The Abu Dhabi effect spreads across the world
As we mentioned in one of our earlier articles today, the Abu Dhabi government has today stepped in to bail out neighbouring Dubai with a $10 billion cash injection. This will allow the Dubai authorities to cover the redemption of a loan which is due today and also refinance and recapitalise any short-term obligations which may have initially been in danger. So what next?
Worldwide stock markets have taken the Abu Dhabi move as a precursor to a potential full bailout of the Dubai situation. As a consequence we have seen markets in the Far East rise and indeed US stock market futures have picked up strongly ahead of the official open. There are many who believe that the likes of Abu Dhabi could not afford to let the Dubai situation drag on for much longer because ultimately it could have impacted upon the region and directly on its own economy.
Even though many people believe that the Dubai growth story is now dead and buried there is a feeling there is still a significant story to tell and indeed Dubai will live to fight another day, although under what conditions remains to be seen!
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