Commandos march across the Kim Il Sung square during a military parade in Pyongyang, North Korea. War with the country could have devastating consequences for investors. Wong Maye-E / AP
Commandos march across the Kim Il Sung square during a military parade in Pyongyang, North Korea. War with the country could have devastating consequences for investors. Wong Maye-E / AP

What would a war in North Korea mean for Middle East investors?



With the 2003 Second Gulf War so long ago, many investors have no experience of what a major war means for their portfolio. The civil wars in Iraq, Syria and Yemen have been comparative sideshows in terms of their economic impact outside those countries.

Of course nobody but a madman would actually want any sort of war, with its horrific consequences for those fighting and living under it. But as history shows, that has never stopped them happening in the past.

I remember being at a press conference in Dubai just before the start of the Second Gulf War in March 2003. Somebody came running up to me with spreadsheets and graphs in his hands to explain that now was the point of maximum uncertainty - just before the shooting started - and that this was the very lowest point to buy global stocks.

At the time I was a bit shocked that anyone could take such a cool view of an approaching disaster. Yet this particular contrarian investor had certainly got his timing right.

Right now in North Korea the drums of war are beating again. But nobody really believes anything will happen because it is almost 70 years since the First Korean War, and in all that time belligerent talk and weapons testing has not resulted in war.

However, with US President Donald Trump hinting that his current consultations with US military could be ‘the calm before the storm’ and ‘nothing else will works’ - that could change quite suddenly.

If war was to commence, it would be a dramatic and extremely violent affair. It would also upset the current complacency in extremely overvalued US and other global stock markets, with seriously negative consequences.

After the very quick and at first successful invasion of Iraq by the US and its allies the stock market went up. But it had reached rock bottom first. History could repeat itself again.

For what financial markets hate more than anything is uncertainty, and nothing is more uncertain than a war. It could turn out to be a pushover like Iraq - which later morphed into a disaster - or nuclear bombs might land on South Korea causing immense loss of life.

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Read more from Peter Cooper:

The best contrarian investment opportunities this Autumn

Will gold shine brightly again this autumn as bitcoin crashes?

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Pricing of worst possible scenarios into stock markets is always a painful experience for those fully invested at the time, and the subsequent recovery can take many years, particularly when stock prices have reached record-breaking levels as they have today.

Conversely wars tend be very positive for commodity prices and interest rates.

Financial markets are then thinking further ahead and asking well what if this proves to be a longer commitment than originally advertised. The First World War was supposed to be over by Christmas but took four years to reach an inconclusive conclusion.

Therefore, markets assume that commodities ought to cost more because military equipment lost will need to be replaced. Also there is an assumption that inflation will follow the necessary printing of money to pay for the conflict.

So the Middle East sat on the world’s largest energy reserves would be a net beneficiary. Also on some calculations, more than one-third of the world’s energy supply flows would be disrupted by a conflict in Asia, and that alone would mean far higher oil and gas prices.

Opportunistic investors might care to buy up oil shares, for example, in the stock market mayhem that would result from a surprise conflict in North Korea or the build up to one.

One of my contrarian investment friends was thinking about South Korean shares as a clear buy in such a tragedy a couple of months back. Professional investors already have this situation on their radar but, like everybody else, have been loathed to jump the gun.

Classic safe havens like precious metals also move up and down in price on every news item about North Korea. Gold and silver would benefit due to fears about future inflation from money printing as well as a flight from riskier assets like overvalued stock markets and bonds.

If a North Korean war was to get completely out of hand, then gold could hit record highs as central banks would then have so many problems to deal with that fixing the gold price would be put on the backburner as it was in 2009 to 2011.

Rising interest rates from falling bond markets would put a big squeeze on all asset prices related to cheap money. Holding cash would be a better place to be, at least until the initial bear market was completed.

Real estate is a more difficult asset to call, however. It also has a safe haven appeal and in a time of chaos in stock markets, real estate can benefit as a less risky alternative.

A bad crash in the Dubai Financial Market in the mid-2000s did nothing to derail the then property boom, for instance, and in fact powered it to new highs just in time for the Global Financial Crash of 2008.

So while war is the worst of manmade tragedies it can be a friend to the opportunistic investor if you move correctly when it happens.

Sir John Templeton, one of the world’s most famous investors, made his first fortune by borrowing big to invest in undervalued US companies in the early days of the Second World War when the effect the war was to have on profits was not generally appreciated.

Unfortunately, today US stocks are very overvalued so it is impossible to make the same argument, and selling short is a more obvious course of action.

Buying precious metals now while prices are cheap is a far better analogy. Right now people prefer to gamble on bitcoin going up and Facebook shares rather than buy gold, and the contrarian in me reckons the consensus is wrong as usual.

Peter Cooper has been writing about finance in the Gulf for over 20 years

Company Profile

Name: Neo Mobility
Started: February 2023
Co-founders: Abhishek Shah and Anish Garg
Based: Dubai
Industry: Logistics
Funding: $10 million
Investors: Delta Corp, Pyse Sustainability Fund, angel investors

The Byblos iftar in numbers

29 or 30 days – the number of iftar services held during the holy month

50 staff members required to prepare an iftar

200 to 350 the number of people served iftar nightly

160 litres of the traditional Ramadan drink, jalab, is served in total

500 litres of soup is served during the holy month

200 kilograms of meat is used for various dishes

350 kilograms of onion is used in dishes

5 minutes – the average time that staff have to eat
 

Sarfira

Director: Sudha Kongara Prasad

Starring: Akshay Kumar, Radhika Madan, Paresh Rawal

Rating: 2/5

Important questions to consider

1. Where on the plane does my pet travel?

There are different types of travel available for pets:

  • Manifest cargo
  • Excess luggage in the hold
  • Excess luggage in the cabin

Each option is safe. The feasibility of each option is based on the size and breed of your pet, the airline they are traveling on and country they are travelling to.

