UNITED ARAB EMIRATESCOUNTRY ANALYSIS

Team 5Business in the Global Economy

UAE Perspective

UAE Emirate: Dubai 1990

UAE Perspective

UAE Emirate: Dubai 2003

UAE Perspective

UAE Emirate: Dubai 2007

UAE Overview

Background UAE: Who are the Emirates Government structure

Sources of Revenue Oil Real Estate/Tourism Infrastructure Technology/Digital Media Healthcare Education

UAE Vision Dubai’s 2015 strategic plan Diversification away from oil

UAE Annual Growth

Key Drivers GDP - Avg 23% BOP Surplus - Avg 32% Foreign Reserves - Avg 26% FDI - Avg $13B USD

Consequences of Growth Inflation reached 11% in

2007 External debt increased to

$170B USD in 2007, up 17%

  2004   2005   2006   2007 2008*

GDP (MilDihrams) 386,535 485,513 624,623 729,732 M↓

Y/Y % Change    20.13    25.61    28.65    16.83

BOP (MilDirhams) 101,231 157,154 211,302 236,152 M↓

Y/Y % Change    29.35    55.24    34.46    11.76

Foreign Reserves (BilUSD) 19 21 28 38 M↑

Y/Y % Change 22.52 13.51 35.24 34.86

FDI (BilUSD) 9 13 11 19 M↑

Y/Y % Change 109.30 44.44 -15.38 68.18

CPI (Inflation) 115 122 133 148 M↓

Y/Y % Change    5.04    6.20    9.29    11.13

*M↓ = Moderate Decrease M↑ = Moderate Increase

Effects of Recent Global Slowdown A strong surplus and foreign reserves will shield UAE from

long term impacts Short term decrease in consumer debt and inflation

Recommendations: Real Estate Current Outlook

Appreciation in real estate prices: e.g. condos experienced ~226% in 4 years

Improved infrastructure needed to support growth

Some markets are overheated, bubble?

Global credit crunch Long Term Drivers

Population growth: 3.8% Strategic focus on being an

international destination; Deregulation

Continued investment by foreign entities Recommendation

Short Term Investors: Opportunities exist in middle income housing; More conservative investors may want to wait until the global market rebounds

Long Term Investors: Invest in companies providing infrastructure; Real Estate Investment Trusts (REITs); Direct investment in Dubai Real Estate

Recommendations: Health Care Current Outlook

Investments by John Hopkins, Cleveland Clinic and other institutions

Need for attracting investors and skilled laborers from developed nations

Limited impact by global slowdown Long Term Drivers

Population growth: 3.8% Creation of Dubai Healthcare City Increases in median ages of men

(74) and women (76) Increase in heart disease and

diabetes Recommendation

Short Term Investors: Invest in companies providing high tech healthcare equipment or supplies; Drug companies

Long Term Investors: Foreign Hospitals and insurance organization may consider expansion into the UAE

Dubai’s Health Care City: Under Construction

Recommendations: Education Current Outlook

Majority of skilled labor and expertise comes from other countries like India

Campus investments by NYU, Michigan State, and George Mason Universities

Uneducated labor force Limited impact by global slowdown

Long Term Drivers Population growth: 3.8% Strategic vision of UAE Progress towards educational

equality Recommendation

Short Term Investors: Invest in companies supplying education resources; IT Education

Long Term Investors: Universities should consider satellite campuses in Dubai.

Recommendations: Stock Market Current Outlook

UAE market down ~60% YTD High level of uncertainty in the

global economy Limited liquidity and market

information Global credit crunch

Long Term Drivers Strong country fundamentals Projected appreciation in oil

prices Converting to GCC common

currency in 2010

Recommendation Risky Investors: Wait until market confidence returns; signaled by

VIX level in the 30-40 range; Invest in Market Vectors Gulf States Index (ETF TICKER: MES)

Risk Adverse Investors: Wait until market confidence returns to historic levels; signaled by VIX level in the 10-15 range; Invest in ETF TICKER: MES

Risks to Consider Before Investing Societal and Cultural Risks

Stable cultural and societal environments attract foreign workers Though UAE is one of the most progressive Emirates, it still is behind many

other cultures Infrastructure Showing Cracks

Considered by the BMI institute as the second highest risk in the Gulf region. Lacking in the following areas:

Water Generation Sewer Systems Power Generation Energy Usage

Threat of Terrorism Alliance with United States causes tension with Iranian neighbors High level of expatriate population from western countries

Potential Economic Bubble Though UAE continues to experience growth, many experts think it may be

overheated Continued dependence on oil Continued inflation Long term effects of the credit crunch on foreign investors

Summary

Sector Investment

Short Term Trend Long Term Trend

Real Estate

Healthcare

Education

Stock MarketNegative Eve

nPositive

Recommendation: United Arab Emirates has a positive long term investment horizon

Questions and Discussion

2009 International Study: Dubai anyone…