An eerie calm engulfed Dubai's financial centre, even as the city-state's two stock exchanges and another down the road in Abu Dhabi took a hammering.
Investors rushed to unload shares of several corporations expected to bear the brunt of a sharp downturn in Dubai's economy, the result of the announcement last week that the powerful holding company Dubai World needs a break from making payments on its $59-billion (U.S.) in debts.
Abu Dhabi's market was down a record 8.3 per cent Monday, and the Dubai Financial Market fell 7.3 per cent, with several banks, transportation and construction firms at or near the daily allowable loss of 10 per cent. Over at the more modern Nasdaq Dubai, DP World, a major subsidiary of Dubai World and one of the few subsidiaries listed on an exchange, lost 14.88 per cent of its value, hovering all day just above the exchange's 15-per-cent loss limit per day.
Global markets have been gyrating wildly since Dubai World first announced plans for a debt standstill last Wednesday, just before holidays began. Emerging markets and Asia were hard hit last week, but largely bounced back Monday as investors hoped Dubai's problems would remain largely contained.
In Dubai, government and private offices had almost all been given a 10-day holiday with the religious festival of Eid al Adha, ending later this week with the celebration of the United Arab Emirates independence day.
Eid al Adha commemorates the sacrifice the patriarch Abraham was about to make of his son Ishmael. This year, however, the holiday might also be said to mark the sacrifice of those holding stocks in vulnerable Dubai companies.
Together, the Dubai and Abu Dhabi markets shed about $10-billion in capitalization yesterday. They would have shed more, but for the exchanges' strict limits. In both cities, there were many orders to sell; almost none to buy...read more
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