 

2. What is the difference between my pet traveling as manifest cargo or as excess luggage?

If traveling as manifest cargo, your pet is traveling in the front hold of the plane and can travel with or without you being on the same plane. The cost of your pets travel is based on volumetric weight, in other words, the size of their travel crate.

If traveling as excess luggage, your pet will be in the rear hold of the plane and must be traveling under the ticket of a human passenger. The cost of your pets travel is based on the actual (combined) weight of your pet in their crate.

 

3. What happens when my pet arrives in the country they are traveling to?

As soon as the flight arrives, your pet will be taken from the plane straight to the airport terminal.

If your pet is traveling as excess luggage, they will taken to the oversized luggage area in the arrival hall. Once you clear passport control, you will be able to collect them at the same time as your normal luggage. As you exit the airport via the ‘something to declare’ customs channel you will be asked to present your pets travel paperwork to the customs official and / or the vet on duty. 

If your pet is traveling as manifest cargo, they will be taken to the Animal Reception Centre. There, their documentation will be reviewed by the staff of the ARC to ensure all is in order. At the same time, relevant customs formalities will be completed by staff based at the arriving airport. 

 

4. How long does the travel paperwork and other travel preparations take?

This depends entirely on the location that your pet is traveling to. Your pet relocation compnay will provide you with an accurate timeline of how long the relevant preparations will take and at what point in the process the various steps must be taken.

In some cases they can get your pet ‘travel ready’ in a few days. In others it can be up to six months or more.

 

5. What vaccinations does my pet need to travel?

Regardless of where your pet is traveling, they will need certain vaccinations. The exact vaccinations they need are entirely dependent on the location they are traveling to. The one vaccination that is mandatory for every country your pet may travel to is a rabies vaccination.

Other vaccinations may also be necessary. These will be advised to you as relevant. In every situation, it is essential to keep your vaccinations current and to not miss a due date, even by one day. To do so could severely hinder your pets travel plans.

Source: Pawsome Pets UAE

The years Ramadan fell in May

1987

1954

1921

1888

DUNE: PART TWO

Director: Denis Villeneuve

Starring: Timothee Chamalet, Zendaya, Austin Butler

Rating: 5/5

How to volunteer

The UAE volunteers campaign can be reached at www.volunteers.ae , or by calling 800-VOLAE (80086523), or emailing info@volunteers.ae.

COMPANY PROFILE

Company name: Klipit

Started: 2022

Founders: Venkat Reddy, Mohammed Al Bulooki, Bilal Merchant, Asif Ahmed, Ovais Merchant

Based: Dubai, UAE

Industry: Digital receipts, finance, blockchain

Funding: $4 million

Investors: Privately/self-funded

COMPANY PROFILE

Company name: Almouneer
Started: 2017
Founders: Dr Noha Khater and Rania Kadry
Based: Egypt
Number of staff: 120
Investment: Bootstrapped, with support from Insead and Egyptian government, seed round of
$3.6 million led by Global Ventures

The Specs

Lamborghini LM002
Engine: 5.2-litre V12
Power: 450hp at 6,800rpm
Torque: 500Nm at 4,500rpm
Transmission: Five-speed manual
0-100kph: 9 seconds (approx)
Top speed: 210kph (approx)
Years built: 1986-93
Total vehicles built: 328
Value today: $300,000+

Structural weaknesses facing Israel economy

1. Labour productivity is lower than the average of the developed economies, particularly in the non-tradable industries.
2. The low level of basic skills among workers and the high level of inequality between those with various skills.
3. Low employment rates, particularly among Arab women and Ultra-Othodox Jewish men.
4. A lack of basic knowledge required for integration into the labour force, due to the lack of core curriculum studies in schools for Ultra-Othodox Jews.
5. A need to upgrade and expand physical infrastructure, particularly mass transit infrastructure.
6. The poverty rate at more than double the OECD average.
7. Population growth of about 2 per cent per year, compared to 0.6 per cent OECD average posing challenge for fiscal policy and underpinning pressure on education, health care, welfare housing and physical infrastructure, which will increase in the coming years.

FIXTURES

Saturday
5.30pm: Shabab Al Ahli v Al Wahda
5.30pm: Khorfakkan v Baniyas
8.15pm: Hatta v Ajman
8.15pm: Sharjah v Al Ain
Sunday
5.30pm: Kalba v Al Jazira
5.30pm: Fujairah v Al Dhafra
8.15pm: Al Nasr v Al Wasl

U19 World Cup in South Africa

Group A: India, Japan, New Zealand, Sri Lanka

Group B: Australia, England, Nigeria, West Indies

Group C: Bangladesh, Pakistan, Scotland, Zimbabwe

Group D: Afghanistan, Canada, South Africa, UAE

UAE fixtures

Saturday, January 18, v Canada

Wednesday, January 22, v Afghanistan

Saturday, January 25, v South Africa

UAE squad

Aryan Lakra (captain), Vriitya Aravind, Deshan Chethyia, Mohammed Farazuddin, Jonathan Figy, Osama Hassan, Karthik Meiyappan, Rishabh Mukherjee, Ali Naseer, Wasi Shah, Alishan Sharafu, Sanchit Sharma, Kai Smith, Akasha Tahir, Ansh Tandon

Company profile

Company name: amana
Started: 2010
Founders: Karim Farra and Ziad Aboujeb
Based: UAE
Regulator: DFSA
Sector: Financial services
Current number of staff: 85
Investment stage: Self-funded


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