December 21, 2009
Posted: 1131 GMT

You have to admit gold has kind of stolen the show in the metals sector this year. The traditional safe haven investment raced to settle at a record price of $1,218.30 an ounce in early December. Now prices have fallen off somewhat since then, but the gold bulls and the gold bears are still arguing it out over when we might see $1500.

In all this gold rush though, you may have overlooked the significant gains in other metals. Here are a few to watch in 2010.

Platinum: Platinum prices have made solid gains this year, but some analysts say the precious metal could have more room to grow. Used both for jewelry and industrial purposes, constrained supply is an issue.

Copper: Prices for this industrial metal more than doubled in 2009 after a difficult 2008. Copper watchers expect demand for the metal will continue rising as global economies pick up in 2010. Copper is a key component for building projects, autos and electrical wiring, so it is an essential resource for quickly growing countries like China.

Steel: More, more and more seems to be China's attitude towards steel at the moment. Still the outlook for this essential building material is far from certain. Fitch Ratings predicts in a recent report that demand will recover at a "modest pace" over the 12-18 months, but says high stocks and excess capacity should limit price increases.  Morgan Stanley believes such overproduction should recede though and higher prices are on the horizon, driven by rising raw materials costs and China's booming property sector.

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Filed under: Biz Clinic


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December 18, 2009
Posted: 1104 GMT

For those of us that have crossed the age threshold of 30 years, one is quite aware of the changes in life.  If you are not doing what you desire at that age, you ought to be.  If you are content with your life to date, one then might ask “is there more?”

That is where the Gulf Cooperation Council is at this juncture – 30 years on and counting.  Undoubtedly, the annual meeting was overshadowed by the year-end crisis management techniques in the UAE, specifically Abu Dhabi stepping in at the 11th hour to inject $10 billion into neighboring Dubai.  I don’t think it was a coincidence that the UAE President H.H. Sheikh Khalifa bin Zayed Al Nahyan wanted to get that mopped up before travelling to Kuwait for the GCC Summit.

The council of six countries was created during the tensions of the Iran-Iraq War to create a common economic and security policy; they are, as we find out from the European example, tightly linked.

The GCC is eager to create a single currency, a la the Euro, next year.  We know already that two of six countries, the UAE and Oman, will not join the party at the start.  It is not clear after this most recent summit whether that union will proceed as planned and also whether the long-coveted dollar link will survive.  There are more opinions about that than there are countries in the Gulf.

During a panel I chaired at the Arab Thought Foundation annual FIKR (meaning thought in Arabic) conference in Kuwait, we had a healthy debate about the key ingredients for unity.  Two of the European panel members pointed to security and transportation.

They recalled the Marshall Plan to rebuild Europe that also anchored Germany to the West. It was the beginning of a 40-year process that eventually led to the European Union, which now has 27 members.  During that reconstruction effort, roads and rails were built right across Europe – the essential arteries to trade and the movement of people and goods.

Our two Arab members of the panel were in complete solidarity with this premise and hoped that the Gulf War would have brought not only the Gulf countries closer together but the broader region as well.  That has happened to a certain extent, but old rivalries and national priorities have certainly carried much more weight than the collective good of the next generation which vitally needs to see the benefits of oil and gas wealth.

There was also agreement that the most pressing issue is youth unemployment, which, most outside the region do not know is more than a quarter of the population between 15-30 years old.  Unemployment will surge with the highest birth rate in the world right now.

Five years ago, the region signed onto a regional trade agreement to lower barriers amongst the 20-plus countries of the region.  In actual practice, businesses complain about the non-tariff barriers to commerce.  Waiting times at borders within the Middle East can range from five hours to 50 hours – that is no joke – and we are talking about that level of delays even within the six Gulf States.

It goes back to the original premise, why 30 is not only an important threshold for the GCC and the region in general, but those who may be frustrated because they want to fulfil their dreams.  A vision has been conveyed and step by step, the hurdles need to be crossed for a single market, a common currency and most importantly a common goal to create opportunity to those who most need it.

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Filed under: Business • Marketplace Middle East


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December 16, 2009
Posted: 1119 GMT

People have been using social media sites such as Twitter and Facebook to express their feelings about the threatened strike by British Airways cabin crews.

Both the airline and the union have been slammed by people who may be affected by the strike and CNN has been monitoring the so-called “real-time Web” to see the massive outpouring of emotion but also to help us connect directly with people who have a story to tell.

Social media plays a part in almost every major story we cover at CNN and we have millions of followers for our Twitter and Facebook accounts.

