Friday 27 February 2009

Indicating Markets - Feb 27th


*Has anyone else in Dubai noticed a new phenomenon recently on the roads? It can be quite distracting at first and dazzling as you surely will not be used to the strobe-like effect and disorientating nature of the flashing-yellow lights that flick from left-to-right in front of your eyes. Yes, it’s called I-N-D-I-C-A-T-I-N-G. Seems many have discovered that small lever to the left of their steering wheel that actually moves upwards and downwards to provide a brief-glimpse into the future of the driver’s intentions – something extremely valuable in this city where the driving-minds of many drivers are clearly “not quite with us” and a close dice-with-death is always there to jar you awake on the early-morning drive into work - certainly works better than a strong-cup-of-hot-black-coffee, trust me.

*To put a financial-spin on this phenomenon I believe it is reasonable to suggest that a large dose of humility (whether willingly or not) has been experienced by the once high-flying Dubai resident, a sudden appreciation that the paths-are-not-paved-with-gold and money is not simply sitting in bags there for you to collect at mortgagers, and no – there is not another fool waiting down the line to take your speculated-upon property off your hands at an even more ridiculous price than the one you “paid” – so yes, that means the fool is….

*When London experienced its massive influx of Eastern European immigrants in the early 2000s everyone pointed to a great boom and increase in service-friendliness at restaurants/bars as those jobs that the British considered themselves too-good-to-do were appreciatively eaten-up by those hungry for Sterling - ohh..those were the days. A negative implication was of course the deterioration in politeness on the streets of cramped London, and there was a sudden degradation in the number of those bothering to indicate when switching lanes. Honestly, how difficult is it to move your hand a matter of inches to push a stick a further couple of inches? – are those lost milliseconds of your life really that precious? At that time there were numerous articles and reports in the notoriously-nasty British press about a loss of culture and the charm that London possessed – what we are now seeing in Dubai is an exact opposite of London’s experience and can only be for the better – small changes for one to notice, but the seemingly insignificant can quickly become an important force of momentum for larger and greater shifts in culture and environment.

*Could it be that Dubai’s new-found humble manner of driving and a surprising respect for others’ safety on the roads is a direct result of feeling-the-pinch and hence a natural and direct result of wanting to be polite? There was a report in the FT a week or so back exploring a similar phenomenon amongst bankers in New York – they have miraculously re-discovered words such as “please” and “thank you” - many have experienced pains in their jaws due to muscles being awakened after years of neglect when forming these words and phrases – here in Dubai many will surely not lament the fall of the loud and arrogant ex-pat describing how many millions of Dirham he just made on his latest property-deal. But something more serious lies beneath this indicating phenomenon – jobs have been lost and continue to be at a spectacular rate, international firms are re-thinking their decision to have and need a “hub” and even the social scene has witnessed a marked decrease in those wanting to be out-and-about every evening. There is a marked change in the atmosphere in this city, and again it is imperative for Dubai to act quickly and decisively to stem the outflow of those who came here looking for a high-quality of life at an affordable (and tax-free) price. Lowering prices (a common theme in these commentaries) would be a good start. The hard-times all are experiencing will surely come to an end at some point, but the pain and suffering that must be experienced before the trough is reached can be alleviated with concerted and imaginative effort.

A drawback to the welcome trend of indicating drivers?- reports that drivers from Abu Dhabi have not understood many of the signals the kind Dubai drivers are providing and have taken offence at the flashing lights believing them to be a slur to their distinctive red number-plated vehicles – oh well, who said change was easy?

