Iran Expects

Iran’s Revolution – but only revolving back to the 1980s…
Iranian elections – a little insight after a couple of discussions with the (many) Iranians that are residing here within UAE (110,237 to be precise), and those dispersed around the rest of the (mainly import/export) world. At best a touchy and opaque subject, and not wanting to antagonise any particular party, but a re-iteration and collation of information, from a variety of sources to best try and understand the major implications of the results seemed appropriate.
Our research team tried to put together some long-term and general implications for the GCC markets (Dubai in particular through its hub-role and close association with the Iranian diaspora, impacting DP World, Emaar and others) as it focused on what the world appears to be viewing as a “moderate” contender – international news networks and the like are all focused on this so-seeming uprising by the youth of Iran. True, any change from the fire-breathing and seemingly self-destructive current President Ahmadinejad would at first appear a welcome and dramatic change.

However, as most things in life, all is not as first appears. The apparent reformist, in the guise of Mir-Hossein Moussavi that is the centre of much of the hopeful attention, has attracted the young and energetic hearts and minds of Iran’s disenfranchised youth. The fact that Moussavi has even been allowed to run (as all the contenders in the elections are first vetted and chosen by the Islamic governing council that answers to Ayotallah Khamenei) is the first hint that not all is as optimistic as some would like. The Islamic revolution in 1979 brought with it a great degree of control for the Isalmic clerics, and they have not allowed even a slight slip in their power since then. What on the surface have appeared to be moments of moderation as fronted by some of the more open-to-dialogue-with-the-west leaders, have really been little more than smoke-screens to placate and anaesthetise the prone-to-spurts-of-revolution population – normally the student population.

So what about Moussavi himself now? Don’t all the demonstrations and chants for the fall of Ahmadinejad provide a slight hope that there really will be a sweeping change in policy and openness to the west from the singled out nuclear-proliferating nation? It seems that those that actually recall his last reign as President (in the 1980s), do not expect much out of him this time around. He has never looked to stand against the ideals of the Islamic revolution, nor attempt to radically alter any of its associated beliefs and policies – clearly a safe bet for the Ayotallah to kill two birds with one stone – provide the west with its character to talk to, and provide the people of the country with a temporary false sense of hope that may relax a few of the more stringent measures here and there, but otherwise leave the fabric of the restrictive ideology unchanged.

Some cling on to the extra portion of hope that Moussavi may in fact be playing an equally Machiavellian game with the Ayotallah, and will prove to be much more of a reformist once he is in a position of power ((if indeed he succeeds today), possibly rallying the spirit of the people behind him in a far more significant wind of change than the Ayotallah bargained for – but that really would be a politically convoluted move, and may be clutching a little too far.

Whatever happens in today’s round (if none of the four candidates takes more than 50% of the vote, the top two will go on to a second round next Friday) the world is watching – but they should also look beyond the façade and into the machinations of elaborate politics.

Ballsy + expensive moves…
In another week of fun-filled-financial-markets, where the Treasury have had the nasty-shock of realisation that funding their huge levels of borrowing will cost a little more than expected through rising bond yields and a continued selling-off of “safe” assets, China has come through to live up to its imposed label of world economic saviour as it posts rising industrial output levels (+ 8.9% vs 7.7% cons YoY)and their banks continue to lend, Crude Oil remains above $70/brl as anticipations surrounding increased global demand stubbornly increase, and the WHO announced an official pandemic – markets continued to lose some of their earlier rallying steam

Some of the major US banks are seeking to repay TARP money by next Wednesday. The likes of Goldman Sachs and Morgan Stanley (sadly no mention of increasingly govt owned Citi) demonstrating a newfound strength of character to rise up and attempt to remove the shackles of government thrown onto them during the worst of the crisis last year. They are feeling leaner and meaner, and can smell the opportunity to make money in these markets – the desire to avoid increased regulation and be able to business without restraint proving more attractive than worrying whether or not we are really out of troubled waters.

With the recently humbled masters-of-the-universe beginning to stage their comeback (superheroes always love a good sequel) with a series of gutsy manoeuvres, an equally ballsy move by another self-loving master-of-his-profession has embarked on his own awe-inspiring strategy. After all the fun of the markets, how could the world of sport possibly trump the incredible sums of money that the public have become so used to hearing about - $1trn here, another $1.5trn there, with hardly a flutter of the eyelid when only a mere bunch of billions are mentioned. Well, the money-bags of Real Madrid (did anyone tell them there was a slight global financial crisis currently ongoing?) were able to generate record-breaking headlines for Cristiano Ronaldo as he transferred across from Man U for an estimated $130m.

Kudos on this occasion must be accredited to the sellers though, able to solicit such a high price in such a difficult market – almost as savvy a trade as the sale of Sheikh Mansour’s Barcalys stake – could we have seen the top-of-the-market for football stars? Ronaldo’s form should continue to delight his new manager at least, at a slightly-reduced-bang-for-his-buck.