China to build aircraft carrier-sized ‘science island’

China’s massive maritime science infrastructure – an aircraft carrier-sized floating artificial island – has officially entered its engineering construction phase. On October 18, Shanghai Jiao Tong University (SJTU), the facility’s lead developer, signed a construction contract worth over 2.7 billion yuan (US$405 million) with a shipbuilder under China State Shipbuilding Corporation, according to media reports.

The semi-submersible twin-hull platform is the world’s first mobile, self-sustaining artificial island and is expected to be fully completed and delivered by June 2030, news outlet Shanghai Observer reported on October 21.

During deep-sea and far-ocean expeditions, traditional research vessels struggle to remain stationary in gale force winds and massive waves for extended periods. In such violently pitching environments, on-board precision optical instruments and analytical balances cannot function properly.

Conversely, while fixed offshore platforms are massive and highly resistant to wind and waves, they lack self-propulsion and cannot be relocated to suit changing research needs.

The ultra large floating research platform therefore fills a unique need, and what makes it revolutionary is its combination of mobility and permanence.

Unlike fixed research stations or conventional vessels constrained by fuel and supplies, the floating island can cruise at 11 knots, or about 20 km/h (12.4mph), while supporting more than 200 researchers.

Officially named the Deep-Sea All-Weather Resident Floating Research Facility and designated as a major national scientific infrastructure project in China’s 14th five-year plan, the facility – also dubbed a “far-sea floating mobile island” – is the culmination of a decade of research and planning.

The structure measures 138 meters (453 feet) long and 85 meters wide, with its main deck sitting 45 meters above water – roughly the height of a 15-storey building.

This means that, even in extreme sea conditions churning up 20-metre waves, the swells would be unable to breach and flood the core laboratory zones and living quarters on the main deck.

The platform’s maximum displacement is about 74,000 tons, surpassing the vast majority of conventional destroyers and research vessels worldwide and approaching the scale of a large aircraft carrier. China’s newest aircraft carrier, the Fujian, has a displacement of more than 80,000 tons.

Its twin-hull design allows it to operate in sea state 7, namely “high” seas with six to nine-meter waves. And it can survive typhoons as intense as up to Force 17 on the Extended Beaufort Scale.

Notably, while it is officially a civilian research platform, engineers behind the project have proposed a nuclear-blast-proof design.

To support prolonged, high-intensity deep-sea research, the floating island features comprehensive architecture comprising a main platform system, a shipborne laboratory system and a shore-based support network.

The shipborne component features six laboratories dedicated to researching core fields such as heavy marine equipment and systems technology, marine disaster meteorological observation and the long-term observation of marine ecosystems.

According to China’s state news agency Xinhua in May, Zhou Meng, the project’s chief scientist and dean of SJTU’s School of Oceanography, said the facility would excel in scenarios such as sea trials for high-end equipment, close-range typhoon detection and marine scientific observation.

The mega facility would also be open to, and shared with, global research institutions and enterprises, Zhou added.

 

AI Bubble: Investors Must Prepare for a Crisis Worse Than Sub-Prime

The artificial intelligence revolution may transform the global economy, but investors must not confuse technological progress with guaranteed financial returns.

The warning signs are becoming increasingly difficult to ignore. More than US$2 trillion in market value is set to disappear from the technology-heavy Nasdaq 100 in October, which has already declined over 5.8%. Investors are beginning to question whether the enormous sums being poured into artificial intelligence (AI) infrastructure can generate adequate returns within a reasonable period.

The problem extends beyond declining share prices. Big Tech companies are escalating capital expenditure, building data centres, acquiring expensive computing equipment and expanding infrastructure at an extraordinary pace. Morgan Stanley expects AI infrastructure spending to exceed US$1 trillion next year, while J.P. Morgan projects global AI capital expenditure of US$5.5 trillion by 2030.

What makes this development particularly worrying is the growing dependence on external financing. Companies that once financed expansion through substantial operating cash flows are increasingly approaching bond and equity markets. Meta's proposed US$97.5 billion fundraising and Microsoft's reported US$25 billion bond issuance illustrate the scale of financing requirements.

Investors must ask a fundamental question: what happens if anticipated AI revenues fail to justify these investments?

Data centres, specialized chips and associated infrastructure involve enormous upfront costs. Technology also evolves rapidly, creating the possibility that today's expensive assets could lose economic value before delivering expected returns.

The sub-prime mortgage crisis demonstrated how excessive optimism, leverage and interconnected financial exposures can turn a seemingly contained problem into a global financial catastrophe.

