As we have advised before, global media can only report on past events and not future possibilities.
Bloomberg has today reported exactly what we reported in Oct 2018 and Dec 2018 that 19 banks in the Middle East will merge.
You may read our projection and perspective of 26 Dec 2018 here:
Today, Bloomberg has reported all the mergers that we had reported months ago.
9 Jan 2019: Why Gulf Banks Are Merging Like Never Before
We are also worried that the last month's Sharjah bank bailout of Investbank could not be concluded in mid Dec 2018 at their meeting, the meeting of the board was postponed until 8 Jan 2019 and until now there is no news of the status.
The last update stated that more money was needed for the bailout and after that there has been complete silence.
We are watching this news with bated breath and hope the Govt of Sharjah will bail the bank out but if the situation is worse, they may either need to sell the bank to Abu Dhabi or shut it down. Let us see.
30 Dec 2018: Sharjah makes enhanced offer for struggling Invest Bank
In addition, business all around is collapsing.
Many billionaires are now almost penniless and cannot even pay their bills.
We expect many more millionaires and billionaires to keep going bankrupt across Middle East for one reason or another as the oil price led multi faceted perfect storm carries on hurting everyone relentlessly.
We expect many more millionaires and billionaires to keep going bankrupt across Middle East for one reason or another as the oil price led multi faceted perfect storm carries on hurting everyone relentlessly.
"The crackdown’s impact on the business community and private enterprise, which are already reeling from low oil prices and weakened consumer confidence, has shattered investor confidence and contributed to a sense of uncertainty around the policies of Crown Prince Mohammed bin Salman.
The idle aircraft, which one of the sources estimated at up to about 70, include Bombardier and Gulfstream jets, the sources said. There are also larger Airbus and Boeing aircraft that are more commonly associated with commercial airlines but are often used in the Middle East as private jets."
In addition to various other work permit bans, Oman has also placed ban on foreigners in education now.
Saudi keeps banning more and more jobs for foreigners every few months.
"Shops selling medical devices and equipment, construction materials, auto spare parts, confectionery and ‘carpets of all kinds’ will have to ensure that at least 70 per cent of their staff are Saudi nationals."
We have advised firmly and continually since 2015 that Dubai which was the most popular destination in the Middle East for investing will keep going down in all aspects.
Whether it is business conditions, real estate, stock markets or a crash in banking and trade.
We have been dead on, in our projections, that Dubai real estate will drop every single month and every single year since 2015.
Stock market did remain weak but had a small gain in 2016 otherwise stock market also has dropped every single year since 2015.
It is very sad that advisers, real estate brokers and even top property consultants like Savills or Knight Frank have never had a correct prediction since 2015. They always promise that things will stabilize, improve or grow.
Now, 5th year into a massive drop, they have come out claiming that there is more blood and declines ahead.
Well, we will be damned!
They finally catch up with our 2015 prediction!
This decline across the Middle East and Dubai in particular is a never ending decline and wish that these "smart" people working in Savills and Knight Frank had advised their investors what we have advised our clients since 2015.
31 Dec 2018: Dubai stocks limp to end of worst year since financial crisis
Due to the intensity of localization across all GCC countries, even jobs that are not banned may not get visas so easily for expats, thus literally closing the doors for all new job seekers across GCC or those expats who choose to work will be severely underpaid in very stressful conditions.
Expect more banking mergers, less and less jobs for expats, even lower pricing of real estate, more taxes/fees/fines and less business in every sector every single month over the next several years.
We are expecting thousands of banking job cuts, retail, school, healthcare and super market job cuts etc in the weeks ahead across GCC as people get back to work and owners realize that business conditions are even worse than in the year gone by.
Hi Manoj,
ReplyDeletethanks for all your work!
The truth is that the peak in real estate that was formed in 2014 was a LOWER HIGH than the peak of 2009/10, which was a massive red flag for those of us in the business of paying attention. Some of us have acted in accordance with these realities and made money in the process.
However, I suspect that now that the main stream press is finally starting to report this macro analysis in ernest, that we may be nearing a bottoming process, and therefore, smart money may want to start looking at picking up severely distressed assets on a massive discount with a 7 year investment horizon.
