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Stocks drop 3-5% around the world as Dubai World, the government investment company burdened by $59 billion of liabilities, sought to delay repayment on much of its debt.

Goldman Sachs Group Inc. analysts estimated potential credit losses at HSBC related to Dubai World may be $611 million, and $177 million for Standard Chartered, according to a research report released today. The impact on both banks will be “manageable,” the analysts wrote.  Sumitomo Mitsui Financial Group Inc., Japan’s second-largest bank by market value, may be owed at least $225 million by Dubai World, according to people familiar with the matter.
Dubai borrowed $80 billion in a four-year construction boom that transformed the sheikhdom into a regional tourism and financial hub. It suffered the world’s steepest property slump in the global recession, with home prices dropping 50 percent from their 2008 peak, according to Deutsche Bank AG.  Read more... (523 words, 2 images, estimated 2:06 mins reading time)