk, of Nakheel, a real estate subsidiary of Dubai World.
Saudi shares rallied last week, driven by the banking sector which was the key beneficiary from the Dubai World salvage plan.
The Tadawul All-Share Index (TASI) of the Arab world’s largest stock exchange gained 3.4 percent last week, surpassing the 6,000-point hurdle and closing at 6,153.85 points.
TASI is currently 28.1 percent higher than the year’s start, according to the weekly report of the Riyadh-based Bakheet Investment Group (BIG).
The report expected the Saudi market to be “stable” next week with investors awaiting the 2009 results, barring any dramatic movements in oil prices or developments on world markets.
The Dubai World bailout plan had a tangibly positive impact on the UAE stock exchanges of Dubai and Abu Dhabi, which managed to regain a major part of the losses they incurred over the past two weeks.
The all-share index of the Dubai stock market soared 14.5 percent, while the benchmark of Abu Dhabi stock exchange jumped 11.3 percent, closing week respectively at 1,879 points and 2,774 points.
The all-share index of the Amman Stock Exchange gained 1.75 percent last week, closing at 2,598 points, according to the ASE weekly report.
Kuwait’s KSE all-share index climbed 5 percent last week, closing at 7,104 points. Egypt’s AGX30 index, measuring the performance of the market’s 30 most active stocks, also gained 5.3 percent last week, closing at 6,478 points.