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Peter Cooper
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Peter Cooper is the editor and publisher of the ArabianMoney Investment Newsletter and ArabianMoney.net website. He was formerly a partner in AMEInfo.com, sold in a private equity deal in 1996. His book 'Opportunity Dubai: Making a Fortune in the Middle East' was a best seller, and his latest... More
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Dubai Sabbatical: The Road to $5,000 Gold
  • Ten reasons not to be so optimistic about 2010
     1. Global bank balance sheets remain loaded with toxic assets. The real banking crisis has not started. Government bailouts have delayed the day of reckoning, not eliminated it.

    2. Stock markets rebounded ‘too far, too fast’ in 2009 and are overdue for a big correction, see the Bradley forecast.

    3. Chinese exports fell around 20 per cent in 2009, and have not recovered. Global trade continues to reel from the worst crash since the 1930s.

    4. US consumer and commercial lending is sharply down. The banks still are not lending for spending.

    5. Property values continue to deteriorate around the world putting new financial pressure on owners and banks. US mortgage resets are the sub-prime crisis part two.

    6. A double-dip recession like 1980-82 is the most likely scenario with a further leg down in the second half of 2010. The 2009 downturn was too short following a major financial crisis.

    7. Emerging markets like India and China are faking their growth – Chinese exports for example are in a deep depression. These markets are anyway too small to lead global recovery.

    8. Oil prices are too high, and generally depress economic activity.

    9. The record gold price indicates that smart investors are expecting the worst.

    10. In past major global financial crises a bond market crash has always been the final phase, and we have not seen that yet. This will bring much higher interest rates, and a boom in the gold price.



    Disclosure: No stocks mentioned
    Tags: Global Macro
    Jan 02 1:05 AM | Link | Comment!
  • US loses out to Korea for $20bn UAE nuclear reactor contract
     There is never a dull day in the United Arab Emirates. Just when journalists thought it safe to put up their feet for a holiday between Christmas and the New Year the government issues a brief statement placing a landmark $20.4 billion contract for four nuclear power stations with Korean companies.

    What happened to the expected deal with a US consortium led by General Electric, or for that matter the widely trumpeted French group headed by Electricite de France? We will never know, of course, these things are decided behind closed doors.

    Korean triumph

    But hats off to Korea Power, a state-run utility which supplies almost all the power in South Korea, Doosan Heavy Industries & Construction, Hyundai Engineering & Construction, Samsung C&T Corporation, and Westinghouse Electric – whose inclusion will be some sop to the disappointed Americans.

    The news will be jumped on by the New Silk Road enthusiasts who foresee a radical shift in Middle Eastern business towards Asia as the global powerhouse of the future. In this instance they are literally and metaphorically on solid ground.

    From a political standpoint the UAE is keen to sign up to peaceful nuclear power to make a point to both the US and Iran. But a rapidly growing UAE economy is set to double its electricity demand to 40,000MW by 2020, and it hopes by then its oil will be worth a lot more in exports than as a power source.

    So this growing nation needs nuclear power. It is also commercially sensitive and the most likely reason for the Koreans winning the bid is that they came in with the best price.

    Lowest cost

    After all if you are going for low-cost electricity, you might as well get is as cheaply as possible. South Korea has aggressive expansion plans for its nuclear industry and a deal with the UAE is clearly a feather in their cap. But Samsung built the Burj Dubai, the world’s tallest building due to open January 4th, so they are hardly unknown in the UAE.

    The Korean government says it is also pursuing contracts in Jordan, Turkey and China. Perhaps they should be looking to other emirates in the Gulf. It is hard to imagine that Qatar is not going to copy the UAE and go nuclear.

    Written by Peter Cooper Edit

    December 27, 2009 at 4:42 pm

     
     


    Disclosure: UAE electricity consumer
    Tags: Middle East
    Dec 27 7:56 AM | Link | Comment!
  • Dubai debt crisis follows world’s worst realty crash in 2009

    In the laws of gravity what goes up most will fall furthest, and that certainly proved true of the Dubai real estate market in 2009, a year that most participants would like to forget and some still refuse to acknowledge has actually happened.

    By the middle of 2009 studies by leading estate agents placed Dubai at the very bottom of a global league table of property markets with prices down around 50 per cent on a year earlier. Of course, the background is a market where prices had quadrupled in five years until this year of reckoning.

    The scenes in Dubai in 2009 have been reminiscent of the Asian Financial Crisis of a decade earlier with abandoned building sites on every corner and vacant patch of desert. It is a sight to bring tears to the eyes of developers, bankers and property owners.

    Abandoned construction sites

    Usually in property crashes there is one unfinished development that symbolizes all that went wrong. Dubai has a number of candidates: the second and third Palm islands; the map of the world in islands offshore; the abandoned skyscrapers of the Dubai International Financial Centre and the Business Bay; or the extremely quiet City of Arabia where dinosaurs were again supposed to walk the earth.

    However, surely the shining symbol of Dubai’s excess is the Burj Dubai, the world’s tallest building, which is still set to open on January 4th. You can not get much more symbolic that an 800-metre tower with 1,044 apartments, 160 hotel rooms and even 3,000 car parking spaces.

    Through-out modern history constructing the world’s tallest building has often been a signal that a property market is at the top and about to crash, as my book ‘Opportunity Dubai’ noted in 2008. Fortunately for Dubai the Burj Dubai is the work of stock market listed Emaar Properties, the most financially sound of local developers whose first-mover advantage in the market was played to great advantage.

    Limitless debt

    It is the state-owned Dubai World property developers Nakheel and Limitless that brought us the Dubai debt crisis of December, a crisis that ended as suddenly as it began with Abu Dhabi agreeing a new bond issue for Dubai at the eleventh hour. But how else could the world’s worst realty crash have ended?

    Property booms are always fueled by easy credit and debt. At first there is a real dislocation – like the Dubai decision to sell real estate to foreigners for the first time in 2002. Then there is a genuine surge of interest in the new opportunity.

    But this soon gets out of hand as people buy with higher and higher expectations. And remarkably those expectations are at first realized, because the flow of funds from the same buyers drives up prices. No shortage of schemes to take this money emerge.

    2008 crash

    Eventually the music stops and the credit dries up, and the market crashes. This is what happened in September 2008 with the global financial crisis which suddenly removed the foreign credit lines that had become essential for the majority of the Dubai projects.

    It is probably true that too much construction was approved for too shorter timeframe. That forced up construction prices and fueled the boom to even more unsustainable levels. But the global financial crisis was the pin that burst the bubble.

    For 2010 the prospect is a rescheduling of some loans, and the new bankruptcy laws leave open the possible liquidation of projects where the situation is not redeemable. Will the property market deteriorate further before it gets better? That might well prove true but prices have already fallen so far that they simply could not fall by the same amount again.

    Written by Peter Cooper Edit

    December 27, 2009 at 8:47 am

    Posted in BankingDubai PropertyIslami 

    Disclosure: One villa in Dubai
    Dec 27 12:15 AM | Link | 2 Comments
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