Business | Markets
Banking liquidity fears drive stocks down across the region
Gulf shares declined as Global Investment House KSCC hired HSBC Holdings Plc to renegotiate debt that totals $3 billion (Dh11 billion), triggering concern the region's banks are struggling to repay loans.
- Bloomberg
- Published: 23:36 December 22, 2008
Dubai : Gulf shares declined as Global Investment House KSCC hired HSBC Holdings Plc to renegotiate debt that totals $3 billion (Dh11 billion), triggering concern the region's banks are struggling to repay loans.
Global plunged to the lowest in more than four years. Shuaa Capital PSC tumbled an eighth day as it sought to extend the maturity on a convertible bond.
Union Properties PJSC declined as it planned to sell bonds to "strategic investors".
The Kuwait Stock Exchange Index retreated 2.2 per cent to 8,211.30, bringing the drop for the year to 35 per cent.
"Investors have very little confidence in the markets," Bassam Ramahi, brokerage manager at Emirates Securities LLC in Abu Dhabi, said in a telephone interview. "People are waiting on the sidelines because they're not sure how deep the global banking crisis is, and how it will affect the local firms."
Financial firms globally have reported $1 trillion in writedowns and credit losses, data compiled by Bloomberg shows.
Some of the biggest regional borrowers have been facing difficulties to refinance their maturing loans amid tightening credit conditions and rising borrowing cost.
Gulf countries have to repay $34.9 billion in 2009 in maturing bonds and loans, according to a Merrill Lynch & Co report on October 9.
Global, Kuwaiti's biggest investment bank, plunged 8.9 per cent to 255 fils, its lowest close since November 2004. Global appointed HSBC as an adviser to renegotiate debt which totals $3 billion after it missed the payment on a $200-million loan due this month.
The Dubai Financial Market General Index lost 3.9 per cent. The measure is down 71 per cent this year.
Dubai, which is building the world's tallest tower and the biggest man-made islands, is bracing for a slowdown of its once booming property industry after residential prices quadrupled in the past five years and the seizure of global credit markets hurt mortgage lending.
A more than 70 per cent drop in the oil price has also threatened investments and is "wreaking havoc", Saudi Oil Minister Ali Al Nuaimi said on December 19.
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