|By Matein Khalid| 2018 has been a difficult year for GCC and Dubai real estate. Rents and capital values continued to fall in the third quarter, albeit at different rates in specific segments and micro-markets. The Federal Reserve’s latest monetary tightening at the September 26 FOMC means the six months Emirates Interbank Offered Rate (EIBOR), the bellwether rate for floating rate home mortgages in the UAE is […]
|By Matein Khalid| Crude oil prices plunged by 7% in two sessions as Saudi Arabia and Russia confirmed that they would release 1 million barrels a day in the wet barrel markets. Speculative froth in the oil futures markets vanished, to be replaced by a new trading calculus based on the realities of supply and demand – as well as the unknowable (and unquantifiable!) arc of […]
|By Matein Khalid| I had written an article titled “six reasons to be bullish Saudi equities in 2018, published in the KT on January 28. Yet I was surprised to see Saudi Arabian equities become the world’s second best performing stock market in 2018 after Egypt. The Saudi equity index fund (KSA) I recommended in my column is up 18% at a time when the MSCI emerging markets […]
By Matein Khalid A dismal legacy of civil war, sanctions, insurgency, foreign invasion and terrorism has had a catastrophic impact on the Iraqi economy. Prime Minister Haider al-Abadi told the assembled global elite at Davos 2018 that Iraq needed $100 billion in postwar construction. Yet money alone will not solve Iraq’s problems of systemic corruption, a society divided by sectarian cleavages, poverty, the displacement of 2 million […]
|By Matein Khalid| I had projected a bloodbath in the US Treasury bond market since late 2016, when it was obvious that Trump’s tax reform would double the US budget deficit at the same time as the Federal Reserve prepared to “normalize” or shrink its balance sheet by $470 billion. Fiscal stimulus is often a policy ballast amid a depression, as in the early 1980’s or 2009, not […]
|By Matein Khalid| When I first started on a Treasury bond futures trading desk in New York fresh out of Wharton, a senior mentor once advised to keep track of the four heartbeats of gold finance in real time. The price of money (interest rates), the price of currency (the US dollar), the price of oil and the price of gold. The price of money can be […]
|By Matein Khalid| Dubai based Gulf Islamic Investments (GII) acquired a one million square foot Amazon logistics center in Dortmund, Germany for $144 million. This deal is a testament to the boutique global merchant bank created in Dubai by GII’s co-founder/CEO Pankaj Gupta, who I am honored to call a friend. I consciously model my own firm Asas Capial on the strategic path laid out by GII and […]
|By Matein Khalid|The rise in Brent crude to $60 a barrel and the trade volume ballast generated by the world’s first post Lehman synchronized economic recovery is hugely positive for UAE economic growth in 2018. After all, the UAE is unique because Abu Dhabi’s 100 billion barrels of proven oil reserves is complemented by Dubai’s role as the Gulf’s financial, logistics, aviation, shopping and services hub. The […]
|By Matein Khalid|I am often asked by investors to articulate my “philosophy” of real estate investing. Tough question. My ideal deal is one where it is possible to buy brick and mortar assets at 60 – 70% of replacement cost. This usually occurs in the aftermath of a banking crisis or economic shock. This was the case in Florida homes in 2009 or Spanish office space in […]
|By Matein Khalid| US and global equities surged on news of the US House of Representatives pass the tax reform bill, Cisco and Walmart posted blowout earnings and a potential bidding war emerged for Fox’s media assets. The rally on Thursday followed a week of carnage in the US high yield debt markets, flattening of the US Treasury yield curve and losses in the major stock market indices worldwide. […]
|By Matein Khalid|Emaar Properties will sell 20% of its UAE development portfolio in an initial public offering in November. This is the first IPO in the UAE capital markets in the last three years and follows bellwether offerings such as Emaar Malls and Emaar Misr. Emaar’s Dubai development’s adjusted net value is 24.1 UAE dirhams and I would not be surprised if the post IPO revalues the […]
|By Matein Khalid| Jamie Dimon, the unanointed king of Wall Street and chief executive of New York banking colossus J.P. Morgan did not mince his words. He called Bitcoin “a fraud”, a speculative bubble comparable to the Dutch tulip mania of the seventeenth century and declared he would fire any trader at his bank trading in the cryptocurrency “in a second” for “stupidity”. This has only reinforced the […]
