Impact of Khalifa’s speech

The President, in a speech published in the launch issue of Arabic business daily newspaper alrroya aleqtisadiya, denied rumours the Abu Dhabi government sought to acquire Dubai government-owned companies.

He also said the country’s national institutions could handle any burden resulting from the international financial crisis.

Gulf Cooperation Council Secretary General Abdul Rahman Al Atiyyah commended the President’s prudence and acumen in handling the global financial crisis and his confidence to contain its repercussions and impacts.

Fahd Iqbal, EFG Hermes, vice president for research said that after Dubai issued $20 billion bond, of which $10 billion was fully subscribed for by the UAE Central Bank, it was indicated that it was doubtful that Abu Dhabi would acquire Dubai assets. This was backed up by the President’s statement.

“…We believe that it is unlikely for any of Dubai’s assets to undergo a transfer of ownership, either to a federal or an Abu Dhabi government level,” he said.

Iqbal said that where Dubai had previously charted its own path - especially with the development of the real estate sector - a federal approach would now be taken.

“Indeed, this is evidenced by announcements regarding the creation of federal bodies to oversee and administer the real estate sector and debt levels across the UAE.”

Immediate impact from The President’s comment may be reflected in modest support for the UAE stock markets.

“However, we believe it is unlikely to trigger a significant or sustained rally,” he said.

“From a timings perspective we believe this level of official commentary could have been usefully announced earlier. We believe a more important trigger will come from any announcement regarding government support to the real estate sector.”

Jamer al-Jaouni, general manager at Middle East Financial Brokerage, said the statement would be critical in helping prevent rumours.

“… Such talk has circulating in the market for some time and it is spreading not just in the local markets but in the region as well. It has created a lot of negative sentiment on the market and has definitely had a negative effect in terms of rebuilding confidence in the markets.”

Kuwait Financial Centre Senior Vice President-Research MR Raghu said Dubai was intrinsically linked to the international business scene and may not be able to solve all the problems by itself.

“However, given the dynamism shown by Dubai Inc in the past it may get that help sooner than later. However, it will be high level speculation to guess as to the source of that help. Most of the GCC countries have high stakes in Dubai being projected as the face of GCC. Hence, it may be at the peril of others not to lift and support Dubai.”

The government’s continued support to the banking sector in easing its liquidity crunch and bolstering investors’ confidence in the economy has enabled the Arab world’s second largest economy to manage the impact of global economic recession, said Fatima Al Jaber, chief operating officer of Al Jaber Group, an Abu Dhabi conglomerate.

Al Jaber said that government policies have already resulted in controlling the economic crisis and hoped that planned investments into the infrastructure will further strengthen the economy in offsetting the negative fall-out of economic downturn.

Khalfan Saeed Al Kaabi, director of ADCCI, said that the President’s confidence in the national leadership and institutions to steer the country out of the impact of global financial crisis is a welcome statement, which will infuse investors’ confidence in the economy.

His pledge of continuous support to the private sector will go a long way in reassuring the business community of government’s commitment to stimulate the economy.

Yusuffali MA, member of the board of directors of Abu Dhabi Chamber of Commerce and Industry and managing director of EMKE Group, said that the President’s policy statement would inject buoyancy into the economy at a time when international financial markets are jittery.

“I can say that it is only because of the farsighted and fundamentally strong policy-decisions taken at the right time by the national leadership, that the economic crisis has been contained,” said Yusuffali.

Giyas Gokkent, chief economist at the National Bank of Abu Dhabi, described the overall statement as extremely positive for Dubai, which reinforces the harmony and national solidarity that exists in the state.

Expatriates have welcomed the assurance given by The President, His Highness Shaikh Khalifa bin Zayed Al Nahyan on the UAE’s ability to address the financial crisis and maintain the country’s reputation as a centre for investment, both regional and international.

Mohammed Riaz, a Pakistani businessman says, “The president’s statement on handling the financial crisis at the top level has come as a relief. We are now looking at the outcome since businesses all over the world have suffered greatly and many have been affected.”

“With the government’s support, I am sure that the UAE will sail through the economic crisis. As residents, we are hoping for a positive outcome since our livelihood depends on the financial institutions that are running smoothly,” opines Ali Ahmed, a Dubai-based marketing professional.