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Travel Diary: DUBAI Commodities Investment World MENA 2008 by John Lee, CFA Dubai Commodities Investment World Conference (May 25-27, 2008) I had the pleasure to speak at Commodities Investment World MENA 2008 (http://www.terrapinn.com/2008/ciwae/) in Dubai in May. This was the first time I’ve had an opportunity to visit the Middle east, so off I went. May 24: boarded plane Vancouver to London May 25 I arrived in London in the morning and got to spend an afternoon in the city with a 6 hour layover. Tower Bridge, Piccadilly Circus, the usual tour.
Heathrow Express is terrific: 15 min to Central London for GBP 19 one way. Be sure to buy the one day round trip for GBP 23. (I was stupid and paid more). London has to be the most expensive city I’ve traveled to in the last 5 years (and I see dozens per year). A Starbucks coffee sets you back GBP 3.5 pounds (USD 7); A subway ticket cost you GBP 5.1 (USD 10). After the first hour, I had to stop the pain and simply replace the “GBP” with “USD” everywhere I looked and chose to shock myself once my month-end credit card bill came. Britain is the twin sister of the US in terms of debt addiction. Its largest mortgage issuer Northern Rock was nationalized last year. Housing prices last month showed the first decline in a decade, and consumer confidence is at a 9 year low. Interest rates are at 5%. Such a relatively high rate is the only thing that’s holding the pound sterling up. The rate has to go down and somehow I feel this is a reply to the US lagged by about one year, except that the UK may be in worse shape because its economy is almost entirely service sector-driven. Technically if the XBP breaks 195 (head of shoulder neckline) we will see 185 and possibly back to 175.
Save the GBP 50 for the private double-decker bus tour, I took the #15 bus (free with the GBP 5.3 one day travel pass) from Tower Bridge all the way to Paddington (passing Trafalgar Square, Oxford Street, Marble Arch) to catch the Heathrow Express for the 8pm flight on Emirate Airlines to UAE. The airline is said to be the best airline in the world. I am not so sure. Check-in lines were VERY long and they were clearly short-staffed. The waiting lounge had some dated magazines and the carpet and seats were dirty and worn-out. The flight is no different than any other; the meals were so-so and I didn’t detect any superior hospitality from the staff. In fact, I’d advise against traveling Emirates to Dubai since from London it carries mostly transit passengers to other Mideast countries, India, and Australia. It was very full. I can’t imagine BA would use Dubai as a hub to Australia and therefore I assume there’d be more room and the process would be less hectic. Arrived in Dubai. Taxi was cheap with an 80-cent start. Don’t rent a car. I checked in at the Shangri-la at 7am, used the gym and shower to get ready for the 9:40am conference start.
This conference is an institution type of conference. There were about 50-100 in attendance and it’s a highly qualified and intellectual crowd. I was surrounded by head traders of billion dollar-plus funds. I appeared on one panel in the morning and did well. Most investors have exposure to the futures/metals but nearly none have invested in mining.
Right after the panel I received much positive feedback at the break and lunch. I slept in the afternoon and went out for dinner with Donner Metals CEO Dave Patterson (TSX-V: DON). It was very hot during the day (40C/104F) and at night slightly tolerable at around 35C/95F and very dry throughout. I headed out for one drink and called it a night. In the morning I spent a good hour preparing some slides for my afternoon panels and sessions to present, since the crowd paid $thousands to attend and was very focused. My slides on the gold panel with World Gold Council are here: My slides on the base metals / mining panel are here: The crowd in the afternoon was lighter and I think my panels went very well and received good comments. I learned there are 1.7 billion Muslims worldwide, they are very law-abiding as I saw not a single police officer in the entire time after leaving the airport. Money in the Islamic banking system is set to reach $1 trillion shortly from less than $100 billion at the turn of the century. On the topic of oil, it’s surprising to learn that many Gulf States are running oil deficits in order to fuel their own development and growth. The conference finished at 5pm. Terrapinn (http://www.terrapinn.com) arrange many conferences around the world every year. They are very professional and organized. The sessions include keynotes, panels, interactive round tables, speed networking, and post-conference mingling events. I would not hesitate to recommend their conferences. Dubai Dubai is an incredible tale. For the last 50 years, it was run by the king and his heirs. The city began as a tiny fishing village surrounded by empty desert. Oil was found in 1960’s and in the last 10 years in particular, the city has transformed to become unquestionably the MOST Futuristic City. Oil money today is only 20% of their revenue and 6% of GDP. The King knew the oil will run out in a few years for UAE so they developed Dubai as the Middle East Financial Center, an international hub, and top tourist destination.
Having praised Dubai’s progress, one can say there is no city planning to speak of. Development replicates in pockets throughout the city with nothing in between. There is no “let’s go for a walk” since there is no public park, seawall, or garden to speak off. You will die of heat exhaustion anyway, so better just stay in at the mall. I had 3 more days to burn before going home. I didn’t know what to do. Dubai is a very conservative city by western standards. Not much to do indoors, at night time the government closed most dance joints leaving out some hotel bars and restaurants. You can get long term jail time for public drunkenness or driving with a single drop of alcohol. The air is dirty, the people aren’t really friendly and did I mention it’s 40C? So I wandered around the mall, went to the hotel gym, and worked the rest of the time. Dubai is 11 hours ahead of Vancouver and I never really adjusted to it during the 5 day stay.
May 31 Finally time to go home. I found airport security and immigration at Heathrow and Dubai to be easy and efficient. One need not take off shoes, take out laptops to go through security. There are no interrogation questions and customs forms to fill; I timed and it took on average 5 seconds for a Heathrow immigration agent to process each traveler, granted it’s shy of Narita’s record of 3 seconds in my estimation, nonetheless it’s far, far ahead of any US or Canadian cities. No wonder recent congressional reports indicated over tens of billions lost per year in airports through airlines and passenger delays. The development in Dubai truly puts most governments to shame. Just what happened to the US surpluses from early 2000? Wasted. Most cities in the US lack modern development barring another sports stadium. This is just not in the US: in Vancouver there is only one major business/commerce building erected in the 5 years (Bentall), and 30 floors is considered low rise in Dubai. The Arabs are smart, they raced to convert petrol dollars to hard goods before the Chinese convert USD 1.7 trillion of theirs. Latest report shows China is accumulating $100 million US dollars every hour. Just how can commodity prices (oil, gold, anything) not go up when there are $trillions to be spent with urgency? Dubai is an interesting spot, although not my top destination to visit. This makes me realize all the more how special Vancouver is. I will be in downtown Vancouver for the Cambridge Investment Conference June 15 & 16: http://cambridgehouse.ca/ch_june2008.html Comments can be emailed to: John Lee, CFA |
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