Dubai debt bubble ....

World over today stock exchanges felt tremors on concern over the Dubai debt crisis, and Dalal Street was not spared either.

The "bad" news was, on Wednesday 25/11/2009, the govt of Dubai announced that it will ask the lendors of one of its major flagship firm, Dubai World; a state-run co. venturing into a no. of businesses including realty, logistics, and its realty subsidiary Nakheel, for a "standstill" on estimated debt of around 80 billion dollars, while it restructures the co.

Abu Dhabi, Dubais oil rich neighbour had earlier bailed out the cos debt to the tune of 15 billion dollars approx. via indirect routes of 2 of its major banks. Today, it has commented that it will aid on a "pick and choose" basis, which means that any sort of blanket assistance from Abu Dhabi is unlikely.

Many Indian cos have direct or indirect exposure to Dubai. The ones which do not have, will also be affected because of shaky investor confidence. MSCI index on friday fell a record 4% confirming that Indian Stock markets will not go unaffected in case of a crisis.

Talking about our economy as a whole, a lot of Indians work in Dubai. Confirmation of a crisis may lead to severe job cuts, obviously, also affecting the inward remmitances.

Unless a bail-out, another bubble seems to be on the verge of bursting. Overall, it will be a very shaky week ahead, news and rumour sensitive...

I rest my views here ... Trade safe !!




(Sources: My Iris, The Mint, DNA Money)

Disclaimer: The said technical analysis is a perception based on various charting methods. Trades on my opinion are to be done solely at your own discretion.