Like them or not you can’t seem to keep the Americans out of the news these days, especially in Dubai. As we have spent a rather large part of our blog writing about the DIC Liverpool issue I thought I might concentrate on other matters. However when looking around for something to write about the thing that came to mind was the global crash on the stock markets.

Fears of an American (yes it those people again) recession has meant that there is a worldwide downturn in business and the stock markets. This is how the global market works I guess it’s a part of living in a global economy. The Dubai stock market has never been a stable place even at the best of times, many say there are too many cowboys with too much money which they haven’t worked very hard to earn. This causes a almost casino like market to exists where people are not investing but gambling on shares and hoping for massive returns in double quick time.

A global market crash will of course just put more pressure on markets such as the one in Dubai and may well ruin some of the get rich quick brigade. The Gulf News reported that:

“UAE shares sank for the fifth consecutive day on Tuesday as panic selling led by foreign investors drove local shares down.

The sell off triggered by US recession fears saw the Dubai Financial Market Index plunging 6.2 per cent to finish at 5,210.58, while the Abu Dhabi Securities Market shed 6.8 per cent to close at 4,302.46.

Both bourses together shed another Dh50.7 billion in market capitalisation yesterday, bringing the cumulative losses for the last five trading sessions to Dh132 billion.”

This kind of selling not only by locals but foreign investors highlights the fragility of Dubai’s markets and the whole Dubai economy as a whole. The level of foreign investment in Dubai is staggering this means there is a high level of reliance on foreign money to prop up the local economy. This is all fair and well during the good times, however when the times are hard as now, those who have invested will not stand around very long for before pulling out their money. The warning signs are there, let’s hope they are noticed before it’s too late.

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