JEDDAH/KUWAIT CITY: The United Arab Emirates has successfully “contained” the negative impacts of the global financial meltdown on the back of its solid economy, the UAE president said on Wednesday.
“We have been able to contain the negative impacts of the (global economic) crisis and overcome many of its results and consequences,” Sheikh Khalifa bin Zayed Al-Nahayan told Kuwait’s KUNA news agency in an interview.
“We have the ability and determination to continue to work in this direction... to remove all obstacles that prevent strong development,” the president said.
Sheikh Khalifa, whose country is the third largest OPEC producer and which has huge foreign investments, said the UAE economy was based on strong foundations.
Like other Gulf states, the UAE had already been hit hard by the impact of the global financial crisis mainly through the sharp drop in oil revenues and losses in its estimated $400 billion-$800 billion of reserves.
Meanwhile, Dubai’s index fell to a 38-week low on Wednesday, weighing on other Gulf markets, while the cost of insuring the emirate’s debt soared as investors grew increasingly nervous about Dubai World’s $26 billion restructuring.
Dubai’s benchmark fell 6.4 percent to 1,533 points, its lowest finish since March 19, taking its losses to 27 percent in the six trading sessions since Dubai World asked for a debt standstill.
Most Dubai heavyweight stocks fell by almost 10 percent, the maximum allowed, and with no buyers coming in at these levels, trading was moribund for much of the session.
Emaar Properties dropped 9.9 percent and DP World dropped 8.7 per cent, a day after Moody’s downgraded the pair.
The markets had opened slightly weaker but plunged after the first hour of trading following a Financial Times report that Dubai is struggling to halt the debt crisis from spreading. w“The credit downgrades of Dubai’s government-owned companies have triggered an accelerated payment clause on a $2 billion debt issued by the emirate’s utilities provider,” said a front-page report in the Financial Times.
“Dubai Electricity and Water Authority’s $2 billion securitization program... originally maturing in 2036, may have to be redeemed in full on Dec. 14 — the day Dubai World’s property developer, Nakheel, is due to redeem” the most imminent part of the debt, it said.
The report was referring to a $3.5 billion Islamic bond debt, or sukuk, that real estate giant Nakheel is scheduled to repay next week.
The UAE exchanges have been in freefall since Nakheel, part of state-owned conglomerate Dubai World, sought a six-month freeze on the sukuk on Nov. 25. Dubai World, whose assets include ports around the world, is liable for $59 billion, while the emirate’s overall debts are at least $80 billion, with some estimates as high as $120 billion.
Dubai’s stock market has now nose-dived by 26.7 percent since the shock announcement, while its Abu Dhabi counterpart has plummeted 15.2 percent over the same period.
Saudi Arabia’s index fell 2.43 percent, its biggest decline since late October, Oman’s index made its largest one-day loss for 33 weeks and Abu Dhabi slumped to a 32-week low as Dubai’s debt turmoil sparked panic selling among regional investors. The Abu Dhabi index dropped 2.8 percent to 2,467 points. The Kuwait stock index fell 0.3 percent to 6,744 points. The Omani measure dropped 4 percent to 5,968 points.
The Tadawul All-Share Index (TASI) closed at 5,954.13, down 148.49 points. A strong negative session to close the week, with losses borne by all sectors. The losses ranged from 0.78 percent by the Cement sector to 3.53 percent by the Banks & Financial Services sector. The overall market breadth remained strongly negative, with only 11 advancers against 119 decliners, giving an AD ratio of 0.09, the Jeddah-based Financial Transaction House (FTH) said in its daily market commentary on Wednesday.
The Qatari benchmark declined 2 percent to 6,845 points and Bahraini index fell 0.7 percent to 1,414 points.
— With input from agencies
