Waterloo

Waterloo                                                                                            22 January 2021

JLL has come out and forecast that Dubai property prices are set to fall again in 2021 by between 5% to 8%, as excess supply remains the sector’s bugbear. According to Dana Salbak, head of research ““Dubai does have oversupply in residential units … and that is likely to put further downward pressure on the market.” The firm notes that the Dubai market was under pressure last year, driven by Covid-19, with prices dipping 8% on the year, whilst forecasting a further 53k units to hit the market  in 2021 – increasing Dubai’s property portfolio by 8.9% to 648k. (Official figures for 2020 are not yet available but at the end of 2019, the emirate boasted 663k units, of which 543k were apartments and 120k were villas). Over the past three years, Dubai’s population has grown 7.3% to 3.192 million, 5.1% to 3.356 million and 1.6% to 3.411 million at the end of December 2020). There is no doubt that there has been a dearth of new releases over the past eighteen months, so the supply line is beginning to slow quite appreciably and that will start to see a move to some sort of equilibrium. One of the main drivers behind the bearish property market has been the low energy prices but with oil breaking out towards the US$ 60 mark, and some looking at a US$ 75 a barrel, there is no doubt that a higher oil price is good for the emirate’s economy and will prove a boon for property prices. Furthermore, a low US$ is another factor that bodes well for Dubai and then add on the Expo factor and the recent regulatory changes taking effect, there is only one direction for the property market to go – and that is north.

Whereas JLL forecast an additional 53k units in 2021, Core reckon a lower number of 39k, driven by significantly lower buying costs and a raft of government-led demand drivers, although developers will adjust supply during the year, in line with consumer demand. The consultancy mentioned that 36k units were added to the Dubai property portfolio last year, indicating that the secondary market rose 7%. It noted that there had been a marked slowdown in the off-plan market, contracting by 32% on the year, and relative resilience in the secondary market, with record transaction volumes seen, largely led by end-user buyers. There is no doubt that interested buyers should focus on villas, in well-developed areas such as The Meadows, which will inevitably see prices move north in 2021. In contrast there is still too much softness for apartments and off-plan villas and apartments which will only see prices plateau towards the end of the year. In 2020, there were sharp declines in apartment prices including 15% lower in Discovery Gardens and Dubailand, with lower 4% falls noted in Downtown and Palm Jumeriah. Since the last property price peak in 2014, villa and apartment prices have tanked 31% and 35%.  With selling prices almost equating to actual cost prices, historically low interest rates and attractivebank packages, this year will turn out to be the best economic opportunity for buyers to purchase their own property. Since the last property peak in 2014, villa and apartment prices have tanked 31% and 35%.

Core also commented on the state of the commercial property sector and noted that there are some landlords offering twelve months’ free rent for clients, signing up for five years., as well as helping with fitout costs. There seems to be up to 50% vacancy rates in some of Dubai’s newer developments. Covid-19 has been particularly unkind to Dubai’s older commercial buildings, with Deira, Bur Dubai and Garhoud witnessing year on year rental falls of up to 25%., with tenants either closing their offices or moving to newer locations in locations such as JLT and SZR. Although JLT and Business Bay are in most demand, they also have seen 2020 rentals declines of up to 20%; average rents in both locations start at US$ 17 per sq ft. The reality of the situation is that this sector will continue to struggle this year as its starts 2021, with a 24% vacancy rate, or 25.2 million sq ft out of a total 104.9 million sq ft office stock. There are bargains to be had for renters this year.

A Dubai-based renewable energy firm is investigating deploying wind capacity to support companies that are cement quarrying in Abu Dhabi and West Africa. Enerwhere, specialising in portable, easy-to-install solar hybrid systems for off-grid projects, believes renewables can be used to help mining and quarrying industries in the UAE and West Africa to reduce their carbon footprint. The company has installed floating solar photovoltaic panel systems off Zaya Nurai island in Abu Dhabi and is already using solar installations to power cement recycling processes at Al Dhafrah. Enerwhere also plans to raise “a double-digit million dollar figure” this year to meet capital deployment for existing projects in solar and battery technology, as well as to expand one of its software systems internationally.

One of the last actions of the departing President Trump was to exempt he UAE from a 10% tariff imposed on metals imports, as from 03 February.  The decision came after the US and the UAE agreed to a quota limiting the volume of aluminium imports and follows the strengthening of bilateral national security and economic ties. The new quota will see Dubai’s aluminium exports return to almost the same level they were before the tariff was imposed in March 2018. The UAE, which is the third-largest aluminium exporter to the US, joined Argentina, Australia, Canada and Mexico who were also exempted. Donald Trump also noted that the measure “will provide effective, long-term alternative means to address the contribution of the United Arab Emirates to the threatened impairment to our national security by restraining aluminium article exports from the United Arab Emirates to the United States, limiting export surges by the United Arab Emirates, and discouraging excess aluminium capacity and excess aluminium production”.

