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Damac announces cash refund option for investors of Palm Springs

September 4, 2011 19:50 by elysian
Damac Properties has offered the option of cash refund to investors of Palm Springs project in Palm Jebel Ali. 

The investors in the project have revealed that Damac has offered them the options of either 70percent cash refund within two weeks or 100percent refund with 25 percent within two weeks, and the rest paid at duration of three years, with 25 percent payment each year. 

The Senior Vice President – Corporate Communication, Damac Properties, Niall McLoughlin, revealed that Damac is committed towards working on the Palm Springs in bringing about a closure to this long-pending issue.

Palm Springs was planned to be a 25-storey beachfront development on Palm Jebel Ali. Damac had tried to cancel the project in 2008, but agreed to reinstate due to protestation by investors. 

According to RERA’s report last year, the works on this project are yet to begin, and the project plot has not been handed over to the developer. The RERA statement said that the developer is in the process of amalgamating the two plots, and get the new affection plan. 

In the month of May this year, RERA cancelled nearly 218 projects. UAE witnessed completion of 129 projects since 2009, and 237 out of 450 projects are likely to be ready any time soon.

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Categories: Company News | Developer News | Financial Services | General | Investment News | Property Management News

Chicago firm's design towers over the rest

August 2, 2011 19:48 by elysian

Plan by architects Smith, Gill chosen for kilometer-high Saudi skyscraper

  

The competition to design a new skyscraper in Saudi Arabia had a simple but lofty rule: The tower had to be the world's first kilometer-tall building.

The design submitted by Chicago architects Adrian Smith and Gordon Gill — a sleek glass tower built atop three legs and tapering into a skyscraping needle — was announced as the winner Tuesday, further cementing Chicago's role as a hub of cutting-edge architecture.

Construction of the $1.2 billion building, called Kingdom Tower, is expected to begin around December in the waterfront city of Jeddahand be completed a little more than five years later, Smith said. The tower's exact height hasn't been revealed, but it will be the first building to be at least a kilometer, or 3,280 feet, tall, according to Adrian Smith + Gordon Gill Architecture.

If completed, the tower will be at least 563 feet taller than the world's current tallest building, the 2,717-footBurj Khalifa in Dubai, United Arab Emirates, and nearly double the height of Chicago's Willis Tower, including its antennas.

Smith was the lead designer of Burj Khalifa and Chicago's Trump International Hotel & Tower while he was with the Chicago office of Skidmore, Owings & Merrill. Burj Khalifa opened in January 2010.

The expectations surrounding record-setting buildings are often hard to meet. Burj Khalifa had relatively high vacancy rates when it opened just after Dubai's real estate bust, and others have not been built despite high-profile plans. That's true of the 2,000-foot Chicago Spire. Ireland's Garrett Kelleher promised to build it at 400 N. Lake Shore Drive, but the plan collapsed, leaving a hole at the site and millions in lawsuits from his creditors.

But judging buildings such as Burj Khalifa and Kingdom Tower on their first few years of operation is unfair because doing so fails to account for their long-term effect on the value of surrounding properties and their performance over time, said Antony Wood, executive director of the Chicago-based Council on Tall Buildings and Urban Habitat.

"It's expensive to build a supertall building," Wood said. "If you look at the history of the world's tallest, it's never been about just making the largest financial return. It's about other things. It's about ego, attention, status and all those things."

Kingdom Tower will house a luxury hotel, apartments, condos, office space and the world's highest observatory. It is part of Kingdom City, a development in Jeddah expected to cost $20 billion, according to the architecture firm.

Smith and Gill's firm beat at least five others, including Skidmore, that submitted plans for the tower. Smith and Gill said the building's backers wanted the structure to be a symbol of Saudi Arabia's future, so they designed it to resemble a plant shooting skyward.

"We looked to a powerful symbol of life springing from the ground and forming itself as a vertical spire toward the heavens," Gill said. "We used symbols such as new plant growth coming out of the sand and spoke to that as a kind of rejuvenation of intellectual capital, business and culture. I think that those are some of the things that we hope this building will come to represent."