We use this huge following, and the fact that we have most of our CNN correspondents and anchors using social media themselves, to help us find people who have a real story to tell.

In the case of the threatened strike at British Airways, we asked Richard Quest to reach out using his social media accounts to ask for people whose travel plans are threatened by the strike to contact him directly. Richard will be featuring some of the people and stories he has found over the next few days on CNN. You can tweet Richard back or e-mail him at quest@cnn.com

As well as Richard Quest, Adrian Finighan has been reporting from Heathrow Airport all day and Michael Holmes and Ayesha Durgahee will be reporting live from London today as well.

All of them are using social media to reach out to the audience and to direct people to our latest reporting on CNN and CNN.com.

We also use new social media tools such as “Twitter Lists” to collect all our relevant Twitter accounts on a story in one place. This allows our audience to easily find all of our correspondents on the story and to see the “real-time” coverage of the story alongside the reporting on CNN and CNN.com.

Here is our CNN Twitter List for the British Airways story.

We have also added the official Twitter accounts for British Airways and for the Unite trade union to our list so you can see our reporting and the information being put out by the parties involved in the dispute.

An unfiltered stream of information on social media can make it very hard for people to find relevant information and an element of “curation” helps the audience find what they are looking for but also helps us at CNN to direct people to our latest reporting on CNN and CNN.com.

We are also using the power of CNN iReport to allow people to send their stories and images about the threatened strike directly to CNN and give people an opportunity to tell their own story. We have set up an iReport assignment page for people to share their stories with us.

Looking to social media for people expressing their opinions about a story is interesting but what we are looking for at CNN is not just a stream of opinion and commentary, but real people with real stories to tell.

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Filed under: Air industry • Social media


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December 14, 2009
Posted: 1705 GMT

How have the housing markets held up in three major cities at the end of a tumultuous year?

Filed under: Biz Clinic • Business


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Posted: 331 GMT

MEERUT, India - Sajid, a tileworker from Andhra Pradesh, India, heard Dubai was a kind of paradise: A land of beautiful beaches, clean roads and plenty of high pay.  So he did what many of his friends and fellow Indians had done.  He paid an agent to fix him a job and went to Dubai.

Indians top the global list of migrant workers: more Indians leave their country to find work and send back money, called remittances, than citizens of any other country. The Indian Government estimates there are over five million Indian workers overseas, with 90 percent of them in the Gulf region.  Most of them are considered temporary migrants.

If you travel through the south Indian state of Kerala, it is easy to spot the homes and stores built by remittances.  Ask locals where the money comes from, and “Dubai money” is often the answer.  Kerala has the greatest number of migrants to that Gulf nation.

Sajid and other locals estimate there were more than 35,000 others who came from their area, looking for a better future.  They are from Meerut, a dusty north Indian city that sprawls into house plots being carved from former farmland.

In Dubai, Sajid says he lived in a camp with other workers, where water would run out.  He says there was often no cooking gas, so he and his friends would borrow gas from other camps to make their meals.  Life was difficult, he said, but for several years, it was fine.  He was able to save money and sent it back to his parents, his brothers and sisters, his wife and five children.

About eight months ago, Sajid says, his boss came to him and his fellow workers and told them to work faster.  “Do more in less time,” Sajid says he was told.  Sajid didn’t know what was happening but started to realize something was wrong when he saw other workers being ‘sent back.’

Then his pay stopped for a month, and then two, until he was owed six months pay.

He and his fellow Muslim workers were told to go home for the festival of Eid and they’d get a lump sum on return.  Sajid says they went, believing that they’d be happy to get their money in one chunk.  But before he left, he was told to sign a paper in English.  He couldn’t read it but says he thought it was a form for his leave.

While home for Eid, he got a call saying his visa was cancelled since he’d resigned.   It was then Sajid understood he’d been tricked into signing a resignation form.  Sajid has heard nothing since that phone call, and doubts he’ll get his money.

His father Shahabuddine has had to sell his land in Meerut to pay debts, including payments on the more than $2,000 that was owed to the agent that sent Sajid to Dubai.

Sajid has been trying to find local tilework – the only trade he knows – but says work in Meerut will only pay enough for him and his family to live from day to day.

In spite of his bad experience, Sajid says, he’d go back to Dubai if the work picked up.  For Sajid, and millions of other Indians, a place like Dubai is still the best hope for a better future.

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Filed under: Business • Financial crisis • Sign of the times


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December 11, 2009
Posted: 1539 GMT

Early in this millennium, which seems like an eternity today, I was taken on a helicopter tour of Dubai for a story I was working on. Sheikh Zayed Road, the main artery of the emirate, still had empty gaps where giant skyscrapers are today.

