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Dubai crisis to have limited impact on local markets: analysts
By Nam Kwang-sik
SEOUL, Nov. 27 (Yonhap) -- South Korea's exposure to Dubai's financial sector is minimal and the city-state's debt problems are unlikely to have serious impact on local financial markets, analysts said Friday.
On Wednesday, Dubai World, a state-owned holding company in the United Arab Emirates, called for a six-month repayment moratorium on debts of around US$60 billion.
South Korean financial institutions' exposure to Dubai stood at $88 million, taking up 0.4 percent of all external credit of $52.8 billion as of the end of September, with exposure to Dubai World estimated at $32 million, according to data released by the Financial Supervisory Service.
"Direct exposure of South Korean financial markets to the Dubai debt crisis will be limited," Chun Chong-woo, an analyst at Samsung Securities Co. said, adding that the South Korean won is expected to fall temporarily against the U.S. dollar.
The impact of the crisis also will have a marginal effect on the fundamentals of South Korean builders, as they have mainly won orders from Abu Dhabi and the UAE, not Dubai in recent years.
"Only Samsung C&T Corp. has been operating in Dubai. As for local builders, the main market is not Dubai but Abu Dhabi," said Park Yong-do, an analyst at LIG Investment Securities Co. said in a report.
Major local builders like Daewoo Engineering & Construction Co. and Hyundai Engineering & Construction Co. won orders worth nearly $14 billion from Abu Dhabi, with those from Dubai about US$2 billion between 2004 and 2009, according to data by LIG Investment Securities.
Shares of local builders took a beating on worries over the negative impact that the Dubai debt crisis would touch off.
Top builder Hyundai Engineering & Construction fell 2.34 percent to 66,900 won and Samsung C&T was down 2.01 percent to 46,350 won as of 11:10 on the Seoul bourse.
ksnam@yna.co.kr
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