Wednesday 25 February 2009

Wednesday 25th February

*MENA markets have traded relatively well today so far with Abu Dhabi following on from yesterday’s gains (+0.34%) and Dubai lower now (-1.4%) despite trading up in the morning in a slight bounce-back – DPWorld here the biggest piece of news as it cuts ancillary charges at Jebel Ali port. GCC also announcing plans to invest close to $205bn in oil projects for the rest of ’09 (an increase of 10% from $188bn in ’08). Qatar down again on no news (-1.4%) but Saudi up (+1.6%) – again no news though. Volumes and flows across the region have been steady throughout the day. Following US’s rally overnight (more below) Asia had a good opening and has maintained the momentum throughout the day to close up across the board, with Japan notably coming off 26-yr lows (+2.7%) and HK rising (1.6%) on heavy volume – most of Asia returns from brink of 5-yr lows. Europe also playing ball and currently trading +1.7% avg. across majors, Germany in particular doing well as hopes for manufacturers creeps in, but RBS and general UK nationalisation saga preserving a gloomy mood and preventing a stronger rally. US futures suggesting an indecisive open for now.

*Is it time to celebrate? Markets all rallied (or dead-cat bounced) following President Obama’s strong speech to Congress and Bernanke’s testament to the Senate. US ended up 3.3% on DJIA and 4% S&P500. Obama’s first speech to Congress as he rallied the US public to continue the fight “we’ll be back, and we’ll be better” was naturally eloquent and well delivered, but more importantly he was delivering on his promise to focus first and foremost on home-grown economic problems and ensured this was clearly portrayed throughout the speech. He promised – and markets listened and reacted. And what’s in store for us bankers? Our man Obama was quite clear there;”...executives flying around in private jets..THOSE DAYS ARE OVER!” (cue raucous applause from Congress) –grrrrrrreat.

*As for Bernanke, well, he believes we could be out of the current recession by the end of 2009 and a recovery will be underway by 2010 – that would be nice now wouldn’t it? Bernanke certainly did his best to alleviate concern when he spoke in front of the Senate for what now seems like a weekly meeting. I guess there is only so much one can take in terms of watching the markets tank as you talk longer and longer - can’t be very good for his ego at all and I’m sure Bernanke enjoyed watching the DJIA indicator actually tick-up as he professed his beliefs to his eagerly attentive panel of interrogators. He cited the need to purchase more convertible stock in the financials rather than ordinary shares and only converting if losses continued to pose a systemic threat to the system by the collapse of any one institution. The word “nationalization” is clearly something almost anemic to the US public and so out of keeping with the belief in capitalism in its purest form (take a look at Atlas Shrugged again) that it is a direct threat to their belief and way-of-life – no matter how much the politicians may feel it is the necessary and correct step to take, it would be an exceedingly painful one for the idealist – we’ll examine this in more detail on Friday.

*Currencies: the Yen has weakened vs the US$ from the high of 87.79 (reached December 17th) and is now trading 10.7% lower at 97.14 (a couple of strong moves by the USD vs Yen last week and this week in particular bringing us back to a level we have not seen since early November (when de-leveraging and a total aversion to risk seemed to take hold and severe drops across global markets sent us spinning downwards). Could this currency shift be just in time as Japan posts its worst trade deficit ever? – Y952bn vs Y320bn but better than consensus at Y1,200? Let’s hope it does something to help the world’s second largest economy resuscitate its strangled manufacturing and export industries (exports down 45% YoY in Jan). For the more conspiratorial out there it is a slight coincidence we see the Yen weakening purposefully just as Hilary Clinton returns from her first official visit out of the US across Asia (Japan was her first stop) and Obama yesterday accepted his first foreign visitor (Japan’s PM Taro Aso) –concerted effort to weaken the Yen by Bank of Japan and implicit agreement by the US? – would they really? Nah….well maybe;)

*Keeping with the Japan theme, they successfully launched an environment-tracking satellite last week in an important move to help monitor global environmental changes. I was hence saddened to see yesterday a total failure of NASA’s attempt to launch a satellite of its own – costing $280m - into space to chart the ozone layer and track other effects of C02 contamination levels – not only did the satellite never make it outside the earth’s atmosphere to its orbiting height (was the Ozone layer too strong in that area?) but it crash-landed into Antarctica – one of the very places mankind is trying to save through its efforts to stem climate changes through over-pollution and expansion. Apart from the worrying fact that the US failed at a time where public perception of its capabilities is at an all-time low (but Japan quietly succeeded with quality craftsmanship and effective deployment – as always) is also concern I have and hope that the crashing satellite did not take-out a couple of those Penguins we all love when it smashed into it’s icy resting place.

