America's last two independent investment banks, Morgan Stanley and Goldman Sachs, came under sustained selling pressure in trading yesterday on Wall Street.
Morgan Stanley shares fell by 44 per cent at one point, its lowest level for 10 years, while Goldman Sachs followed it down, dropping by 23 per cent.
Markets were reacting to "rumour and fear", said Colm Kelleher, the finance chief of Morgan Stanley, while reporting better than estimated earnings for the third quarter.
In response to fears of market manipulation, the Securities and Exchange Commission will implement rules today making it more difficult and expensive for short sellers to operate and drive the market further downwards.
The moves may have come a day too late. There is no doubt that investors have taken a good look at the American International Group (AIG) bailout and do not like what they are seeing.
The chances of the banks remaining independent now look very slim, particularly as credit default swaps for both have risen to an all-time high, indicating that traders expect them to collapse.
Gulf markets, despite rallying yesterday, are likely to come under renewed attack, particularly in the financial sector.
Large falls in the GCC today cannot be ruled out now. GCC markets yesterday were buoyed by the US government's rescue of the insurance giant AIG, but the gains were not impressive - all Dubai could do was regain Tuesday's losses and close at Monday's level. The Dubai Financial Market (DFM) closed up 2.29 per cent, reclaiming the losses made on Tuesday, while the Abu Dhabi Securities Exchange posted a 1.62 per cent gain.
Other GCC markets posted as good as, if not bigger, gains - Saudi was up 2.36 per cent, Doha gained a huge 8.61 per cent after seeing some significant losses earlier this week, while Muscat was boosted by a 4.16 per cent rise. Smaller but equally important gains given the freefalls of recent days and weeks were seen in Kuwait and Bahrain, which continue to lag the rest of the region, rising 1.87 and 1.13 per cent respectively.
GCC markets were buoyed by a rally on Tokyo's Nikkei, which closed up 1.2 per cent, while managing to shrug off disappointing news in Hong Kong, which fell 3.63 per cent, a surprising drop considering its losses on previous days.
With that exception, Asian markets generally reacted favourably to the US government's announcement that it would provide an US$85 billion (Dh312bn) loan to AIG and take ownership of 80 per cent of the company's shares. They have yet to absorb the shock of Morgan Stanley and Goldman Sachs.
Analysts had feared AIG's collapse would exacerbate the global financial chaos because the giant underwriter was so closely entwined with many of the world's financial institutions.
Investor confidence is already fragile, with a Merrill Lynch survey - conducted before the Lehman Brothers collapse - finding that 61 per cent of fund managers believe a recession is likely in the next 12 months. In addition, the bank's Risk and Liquidity composite has fallen to its lowest level in more than a decade, showing that investors have adopted more defensive strategies and shortened their investment time horizons, with liquidity conditions seriously worsened since last month.
In a hectic day on the London Stock Exchange, shares rose at first, despite the plummeting value of the banking group HBoS, and were given a fillip when it emerged that rival Lloyds TSB was close to acquiring the beleaguered bank. The LSE's FTSE 100 Index closed at 4912.4, down 2.8 per cent - the first time it has closed below 5,000 since June 2005.
Lloyds stock was up 15 per cent on the back of the news and HBoS recovered its heavy early morning losses to be up nine per cent. However, as soon as New York opened nearly two per cent down, and because of traders' fears that the AIG bailout would not be enough to help the system, London followed suit, falling more than one per cent along with similar losses in Frankfurt and Paris. At a stroke, European markets had their mini-recovery wiped out. Moscow's two stock exchanges suspended trading yesterday for the second day after huge falls in the markets - they have collapsed by more than 50 per cent since peaking in May, and continue to do so. This follows the impact of the Georgian war, which scared off foreign investors, the oligarchs' battle with the oil major BP and falling oil prices.
afoxwell@thenational.ae
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
How to wear a kandura
Dos
- Wear the right fabric for the right season and occasion
- Always ask for the dress code if you don’t know
- Wear a white kandura, white ghutra / shemagh (headwear) and black shoes for work
- Wear 100 per cent cotton under the kandura as most fabrics are polyester
Don’ts
- Wear hamdania for work, always wear a ghutra and agal
- Buy a kandura only based on how it feels; ask questions about the fabric and understand what you are buying
COMPANY%20PROFILE%20
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The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
Apple%20Mac%20through%20the%20years
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PREMIER LEAGUE RESULTS
Bournemouth 1 Manchester City 2
Watford 0 Brighton and Hove Albion 0
Newcastle United 3 West Ham United 0
Huddersfield Town 0 Southampton 0
Crystal Palace 0 Swansea City 2
Manchester United 2 Leicester City 0
West Bromwich Albion 1 Stoke City 1
Chelsea 2 Everton 0
Tottenham Hotspur 1 Burnley 1
Liverpool 4 Arsenal 0
How green is the expo nursery?
Some 400,000 shrubs and 13,000 trees in the on-site nursery
An additional 450,000 shrubs and 4,000 trees to be delivered in the months leading up to the expo
Ghaf, date palm, acacia arabica, acacia tortilis, vitex or sage, techoma and the salvadora are just some heat tolerant native plants in the nursery
Approximately 340 species of shrubs and trees selected for diverse landscape
The nursery team works exclusively with organic fertilisers and pesticides
All shrubs and trees supplied by Dubai Municipality
Most sourced from farms, nurseries across the country
Plants and trees are re-potted when they arrive at nursery to give them room to grow
Some mature trees are in open areas or planted within the expo site
Green waste is recycled as compost
Treated sewage effluent supplied by Dubai Municipality is used to meet the majority of the nursery’s irrigation needs
Construction workforce peaked at 40,000 workers
About 65,000 people have signed up to volunteer
Main themes of expo is ‘Connecting Minds, Creating the Future’ and three subthemes of opportunity, mobility and sustainability.
