HONG KONG (MarketWatch) -- Asian markets got a positive jolt from news that Dubai received $10 billion in financing from Abu Dhabi, with investors buying stocks and higher-yielding currencies on relief that there would be no default on Dubai bonds maturing Monday.
"[The $10 billion assistance provided to Dubai World] will provide relief for the immediate payments," said John Tofarides, an analyst at Moody's Middle East in Dubai. "Short-term investment sentiment will rise but it will take more to instill confidence to previous levels."
The strong close followed a weak opening for many markets. Japan's Nikkei 225 Average, which fell as much as 1% during the session, finished the day flat at 10,105.68. Hong Kong's Hang Seng Index, which fell more than 1.6% earlier, recovered to end 0.8% up, while China's Shanghai Composite bounced back to finish 1.7% higher. Australia's S&P/ASX 200 gained 0.4%, New Zealand's NZX 50 fell 0.9%, South Korea's Kospi rose 0.5% and Taipei's Taiex advanced 0.3%.
In afternoon trading, India's Sensex had advanced 0.7%, while Singapore's Straits Times Index had risen 0.2%.
"Abu Dhabi has basically indicated that Dubai will be good for its debts," said Macquarie Private Wealth Senior Private Client Adviser Marcus Droga. "It just reinforces previous overtures that Abu Dhabi would assist Dubai and it suggests that the region is going to be OK."
The turnaround in markets came after Dubai said it authorized a $4.1 billion payment on a Dubai World bond obligation maturing Monday from the Abu Dhabi funds. Dubai said the remaining funds would go toward interest expenses and working capital through April. Read full story.
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