DUBAI, Dec 1 – The Dubai and Abu Dhabi stock markets plunged on Tuesday by 6.25 percent and 5.91 percent respectively in early trade, adding to the previous day\’s heavy losses amid continuing concern over Dubai\’s debt woes.
Investors were alarmed by a finance ministry official\’s statement on television that the government is not guaranteeing the 59 billion dollars of debt held by massive state-controlled conglomerate Dubai World.
The market was also digesting a statement in the middle of the night from Dubai World saying that it wants to change the repayment terms of 26 billion dollars in debt and restructure the companies that owe the money.
The DFM index in Dubai dropped 121.33 points to 1,819.33, while the Abu Dhabi Securities Exchange index fell 157.68 points to 2,510.55 in early trade.
Since the two markets reopened on Monday following a four-day holiday for the Muslim festival of Eid al-Adha, Dubai\’s market has shed about 13 percent of its value while Abu Dhabi has lost around 14 percent.
Dubai\’s leading real estate sector fell by 8.55 percent on Tuesday, near the one-day maximum-allowed drop of 10 percent, while the finance and investments sector shed 9.6 percent of its value.
Giant property developer and market leader Emaar sank by 9.87 percent, following the pattern of its Monday movement, while Dubai Islamic lost 9.84 percent of its value.
Abu Dhabi\’s real estate sector also plummeted 9.9 percent, while the banking sector fell 6.46 percent.
Dubai last week announced it wants to halt payments for six months on its entire debt, sending jitters across global financial markets.
In an interview with state television broadcast after the markets closed on Monday, Dubai Department of Finance head Abdulrahman al-Saleh said: "It is true that the government is the owner, but as the firm has several activities and is exposed to different sorts of risks, the decision was from the day of its establishment that the company would not be guaranteed by the government."