The AI investment cycle carries a different risk profile, but its potential transmission channels are equally concerning.

A sharp correction in technology valuations could spread into corporate bonds, private credit, banks and institutional investment portfolios.

There is no denying AI's transformative potential. However, technological breakthroughs do not guarantee that every company investing in them will earn attractive returns. Nor does strong revenue growth automatically justify unlimited capital expenditure.

My warning to investors is simple: do not become prisoners of the AI narrative. Examine valuations, debt exposure, cash flows and realistic returns before committing capital. The danger is not that AI will fail, but that financial markets may have priced in an exceptionally optimistic future.

If expectations collapse, the resulting financial damage could extend far beyond Silicon Valley. Investors who ignore these warning signs today may discover tomorrow that the AI bubble was considerably more dangerous than they imagined.

Arabs Must Come Out of the Illusion That the US Is There to Protect Them

When we launched our blog, Geo Politics in South Asia and MENA, in June 2012, I had a clear perception that the United States wanted to keep Arab monarchies strategically dependent on Washington. Its objectives were straightforward: secure access to inexpensive oil, ensure petroleum transactions remained predominantly dollar-denominated, and sell billions of dollars' worth of weapons to wealthy Arab states.

The US-Saudi strategic relationship laid the foundation for this arrangement. Over subsequent decades, Washington consolidated its influence over Arab oil producers while becoming their principal arms supplier.

Following the Islamic Revolution in Iran in 1979, the United States increasingly promoted the narrative that Iran posed a greater threat to Arab security than Israel. This perception helped Washington strengthen its military presence and deepen Arab dependence on American protection.

Egypt, although not part of the Arabian Peninsula, was persuaded to sign the Camp David Accords and subsequently normalize relations with Israel. During Trump's first presidency, several other Arab countries were encouraged to join the Abraham Accords.

Meanwhile, the United States established military bases across the Gulf, ostensibly to protect Arab monarchies against Iranian aggression. Recent developments, however, have exposed the limitations of this security arrangement. American bases were extensively used in military operations against Iran, yet their presence did not guarantee adequate protection against Iranian missile and drone attacks on Arab territories.

Developments surrounding the Strait of Hormuz have further strengthened the perception that Washington's regional priorities do not necessarily coincide with those of Arab oil producers. Disruption of this vital energy corridor threatens not only Iran but also the economic interests of Gulf exporters.

These developments should compel Arab leaders to reconsider decades of strategic dependence. The Iranian threat should not remain a permanent justification for Arab subservience to American interests.

The Gulf Cooperation Council (GCC) must convene an emergency summit to initiate a new regional security framework. Member states should overcome historical animosities, establish cordial relations with Iran and stop outsourcing their security to Washington.

They must also strengthen independent defence capabilities and expand strategic partnerships with China and Russia.

The time has come for Arab monarchies to recognize that American protection comes with American priorities. Regional security must be built through regional cooperation, not purchased through endless arms deals.

PSX benchmark index up 2.5%WoW

Pakistan Stock Exchange (PSX) staged a recovery during the outgoing week due to rejuvenation of diplomatic engagement to resolve the Middle East conflict, and higher than expected corporate earnings announced during the ongoing result season. The benchmark Index gained 4,034 points or 2.5%WoW to close at 166,409 on Friday, October 30, 2026. The average daily trading volume surged by 121%WoW to 1,095 million shares.

Driving the diplomatic momentum were Pakistan-proposed talks in Tehran between the Makkah Pact states and Iran, alongside reports of renewed US outreach to Iran ahead of the US midterm elections.

Meanwhile, supply concerns fueled by Houthi attacks on Saudi Arabia and tanker incidents near the Strait of Hormuz kept Brent crude elevated, up 0.7%WoW at US$117.1/ bbl as of Friday.

On the macroeconomic front, State Bank of Pakistan (SBP) raised the policy rate by 50bps to 12.0% (its first hike since April), while raising its FY27 remittances forecast to US$45 billion from US$44 billion and foreign exchange reserves forecast to US$23 billion end December 2026 and US$25 billion for end June 2027.

The SBP raised PKR1.8 trillion in the latest T-bills auction against a target of PKR1.7 trillion, with cut-off yields rising by 25-61bps across tenors.

Foreign exchange reserves held by SBP rose to US$21.5 billion as of October 23, 2026.