The UAE became the first country in the world to manufacture aluminium using solar power. An agreement between Dubai Electricity and Water Authority and Emirates Global Aluminium will see DEWA supplying EGA’s smelter with solar power from the Mohammed bin Rashid Al Maktoum Solar Park. It is expected in its first year, 560 megawatt hours of solar power will be supplied, enough to make 40k tonnes of aluminium in the first year, with the potential for significant expansion. The solar aluminium is branded under the product name, CelestiAL. This will go some way to make Dubai the most sustainable city in the world and become a global leader in the development and application of scientific and technological advances in the energy sector.

Dubai Maritime City (DMC) reported that, after eleven months of work, 80% of its US$ 38 million road and infrastructure works in Phase 1 of its commercial district are nearing completion. When finished, the site will become a major hub for maritime services and enhance Dubai’s position as a leading global maritime centre. DP World’s purpose-built maritime centre is an integrated, specialised development and will add significant value to the maritime industry and support the expansion of the business community in the UAE.

With online business and e-commerce gaining momentum, the DED Trader licence recorded a 132% growth in numbers to 5.8k last year. This particular permit was launched to licence freelancers at their place of residence in Dubai and enable start-ups to conduct business activities online and across social networking accounts. Interestingly since its 2017start-up, a total of almost 10k licences have been issued, 57% of which were for women. The top three categories were for ‘Marketing Services Via Social Media’, ‘Perfumes & Cosmetics Trading; Portal’ and ‘Sweets & Candies Preparing’. The total number of DED Trader licence groups now numbers 86. The DED licence is issued electronically, with the whole process, including payment, being carried out on-line.

One of Dubai’s best export earners, dnata has invested US$ 40 million in a new, state-of-the art 150k sq ft cargo complex, dnata City North, at Manchester Airport. The company, one of the largest global air services providers, has expanded its operations, that now include 125k sq ft of warehouse space, so that it can process over 150k tonnes of cargo annually. Over the past decade, dnata has made significant investments in the UK to enhance its position as one of the leading players in the country. It currently operates fourteen facilities at six airports and is able to handle more than 850k tonnes of cargo annually across the country. On the global stage, it serves 300 airlines, at 126 airports, in 19 countries, with ground handling, cargo and catering services.

Last year, Dubai Customs posted there was a 30.2% increase in the number of customs declarations to 13.8 million, with 97% of all transactions not requiring human intervention, thanks to their Smart Workspace Platform. Over the same period, there was a 37.4% hike in business registration requests to 250k. Other statistics show that there were 875k refund requests applications and certificates, 475k report and certificate requests and 334k inspection booking requests. These figures are an indicator how well Dubai has weathered the economic environment during Covid-19. The success of recent innovative measures is reflected in the fact that only 0.6% (102k) of the total transactions were carried via a personal visit, with the remainder (15.9 million) split between smart channels (62.8%) and electronic channels (37.5%).

According to the Central Bank, in the seven months to November, the total assets of Dubai and Abu Dhabi banks rose 1.7% to US$ 803 billion of the UAE; Dubai banks’ total came in at US$ 413 billion. These two emirates accounted for 92% of the total bank assets in the country, with the other five emirates making up the balance.. Year on year to September, there had been a 7.6% jump, to US$ 886 billion, in the total assets of all banks operating across the UAE. The total loans and advances given by Dubai banks were US$ 236 billion and deposits taken at US$ 226 billion. The combined value of the capital and reserves of Abu Dhabi and Dubai banks totalled US$ 100 billion, which constitutes about 92% of the total capital and reserves of the UAE banking system. In their most recent report, Fitch considered the general business and operating environment for banks in the UAE to remain as challenging in 2021 as it was in 2020, and that defaults are set to rise as government support measures wane. It also expects the asset quality of UAE banks to deteriorate this year, as payment holidays expire and not all borrowers being  able to weather the downturn with real estate, contracting, retail, aviation and hospitality being the most affected sectors.