It feels like capitulation is slowly coming and the downside momo will start to slow down (and maybe even reverse) in the next 12/18 months.
Just my 2 cents
thanks again
cheers
Hello dear AR,
DeleteThank you for your valuable comment. Appreciate it.
However, I disagree.
Except for Burj Khalifa and maybe 1-2 other projects such as unfinished Pentominium or Dubai Pearl or Palm Jebel Ali etc, all areas had a HIGHER HIGH in 2014 than the peak prices in 2007.
Prices declined in 2008 and by end 2008 had plunged and it took well over 2 years by 2011 to start rising again.
JBR, JLT, Barari, Ranches, Marina, Emirates Hills etc all went higher in 2014. Palm Jumeirah was not even released in 2008 nor was Downtown Dubai so they too went higher in 2014.
Jumeirah Park, Islands, International City, Discovery etc also went higher in 2014.
Secondly, until 2008-2009 the largest investors were from Britain, Russia, Iran, Qatar, Saudi, Germans, then Pakistani and Indians (even including Canadian and British Passports) etc. As on date, there is almost no buyers including the money launderers.
Once UAE released data on banks and real estate to Saudis based on a phone call in Nov 2017 (when those 5,000 super wealthy elites of Riyadh were jailed in Ritz) that was another death knell for UAE since the sacrosanct laws of banking worldwide were broken by UAE for the very first time.
This has not gone unnoticed with the global "smart" investors.
UAE released their data to Saudi within a matter of days based on a phone call which is a historic first in the entire history of banking and no country has released bank data to another country without a court order, ever.
The Qataris had to scramble out in 2017, much like Saudis in 2018 now, whose assets have been confiscated by the state, and the largest investors like Iranians, Yemenis, Pakistanis and Indians and British and Russians will never return since their own Govts are chasing them or they have been banned by UAE. Small ones will come but sellers vastly outnumber buyers due to active mass tax investigations of recent NRI's and NRP's over the last decade.
Ex PM Nawaz Sharif of Pakistan is a prime example who is now in jail due to a Dubai related evidence from Jebel Ali free zone.
This was not the case until a few years ago. Add to it the defaults by major corporations and shutting businesses and dozens of videos and news coming about Dubai and GCC worldwide, there is simply no chance for a return to any high or low of prices in the years ahead. Prices will simply keep dropping and there will be no bounce back whatsoever unfortunately.
We have inside knowledge of who has been selling assets over the last 1-2 years and these are super top people. Thats all we can say. Most sales have been at depressed prices because they need to sell over night for cash.
Dubai was a mecca for keeping assets for people from Middle East and Africa region only. Others like Europeans and Russians just tagged along and got eviscerated in 2008-2010 crisis. They have sworn never to return.
Chinese had come in droves in 2005-2008 era and they too are gone except for some small time traders.
We also are aware of the situation that had happened in Burj Khalifa whereby foreclosure was banned and almost no one knows who were the biggest investors in Burj Khalifa at inception. It was the South Koreans.
They too have left forever.
While in stock markets, a company may make money again, or get bailed out or shut stores after bankruptcy protection to regain lost prestige and shares may rise based on technicals and cash flows. But fundamentals still remain important else they become like Blackberry, Motorola, Nortel or Lehman.
However, in case of Dubai, as I have pointed out with several articles, that not only it's a global decline but the worst declines globally out of 150 cities (now attested by brokerage firms or Bloomberg etc) are in UAE.
I wish and hope that you are right but based on all the above and the currency declines in the region and far, Iran, Yemen and Qatar and other sanctions, oil price decline and war related activities in the region, legal issues etc, smart money simply cannot back.
DeleteDecline has been slow yet pronounced because post 2009, only super wealthy bought properties and over 80% property buyers in UAE were in cash.
These super rich are reluctant to sell because they can hold longer and are more resilient hence the decline is long term, sustained and severe. As soon as someone gets a business problem, or margin call or need to leave for whatever reason or get jailed or run away, then they have no choice but to sell at whatever price.
