By Shane McGinley
The forecast by a member of Dubai’s ruling family comes as the emirate looks to sell shares in some of its biggest assets.
Global equity prices are likely to grow up to 30 percent over the next two years, a member of Dubai’s ruling family told Arabian Business as the emirate announced it was considering selling shares in some of its biggest assets.
“I think within the next, by 2012, I think you will really see a 20 or 30 percent increase in prices globally for equities,” HH Sheikh Maktoum Hasher Al Maktoum, nephew of Dubai's Ruler, Sheikh Mohammed bin Rashid Al Maktoum and CEO of the Al Fajer Group, to Arabian Business.
Speaking on the sidelines of the Arabian Business Forum in Dubai, his comments came following reports that Dubai may consider selling parts of government-owned companies as it continues to restructure its debts.
“Selling anything in this period of time, unless you have to, you shouldn’t,” Sheikh Maktoum said. However, he added that “it is a very tough balancing act and I think it is going to be challenging. But the good thing is Dubai has a lot of high quality assets.”
However, Dr John Sfakianakis, group general manager and chief economist of Banque Saudi Fransi, said it was too early to predict a recovery in the global equities market.
Sfakianakis added that Dubai may also have to suffer a loss on the sale of shares in some of its assets as they have dropped in value since the boom days in 2008.
“Dubai would need to sell some assets in 2011 and 2012 irrespective of how markets behave… It depends what they want to sell now but I would say that it would be hard to get the money they paid for some of their assets because for some of these assets they over-paid. So even if markets go up it might be difficult for their assets to reach the prices they paid for prior to 2008,” he told Arabian Business.
Some of the assets Dubai is reportedly considering selling shares in to raise cash to service its debts include DP World, the Atlantis Hotel and its partnership of the Las Vegas casino resort CityCenter. There is also keen interest in other state-linked assets such as Emirates airlines and Dubai Electricity and Water Authority (DEWA).
Not being a financial expert I am a little bit confused. If I were confident that share prices are to increase 30% over the next 2 years, my instinct would be to go long; borrowing even at 10% per year would still give you a great upside.
But here we are discussing going short, maybe AB could further research this and publish some follow up?
I'm no financial expert either. But doing quite a lot of reading these days I don't really see the markets going anyway except for maybe commodities mainly gold silver copper. That's what the problem has been with the markets, people think they can make them go up purely on SPECULATION. Unbelieveable, someone says there's going to be a short a supply of wheat in the next two years, and the markets respond to that statement, not knowing if it's true or not. PURE SPECULATION. The markets are rigged whichever way you look at them.
Long might be the right solution.
But you know, everybody needs cash right now, even the big guys. And sometimes they have to sell assets to get it...
With 2 Trillion $ worth of liquidity being added in the world economies and the US Fed working very hard to create inflation a 30% increase over 2 years is probably on the lower side for quality assets .With many Emerging markets now joining the world growth Engine there is a shift in how and which markets will grow . Singapur is growing at 15% annually and other Asian and Latin American economies are above 8% and that is where the money will flow it will be very difficult for closed economies to grow above the new normal growth of 2.5 - 4% unless steps are taken to attract FDI with long term assurances and full transparency , a long term plan to get the brightest minds to this region we will be stuck with under 4% growth and probably 15% or less growth in the local stock markets
I don't see any fundimental reason for a equity growth rates of between 20-30% over the next 24mths. I see every reason for the reverse to be true. USA massively hampered by Debt and possible bond defaults, the UK being in the same boat, Europe collectively is just one massive basket case and from that perspective, the worst is definately yet to come. I see a wave or sunami of potential Bond defaults heading this way from the west. The world will be swamped by nations unable to repay their national debts and all that has massive consequenses.
When the bond market tanks and currency wars start and inflation goes out of control and banks start to fail due to default where will the money go to Gold Silver and all fixed assets quality assets and those assets will go up 50% + per year.
Look at silver this year it is up 70% . But even the US markets are up 15% money will flow towards quality assets and the King $