The building's tapered, sloping shape is designed in part to counteract wind forces, building on lessons learned from the construction of some of the world's other tallest skyscrapers, Smith said.

"The design of a supertall building is very new territory in the science of structural engineering and architecture," he said. "You only get one or two of these per decade, so each time we do a supertall building, the learning curve on how to do the next one is improved by about 10 percent of man's knowledge."

The winning design was announced by Saudi billionaire Prince Alwaleed bin Talal, a nephew of Saudi King Abdullah.

The contractor will be Saudi Binladin Group, the multinational engineering firm started in 1931 by the father of Osama bin Laden. Company officials have said the terrorist mastermind, who was killed by U.S. forces in May, was forced out as a shareholder in 1993. 

 

 

Reference: http://www.chicagotribune.com 


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Categories: Developer News | Elysian UAE | Financial Services | General | Overseas News

Ferrari World – Yas Island

November 24, 2010 21:30 by elysian
The Ferrari World Theme Park has recently opened its doors in Abu Dhabi. Home to the worlds fastest rollercoaster (Formula Rossa) as well as many other state of the art facilities which are all first of its kind in the UAE. The attraction has already had great results, with many people turning up every day to live unique experiences on state of the art simulators and thrilling rides. This is a must see as well as a must live experience.

Branded Cars

November 24, 2010 21:29 by elysian
10 new elysian branded cars to hit the roads by December 1st 2010. As a result of elysian’s successes over the last few years, elysian has now added a brand new fleet or cars to their operation. From Dec 1st onwards the roads of Abu Dhabi will see the elysian branded cars on the streets taking clients to property viewings and once again extending the level of service to their clients which go beyond any other real estate company.

Queen Arrives In Abu Dhabi

November 24, 2010 21:26 by elysian
The Queen arrives in Abu Dhabi today to meet with Sheikh Khalifa signalling stronger ties between Britain and the UAE. This is a great sign for both Britain as well as the UAE and re confirms the strategic growth of the region and greater investments. The first 9 months of 2010 seen trade between the UAE and Britain rise more than 15% to Dh 22 billion, boosting plans significantly to strengthen business links between the 2 countries by 2015. Oil exports from the UAE to the UK rose by 36% in the first 9 months of 2010 and is expected to rise year on year over the foreseeable future.

Foreign Currency Investment Opportunities In A Global Recession

September 20, 2009 02:09 by elysian
hen a country's currency rises in value, this tends to be bad for exports - not a good thing for a country in recession. So often countries will take steps to make their currency cheaper, an insight that can lead to some profitable investments in the foreign currency exchange. For more on this, see the following article from Money Morning. 

When rumors of the Swiss central bank again intervening to drive down the value of the Swiss franc hit the world’s currency trading desks late last week, it underscored just how hard global governments are fighting against the strong currencies that can derail exports while also blunting consumer demand at home.

In fact, in the face of a stagnant world economy unrivaled since the Great Depression, we’re now looking at an era of competitive currency devaluations - where every country tries to keep its own currency from rising too much.

Far too many investors are either unaware of these efforts, or dismiss these currency strategies as bureaucratic wrangling. But I’ve been watching this unfold for the past eight years, and have made a significant amount of money from this insight.

And there’s still a substantial profit to be made - for those who understand just what’s happening.

When Strength Leads to Weakness

Since about 2001, whenever any currency rises too much, the local manufacturers or farmers - or anyone who lives by exporting - start to scream about it. Their local governments respond by doing all they can to lower the value of that currency, having it fall in value and thus making exports cheaper - all this in the hope that the domestic economy will become better.

Pick any period so far in this young century and you’ll see that this is true. For instance, right now you see it in those countries whose currencies have soared the most in the last few months.