Today, we are aware that prices are at least 60-70% down since 2014 peak and even then there are no buyers and in my opinion, except very few lucky people (like you perhaps) who have not been hurt in 2008-2010 and nor in the 2015-2019 collapse, perhaps are buyers but those numbers are in hundreds but the property available is in the region of USD 1.2 to 1.5 trillion in UAE alone and there were more than 500 unfinished towers in 2009 and this number is certain to have risen today.
For any capitulation or bounce to occur, you need real demand due to real business and real jobs, none of which seem to be happening and we are at the worst levels today than at the start of the decline in Jan 2015. And please remember that the worst is yet to come.
Hope this helps.
Wishing you all the very best,
I found this informative and interesting blog so i think so its very useful and knowledge able.I would like to thank you for the efforts you have made in writing this article.
ReplyDeleteBursa Malaysia Stocks
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ReplyDeletePlots for sale in Bankers Town
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DeleteDiscovered this informative and eye opening blog when someone posted one of your UAE related blog on our whatsapp group. Having lived in the UAE for more than 22 years I have seen the growth and decline of Dubai real estate. There was a time when people went berserk buying off plan properties and flipping it. Many made money and many lost money.
ReplyDeleteUAE was once upon a time THE best country especially for people coming from the Indian sub continent. Sadly, present situation is such that people are struggling with the high cost of living. Moving to Sharjah and Ajman means 3-5 hours of commute daily. Companies are downsizing, businesses are closing down and laws are changing.
I have an emarati friend who said and I quote "we are loosing talent to Canada" as most of the people whom he knew immigrated to Canada. In fact he and his family are investing heavily in Canada and UK.
I pray and hope that things get better in future.
Hello and Good day,
DeleteThank you very much for your comment and glad that you find the information useful.
You may inform your Emirati friend that Canadian dollar versus USD is down 40% and will go down further in 2019 along with real estate, trade and tourism in Canada.
Saudi has a ban on visiting or traveling or trading with Canada as well and China is about to lose it's mind with Canada too while China, India and America refuse to sign any deal with Canada over the last several years.
Meanwhile, let's hope for the best,
Hello.
DeleteI have been watching the global economy since 2012. I'm starting to learn what happened in 2009. I'm actually shocked what will be soon around the world. What do you think will happen with Brexit and pound?
I think the world is waiting for Brexit and global shock in financial markets.
Hello again,
DeleteThanks for your views.
We are living in one of the most uncertain periods of history ever.
We have never had such dimensions of severe unemployment, excessive debt, excessive business losses, fights among nations, terror, pollution, water and food scarcity etc.
All of this is tied to over population.
No one on this planet wants to talk about over population except me and maybe a few others which is the root cause of all crises over the last 2 decades.
All problems in this world are tied to over population alone.
Nothing will happen with Brexit. It is a very well calculated move and I endorse it.
It is wise of the Queen to get Britain to separate from the mainland EU.
Most countries or states want to go alone because everyone is different and has a right to self determination of their future.
EU is a mess with 29 partner nations, 3 agreements and no fiscal union nor military union etc and was a flawed experiment since inception and must break one fine day which shall be soon.
By going alone, Britain will avoid sharing any mishaps like in Greece or Italy or Cyprus that have an endless bottom and won't have to share any money for their follies.
It's a short term volatility. GBP has been declining for decades.
Meanwhile, what the people planning to move to Europe don't know or have grossly ignored is that EU wants to levy a 0.2% financial transaction tax and a digital online tax. Once they figure it out, they will all rush back to UK which has always been a heaven for foreigners who wish to pay low taxes.
Anything that screams disaster in the media, you must learn to ignore, because it will never happen.
You may have heard this word called Black Swan, which means that no one can predict anything about the future and rare events are well, rare, and these are the tail risks.
Financial Markets will continue to slide gradually until Trump takes his tariffs back. Everything else can be contained.
There will be specific things like Chinese not investing abroad or Americans sanctioning Iran or land of whites take over in South Africa or Zimbabwe that will cause business to collapse but those are in the realm of deglobalization and again, self determination.
In case of Iran or China they are being instigated by America because America is now a failed nation and does not like to see the rise of others and share the stage with others what rightfully belongs to others.
