The Dubai debt story continues to weigh on investor sentiment.
While perhaps not as bad as the news that hamstrung equities markets when Dubai World announced its restructuring in November, Dubai International Capital's (DIC) three-month debt extension request to lenders late last Thursday is an added burden on markets.
"The DIC announcement was widely anticipated and mostly priced in but it makes it difficult for the markets to recover from recent sharp declines," said Saud Masud, the head of research at the Swiss Bank UBS.
"It will be an anomaly if more Dubai Holding entities did not follow DIC but, for investors, the concern is what the extent of those debts would be."
Both the Dubai Financial Market (DFM) General Index and the Abu Dhabi Securities Exchange (ADX) General Index were caught up in the region-wide selling spree last week as mounting worries on euro-zone sovereign debt and sliding prices of crude hit GCC equities markets.
The Saudi Tadawul All-Share Index was the biggest loser, dropping more than 8 per cent over the past week, from 6401.06 to 5862.31, with petrochemical stocks taking a beating. The DFM dropped from 1691.71 to 1605.22 last week and the ADX fell to 2641.10, from 2780.63. Aldar and Emaar took the brunt of selling, losing 11 and 8.8 per cent of their value last week respectively, according to data compiled by the German lender, BHF Bank.
While local markets recorded early gains yesterday, concerns over DIC debt proved a headwind, dragging the markets down to close in the red. Dubai shares closed 0.3 per cent down while the Abu Dhabi main index retreated 0.2 per cent.
Light, sweet crude oil rose more than 4 per cent over Thursday and Friday, ending the week at US$73.97 a barrel on the New York Mercantile Exchange. "The DIC debt restructuring would still be lurking in the back of the minds, but if oil prices recovered the way they did recently, we might see international story taking over the local factors," said Ingmar Burgardt, the head of BHF in Abu Dhabi. "We think investors are searching for more details on this issue which is still unfolding."
skhan@thenational.ae
Coal Black Mornings
Brett Anderson
Little Brown Book Group
LIVING IN...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
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'How To Build A Boat'
Jonathan Gornall, Simon & Schuster
Our legal advisor
Ahmad El Sayed is Senior Associate at Charles Russell Speechlys, a law firm headquartered in London with offices in the UK, Europe, the Middle East and Hong Kong.
Experience: Commercial litigator who has assisted clients with overseas judgments before UAE courts. His specialties are cases related to banking, real estate, shareholder disputes, company liquidations and criminal matters as well as employment related litigation.
Education: Sagesse University, Beirut, Lebanon, in 2005.
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How The Debt Panel's advice helped readers in 2019
December 11: 'My husband died, so what happens to the Dh240,000 he owes in the UAE?'
JL, a housewife from India, wrote to us about her husband, who died earlier this month. He left behind an outstanding loan of Dh240,000 and she was hoping to pay it off with an insurance policy he had taken out. She also wanted to recover some of her husband’s end-of-service liabilities to help support her and her son.
“I have no words to thank you for helping me out,” she wrote to The Debt Panel after receiving the panellists' comments. “The advice has given me an idea of the present status of the loan and how to take it up further. I will draft a letter and send it to the email ID on the bank’s website along with the death certificate. I hope and pray to find a way out of this.”
November 26: ‘I owe Dh100,000 because my employer has not paid me for a year’
SL, a financial services employee from India, left the UAE in June after quitting his job because his employer had not paid him since November 2018. He owes Dh103,800 on four debts and was told by the panellists he may be able to use the insolvency law to solve his issue.
SL thanked the panellists for their efforts. "Indeed, I have some clarity on the consequence of the case and the next steps to take regarding my situation," he says. "Hopefully, I will be able to provide a positive testimony soon."
October 15: 'I lost my job and left the UAE owing Dh71,000. Can I return?'
MS, an energy sector employee from South Africa, left the UAE in August after losing his Dh12,000 job. He was struggling to meet the repayments while securing a new position in the UAE and feared he would be detained if he returned. He has now secured a new job and will return to the Emirates this month.
“The insolvency law is indeed a relief to hear,” he says. "I will not apply for insolvency at this stage. I have been able to pay something towards my loan and credit card. As it stands, I only have a one-month deficit, which I will be able to recover by the end of December."
How to tell if your child is being bullied at school
Sudden change in behaviour or displays higher levels of stress or anxiety
Shows signs of depression or isolation
Ability to sleep well diminishes
Academic performance begins to deteriorate
Changes in eating habits
Struggles to concentrate
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Key products and UAE prices
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UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
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Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
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