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Will Dubai crisis affects China?

2009-11-28 12:27 BJT

Special Report: Dubai Debt Crisis |

The Dubai crisis has caused fluctuation in the global financial market.Asian stocks slumped with banking shares pushing the yen to a 14-year high against a struggling dollar as investors unwound risky trades.

China's stock market dropped more than a hundred points following Dubai's announcement. However, experts say the current impact is more on a mental level, while the real impact remains uncertain.

Huang Xianbin, chief Strategic Analyst of CINDA Securities, said, "Domestic investors worry whether outside factors will affect the Chinese financial market, so the current adjustment is on a mental level. Generally, I think it will have a short-term impact."

However some experts worry international hot money will soon be withdrawn from new emerging markets that are high risk. This would likely cause another round of financial hurt.

Fang Ming, senior analyst of Financial Market Dept.,BOC, said, "Some hot money will depart from new emerging markets after the Dubai crisis. There is hot money in China, which will also be withdrawn from the market. The stock market will surely be affected."

Dubai is well-known for its seven star hotel. In the past four years, the city has launched construction projects at a cost of over 300 billion US dollars. Under such circumstances, the global financial crisis that first bit in last year hit Dubai directly. Housing prices dropped and construction projects were canceled. Experts have noted that China should learn from the situation.

Li Gang, Financial Market Dept., Agricutural Bank of China,said, "The economic bubble popped in Dubai as its property market collapsed. China should learn from this. It also reminded us of the importance of a balanced economic recovery and controlling hot money."

China's four leading banks said on Friday that they do not hold any troubled Dubai World bonds. The claim was made by China's Bank of Communications, Industrial and Commercial Bank of China, Bank of China, and China Construction Bank.

Editor: Zhang Ning | Source: