Risky times, but not all doom and gloom

If you could bottle risk, this week's product would be a particularly good vintage, writes Wayne Arnold.

If you could bottle risk, this week's product would be a particularly good vintage. We've got Iran test-firing missiles, the Fed reaching out for unprecedented authority as Wall Street reaches new levels of anxiety and Bush and the G8 demonstrating their inability to come up with any coordinated response to the crisis. Naturally, stocks in the Gulf have fallen in response, except in the UAE, where investors continue to ignore reality and pump up construction stocks and perpetuate the now ridiculous property bubble that has sent prices in Dubai 78 per cent in the past year.

Even if you believe emerging markets will continue to produce new millionaire émigrés despite what appears to be the impending global slowdown of 2009, will they necessarily continue to flock to given that Ahmedinejad seems intent on provoking the kind of military confrontation that will perpetuate the control of the Revolutionary Guards? Clearly, many foreign investors are hedging their bets, pulling some cash out of the UAE. And lucky for us, so is Abu Dhabi, with the Abu Dhabi Investment Council concluding its bid to buy a stake in a portfolio of Manhattan real estate that includes part of the Chrysler Building.

Manhattan property prices also continue to rise and thanks to the combat soldiers patrolling Grand Central Station, New York office space seems a solid investment in a time of stagflation. The other good news is that Big Oil is finally getting a chance to help expand Abu Dhabi city's oil and gas production following a deal giving ConocoPhilips a 40 per cent stake in developing the Shah natural gas field. At the same time, Taqa continues to offset Abu Dhabi city's exposure to its own geography,buying more North Sea assets from Esso and Shell. Elsewhere, continues to make waves with its own investments, this time reportedly bidding for a casino in Monaco. Let fly the dice of war.