I arrived on an Emirates airline flight from London to the city of Dubai in the United Arab Emirates (UAE), on September 22, 2005 on what was intended to be just a brief stopover of 2 days on my way to Bangkok, and then on to China. The trip got somewhat extended however, as I will expand on below.
The UAE is a fascinating, incredibly small (in terms of population at 2.6 million) country which only officially came into existence in 1971 when what was called the Trucial States or Trucial Oman, in reference of a nineteenth-century truce between the British and some Arab Sheikhs, joined together to form one nation.
More importantly, from an economic perpective, petroleum was discovered for the first time in this area in 1959, when deposits were located beneath the coastal waters of Abu Dhabi, the largest of the sheikhdoms. Since the discovery of oil in the UAE more than 40 years ago, the UAE has undergone a profound transformation from an impoverished region of small desert principalities to a modern state with a high standard of living and is now the richest country in the muslim world.
The city of Dubai has grown from a pearl-fishing town in the 1950's into a dynamic trading city, boasting an indoor ski resort, giant manmade residential islands and, soon, the world's tallest building.
In recent years the UAE stock market had performed very well, but as of 2006, the UAE markets have followed nearly all the Middle Eastern bourses in an all out collapse. The UAE Index fell from a peak of 6,750 to its recent level of 3,750 in just a matter of months.
The story of the UAE stock market is also the story of the UAE's economic growth as both have been driven by two things: oil prices and global monetary inflation driven by the massive credit bubble.
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