Tuesday 24 February 2009

Tuesday 24th February

Morning All,

As always, please do call in or send through an e-mail if you would like to discuss any of the issues mentioned below...

*Oh dear – possible part-nationalisation (or at least significant increases in government stakes) of both Citi and Bank of America creating a short-covering up-tick in both stocks yesterday but not helping the US markets put in a decent performance as they sold throughout the trading day to end around -3.5%. Asia has not performed much better, with China even falling for the 1st time in 4days as negative investor sentiment simply proves too much for those more optimistic out there – and some possible short-term profit taking coming through after performing so strongly over the last few weeks. Hong Kong flows and volume slightly lower than the average seen last week but still we see the market fall almost 3% there, and Nomura’s share sale (equity sale to rebuild capital – paying off ex-Lehman’s employees bonuses by any chance?) pushing the heavily punished Nikkei in Japan down again (-1.5%). Middle East markets still reacting with heavy volume across UAE markets, Dubai coming off a little (-4%) following yesterday’s big rise (+7.9%), giving way for Abu Dhabi to shine (+1.8%) as investors understand the implications of essentially a floor created to any further falls in Dubai and the increased “Federalisation” of Dubai’s once very autonomous institutions (Saudi also unfortunately shedding -5.2%). Again, the removal of extreme uncertainty over Federal assistance the most significant aspect of the $10bn bond purchase, and at least we now have a mechanism in place for any further injections.

*Where do we go from here? Asian markets are trading at their lowest levels for 5yrs, US markets traded down to close at their lowest level since April 1997 (6th straight –ve session in a row, longest losing streak since last October) and Obama is having trouble bringing any sense of confidence (or coherence – thanks Mr Geithner) back into the investment community. Talk of nationalisation aside, the debt-deflation fear is gaining ground, and even the BDIY (Baltic Dry Index) that we like watching rise so much has fallen for the 1st time in 5 days – its rebound from the lows are still impressive though and heartening for shippers and commodity traders alike (last December I could have transported an entire container-load of my very valuable, and clearly rare, Gold for $0 + taxes, in July 2007 this would have cost $2,100 +taxes and I would have been lucky to even find an available container/ship). Eastern Europe (more below) now the latest “hot-thing” and not in a good way, Middle East recessionary fears abundantly expressed daily and no respite from even the once booming BRICs. Stick to Qatar in my opinion.

*Eastern Europe gaining a lot of media attention (not something you want in this economic environment) as newspaper articles and TV journalists alike point to a possible meltdown of its banking system and the negative repercussions for those Western banks so highly exposed (and leveraged) to what was once one of the most promising development areas. The $1.7trn figure quoted in some articles as what Eastern Europe has borrowed abroad is certainly a cause for concern, but some (including our analysts) believe it is misleading. This number comes from the Bank of International Settlements (BIS) data of total foreign claims to Emerging Europe, which is flawed in several ways (not least that Turkey is included which is not even part of the CEE).

*Nevertheless, already some moves by the Eastern bloc to defend their currencies against speculation and rumours they will be approaching the IMF for assistance. This also ties in to reports over the weekend that applications to the EU and the single currency had increased from the former communist states – but might it be a case that they are simply too worried with signs they may have to return to a more public system of intervention than the private industry and entrepreneurial activity that had been so touted over the last 15yrs? Judging by moves made across the rest of Europe and the US (not to mention the UK’s almost full nationalisation of its banking sector) I am not surprised given the recent Russian “muscle-flexing” across its former territories that the once-communist nations may be unnerved by any notion of a return to the welcoming arms of the soviet empire! Worth keeping an eye on the development of this one and how it may impact an already excessively nervous and rumour-reacting investor.

