Dubai debt crisis hits US markets
The US took the brunt of the fallout yesterday having been closed for Thanksgiving on Thursday.
All leading indicators were down, with the Dow Jones Industrial Average and the Nasdaq down by 1.3%.
In Europe, markets reversed Thursday’s fall as Britain’s FTSE closed up 1% with the CAC 40 in France ahead by more than 1%, while Germany’s Dax gained more than 1.3%.
In Dublin, the ISEQ 100 index of Irish shares gained 1.93% on the day with small gains across many shares, including financial stocks, despite possible exposure to the Dubai market, which looks like a property-led economy that has gone seriously wrong.
Both main Irish banks rose on the day with AIB up 2.5% to €1.64.
Bank of Ireland, which has admitted some modest exposure to Dubai, gained 1.5% to €1.70 while other modest gains were recorded across the market.
However, there were some losers. Kerry Group lost 2%, a fall of 39 cents, to end the day at €19.76.
Origin, a subsidiary of giant food group Aryzta lost 4.63% to €2.10, a fall of 10c, while Irish Continental Group also fell 10c or 0.735% on the day to close at €13.60.
Commenting from Dubai, Jim Mongey, head of Enterprise Ireland’s Middle East office, said Irish firms had only modest exposure to the Dubai economy.
Dubai is essentially a property play while oil accounts for just 2% of its economic output.
On November 13, Trade and Commerce Minister Billy Kelleher led an Enterprise Ireland trade mission of 44 Irish companies to the United Arab Emirates.
Sales by Irish companies in the UAE were €333 million last year, an annual increase of 14%.
Ahead of the mission, Enterprise Ireland chief executive Frank Ryan said that there is potential for an accelerated expansion of trade between the two countries and Irish business is strongly positioned to contribute to the UAE’s impressive pace of economic development.
Mr Mongey said the difficulties in Dubai would not divert them from continuing to build on its growing presence in the region.
The price of oil slumped to a seven-week low point yesterday evening.
US crude fell to $72.39 a barrel – the lowest level since the start of October.
It later pulled backed to $74.90, down $3.06 compared with Thursday’s close. Brent crude dropped 89 cents to $76.10.
Oil is currently up by 80% from the levels it hit last December when the global economy was still struggling to come out of recession.
It is regarded as a strong alternative investment to the weak dollar which is expected to continue to lose value, analysts said.
What is Dubai World?
It is the emirate’s flag bearer in global investments and has a central role in the direction of Dubai’s economy.
Assets include DP World, which caused a storm when trying to take over six US ports. Property arm Nakheel built The Palm Islands and The World developments.
CONNECT WITH US TODAY
Be the first to know the latest news and updates
