Tuesday, November 29, 2005

Massacre on the trading floor!

The last couple of weeks has been brutal for the stock markets in the UAE. Yesterday (Nov. 28) alone, the Dubai market went down more than 3%, the cumulative losses to date approaches 15%, the correction is well underway, and the trend is continuing!

What is absolutely noteworthy, is how fearful and dejected everybody around is about the stock market slide. Taken with a pinch of salt, the markets still made stratospheric gains this year, and has pushed valuation to a ludicrous level, just imagine, I have heard CEOs saying "My company is not worth that much".

The main cause of this slide was not a sudden awakening and re-acquaintance with investing sense, it was a movement of liquidity (mainly from other GCC speculators) towards other opportunities. That showed how much the liquidity and the demand on instruments rather than underlying assets influences this market.

I think there are several deficiencies in this market that are making it more exposed to wild swings and boom and bust cycles.
First of all, around half of the shares listed in both Dubai and Abu Dhabi are nearly never traded, that makes the market a hostage to handful of wildly swinging stocks. I think that the authorities should make sure that listed securities are liquid through a specialist market maker system. For example, Mashreq bank is one of the stars of the banking sectors, but is almost never traded as most of its stock is closely held. I think that the investment community can be better served if guaranteed access to the leading stocks is assured.

Second, the physical setup, open cry and current broker system encourages speculators who place themselves on the floors and brokers who service them without any value added. A move toward complete electronic trading will force rationalization, will force brokers to invest in better staff, facilities and customer service, and will distance speculators for the rumour mongering at the DWTC as it is right now.

Third, I think that the disconnect between the Dubai and Abu Dhabi exchanges is not serving the market or the investors. While the historical reasons for the existence of the two exchanges are clear, their continued rivalry is illogical. If they both turn to electronic trading, a merger will make total sense without any loss of face. If that is not politically possible, I think that Dubai Financial Market should move most of its listing to DIFX, the rest to Abu Dhabi, and go to international level exchange in one swoop.

I can list 10 more shortcomings, but I think I made my point, it is wild west situation right now, and while we can all preach about fundamental analysis and core investment values, structural changes have to be made to make the market and thus the economy less prone to boom and bust cycles.

Sunday, November 27, 2005

The earth did not move and I did not have cigaratte afterwards!

I know that the title sounds like my typical Thursday night date, but bear with me a bit ….

Utter panic and pandemonium, hordes of frightened residents running in all direction, buildings shaking so hard that bird-flu infected dead pigeons are raining from the sky! Speed cameras flashing at stalled traffic catching Jumeira Janes in a bad hair day! Punters leaving 5 star restaurants in hotel towers without having to pay for the Lobster and the single malt whiskey!

It sounds fun, unfortunately, it did not happen in Dubai! There was a 5.9 earthquake in Bandar Abbas, Iran, over 140 KM away, we got a mild tremor here that barely registered, and everybody is blowing the whole f--ing thing way out of proportion. Radio is talking about people who will camp outside for the night (who should be thankful that they are not in Pakistani side of Kashmir), mass evacuations and people falling off chairs.

People, if you put down your crack pipe a little bit, you will discover that it was no big deal, yes, nature can affect Dubai, accept it, improve your taste in shoes, and move on!

Saturday, November 26, 2005

On truimph and affliction

The last week has been quite mad. I have been running around like a headless chicken trying to organize a launch for one of our company's projects.
At the same time, I have been suffering from medical condition that has impacted my quality of life in a serious manner.

The combination of the two was not very fortunate, as my condition worsened considerably due to stress and lack of sleep, and the people around me suffered from my mood. I hereby apologise to all of them, next time, learn to stay away you dimwits $#*&^%
As our launch took place last Tuesday, and it was a great success, and most of my work stress ended by Thursday morning, I was expecting a better week.

Alas, this optimism was mitigated by one unforeseen event. To pursue an important project, I was re-located temporarily to Sharjah, the armpit of civilization, bereft of that important lubricant of intelligent conversations, Alcohol! I have to endure this torturous decamping for 2-3 weeks, I am hating the commute already, even that it took 17 minutes today!