Let’s focus on the recent highest-flying currencies. The New Zealand dollar soared 23.6% against the U.S. dollar from mid-March through mid-June. That’s the best three-month performance for the Kiwi dollar since way back in 1971, when currencies began floating against each other.

And over 2009, as a whole so far, the strongest currency has been the South African rand, which has soared 18.3% against the dollar since Jan.1, the best performer of all the 16 major currencies. Other currencies that have been strong have been the Norwegian krone and the Canadian dollar (both up 13% since 2009 began) and the Australian dollar (up 14.6%).

It should be no surprise that all these countries have been making noises and taking action to try to reverse that trend. Take New Zealand. This is a country that depends on exports, especially agricultural exports. Total export prices have plunged 8.2% from 2008’s last quarter to 2009’s first quarter. This is not an annualized rate, either, but a quarter-to-quarter drop. If continued at that rate, it would mean a 33% fall in export income over the year. According to Fonterra Co-operative Group Ltd., the world’s largest dairy exporter, New Zealand farmers have suffered a 12% drop in milk prices over the last few weeks. The dairy industry accounts for 20% of New Zealand’s export earnings.

As The New Zealand Herald stated in an article on June 16: "That (the plunge in income for New Zealand dairy producers) explains why Reserve Bank Governor Alan Bollard (New Zealand’s counterpart to U.S. Federal Reserve Chairman Ben S. Bernanke) last week called the exchange rate rise against the U.S. dollar ‘unhelpful’ and a ‘real risk to us‘ as the country endures the deepest recession in three decades."

The same article goes on to quote the head of the New Zealand Manufacturers and Exporters Association, John Walley: "We don’t see any green shoots in our markets both at home and abroad. And the high exchange rate is strangling any ’shoots’ that are poking their heads up."

The New Zealand monetary authorities are doing all they can do cheapen their dollar. That includes slashing interest rates to just 2.5%, which is a shock to those of us who remember Kiwi interest rates as being the highest in the world. They are printing money and talking about actively intervening in the currency markets to sell their dollar short. New Zealand’s finance minister, Bill English, just came right out and said that his government would prefer a weaker currency.

I could go on and on. The Australian treasury secretary, Ken Henry, just announced, in language as radical as finance ministers usually get: “If today’s high exchange rates continue, that would imply downside risk to the economy."

However, I don’t sense as grave concern at the rise of the Aussie dollar as I do with the people of New Zealand about their currency. Thus, it would not surprise me to see the Kiwi fall versus the Aussie, or, put another way, the Aussie falling less than the Kiwi.

Additional Global Currency Concerns

Moving on to Canada, we see that its central bank just announced that the "unprecedentedly rapid rise" of the Canadian dollar may "fully offset" any hope for economic recovery.

South Africa’s central bank has just announced that it has a policy of buying U.S. dollars in order to cheapen the rand. That country’s version of Bernanke, Tito Mboweni, said that although he used to be against intervention in the currency markets, the soaring South African rand has caused him to change his mind.

You can see why. Exports and domestic retail sales are plunging due to the high value of the rand. South Africa’s unemployment rate is now 23.5%, the highest of all 61 countries tracked by Bloomberg. Interest rates have been slashed this year from 7.5% to the current 4.5%, but this is not enough for the Union of Metalworkers, which has threatened to strike if interest rates are not cut more.

Finally, let’s look at Norway. Here is a European country, yet it does not use the euro, preferring instead to keep its own currency. This currency has risen by 13% so far this year against both the euro and the U.S. dollar. So are they happy about it in Oslo? Not very.

The strong currency has hit demand for Norway’s exports hard. In response to this, companies have cut staff, which in turn cuts domestic demand. Also, big companies laying people off is a very un-Norwegian thing to do. The world’s second-largest newsprint maker, Norske Skogindistrier ASA just announced job cutbacks. This has been something of a shock, even though the decline of newspapers should have been a warning. Newspapers just don’t want to pay higher prices for newsprint when the currency these products are denominated in has risen so much this year.

