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from Breakingviews:

Builder’s shaky foundations dent UAE’s credibility

By Una Galani

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

The shaky foundations of the most prominent builder in the United Arab Emirates have dented the country’s credibility. Shares in Dubai-based Arabtec, which helped erect the world’s tallest tower in the emirate, have more than halved since May 15, wiping almost $4.9 billion off its market value. The debacle is a warning to investors attracted by the UAE’s new emerging market status.

Graphic: Arabtec's rise and fall

Arabtec’s slide began last month amid rumours of a rift between its two largest shareholders. Chief executive Hasan Ismaik mysteriously trebled his stake in the contractor to 28.9 percent this year before resigning as chief executive on June 18. Fears that he will sell out have left a massive overhang on the stock. The slide accelerated earlier this month when Aabar, an investment fund of the Abu Dhabi government, cut its stake from 21.6 percent to 18.9 percent.

Arabtec has not provided any serious explanation for what is happening. The company has said that it’s implementing a “limited restructuring” but it hasn’t quantified that in any way. A cadre of senior executives has also left the company raising questions marks over the expansionist strategy Arabtec has pursued in the past two years, taking it into new sectors such as heavy industry and oil and gas.

from Breakingviews:

Blunt instrument is needed for global house bubble

By Ian Campbell

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

House price bubbles thrust economies forward and crush them when they burst. The International Monetary Fund has now raised the prospect of a global housing bubble that could potentially destabilise the world economy. The risk is credible, but the IMF is sadly too coy about the root cause of the problem – ultra-loose U.S. monetary policy.

from Hugo Dixon:

Six solutions for the UK housing crisis

By Hugo Dixon

Hugo Dixon is Editor-at-Large, Reuters News. The opinions expressed are his own.

Britain’s main economic problem is that the supply of homes isn’t rising nearly as fast as demand. This doesn’t just create the risk of a new housing bubble; young people are finding it increasingly hard to find places to live, especially in crowded London and southeast England. So I make no apologies for returning to the topic after only three weeks.

from Breakingviews:

Mud sticks for China’s warring heavy industries

By John Foley

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

In China, the stodgy world of construction equipment has become a hotbed of fraud accusations, espionage and attempted kidnapping. It shows what happens when fierce competition comes without clear rules.

from Photographers' Blog:

The women of China’s workforce

Shanghai, China

By Aly Song

Sometimes a good story comes naturally.

As a follow-up to China’s mighty urbanization policy, I gained access to a huge construction site within a new residential development zone some 30 kilometers (18 miles) from Shanghai’s city center. My original plan was to photograph the lives of Chinese migrant workers at night. I imagined that they would probably go to some colorful places and do some interesting things after nightfall. But I was completely wrong – every day they went straight back to their dormitories, where they would eat, chat, play some poker, probably watch an outdoor movie once a month, and that’s it!

I was about to give up when I noticed that there were many women at the dormitories. I got curious so I asked other workers: “Your boss has no problem having wives living here too?” One of them replied: “They also work here at the construction site.” To be honest, I was very surprised because in my mind, construction work has always been a job for men.

from Breakingviews:

Feature: Nest-flyers are poised to supercharge U.S. economy

By Dan Indiviglio
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Flying the nest should pay big economic dividends in the United States. As jobs return, the expectation is that droves of 20-somethings will ditch their roommates or vacate Hotel Mom & Dad to get their own places. They may rent more than they buy, but the effects still look profound. Between home building and related activity like furniture sales, Breakingviews reckons new household formation could account for up to a whopping 30 percent of GDP growth through 2019.

Residential construction in large part powered U.S. output during the boom last decade. Ground was broken on the building of over 2 million new homes in 2005. According to the Census Bureau, between 2009 and 2011, so-called housing starts plummeted to an average of just 580,000.

from MacroScope:

U.S. housing outlook still promising despite rise in rates: Citigroup economist

U.S. housing sector fundamentals remain favorable despite the recent rise in interest rates and the sharp drop in housing starts in June, says Citigroup economist Peter D'Antonio.

Housing starts fell 9.9 percent to a ten-month low of 836,000 units in June.

But the decline was almost all in the volatile multi-family sector, D'Antonio notes. Single-family starts remained in a range just below 600,000, while multi-family fell 26 percent to 245,000.

from Global Investing:

Emerging markets’ export problem

Taiwan's forecast-beating export data today came as a pleasant surprise amid the general emerging markets economic gloom.  In a raft of developing countries, from South Korea to Brazil, from Malaysia to the Czech Republic, export data has disappointed. HSBC's monthly PMI index showed this month that recovery remains subdued.

With Europe still in the doldrums, this is not totally unsurprising. But economists are growing increasingly concerned because the lack of export growth coindides with a nascent U.S. recovery. Clearly EM is failing to ride the US coattails.

from MacroScope:

U.S. housing recovery running out of steam? Not so fast, says Coldwell Banker CEO Huskey

U.S.home resales unexpectedly fell in December, but the drop was not large enough to suggest the recovery in the housing sector is running out of steam.

The National Association of Realtors said on Tuesday that existing home sales dropped 1.0 percent last month to a seasonally adjusted annual rate of 4.94 million units.

from Breakingviews:

Caterpillar’s Chinese lesson: dig below top line

By John Foley

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

As a company that makes excavators, Caterpillar should know the importance of digging. The U.S. machine maker has taken a $580 million write-down on a Chinese mining equipment producer it bought less than a year ago, erasing three quarters of that deal’s value. The accounting fraud that Caterpillar claims to have found at ERA Mining may not have been visible at the time of the purchase. But the low quality of its target’s rapid growth was.

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