Dubai Market Plunges for Third Day Amid Uncertainty
Associated Press reports: Dubai's main stock exchange plunged for a third straight day Wednesday as investors dumped holdings in the troubled Arab boomtown amid a scramble for details about the depth of its debt woes.
The Dubai Financial Market's benchmark index dropped 6.3 percent at the close, building on steep declines since Monday. The bourse in Abu Dhabi (home to the United Arab Emirates' federal government) tumbled 2.8 percent.
The declines reflected a lack of information about the scope of Dubai's debt pile and how it plans to repay it. Concerns over the government's increasingly clear unwillingness to assume responsibility for the debts of companies that it owns — best illustrated by officials' lack of backing for troubled conglomerate Dubai World — are also weighing on the market, analysts say.
The crunch prompted Dubai's government, on the eve of the U.S. Thanksgiving holiday, to announce that Dubai World would seek a six-month "standstill," effectively a delay, on repaying some of its $60 billion in debts.
While the company later said the restructuring would involve roughly $26 billion in debts, and indicated it may sell some assets to raise the cash, it said its profitable ports and related free zone operations would be exempt from the restructuring. Also off the table was its private equity division Istithmar World and Infinity World Holding, the co-owner of Las Vegas' new $8.5 billion CityCenter hotel and casino complex.
Dubai World's Istithmar lost ownership of the W Union Square New York hotel in a foreclosure auction Tuesday. Istithmar acquired the hotel in October 2006 for $285 million, according to Real Capital Analytics, a data tracking firm.
Also in trouble was The Fontainebleau in Miami Beach. The Dubai World property's $660 million loan was due in August. Contractors also claim the owner of the historic hotel owes them $60 million.
See RCA's recent Global Currents article "Mapping the Dubai Surprise."
View the full article on Associated Press: Dubai Market Plunges for Third Day Amid Uncertainty
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Posted by: Matthew Stone