THE local bourse has shrugged off the Dubai contagion, with the benchmark Straits Times Index falling by a mere 0.44 per cent or 20 points.
This is in the wake of a sharp rebound by other regional bourses such as Hong Kong and Tokyo after Friday’s sharp fall.
As Citigroup pointed out in a report this morning, Asian markets are likely to be beneficiaries from funds switching out of emerging markets into safer havens, following the Dubai world debacle.
Some market writers have warned darkly that Dubai may mark the start of a new and more frightening phase in the global financial crisis, as it raises a serious question over the viability of the sovereign debts issued by certain countries.
However, the Dubai crisis is not something new. It has been lurking in the background since March when reports started appearing about the thousands of expatriates fleeing the city on the next plane home after abandoning their cars at the airport, after losing their jobs.
More likely, it is the tailwind of the global financial crisis which has rocketed the global stock markets in the past two years.
But bankers had stayed in a mood of denial over Dubai, simply because they believed that its richer neighbour Abu Dhabi would have no choice but to bail it out. Too bad, they read the mood wrong.
Let’s put the Dubai crisis in perspective.
Dubai World has asked for a standstill on about US$60 billion of debts.
But that is only equivalent to one-third of the US$180 billion which the US government spent last year to rescue beleaguered AIG, or just under three times of the US$21 billion set aside by Goldman Sachs to be paid as bonuses to its employees.
In contrast, when Lehman Brothers went up in smoke last year, it had liabilities of about US$616 billion – or more than 10 times of the debts owed by Dubai World.
As such, it turns out that Friday was an excellent day for bargain-hunters to buy shares when Asian markets were rocked by convulsions over Dubai.
Too bad, the Singapore market was closed for the Hari Raya Haji holiday on Friday. It would have provided investors with a rare opportunity to buy on dips.