Panic spread around global financial markets yesterday as they took in the implications of Dubai World's request for a debt moratorium, but the Thai financial markets and companies have so far faced a limited impact from the roiling turmoil.

Capital Nomura Securities, indicated in a report yesterday that it did not foresee any major impact on the Thai market, unlike the fallout from last year's collapse of US financial institutions.

Thai stocks fell 0.78 per cent to close at 680.37, tracking regional losses after Dubai asked for a debt-repayment delay for a key state-owned firm. The baht fell against the dollar to close at 33.23-33.24, compared to Thursday's close of 33.16-33.17.

HSBC Holdings and Standard Chartered led declines in bank shares in Asia, and European stocks fell the most in seven months after Dubai World, with US$59 billion (Bt1.96 trillion) of liabilities, said it would seek a "standstill" agreement to delay repayment of its debt.

Royal Bank of Scotland Group, Lloyds Banking Group and Credit Suisse Group slumped on concern Dubai will rattle lenders recovering from the global credit freeze that has triggered $1.72 trillion in losses and write-downs.

Dubai World, controlled by the emirate's ruler, Sheikh Mohammed Bin Rashid al-Maktoum, borrowed from more than 70 lenders to buy assets ranging from stakes in Las Vegas casino company MGM Mirage to London-based Standard Chartered through Istithmar, a Dubai World investment arm. The request for a postponement includes $3.52 billion of bonds due on December 14 from Dubai World property unit Nakheel.

MAJOR EXPORT MARKET

The United Arab Emirates, in which Dubai is one of the seven sheikhdoms, is Thailand's most important export market in the Middle East. The UAE takes 28.6 per cent of Thai exports to the Middle East market of 15 countries, according to Capital Nomura Securities' report.

Major Thai export items to the UAE include cars and car parts, refrigerators and parts, gems and jewellery, iron and steel, radio and TV sets, computers, cloth, plastic pellets, chemicals and machinery.

The UAE also imports food products from Thailand such as rice, sugar, canned fruit, fresh and dry fruit, frozen seafood and wheat products, amounting to about $109 million annually.

Investors are concerned about the business exposure of Thai construction companies in the UAE. The shares of Italian-Thai Development, the Kingdom's biggest construction company, dropped 2.8 per cent yesterday to Bt2.80, the lowest close since August 21.

Italian-Thai has been investing in the construction sector in the UAE through two subsidies - ITD-NWR, in which it holds a 60-per-cent stake, and QINA Contracting, in which it holds 24 per cent. ITD-NWR was involved in the construction of the Palm Laguna in the UAE. In 2008, Italian-Thai booked about Bt278 million as earnings from the project. Power Line Engineering stock slumped 2.8 per cent to Bt1.38, its lowest close since May 18, while Syntec Construction fell 1.5 per cent to Bt0.66.

Italian-Thai, Power Line and Syntec will face a negative impact from their projects in Dubai after the state-owned company asked to postpone debt payments, DBS Vickers Securities (Thailand) said in a report yesterday.

Nawarat Patanakarn may see the highest impact, DBS Vickers wrote. The brokerage cut its rating on Nawarat to "fully valued" from "buy". It also cited Power Line and Syntec as having projects in Dubai. Other companies with exposure to the Middle East include Raimon Land, part of which is held by Istithmar Hotels FZE - an investment arm of Dubai World - and Ascon, which is holding joint-venture talks with Dubai.

The question arises as to the impact on Bumrungrad Hospital (BH), since it has investments in Dubai.

According to SCB Securities, BH should be completely unaffected since it sold its shares in Bumrungrad Hospital Dubai (BHD) back to Istithmar in the third quarter and cash has already been received by BIL, an international investment arm in which BH holds 31.5 per cent.

Istithmar World is an investment arm of Dubai World.

BHD was initially planned as a joint investment between BIL and Istithmar, but the plan was scrapped last year as Dubai's economic conditions were deemed unsuitable. BIL put only $2 million into BHD prior to the cancellation of the plan and made full provisions of Bt76 million in the final quarter of 2008. It then sold the shares back to Istithmar in the third quarter of this year and was paid in cash.

Asian banks have limited exposure to Dubai World compared to other world banks.