|By Euan Wilson | Excerpted from the May 2009 Socionomist
Originally published under the title, “Sky High? Not in Saudi Arabia or Dubai: Skyscrapers”
[Ed: In this brief article, socionomist Euan Wilson offers powerful evidence of the efficacy of the so-called Skyscraper Index, which states that developers tend to announce massive construction projects at positive social mood peaks and delay or cancel these same projects during the subsequent negative mood phase.
Here is an excerpt of Wilson’s May 2009 article.]
The advance in the stock market from 2002 to 2007 brought fresh announcements of big construction projects around the world. But since the massive bear market resumed in 2007, global social mood has undergone the biggest swing from positive to negative in generations, and those same projects are now experiencing massive cutbacks, delays, controversy and outright cancellation. Ventures in Saudi Arabia and Dubai provide an excellent case study.
The developers of Saudi Arabia’s Mile High Tower have put their project on hold indefinitely. The December 2008 issue of The Elliott Wave Financial Forecast predicted that the Mile High would never get beyond the blueprint phase.
Mile High’s proposed rival, the Nakheel Tower of Dubai, also appears unlikely to get off the ground. In January, its government-backed construction firm announced the project’s shelving for at least one year. While Nakheel assures the press that the project will restart, it offers no reason for the delay, and we doubt the tower will ever see completion. That the company still positions the tower as a future possibility fits our characterization of a bear market as a Slope of Hope. It also confirms that full capitulation to the bearish mood trend still lies ahead…
As you read Wilson’s article, bear in mind that it first published in 2009 and that positive mood has surged ever since.
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