Trading screens became a sea of red last Thursday when the news first broke that Dubai was going wobbly on its £35bn debt pile
The FTSE 100 dropped 99.9 points to 5,265 and shares in the London Stock Exchange itself fell 35p to 780p amid worries the state-owned Borse Dubai could sell its near-21% stake in the company.
In the construction arena, the consultants were hit harder than the contractors and Hyder suffered the sharpest fall, dropping 12% on the day. Atkins had a 4% wobble between Wednesday and Friday while WSP was trading 13% down over a seven-day period by this Wednesday.
The screaming headlines and worries about the status of other sovereign debt around the world died down by the start of this week, which enabled a more sanguine view.
Given that a lot of the data on bad debt in the region was already known, analysts described the reaction of investors as “knee jerk”.
And so the plunge in confidence, in most cases, proved to be short-lived as murmurs of a restructuring plan surfaced early this week.
Michael Parkinson, an analyst at Brewin Dolphin, said: “The market has been aware of the issues for quite a while and they’ve all made provisions against some of their debt. There will be more write-offs, I expect. But it’s not going to tip any of these companies over.”
He pointed out that Scott Wilson’s share price fell a long way despite the firm’s mere £3m debt exposure in Dubai, none of it with Dubai World.