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Ripple Effects Begin: Dubai Crashes Over 6.5%, Most In 14 Months
It appears the weakness in US equity markets (the last of the hot money flow darlings to be hit) is now rippling back down the bubble-complex of world equity markets. Dubai, infamous for its huge surge in the last 2 years and 36x over-subscribed IPO of a company with no actual operations - which marked the top before a 30% collapse - was open for business today and crashed 6.5%. This the Dubai Financial Markets General Index biggest daily drop in 14 months... the ripple effect is beginning.
It appears the hot money trades are slowly being unwound... commodities, EM FX, HY credit, and now US equities...
And are now blowing-back to the rest of the world's most bubblicious markets...
Charts: Bloomberg
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ripple effect???
that more like a tsunami..
Dubai do sell. Easy come easy go.
Ebola will reduce price of everything by 90% except labor, which will go up 10X.
Danger Pay = the new norm in ebola infested work environments... whether you work for a union or not.
Dont worry Ben ... we all know when QE fails it's all dat ebola's fault.
What if the e-cat really works?
http://theness.com/neurologicablog/index.php/e-cat-cold-fusion-claims-ar...
Could explain everything. Bad and good.
I'm skeptical but curious.
BTFC = Buy The Fucking Crash
uh, NOOO!
WATCH YOUR LANGUAGE !!
If something cannot go on forever, it will end.
Just waiting for the eventual mother of all margin calls...and then the corn gets a poppin'.
I suspect there may be a run on nail guns..
Nomadic tribes in the desert tend to find it a little hard to load a washing machine on a camel and take it around to wash their robes.
Camels are cheaper than Land Rovers anyway.
+1
Just wondering… Do they have a Bedouin version of the “Pimp My Ride” show? How do you pimp-up a camel? ;-)
Looney
actually arabs love doing crazy shit stunts with cars, look them up on youtube
http://www.youtube.com/watch?v=Y5tUW1-Jb7U
they even do crazy drifts right in live traffic, dem crazy arabs
Nomadic tribes in the desert tend to find it a little hard to load a washing machine on a camel and take it around to wash their robes.
Camels are cheaper than Land Rovers anyway.
+1
Nomadic tribes in the desert tend to find it a little hard to load a washing machine on a camel and take it around to wash their robes.
Camels are cheaper than Land Rovers anyway.
and +1
is there an echo in here..
Bradley Fighting Vehicles and the very expensive upgrade that I'm sure is now being rushed into production were purpose built to fight in an NBC type environment.
Long air conditioners....
Long till they turn off the indoor snow making machines
Where is Dubia Banker when we need him? Too busy watching his screens turn red, I guess.i
I am around...busy day...just got free...and it is past midnight.
To be fair...Dubai stock market was at 1,384 on 13 Oct 2011....then 1,635 on 15 Oct 2012...2,909 on 20 Oct 2013....and after the crash tody is at 4,619.
In 3 years, market is up 233%.
It is one of the best performing markets on the planet over this time frame. 58% in last 1 year also is the best.
Hence, some corrections or pullbacks are to be expected. But I do not see ZH talk about the facts that over 1 year or 3 years, Dubai is one of the best in the world, after accounting for the 'crash' (correction?) (oil related volatility?) today.
Secondly, even the Dow is only 4.6% approx down from its peak of 17,350.
Markets are still not as low as they could possibly go. A few days chart is not reflectve of the massive past uptrend over the last 5 years.
I said this last week that I don't expect markets to be down 30% to 40% purely because QE and stealth QE is on, buy backs are biggest in history, liquidity still abounds because PE and other alternates like hedge funds are scary, China is buying, pension funds and SWF have to buy, bonds have created liquidity on most balance sheets, banks and everyone else including Govts have learnt lessons from 2008-2009 crisis so are better prepared (even Gov Rajan of India's RBI who was a vocal opponent of QE stoppage due to its impact on India and other EM has said today that India and others are better prepared), cost cutting has occured on a massive scale causing huge unemployment, but is very good for corporate balance sheets......even Bill Gross has to buy next week onwards, interest rates have been kept artificially low which is good for large balance sheets, corporates in EU and US are sitting on largest cash reserveson their balance sheets and corporates have had largest profits in their history ever, derivatives are less than they were 5-6 years ago due to more regulations and less demand from customers to buy such investments etc which brings lot of stability.
While volatility is caused by extraneous factors as well as sentiments, but fundamentally, there are more positives than negatives as on date for large US/EU corporates.
