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“Dubai’s financial health has come under scrutiny after a major, government-owned investmnet company asker for a six-month dely on repaying its debts.”
According to BBC News, Dubai World, the government-owned investment company, has a debt of $59 billion to the banks in Europe. The request for a postpone had considerable effect on the European stock market. Especially the Royal Bank of Scotland’s stock market was badly affected.
Dubai World was suffering from a credit-crunch as global economic recession has started from last year. Also the massive construction of skyscrappers, hotels, and fancy facilities has put a lot of financial burden on the company.
This is a credit default swap chart for countries that have been affected by Dubai’s delay in debt payment. This lists countries from left to right that are most vulnerable to this event. Those countries that are in deep danger of bankruptcy are Ukraine, Venezuela, Vietnam, and countries in Middle East. Countries that have low CDS points but have rapid increase are Japan, Chile and UK. These countries do not have high risk, however, they are potential danger.
Overall, this event certainly abashed Dubai’s credibility on its reliability and of its investment.
CDS data Chart: Asian Economy News (In Korean Language)