The Gulf and Asia now face a new and urgent threat to financial stability: sovereign arbitrage. With banks in Europe and the US now backed by their respective governments, any bank outside these guarantees not backed by its own government represents a riskier investment. It's tantamount to a sudden, sweeping ratings change for all Western banks.
Overnight, they went from shaky to sovereign. So if you think, say, Bank Mashreq - which I mention only because it is the country's largest bank that is not already partially government-owned ? is less likely to go under than the US government, no worries. If you think Uncle Sam might still have a few more laps to run, the UAE would be well-advised to jump in and start the kind of shotgun wedding Washington arm-wrestled its own banks into earlier this week.
This perhaps explains why Henry Paulson obliged even the relatively healthy bank Wells Fargo to accept federal funds: he knew, as other banks will soon realize, that once the US government backed other banks, that Wells would suddenly not look so stalwart. What's going to continue to drag financial shares down is the widening recession in the US, one that threatens to throw the whole world into a slowdown that to many countries will result in a real recession or slower growth that feels recessionary. US home prices look like they are still falling, which will continue to bite into American consumption. US retail sales fell sharply in September, indicating that consumers are already responding to the stormy skies over credit markets.
But once the terrifying collapse of the global financial system has been averted through temporary nationalization, we can look at the bright side of all this: de-leveraging can now continue, which means for any investor with cash, it's bargain-shopping time. Inflation is licked in most parts of the world thanks to recession, which means bonds now offer some ballast to portfolios once again, or at least they should in time. With a steady supply of reliable yields (preferably from countries with current account surpluses whose currencies won't go the way of Iceland's), investors are free to hunt for stocks in companies that will benefit from the tougher environment.
warnold@thenational.ae
MATCH INFO
Uefa Champions League semi-final, first leg
Barcelona v Liverpool, Wednesday, 11pm (UAE).
Second leg
Liverpool v Barcelona, Tuesday, May 7, 11pm
Games on BeIN Sports
The%20specs
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%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%20Nag%20Ashwin%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarring%3A%20%3C%2Fstrong%3EPrabhas%2C%20Saswata%20Chatterjee%2C%20Deepika%20Padukone%2C%20Amitabh%20Bachchan%2C%20Shobhana%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%20%3C%2Fstrong%3E%E2%98%85%E2%98%85%E2%98%85%E2%98%85%3C%2Fp%3E%0A
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
more from Janine di Giovanni
PROFILE
Name: Enhance Fitness
Year started: 2018
Based: UAE
Employees: 200
Amount raised: $3m
Investors: Global Ventures and angel investors
Sweet%20Tooth
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Babumoshai Bandookbaaz
Director: Kushan Nandy
Starring: Nawazuddin Siddiqui, Bidita Bag, Jatin Goswami
Three stars
Day 4, Dubai Test: At a glance
Moment of the day Lahiru Gamage appeared to have been hard done by when he had his dismissal of Sami Aslam chalked off for a no-ball. Replays suggested he had not overstepped. No matter. Two balls later, the exact same combination – Gamage the bowler and Kusal Mendis at second slip – combined again to send Aslam back.
Stat of the day Haris Sohail took three wickets for one run in the only over he bowled, to end the Sri Lanka second innings in a hurry. That was as many as he had managed in total in his 10-year, 58-match first-class career to date. It was also the first time a bowler had taken three wickets having bowled just one over in an innings in Tests.
The verdict Just 119 more and with five wickets remaining seems like a perfectly attainable target for Pakistan. Factor in the fact the pitch is worn, is turning prodigiously, and that Sri Lanka’s seam bowlers have also been finding the strip to their liking, it is apparent the task is still a tough one. Still, though, thanks to Asad Shafiq and Sarfraz Ahmed, it is possible.
Remaining fixtures
- August 29 – UAE v Saudi Arabia, Hazza bin Zayed Stadium, Al Ain
- September 5 – Iraq v UAE, Amman, Jordan (venue TBC)
Saturday's results
Brighton 1-1 Leicester City
Everton 1-0 Cardiff City
Manchester United 0-0 Crystal Palace
Watford 0-3 Liverpool
West Ham United 0-4 Manchester City
MATCH INFO
Champions League quarter-final, first leg
Ajax v Juventus, Wednesday, 11pm (UAE)
Match on BeIN Sports
Karwaan
Producer: Ronnie Screwvala
Director: Akarsh Khurana
Starring: Irrfan Khan, Dulquer Salmaan, Mithila Palkar
Rating: 4/5