I could not resist coming back to the forum after what the world has just witnessed: a massacre on the world bourses! Billions and billions of dollars of people's savings have just been wiped out!
This is all monumental and it is bound to have an effect on world real estate prices. My banker friends are advising to watch your bank account savings as well as investments and be ready. But the dollar is also bleeding. China is leading the contagion!
Pakistan is not too well connected to the world economies due to our dwindling exports but nevertheless this is so massive that it is bound to have some effect here as well.
Paki 1…Sir need your analysis property sector.What will be the repercussions of such massive down turn of stock market?
Good to see you Paki-1.
Welcome back Paki-1
Dear Paki!
What is now suggested way of keeping one's savings, in dollars, in property, in gold or something else ???
Welcome back paki-1 
Welcome back Paki 1
KSE Bounced back today as , our economy is not export based... Nonetheless investors will be careful in the stocks and may be the money will flow back in the property market..
Ali,
If you have dollars, keep them.
The next best investment would be to invest in Oil as it is going to hit bottom very soon and then the upturn of oil industry will come within a year ... You can easily triple your investment in one year.
Property investment in Pakistan is not a good option currently.
It seems money will flow more in property market.
Tripling in one year by investing in dollar???
today dollar=104 rupees, so after one it should be= 312 rupees??
oil at 40 dollars a barell must= 120 plus?
so is it possible ,while international stocks have slummed, real estate stagnant, gold decreasing .......WHO CAN EXPLAIN THIS MESS UP HERE??
ye sara fasad dollar chahpney ka natija haey , baghair kisi haqeeqat key dollar amrica chahp raha haey oor ye dunya issay bhugtegi.
Truth Seeker ...
Read my post again and work on your reading comprehension skills ...
Oil will hit bottom somewhere close to 30-32$ ....and it cant stay there forever... And will cross 80$ mark easily.
I never said investing in dollar will triple your investment.
P.S. I am in oil industry and know what i am talking about
Sheikh sb what are the best options of investing in Oil for people based in Pakistan?
@Sheikh. Oil game is very complex. Are you sure oil will rebound?
I read a few articles in New York Times etc and according to them it will take a lot of time to rebound.
At 30$ per barrel, all deep water projects and explorations will be at halt. Production from existing wells will drop eventually amd there is no way demand can be met after certain time (can be a year max).
YC,
There are broker companies in Islamabad who can invest in commodities for you. All trading is done in USD.
A lot of people made good money in 2008 oil downturn. That down turn was short one which lasted for 1 year only. This one is expected to last till end of 2016.
For oil to rebound anytime soon, you need a big war in the Persian Gulf. But the West has signed peace with Iran so that means more oil in the market. Iran has stockpiles of unsold oil with which it will glut the market.
So who will fight to jack up the per barrel price? If the Gulf economies go under, overseas Pakistani workers might head back. That will push up real estate in the short term. But there will be loss of sustainable overseas Pakistanis investment in property.
Sheikh saab reading comprehension ko chorain..
Aap ki oil prices uptrend kay hawaley saey predictions itni solid ground based naheen hain..
max last year 1 barrel =103 dollar ..i.e july /aug 2014
laikin geopolitical scenarios change hochukay hain , irani oil 3-5 million barrel/day market may aney say demand itni jaldi upshoot naheen karegi.
china ki economy production lines oor oil consumption agar shoot na karay to prices next one year tak 40-50 key beech main hi rahaingee..
Here is my analysis of what is going on based on what I deal with every day at work.
The very basis for any investment is to buy low and sell high. We are now presented with a golden opportunity to purchase oil at prices that are at par with the 2008 crisis. This price will be subject to the following fluctuations.
Demand side: There is very healthy demand for oil out there. The middle class of the developing world is increasing and with this comes an increased appetite for consumption. If oil stays this low in the next 12 months you will see a massive shift from suzuki altos and tatas to cars with bigger engine sizes. Multiply this across all of Asia. You see the ford f-150 becoming the car of choice in America this year again because of low oil.
Currently total oil consumption is 95 million barrels a day. This is 50 % developed (OECD) and 50% non-developed countries.
Supply side: Total oil supply is 93 million barrels a day. So the surplus is 2 million a day. That is it. Does this make any fundamental sense that oil is almost 40% of what it was a year ago because of a 2 million barrel surplus. It makes no sense.
What has happened is that the shale oil producers have increased their oil production by a million barrels a year for the past 5 years. This is where they have caused the surplus to a market that was in equilibrium. This has scared the gulf countries because they see their market share dwindling. What they have done is opened the spigots and are pumping oil at record levels to maintain the market share. This has caused a vicious cycle because now what is happening is that to balance their budget they have to sell more oil since prices are low. Remember revenue = Price X quantity.
The lead OPEC states also want to weaken the economies of Iran and Russia. They don't mind that the economies of venezuela and other weaker countries will be taken through the grinder.
Future state: Supply will increase by another million barrels of oil a day in the next 6 months. Iran is increasing, Iraq has fixed their production woes and the Canadian oil sands are online now too. The only reduction in supply might be from the shale producers. They have managed to dodge the bullet of low prices because their output was hedged till the end of this year at over 80 dollars a barrel. When they go to renew their hedges cap in hand they will realize they are only able to get 50 bucks or so. This is when many of them will go bankrupt or freeze production for another day.
If the world economy does slow down further there might be a further slow down in demand.
Trade: I am guess most of us here don't have access to tanker where we can buy a hundred thousand of Saudi sweet and store off the coast of Makran. The few options we are presented with are
a) A portfolio of stocks of oil companies including the majors (exon), minors (EOG), service providers (Haliburton) etc.
b) ETFs like XLE if you consider them halal
c) ETFs like UWTI if you consider them halal if you buy at the dips and sell at the highs. You have to actively shift your portfolio around.
d) If you are scared of the world economy going bust wait for gold to hit 1000 an ounce. As soon as it hits that buy gold and sit on it for 5 years.
I can present the link between the USD Oil and safe haven commodities like gold and silver, but that is for another day.
Khan007 I agree with you. I think it is smart to invest in oil for the long term if you can. Investing in oil&gas companies shares is one way of doing it. What are the other options?