CNN International, November 30, 2009
The U.S. stock market opened lower on Friday as traders seized their first chance to respond to Dubai’s debt problems. The Dow started trading some two percent lower while Europe’s main indices closed higher after recouping earlier losses. Asian markets took a hit during Friday’s trade after Dubai shocked investors by announcing it was requesting a debt freeze for at least six months for one of its biggest holding companies, Dubai World and its real estate arm, Nakheel. The government timed the release on the eve of the Eid holiday to shield local markets from the full impact of the statement, averting a potential sell-off over fears that one of the region’s biggest companies couldn’t pay its debts.
International investors were outraged over the timing, especially in the U.S. where the Thanksgiving holiday limited their ability to respond to the statement by adjusting their holdings. The Dubai government sought to explain its timing late Thursday in a statement which said that the Emirate understood "the concerns of the market and creditors in particular."
It added that, "our intervention in Dubai World was carefully planned and reflects its specific financial position."
"It’s not specifically they want to destabilize western markets — that wouldn’t be in their interests," Stephen Pope, Chief Global Equity Strategist at Cantor Fitzgerald told CNN.
"The timing is more of a local idea — they wanted to get the bad news out.. to allow the local markets to observe what’s happening in the more sophisticated markets and react accordingly," he said.