Gulf stock markets took a breather on Thursday, closing slightly higher after suffering heavy losses earlier in the week and suggesting that the initial shock waves of Dubai's debt crisis are subsiding. But in a further sign of the fallout from the shock announcement last week that Dubai World wants to halt payment on its $59 billion debt for at least six months, international ratings agency Standard & Poor's cut the credit ratings of six Dubai government-related entities (GREs) to junk status. And details are emerging of the trouble caused by Dubai's debt woes to banks around the world, with European banks having $88 billion exposure to the UAE at the end of June, according to provisional figures released by the Basel-based Bank for International Settlements. Three Gulf bourses were open for trading on Thursday. Qatar's Doha Securities Market closed 1.21 percent higher, two days after shedding a massive 8.3 percent on fears local companies could be exposed to the Dubai debt crisis. The Kuwait Stock Exchange, the second largest in the Arab world, rose 0.71 percent while the tiny Bahrain Stock Exchange was up 0.19 percent after edging down on Wednesday. But the Saudi bourse, the Arab world's largest, as well as the two United Arab Emirates markets of Dubai and Abu Dhabi, and Oman, were all shut. Earlier Thursday, S&P lowered to junk status its ratings for the six Dubai GREs it rates - DP World, DIFC Investments, Jebel Ali Free Zone, Dubai Multi Commodities Centre Authority, Dubai Holding Commercial Operations Group and Emaar Properties PJSC. S&P also lowered its ratings on four Dubai-based banks to junk status because of their large exposures to Dubai companies including Dubai World and its troubled property subsidiary Nakheel. Credit ratings for the six companies and four banks remain under surveillance and could be downgraded further, the agency said. The four banks affected at Emirates Bank International PJSC (EBI), National Bank of Dubai (NBD), Mashreqbank (Mashreq) and Dubai Islamic Bank (DIB). The assets and liabilities of EBI and NBD were recently merged, S&P noted. Banks in Asia meanwhile appear to have emerged relatively unscathed from the financial crisis in the Gulf state, whose debts are estimated at $80-100 billion. Moody's Investors Service said that Asian banks had minimal exposure to Dubai and its debt-laden conglomerate Dubai World. “To date, we have found no Asian bank to have sufficiently high levels of exposure to members of the Dubai World group to warrant any ratings actions,” the credit rating agency said in statement late Wednesday. “Even those banks with the larger exposures to Dubai World firms, could fully provision those exposures and still report a profit for the year,” it said. But provisional statistics provided by the Bank for International Settlements showed the heavy exposure of European and British banks in particular to the UAE at the end of June. British banks accounted for $50.2 billion, more than half of European banks' total exposure, while French banks had exposure of $11.3 billion and German banks were exposed to the tune of $10.6 billion, according to BIS. Moreover, world stock markets rose Thursday, with Japan's Nikkei up around 4 percent, after Bank of America Corp. said it will repay $45 billion of government bailout money and as investors prepared for a crucial policy statement from the European Central Bank. In Europe, the FTSE 100 index of leading British shares was up 10.42 points, or 0.2 percent, at 5,337.79 while Germany's DAX rose 33.36 points, or 0.6 percent, to 5,815.04. The CAC-40 in France was 21.10 points, or 0.6 percent, higher at 3,817.02. US stocks dipped Thursday. The Dow Jones Industrial Average fell 86.53 points (0.83 percent) to finish at 10,366.15. The Nasdaq composite slid 11.89 points (0.54 percent) to 2,173.14 and the broad-market Standard & Poor's 500 index dropped 9.32 points (0.84 percent) to 1,199.92.