At the beginning of the week, Al Mal Capital REIT started trading on the DFM, the culmination of collaboration between the bourse, the Securities and Commodities Authority and Dubai Land Department, that expands and also diversifies share investments open to investors. The listing follows the successful November floating of the new fund by Al Mal Capital, raising US$ 95 million. These funds will be invested by the company in a Sharia-compliant diversified portfolio – including healthcare, education and industrial – of companies’ income generating properties, with a target 7.0% annual return. Dubai Investments owns 66.61% of the shareholding. It is expected that this new class to the market will encourage other Reits, (Real Estate Investment Trusts), to join the local stock market which in turn will also have a positive knock-on impact on the Dubai property sector. The DFM has signed an MoU, with the DLD, as a general framework for their collaboration as well as drafting attractive rules for creation, listing and trading of Reits in collaboration with the SCA. One of the aims is to facilitate accessibility for future Reits to trade on the DFM by making the whole process streamlined to meet the needs of such entities. The other benefit is that since real estate tends to be capital intensive, a listing on the share market is a relatively cheap way of funding.

UAE’s  two biggest telecoms companies – Etisalat and du – are to increase the ownership limit for non-UAE nationals from 20% to 49% of its capital; the move still requires rubber stamping by the regulatory authorities and shareholders. However, local and international telecommunication companies are not permitted to hold shares in du and no individual or legal entities are allowed to own more than 5%in the company’s capital, except those holding a current balance of more than 5%. The move is expected to see both share values move north from their current values of US$ 5.31 (Etisalat) and US$ 1.80 (du), with these prices already 14% higher on the week, since the announcement.

Emirates Central Cooling Systems Corporation posted a 3.4% hike in 2020 profits to US$ 246 million, on the back of a 3.0% rise in revenue at US$ 616 million. Empower services 1.25k buildings, with district cooling services and has a customer base of over 140k. By the end of the year, the facility’s total cooling capacity had topped 1.64 million Refrigeration Tons.

The bourse opened on Sunday 17 January and, having gained 344 points (14.6%) the previous fortnight, gained a further 33 points (1.2%) to close on 2,735 by Thursday 21 January. Emaar Properties, US$ 0.13 higher the previous fortnight, traded up again, by US$ 0.01, to close at US$ 1.10, whilst Arabtec is now in the throes of liquidation, with its last trading, late in September, at US$ 0.14. Thursday 21 January saw the market trading at 372 million shares, worth US$ 118 million, (compared to 203 million shares, at a value of US$ 56 million, on 14 January).

By Thursday, 21 January, Brent, US$ 15.12 (36.8%) higher the previous nine weeks, was up US$ 0.77 (1.3%) in this week’s trading to close on US$ 55.43. Gold, US$ 56 (2.9%) lower the previous week, gained US$ 11 (0.6%), by Thursday 21 January, to close on US$ 1,864.

With the Organisation for Economic Co-operation and Development investigating environmental destruction and alleged human rights abuses at the massive Cerrejon thermal coal mine in Colombia, there is every chance that the three leading global miners – BHP, Anglo American and Glencore – could be forced to close down the thirty-year old mine. Latin America’s largest mine has long been accused by the local community, including the Indigenous Wayuu people, of forced evictions, pollution and human rights abuses. Late last year, the United Nations showed its concern by calling on the three miners to suspend some operations at the coal mine, The OECD have received formal complaints from the Global Legal Action Network, as well as from a coalition of Colombian and international human rights and environmental groups. GLAN commented that there had been a systemic failure by the mine’s owners to respect basic human rights – and if the OECD thinks likewise, the mining giants could be forced to progressively stop mining, rehabilitate the environment and compensate surrounding communities.

HSBC is to close 16.0% of its 593 UK branches between April and September this year, as an increasing number of customers are turning to digital banking, with coronavirus lockdowns accelerating the move to online banking; no redundancies are expected, with staff moving to nearby branches. The bank commented that branch usage by customers had fallen by over 33% since 2016, and that 90% of all customer contact was over the phone, internet or smartphone.

As he has done for his club Manchester United on many occasions, Burberry hopes that Marcus Rashford will do the same for them. Having seen its sales tank almost 40% during the festive season and underlying sales fall in 9% in Q4 ,it hopes that the Rashford magic works for the luxury brand. Of late, it has had a torrid time seeing, for the third time in 2020, comparable store sales in Europe, the Middle East, India and Africa declining 37%. The usual driver continues to be the Covid-19 pandemic, closing shops and lockdowns resulting in fewer tourists visiting its European stores. Currently 15% of its outlets remain closed during the third wave – and this number will inevitably rise with further lockdowns as the new strains take effect. One note of optimism was that digital sales jumped by 50%.

