Only two years removed from the financial crisis, could the US be inflating another bubble?
It is a distinct possibility, experts said yesterday as they digested the performance of LinkedIn's initial public offering.
LinkedIn's shares more than doubled in their public trading debut on Thursday, evoking memories of the investors' love affair with internet stocks during the dot.com boom of the late 1990s.
The professional social networking company, which began in one man's living room less than a decade ago, is now worth more than the motorcycle maker Harley-Davidson and the ratings company Moody's Investors Service.
Lawrence Summers, a former US Treasury secretary, said yesterday there was rising concern that technology stocks were in a bubble as investors shook off their apprehension from the 2007 to 2009 US mortgage and credit collapse.
"Who could have imagined that the concern with respect to any American financial asset, just two years after the crisis, would be a bubble?" Mr Summers, who has returned to being a Harvard University professor, said at a conference yesterday in Shanghai. "Yet that concern is increasingly raised with respect to American technology, with respect to certain other American assets. That is a reflection of the resumption of confidence."
The LinkedIn performance even caught bankers by surprise. Bankers typically try to price an IPO so that the stock rises about 15 per cent on the first day of trading: enough to reward investors who made a bet, but not so much that original shareholders feel were short-changed.
Only days ago, LinkedIn proposed a price range for the IPO that valued it at just over US$3 billion (Dh11.01bn). After its first day of trading, it was worth nearly $9bn, adding to concerns that the valuations of social networking companies were exceeding the businesses' earning potential.
"It seems to bring back memories of the tech bubble," said Jack Ablin, the chief investment officer at Harris Private Bank in Chicago. "Based on what I know, it seems like investors are a little overly enthusiastic."
Elsewhere, US farmland prices could also be in a bubble, Thomas Hoenig, the president of the Federal Reserve Bank of Kansas City, said this year.
"Today there are very substantial risks, to be sure, but the economy is growing, unemployment is falling and financial conditions are normalised," said Mr Summers, who was director of the White House national economic council in the Obama administration from 2009 until last year.
Mr Summers said the "central irony" of a financial crisis was that it was caused by too much confidence, borrowing and lending, and was resolved by more confidence, borrowing and spending. He was Treasury chief from 1999 to 2001, a term that coincided with the collapse of technology shares. The Nasdaq Composite Index fell 39 per cent in 2000.
* with agencies
Which honey takes your fancy?
Al Ghaf Honey
The Al Ghaf tree is a local desert tree which bears the harsh summers with drought and high temperatures. From the rich flowers, bees that pollinate this tree can produce delicious red colour honey in June and July each year
Sidr Honey
The Sidr tree is an evergreen tree with long and strong forked branches. The blossom from this tree is called Yabyab, which provides rich food for bees to produce honey in October and November. This honey is the most expensive, but tastiest
Samar Honey
The Samar tree trunk, leaves and blossom contains Barm which is the secret of healing. You can enjoy the best types of honey from this tree every year in May and June. It is an historical witness to the life of the Emirati nation which represents the harsh desert and mountain environments
COMPANY%20PROFILE%20
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Springtime in a Broken Mirror,
Mario Benedetti, Penguin Modern Classics
COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
UAE currency: the story behind the money in your pockets
Porsche Macan T: The Specs
Engine: 2.0-litre 4-cyl turbo
Power: 265hp from 5,000-6,500rpm
Torque: 400Nm from 1,800-4,500rpm
Transmission: 7-speed dual-clutch auto
Speed: 0-100kph in 6.2sec
Top speed: 232kph
Fuel consumption: 10.7L/100km
On sale: May or June
Price: From Dh259,900
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Squid Game season two
Director: Hwang Dong-hyuk
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Rating: 4.5/5
Tax authority targets shisha levy evasion
The Federal Tax Authority will track shisha imports with electronic markers to protect customers and ensure levies have been paid.
Khalid Ali Al Bustani, director of the tax authority, on Sunday said the move is to "prevent tax evasion and support the authority’s tax collection efforts".
The scheme’s first phase, which came into effect on 1st January, 2019, covers all types of imported and domestically produced and distributed cigarettes. As of May 1, importing any type of cigarettes without the digital marks will be prohibited.
He said the latest phase will see imported and locally produced shisha tobacco tracked by the final quarter of this year.
"The FTA also maintains ongoing communication with concerned companies, to help them adapt their systems to meet our requirements and coordinate between all parties involved," he said.
As with cigarettes, shisha was hit with a 100 per cent tax in October 2017, though manufacturers and cafes absorbed some of the costs to prevent prices doubling.
BIGGEST CYBER SECURITY INCIDENTS IN RECENT TIMES
SolarWinds supply chain attack: Came to light in December 2020 but had taken root for several months, compromising major tech companies, governments and its entities
Microsoft Exchange server exploitation: March 2021; attackers used a vulnerability to steal emails
Kaseya attack: July 2021; ransomware hit perpetrated REvil, resulting in severe downtime for more than 1,000 companies
Log4j breach: December 2021; attackers exploited the Java-written code to inflitrate businesses and governments
Some of Darwish's last words
"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008
His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.