Norwegian Prime Minister Jens Stoltenberg, up for re-election this September, has said that supporting the labor market through this crisis - Norway’s first recession in more than 20 years (the last one coming when oil prices plunged back in the 1980s) - is his very top priority. He has pledged whatever money it takes to try to stimulate spending. And though, as far as I know, no one has publicly said that they want a lower krone, the central bank has cut interest rates fully seven times in the last eight months. It is now down to 1.25%, and stands ready to go lower.

One thing that’s important to remember: This is just a snapshot of those currencies that find themselves the strongest risers so far this year. At any given time in the last few years, whichever currencies have been strongest have screamed about their plight.

A year ago, for instance, with a euro at $1.60, Germany - a huge exporting country - basically said it wanted a cheaper euro. It got what it was seeking: The euro fell to $1.23 within months, but is now drifting back up. The United Kingdom wanted its high-flying pound - then at $2`.10 - to fall to boost domestic and foreign demand for its goods. It got its wish: Within months the pound had plunged to $1.45. And on it has gone for a few years now.

A few years ago, Americans were angry that the Chinese had such a cheap currency and forced it to float. In the four years since that happened, China’s yuan has risen about 24% against the dollar and you don’t hear so many American threats. (Of course, this could also be because China owns so much U.S debt and America does not want to antagonize its largest lender).

This article has been reposted from Money Morning. You can view the article on Money Morning's investment news website here.

Buffett Says It's Over

It's over -- according the world's most successful investor. Yesterday, Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) CEO Warren Buffett effectively called the end of the U.S. recession, saying the economy has "sort of plateaued at the bottom." Only the day before, Fed chairman Ben Bernanke said the recession "was very likely over." How should investors position themselves?

On Tuesday, Buffett said that Berkshire is buying stocks "because I am getting a lot for my money." That sounds encouraging enough, but does it mean that stocks are, in aggregate, undervalued? Unfortunately not.

Buying ... selectively 

Buffett isn't an index investor -- he purchases individual securities that he believes are undervalued. Meanwhile, with the S&P 500 rallying 58% from the March 9 market low, the stock market has lived up to its reputation as a leading indicator of the economy and then some, with current valuations suggestive of a robust recovery.

Indeed, the S&P 500 index is currently priced at 19.1 times its cyclically adjusted earnings (average inflation-adjusted earnings over the prior 10 years) -- the long-term historical average is 16.3.

The ol' animal spirits are back 

Rising stock prices fuel confidence -- the resurrection of the M&A market is another by-product of that process. On Tuesday, for example, software firm Adobe (Nasdaq: ADBE) announced that it is acquiring Omniture (Nasdaq: OMTR) for $1.8 billion.

Buffett himself highlighted an example of the "animal spirits" returning to the market. Calling Kraft's (NYSE: KFT) bid price forCadbury (NYSE: CSG) "a full price," he added "I've got a lot of confidence in (CEO) Irene Rosenfeld, but they have to do a lot of things right to justify this price." Berkshire Hathaway is Kraft's largest shareholder.

If you want to own equities, focus on individual stocks 

The recession may well be over, but that is no reason to buy stocks indiscriminately -- in toto, the market isn't cheap. If you wish to ratchet up your exposure to equities, the best course of action is to focus on individual stocks that meet Buffett's standard -- i.e., make sure you're "getting a lot for your money."

Source: The Motley Fool

How Much Home Can You Afford?

The biggest hassle facing prospective homeowners. The bank asks you all sorts of nosy questions about your income and savings, and after you've poured your heart out and shared all your money secrets, they might not even lend you as much as you need. The nerve! 

Of course, they do have a point. Put yourself in the bank's shoes: If you were going to lend people money, what would you want to know about them? Of course you'd want to know whether: 

  1. They make enough money to pay you back.
  2. They've been trustworthy in the past.
  3. They have something of value to trade, should they be unable to pay you back.
Congratulations: In financial parlance, you've just been introduced to the concepts of income, credit worthiness, and collateral -- the three main factors that go into the lending decision. Let's look at each one, and how they affect what you can afford. 

