Buying gold bullion, and shorting top US stock futures on the Dubai Gold and Commodities Exchange (DGCX), were the most attractive investment ideas I could glean from the third annual Global Commodity Outlook Conference held last Sunday in the Almas Tower of the Dubai Multi Commodities Centre.
Apart from precious metals, the speakers had little good to say about the immediate investment prospects for commodities in general. The Chinese economic slowdown – which the Jain SP Professor John Talbott convincingly demonstrated to be already a recession – is to blame.
The UD Industrial chief executive John Short explained: “We think China has a cold, or maybe worse. But when China gets a cold, we get pneumonia. We are facing a very, very difficult three to four years ahead. This will get really ugly before it gets better … Asset prices are not yet at lows because we have not seen the debt defaults and bankruptcies yet.”
Demand from construction projects for raw materials like steel and copper will also dry up over the next six to 12 months as the project pipeline withers and companies run out of money, he added.
Not surprisingly for a conference about commodities, the recent collapse in the price of oil was a major focus for speakers.
Matt Stanley, a commodities broker from Freight Industrial Services, commented that even his taxi driver seemed to know the supply and demand situation in the oil market and that surely this must indicate the bottom.
However, as Eli Mashmoor, the head of futures at MJD Partnership, noted, the idea of Saudi Arabia reaching an accommodation now with Russia on supply was “absurd”, as it would mean that all the money spent so far in forcing non-Opec producers out of business was lost.
Nobody seemed too optimistic about the immediate outlook for the oil sector, so the same rule about asset prices in the sector – for example, oil major stocks – probably applies. Investors need to wait for another day to bargain-basement shop.
Iran’s return to the oil market was dismissed as irrelevant because it will take years for production increases to become significant, if the necessary US$20 billion to $100bn investment required to make it happen can even be found.
That said, the loss of sanctions is good news for trade between Iran and Dubai, and also a boost for the local gold trade.
Gold’s 10 per cent price surge since the start of this year was a standout at this conference, which was otherwise about as gloomy as you could get for commodities as an asset class. Even here, the Chinese New Year looked about to upset the party.
National Bank of Fujairah’s head of trading, Junaid Anwar Khan, pointed out that this had been the pattern in the previous two years. Nevertheless, he overlooked the very different start to this year in terms of the sharp corrections in global stock markets and weakness in the US dollar, as well as the rather startling impact of the Fed’s December rate cut on US treasury bonds.
In such volatile periods investors often move into a safe haven such as precious metals. It was certainly the feeling of this lively conference, for which 470 registered as delegates, that volatility was back with a vengeance this year and here to stay.
That was one reason why Rajab Hamed, the chief executive of the precious metals trader Sabayik Al Kuwait, thought gold would not test new lows this year but remain in a $1,100 to $1,200 an ounce trading range. “Investor demand will respond to market instability,” he said.
The Dubai gold veteran Tawhid Abdullah, the chairman of the Dubai Gold and Jewellery Group, was cautious about predicting future prices but noted that “if we get quantitative easing from the US then all bets are off”. That’s the sort of policy response that would follow another major financial crisis.
Apart from gold, the other investment option I spotted for the first time at this event was on the sidelines at the DGCX stall, which was presenting its new single-stock futures product.
Basically you can now short futures in Apple, Facebook, Microsoft, Google and JP Morgan at a low cost from Dubai. Futures offer leverage in exchange for a wipeout to the downside, but any upside will be considerably greater than just owning the stocks outright.
This is an investment for local family offices and sophisticated investors only. But if you are convinced that a company such as Facebook, whose market valuation is presently higher than all the gold producers of the world, is overvalued, then this could be the way to go.
Peter Cooper has been a senior business journalist in the Arabian Gulf for the past 20 years.
