Crisis at Dubai Flagship Roils World Markets
In surprise, government takes over Dubai World; bank stocks pounded
By Will McCahill,  Newser Staff
Posted Nov 26, 2009 8:22 PM CST
Investors worried about the opacity of Dubai's government and of Dubai World.   (Wikimedia Commons)

(Newser) – A move today by the government of Dubai to take over its flagship company, Dubai World, caused ripples of panic throughout the region, and translated into a selloff in bank stocks in Europe and Asia. The government also aims to delay payments on $60 billion in debt, a request that caused the price of insuring debt in emerging economies to soar, the Wall Street Journal reports.

The opaque nature of the both Dubai World and the emirate’s government itself didn’t help matters, traders tell the Financial Times—which could mean long-term trouble ahead. “In the absence of definitive information it’s hard to see the market treating this as an isolated one-off,” one notes. Nonetheless, a Dubai official called the move a “sensible business decision … (to) ensure long-term commercial success,” and promised more information next week.