Report today describing Qatar’s continued rise and attractiveness for those unfortunately finding they no longer have jobs in Dubai (previously the Middle East’s advertising hub for international firms) another signal that Doha’s economy is working its way quite-nicely-thank-you-very-much despite global gloom. It is of course taking advantage of the severe downturn in the marketing industry across Dubai, but too much emphasis on numbers could be misleading as there was a great deal of over-employment across the media industry in Dubai during the creation of its “brand” – and you cannot expect every individual losing their job to be offered one in a city where they are very intent on projecting their acceptance of only the cream-of-the-crop. Doha is now widely recognised as a bright-spot amidst the despairing economic environment, but the Doha stock market (DSM -29.7% YTD) has not reflected this as of yet, and poses an enticing prospect for local and international investors alike. The fact it has not rebounded rapidly from its profit-taking sell-off a sign that risk-taking really is hardly existent – but once the hunger returns it will be one market to watch before the appetite is satiated.

*An interesting indicator on the state of the once fashionable low-cost airline industry here in the GCC – desire to fly like a cooped-chicken seems to be over for now, as a report shows noteworthy reduction in price discrepancy between (once much cheaper) budget-airlines and the fully-fledged carriers. The airlines (such as Emirates) have of course been pursuing aggressive price-cutting policies and for many this is now no longer large enough to justify the reduction in service found on the budget carriers. However, this is likely unsustainable for the carriers as they look to expand their fleets and maintain growth targets – could this be why (as reported yesterday) Emirates is trying to capture as much extra revenue as possible through other means such as charging extortionate prices for excess baggage?hmmm…

Gold has come back only slightly from close to $1,000/oz as it takes a breath and stretches its golden limbs before making a dash for the (now seemingly inevitable) $1,500/oz mark. The emotional and psychological aspect to the commodity gains in allure, despite consumer demand for necklaces, bracelets and rings declining. Europe currently negative again with majors off about -2%. US Futures though pointing to a slightly higher open (DJIA +33pts, S&P +3.8pts). We’ll continue to watch….

Monday 23 February 2009


Morning All,

UAE Solidarity Special – Abu Dhabi comes to the rescue in true Hollywood Fashion

Monday morning, and already we have a partial nationalisation of Citigroup on the cards (reports government will increase stake to 40%), a bail-out of its own form in the UAE, an intra-day trading high of $1,000/oz on Gold, the end of Swiss banking-privacy as we know it, proposals for hedge funds to come under EU regulations and an elimination of some tax-havens (concerns over money-laundering here by any chance? – see Madoff and Stanford for clarification) and a whole bunch of Oscar statues awarded to a movie about a “slumdog” millionaire come good - at least some form of capitalism is working!

As if to celebrate the Oscars ceremony and instill its own portion of Hollywood suspense and thrill, the UAE dramatically and at the last minute unveiled a $20bn bond programme announced yesterday by Dubai, and fully subscribed to by the Federal Government (i.e. Abu Dhabi) – it has succeeded in clarifying what had been a rather opaque situation here in the UAE. The 5-year unsecured note will have an interest rate of 4%. Dubai is now clearly being supported by the Federal government and will be provided with the liquidity necessary to refinance any of its upcoming payment obligations . The “will they/won’t they” scenario of Bourse Dubai last week caused much undue anxiety amongst local and international investors/market watchers alike – a clear-cut and exhaustive solution such as that administered is exactly what we needed to see, and the UAE should be applauded for finally taking charge of its affairs without uncertainty. Whilst we will never truly know the details that sit behind any agreements amongst the member states of the UAE, there is now confidence that support is there and an unwillingness to witness the total demise of Dubai’s standing as an economic entity exists. Seems some of the difficult decisions that had to be made were faced head-on. Must have been fun witnessing what surely were some tense conversations amongst the relevant Abu Dhabi/Dubai clans (fly on the wall anyone?) – let us hope any further situations are dealt with in a similar fashion and the need to come so close to the brink once-again avoided.