Money is a zero sum game, if it leaves one nation or one stock, it goes into something else, so it keeps balancing itself.
So tech is going down due to China retaliatory tariffs and bans but Cannabis is rising. Or money is leaving UK but going to EU.
Currencies will keep going down because trade is declining, if trade rises (of which chances are low), then currencies may come back, else not.
Hope this helps.
Do you really think real estate will go down in Canada? With the amount of immigrants coming into Canada real estate has been on a high. Now with Saudiasation in Saudi Arabia and job insecurity and economic problems in UAE many indians and pakistanis are moving to Canada. They are bringing in money and buying houses which has led to real estate prices going high. Not to forget the Chinese who bring in bags of cash.
DeleteCanada announced they will be taking in a million immigrants this year. Canada is getting the cream of the world which they are not utilising. Doctors are working as taxi drivers and in factories coz their degrees are not recognised. To practise they have to study here and give umpteem exams. Why bring in so many immigrants when there are no jobs and you don't recognise their education?????
Hello,
DeleteThank you for your comment and visiting the blog.
Yes, we believe Canada will see a massive crisis during 2019.
Canadian crude is selling between 10-15 dollars.
https://seekingalpha.com/article/4233835-canadian-heavy-oil-discount-falls-single-digits-crude-quality-matters
Pretty much every commodity that Canada and commodity producing nations produce are at multi year lows from copper to Iron ore etc. Canada depends on these revenues a lot and budget deficit has started from 3Q 2018. We are talking as high as CAD 20b budget deficit in the next budget.
due to this interest rates have started rising which will make half of Canada bankrupt (according to Canadians themselves). https://www.zerohedge.com/news/2019-01-09/bankrupt-eh-insolvency-filings-soar-almost-all-canadian-provinces
Plus whats unknown that 2 largest economies in the world, India and China have refused to do any business with Canada. In addition, Trump literally hates Trudeau and even recrafted NAFTA after 20 plus years.
Already GM factory in Oshawa and call centre in NS have shut in the last 2 months. These were US companies operating for decades.
Real estate sales are now at 2 decade lows. https://www.bnnbloomberg.ca/toronto-home-sales-drop-16-in-2018-as-fewer-houses-listed-1.1193443
Prices have to follow, there is no doubt about it.
Every year hundreds of restaurants are closing in Toronto. https://dailyhive.com/toronto/rip-toronto-restaurants-closed-2018
not to mention stores in malls and on Yonge Street and Calgary, Montreal and Vancouver etc.
The quality of migrants is terrible as compared to 20 years ago. They are not bringing money.
We are involved in Canadian PR. All Canadian PR is almost shut for wealthy people. Migrants are coming but they are coming because they want to escape their homelands like India, China, Middle East and are of older age or thousands of refugees. They are not able to contribute much because of lack of jobs and lack of skills both which even you pointed out about doctors. On top, India, China etc have tight capital control laws so money cannot be taken out easily and anti corruption drives are at their highest worldwide.
Even CAD USD exchange rate is hanging at very risky levels around 0.75. If it touches below 0.73, it will simply drop to 0.68 and then 0.62 level within weeks. We expect this to occur within 2019 and hopefully soon.
There is simply no sign to balance these losses in commodities, real estate, consumer spending etc causing banks to weaken.
We were supposed to make a blog post on China going to hurt Canada in immeasurable ways but haven't had the time.
China has arrested 13-14 Canadians, about to hang one, doesn't sign no deals with Canada, is threatening Canada every other week, the Chinese Ambassador held an unprecedented press conference 2 days ago to warn Canada, all Chinese are mostly angry due to arrest of Huawei CFO who is a "princess" in China on unilateral Iran sanctions which no country agrees to and now China has passed an alert to warn Chinese in Canada (which basically means leave Canada). https://beta.scmp.com/news/china/diplomacy/article/2182190/china-issues-travel-alert-telling-citizens-they-could-be
In addition, all 16,000 wealthy or state sponsored Saudis have left Canada in Nov 2018. https://www.newsweek.com/saudi-arabia-orders-16000-students-leave-canada-amid-diplomatic-row-1060547
All of the above will hurt Canada super badly and it has already begun.
