Some folks argued that consolidation is a good thing. However, we completely disagree in the case of current GCC scenario especially in Saudi and UAE when there is no growth or liquidity.
In this instance, it's a sign of a major forthcoming crisis.
In this instance, it's a sign of a major forthcoming crisis.
When money is leaving in billions, money velocity is extremely weak, real estate and trade has dropped to a fraction of what it used to be a few years ago, taxes, fees and fines are sky high along with business/visa costs, dollar peg has made UAE/Saudi the most expensive places on planet Earth (because they are unable to diffuse the situation a bit by weakening their currencies), several nationalities are banned, cash reserves have depleted to non liquid assets only, active wars are being fought while only lower end workers are coming for jobs in the Gulf instead of top end ones, these factors (all at the same time) can cause the very best of economies to crumble.
Last night, critical news which is always released on a Thursday night when everyone in GCC is asleep, 3 UAE bank merger news has taken another major step that 3 UAE banks whom we had predicted will merge has moved ahead.
The merger will be thus:
"Under plans being discussed, Abu Dhabi Commercial Bank PJSC would acquire Union National Bank PJSC to form a conventional lender, the people said, asking not to be identified because the talks are private. The Islamic divisions of ADCB and UNB would merge and then take over privately-held Al Hilal Bank, they said."
Hundreds of bankers will be fired within the next few weeks until Dec-Jan and tens of branches will be shut across UAE.
In addition, Emaar itself is in a massive cash crunch (just like Etihad airlines) and all other property developers are.
Emaar is planning to sell all it's top 5 lucrative hotels (Address Hotels) to Abu Dhabi at probably one third of valuation.
We are aware that these 5 Address Hotels located in Dubai were on sale on a discrete basis for approx AED 2.9bn and are not surprised that they could not find any buyer except Abu Dhabi who now needs to bail them out like in many other major assets over the last few years.
We would be surprised if Abu Dhabi will pay more than AED 1bn for these assets being a distress sale, if at all.
Hundreds of hotel staff will be fired once Abu Dhabi takes over.
In another blow to the UAE, Macy's and Bloomingdale's from NY have pulled out of Abu Dhabi even before yet another empty large mall opened next year.
Iranians have pretty much left UAE along with their money, their businesses and sold bulk of real estate. They were the pioneers and major investors in Dubai real estate since inception circa 2002.
Again, we have warned many times that several nationalities who are banned have all left or are leaving and none is investing a single cent in UAE any longer for several years rather they are all pulling money out from UAE/Saudi.
"Parham Gohari, co-founder of Frontier Partners, which advises multinationals on entering Iran, said 80 percent of clients working through the U.A.E. had halted operations because of the restrictions and plunging rial. Some turned to nearby Oman, which has a more neutral relationship with Iran, he said."
Residential property prices along with hotel valuations and hotel room occupancy have been plunging since Jan 2015 on a continuous basis.
Please note that the worst is yet to come and in the short term should come sooner once US mid term elections are over next week.
Next few months are very critical for UAE and Saudi as they need to decide when to accept yuan for oil (and form an alliance with Russia/China) while Saudi goes through the most disastrous transition in the Royal family which is critical for the very survival of their country as one nation.
In this climate, no business, stocks, property etc can flourish no matter how bullish one may be.
Or no matter how much money has been paid to the bankers and analcysts (working mostly for companies pretty much owned by the Govt itself or under fear of being arrested/deported) who have been writing outright lies in their reports and make verbal diarrhoea like comments for the past 4 years causing losses for every single client of theirs.
Last week, CNBC opened their media set up to broadcast from Dubai just like Bloomberg started a few years back to broadcast more marketing in order to convince gullible folks globally who are being subconsciously persuaded to lose their hard earned money by investing in the GCC quagmire.
But don't ask whether CNBC and Bloomberg were paid to set up their broadcast operations in Dubai at this crisis time.
Because we are not at liberty to disclose this.
Just yesterday, Bill Gates who was cheated by Abraaj Group in Dubai this year, has decided not to work with the Saudis as well. Both UAE and Saudi have given him more grief and losses than even the second richest man in the world can handle.
We guess if there is a giant signal for a major oncoming crisis in GCC, then this is it.
Gates Foundation halts cooperation with Saudi crown prince's nonprofit after Khashoggi killing
Do you still need more evidence that more and more money is not only leaving but also not coming to the GCC creating a massive double whammy, plus all the other issues?
great job
ReplyDeleteDear Hassan,
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