Expo 2020 Dubai to open in October 2020 and run for six months
The%20specs
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FIGHT%20CARD
%3Cp%3E%3Cstrong%3EFeatherweight%204%20rounds%3A%3C%2Fstrong%3E%3Cbr%3EYousuf%20Ali%20(2-0-0)%20(win-loss-draw)%20v%20Alex%20Semugenyi%20(0-1-0)%3Cbr%3E%3Cstrong%3EWelterweight%206%20rounds%3A%3C%2Fstrong%3E%3Cbr%3EBenyamin%20Moradzadeh%20(0-0-0)%20v%20Rohit%20Chaudhary%20(4-0-2)%3Cbr%3E%3Cstrong%3EHeavyweight%204%20rounds%3A%3C%2Fstrong%3E%3Cbr%3EYoussef%20Karrar%20(1-0-0)%20v%20Muhammad%20Muzeei%20(0-0-0)%3Cbr%3E%3Cstrong%3EWelterweight%206%20rounds%3A%3C%2Fstrong%3E%3Cbr%3EMarwan%20Mohamad%20Madboly%20(2-0-0)%20v%20Sheldon%20Schultz%20(4-4-0)%3Cbr%3E%3Cstrong%3ESuper%20featherweight%208%20rounds%3A%3C%2Fstrong%3E%3Cbr%3EBishara%20Sabbar%20(6-0-0)%20v%20Mohammed%20Azahar%20(8-5-1)%3Cbr%3E%3Cstrong%3ECruiseweight%208%20rounds%3A%3C%2Fstrong%3E%3Cbr%3EMohammed%20Bekdash%20(25-0-0)%20v%20Musa%20N%E2%80%99tege%20(8-4-0)%3Cbr%3E%3Cstrong%3ESuper%20flyweight%2010%20rounds%3A%3C%2Fstrong%3E%3Cbr%3ESultan%20Al%20Nuaimi%20(9-0-0)%20v%20Jemsi%20Kibazange%20(18-6-2)%3Cbr%3E%3Cstrong%3ELightweight%2010%20rounds%3A%3C%2Fstrong%3E%3Cbr%3EBader%20Samreen%20(8-0-0)%20v%20Jose%20Paez%20Gonzales%20(16-2-2-)%3C%2Fp%3E%0A
COMPANY%20PROFILE%20
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'Doctor Strange in the Multiverse Of Madness'
Director: Sam Raimi
Cast: Benedict Cumberbatch, Elizabeth Olsen, Chiwetel Ejiofor, Benedict Wong, Xochitl Gomez, Michael Stuhlbarg and Rachel McAdams
Rating: 3/5
Company%20profile
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Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
Rashid & Rajab
Director: Mohammed Saeed Harib
Stars: Shadi Alfons, Marwan Abdullah, Doaa Mostafa Ragab
Two stars out of five
Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
The biog
Fast facts on Neil Armstrong’s personal life:
- Armstrong was born on August 5, 1930, in Wapakoneta, Ohio
- He earned his private pilot’s license when he was 16 – he could fly before he could drive
- There was tragedy in his married life: Neil and Janet Armstrong’s daughter Karen died at the age of two in 1962 after suffering a brain tumour. She was the couple’s only daughter. Their two sons, Rick and Mark, consulted on the film
- After Armstrong departed Nasa, he bought a farm in the town of Lebanon, Ohio, in 1971 – its airstrip allowed him to tap back into his love of flying
- In 1994, Janet divorced Neil after 38 years of marriage. Two years earlier, Neil met Carol Knight, who became his second wife in 1994
Profile box
Company name: baraka
Started: July 2020
Founders: Feras Jalbout and Kunal Taneja
Based: Dubai and Bahrain
Sector: FinTech
Initial investment: $150,000
Current staff: 12
Stage: Pre-seed capital raising of $1 million
Investors: Class 5 Global, FJ Labs, IMO Ventures, The Community Fund, VentureSouq, Fox Ventures, Dr Abdulla Elyas (private investment)
RESULTS
6.30pm: Meydan Sprint Group 2 US$175,000 1,000m
Winner: Ertijaal, Jim Crowley (jockey), Ali Rashid Al Raihe (trainer)
7.05pm: Handicap $60,000 1,400m
Winner: Secret Ambition, Richard Mullen, Satish Seemar
7.40pm: Handicap $160,000 1,400m
Winner: Raven’s Corner, Richard Mullen, Satish Seemar
8.15pm: Dubai Millennium Stakes Group 3 $200,000 2,000m
Winner: Folkswood, William Buick, Charlie Appleby
8.50pm: Zabeel Mile Group 2 $250,000 1,600m
Winner: Janoobi, Jim Crowley, Mike de Kock
9.25pm: Handicap $125,000 1,600m
Winner: Capezzano, Mickael Barzalona, Salem bin Ghadayer
Scoreline
Real Madrid 1
Ronaldo (53')
Atletico Madrid 1
Griezmann (57')
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
RACECARD
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Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
