With the US on its Thanksgiving holiday, the Middle East on Eid al Adha, and trading on the London Stock Exchange temporarily closed for technical reasons, the environment yesterday was ripe for rumour and sensation. The story of Dubai World's troubles provided the essential raw material. World markets declined on the fallout from Wednesday's announcement that Dubai World was restructuring and seeking to delay US$4.1 billion (Dh15.06bn) repayment of Nakheel's sukuk. Emerging markets, and the Gulf in particular, were particularly badly affected.
But the herd instincts of markets - and newspapers - often overdramatise the cold hard realities of a situation. After a few days, the Dubai story will find itself off the front pages; it will linger for a while in the business sections, as the procedures of the standstill are worked through; but eventually the emirate will be back in its usual slots - the travel, architecture and lifestyle supplements.
There is some serious work to be done, however, before normal service is resumed on how the world sees Dubai. Confidence has been badly dented by the way the restructuring was made public. With hindsight, it should have been stressed more emphatically over recent months that a debt standstill is a normal part of the corporate restructuring process and a valid option for the emirate. Two Gulf businesses - Global Investment House and Investment Dar - have already experienced standstills this year.
Dubai World's problems are of a different magnitude and have greater implications outside the narrow confines of the Gulf. That is all the more reason for calm, long-term consideration, rather than hysteria, by global markets. @Email:fkane@thenational.ae