The de facto head of Samsung Electronics for the past six years has been sentenced to two years and six months in a bribery case which was a retrial of an earlier one involving the country’s former President Park Geun-hye, who was also jailed for bribery and corruption. It was alleged – and accepted by the court – that Lee Jae Yong “actively provided bribes and implicitly asked the president to use her power to help his smooth succession” at the head of Samsung. In a damming accusation of the way that the conglomerate is run, the court noted that “it is very unfortunate that Samsung, the country’s top company and proud global innovator, is repeatedly involved in crimes whenever there is a change in political power.” It found Lee guilty of bribery, embezzlement and concealment of criminal proceeds, worth about US$ 8 million. The company was accused of paying US$38 million to two non-profit foundations operated by Choi Soon-sil, a friend of the disgraced jailed president in exchange for political support – alleged to include backing for a controversial Samsung merger which paved the way for Lee to become eventual head of the conglomerate.

Notwithstanding the ongoing pandemic, and its continuing drag on  global economic life, Q4 proved a bonanza for JP Morgan, with profits 42.5% higher at US$ 12.1 billion, equating to US$ 3.79 per share or, excluding one-time items, $3.07 a share – well above the analysts’ forecast of $2.62 per share; the one-time item was the New York-based bank “releasing” US$ 1.9 billion  of funds it had set aside last year to cover potential loan losses caused by the coronavirus pandemic and subsequent recession; it still has over US 30 billion in provisions to weather any future credit crisis. The largest bank by assets in the US confirmed that these stellar figures were mainly attributable to the firm’s investment banking division which saw profits jump 82.0% to US$ 5.35 billion.

Having raised US$ 230 million from existing shareholders, the latest funding round indicates the value of UK-based Deliveroo could be as high as US$ 7.0 billion, as reports indicate that the food-delivery start-up could be contemplating an early IPO. The money raised will be utilised by Deliveroo “to continue to innovate, developing new tech tools to support restaurants, to provide riders with more work and to extend choice for customers, bringing them the food they love from more restaurants than ever before”. The seven-year old firm currently operates in twelve countries, including the UAE, UK, Australia and Singapore, and has more than 2k employees in offices around the world. Its network spans 140k restaurants and 110k riders globally.

There are indicators that Turkey is increasing its presence in the African continent, as it tries to curry favour with countries by doses of aid and trade. Over the past fifteen years, Turkish president, Recep Erdogan, has overseen the number of Turkish embassies in Africa increase from 12 to 42; there are 55 countries in the African Union. The Turkish administration recognises the economic and geopolitical importance of the continent and is now in the midst of a regional power struggle, centred on trade and influence. It seems that there are certain African countries which prefer to have a Turkish benefactor, rather than say a British/Portuguese/French occupation – and of late a growing Chinese influence. Most of its focus seems to be centred on the Horn of Africa, with Ethiopia, the continent’s second most populous country, being of particular interest; almost 42% of the US$ 6 billion that Turkish companies have invested in the area has gone there.

By Thursday, Australian shares had risen to their highest level since pre-Covid February 2020, driven by the feel-good factor of Joe Biden’s inauguration, boosting global sentiment, while local data showed a faster-than-expected recovery for the nation’s job market. The ASX  200 closed 0.8% higher on the day at 6,824 points, with the broader All Ordinaries index up by a similar margin to 7,107. Meanwhile, its economic life-line commodity, iron ore, closed on US$ 170, as there are signs that shipments are slowly rising, with 17 million tonnes being shipped the previous week. Other good economic news came with the December unemployment rate dropping 0.2% to 6.4% – slightly better than an earlier Reserve Bank forecast – as 50k people started a new job. This double whammy of positive news had the knock-on effect of pushing the Aussie dollar higher, to just under US$ 0.78, with every likelihood of moving slightly higher by the end of the month, assisted by a weaker greenback.

US markets also hit record highs, as Joe Biden was inaugurated as the 46th US President, with both the S&P 500 and Nasdaq hitting all-time highs on Wednesday. By the end of Thursday trading the S&P 500 was at 3,853 points, the Dow Jones 31,176 and NASDAQ Composite 13,531 points. The markets are potentially hopeful about the new President passing a proposed US$ 1.9 trillion stimulus package, which will enhance the bullish sentiment, and see markets rise even further. It is interesting to note that the Dow has gained 57% since Donald Trump first took office in January 2017 but this figure was less than the 72% hike recorded in Obama’s first four years in office.  

Last week saw a 151k applications for US state unemployment benefits to 961k. Despite the fall, the numbers are still on the high side, driven by the rising number of coronavirus cases and the relatively low uptake of the vaccine in the country. Continuing claims in state programmes, which monitors the number of citizens receiving ongoing jobless benefits, fell by 127k to just over five million. It will be interesting to see what the new Biden administration can do to improve the situation.

