Global markets rallied this morning as fears over the Dubai debt crisis started to ease.
As the facts of Dubai’s debt crisis unravelled at the end of last week, shares across the world plunged but have today recovered as confidence returns.
It emerged last week that state-owned company Dubai World wanted a six-month holiday from its debt repayments. The state-owned conglomerate owes $59 billion of the country’s entire $80 billion debt mountain.
The request of a repayment holiday triggered fears of a run on local banks. As a result, the United Arab Emirates Central Bank stepped in by providing an emergency liquidity facility for local lenders, which has allayed investors fears.
Shares in London, in particular, fell last week as it emerged that UK banks have lent over an £30 billion to the United Arab Emirates as a whole - the majority of which went to Dubai.
However, London‘s FTSE gained 16.16 points in early trading today to 5,261.89. In Asia, Japan’s Nikkei 225 stock average gained 224.82 points to 9,306.34.
Hong Kong’s Hang Seng index surged 703.15 points, or 3.3%, to 21,837.65, while South Korea’s Kospi gained 2.7% to 1,565.80.
Australia’s index climbed 2.7% higher, while Shanghai’s market gained. Taiwan’s benchmark rose 1.7%.
It is hoped that Wall Street will carry on the gains later today.
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