U.S. Subprime and now Dubai Subprime – More to Come?
Looking at how poorly Maxis stock price performs since it’s relisting in the local stock market, those who didn’t get it through the supposingly transparent IPO balloting and was sulking can now grin from ear to ear (didn’t I tell you so? *grin*).
The stock didn’t get to touch RM6.00 a share (as I expected because at RM6.00 the stock would be trading at a whopping EPS of 20 times) and fortunately retailers didn’t chase the stock. As I’ve mentioned earlier the local stock market is probably already at its peak but most importantly Maxis is now a different animal. Faced with saturation in mobile telecommunication sector, investors need more than marketing talk to be convinced that it’s worth throwing more money investing the stock.
You may already know about this by now but the fact was retailers who applied for Maxis IPO via ATMs (automated teller machines) other than CIMB’s ATMs had pathetic low percentage of securing the shares. Hence if you wish to talk about transparency (in balloting) maybe this is a simple area to start investigating why the special preferences to CIMB, the banking company owned by none other than PM Najib’s brother which happened to be the main underwriter of Maxis IPO exercise. OK, let’s stop talking about Maxis IPO because there are more important issues that you should know.
The latest bombshell in the global financial market is definitely the crisis faced by once the mighty-booming Dubai. The United Arab Emirates’s investment and development engine, Dubai World, announced last week that it was seeking a six-month delay in paying creditors on nearly US$60 billion in debt. As a result Dubai’s stock exchange plunged more than 7 percent while share prices of Dubai World tumbled almost 15 percent when market opened early Monday (today). UAE’s central bank may did the right thing by instantly pledging to make funding available to all banks in the country (including foreign banking’s branches) but it didn’t promise any carrot to help Dubai World. This US$60 billion (some said US$90 billion or more) can potentially become the largest sovereign debt default since Argentina.