Not all is well in the UAE yet though. Following some positively surprising reaction to the widely-disseminated “Soft-Shell-Crab-Index” a couple of weeks back, I just wanted to point out the latest report from a monthly UAE research body (YouGov’s Reality Check) where apparently they have found “consumers in the UAE are adjusting to a more economical lifestyle” and that 46% of respondents to the survey indicated they are considering relocating out of the UAE due to the current economic environment – hmmm, we of course do not want to see people leaving the UAE, rather more of the adjustment to lifestyle as it is only a concerted effort by consumers (rapidly dwindling in number) that will bring about the necessary changes to the Dubai pricing structure - I use the word “structure” loosely as most pricing here seems to be plucked out of thin air and decided upon using a benchmark made up of 5yr old (midst of bull-market) data.

A negative and indirect result of this change in lifestyle?; Dubai trying to pluck every last Durham from those using its services it seems: a recent flight on Emirates saw a passenger fly into Dubai from London Heathrow with a few kilos in excess of the allowance in one suitcase but an understanding and kind staff there allowing the excess without incident – only for the same passenger to be told they would have to pay 110DHS/kilo (it is only 40Dhs/Kilo on Sri Lanka Air – a partner airline) when returning to London from Emirates’ (gleaming and totally empty) new Terminal 3 at Dubai Int’l. How can it be that Emirates’ Heathrow staff are so lenient yet the Home terminal of the airline insists on charging its “much valued” customers every which way they turn? Is Dubai really that strapped for cash that it is going to start destroying the very element it should be working hard to be known for – good service and great value for money?

You certainly will not find any value for money if you are a resident in Dubai and looking to spend the day at one of the hotel pools/beaches. In a baffling move where prices have actually been increased significantly (100% to be precise) at a well-known international hotel resort, it will now cost you almost as much as carrying 5 extra kilos on Emirates ((per person!) to spend the day in the sun – I am wondering whether it would actually be cheaper to book into the hotel for the night judging by the internet specials going around across the (languishingly low occupancy rate) hotels at present and make use of the facilities. At least that way you would be able to pack-up all the little soaps and shower gels as you check-out and feel better about not having just gone to the free public-beach in the first place (only problem there is you cannot swim without risk of catching E-Coli). To put this beach-access-discrepancy into context: to spend the day at the beach at one of the world’s most pretentious, over-priced resorts in one of the world’s most pretentious, over priced cities – St Tropez, would still cost you 30% less per person than walking into a Dubai 5* Hotel. I look forward to the UAE consumer/tourist ensuring changes to this inexplicable price differential is rectified.

Friday 20 February 2009

Dear Barack - on your inaguration...

Dear Barack,

Congratulations on your appointment today – I wish you well in your endeavours and trust you have prepared yourself for the next 8 years (if all goes well) in the highest office the US offers. The world is hoping you will perform half as well as we wish you too.

I write to you today as a humble quasi-governmental employee. I know you have a lot of issues waiting for you in the form of e-mails received on your widely-publicised Blackberry, but I’ve cunningly placed a red-asterisk next to mine so it stands out when you browse your folder – I thought you’d appreciate the initiative I have shown in grabbing your attention, much like you have grabbed the world’s with your fresh and appealing approach. Notice please that I have not touched upon the “race-angle” involved in your incredible rise-to-the-top – I do not see what is has to do with anything – after all no one has congratulated me on being originally Lebanese but fighting through prejudice and injustice to work at such a great US firm – OK, maybe your achievement is slightly more impressive, but you get my point.

Anyway, once you and the family have worked out the most important choice facing you – “which puppy do we buy?” – I would like to highlight a request echoed by a great number of my peers in the financial world. For months now we have read disparaging stories about ourselves – how we are nothing but money-loving-greedy-immoral-dishonest-slippery characters, almost as vilified now in the press as reality-TV stars (and anyone that has ever watched UK Big Brother understands that that is baaaaaaad press). How is it that I have fallen so far in reputation in the eyes of my family and friends - not to mention all the girls I used to try to impress at parties – in less than a year? In fact, this time last year I was very much a private sector employee and worked for one of the US’s most respected and well-know financial “powerhouses” (boy those were good days). We are now treated quite unfairly I feel. Many of us “investment bankers” are a hard-working humble bunch, helping to serve our client-base and inform of market moves as well as provide guidance on research and general views on the macro/micro economic environment. I felt I was providing a much-needed and appreciated service, imparting my own nuggets-of-wisdom when necessary and helping those that paid-us handsomely to navigate the murky waters of financial jargon. Where did it all go wrong? Why do my family and friends no longer consider what I do as a “respectable” occupation and scowl at me when now refused mortgages and consumer loans? And please tell me why those girls at parties and clubs that used to fall over themselves to meet a “banker” now snigger knowingly when I tell them what I do?? Where did it all go wrong!?

