Share prices in the United Arab Emirates were battered again on Wednesday over Dubai's worsening debt woes, as the Gulf country insisted it was coping with the global economic crisis. The Dubai Financial Market shed 6.39 percent to finish at 1,533.36 points, giving up all its gains since the start of the year, while the Abu Dhabi Securities Exchange was down 2.82 percent at 2,467.04 points.
But, even as the brutal sell-off continued, the UAE's president said his nation had successfully "contained" the negative impacts of the global financial meltdown on the back of its solid economy. "We have been able to contain the negative impacts of the (global economic) crisis and overcome many of its results and consequences," Sheikh Khalifa bin Zayed al-Nahayan said.
The markets had opened slightly weaker but plunged after the first hour of trading following a Financial Times report on the spreading Dubai debt crisis. "The credit downgrades of Dubai's government-owned companies have triggered an accelerated payment clause on a 2.0-billion-dollar debt issued by the emirate's utilities provider," said a front-page report in the Financial Times.
The report was referring to a 3.5-billion-dollar Islamic bond debt, or sukuk, that real estate giant Nakheel is scheduled to repay next week. The UAE exchanges have been in freefall since Nakheel, part of state-owned conglomerate Dubai World, sought a six-month freeze on the sukuk on November 25.
Dubai World, whose assets include ports around the world, is liable for 59 billion dollars, while the emirate's overall debts are at least 80 billion dollars, with some estimates as high as 120 billion dollars. Dubai's bourse has now nose-dived by 26.7 percent since the shock announcement, while Abu Dhabi's has plummeted 15.2 percent over the same period.
Making matters worse, Nakheel reported Wednesday a loss of 13.4 billion dirhams (3.64 billion dollars) for the first half of 2009 compared with the same period last year. Among the hardest-hit Dubai stocks on Wednesday was giant developer Emaar Properties, which shed 9.86 percent a day after losing 9.84 percent, again narrowly missing the maximum-allowed 10-percent drop.
In other Gulf markets, the Saudi bourse - the Arab world's largest - dropped 2.43 percent to 5,954.13 points, with the leading bank sector sliding 3.53 percent and petrochemicals down 1.96 percent. Kuwait Stock Exchange closed down 0.32 percent at 6,743.8 points, while the Qatar exchange dropped 1.99 percent to end at 6,845.18 points.