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	<title>pligg - published -international news-</title>
	<link>http://www.housebubble.org</link>
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	<pubDate>Mon, 05 Feb 2007 12:50:40 MST</pubDate>
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		<title><![CDATA[A Mideast Housing Bubble?]]></title>
		<link>http://www.housebubble.org/story.php?title=Mideast-Housing-Bubble</link>
		<comments>http://www.housebubble.org/story.php?title=Mideast-Housing-Bubble</comments>
		<pubDate>Mon, 05 Feb 2007 12:50:40 MST</pubDate>
		<dc:creator>Asder</dc:creator>
		<category>international news</category>
		<guid>http://www.housebubble.org/story.php?title=Mideast-Housing-Bubble</guid>
		<description><![CDATA[MarketWatch has this unusual report on the housing bubble in the Middle East.  Scary to see how the bubble is as global as it is: &amp;quot; Cheap credit has fueled a construction boom in the Persian Gulf, but the supply of luxury buildings so mismatches the demand that eventually the real estate market will crash, dragging down the equity markets as well.That's the thesis of Gabriel Stein, analyst at U.K.-based Lombard Street Research.&amp;quot;Low interest rates are driving a credit boom, which primarily is then used to fuel stock prices and real estate speculation,&amp;quot; said Stein. &amp;quot;But the real estate sector is also strangely skewed.&amp;quot;In most of the Gulf Cooperation Council states - which include Kuwait, Saudi Arabia, Bahrain, Oman, Qatar and the United Arab Emirates -- there is substantial demand for low-cost affordable housing, but the majority of new construction is high-cost luxury residences, Stein said.&amp;quot;The big risk for the GCC regions - in addition to the vagaries of oil and natural gas prices - is therefore the likelihood of a real estate crash,&amp;quot; Stein said. &amp;quot;Because GCC pockets are deep, it may take longer to happen. And when it comes, it will be bad news for stock markets dominated by the finance and real estate/construction sectors.&amp;quot;The GCC stock markets have generally recovered from last year's crash, but the overheating of the real estate sector might spell fresh troubleA look at various indexes that track market performance in the region shows the clear downward trend of the last 12 months. ... &amp;quot;A lot of investors had woken up to equities,&amp;quot; Hollis said. &amp;quot;There was a day-trading frenzy like the one we saw in the West in the dotcom boom. Towards the beginning of 2006, you had some companies valued at 66 times their earnings.&amp;quot;Banks were providing easy credit to the retail market. And after the events of September 11, 2001, some private Middle Eastern funds moved billions of dollars in assets back to the Gulf region.The weakness on the GCC markets over the last year is also related to the structure of those markets, said Rochdi A. Younsi, an analyst at the Eurasia Group.The Royal families that reign in the Gulf countries have generally encouraged their subjects to participate in the stock markets in order to keep them busy and discourage them from making demands for democratization, Younsi said. As a result, many inexperienced traders have jumped into stock trading, losing a lot of money in the process.To complicate matters, investors in those countries often have little information about the companies they're investing in as disclosure requirements are nowhere near as advanced as they are in Western markets.&amp;quot;Throughout the Gulf region, you have traders trading in the stock market based on rumors, with very little information,&amp;quot; Younsi said. &amp;quot;The slightest rumor causes a lot of panic.&amp;quot; &amp;quot; &nbsp;&#187;&nbsp;<a href='http://www.marketwatch.com/news/story/middle-east-markets-face-real/story.aspx?guid={0BB6A3DE-F47C-456B-B21E-52BF65F485DC}'>original news</a>]]></description>
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