Other major news flow during the week included: 1) The US Federal Reserve holds interest rates steady, 2) Pakistan considers raising US$500 million via a second Panda bond in 2HFY27 without ADB/ AIIB guarantees, 3) Pakistan secures third LNG cargo from Qatar in October, 4) SIFC lines up US$40 billion investment pipeline across 38 projects, including a proposed US$6 billion refinery program, and 5) Pakistan seeks new US$600 million World Bank loan tied to structural and trade reforms.

Top performing sectors were Leasing, Transport, and Tobacco, while the lagged included Paper & Board, Apparel, and Jute.

Major net buyers were Other Organizations (US$50.9 million) and Individuals (US$7.3 million), major net sellers were Foreigners (US$60.6 million) and Insurance Companies (US$4.0 million).

Top performing scrips were: GHNI, CNERGY, TGL, KOHC, and COLG, while laggards included: PKGS, INIL, LCI, AGP, and IMAGE.

AKD Securities expects the market to improve on the back of strengthening economic indicators. Any positive development on Middle East conflict could moderate international oil prices and serve as a key trigger for market as it paves the way for monetary easing.

The market continues to trade at attractive valuations, with forward P/E of 6.0x.

Top picks of the brokerage house include: OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP and SYS.

Trump Must Not Make the Mistake of Attacking Iran Again

The US-Israel war on Iran, which began on February 28, 2026, should have taught President Donald Trump an important lesson: military superiority does not automatically translate into strategic victory. Yet reports suggest that the administration is considering another assault on Iran after the November 3 midterm elections. Trump must not repeat the mistake of launching another military offensive.

The financial cost alone should prompt serious reconsideration. According to the latest Pentagon estimate, the war has cost American taxpayers approximately US$47.1 billion through October 16. This figure does not include the full cost of repairing damaged US military installations in the region. After spending this staggering amount, Washington has failed to bring Iran to its knees. Instead, the conflict has raised questions about American military deterrence and tarnished the country's international image.

Senator Chris Murphy, after attending a classified briefing on possible renewed military operations, described the administration's proposed plan as "insane". He warned that another assault could trigger devastating escalation, prolong the conflict and undermine America's commitment to the rule of law. His concerns deserve attention, particularly given reports that Iranian energy infrastructure, military installations and nuclear facilities feature among potential targets.

Trump must understand that the longer this confrontation continues, the greater the damage to American credibility. Further attacks may not weaken Iran's resolve; they could reinforce its determination to resist external pressure. Indeed, imprudent American policies risk turning Iran into an even bigger strategic specter, while Arab allies increasingly question the security guarantees offered by Washington.

The Gulf states have already experienced the consequences of being drawn into a confrontation involving their territory and security interests. Their growing uncertainty should not be mistaken for unconditional support for another American military adventure.

Meanwhile, China and Russia are gradually expanding their diplomatic and strategic engagement in the region. Every prolonged American miscalculation creates additional space for these powers to challenge Washington's traditional influence. The erosion of US hegemony in the Middle East may therefore become an unintended consequence of its own policies.

The reported diplomatic outreach by Vice President JD Vance offers an opportunity to reconsider the course of action. Washington should pursue negotiations rather than another bombing campaign. Iran's Foreign Minister Abbas Araghchi has also reiterated Tehran's willingness to pursue a peaceful resolution, while insisting on its right to defend itself.

Trump should recognize that ending a war without achieving every military objective is not necessarily defeat. Launching another military offensive without a credible exit strategy could prove far costlier. It may further weaken American credibility, undermine the confidence of Arab allies and hasten the end of US hegemony in the Middle East.

Stephen Schwarzman: The King of Capital and a Unique Diplomat

At 79, Stephen A. Schwarzman remains one of the most influential personalities in global finance. Widely known as the "King of Capital," he is the co-founder, chairman and chief executive of Blackstone, one of the world's largest alternative investment management firms. His journey from a modest family business in Pennsylvania to the commanding heights of international finance is a remarkable story of ambition, calculated risk-taking and persistence.

Born on February 14, 1947, in Philadelphia, Schwarzman grew up in a family that operated a dry-goods store. His early exposure to business came from working alongside his father. At just 14, he demonstrated an entrepreneurial instinct by starting a lawn-mowing business and employing his younger twin brothers.

He graduated from Yale University in 1969 and subsequently earned an MBA from Harvard Business School in 1972. His professional career began on Wall Street, where he joined Lehman Brothers and quickly established himself in mergers and acquisitions. By the age of 31, he had become a managing director.