Just because Canadian Govt or media doesn't publish all of this in one post does not mean that it is not happening.
In the end, we stick with our projection that Canadian economy will sink without a bottom (almost like Dubai) in the months ahead.
Thank you and best regards,
Hello Sir,
ReplyDeleteThank you for the informative blog!
Well interesting times ahead... Middles East is in shambles... Europe barely surviving... Canadian economy is sinking... India with everything going on does not paint a rosy picture either and with general elections round the corner economic viability will be proved over next few years.
Is this a worldwide phenomenon? If it is so, then there is no safer place to be when it comes to investments? Which countries can live upto the challenges posted by economics instability, if there be any?
Hello and Good morning,
DeleteThank you for your appreciation and for visiting the blog.
Most countries and their economic systems are in shambles and will worsen over the next several years.
While it is a global phenomenon but 2 countries stand out and the reason they stand out is because they are "insulated" from the rest of the world.
They are China and Philippines. They are not only relatively stable but actually growing very nicely over the past 5-10 years.
Most other countries are in serious decline unless you we end up tiny nations like St Kitts or Fiji who rely on tourism of few thousand and have populations of 50-100k, perhaps they are an exception and are "stable" but they really don't matter on a global scale.
Reason why Philippines is stable because it does not rely on import or exports, is very self sufficient, has one religion and generally very humble people but very homogenous too so less conflict.
There are these natural calamities that roll around every 5 years or some terror but they are all from foreign adversaries like America and nothing much within. But can also be isolated on just 1-2 of their 7,000 islands including the natural disasters.
China is rising because it is insulated too.
Let me explain because everyone is told that China is in collapse mode which it is not.
China has it's own banks, own payment systems, own tech companies, own food companies, own commodity companies, own stock and commodity exchanges, own hotel companies, own FMCG companies, own AI, own telecoms, own infra companies etc. They have so much that they are the leading exporter to more nations than America as No 1 exporter but have been focused on self and service sector over the last decade which is why they are bound to rise further because they are going up the value chain (from manufacturing to service like USA did after 1980's).
They basically can tell every single foreign company to get lost but they don't do so because we live in a globalised world where a set of rules are necessary for a long term stability and showing leadership.
For example, China adds the GDP of entire India every 3-4 years. Same for UK, China adds an entire UK GDP every 3-4 years.
No other country, except USA in the 1960's onwards until 9/11 has ever grown at such speed nor brought out billion people out of poverty in less than 40 years for which China has no precedent. And no country ever will go grow again like this in the future.
Of course, there will be hiccups but again they are due to foreign adversaries and are to be expected if one is a smart nation which China is. They have anticipated Trump like idiot to cause havoc. If you observe, they barely even respond to Trump except retaliating where it hurts USA more than it can ever hurt China.
2/2...
DeleteAside from those 2 countries, it's very hard to find any nation (Russia comes to mind and is also doing well because they are getting more and more aligned to China over the past 5 years, thanks to USA which has made Russia stronger and a positive growth member over the next several years) who has the necessary features or positives on their side as of now because the world is changing from oil to gas, shipping to rail roads, oil based vehicles to electric vehicles, less tourism, more sanctions, wars, animosity among nations, more AI, more e commerce etc which is what is leading all countries down the drain.
One thing to remember that unlike in the past, we saw growth in countries like Germany, USA, UK, EU, ME etc where they had less people but more jobs. Today it is the opposite, they have more people than jobs so they are all busy sending people back and causing problems in the countries that used to send millions to these nations for work. While, China, Philippines, Russia have a lot of jobs but they also have a lot of people of their own so they don't need foreigners so we have a check mate like situation.
One of the biggest factors why this world is going under is over population everywhere you see. These young people will not get jobs that they are trained for which will wreak havoc everywhere and cause all sorts of problems, not just economic.
It's very sad, it's the reality and it's the truth.
As far as investing goes, one has to be very smart, be like a stealth stock trader like a sniper, get in and out, focus on very strong companies (not the Top 10 but sometimes maybe) and keep money on cash or deposits if trading doesn't suit.