Sunday, November 20, 2005

The big air show

As residents of this over-developed plot of sand -which I grudgingly adore-, we became accustomed to the succession of exhibitions that graces this town, infusing more hype and commerce if that is possible!

However, even while aware of the enormous economic benefits of this, I cannot but bitch how such events has became complete nuisance to residents, especially me.

To me, a big event like the Dubai 2005, the Ninth International Aerospace Exhibition which starts today means endless traffic jams, extra security at hotel entrances, fully booked restaurants, and a million other things I would gladly do without. The exhibition becomes a ready excuse for all you suppliers and service providers, who could not deliver because of the show, I fail to see why the Air Show has caused a printer cartridge shortage! The word even has it that the infamous Cyclone ladies raise their prices by 30-50% during the such exhibitions, to the delight of local companions.

I know that all big and thriving cities have a bustling convention trade, I have been in the Jarvis Center, Hanover Expo, Tokyo Dome, etc, but no where was the effect so overwhelming on the city as I see here, maybe I notice this because I live around, but I think that until they get the infrastructure sorted out, Dubai authorities should take a couple of years breather from the damn convention business!

Saturday, November 19, 2005

An Ode to the Dubaian tribes

Dubai has been called many things, miracle, debacle, glitzy, sleazy, civilized, novae riche, ostentatious, ambitious, etc etc etc
Maybe Dubai is all of that and more, few scholarly work has addressed the glue that holds the city together: the Nass of Dubai, its inhabitants, the consummate nomadic tribes that are the resident population, national and foreign alike.
Like or not, these tribes, as disjointed and ghettoed as they are, still have some shared attributes that amazingly enough, creates a sense of belonging for whoever pass the Dubai test of the first 3-4 months. These attributes are a mix bag of melodies and maladies, fantastic calamities, optimism and dogma, togetherness and exclusion, and of the endless search for a better present, let alone the future.

Some of these attributes are:

Multiculturalism (and its discontents): One of the things that people cite about Dubai, is how ethnically and culturally diverse this place is. In a way, it is, and yet it is sort of fishbowl diversity, where experience is only skin deep. You meet many types of people, but you live and interact within “your own kind”, unabashedly discriminatory, sexist, ageist. You choose to overlook how other groups are treated in your “playgrounds”. You don’t notice how your favorite places have only very narrow diversity, unless you count the staff. In a way, you are accustomed by being served and pampered by people of different origin, but not to report to them at work.
In this charged atmosphere, you still see shining example of inclusion that Dubai excel at, which makes morally comfortable for you to hire a driver and a maid for a pittance.

Political incorrectness (and cultural inclusiveness): The Dubian is a gruff individual, who enjoys snide remarks, innuendo and derogative labels. Who mock people as Porsche jockeys, Jumeirah Janes, trolly dollies, snake charmers and Russian pros. Who gesture like Luigi, shake their head sideways, inject Inshallah and Khalas unnecessarily, wear sunglasses in dark clubs, and do insensitive ethnic impressions “Fife Khundred Dirkham, no kissing”.
Cussing is extremely acceptable, even endearing, it shows your true proletarian colors while sipping your Moet. Screaming obscenities on your mobile halfway during the movie, is expected, anybody who dare shush you is threatened with bodily harm, or worse “deporting you back to jungle you came from, cargo!” All in all, the pace of the place dictate the jettisoning of niceties, good manners are speed pumps on the road to development!

Personal distinction (also known as “the VIP syndrome): In Dubai, everyone is a VIP, unless they are VVIP! The true Dubian considers queuing below him/her, honk his/her horn at the petrol station if the attendant does not appear in 15 second. Always trying to be on the guest list, in the VIP section, in the opening, the first row, you get the drift. Damned is the person who deny you your earthly entitlements even for a minute, you holler, make a racket and start dialing while asking for the manager. The food, drink, and even the attire of the staff should be customized to suit your impeccable taste, with dire consequences otherwise. Dubai is a place where Panache is awarded with Pizzazz, Oompa Loompa style.