To understand Dubai development's past and future, a helicopter view is required.
To understand Dubai development's past and future, a helicopter view is required.

On that same tour today, The Palm and World projects, which light up the coastline at night, and the “old” Burj Al Arab hotel - celebrating its 10-year anniversary - are pieces of a puzzle that make up Brand Dubai.

From up above it is easier to see what has been built - most strikingly the Jebel Ali Port which was nothing more than a sandy stretch of land two decades ago on my first visit during the Gulf War. Today, the port is the largest container facility in the region, dwarfing its rivals by a factor of four. DP World has more than 50 other facilities dotted around the globe, a successful creation of Dubai World’s spending spree.

It is these traits in Dubai that regional businessmen and government leaders list under the banner of infrastructure which will allow the brand as they see it to survive its worst challenge in the short history of the emirate, something lost as the scenes in this financial drama unfold on a daily basis.

While in Kuwait City this week, I rushed over to the Sheraton Hotel for a meeting to obtain background for a panel I was chairing and to get a different view of the financial crisis.  On my way out, I saw the photos from the winter of 1991.  I remember back then walking on shards of glass and metal, the intense devastation of the hotel by Iraqi troops. This was a stark reminder of where the city and the region came from in the last two decades.

Dubai was just embarking on its expansion with an ambitious Sultan bin Sulayem - the embattled chairman of Dubai World - rolling out his blueprints for the port which was his initial “Field of Dreams.”  He was wondering why I had a skeptical look on my face of disbelief.  Maybe I lacked imagination and he was perhaps overly ambitious after that grand project was completed.

Dubai World represents the primary, but certainly not the only challenge for the emirate today.  Government officials and creditors are starting what appears to be a much longer path to restructuring than most were anticipating just 10 days ago.  It won’t be half a year; the cost of borrowing will increase as the score of rating downgrades continue to pour in and there won’t be one giant property company with assets of $50 billion (at old valuations) because the deal was called off to merge Emaar and the companies under the Dubai Holdings umbrella.

One private equity player pointed to this leveraged play being written in Dubai nearly two and half years ago as we launched our program.  The debt he flagged at the time will eventually catch up with all the players in what most like to call Dubai Inc.  In the region, that label is used as a common reference to all the holding companies created by the government.  From far beyond the financial centers whose lending institutions bankrolled this debt mountain they ask questions like “Is Dubai Inc. a publicly listed company?”  “What do you mean the government owns stakes in each of them?” and “Why were they allowed to borrow so much money?”

We can call that the view from 35,000 feet, skyhigh in a jetliner where we cannot recognize the offshore projects, the port or the iconic hotel.  In the region, most have at one point or another taken that helicopter tour and know why it is important to get today’s financial burden sorted out.  They rightly though have difficulty answering those questions.

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Filed under: Business • Marketplace Middle East


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December 8, 2009
Posted: 653 GMT

Bond traders may not be considered the life of the party, but the bond market has been among the best buys in 2009 investing.

In this Web exclusive, a closer look at how bond trading works for you.

Filed under: Biz Clinic


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November 30, 2009
Posted: 2039 GMT

It has almost become legend in London Underground parlance, “mind the gap”, meaning that commuters should move with caution as they enter the train to avoid an accident on the platform.

This phrase “mind the gap” applies as well with what we are dealing with in Dubai and the UAE overall. Comments, many complain, have tended to be either inconsistent on the one hand or contradictory on the other.

That again was the experience in the last 48 hours, when the central bank of the UAE said it would offer liquidity to the banking system to all domestic and foreign banks with operations in the Emirates. The move was designed to avoid a run on institutions by depositors and guarantee there are ample funds available if the need arises. It went over well and indeed there was no panic.

Twenty-four hours later, we were on the receiving end of a statement by a hitherto unknown official from the Dubai Department of Finance Abudulrahman al Saleh who said the investors and lenders may have to shoulder the responsibility of their actions.

To be precise, he noted that Dubai World “was set up on a commercial basis and not guaranteed by the government.” The statement was crystal clear, that buyers or in this case lenders should beware. Nothing wrong with that approach if it is telegraphed in advance, but in this case -– having spoken to a number of bankers and others involved in the process –- it was not. This, one London veteran of the Middle East said, “is not the way to rebuild confidence.”

When covering the region one learns to put various pieces of the puzzle together by working the phones, talking face-to-face over a coffee and then completing the picture. In this instance we are not there yet. Some would contend we are still a way off.