Do you make enough to pay the lender back?

Your lender will want to know not only how much money you have, but also how much you will likely make over the next 30 years. Also, what are your other debts? Do you owe money for college loans or credit card charges? Do you have any other assets? Things like stocks and mutual funds, or personal property like a boat or a car, are also considered in figuring out how much a bank will lend you. 

Ideally, you'll want to come up with at least 20% of the value of your new home as a down payment, to avoid things like mortgage insurance payments (also called private mortgage insurance, or PMI). But you probably qualify for plenty of financing arrangements that will get you into a new home for as little as 3% of the asking price. 

The lender will also plug your income numbers into a couple of formulas: the front-end ratio (having to do with your mortgage payments) and the back-end ratio (having to do with your debt). 

For instance, let's say your gross income is $4,000 a month, and you have $400 a month in debt payments. A common rule of thumb is that they'll allow you to pay around 30% of your gross income toward your mortgage payment every month. This is known as the front-end ratio. In this example, 30% of $4,000 is $1,200 a month -- so, they'll reason, you can afford put $1,200 toward your mortgage payment. 

Your debt ratio, or back-end ratio, on the other hand, is $400/$4,000, or 10%. That's not bad. They don't want more than around 40% of your gross income going to total debt -- mortgage, credit card interest, and other payments -- and in this case, your payments add up to 39%. (These ratios can vary somewhat; the ones given here are just examples). 

Have you been trustworthy in the past? 

Potential mates aren't the only ones curious about your past. Your lender wants to know your history, too, before deciding whether or not to commit. Your credit report -- a nifty little compilation of your personal financial history -- will reveal whether you have a track record of paying your bills on time. Before you even start shopping around for a loan, pull your reports from the major credit reporting bureaus by going to the AnnualCreditReport.com website. If you see anything unsavory, clean it up to make yourself more attractive to lenders. 

Do you have any collateral? 

The house you buy will generally be considered collateral for your mortgage. As a result, in case you can't repay the loan, the bank can decide to do something really nasty: foreclose on the mortgage and repossess the house. You will find yourself out on the street -- with your dog, your La-Z-Boy, your collection of unpublished poetry, a couple of suitcases, and your toiletries kit. Your house now belongs to the bank, and it is unlikely that anyone will ever loan you money again. Hot tip: Avoid this scenario at all costs. 

Now, let's discuss your needs 

How much you make, your creditworthiness, and how much collateral you have are all questions from the bank's point of view, because the amount of house you can afford is largely a question of how big a loan you can afford. Now, let's look at a few things from your point of view. 

Your timeline 

To determine whether you should buy a new home, think about how long you're planning to stay in it. It generally doesn't make economic sense to buy if you're only planning to stay there for a couple of years. Since you'll be paying fees to buy and then sell your house, it would have to appreciate in value very quickly while you're living there to make the entire deal financially worthwhile. 

Your comfort zone 

Before you borrow $100,000, $200,000, or whatever you need for your mortgage, figure out whether you can really afford it. Just because the bank will loan it to you doesn't mean that you'll be able to pay it back -- at least, not without cutting into other goals that may be a priority for you. Are you planning to have a big family? Would you rather spend money on travel or spoiling the grandkids? 

Remember, your house payment is just one piece of your financial puzzle. Carefully consider what you might need to give up to make that house a reality, and ask yourself whether you're really willing to do it 

Source: The Motley Fool

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Categories: Financial Services

It's Official -- The Recession Is Over

September 20, 2009 02:03 by elysian
Could it be? Is this recession finally on its last legs? Well, wishful thinking never accounts for much, but battle-weary Americans finally have some solid proof that this long, protracted economic crisis is at last coming to an end.

