The Johannesburg Stock Exchange
(JSE) was red all over on Friday as
investors cut their losses following
revelations about the magnitude
of debt problems in Dubai.

During mid-morning trading

on Friday, the JSE All-Share Index

was 2.16% down at 26,441 points.

The Financial 15 and Industrial 25

indices were down 2.21% and

1.32% respectively.

The rand continued its downward

trend against the dollar,

trading at R7.60 to the

US currency from around

R7.50 on Thursday.

"All of a sudden the world seems

a much gloomier place as

investors start evaluating

the effect of what the Dubai

fallout would be," wrote traders

at stock brokerage Barnard

Jacobs Mellet (BJM) in a note

to clients on Friday.

Dubai, part of the oil-exporting

United Arab Emirates (UAE),

said on Wednesday it would

ask creditors of state-owned

Dubai World and Nakheel

to agree to a standstill on

billions of dollars of debt as

a first step towards restructuring.

Dubai World , the conglomerate

that led the emirate's expansion,

had $59bn of liabilities as

of August, most of Dubai's total

debt of $80bn. Nakheel was

the builder of three palm-shaped

islands off Dubai.

This prompted ratings agency

Standard & Poor's (S&P) to place

four Dubai-based banks

on a negative credit watch.

"The rating actions reflect

the large exposure these banks

have to Dubai World and

Nakheel, and more generally

to Dubai-based government-related

entities, and the risks that the

standstill agreement would pose

to these banks," said Standard & Poor's

credit analyst Mohamed Damak.

Damak added that S&P expected

asset quality to continue to

deteriorate in the coming quarters

and that "this trend could be

exacerbated by the direct and

indirect impact of a debt

restructuring by Dubai World,

which represents a major

pillar of the Dubai economy."

Andrew Kinsey, Head of Risk at

derivatives trading firm Global Trader,

said that the fallout from Dubai

could have far-reaching

consequences for investors

both internationally and locally.

"It highlights the fact there is

substantial overcapacity in just

about every market you care

to look at," said Kinsey.

Ernie Gruhn said investors may

only have a clearer picture on

Monday of the direction the markets

would take, as the US markets will

only trade for a half-day on

Friday due to the Thanksgiving holiday.

Johannesburg Stock Exchange (JSE)

| Barnard Jacobs Mellet (BJM) |

Global Trader