Dubai’s stock market rose sharply as Abu Dhabi announced a 10-billion dollar bail out for debt-laden Dubai World. The unexpected news brought some welcome relief to the market.

Dubai’s benchmark stock index led a surge Monday on regional markets, jumping more than 10 percent. This was the market’s biggest one-day gain in fourteen months.
Fadi Ajaj, stockbroker, said, “Today the stocks in the DFM and in the ADX have surged today on the news about the bailout from Abu Dhabi, the 10 billion dollar bailout from Abu Dhabi, of course this was a very pleasant surprise for every investor in the UAE and outside the UAE.”

Dubai says 4.1 billion dollars of that bailout is allocated to property developer Nakheel to repay its Islamic bond which matured on Monday.

The remaining funds will be used to help Dubai World, which has asked creditors to agree to restructure 26 billion dollars of its debt, until the end of April next year.


Gulf Stock Markets Fall Again On Dubai Fear
The Dubai stock market plunged by 6.25% on opening, coming back only slightly to end the day 5.61% down.

Abu Dhabi, which has pledged to help to its stricken neighbour “on a case-by-case basis”, saw its main index slip another 3.5%.

Markets in both emirates fell by more than 7% on Monday, their first day of trading after the four-day Muslim holiday of Eid al Adha.

Meanwhile Qatar’s DSM Index, which was closed on Monday, joined the slide on opening.

Dubai revealed at the start of the Eid festival that the government’s holding company, Dubai World, had asked for delays on payments of debts of £35bn.

The revelation has sent shockwaves through world stock markets amid fears Dubai would default on its debt payment.

But investors in London came out of the blocks in a far brighter mood on Tuesday.

The FTSE 100 index closed up by more than 2%, mirroring gains in Europe.

Confusion among global investors over Dubai World persisted as the city-state seemed to have washed its hands of the massive, debt-ridden investment conglomerate.

The muddled message from Dubai has fuelled worries over the future of Dubai World, which is involved in projects around the globe – from Gulf banks to UK ports and the Turnberry golf course in Scotland.

Dubai finance official Abdulrahman al Saleh said on Monday that lenders should take some of the responsibility for the problems.

He argued that lenders, investors and contractors had got involved with the company on the basis of the feasibility of its projects, not on assurances provided by Dubai’s government.

Dubai’s stock market closed Wednesday with a 2.54 percent rise on growing confidence in the Gulf emirate over its debt relief.

The Dubai Financial Market index closed at 1,889.99 points, while the bourse in neighbouring Abu Dhabi posted a slight loss of 0.94 percent, finishing at 2,767.80 points. Leading Emaar Properties surged 6.99 percent, while the shares of giant construction firm Arabtec closed 4.80 percent stronger. The Abu Dhabi Stock Exchange’s general index climbed almost eight percent on Monday on the back of the announcement, which came amid concerns Dubai would default on the debt.

On Tuesday, however, Dubai shed 1.49 percent and Abu Dhabi lost 0.96 percent as investors took profits and digested the previous day’s news of the Abu Dhabi debt bailout, analysts said. Trading on other Gulf exchanges on Wednesday resulted in a mixed bag of small rises and slight falls. Saudi Arabia’s stock market, the largest in the Arab world, closed with a gain of 0.72 percent on Wednesday, rising to 6,153.85 points. Kuwait’s bourse closed with a 1.20 percent increase and Qatar’s closed 0.40 percent higher, while Oman’s market posted a decline of 0.36 percent. Bahrain’s exchange was closed Wednesday for National Day.

Even more striking were the cash flow figures, with revenue down by 78pc to $540m for the company, at the centre of a crisis over calls for a debt “standstill” by its owner, Dubai World.

The news sent Dubai’s stock markets plunging again on Wednesday, with a fall of 6.4pc on the general index taking it back to where it started the year.

Panic has started to spread to other state-owned companies, especially in the property sector, with Emaar, developer of the Burj Dubai, the world’s tallest building, falling 9.9pc after Moody’s downgraded its credit rating. Arabtec Holding, the United Arab Emirates’ biggest construction firm, also fell 9.9pc over fears of its exposure to Nakheel.

In a research note, Barclays said that other “Dubai Inc” companies would have difficulty in tapping the debt market, threatening a wider contagion.

Dubai World is facing a battle with creditors over its request that they “standstill” $26bn of debt, including a $4bn Islamic bond repayment by Nakheel due on

The latest figures show how difficult it will be for Nakheel to find the money if the government maintains its stance that it does not guarantee the debt of state companies.

They also indicate the continuing crisis likely to face both the company and the emirate even if the short-term funding crisis is resolved amicably. The company said it did not have the cash to continue work on all its large stock of unfinished office blocks and its artificial island developments, which represent liabilities estimated at billions of dollars more.

The company also lowered the value of its land and properties under construction by $3.5bn. Property prices have fallen by half in the Emirate in the last year, and analysts expect further write-downs.

Other figures released on Wednesday put Dubai’s financial problems in a broader context. The United Arab Emirates as a whole has made 16pc of its professional workforce redundant in last year, with Dubai being the worst hit, according to a survey by gulftalent.com, a recruitment website.

The property sector was the worst hit. Pay rises continued at above the rate of inflation, though, with an average of 5.5pc across the UAE.

United Arab Emirates

One of Dubai’s two stock exchanges changed its name to Nasdaq Dubai on Tuesday, building on the brand of its minority shareholder as it tries to establish the city as a global financial hub.

The switch from Dubai International Financial Exchange takes effect immediately.

“This initiative is extremely important for us to take Dubai forward and to contribute and add value to the development of capital markets in the region,” Essa Kazim, chairman and chief executive of Borse Dubai, the exchange’s biggest shareholder, told reporters at the rebranded company’s headquarters.

In an effort to raise the Dubai board’s visibility, exchange operator and one-third owner Nasdaq OMX Group Inc. will list its own shares on the Nasdaq Dubai starting Thursday. The company’s stock will also continue trading on the main Nasdaq exchange in New York.

Nasdaq Dubai is primarily focused on international stocks, while crosstown exchange Dubai Financial Market mostly lists local stocks. Both compete for capital against numerous regional trading floors.

The exchange now known as Nasdaq Dubai last month announced a series of initiatives aimed at boosting its relatively small trading levels and enticing more of the region’s wealthy investors. It has attracted only 15 companies other than its U.S. shareholder.

On Wednesday, the exchange plans to begin offering futures tied to a basket of UAE stocks, most of which are listed on other local exchanges.

Starting next week, the exchange will open Sundays for a six-day week. It is also making it easier for U.S. companies to create a secondary listing in Dubai.