Signs of life 

The Federal Reserve's latest survey of business conditions shows that economic activity has either stabilized or is improving in most areas of the country. Businesses in most of the Fed regions reported that they were "cautiously positive" about future economic growth. In fact, all but one of the Fed's 12 regions indicated that economic activity had firmed or stabilized. This is far from a ringing endorsement of a return to heady growth, but for the economy, it's an important first step in leaving the recession behind.

To further add to gathering optimism, analysts now estimate that the economy is growing at a roughly 3%-4% annual rate in the current third quarter. That's pretty much in line with long-term average growth. Of course, much of this growth is due to increased auto sales from the likes of General Motors (NYSE: GM), which have gotten a boost from the government's Cash for Clunkers program. The recovery won't have any staying power if consumers don't start spending again to pick up some of the slack, but nonetheless, it looks like conditions are firming across the country and setting the stage for future growth.

Getting a jump-start on recovery 

While any signs of growth are welcome, folks should remember that even if the recession has technically already ended, it likely won't feel like it has ended for some time to come. Unemployment will remain uncomfortably high well into 2010, which will put a damper on any truly comprehensive recovery. That means it may not be a straight-shot market climb from here on out. Be prepared for more fits and starts, and maybe even a correction, along the way. Overall investor sentiment is still largely negative, and the market certainly isn't as cheap as it was six months ago, but bargains are still lurking out there.

So where can opportunistic investors look to capitalize on a recovering economy? Well, there's one area that has, more often than not, led the rest of the economy out of recession -- small-cap stocks. As business conditions improve and credit thaws, smaller companies are usually the first out of the gate. Investors looking to make a mint on small-fry companies can take a cue from one of the best small-cap shops around -- Royce & Associates. Management here likes what it sees in the industrial materials sector, with big bets on names like Canadian mining companies Silver Standard Resources (Nasdaq: SSRI) and Pan American Silver Corporation (Nasdaq: PAAS), as well as Intrepid Potash (NYSE: IPI) closer to home.

Of course, this time around, small caps may not have quite as much room to run as they have in prior recovery periods, given the nice rise they've had in the past decade or so. But you can still capitalize on the potential for appreciation that these faster-growing companies offer -- by fishing in mid-cap waters. In fact, mid caps have outpaced large-cap and small-cap stocks by nearly 10 percentage points so far this year! It looks like mid caps have hit the investing sweet spot, the perfect blend of growth and stability in these troubled economic times. Manager Joel Tillinghast of Fidelity Low-Priced Stock(FLPSX) has been adding to his stock of mid-sized consumer companies like Gildan Activewear (NYSE: GIL), Royal Caribbean Cruises (NYSE: RCL), and food and drug retailer Safeway (NYSE: SWY). Thanks in part to his focus on the middle of the market-cap pack, Low-Priced Stock is up 34% this year through the end of August.

So even if the current recession has taken its last breath, the economy is still likely to be on life support for some time to come. Recovery will not be easy, or quick. But it will get here ... eventually. Source: The Motley Fool

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Categories: Financial Services

Property market will see a raise of 500 million Euros

September 20, 2009 01:54 by elysian
Henderson Global Investors are trying to focus on developed markets. The minimum amount for the funds will at least be 500 million Euros.

With the recent fall down in property prices, investors are not ready to take any kind of risks. Henderson Global Investors are thinking to open two property funds. They are mostly targeting prime offices and malls in London and Paris. 

According to Alice Breheny, head of property research at Henderson Global Investors said that they recommend buying offices in central London. The group is keen on the French retail sector. This is because the French retail sector has strong fundamentals in terms of demand and supply. 

She expects that at the end of the year, the United Kingdom will see an improvement in the commercial property values. With the improvement in the United Kingdom, the other key property markets such as Germany and France in Europe will also improve. 

With the fall down in the US home loan market, the whole world has witnessed economic crisis. Many property investors are avoiding the risk of investing in risky and unfamiliar property markets. 

It has been a long time since the UK investment market has witnessed a fall. This is the sharpest of all. The market is expected to recover soon.

