World stocks fell as news of Dubai asking for a creditor standstill at Dubai World and Vietnam's currency devaluation, increased investors' aversion to risk.
Dubai's financial health has come under scrutiny after a major, government-owned investment company asked for a six-month delay on repaying its debts. Dubai World, which has total debts of $59bn (£35bn), is asking creditors if it can postpone its forthcoming payments until May next year. Dubai World has also appointed global accountancy group Deloitte to help with its financial restructuring. The company has been hit hard by the global credit crunch and recession. It was due to repay $3.5bn of its debts next month.
The request for a delay in repayments led to major credit ratings agencies downgrading a number of state-backed companies. Following six years of rapid growth, the Dubai economy has slumped since the second half of 2008. The Dubai government said in a statement that the request to delay debt repayments also applied to property developer Nakheel, a Dubai World subsidiary.
The announcement raised concern about the once-booming Gulf region's financial health and added to general nervousness in financial markets about the real state of the world economy at a time when investors are also seeking to lock in 2009 profits
Meanwhile, Vietnam's stock market tumbled after the nation's central bank devalued the currency by around 5% against the US dollar and raised interest rates by a percentage point to 8% from 1 December 2009..
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