Dubai Shocks International Stock Markets by Defaulting on Loans

Discussion in 'Off Topic Discussion' started by Fergal, Nov 26, 2009.

  1. Fergal

    Fergal
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    Dubai's government have made international stock markets very nervous by announcing it would ask creditors for a debt moratorium of at least six months. The Standard and Poor's rating agency has described this move as a default.

    Global stock markets fell in response to the news, with the greatest falls experienced in Europe. More here.
     
  2. scifi

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    It has been revealed that it is actually a company called "Dubai World" that has defaulted on this loan which is projected around $80-100 billion..Dubai World is the same company which has to its credit projects like "the Palm".....
     
  3. Fergal

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    That's correct Scifi. What's quite worrying is that the company is owned by the government.
     
  4. scifi

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    No big deal Fergal..I came to know that even Government has taken guarantee of some of the deals..SO no big issue still as there will be plenty of interested parties there around the globe ready to buy assets like "The Palm".which is a project large enough, I think will be able to bail out Dubai...:)
     
  5. Fergal

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    The Palm is a very attractive project. However, I'm not sure how many investors would be willing to purchase it, when they themselves are experiencing tighter financial times and there have been very public concerns about the financial stability and future of Dubai. Even if they did find buyers, I'm really not sure that the debt laden development companies in Dubai could sell their assets at a high enough price to cover their loans.
     
  6. scifi

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    Yeah ..that might be true...But I have made this projection from a news that I came across few days back where it was mentioned that Bollywood actors and other rich parties are finding it interesting option to invest in property in Dubai seeing the current situation in Dubai..where property prices are experiencing a sharp dip in their prices....some are even claimed to be less than Delhi and Bombay rates..."They are even saying its better to buy Bungalow in Dubai than to buy a flat in Mumbai"...:D
     
    #6 scifi, Dec 8, 2009
    Last edited: Dec 8, 2009
  7. Fergal

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    That's interesting Scifi. To be honest is surprises me that people would consider buying in Dubai at this time, given all the recent worrying press reports. I hope that those investors make a good return on their investment and that they don't get their fingers burnt.

    I did some research on Dubai in 2007 and there were a couple factors that I found quite worrying in relation to investing in property there;

    1. It is not a democracy and I was concerned that the rulers of the country could some day decide to take foreign owned property into state control. There is some precedent of this happening in that part of the world - I'm not certain but I think it may have been in Iran.

    2. There was so much new building and development happening there that it was difficult to see how someone could sell a second hand property, if they decided to unload it a couple of years after purchasing it.
     
  8. Fergal

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    Abu Dhabi has announced that they are providing Dubai with a much needed $10 Billion rescue package. This should help to alleviate investor concerns. More.
     
  9. scifi

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    Well Fergal..its great piece of information you have dig out...
    But I think it might be for speculation purposes..
    To quote an example.Recently I happened to visit an Seminar on Corporate Connect Series in Delhi..There I met with Cargil Operations MD, he told me that when WTC was attacked, the prices of planes dipped off all over the world tremendously and at this time Cargil decided to buy it as an asset...They later made very huge profits on it and their profits on these assets even surpassed profits of industry leaders in that segment...
    So I think it is though risky..But it is also true and can not be ignored ...HIGK RISK HIGH RETURN...:)
     
  10. Fergal

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    Thanks Scifi, that's a great story and it explains your point very well. I heard another story about an investor who purchased loads of shares in arms companies immediately after the 9/11 attack. he knew that America would go to war after it and their share prices would go up.
     
  11. Bernardcraig20

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    Knowing the current situation of the stock market is crucial especially if you have stocks invested in it. It is better to be up to dated to the situations so that you could know the actions to be taken if some changes in the stock market occur as to secure your stocks to lose. Today, the stock market is unstable so we need to be vigilant to the current market conditions.
     

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