INTRODUCTION OF DUBAI

8/7/2019 INTRODUCTION OF DUBAI

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DUBAI CRISES

PRESENTATION BY :

MOHIT KUKREJA

ANIL CHHABRIA

DHIRAJ PURSWANI

NITIN NAGDEV

KARAN KHATRI



Trading and commercial hub of the Middle East

Its geographical location made it an important trading hub and by the beginning of the 20th century,it was an important port.

Today, Dubai has emerged as a global city and abusiness hub.Although Dubai's economy was built onthe oil industry, currently the emirate's main revenuesare from tourism, real estate, and financial services.



Composition of UAE economy



UNEMPLOYMENT 4% MAY (2009)

GDP GROWTH 7.4% (2008)

CPI INFLATION 1.9% APRIL (08 09)

NATIONAL DEBT $142 BILLION JUNE 18,09





Dubai had issued to internationalinvestors, bonds worth $1.9trillion,

& sent the message that itseconomic position is unshakable!

But now that foundation hasshaken!



Dubai was another fallout of the global real estate bubbleWith global financial markets plunging after Dubai World, the

government investment company burdened with $59 bn liabilities,

requested for deferment of debt to its creditors for six months,

on25th Nov 2009.

Nakheel has a debt of $26bn[ $3.5 bn islamic bond due to be paid

on 14th Dec 2009.

The Dubai governments total debt is estimated at $80 bn.

Indian stock markets also plunged with heavy selling witnessed in

banking, infrastructure and realty stocks.



Dubai's GDP, which achieved an annual growth

rate of 17.9% from 2000 to 2006, is expected to

slow to 6% in 2009, the Dubai Chamber of

Commerce and Industry. DCCI director general

Hamad Buamim said the largest contributor to

Dubai's GDP remained the real estate sector. In

2007, the sector contributed 8% to thecountry's GDP with investments totaling

Dhs25.8bn, reported Gulf News.



MAJOR IMPACTS OF DUBAI CRISES



Across Asia banking shares plunges down.

Hangsang 3.1%

Nikkei 1.8% Shanghai composite index 2.36%

Australian stock exchange 3.0%

BSE 2.0%





The construction industries seeking a major freefall

Labourers are asked to go home

Whatever construction projects were on the avil,areshelved



There was slight drop in oil prices as oil contributes

to 6 % in Dubai economy.

This crisis is a setback pushing Dubai to rely more

on oil revenue. Dubai has to pump more oil out to

finance its debt. and as OPEC is not expected toincrease the production quotas, expecting oilprices to go even lower.

Immediate drop in oil prices



Dubai does not produce Gold on its own, it seeks

exports from countries like India and re-exportsthem to other countries.

Drop in demand of Gold:-



Depreciation in Dirham:-

The valuation of AED (The local currency of Dubai)saw a drop. This means the strengthening of the

Dollar, by a bit.



Dubai, unlike other six emirates of UAE is not a country rich with oilresources.

This city state is purely a business city wholly depending upon tourismand other businesses.

Dubai World, in a haste to attract world entrepreneurs started spendingmore and more on building fine roads, star hotels,etc.

Foreign institutional investors also invested much here, especially

during the last four years.

Real-estate business in Dubai suddenly collapsed.

This made an impact on other businesses also.



�Dubai world has business tie-ups in different countries including India.

These projects, may be delayed( resulting in cost increase), or dropped,or prolonged.

�Unemployment problem may arise in Dubai. Enterprises may have to

retrench a portion of their employees.10 lakh Indians are working inDubai and other UAE countries.

�Foreign Institutional investers, who have business ties with DubaiWorld, may face loss.70 financial institutions have lent credits to Dubai

world.

�Banks in Dubai may face crisis.

�When the world is recovering from last year's economic recession, thismay push it back to same position.





EFFECT ON IMPORT EXPORT ESTATE OF INDIA

� Even gems and jeweler industries maybe impacted negatively with many

Indian firms having links to Dubaisworld-famous bullion markets.

yA substantial portion of Indias inwardNRI remittances come from UAE.



IMPACT ON EXPORT

Indias Export to UAE 13.1% in FY09 -

Gems And Jeweler - 38.38%

Petroleum products - 17.53%

Non ferrous metals - 17.42%

Basmati Rice - 29.4%

achines - 16.34%



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Bank of Baroda : Bank of Baroda has some real estate

exposure to Dubai -accounting to around five per cent of its loan book.

State Bank of India: The bank has an exposure of Rs1,443 crore or 0.2 percent of total assets in the UAE, whichthe bank claims as insignificant.

Even as banks are denying that they will be impactedmaterially by the present Dubai debt crisis, RBI hasdirected banks to reveal their exposure to Dubai World.



DUBAI government has announced just recently, that it is,for the timebeing ,not in a position to repay its outstanding debt of $7,40,000.

At the same time, Government owned mega finance institution-DUBAIWORLD also declared that it may not be able to repay any loan for 6months.

This 'Dubai World' is engaged in different business enterprises like-transport,ship building,township building,etc.

A sister-concern of Dubai world,a building construction company, namedNAKHEEL is also telling that it requires some more time to repay its debt

instalments.

All these indicate that Dubai's financial

foundation is ...... SHAKING!



ROLE OF ABU DHABI AS A SAVERROLE OF ABU DHABI AS A SAVER

�Dubai asked Abu dhabi to bail out from this crises.

�However , it up to Abu Dhabi, the wealthy capital of theUnited Arab Emirates how it would like to assist Dubai.

�Analysts are expecting Abu Dhabi (the senior andcontrolling Emirate in the UAE) to help soften the blow of this crisis.

�A recent report by H BC confirms that Abu Dhabi has thecash liquidity to support its own banks and property

companies



�

Therefore, Abu Dhabi is likely to use some of thisliquidity and stability to help prevent a complete

collapse of markets in Dubai.

�The UAE Central Bank has already confirmed that itboard has discussed plans to launch facilities for

supporting real estate lending in Dubai, as well as in

the rest of the UAE.



�Inspite of all these, experts hope that it is possible to recover.

� Then Abudhabhi, another emirette in UAE, had helped Dubai bylending a loan of $1,00,000.Abudhabhi is a financially stable country..It

can help.

�Just on 29th,November,Abudhabhi has announced that it wouldconcider the financing aspect,item wise, taking each main transactionon merits.

�It has also clarified,it is not going to take full responsibility of all loans.

�There are many wonderful constructions in Dubai.









Diversification is not just a buzzwordDebt does matter ... Eventually

Foreign investing can be risky





THANK YOU

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INTRODUCTION OF DUBAI