In 1985, Schwarzman joined hands with Peter G. Peterson, a former chairman of Lehman Brothers, to establish Blackstone. What started as a two-person investment advisory business gradually evolved into a global financial powerhouse. Today, Blackstone employs approximately 5,000 people and manages more than US$1.3 trillion in assets. Its investments span private equity, real estate, infrastructure, credit, life sciences and other alternative asset classes. It has also emerged as a major investor in data centres, critical infrastructure supporting the global artificial intelligence revolution.

Interestingly, Schwarzman acknowledges that Japan played a crucial role in Blackstone's early survival and expansion. Japanese investors provided important capital when the firm was struggling to establish itself. He also developed enduring relationships with Japanese business leaders, including Yasuo Kanzaki of Nikko Securities. His admiration for former Japanese Prime Minister Shinzo Abe reflects his interest in economic reform and political leadership.

Beyond business, Schwarzman has cultivated relationships with successive US presidents and international political leaders. He describes himself as someone willing to serve his country by communicating American economic and trade priorities to foreign governments. He has particularly sought to facilitate understanding between Washington and Beijing, including during Donald Trump's presidency.

His engagement with China also extends to education. In 2013, he established the Schwarzman Scholars program at Tsinghua University in Beijing, modelled on the Rhodes Scholarship, to develop future global leaders with a deeper understanding of China. His philanthropic contributions have also supported Yale University, the New York Public Library and other educational and cultural institutions.

In 2019, Schwarzman published What It Takes: Lessons in the Pursuit of Excellence, sharing experiences from his business career, failures and personal development.

Two principles summarize his philosophy: "A better tomorrow" and "learn every day." His life illustrates how entrepreneurial ambition, strategic relationships and continuous learning can transform a modest beginning into an institution of global significance.

Ultimately, Schwarzman's influence extends well beyond Wall Street. Through Blackstone's investment decisions, philanthropic initiatives and relationships with political leaders, he occupies a distinctive position at the intersection of global finance, business and diplomacy.

Pakistan’s Closed Borders: The Enormous Economic Cost

Pakistan shares borders with four countries: India, Afghanistan, Iran and China. Recent media reports have highlighted restrictions on cross-border movement, with China remaining an important exception. While security considerations may justify temporary closures, their economic consequences deserve much greater scrutiny.

The immediate impact is visible. Traders on both sides face delayed deliveries, stranded consignments and mounting financial losses. Perishable commodities are particularly vulnerable, as delays can destroy their value. Disrupted supplies also affect domestic prices, while shortages of essential goods impose additional costs on consumers. Transporters, logistics companies and workers dependent on cross-border commerce suffer as commercial activity comes to a standstill.

Yet an important question remains largely unaddressed: what is the total economic cost of closing Pakistan’s borders, and how much revenue does the government forgo?

Transit-related charges, customs services, port handling, warehousing and transportation generate economic activity and, where applicable, public revenue. Prolonged restrictions can disrupt these revenue streams while affecting employment, foreign exchange earnings and regional connectivity. The government should quantify these losses rather than treat border closures merely as administrative or security measures.

Afghanistan presents a distinct challenge because it is landlocked and depends on neighbouring countries for access to international markets. International transit arrangements recognize the importance of facilitating such movement, although the precise obligations and permissible restrictions depend on applicable agreements and laws. Pakistan should clarify how its border policy reconciles legitimate security requirements with its transit commitments.

Security is frequently cited to justify restrictions along the Pakistan-Afghanistan border. However, the effectiveness of prolonged closures in preventing cross-border terrorism deserves objective evaluation. If militant networks can exploit porous stretches of the frontier, restricting legitimate commerce may impose substantial economic costs without necessarily resolving the underlying security problem.

The Pakistan-Iran border raises another question. With tensions surrounding the Strait of Hormuz disrupting regional trade, Pakistan’s land routes have acquired additional strategic significance. Whether restrictions were intended to impede transit goods destined for Iran remains unverified. Nevertheless, the circumstances warrant transparency about the rationale, economic consequences and intended outcomes of such measures.

Pakistan needs a coherent border-management policy that combines effective security with the facilitation of legitimate trade. The government should publish the reasons for closures, their duration, estimated fiscal and commercial losses, and the criteria for reopening crossings.

National security is indispensable, but so is economic resilience. Before closing vital trade routes for extended periods, policymakers must assess both the security benefits and the economic costs. Without such an assessment, Pakistan risks sacrificing trade, revenue and regional connectivity without establishing whether the restrictions deliver commensurate benefits.