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Global markets yesterday rallied in response to governments' support all over the world after sliding for weeks, shattering investor confidence. The latest rally brings a temporary sigh of relief to all.
The UAE's stock markets responded in a much stronger manner than others. The Dubai Financial Market index rose 10.53 per cent yesterday, giving the Cabinet decision a thumping support. Besides, the latest decision by the Emirates Securities and Commodities Authority to waive the share buyback approval will help more money enter the market to boost liquidity - a timely decision.
However, the big question remains: Is this a temporary reprieve or a permanent one?
Although the markets responded well, it is too early to draw a straightforward conclusion on what direction it is heading - up or down. The crisis in the global financial system is really deep-rooted and would require more than mere assurances for anyone to draw conclusions, something that the market and investors need.
The current crisis reflects a major fault line in the global economy. In the process of doing too many public relations exercises on the relative strengths of countries and corporates, both politicians and corporate heads have been avoiding the basics - transparency, honesty and due diligence in decisions. It would be foolish to say that the current global financial crisis is over because it's not. In fact, it's far from over.
As the global finance ministers and governors of central banks gather for the annual International Monetary Fund and World Bank jumboree in Washington, investors worldwide seek a permanent remedy to the crisis, although analysts predict the worst is yet to come. The US economy - the most troubled market - has yet to bottom out and this remains a cause for concern.
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