Another thing is that for the first time in 45 years we have seen USD interest rates rise, which is adding to the pressure everywhere.
It was so easy to make money for 45 years but ever since 2016 in investing, it has become impossible. Previously 90% ideas would make money, today 90% of ideas can not make money!
Hope this helps.
Thank you and best wishes,
Dear Sir,
ReplyDeleteFurther to your above reply on the global phenomenon.
Can we then call it a "correction mode" worldwide wherein all the economies are correcting themselves? If that is so is it still scary as you suggest?
Doesn't the global turmoil make India a much more suitable investment option for an Indian... rather than taking up a second tier citizenship in a "sinking" developed economy like Canada... where they have the right to revoke you citizenship privileges anytime.
Thank You
Hello again,
DeleteThanks again for your reply and your very interesting question.
Correction mode can happen in a company or an economy for various reasons.
It can be policy changes at political level (Trump in USA, Modi in India, corrupt politicians in Africa, Malaysia's Najib etc). They do not care for their economy or public or country but just their own whims which causes distress to many and leads a country into a decline, some fast some slowly.
Another correction occurs in a company or a country due to bankruptcy (example, UAE, Saudi, African nations, Venezuela, Zimbabwe, South Africa, even India etc). Here they have no control but the goods that made these countries stand up and rise to glory are at significant discounts and some cases there is no need like gold is in low demand or oil is being changed to electric vehicles, CNG and gas or iron ore and copper is down due to lower construction globally etc.
Some others could slow down because their goods also won't sell and they have had poor policies, like in Germany, EU, etc, they are sanctioning Russia, Iran and China who are buying less causing hurt back to these nations and then refugees have caused havoc leading to declines. These are reparable situations but their currency will always be a headache.
So if you see, reasons are different for correction but could happen at the same time because global trade is sinking by trillions of dollars, over population, demand destruction due to wars, sanctions, massive global unemployment leading to lower demand, terror attacks etc. Now it's a domino effect since 2014 in most countries.
It will get more scary every single year around the world with more mayhem like we have seen in Paris, Brussels, London, not to mention entire Middle East and Africa, terror will play havoc everywhere because millions are unhappy and jobless and broke.
India is suitable option for Indians because they have capital controls anyways and money cannot be taken out easily for investing. Stocks are risky, in USD terms they are ok, nothing great, because one cannot expect 100% profits all the time, rupee depreciates, taxes are there, cost is high and real estate is in shambles for almost going to be a decade in a few years. All these events or bankruptcies of Kingfisher, ILFS, bank stocks, diamond companies can cause massive losses for investors too causing poor rates of returns.
Canada is a much better option because many people have no clue whats happening there, so people keep going. There are always good pockets in Cannabis or some decent stable sectors like education where people may get on with their lives. Never underestimate why people leave India or any country which is due to safety, pollution, education of kids etc. Not just economics.
Canada is a nice country but their "correction mode" is due to economics not a societal collapse like in India or Middle East or Africa.
There is a good chance Canada MAY stabilise in a few years like Spain or Iceland did after 2009-2010 crisis.
Problem in USA and Canada and western economies is that the wages have declined or stayed stagnant for almost 20 years while cost of living has risen by double approx in rents, taxis, public transit, property taxes etc (basics). This is the reason I do not recommend moving there. but people are generally positive in life and they believe that things will turn around and that "they" will be the lucky ones. Some may be retiring and want to ease because they have money. Some may do business which is possible anywhere due to internet etc.
Canada or any country cannot revoke anyone's citizenship ever unless it was obtained by fraud that needs to be proven in a court. There have been at most few Nazi cases or someone who lied before 9/11 when rules were light where probably 10 passports have been cancelled in the last 2 decades. In UAE and such countries, they cancel as many passports every week, lol.
DeleteSo Canada has a chance in a few years but others not, however, looking next few years, Canada will slow down.
Also remember immigrants always get though in Canada if they are educated and hard working. Because they will work for one third the salary of an experienced person.
Hope this helps.
Thank you and best wishes,