Dubai debt fears spark stock market tumble
Updated on 27 November 2009
Shares tumble amid fears that Dubai could push the world back into recession after the Gulf state delays payment on billions of dollars of debt.
The crisis flared yesterday after Dubai's government-owned investment company asked for a sixth-month delay on repaying debt.
Dubai World, which has debts of nearly $60bn, asked creditors if it can postpone its payments until at least next May.
"It's absolute paranoia. This is the last thing the market needed in the run up to Christmas," said Manus Cranny, head of sales at MF Global.
"It's not just the Dubai debt; investors are wondering what other black holes there are and what the ramifications are for global companies."
Dubai is famed for its man-made islands, indoor ski slopes and world's tallest tower, but it has been hit hard by the global credit crunch and recession.
Property prices in Dubai have slumped by around 50 per cent within the last year.
Lay-offs, prompted in part by project cancellations and delays, have forced many expatriates out of the city.
Dubai is one of seven self-governing emirates or states that make up the United Arab Emirates and one of the key forces behind the growth of the city-state.
It has had to rely on trade, finance and tourism to compensate for its lack of oil wealth.
The conglomerate, whose businesses range from hauling cargo off ships to building islands and running US luxury hotels, announced in October that it has had reduce its work force by 15 per cent.