|By Matein Khalid| Trump’s post Charlottesville remarks, the Barcelona terrorist attacks and Cisco’s results unnerved the US stock market bulls last week. Friday was a surreal moment in the history of Wall Street. It was entirely rational for traders on the New York Stock Exchange floor to cheers and the Dow Jones Index rise 150 points when news broke that Trump had fired his alt-right, white nationalist chief strategist […]
|By Matein Khalid| The financial markets finally cottoned on the increasingly sordid political realities created by the Trump White House. Trump could well be impeached for obstruction of justice if he tried to pressure FBI Director James Comey to drop an investigation on disgraced General Michael Flynn’s contacts with Russian intelligence before the election. The appointment of a special prosecutor to investigate the scandal means Washington is […]
|By Matein Khalid| Janet Yellen confirmed the Wall Street consensus that the Federal Reserve will raise its overnight borrowing (Fed Funds) rate at the March FOMC. Wage growth, inflation, crude oil, asset prices, economic data momentum and Trump’s fiscal stimulus all reinforce the dual mandate logic of a rate hike. Only a really awful February non-farm payroll shock (consensus is 200,000 jobs) will avert a rate hike […]
|By Matein Khalid| The US Dollar Index has now fallen 3.5% since it peaked on January 3. Donald Trump and his White House aides broke the 20 year taboo against speaking out against the “strong dollar” policy platitudes. The Federal Reserve did not raise interest rates and signaled no rate hike is imminent at the March FOMC. It is significant that the US dollar has fallen against […]
|By Matein Khalid| The election of a Manhattan property developer and (failed) casino owner as President of the United State has not been positive for most American real estate investment trusts (REIT’s). The sharp rise in US interest rates since the election and the Federal Reserve’s vigilance against inflation risk hits this classic “bond proxy” sector, with its reliance on leverage to boost investor returns. In addition, […]
|By Matein Khalid|“Few individuals alter the course of history. Fewer still change the map of the world. Hardly anyone creates a nation state. Mohammed Ali Jinnah did all three”. Dr. Stanley Wolpert’s words still give me goose pimples two decades after I first read his book. Mr. Jinnah founded Pakistan and was also my ancestral kinsman. I too was born in Karachi, the city by the sea, […]
|By Matein Khalid| Donald Trump’s shock win will have a profound impact on the GCC economic constellation via multiple feedback loops. His economic policies mean a much higher US dollar, anathema to GCC economies since it correlates with stock/property market crashes, banking stress and oil slumps. This is the macroeconomic linkage due to the GCC US dollar peg whose lessons the region learnt the hard way in […]
|By Matein Khalid| The fall in oil prices since 2014 has triggered a liquidity crunch and higher funding costs in the UAE banking system. EIBOR is almost double the London interbank rate LIBOR. Non-performing loan (NPL) have begun to rise as property prices have fallen 20% from their peak and corporate/SME borrowers are hit by a sharp downturn in the business cycle. DIB shares reflect these macro […]
|By Matein Khalid| The Algiers pact was a game changer in the international oil markets. Crude oil prices have risen to three month highs above $50 Brent after OPEC agreed to cut output to the 32.5 – 33 MBD range, with the symbolic Saudi-Iranian deal reinforced by a sharp drop in US inventories and Hurricane Matthew’s havoc in the Caribbean. Unfortunately for OPEC, the US land rig […]
|By Matein Khalid| The Federal Reserve did not disappoint the financial markets after Janet Yellen’s FOMC conference on Wednesday. The US central bank did not raise the overnight borrowing (or Fed Funds rate) to 0.5% on the eve of the November election. This triggered a wild rally in the US stock market with the Dow Jones up 163 points, gold up to $1342 and oil to $46 […]
|By Matein Khalid| When Ben Bernanke uttered the word “taper” in May 2013, he triggered a bloodbath in emerging markets and a free fall in “fragile five” currencies that included the Indian rupee and the Indonesian rupiah. However, Asian equities markets, while not immune to a Fed rate hike, are far better positioned for higher US dollar interest rates than in 2013, let alone 2007 or 1998. […]
|By Matein Khalid|I had written a column two weeks ago outlining my view that US equities faced a dangerous autumn and the S&P 500 index was set for a fall of 150 points. However, even I did not expect the S&P500 index to fall 52 points on Friday (the Dow dropped 394 points and NASDAQ 133 points), its worst performance since the Brexit shock. It was even […]
