‘There is always a bull market somewhere’, says my editor, Frank Hemsley.
And he’s right. At any given time, somewhere in the world a stock market is moving up – even when the ones we know best, like the FTSE, the Dow Jones and the Nasdaq, are under pressure.
And in fact, surprisingly often developments in far-away countries have reverberations on companies back in the UK.
Just as an example, the thought wouldn’t usually spring to anyone’s mind that developments in the Arab region would have a considerable impact on the earnings of Costa Coffee, the UK coffee shop chain. But it does.
Just recently I spent four days scouring Dubai for investment trends and ideas. It’s a place that’s been on my radar screen for years – but I’ve never made the trip. I wish I hadn’t waited so long…
As you have most likely picked up in the property sections of your newspaper, there are numerous large property developments under way in Dubai:https://www.thepalm.ae/ and https://www.theworld.ae/ (both sea-side properties on reclaimed land) as well as the Burj Dubai tower (https://www.burjdubai.com/) tower – rumoured to become the world’s highest building.
Prices of Dubai real estate have been heading straight up and a lot of UK property investors have already jumped on the bandwagon.
I made it my mission to find out if there are other noteworthy investments to be found in Dubai… besides the property sector.
Local newspapers are a great source for finding ‘off-the-beaten path’ leads to investment ideas. I have to admit, Khaleej Times has not until now been among my staple of 20 – 30 newspapers I read regularly. But after my stay in Dubai, I’ll now subscribe to it as it gives you access to news stories with an entirely different angle.
Running coffee shop chains is not exactly a growth business in the UK, and that’s why the group is looking further a field…to Dubai.
Take a look at the firm’s regional markets… Costa Coffee has 18 stores in Dubai and in the coming four years it plans to open not less than 10 new stores each year. In the entire North African region, it plans to expand from currently 75 stores to 300 stores over the next few years. At currently 700 stores in total, this will become a market large enough to influence Costa Coffee’s profits – and the value of the entire firm.
Costa isn’t listed directly on the stock market, although it is owned by the pubs and hotels group, Whitbread (Costa was one of the few bright lights in an otherwise miserable results announcement from Whitbread earlier this week.)
But there are other UK and European firms that could equally profit from Dubai’s astounding growth rates, and where you can buy shares on the stock market. I’ve not checked into any of them in depth at all, but just as I was poking around I came across these few…
Balfour Beatty (BBY), the construction company, has a strong position in this fast-growing market. In fact, it’s recently secured the £400m contract to build Burj Mall, the world’s largest shopping centre you saw above.
WSP Plc (WSH) is a multi-disciplined consultant firm operating in the building industry in 50 countries worldwide – and has recently merged with UAE company, PHB Group to get in on the Dubai growth trend. (Check out WSP’s chart pattern for a nice upward trend!: https://uk.finance.yahoo.com/q/bc?s=WSH.L&t=1y)
Or what about this little minnow…
Hallin Marine (HMS) – which has just been admitted to the AIM market in London – is involved in the provision of subsea solutions to the oil and gas industry in South East Asia, China… and the Middle East. Of course, it’s early days with this stock but it could one day turn out to be an interesting way to speculate on the great oil bull market.
Again, I haven’t studied any of these stocks in detail and I’m not recommending you buy them. But it gives you just a taster of the scope for UK-listed exposure to Dubai…
The Arab region has excellent demographics, with one of the world’s youngest populations. What’s more, some Arab countries have started to attract foreigners. In Dubai, 90% of the population consists of expatriates. The place feels a bit like London or New York, and with a friendly tax regime and lots of sunshine more expatriates are bound to move in.
New legislation will now make it possible for the first time for foreigners to own the majority of a Dubai-based company. The government clearly aims to bring entrepreneurs into the country.
Just recently it emerged that Dubai is going to open its own international stock exchange, the DIFX, in September – that has to be a great thing for people wishing to invest direct. Emirates, the country’s airline, could be the first share to be listed there when its IPO goes ahead. More local firms would then follow, and some of these shares would certainly be listed abroad too.
Opportunities in Dubai are stacking up.
In other words, there is a growing number of investments available in the region – both local shares, as well as foreign firms that somehow profit from Dubai’s growth rates. This is preparing the ground for us making rich pickings.
Sven LorenSpecial Situations Analyst
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