Dubai market valuations are barely at normal levels after being down for almost 7-8 years since 2005. 2 IPO's have come (one the famous shell company which has started expanding and acquiring assets like mad, every month) and another being the one of the 3-4 iconic assets of Dubai being the Dubai Mall. At least 3-4 more IPO's are still in the pipeline for this year including a London cross listing of Damac Properties.
One must also remember that Dubai / UAE and Qatar were granted EM Status this June which will direct some passive index funds to these 2 markets in $2-3 bn size each.
Markets in Dubai have gone transparent ever since Govt entities started issuing bonds and a basic requirement of a prospectus was met by most entities which has never happened in any Middle Eastern country. Almost nowehere have I read that by issuing bonds, the entities have become transparent and have gone to the extent of disclosing assets of the Ruler of Dubai which is unpredecented.
Unless Dubai market falls another hefty 30% to 40% which does not seem likely due to future growth and profitability, lower leverage and major increases in the market over the last 3 years, due to past significant undervaluations, I do not believe that Dubai market decline is indicator of any major correction on its way. This is just the impact of the manipulation of bringing oil price down in the last week or two, which is controlled by USD banks and executed in a small room somewhere in the allies of Chicago or London whose impact is being felt in this part of the world.
If we do not see quick appreciation of oil back to USD 100 levels or at least USD 90 levels, we will have bigger things to worry about such as losing control over global pricing of oil, just like US/EU are going to lose control over pricing of gold once Shanghai opened gold exchange on Sept 18, 2014. Previously, US has already lost a battle in global currency hegemony where most countries have declared that they wish to trade Chinese Renminbi and hold it as reserves and conduct bulk of their trade with China in Renminbi. If US loses oil monopoly, then what is an empire worth if it does not hold sway on some of the most important commodities or its trade currency? UK will become the first western country and first outside of China to issue RMB bonds for holdings in its reserves next week or two.
Dubai has diverted its economy towards tourism and its stock market will not have a major impact even if it drops 50% on its bustling tourism and retail led economy (where the shell company shall play a major role and generate real profits and real revenues without much debt). While ZH laughs on a shell company, they have announced that renowned footballer Christiano Ronaldo's first footwear store in GCC shall open by Feb 2015. This will be global brand launch of the famous footballer's footwear by the Marka company.
As far as the index is concerned, I believe it is a great buying opportunity, looking 1 or 2 years down the road. But alas, except through 1 or 2 banks in the market, no UAE only funds are available outside UAE and for buying UAE stocks one needs an investor number which is only available to UAE residents or GCC nationals. One large local bank just launched 10 funds today registered in Luxembourg and another large UAE bank has announced plans to convert existing fund into a Luxembourg entity in order to go international. While a third large UAE bank has started expanding globally with the intention of supporting trade in 8 countries around the world and has hired top ANZ executives to deliver the global growth strategy. The losses of international banks are to become the profits of such enterprising banks who are channeling their oil led, retail led and tourism led surpluses through their banks and converting them into real profits while US and EU markets/bank/real estate etc stagnate or decline.
"markets still not as low as they could possibly go"---this is true. Zero is always available.
Cracking post that. Interesting stuff. I think everyone will of learned something from this. Nice work.
Dubai banker, please explain what finincial tool or any CB or Government acton will stop the global economic slowing?
And then who will those corporations sell they "goods" to? Dubais princes and princess?
Exactly this. The world is poised for De-Growth. The Keynesians who worship their god of growth are dead, dead, dead.
What, seriously, can Dubai possibly build more of? The world is already at peak oil, and likely past it. We will go past peak Nat Gas within a decade.
World energy use per capita has been falling since the seventies (energy use has overall increased, but pop growth has far outstripped that, ex 4 billion to 7+ billion in that time) which coincidentially was the period Americans, Canadians, and Western Europeans enjoyed the highest standard of living to date. Emerging markets will eventually peak and then decline and then we will have a Malthausian Catastrophe on our hands within the next half century.
starman,
There is absolutely no doubt that world is in trouble.
No CB or Govt will be able to manage the coming onslaught.
Ebola, Middle East unrest, global slowdown, massive unemployment, bank failures, real estate in tatters mostly, artificial manipulation of markets to help 4-5 large banks due to QE are causing grave harm. We are going through a period of major demand destruction and nothing will help but can only delay the inevitable. CB and QE can only delay this catastrophe while hoping that something will help! (Prayers?)
Govt's have so far had QE (unusual monetary tools), delay of Basel regulations, control of all US citizens outside of US with FATCA, spying on passengers on aircrafts as well as accounts and credit cards plus emails and phones of all and sundry worldwide. This gives the Govt some edge but for short periods of time. As Snowden has shown, and then people change their habits.
