Be Glad Tomorrow is a short Trading Day - Dubai Taking it's Toll

World Markets are reacting to the news of Dubai World and it's pretty bad

The selling resumed on Friday in Asia, with the Hang Seng Index down 4.8% and the Nikkei 225 Average down 3.2%, their worst percentage fall since March. Markets were struggling to figure out what kind of exposure banks had to Dubai debt.

Shares of heavyweights Standard Chartered Bank and HSBC /quotes/comstock/13*!hbc/quotes/nls/hbc (HBC 62.07, 0.00, 0.00%) fell over 7% in Asian trading. The banks rank as the top two lenders respectively in the United Arab Emirates.

Gold dropped to 1140 from an all time high of 1192 earlier. The reasons are the need to raise cash and the dollar being safe haven and stopping the dollar shorts. Margin calls by the need to raise cash as well as the rising dollar making gold more expensive are also cited as reasons.

U.S. futures are way down, 234 by the time of this post and few seem to know what's really going on.

It's quite unclear if Dubai will create a domino effect in a fragile global market and what kind of effects that will have.

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RBS Led Dubai World Lenders; HSBC Most at Risk in UAE

RBS Led Dubai World Lenders; HSBC Most at Risk in UAE (Update1)

 

Nov. 27 (Bloomberg) -- Royal Bank of Scotland Group Plc was the biggest underwriter of loans to Dubai World, the state company seeking to reschedule debt, while HSBC Holdings Plc has the most at risk in the United Arab Emirates, according to JPMorgan Chase & Co.

RBS, the largest U.K. government-controlled bank, arranged $2.3 billion, or 17 percent, of Dubai World loans since January 2007, JPMorgan said in a report today, citing Dealogic data. HSBC, Europe’s biggest bank, has the “largest absolute exposure” in the U.A.E. with $17 billion of loans in 2008, JPMorgan said, citing the Emirates Banks Association. Abu Dhabi Commercial Bank PJSC may be owed $1.9 billion by Dubai World, making it the largest creditor outside the emirate, said two people familiar with the companies.

“The market is very nervous about exposure to Dubai and RBS’s name has been associated with it as both a lender and a book runner,” said David Williams, a banks analyst at Fox-Pitt Kelton Ltd. in London. “People are concerned it’s going to produce a new wave of losses. Dubai is driving everything in the market at the moment.”

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U.K. Prime Minister Gordon Brown’s government is monitoring the situation in Dubai, his spokeswoman said today.

“Clearly the restructuring announcement has caused disruption and uncertainty in world markets,” Brown’s spokeswoman Vickie Sheriff told reporters in London. 

 

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There goes UK and possibly EU's recovery?

How many other gut bombs are out there? Let's just hope Citigroup isn't exposed.

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Gold Bugs, Gold recovered to 1171

Kitco Live Gold Chart.

Check out that rock drop and recovery in a matter of hours. Somebody who played that right just made a butt load of money.

It doesn't quite make sense to me for Gold to drop through the floor considering the reasons why it's on fire...even with Dubai, but I've been fooled many times by markets.

The Dow was down 1.48% and NASDAQ down 1.73%. Oil down 2.45%.

Gold just 0.78%. So we might have just seen Gold decouple from oil.

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