Dubai debt crisis rocks U.S., Asia markets
source: http://washingtontimes.com/news/2009/nov/28/dubai-debt-crisis-rocks-markets-in-us-asia/?feat...
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Stock markets tumbled in the United States and across Asia on Friday as shocks from the ongoing debt crisis in the Persian Gulf emirate of Dubai continued to reverberate around the globe.
The once high-flying city-state, which has been ruled by the same family since 1833, announced its intention Wednesday to reschedule payment of $3.5 billion in bonds due in mid-December, rattling investors around the world.
The surprise announcement from Dubai began exacting its toll in Asia on Thursday, afflicted European bourses several hours later and battered Asian indexes Friday before clobbering the U.S. stock market, which had been closed for Thanksgiving.
The Dow Jones Industrial Average, after dropping 233 points, finished the day down 154.48 points (1.5 percent), closing at 10,309.92. All 30 components lost value. The broad-based Standard & Poor's 500 stock index lost 19.14 points (1.7 percent), finishing the shortened post-Thanksgiving session at 1091.49. The tech-heavy Nasdaq composite index dropped 37.61 points (1.7 percent) and ended the day at 2138.44.
In Asia, Japan's Nikkei average tumbled 3.2 percent, Hong Kong's Hang Seng index plummeted 4.8 percent, and the Shanghai composite index lost 2.4 percent after dropping 3.6 percent Thursday. European stock markets showed gains Friday after retreating the day before.
Dubai World Group, a holding company owned 100 percent by Dubai, asked its creditors Wednesday for a six-month "standstill" on its obligations due Dec. 14.
One of seven emirates that comprise the United Arab Emirates, Dubai has been suffering from a catastrophic property slump since the world financial crisis deepened last year. Once sky-high property prices for apartments built on land-reclamation projects in the Persian Gulf have already plunged 50 percent, and UBS AG, a Swiss-based bank, estimates prices could plummet another 30 percent.
"I don't see what the big deal is," said Willem Buiter, a London-based economist who advises governments, central banks and private financial institutions. "Dubai has experienced for most of this decade the craziest construction boom seen in the Middle East since the construction of the Great Pyramids. That boom turned to bust - as booms invariably do
The once high-flying city-state, which has been ruled by the same family since 1833, announced its intention Wednesday to reschedule payment of $3.5 billion in bonds due in mid-December, rattling investors around the world.
The surprise announcement from Dubai began exacting its toll in Asia on Thursday, afflicted European bourses several hours later and battered Asian indexes Friday before clobbering the U.S. stock market, which had been closed for Thanksgiving.
The Dow Jones Industrial Average, after dropping 233 points, finished the day down 154.48 points (1.5 percent), closing at 10,309.92. All 30 components lost value. The broad-based Standard & Poor's 500 stock index lost 19.14 points (1.7 percent), finishing the shortened post-Thanksgiving session at 1091.49. The tech-heavy Nasdaq composite index dropped 37.61 points (1.7 percent) and ended the day at 2138.44.
In Asia, Japan's Nikkei average tumbled 3.2 percent, Hong Kong's Hang Seng index plummeted 4.8 percent, and the Shanghai composite index lost 2.4 percent after dropping 3.6 percent Thursday. European stock markets showed gains Friday after retreating the day before.
Dubai World Group, a holding company owned 100 percent by Dubai, asked its creditors Wednesday for a six-month "standstill" on its obligations due Dec. 14.
One of seven emirates that comprise the United Arab Emirates, Dubai has been suffering from a catastrophic property slump since the world financial crisis deepened last year. Once sky-high property prices for apartments built on land-reclamation projects in the Persian Gulf have already plunged 50 percent, and UBS AG, a Swiss-based bank, estimates prices could plummet another 30 percent.
"I don't see what the big deal is," said Willem Buiter, a London-based economist who advises governments, central banks and private financial institutions. "Dubai has experienced for most of this decade the craziest construction boom seen in the Middle East since the construction of the Great Pyramids. That boom turned to bust - as booms invariably do
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