Wednesday, November 27, 2013

Dubai Expo 2020 & the DFMGI

If you live in Dubai, you cant escape it. Dubai Expo 2020 is plastered everywhere from your morning newspaper to the window of the little restaurant where you get your favorite shawarma.
The DFMGI has gone from approximately 1353 to 1622, 19% for 2012 and from 1622 to 2923, 80% to date making it one of the best performers globally.
The economic effects of actually hosting an event like an expo or the Worldcup are sum zero to net negative depending on the expenditure on essential infrastructure thats lasts a few years compared to porta infrastructure covered well by this article in the gulf news. (http://gulfnews.com/business/opinion/uae-s-expo-2020-bid-is-a-chance-to-mark-history-1.1195582) This point is also made obvious by the protests in Brazil around hosting the Worldcup, who think that the public well-being is of more importance than national pride when it comes to allocating national resources and taxpayer funds.

What is visible locally in Dubai though is this extreme buildup of positive sentiment that has been built around winning the bid. Win or lose ... the end of this announcement and the following euphoria that might last a month or two will be a dampener on sentiment which may manifest itself on asset prices and on the Dubai Financial Markets General Index for which data is most transparent and easily available.