Long-term effect on Bahrain is ruled out

MANAMA: Bahrain is unlikely to suffer any long-term effects from the financial restructuring at Dubai World.

The Bahrain stock market is likely to come under pressure and fall when it re-opens after the Eid break today, taking its lead from falls in other regional markets over the past few days, according to Securities & Investment Company (SICO) head of asset management Shakeel Sarwar.

"I think we have seen the worst of the sell offs in the regional markets," he said.

"First day trading in Bahrain will see negative sentiment, as will Oman.

"But the situation shows signs of improvement with indiscriminate selling probably over.

From Sunday we will see some gradual improvement with stock markets still under pressure, but we will not see the falls we have seen elsewhere in the region in the wake of the Dubai announcement." In Bahrain, the financial sector and real estate will take the brunt of the downturn on the markets with defensive stocks like the telecom sector less affected, he said.

"Financial sector stocks will suffer from contagion until the banks come out with announcements about their exposure to Dubai World and the Dubai real estate sector," he added.

"My view is that Bahrain will have no or a very limited exposure to the problems in Dubai. "Yesteday, Egypt's banks announced that they had no exposure to Dubai World and their markets bounced back." "There is currently a lack of information about Bahrain bank's exposure to the Dubai market," said Bahrain Association of Bankers deputy chairman Salah Hussain.

"Some institutions will have invested in the Dubai real estate market and there will be some exposure to the emirate's banks, but how much is not clear at the moment.

"We have to hope that the UAE government will come in and continue to provide support and if that happens, any impact on Bahrain is likely to be minimal." He said that some of Bahrain's wholesale banks, particularly investment banks were likely to have some exposure to real estate in Dubai as well as well as exposure through money markets with Dubai banks." Dubai ruler and UAE Prime Minister Shaikh Mohammed bin Rashid Al Maktoum yesterday said Dubai was "strong and persistent", in spite of some of the global reaction to debt restructuring plans.

Source:gulf-daily-news.com/