As far as basic goods are concerned, we can see Venezuela, Iran, Afghanistan, Iraq, Somalia, Sudan, Ethiopia and Zimbabwe that regardless of how bad the economic situation on paper is, the world and life must go on.
90% of the world is extremely poor which makes it 6.5bn people approx who really do not care where the price of shares or internet availability or gold value is going. They are simple, many illiterate people who live a basic life and try to survive every single day. Asking a taxi driver what is happening in Swiss banks is like breaking your head against a wall. Or telling a labourer that Citibank shares are 99% down, is like he would stare at you and ask, why do I care?
All of us look at stock markets as the exact personification of every single human in the world which is completely misleading.
Stocks represent a handful of people, say about 300m-400m people (out of 7.2bn) at most who have savings in hundreds of thousands of dollars or in some cases billions (like Buffett or Carl Icahn etc), aside from their house, who even watch the market movements. This is less than 8.45% of the global population as per the last Credit Suisse Wealth Pyramid 2013. I can attest that out of this 400m people, many are so focused on their businesses that they have no time to follow or invest in the markets which is why fixed income markets are so large. Very few people get impacted by stock market movements such as speculators.
The remainder 92% of the world's population who have less than USD 10k in their bank accounts couldnt care less where the markets move, therefore, the impact of stock market as an indicator where the world will go in the next decade is greatly exaggerated. One of the main reasons is that the decline of the western economies is being offset by the raging growth in China.
Since these poor people will eat food, use mobiles, buy some form of clothes, use some medicines whether provided by thge Govt or themselves etc, therefore, such companies will survive. As far as luxury goods or top electronic companies are concerned, I do not need to tell that they depend on the vagaries of such rich people who are 8% of global population but were mostly living in the western world. That is why we see Blackberry, Citibank, Merrill Lynch, Bear Stearns, Sony, Panasonic, Toshiba, Sanyo, Sharp, Motorola, Ericsson, Lehman, Enron, Madoff are all concentrated in one country/continent/G7 nations. Aside from one or two random examples, can someone tell me of a major bankruptcy that has occured in Africa, China or Asia or Latin America or Russia or Canada or Australia?
Even in luxury goods sector, we can see that BMW, Mercedes, Audi, LVMH, Prada, Chanel, Versace are opening shops in Dubai, Shanghai and New Delhi but closing in Madrid, Athens and CA.
Armani opened the first hotel in Dubai. Now Christiano Ronaldo is opening in Dubai being the world first. Paris Hilton has stores in Dubai and visits frequently as she currently is with Kardashians.
Dubai / UAE population has more than doubled just in the last decade. Dont take my word for it. Check World Bank. http://data.worldbank.org/indicator/SP.POP.TOTL/countries/AE?display=gra...
Dubai has come from being a village in the 1970's to a town in 1980's, a city in 1990's and now is punching a lot more weight than its size in the world as these pics on a UK newspaper site attest and is a global nerve centre due to its airline, its free trade pioneering role with world class airports and ports, excellent lifestyle and infrastructure, tax free status, world class financial centre and courts and extremely low crime. From 3 hotels in 1970's, Dubai currently has 615 hotels in 2014 and by 2020, it will double and add more than 550-600 hotels and double its hotel rooms from 40k to 80k room nights.
http://www.telegraph.co.uk/travel/destinations/middleeast/dubai/11133811...
The trick of Dubai's success is hard work, not much reliance on oil but on financial services, trade or now tourism and allowing foreigners to buy stocks as well as real estate and continue its pioneering role for the world to emulate. Every country has some problems. US has rapes of immigrants going on in the fields of California but we do not use that to judge all of US. Slavery was present until 1960's but we do not use it against US. Similarly, Dubai also is not perfect but the safety and excellent infrastructure it offers is better than the best!
Dubai, Shanghai and HK are here to stay and people better get used to it for the future. This is how future cities will be built.
Anyone who uses worker's human rights conditions in Dubai to paint Dubai with a single brush, has obviously not been to Dubai for any extended period of time and armchair critics are well, just armchair critics. They might even find fault with aliens living on Mars!
Thank you, DubaiBanker, for fascinating reading! Regards
Plus 100, and for sharing this up close & personal perspective. Much apreciated, Dubai Banker.
2008 is back with a vengeance and this time central banks have run out of cheap tricks. Looks like the PM crash this time was not manipulation but a leading indicator for the epic rush to liquidity about to comence.
Already started last Friday when ESFG which holds assets in Dubai filed for bankruptcy: http://www.businessweek.com/news/2014-10-09/espirito-santo-financial-gro...
