Dubai’s decision to bail out one of its smaller commercial banks was cheered by investors this week, who saw the move as confirmation that the emirate was still willing, and able, to rescue troubled state-linked companies.
On Tuesday, the first day of trading after Dubai Bank was taken over by the government to protect depositors, the local market gained 1 per cent, followed by a more modest 0.7 per cent gain on Wednesday.
“Investors are happy because it wasn’t news that the bank was in trouble, and it signalled that Dubai wouldn’t let a bank fail,” says Fadi al-Said, head of equities at ING Investment Management Middle East.
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