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UAE stocks take a tumble

DUBAI: Dubai’s stock market dropped 7.3 per cent while the stock market in Abu Dhabi closed 8.3 per cent lower on Monday as trading opened after holidays.

An announcement of the United Arab Emirates (UAE) central bank that it stands behind the UAE banks and branches of foreign banks operating in the country was apparently not enough to check the fall. However, the statement helped push up emerging market stocks. The MSCI Emerging Markets Index climbed 1.2 per cent. U.S. stocks also advanced, following the announcement.

On Sunday, the central bank had declared that banks and branches of foreign banks operating in the UAE could avail a special additional liquidity facility linked to their current accounts at the central bank. The announcement came after the Dubai government-owned holding company, Dubai-World, sought extension of repayment of debt till May next year.

In Washington, the International Monetary Fund (IMF) on Sunday welcomed the intervention by the UAE Central Bank.

“We are continuing to monitor the situation following the unexpected announcement by the Government of Dubai regarding a standstill on the debt of Dubai World and its subsidiary, Nakheel, which has had an adverse impact on financial markets,” it added.

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