While you are right, however, this subsidiary held bulk of its client assets in the Switzerland entity which also went bust and the 150 year old billionaire family who removed money (siphoned?) from the Swiss entity and many others, sits in Portugal due to which all their entities are shutting down and going bankrupt one by one.
A Portuguese bank entity shutting down in Dubai which was barely 4 years old here has absolutely no impact on the reputation or stability of Dubai since they were too small, almost insignificant. While the same bank shut down in Switzerland has caused the first bankruptcy in Switzerland EVER where all assets were booked from various global centres, which should be a primary concern for Switzerland where over 100 private banks have merged, closed or now bankrupted in the past decade. Less than 285 private banks now remain in Switzerland.
Okay, that's very interesting. Thanks.
@ DB
Perhaps I'm being paranoid, but if the ebola crisis gets worse-and all tells point that it will- than would it not be logical for those in the "know" to be the first to gtfo, even though a small fall correction was in order?
I personally think the espirito-santo situation is more important than realized/covered. If allowing big banks to go bankrupt in the EU is the new normal, there's going to be a lot of people nervous in the service.
Worldwide Crash? Ebola? ISIS? Some silver linings?
Fukushima Toyko Olympics cancelled.
Qatar World Cup cancelled.
Bicycles for transportation make come back, as public Ebola transportation crashes.
Hunger Games Sequels written as we speak
Maybe my current outdoor exercise/hobby of building and shooting longbows will come back in style. I shot an arrow into the tailgate of a 1962 Ford Taurus Station wagon, and the hole looked just like a .32 pistol bullet hit it. Bows work pretty good at short rang.
'62 Taurus? Aren't those made from a stretched beer can?
No surprisingly enough; they're pretty tough steel. not like 2002 cars at all. I have a picture of the hole but I can't post it here. If you kicked the tailgate with your boot all you'd do is hurt your foot.
that's fucked up; it was a '92; I had a '92 and a '94 sitting in the yard. Jeez.
Dow and the S&P 500 still headed in the down direction. The Dow goes negative for the year as of Friday...
Dow:
http://www.globaldeflationnews.com/dow-jones-industrial-averageelliott-w...
S&P 500:
http://www.globaldeflationnews.com/sp-500-indexelliott-wave-update-for-w...
Armstrong's numbers
http://armstrongeconomics.com/2014/10/11/us-share-market-for-next-week-o...
http://www.independent.co.uk/news/business/news/hackers-are-plotting-one...
It seems all is already pre-planned and will be blamed on an inexistent cyber attack on the system
Yes, we haven't heard any reports about the "Syrian Electronic Army" since Wolf and the rest of the MSM embarassed themselves with that news story in 2013. We did though hear about "Russian Gangsters" who reportedly stole 1.2 billion passwords (which was subsequently downplayed as insignificant the next day).
I think this time it will be a combo of Syrian Electronic Army and Russian Gangsters and it will be directly solely at banks and ATMs. Fed will come in and "reprint" all money to replenish the funds.
Saviours.
In terms of where the missing $$ actually goes, my guess would be the same place as the $2.8 trillion missing from Pentagon as reported Sept 10/01.
Looks like the Dubai finance minister came along and downvoted everyone.
I get the feeling that the global Central Bankers have finally made the jump - Over The Shark!!!
https://www.youtube.com/watch?v=MpraJYnbVtE
It is all downstream / downhill from here...
Arrest Prince Bandar and Dick Cheney.
Dubai dubie du, be dubie dubai
Dubai dubie du, be dubie dubai
It'll turn out right
For doobies in the night
It has to approach or go beneath the low point of the 30% decline before it counts for much.
I still think we need more playful kittens and smiling puppies on here; so it doesn't get depressing.
I thought that's what the t-shirt girls and asian dating sites were for.
you can watch some crazy arab driving I posted upthread, just as entertaining
if not, then how about kitty porn?
but no, I don't have any, seriously...
"The Kingdon is taking the unusual step of asking buyers to commit to maximum shipments if they want to get its crude. Simply put, "they are threatening [European] buyers" to discontinue sales if they don't agree with the full fixed deliveries. The 'oil weapon' grows stronger..."...
I rest my case! ...
What happens when a bunch of English Jews get together and infiltrate a Muslim religious cult to secure their oil interests 100 years ago!..
shits gonna implode! in 3 2 1 !
Anybody know why Harvey Organ was taken offline?
Yeah BR I caught that one as well. This is all that I could find on it.
If you find anything else -please update
http://fortwealth.com/blog/?p=6011
Black Monday?
Maybe Blacktober?
That's racist.
LOL