I am not going to resurface all those arguments about whether it was originally Bill Clinton’s “American-Dream bill” in 1999 - forcing Freddie Mac and Fannie Mae to extend home-loans to “non-traditional applicants” - or a lack of regulatory oversight during Bush’s Republican tenure that has brought this shame upon the investment banking community. I do want to ask you though, to do what you can as soon as possible to allow my friends and I to hold our heads slightly higher than pavement-eye-level and bring us back out into the bars holding our glasses of champagne and prevent us from cowering in corners at friends’ house-parties (obviously these friends are lawyers and doctors – people with respected and still well-paid professions) to reclaim our roles as kings-of-the-living-room. I am sure there are some that miss us out there. Failing that, how about removing some of the heavily-tarnished negative impressions of our industry just enough to allow us to walk into a sandwich shop at lunch-time and not immediately get asked if we would like the “3-for-1 bankers special”!! Would that be a fair compromise Mr. President?

I know it is asking a lot given we are likely only in the midst of the beginnings of another crunch, the dreaded “credit-card crunch” as the massive lay-offs and difficult trading conditions across retailers and financials alike will lead to individuals inevitably defaulting on their payments and exacerbating a problem that just does not seem to want to go away. However, should blame really be placed on us for GDP Growth flat-lining (+2.5% est. global) in 2009 and making it hard to even earn money on your cash-savings (anyone getting better than Turkey’s 15% on Turkish Lira deposits?). Should we really be plastered across the front-page of newspapers on a daily-basis and heralded as the “Titans-of-Sin”? I understand that certain individuals (uhmm..Madoff) deserve all the bad karma, voodoo and whatever else the world wants to throw at them for the sins they have indeed committed against ordinary folk (not sure though how ordinary Madoff’s clients were) – but asking an entire industry and many of its well-groomed and politely charming individuals who have always aspired to do the best by their clients (you guys at the back stop laughing please) is overly harsh and quite frankly makes people like me want to go off and do something useful and worthwhile for the world like educating children in the “art-of-marketing” in the remote Amazonian-basin. Do you really want a bunch of ex-bankers running amok around the rainforests? Hmmm..didn’t think so.

So Mr. President, please think about the wrongly harassed and harangued bankers out there, do what you can of course to save the economy, steer the US and the rest of the world back onto a course of success, solve the age-old Israeli-Palestinian issue, quietly withdraw from and leave behind a strongly-democratic Iraq, placate China enough to prevent a fire-sale of $1trn in US assets,, protect the environment, track-down OBL, ensure more planes miraculously land on water and earn global respect for your country once again - no pressure though. Please also use some of your magical eloquence and language to reflect the lost-age of the charismatic banker and think of us as we nurse our drinks whilst propped up at the bar (I miss those VIP tables sooo much) – some deserve more blame than others and it wasn’t all our fault. Good luck to you…and all of us.

Yours sincerely,
Hani Kobrossi

Wednesday 11 February 2009

Soft-Shell Crab Index

*I would like to talk about a new index I am putting together (the
Economist has its "Big Mac Index" where PPP – Purchasing Power Parity
– is calculated in US$-terms to determine whether a particular
currency is under/overvalued based on the price of a Big Mac at every
McDonald's in every capital city in the world where one is sold) – my
index is the Dubai-(Zuma and Nobu)-inspired "Soft-Shell-Crab Index" –
my goal: to simply determine which city is the most expensive in
current US$ terms.

