Home Thoughts from Dubai and Dublin

Did you know

a) Istanbul is the only city in the world located on two continents

b) depending on your weight you can lose between 320 and 700 calories playing golf (carrying your own club’s and no caddy car !!)

c) while it is difficult to be precise Hinduism is the oldest religion which can be evidenced by writings

d) the location of the worlds tallest tree (named Hyperion), is kept secret from all but a select few scientists (great so anybody can declare the tallest/largest/biggest/longest something and keep the proof ‘secret’ !!)

e) In 1819, the USA purchased Florida from Spain for the cancellation of a $5 million debt.

What’s happening in the UAE :

  1. You may recall last month I told you about the 50% maximum Loan to Value being imposed by the UAE Central Bank on all non Emirati mortgages. The idea (sorry that is what the Authorities are calling it now) has now been reversed and the UAE Central Bank is almost denying it ever introduced the concept. Mmmmm. And so the mortgage market returns to market. Although you never know in the UAE. This statement could also get reversed !!!
  2. Dubai is one of the safest places on the Planet to live. Unless of course you need to use its wonderfully new and state of the art roads/motorways. And February proved that once again the drivers of Dubai have learnt nothing from the annual carnage and statistics. 24 more dead. And a further 24 injured. In one accident. 18 of them poor Bangladeshi workers in a bus. Just going to work. Earning (small amounts of) money so that they can send it home to their equally poor families. What did they do wrong but get up early in the morning and board the company transport bus for their 10/14 hour shift. In this case it was a 75 ton truck driver forget that he was not on a Formula 1 Grand Prix track. Forgetting about the ability of the driver, speed seems a lesson that most drivers in Dubai are incapable of understanding its inherent dangers. Many in the Arab believe that if your time is up with God, then it does not matter if you drive at 10 or 200 kilometers per hour. Yep it has nothing to do with speed or the drivers inability to control or handle a car.
  3. Emirates Airlines and Dubai International Airport are flying !!! Literally. Dubai’s new superjumbo terminal is now fully functional and this will help the airport move towards it’s 70 million passenger traffic target this/next year – and likely to replace Heathrow as the world’s largest (by throughput) international airport by 2015/2016. The new 20 gate Euro 2.5 billion A 380 Concourse(which in itself will handle 19 million passengers annually)  is now fully functional. Not bad for a little Emirate of just 1.8 million people.  But Dubai has always fully understood and planned that the more people you can fly/pass through the airport, the more your ‘sovereign brand’ improves and the more people visit/hub through the Emirate. Well done to all the ‘contributors’ to this success – Emirates Airlines, Dubai Airport Authority and of course the very gifted people at Dubai Duty Free. There is however one SERIOUS issue that the Airport Authorities need to correct and get sorted. The queues at Passport Control are now seriously out of control. In the year of Emiritisation (the UAE Government are pushing for ‘no unemployment’ amongst Emirati’s) surely this problem can be solved. It is a REAL problem that needs to be sorted – queue’s of 1 hour plus are just NOT acceptable.
  4. Constant changes of the rules at Immigration and Labour. Is it really that difficult to let foreign owned companies in Dubai know of these changes as they happen ? Or is this just some tactic that helps bring joy to the employees at Immigration or Labour. It certainly feels that way when you have all the application papers (which normally run to 10 plus pages/tasks), have waited 25 + minutes for your number to be ‘called’ and then you wait as the Immigration/Labour person sets about looking through your submission papers to see what error he/she can discover. And the smile on the face as she/he ‘discovers’ that you have not completed something that is required in a new rule that was introduced. Five minutes ago !!!
  5. Sharjah (one of the seven Emirates of the UAE) has made it illegal to ‘litter’ anywhere on its streets. Not sure what it means, as I thought this was already the case, but I do know it will probably be enforced in an over-zealous way. Such is the way of life in Sharjah
  6. Dubai gave the go ahead on Wednesday (mid month) to plans for a new $1.6 billion island project featuring the world’s largest ferris wheel at its centre, as the Emirate resumes constructing extravagant projects reminiscent of its boom years. Yep I know what you are thinking. Were there any lessons from the collapse of 2008 ? Well it would appear not.
  7. The Dubai Tennis Open was one of the key sports events of Dubai during February. The figurehead for this truly wonderful annual event (although I don’t seem to get invites anymore !!) is one of Ireland’s most charismatic ambassador’s – Colm McLoughlin. Colm counts as one of a small handful of Irish that are veterans of Dubai and are part of the reason that Irish people in the Emirate are loved and respected. His charm and abilities obviously extend way beyond the running of the hugely successful Dubai Duty Free – where annual turnover and profits exceed those of chains such as Marks & Spencer and Harrods. For this year Colm succeeded in persuading 8 of the top 10 female tennis stars (it would have been 9 were it not for a late injury to one of the registered contestants) to participate in the tournament. I am not sure if Colm personally persuades them but some feat !!!! And the tournament would not be the same without him at the helm – so a result  that can be added to his already ‘well populated’ trophy cabinet of personal and business achievements. Now I wonder if I will get tickets to next years competitions !!!
  8. Jumeirah Lakes (JLT) is as many of you will know my ‘bargain’ property location in Dubai. Both rental and purchase. In time this will change. The location is after all directly across the motorway from Dubai Marina where property prices are almost double. And JLT has significantly greater parking facilities. So when the Master Developer at JLT announced this month that it is going to develop a large parkland (55,000 sq mt) within the development, a further positive was added to this locations appeal. And with work expected to be completed by the end of 2013, property prices will only go one way over the next 18/24 months. And of course I live there !!!

 

Currency Corner :

It seemed that everybody, except Home Thoughts,  believed the Euro crisis was over. Well thanks to our Italian friends, who have a combined National Debt of Euro 1.5 trillion, decided that a comedian and a corrupt Gigolo are better rulers of their Sovereign fate than the financially disciplined Mr Monti.  I expect this strengthening of the $ against the Euro will continue for the rest of the year – with the occasional ‘bounce’ in the Euro related to ‘normal’ trending. The major export economies of Europe will not want to see a strong Euro around for long.

Currency wars were temporarily averted – that is the rush by all the major industrial countries to weaken its currency to assist with growth and export efforts – at the recent  G20 meeting. It passed without any major incident and with no indictment of Japan for implementing a monetary policy that naturally weakened the Yen.

DON’T believe that Sterling is on the way to parity with the Euro. What a rubbish belief, peddled by attention seeking and alarmist currency terrorist’s. The UK economy is no worse than most other ‘Western’ economies as it attempts to reduce it’s Sovereign debt, create employment and revive economic activity. So BUY Sterling as it weakens over the coming weeks. I don’t see the rate going above 90 and will recover as the Euro weakens over the second half of 2013.

Equity Corner :

The all time high for the Dow Jones was 14,164 (day end) or 14,193 (intra day). Despite my prediction that there will be some ‘pull back’ in equities, I now predict this high will be exceeded before we have the ‘pull back’. So expect the Dow Jones to hit an all time high during today/March. Because I view equities as now being over-valued it is difficult to recommend any specific stock to you. All my 2013 share tips have had very impressive starts to the year. But then it would have been hard to find equities that did not have such a good start.

If I was to pick one for you this month it will have to be Aviva. It has not participated in the December or January equity rally and although some strength has come into the price over the past few weeks it still looks cheap relative to sectoral metrics. Financial results are due on March 7th and this should be a catalyst for some price upgrades – assuming global equities stay steady/strong.

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