QE in US should help Dubai: ABN Amro
Moves to pump more money into the global economy should help Dubai by improving the flow of liquidity and boosting risk appetite for the emirate's debt, according to Dutch bank ABN AMRO.
"QE will support Dubai indirectly because it is lowering the financing cost and it will probably have a ripple affect because it will encourage people to take more risk, go for higher yield," said Didier Duret, ABN AMRO's chief investment officer, in Dubai today.
The US Federal Reserve has already indicated it would be prepared to adopt quantitative easing measures if needed, involving pumping more currency into their economy in a bid to sustain growth.
Such a move would have repercussions for global investment appetite by creating a "positive wealth effect" which would encourage global investors to spend, said Mr Duret.
Recent Dubai debt issues have already been well received with a US$1.25 billion (Dh4.6bn) sovereign bond sale by the Dubai Government last month four-times oversubscribed. Subsequent bond sales by Emaar Properties and Dubai Electricity and Water Authority (Dewa) also well received.
"All the bonds that are being issued with yields above seven per cent will be attractive as they're higher than US treasuries," said Mr Duret."
Published: October 21, 2010 04:00 AM