I have been lucky to have visited several great cities in my career
(London, New York, Paris, Hong Kong, Shanghai and Tokyo – oh yeah, and
Dubai) and dined at the relevant faux-Japanese restaurants there (the
Nobus and Zumas of the world). For arguments sake, let's overlook the
slightly different brand names and owners of the faux-Japanese
restaurants in each of the cities mentioned above and assume they are
all trying to achieve the same effect (which they are – serving
made-up extremely over-priced Asian-Fusion (read: fake Japanese)
dishes - except in Tokyo of course). If we take a snapshot of today's
prices for a Soft-Shell Crab dish across the cities and simply
looking at a crude US$ like-for-like to determine which is the most
expensive, Dubai (yep you guessed it) is the most expensive by an
average of almost 25% (but did you guess it would be that much?).

Now, 18mths ago, Dubai's marketing machine would have been extremely
proud of this "most expensive" tag, as it was in keeping with the
allure Dubai was looking to create through the "most luxurious" brand.
But that was (and even wrong then if you ask me) 18mths ago. The world
has changed just a little since then. London and New York have changed
just a little since then in particular. Where London was once deemed
"too-expensive-to-breathe-in" and New York notorious for its minimum
spends on even dining-tables-for-two (if you could find a
reservation), both these once great centres-of-finance have suffered
deeper and faster than others – London's restaurant scene has been
battered (not in the bread-crumb way) with top-class establishments
having to offer deep discounts to incentivise potential diners, and as
mentioned yesterday, New Yorkers are even now haggling over the price
of their morning bagels! Paris, always a culinary hot-spot and
thronged with tourists, sits a full 30% cheaper than Dubai. Hong Kong
20% and Los Angeles 40%! London's Zuma serves the same exact dish as
its Dubai sister-establishment for a full 25% less in US$ terms – come
on Dubai, when you place yourself in context with these other great
cities, that's ridiculous.

Now, Zuma at the DIFC in Dubai is equivalent to the local pub back in
London for a quick drink after work. The only thing is, rather than
paying $6-7/pint "down the local" or even a lofty $15-20 for a double
premium-brand-vodka-on-the-rocks at a swankier London hotel-bar,
drinkers at the Dubai Zuma are having to fork out close to $50 for a
double-premium brand vodka – that is simply incredible. Hong Kong is
closer to $25, Tokyo $30 and even New York $15. Where exactly does
Dubai (and Zuma in particular) think it is? Governmental tax and
supplementary alcohol aside, there is still a significant margin being
made here. I wonder how much longer those living in Dubai (and
particularly those working in DIFC) will a)afford b) put-up-with these
prices. Indirect-taxation in this form has always existed in the UAE
but with the global-macro-environment taking such a
turn-for-the-worse, these discrepancies in cost-of-living (and
standards) are becoming blazingly more obvious.

With all the talk surrounding the financial melt-down and hitting
every major city with relentless brute-force, you would think Dubai
might take advantage of the situation and ensure it positions itself
as a desirable lower-cost location. I know the above may come across
overly harsh, but the truth is I do believe there is a great
opportunity Dubai is missing out on here, the city does have a lot to
offer and was unfortunate to have been caught off-guard during the
boom years in terms of its infrastructure (roads + metro and even
decent housing) which now nearing completion will make for a much more
pleasant living environment – bad timing. However, having spent many
conversations focused on this exact subject, those living here have
not experienced any sense of reduction in living expenses – yet. Come
on Dubai, face the facts and hear the fat-lady-singing and take full
advantage of this situation so that from the rubble you might create a
decent-attractive and affordable living environment. The opportunity
is there and Dubai has done a great job in putting itself (and to be
fair – much of the GCC) on the map – it doesn't have gas money like
Qatar, nor oil money like Abu Dhabi, but it has a lot of experience
from lessons learned – they should now take the lead in re-inventing
the Dubai offering. The Soft-Shell-Crab Index has clearly spoken.