UAE stocks plummet; Asia, Europe rebound
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Last Updated: Monday, November 30, 2009, 22:13
  
Dubai/London: The UAE stock markets tanked over nine percent on Monday after the market reopened for the first time since Dubai debt woes, even as the markets across Europe and Asia rebounded from their last week lows.

Construction, banks and telecom stocks led the decline on the Dubai and Abu Dhabi bourse as jittery investors resorted to panic selling.

Shares of the debt-ridden Dubai World conglomerate, of which Nakheel forms a part, dropped over 15 percent.

Even other construction and finance companies based in the city-state and other parts of the Emirates plunged by the maximum limit of 10 percent as the stock market crashed by 7.9 percent.

Dubai's DFM index was down, Abu Dhabi Securities Exchange's General Index was quoting at 2,668.23, down 242 points or 8.31 percent in the late afternoon trade.

Last week the Dubai government sought a six months delay in repaying its USD 59 billion debt of its principal investment arm Dubai World, raising concern of the financial health of the once financially strong Gulf state.

However, Asian and European markets staged a decent rebound with the Asian stocks closing with over three per cent gains, while the European shares were trading only 0.9 percent lower, much less than the lows seen last week.

Ripple effects of Dubai crisis may be felt in India: RBI Kochi: The ripple effects of the financial crisis in Dubai will be felt in India, but the impact may not be as acute as Indian banks do not have much exposure in the region, RBI Deputy Governor K C Chakrabarty said on Monday.

However, the extent of repercussions on India will be clear only after more details emerge.

"We do not know the exact depth of the situation and what will happen next," Chakrabarty told reporters on the sidelines of a function here when asked if the Dubai financial crisis would impact the Indian economy.

On banking consolidation, he said, the time was not ripe and financial inclusion was more important now.

In a country where 50 percent people do not have bank accounts and 15 percent no access to credit, financial inclusion is more important than consolidation at this juncture, Chakrabarty said.

Banks have to increase their customer base and reach out to the masses, he said.

"I am not against consolidation as such as it reduces cost and helps in achieving size and reduces cost. For us at this moment financial inclusion is more important than consolidation," he said.

On Kerala's proposal to set up financial institutions based on principle of 'Islamic banks' to attract deposits from Non Resident Keralites, he said 'We are not against Islamic banks but as such our rules don't permit this in the fullest sense."

PTI


First Published: Monday, November 30, 2009, 22:13


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