Dubai is shaking investor confidence across the Persian Gulf after it sought a six-month reprieve on debt payments that risked triggering the biggest sovereign default since Argentina in 2001. The move caused a drop in world markets on Thursday and raised questions about Dubais reputation as a magnet for international investment.
In Europe, the FTSE 100, Germanys DAX and the CAC-40 in France opened sharply lower. Earlier in Asia, the Shanghai index sank 119 points, or 3.6%, in the biggest one-day fall since August 31. Hong Kongs Hang Seng shed 1.8%. Wall Street was closed for the Thanksgiving holiday and most markets in the Middle East were silent because of a major Islamic feast.
Stocks, bonds and currencies fell across developing countries. The MSCI Emerging Markets Index of stocks dropped 1.1%, led by declines in China and Russia.
The fallout came swiftly after Wednesdays statement that Dubais main development engine, Dubai World, would ask creditors for a standstill on paying back its $60 billion debt until at least May.
The companys real estate arm, Nakheelwhose projects include the palmshaped island in the Gulfshoulders the bulk of money due to banks, investment houses and outside development contractors. In total, the statebacked networks nicknamed Dubai Inc are $80 billion in the red.
Source: TOI