Source: Propertydevelopment news

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Categories: Financial Services

What Happens If The Yuan Replaces The Dollar As The Main Reserve Currency

September 20, 2009 01:54 by elysian
The chance that the dollar will be replaced by the Chinese yuan seems to be growing, as is China's determination to make it happen. With China's banking system holding 25 times the reserves of the US Federal Reserve, and the US adding trillions more to their debt, the days of the dollar's dominance may be nearing an end. For more on this, see the following article fromMoney Morning. 

Most Americans will view China’s effort to dethrone the U.S. dollar as the world’s main reserve currency as one of the biggest economic threats that this country will have to face.

But the reality is that this tectonic shift in global finance – and the economic shockwaves that will result – could provide investors with some of the greatest profit plays they’ll see in their lifetimes.

No matter which camp you’re in, the China-spawned changes are headed our way.

In 1990, the U.S. banking system was 2.3 to 2.7 times the size of its counterpart in China. Today, however, the situation has been reversed, and there is much more of an imbalance. In fact, China’s banking system has 25 times the reserves of the U.S. Federal Reserve.

At some point, the United States will no longer be able to dictate international monetary policy. Unfortunately, as our monetary policy aptly demonstrates, Washington seems to be the only player involved in this game of high-stakes global finance to not understand just how this is destined to play out.

U.S. leaders continue to employ monetary policy as a weapon – despite the fact that most of the rest of the world views the U.S. dollar as a liability.

At the end of World War II, virtually the entire world functioned on dollars. By some accounts, 100% of the world’s money supply was the dollar. Today that figure has dropped all the way down to 19%, says Rochdale Securities LLC analyst Richard Bove, a noted expert on the U.S. banking system and Federal Reserve.

Now that the federal government has deployed a few trillion dollars more as bailout bucks, it’s clear that the greenback has lost its mojo and the U.S. government has lost its international monetary leverage.

Why is this worrisome? History tells us that the countries with the strongest economies tend to also have the strongest currencies. It may take awhile for the latter to catch up with the former, but the relationship is highly correlated relationship – suggesting that China’s on the rise economically, while its currency is advancing with the unstoppability of a diesel locomotive operating at full throttle.

So if the U.S. dollar gets derailed as the world’s chief reserve currency – as we’ve repeatedly predicted is destined to take place – the world’s next reserve currency is likely to be China’s yuan, known officially as the renminbi.

Washington says that won’t happen, since Beijing takes steps to keep the yuan from being fully tradable. That’s true enough. But Beijing also understands that the dollar is a liability – which is why China’s leaders are going to great lengths to establish the yuan as a viable currency all its own, while simultaneously minimizing the Red Dragon’s dollar-based exposure.

In the last six months, for example, China has signed at least $95 billion in swap agreements, under which it can trade directly with countries for payment in yuan. The countries that sign these deals are getting huge discounts from China in exchange for their participation – and for buying goods from China. And the deals enable China to do an end run around the entire dollar-based currency trading system.

When it comes to this long-term plan to boost the yuan’s importance, China is waging a campaign on multiple fronts. This past spring, for instance, China organized a meeting in Moscow – attended by representatives from Brazil, India and Russia – where the main goal was to supplant the U.S. dollar as the world’s main reserve currency, replacing it with a yuan-led market basket of currencies, one that is simply backed by China’s renminbi, or perhaps even one based on the International Monetary Fund’s so-called Special Drawing Right (SDR).

Created by the IMF in 1969 to support the Bretton Woods fixed exchange rate system, the SDR was redefined in 1973 as a basket of currencies. Today, the SDR consists of the euro, Japanese yen, pound sterling, and U.S. dollar.

My guess is that this gathering in Moscow was merely the first of many such meetings that we’ll see take place around the world in the years to come. Expect the list of attendees to grow, as well.

Given all that we now know, the real question becomes: What happens if China succeeds and the yuan displaces the greenback as the world’s top transactional currency?

The list of potential implications is very long, and includes several scenarios that are almost apocalyptic. But most of the outcomes raise as many questions as they answer.

