LEX Bank collapses often happen at weekends, when markets are closed, to improve the chances of an orderly outcome. The Dubai government’s debt standstill request for state-owned Dubai World, made on the eve of multi-day holidays in the Gulf and US, was bound to rattle investors, however. Yet though they initially dumped shares of banks linked to the emirate, that sell-off abated on Friday.
The emirate’s debt-fuelled property boom was a desert storm foretold. Investors who seriously expected Dubai’s frothy property market to be any different from its global cousins had their heads in the sand. After all, the warning signs were there.