pf@thenational.ae
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TRAP
Starring: Josh Hartnett, Saleka Shyamalan, Ariel Donaghue
Director: M Night Shyamalan
Rating: 3/5
Oppenheimer
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Company%20Profile
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BORDERLANDS
Starring: Cate Blanchett, Kevin Hart, Jamie Lee Curtis
Director: Eli Roth
Rating: 0/5
Confirmed%20bouts%20(more%20to%20be%20added)
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The specs
Engine: 2-litre or 3-litre 4Motion all-wheel-drive Power: 250Nm (2-litre); 340 (3-litre) Torque: 450Nm Transmission: 8-speed automatic Starting price: From Dh212,000 On sale: Now
COMPANY%20PROFILE%20
%3Cp%3E%3Cstrong%3ECompany%20name%3A%20%3C%2Fstrong%3EAlmouneer%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202017%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Dr%20Noha%20Khater%20and%20Rania%20Kadry%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EEgypt%3Cbr%3E%3Cstrong%3ENumber%20of%20staff%3A%20%3C%2Fstrong%3E120%3Cbr%3E%3Cstrong%3EInvestment%3A%20%3C%2Fstrong%3EBootstrapped%2C%20with%20support%20from%20Insead%20and%20Egyptian%20government%2C%20seed%20round%20of%20%3Cbr%3E%243.6%20million%20led%20by%20Global%20Ventures%3Cbr%3E%3C%2Fp%3E%0A
Company Profile
Name: Thndr
Started: 2019
Co-founders: Ahmad Hammouda and Seif Amr
Sector: FinTech
Headquarters: Egypt
UAE base: Hub71, Abu Dhabi
Current number of staff: More than 150
Funds raised: $22 million
The biog
Name: Younis Al Balooshi
Nationality: Emirati
Education: Doctorate degree in forensic medicine at the University of Bonn
Hobbies: Drawing and reading books about graphic design
Russia's Muslim Heartlands
Dominic Rubin, Oxford
MATCH INFO
Rugby World Cup (all times UAE)
Final: England v South Africa, Saturday, 1pm
Sui Dhaaga: Made in India
Director: Sharat Katariya
Starring: Varun Dhawan, Anushka Sharma, Raghubir Yadav
3.5/5
Company%20Profile
%3Cp%3E%3Cstrong%3ECompany%20name%3A%3C%2Fstrong%3E%20Cargoz%3Cbr%3E%3Cstrong%3EDate%20started%3A%3C%2Fstrong%3E%20January%202022%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Premlal%20Pullisserry%20and%20Lijo%20Antony%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Dubai%3Cbr%3E%3Cstrong%3ENumber%20of%20staff%3A%3C%2Fstrong%3E%2030%3Cbr%3E%3Cstrong%3EInvestment%20stage%3A%3C%2Fstrong%3E%20Seed%3C%2Fp%3E%0A
Company name: Farmin
Date started: March 2019
Founder: Dr Ali Al Hammadi
Based: Abu Dhabi
Sector: AgriTech
Initial investment: None to date
Partners/Incubators: UAE Space Agency/Krypto Labs
BOSH!'s pantry essentials
Nutritional yeast
This is Firth's pick and an ingredient he says, "gives you an instant cheesy flavour". He advises making your own cream cheese with it or simply using it to whip up a mac and cheese or wholesome lasagne. It's available in organic and specialist grocery stores across the UAE.
Seeds
"We've got a big jar of mixed seeds in our kitchen," Theasby explains. "That's what you use to make a bolognese or pie or salad: just grab a handful of seeds and sprinkle them over the top. It's a really good way to make sure you're getting your omegas."
Umami flavours
"I could say soya sauce, but I'll say all umami-makers and have them in the same batch," says Firth. He suggests having items such as Marmite, balsamic vinegar and other general, dark, umami-tasting products in your cupboard "to make your bolognese a little bit more 'umptious'".
Onions and garlic
"If you've got them, you can cook basically anything from that base," says Theasby. "These ingredients are so prevalent in every world cuisine and if you've got them in your cupboard, then you know you've got the foundation of a really nice meal."
Your grain of choice
Whether rice, quinoa, pasta or buckwheat, Firth advises always having a stock of your favourite grains in the cupboard. "That you, you have an instant meal and all you have to do is just chuck a bit of veg in."
Company%20Profile
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The specs
Engine: 5.0-litre V8
Power: 480hp at 7,250rpm
Torque: 566Nm at 4,600rpm
Transmission: 10-speed auto
Fuel consumption: L/100km
Price: Dh306,495
On sale: now
More from Neighbourhood Watch:
COMPANY PROFILE
Name: Lamsa
Founder: Badr Ward
Launched: 2014
Employees: 60
Based: Abu Dhabi
Sector: EdTech
Funding to date: $15 million
Results
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COMPANY%20PROFILE
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Six things you need to know about UAE Women’s Special Olympics football team
Several girls started playing football at age four
They describe sport as their passion
The girls don’t dwell on their condition
They just say they may need to work a little harder than others
When not in training, they play football with their brothers and sisters
The girls want to inspire others to join the UAE Special Olympics teams
What is graphene?
Graphene is extracted from graphite and is made up of pure carbon.
It is 200 times more resistant than steel and five times lighter than aluminum.
It conducts electricity better than any other material at room temperature.
It is thought that graphene could boost the useful life of batteries by 10 per cent.
Graphene can also detect cancer cells in the early stages of the disease.
The material was first discovered when Andre Geim and Konstantin Novoselov were 'playing' with graphite at the University of Manchester in 2004.
NBA Finals so far
(Toronto lead 3-1 in best-of-seven series_
Game 1 Raptors 118 Warriors 109
Game 2 Raptors 104 Warriors 109
Game 3 Warriors 109 Raptors 123
Game 4 Warriors 92 Raptors 105
The%20specs
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World Sevens Series standing after Dubai
1. South Africa
2. New Zealand
3. England
4. Fiji
5. Australia
6. Samoa
7. Kenya
8. Scotland
9. France
10. Spain
11. Argentina
12. Canada
13. Wales
14. Uganda
15. United States
16. Russia