Let’s consider the Top Five: 

  • Global Gloom Leads to U.S. Doom: The U.S. dollar goes into freefall for the simple reason that if no country has to hold dollars any longer, they won’t. Instead – thanks to the ragged state of the U.S. government’s finances – many countries will dump greenbacks fast as they can, which will only put additional pressure on an already-strained U.S. financial system, which in turn will further damage our economy.
  • Inflation Inflates: Inflation will strike here with a vengeance, as anything bought, sold or priced in dollars will instantly rise in price to offset this fall.
  • Repatriation Risk: With the dollar serving as the world’s de facto currency, U.S. companies bear very little exchange rate risk when the time comes to repatriate assets or make currency-related adjustments. That would change overnight and prices throughout the value chains would rise sharply to compensate.
  • Money Costs More: The cost of money itself would rise. If the dollar falls, not only will there be massive selling pressure against it, but the cost of borrowing it will rise dramatically as lenders raise rates to cope with the increased risk of dollar-based transactions.
  • Death By Debt: And finally, if there is another reserve currency, other countries will no longer have to buy our debt, and you can guess where that will leave us – especially given the fact that we’ve taken on trillions in new debt to help finance our way out of our current mess.


My best guess is that we won’t see any one of these things in isolation, but will instead experience a blending of several or all of them. To the extent that China continues to absorb our inflationary influences, buy our debt in measured doses and maintain its reserves, we’ll probably have a measured decline in the value of the dollar – but not the catastrophic fall many in the doom, gloom and boom crowd are predicting. At the same time, I also see the IMF change course in the next few years to reflect China’s increasingly substantial influence and monetary power.

On the individual investor level, this clearly provides a new set of influences that most investors have yet to grasp. Most will perceive what I have said as a threat, but I believe the correct way to view this is that there will be a whole new set of opportunities coming our way.

Some of those opportunities will be obvious – like the need to invest in currencies and commodities that are of interest to China. Others, like direct investments in China’s yuan, will require special insight, a good investment guide, or a leap of faith.

The bottom line – and the most important thing to remember – is this: No matter how this plays out, there will always be an upside for investors who are willing to seek it out.

This article has been republished from Money Morning. You can also view this article at 

Money Morning, an investment news and analysis site.

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Categories: Financial Services

Rating of Emaar upgraded by EFG-Hermes

September 9, 2009 23:03 by elysian
EFG-Hermes, the leading financial services company, has upgraded Emaar Properties to neutral from reduce rating in the short-term, pointing out that the company showed better-than-expected second quarter results and hopes a stronger performance during the second half.

According to EFG-Hermes, if not for the one-time write-off of Dh.1.697 for its US subsidiary JL Homes, Emaar, the biggest property developer in Middle East, would have surely reported a solid net profit of Dh.413million, almost thrice higher than its own estimate of Dh.145million.

Emaar had reported a second quarter loss of Dh.1.284 billion.

While there was a 65 percent decline in revenue compared to that noticed a year ago, it was still 25 percent higher than that during the first quarter. Emaar’s operating profit of Dh.458million was also much ahead of the estimate by EFG-Hermes at Dh.127.1million.

Emaar also showed robust growth in rental income during the second quarter, an increase of a hefty 357 percent compared to that during a year ago at Dh.416million, which reflects a great contribution from its UAE-based rental properties, particularly the Dubai Mall.

Analysts are hoping for a further increase in revenue when it opens Burj Dubai, the world’s tallest skyscraper, before end of the year.

Pointing out to the strong balance sheet of Emaar, EFH-Hermes said that the total debt condition of the company in the second quarter decreased by Dh.1.6billion, compared to that during the previous quarter, following the write-off related to its US operations.

Although the long-term ‘neutral’ rating of Emaar has been maintained for now, but, there still remains a lack of visibility about its pending merger with the three property companies controlled by Dubai Holding.

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Categories: Financial Services