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By Keith Fitz-Gerald
Contributing Editor
It was only back in August that I penned a report that I titled, The China Connection: Why Dubai Is Really Interested In MGM.
Within that little investment treatise, I suggested that the "real" story wasn't Dubai's investment in MGM – as most analysts thought. It was Dubai's interest in Asia.
My reasoning was simple. Dubai is one of the world's most sophisticated investors and any money that it placed in Asia – and especially in China – should be viewed as a powerful signal that the biggest profits were still to come.
Well, it's game time. And right on the schedule I'd predicted, too.
Soud Ba'alwy, who is the chairman of Dubai's state-owned investment company, Dubai World, announced that he's going to invest up to $2.5 billion in 'Chinindia' (China and India) over the next 24 months. Given that Dubai World's portfolio is already a staggering $1 billion, this shows that Ba'alwy is preparing to double his stake there – and then some.
This doesn't just suggest how seriously Dubai is taking Chinindia's future potential when it comes to profits: It shows how seriously you should take it, too.
So what are they buying?
Well, for starters, they're warming up the currency trading to get ready – and I'll have a related story on how China is handling that in a few days – then, my bet is that they're going to go after Asia's 'golden trifecta:' Manufacturing, real estate and finance.
You might wonder why resources aren't included. That's logical, but not left out. Expect Dubai to acquire resource-related assets and companies in "packages," or as indirect – but still crucial – elements of deals.
So look for Chinese and Indian companies that specialize in the construction-related resources needed to carry out Dubai's mandates.
How will you know where to find them? That's the easy part. China is pretty secretive, but we've seen that Dubai is not. So the chances are excellent that you'll be able to follow long by conducting fairly regular Internet-based searches using Google, Yahoo, MSN, AOL or whatever other search engine you are comfortable using. Focus on news and business-news searches to stay on top of this developing opportunity. And stay tuned in here: We've got a tenacious team of global opportunity researchers here. As we uncover developments, we'll write about them regularly, just as we have been [check out the news and related links that follow this story if you are new to this topic, or need a quick refresher briefing.]
If you do your homework, and keep reading Money Morning, you'll know just what your move is – and when to make it.
Speaking of which – on a related note, and as part of a longer-term view – you can expect Dubai to start acquiring significant interests in Asian banking houses as part of a long-term strategy that I've dubbed, "The Middle E-Asian Connection."
Indeed, Dubai has already snapped up shares of the Bank of China Ltd., and is rumored to be quietly pursuing other, related banking deals.
However, I also expect Dubai's investment arm to keep some of its capital at home in purchases that are likely to include several Middle East banks, as well. If any of you have heard any of the presentations I've made anywhere in the world over the past few years, you'll know that this is a topic I've reiterated again and again.
If not, here's a quick overview.
Dubai is essentially trying to amass assets that will, in effect, form the foundation of a trading block they want to assemble that can then operate independent of the United States and EU.
That theory should right now be setting off alarms so loud that they're causing Excedrin headache No. 334. Sure it has severely negative implications for the U.S. dollar. But it also offers tremendous profit potential for investors savvy enough to see just what's unfolding here.
For some reason, Wall Street hasn't seen this yet – or doesn't care. But when I outline my little scenario to some of my contacts in the Middle East, or to some bankers or business people from that region, the surprised and chagrined reaction that my analysis elicits clearly shows that they realize I'm onto their "little secret."
And now, so are you.
News and Related Story Links:
- Money Morning Analysis:
The China Connection: Why Dubai is Really Interested In MGM. - Money Morning Analysis:
State Investment Funds: Beware of the Big New Buyers. - Money Morning News:
Dubai's Investment Arm Grabs Stake in MGM. - Money Morning Analysis:
Dubai Employs the Latest Private Equity Strategies to Boost its Shifting Economy. - Money Morning Analysis:
Dubai Plans to Boost Asia Investment by 150% Within Two Years.
About the Author
Keith is a seasoned market analyst and professional trader with more than 37 years of global experience. He is one of very few experts to correctly see both the dot.bomb crisis and the ongoing financial crisis coming ahead of time - and one of even fewer to help millions of investors around the world successfully navigate them both. Forbes hailed him as a "Market Visionary." He is a regular on FOX Business News and Yahoo! Finance, and his observations have been featured in Bloomberg, The Wall Street Journal, WIRED, and MarketWatch. Keith previously led The Money Map Report, Money Map's flagship newsletter, as Chief Investment Strategist, from 20007 to 2020. Keith holds a BS in management and finance from Skidmore College and an MS in international finance (with a focus on Japanese business science) from Chaminade University. He regularly travels the world in search of investment opportunities others don't yet see or understand.