I
have decided to take up the pen for things other than signing deals, engaging major
financial lenders for funding, or writing communications for LJM Development’s
current real estate development projects and want to provide my personal
insight into Global Finance, Currency Markets, and of course the Global Real
Estate market. For over 20 years I have been an active market trader in stocks,
bonds, currencies and real estate deals and feel passionate about sharing my
opinions and knowledge about these topics.
My Experience
A
quick review of my experience in international finance, project management, and
real estate development projects helps inform my view on international
financial matters. Some of the highlights of my career include:
- CFO,
FFC - Fertilizer Company Limited - one of the five largest publicly quoted
companies in Pakistan with over $300 million market capitalization.
- Over
$500B USD raised as a lead negotiator on multiple project funding teams
over the course of my career.
- Active
Stock, Bond and Real Estate trader and Developer.
- Over
$100M CAD under current development projects with LJM Developments.
The future of this
blog
What
I hope to do with this blog is impart some of my knowledge in the areas of my
expertise to like-minded individuals. I will attempt to provide updates on
global markets, projections of stocks, currencies, and real estate investments
based on my opinion in these areas. I look forward to engaging my readers,
fellow industry insiders and other pundits in these areas.
The Global
Financial Picture
In
my first piece I would like to discuss the state of the world’s current affairs
in the realm of stock markets globally, the current silent currency war in the
state of major real estate markets. Of course the current global picture should
be put in perspective in relation to the major global recession of 2008. This
major financial event triggered a financial crisis across the entire world one
of which the G8 and G20 countries do not want to repeat. With the rise of
global communications, the Internet and many more financial tools for
investing, global financial markets have gone through major changes. All large
financial institutions such as pension funds and college funds have not had
major cash outflows because the baby boomer generation has not retired yet.
These institutions however had a major reduction in their holdings due to this
financial crisis.
TheUnited States of all the world powers had the quickest response to this crisis
with a large stimulus cash infusion to their markets with large corporate
bailouts. Although other major economies should have followed suit, they were
slow to act and are still feeling the aftermath of the crisis. In particular, European
countries are still behind the US in market growth and employment figures
because they failed to implement large stimulus packages into their capital
markets timely. The US Dow Jones index in 2009 had reached a low of 6,500 yet
has now peaked at 16,000 due in large part to the stimulus package injected by
the US government. The US commitment to keeping interest rates low currently at
0.25% throughout the crisis aided to the strong comeback of the American
economy and will likely continue to do so, as interest rates are not expected
to rise in the US. Even a 0.25% increase in the interest rate is 100% increase,
which the Federal Reserve will not implement in order to keep investment
flowing into the US economy. Inflation within the economy is currently being
absorbed by real estate. The major economic powers of the world are working
diligently to keep interest rates low and aid the growth of their markets.
The Stock Market
Picture
There
are two major investment opportunities globally: real estate and stocks. Large
institutional investors that have maintained large cash reserves have yet to
make large investments into the market, once this happens it will further push
the American stock markets higher, to a projected 20,000 point level by the end
of 2015. This can be projected because large blue-chip stocks still have very
cheap P/E ratios and strong tech companies such as Apple, Google and Netflix at
their current prices still have room to grow as they came into the market at a
low point. Other strong contributors will include oil, gas, technology, banks
and financial stocks which all currently have room for upward share price
growth.
Global Real Estate
Growth
The
old adage that “God is not creating more land” is very relevant in today’s real
estate market. It is especially true in light of exponential population growth
especially in very densely populated countries such as China and India. Not
only are these populations growing but their middle-class populations and
living standards are increasing steadily, putting demands on real estate
markets globally. As these middle class populations put pressure on their own
societies for better food, water, infrastructure, and housing, they will
naturally expand into other markets. In particular, this growing middle-class
of developing countries is looking for opportunities for real estate
investments in Western countries.
An
example of this can be seen here in Canada with a large volume of real estate
development and land being purchased by newly emigrated people from China,
Middle East, Europe and India. This demand puts pressure on the Canadian real
estate market as over 70% of new immigrants prefer to stay in Eastern Canada,
heightening pressure on the 401 corridor for housing. Canada also has very low
interest rates at 1% and these rates are projected to remain steady for the
next 3 to 4 years. Furthermore Canadian real estate market is considerably
cheaper than other major Western nations such as the US, Australia, Germany,
England and France. Consider the price differences between a flat in London and
a condo in Toronto and the saving is evident. Real state in Canada will remain
strong at least through 2020 with the GTA, Calgary, Edmonton, and Montréal all
in growth patterns.
Other
major real estate markets have seen some easing from the low dollar days and
signs of growth are starting to emerge. This
is especially true in the US where certain high-profile markets in major
urban centers such as New York and Miami are starting to see growth. United
Kingdom’s real-estate market is also growing although at a slower pace than
the US. The EU in general was much slower to act but should be completely out
of recession within 12 to 18 months. My projection for interest rates is that
they will remain below 5% until 2050.
The Currency War
The
United States has taken on a silent war in order to keep the country’s currency
subdued in comparison to other major currencies in the world. By artificially
keeping the currency lower, it aids decision-making for foreign investors and
lowers their overall debt financing. This can be seen by the US dollar consistently
falling after 2 to 3 days of gains. The lower US dollar of course is in
opposition to the market growth, strong indicators in real estate and growth in
employment figures.
This
currency war has caused some spin off activity in driving gold and silver down
in price as well. As well the US-Iran oil pressures will bring down the price
of oil to $80-$85 a barrel within the next few months putting further pressure
on the Canadian economy. As the Canadian economy is largely resource-based;
when fossil fuels, energy and commodity prices fall, we are adversely affected.
Yet lower oil prices provide stability in Third World countries and increase
the quality of living while decreasing unrest. It is felt among many nations
that the need for stabilization, regulation and legislation on pricing, on
quality of life goods, such as oil and gas, wheat, rice and other staples will
help control price imbalances and control Third World unrest.
Projection Summary
Stock Market - I am
bullish on North American stock markets as there is currently lots of liquidity
and room for blue-chip share price growth.
Currencies - In
relation to the US dollar, I project the following: 1.32 Euro, GBP 1.55, Yen
105, AUS $0.86, NZ $0.80, CDN $0.90.
Real Estate
-
Canadian real estate prices will stabilize and experience steady appreciation
over the next 2 years.
-
US real estate market will have steady growth in the next 4 - 5 years.
-
Middle East has already started seeing growth and will continue double-digit
growth until the 2020 Expo in Dubai.
Boilerplate
Mr.
Mian is the CEO of LJM Developments, a real-estate development company based in
Burlington, Canada. Mr. Mian is a Chartered Accountant and a member of the
Fellowship of Chartered Accountants. He completed Executive training at
Massachusetts Institute of Technology and the University of Texas in Project
Management. Mr. Mian brings 20 years of experience in financial services and
real-estate investment.
Legal Disclaimer
The
opinions stated in this blog are those solely of Mr. Liaquat Mian, and do not
represent financial or investment advice, and may not represent L JM
developments. Individuals must seek independent qualified financial advice from
a licensed financial services provider before making any investments. Opinions
and forward looking statements in this blog should not be used for making
financial decisions or investments. Investors must be aware of the risks
involved in making investments and must seek professional advice. This blog is
purely an opinion blog by Liaquat Mian.