Addictiveness (Tequila!): The Dubians are addictive bunch, constantly dependent on their doses of the poison of choice. Be it liquid nectar, nose candy, house music, leggy bottle blondes (I plead guilty!). The Dubian will sacrifice all rather than go into withdrawal shock. You have your local where your tap is open and you usual is served, where the same crappy music send you into orbit, what goes for friends here are also found loitering around the same haunts, bitching about heat, traffic jam and overpriced lager. The scene is conductive to physical addiction, you inject you bloodstream with sand, rest your mind with your shisha and exhale the fume of your absinthe shot. Yet, you never think you lose control while driving home, under the Dubai high, Hurray!

Diabolical nature (usually disguised as open-mindedness): Dubians are all born Geminis in this La La land. They live two lives. They enjoy the lifestyle (and high life) of Dubai while retaining the trappings of home. They go to mosque or Sunday service then meet at night at York’s infamous club. They complain constantly about high prices (that are cheaper than home) and rude help (which they cannot afford at home). They have road rage at the jammed traffic, even when they still enjoy the stratospheric speeding frequently, which at home will lead to being somebody’s toy in 6X6 cell. Dubians embrace each other success with amazing grace and magnanimity “she was a checkout girl before that Sheik spotted her”, “brown noses get BMWs”, “ I bet those legs paid for the Manolo Bahlanik she’s wearing”. Embracing diversity, while retaining paucity.

Optimism & ambition (and its shaky underpinnings): Dubians are an optimist bunch, who else in the world will buy a jetski with next year’s bonus. At lunch tables all around the Sheikh Zaid Road, you hear about new projects, Initial Public Offerings, Emaar share price skyrocketing, new plastic surgery clinics, and bargain basement Bentlys. Ambition run amok in Dubians’ veins, nothing could stop the city getting bigger, higher, better, so why should anything stop them! You fudge your CV, creatively account for your company’s performance, and jump ships every 9 months for a 40% increase in salary, and a golf club membership to boot.
Dubai is where dreams come true, if they don’t, you can always flee the country (business class, of course).

Consumerism (and its victims): Yes, I have to admit, being a man, that I only found out about Jimmy Choo in Dubai, not to mention Vertu mobile phones and the curse that is delicious Iranian Beluga. If Consumers Anonymous had a chapter here, they should issue you an invitation with each driving license/ residency card.
To live here is to be engulfed in endless race to acquire the wanted (vs. the needed) regardless of how ridiculous the cost is.
The true Dubian will pay nearly half of his income on rent, almost the same on the convertible/monstrous SUV payment (stretched to 5 years by the helpful banker, don’t you love him?). With what’s left he/she makes the minimum payments on his/hers 7 credit cards, one of which is maxed out because he/she had to get the 5th mobile this year, wasting enough dough to feed a starving child in Africa for a couple of years, let alone saving for the toddler’s education.
There are enough gadget and expensive shoes here to bankrupt nations, and come on, do we even have an option of not indulging, not when you can only pay 1.25% interest on revolving balance?
Dubai is where the Yin has bought the Yang out, leveraged buyout style.

To sum it up, it is not as bleak as it seems, this mix urban inhumanity and caffeinated insanity has blossomed into a Medusa of opportunities, even with many shortcomings and chronic mass dysfunction, the Dubian tribes are uniquely alive with their own delusion of grandeur, waiting for their Godot, who in this place, is more likely to show up than not.

My first post!

Yes, I know, somebody (like me) with an opinion on every conceivable subject is born to have a blog! and yet it took several years of cajoling from friends to start posting my own!

So Mazen, thanks for the push, I am sure that you (and possible all other readers) will come to regret this decision.

Living in Dubai is a constant whirlwind, the pace gets quicker by the minute, the pace of development is absolutely amazing, and even chronic cynics like me have to admit sometime that we have something extraordinary happening here.

I will try to keep posting regularly, and to share my opinion and frustration, and move from the repressed pundit to a globally ignored one.