Business
UAE: Experts reject Dubai fears amid market upheaval
Dubai, 27 Nov. (AKI) - While global financial markets were still reeling over Dubai's credit woes on Friday, banking experts rejected fears of a worsening credit crisis. Asian stocks fell sharply while European stocks recovered after early falls, and US stocks slipped in early trading, after the state-owned Dubai World announced plans to reschedule a huge debt payment.
Banks outside the Gulf played down their exposure to Dubai debt on Friday after fears of default shook global markets the previous day, and European leaders said the global economy was now strong enough to cope with the setback.
The director-general of the Bank of Italy, Fabrizio Saccomanni, quickly moved to reassure investors saying "it would not provoke any concern" for Italy and there was nothing to worry about.
Speaking at an event organised by Italy's banking association, ABI, Saccomanni said local exposure to Dubai debt was "very contained" and he was cautious about the international market reaction.
Corrado Faissola, the president of the Italian Banking Association (ABI), also said that the exposure of Italian banks was "nonexistent or marginal" and the country's financial institutions should have "no problems".
Federica Miglietta, lecturer in finance at Milan's Bocconi University and researcher at Bari University, said the Dubai decision would "not unleash another Lehman Brothers" referring to the bankrupt Wall Street brokerage, unless it unleashed "an irrational new financial panic".
"The European banks have an exposure of 40 billion dollars which is not small but it is also not a huge amount either," Miglietta told Adnkronos International (AKI).
Miglietta, who edited the book, 'Arab sovereign funds and Islamic finance', said that Italian banks had little exposure compared to the large British banks, Standard Chartered, and HSBC.
Asian stock markets fell sharply on Friday with Tokyo's benchmark Nikkei down 3.2 percent to 9,081.52 and the Hong Kong Hang Seng index closing down 4.84 percent at 21,134.5.
Share indexes in the UK, France and Germany had fallen 3 percent on Thursday but after falling further in early trade the UK's FTSE 100 closed up 1 percent, and both Germany's Dax index and France's Cac 40 were up more than 1 percent.
Italy’s benchmark FTSE MIB index fell for a second day in early trading before closing up 1.29 percent.
Dubai World, which has total debts of 59 billion dollars, stunned markets around the world when it asked creditors on Wednesday if it could postpone its forthcoming debt payments until May 2010.
It was due to repay 3.5 billion dollars in debt in December and some investors fear that Dubai's problems could provoke more further financial turmoil and fuel the credit crisis elsewhere.
UK prime minister Gordon Brown described the fall in the markets as a "setback" but said it was "not on the scale of previous problems".
"The world financial system is stronger now and able to deal with the problems that arise," he told reporters.
French prime minister Francois Fillon said there were enough resources in the region to ensure there would not be a worsening financial crisis, while Russian premier Vladimir Putin said the issue showed it would be tough for the world to shake off the financial crisis.
Banks outside the Gulf played down their exposure to Dubai debt on Friday after fears of default shook global markets the previous day, and European leaders said the global economy was now strong enough to cope with the setback.
The director-general of the Bank of Italy, Fabrizio Saccomanni, quickly moved to reassure investors saying "it would not provoke any concern" for Italy and there was nothing to worry about.
Speaking at an event organised by Italy's banking association, ABI, Saccomanni said local exposure to Dubai debt was "very contained" and he was cautious about the international market reaction.
Corrado Faissola, the president of the Italian Banking Association (ABI), also said that the exposure of Italian banks was "nonexistent or marginal" and the country's financial institutions should have "no problems".
Federica Miglietta, lecturer in finance at Milan's Bocconi University and researcher at Bari University, said the Dubai decision would "not unleash another Lehman Brothers" referring to the bankrupt Wall Street brokerage, unless it unleashed "an irrational new financial panic".
"The European banks have an exposure of 40 billion dollars which is not small but it is also not a huge amount either," Miglietta told Adnkronos International (AKI).
Miglietta, who edited the book, 'Arab sovereign funds and Islamic finance', said that Italian banks had little exposure compared to the large British banks, Standard Chartered, and HSBC.
Asian stock markets fell sharply on Friday with Tokyo's benchmark Nikkei down 3.2 percent to 9,081.52 and the Hong Kong Hang Seng index closing down 4.84 percent at 21,134.5.
Share indexes in the UK, France and Germany had fallen 3 percent on Thursday but after falling further in early trade the UK's FTSE 100 closed up 1 percent, and both Germany's Dax index and France's Cac 40 were up more than 1 percent.
Italy’s benchmark FTSE MIB index fell for a second day in early trading before closing up 1.29 percent.
Dubai World, which has total debts of 59 billion dollars, stunned markets around the world when it asked creditors on Wednesday if it could postpone its forthcoming debt payments until May 2010.
It was due to repay 3.5 billion dollars in debt in December and some investors fear that Dubai's problems could provoke more further financial turmoil and fuel the credit crisis elsewhere.
UK prime minister Gordon Brown described the fall in the markets as a "setback" but said it was "not on the scale of previous problems".
"The world financial system is stronger now and able to deal with the problems that arise," he told reporters.
French prime minister Francois Fillon said there were enough resources in the region to ensure there would not be a worsening financial crisis, while Russian premier Vladimir Putin said the issue showed it would be tough for the world to shake off the financial crisis.
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