The chairman of the Supreme Fiscal Committee of Dubai and Chairman of Emirates Airlines, Sheikh Ahmed bin Saeed al Maktoum is the man calling the shots right now as he and his team comb through the assets of Dubai World and the other “Dubai Inc.” entities. The people I spoke to over the last 72 hours expect more clarity by Wednesday.

In the meantime, bankers who have lent an estimated $123 billion to the UAE overall, 70 percent of that from European banks, might feel they too need to mind the gap.

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Filed under: Marketplace Middle East


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Posted: 610 GMT

My wife invested a tidy sum more than a decade ago in five Chinese companies – and then forgot about it. When going through some paperwork, she rediscovered her investments and learned they had grown five-fold in value by November, 2007.

Our awareness of the investment, however, weighed on us during the calamitous events of 2008 as we watched, month-after-month, the value of the stock slide until we couldn’t take it anymore – in January this year, with the value just 20 percent up from her original investment, we cashed out.

From my previous reporting on behavioral finance, I knew that in the long run the smarter move would be to keep the cash in the market. But an surprise pregnancy and the unplanned expenses (to counter the unplanned joy) made it a straightforward decision for us. At least, we were getting out while we were ahead.

And then I’ve watched the Chinese stock market roar back to life, with year-to-date gains on the Shanghai index alone reaching 90 percent in August.

Doh!

What can I say – we’re human. And as humans we have a nagging propensity to sell low and buy high.

According to behavioral economist, our natural “fight or flight” impulses that kept us alive in the jungle often make our investment portfolios dead meat.

A buy and sell of a stock on a single day is a virtual coin toss: investors have a 50.2 percent chance of making money, investment counselor Philippa Huckle once told me. The longer investors hold, however, the chances of profit expand exponentially: there is a 70 percent likelihood of earning a profit holding for 18 months. Hold for five years, odds increase to a 95 percent probability of positive return, she said.

Yet despite this knowledge, our patience for investment is slipping: from 1984 to 2000 the average stock buy was held for two years and seven months; by 2004, the average slid to two years and two months.

According to Dalbar Inc., a financial research company, a $10,000 mutual fund investment in 1985 left to sit without withdrawal would be worth $95,000 in 20 years, despite losses suffered during the 1987 market crash, the 1997-98 Asian currency crisis and the technology implosion of 2000.

One interesting fact from behavioral finance research helps explain why we dropped that forgotten Chinese stock once we became aware of it – loss aversion. Research shows that investors “feel” the loss twice as much as a similar gain: In other words, the experience to lose $1 ,000 twice as intense as the pleasure of a $1000 gain.

Watching the stock drop month-after-month became too much to take, and we – like a lot of other investors – wanted that pain to go away. And it cost us.

Now I’m trying to forget that, too.

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Filed under: Biz Clinic • Financial markets • Investment


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November 27, 2009
Posted: 536 GMT

Driving around the Chinese town of Yi Wu, my crew and I were listening to the radio when an ad came on encouraging listeners to trade in their old TVs and washers for new ones.

"You can get a 13-percent rebate!" the speakers blared.

The government is going all out to promote its rebate programs and get its citizens spending. The manager of Xin Hong Electric, a store selling electronics and appliances, told us his sales were up as much as 30 percent. Not only can Chinese get discounts on new refrigerators, dryers or microwaves but cars too. Car sales were up nearly 80 percent in October compared to a year ago, driven in part by tax breaks and China's version of the U.S.'s "Cash-for-Clunkers" program. China is expected to overtake the United States as the world's biggest car market this year.

At Xin Hong Electric, I was struck by how many people were taking advantage of the rebate. We met up with a paper fan maker who had just bought a new fridge to add to his recent purchases: a TV, an air conditioner, a washer, and a microwave. He told us he had wanted to upgrade his appliances, anyway, and thought, why not do it now and save some cash?

That savers' mentality is said to have contributed to the imbalances in the world economy. Americans have been taking on too much debt and overspending, while Chinese (and certainly many other consumers in Asia) have been saving for a rainy day. Many economists say the government trade-in programs have had some success, but getting Chinese to feel comfortable spending will take a lot more work. They say the government will need to improve its retirement and health care programs so that people don't have to worry as much about paying large potential medical bills. The bottom line is consumers need to feel confident enough in the future to open their wallets today.

How confident are you in your home country's economy?

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Filed under: Business • China • Financial crisis • United States


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CNN International's business anchors and correspondents get to grips with the issues affecting world business, and they want your questions and feedback.

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