Quicker than usual today as have been experiencing the joys of travelling around the GCC (when exactly did they say that train network will be ready?) and will be doing so again shortly.
Politics? – markets don’t care
As US markets have risen to another 15-month high overnight (Dow 10,725, S&P 1,150) despite further losses reported from Citi (nothing unexpected though), signs of inflation in a still badly-positioned UK economy and another rise towards $80/brl for crude – along with a sharply appreciating USD – bull market players are continuing to push those attempting to exercise more caution aside. Some bad news has hit our favourite halo-wearing US President as a traditionally Democratic seat in Massachusetts was lost to the Republicans which will cause some trouble for the make-or-break healthcare reforms the current White House administration has put so much (well-intentioned and well-needed) effort behind since last summer.
Markets have already reacted across some of those healthcare related names that may take advantage of a turn in reform sentiment but more worrying for Obama the fall-out from a possible reneging on one of his most important campaign promises – not the best time to be meeting with an upset President, as leaders of the financial industry must surely be worrying some aggression will find an outlet their way.
Elsewhere, rumours that China is increasing efforts to reign-back back lending and bring-about a serious slow-down in economic stimulus measures has jittered most investors across Asia, with some significant falls on the CSI300 this morning (-3.22%) spilling over into HK (Hang Seng -1.88%) and surely dampening any positive follow-through from that strong S&P showing last night (+1.25%), indeed Europe looks set to open slightly lower.
20 days into the New Year and still nothing to write about lothario-legend Silvio Berlusconi! Where is our prolific charmer? Must still be recovering from “corrective surgery” following his last moment of crowd interaction.
Plenty of it..but renew anyway…
Watching an extremely oil-rich nation spend so much time and energy (pun intended) on investigating and then rewarding the best alternative power-generating resources would strike many as a long-sighted necessity but a bit of a waste of time (and money) for at least the next 50 years – not for the leaders of Abu Dhabi though. The “Future Energy Summit” currently underway in the UAE’s capital city has attracted a great deal of attention from international energy firms intent on getting a foothold into Abu Dhabi’s much-touted Masdar City initiative – a city that is being built with the intent of being totally carbon-neutral and self-sustaining.
The irony of an oil-producing nation spearheading the world’s first eco-friendly city is of course not lost on anyone but the vision and effort should be applauded - whether or not you are one of the more cynical that does not believe in all the climate-change mumbo-jumbo anyway (remember those damning emails released shortly before the inconclusive Copenhagen summit).
Taking advantage of current access to wealth and a bit-of-a-wave in eco-friendly solutions is a smart move that will not only placate many negatively inclined to a “dirty-energy” exporting nation such as the UAE, but also bring about one of the region’s most needed and essential elements capable of producing a viable and sustainable economy – manufacturing. Whilst we have discussed this at length a few times, the position Saudi, Qatar and Abu Dhabi find themselves in today requires a strong manufacturing sector for both economic and political requirements.
As populations grow and wealth spreads (it spreads slowly, the rich in this part of the world do not really like to throw it around the masses) discontent threatens to increase as more find themselves out of work, dependent on the state and envious of those that do in fact control the nations’ resources (and supercars, and yachts and…). This may take some time of course, say another 50-75 years, but it is certainly smart to prevent a problem from occurring rather than trying to solve one once it has taken shape.
The Mastercard move…
By providing and creating the opportunity for global firms to set-up shop across the Middle East with more intensive purposes than simply distribution, manufacturing in all shapes and forms will create an outlet for a regional population growing in number through natural demographics and immigration, preventing the restlessness that often evolves through inaction – Saudi’s spurt in fundamentalism and a worrying trend towards radicalism in 2001-2006 prompted the Kingdom’s ruler to focus steadily on gearing up the manufacturing sector there. Abu Dhabi is a long way off in terms of Saudi’s population numbers, but with forecasted growth figures pointing to a 200% increase by 2050, spending money now to keep money coming in tomorrow in a peaceful society is clearly viewed as priceless.
The summit itself appeared extremely well-organised and equally well-attended with a lavish award-giving ceremony (no Ricky Gervais hosting unfortunately) recognising the year’s best innovation in renewable energy. Walking around the venue one could not help but wonder what exactly extremely short-dresses and high-heels - that attractively attired “stand helpers” - had to do with environmentally-friendly efforts(?) but the fact large numbers of attendees were walking around (and around, and around), spending a lot of time attentively locked into deep discussion with the aforementioned helpers (clearly knowledgeable about all aspects of their represented business, sure) meant for whatever reason, it was working – possibly a little too much needless conversation-induced-carbon-dioxide being produced though.
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