The impending default by Dubai World threatens to set back emerging financial markets just as they've moved to the forefront of an incipient global economic recovery. As a result, near-term career prospects for bankers in the Middle East look to suffer a second serious blow in little more than a year. Fallout from the crisis might put a damper on other emerging market careers as well, depending how events unfold.
Local media in Dubai are trying to paper over the problem, Reuters reports Monday. Most of the emirate's population of 1.7 million are expatriates drawn by a multi-year construction boom fueled by its position as a hub for both financial and goods trade driven by the region's oil wealth.
The abrupt announcement last Wednesday that Dubai World is delaying payment of a $3.5 billion bond that comes due Dec. 14 "could lead to a fire sale of prize assets and even push the emirate to divest speculative investments made during the six-year boom," according to Reuters.
Dubai World's investments include stakes in investment banks Standard Chartered and Perella Weinberg. Other Dubai corporations and the state itself own stakes in the London Stock Exchange, Deutsche Bank and HSBC. Dubai World also owns marquee consumer brands inlucing the Queen Elizabeth II ocean liner, the Barney's fashion chain and the Turnberry Golf Course.
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