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No long-term impact of Dubai crisis on Bahrain
Bahrain will not suffer any long-term impact out of the financial re-structuring of Dubai World, assured a top official of a securities and investment firm.
The Bahrain stock market will come under pressure and fall when it re-opens following the Eid break today, taking its lead from falls in markets in the region during the past few days, said Shakeel Sarwar, Head of Asset Management, Securities & Investment Company (SICO).
The first day trading in Bahrain will witness negative impact, including Oman, although the situation shows signs of improvement with indiscriminate selling. Beginning Sunday, there is likely to be gradual improvement in stock markets, and although still under pressure, there will not be any falls elsewhere in the region owing to the Dubai announcement, Shakheel said.
In Bahrain, the financial sector and real estate will bear the brunt of the downturn on the market, while defensive stocks such as the telecom sector will be less affected, he said.
Financial sector stocks will suffer from the contagion, until the banks come out with the announcement about their exposure to Dubai World and Dubai real estate sector, he said.
In his opinion, Bahrain will have limited or no exposure to the problems in Dubai.
The Deputy Chairman at Bahrain Association of Bankers, Salah Hussain, said that there is currently a lack of information about Bahrain bank’s exposure to Dubai market.
Few institutions will have invested in Dubai real estate market and there will be some exposure to the emirate’s banks, although the extent of exposure is yet to be clear.
It is hoped that the UAE government steps in and offers support and if that happens, any impact on Bahrain will be minimal, he added.
Few of the wholesale banks in Bahrain, particularly the investment banks, were likely to have some exposure to real estate in Dubai, and exposure through money markets with Dubai Banks, said the Dubai Ruler and UAE Prime Minister, Shaikh Mohammed bin Rashid Al Maktoum, and assured that Dubai is ‘strong and persistent’ despite the global reaction to its debt re-structuring plans.
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