Despite warning of rising deficits, increased lockdowns – as corona virus continues almost unabated – and post Brexit problems, Fitch has maintained UK’s AA- debt rating and outlook at negative; the agency noted that the deficit had widened to 16.2% over the last year and that “the impact of the coronavirus pandemic on the UK economy and the resulting material deterioration in the public finances.” However, it was fairly bullish that its early rollout of Covid vaccines could see a “sustained recovery” in H1 and it raised its 2021 economic forecast from 4.1% to 5.0%, although the recent surge in virus cases could see a Q1 3.0% contraction.

With the advantages of being the first major economy to recover from Covid-19, having enforced strict virus containment measures and emergency relief for businesses, China ended the year, as the only major economy to have expanded in 2020. However, its economy – which grew at 2.3% – grew at its slowest annual pace in more than four decades; Q4’s growth was at a more respectable 6.5%, indicating that the economy is quickly returning to some form of normalcy, (a major improvement on Q1 2020’s 6.8% contraction). Latest monthly data sees the manufacturing sector reporting a 7.3% jump in industrial output, as coronavirus disruptions around the world fuelled demand for Chinese goods. The country’s export figures are even more impressive, considering the current strength of the yuan. This week saw the inauguration of Joe Biden and China cannot expect trade relations, which have deteriorated so much over the past four years of a Trump administration, to improve.

Recent action by  global hedge funds tend to point to a continued weakening of the greenback, with the likes of sterling and the euro heading into positive territory. The expected dollar’s downtrend will also see both the Australian and NZ dollars moving upwards, as hedge funds boost their US dollar net short positions. It is expected that if the pandemic impact lessens earlier in the year, it will benefit those currencies, particularly those from the emerging market countries, which are more leveraged to global growth. There are those who espouse that the greenback is on the rebound after a two-year slide, as US yields recently rose to a ten-month high. However, continuing low rates, high dollar valuations and a strong global economic recovery will see the US currency trade lower on the global stage.

The problem of accountability continues to bug world trade. Last week, questions were raised when Twitter permanently closed Donald Trump’s account and now there are questions on who has the final say when it comes to human rights. For example, this week Foreign Secretary Dominic Raab warned that UK companies would face fines, if they could not show that their supply chains were free from forced labour, particularly when it comes to the Uighur Muslims in the cotton fields of Xinjiang; this area provides 20% of all global cotton. The question is whether the courts, or the UK government, should decide what defines human rights violations and furthermore what action to take if a country is found to have “broken these rules”. For example, China is the UK’s fifth biggest trading partner, with annual trade of US$ 110 billion, and it would be economic suicide to cut ties on the grounds of human rights violations. Amendments to the Trade Bill currently going through Parliament would oblige the government to assess the human rights records of potential partners. There is already one amendment proposing to allow the High Court to declare a genocide in other countries and forcing the immediate cancellation of trade deals with said nations. If that were to happen, then other countries would quickly fill the breach and continue to applaud UK’s stance for taking the moral high ground, whilst filling their public coffers. Then what about several other countries that would not pass the test?

The ECB maintained both interest rates (at 0.5%) and the stimulus package unchanged, at US$ 2.3 trillion, and to run until March 2022 at the earliest, but did not rule out any possible future changes which may occur if the coronavirus cases continue to mount. To maintain liquidity in the system, it will keep long-term loans at minus 1.0% but some analysts reckon that this rate can only continue if the bloc’s governments ‘come to the party’ and offer support through fiscal policies. ECB President Christine Lagarde noted that, because of the pandemic, there had been “some downside risks to the short-term economic outlook,” but there is “an ample monetary stimulus remains essential” and the central bank stands ready to “adjust all its instruments”.  The EU hierarchy estimate that the eurozone economy slumped 7.8% in 2020 and that this year’s rebound will be 4.2%.

There is no doubt that Eurostar is struggling and could be in further financial trouble if no further investment is made. A report late last year noted that passenger numbers were 95% lower in November than they were just before the onset of the pandemic in March and the two trains an hour from London to Brussels/Paris then have been replaced by just two trains a day. No wonder then that some London business leaders have written to the government calling for financial support for the struggling rail firm, requesting, at least, government loans and relief from business rates. It seems that the firm, (60% owned by the French state rail firm SNCF and the balance, formerly owned by the UK government before being sold to private businesses for almost US$ 1.1 billion in 2015) has not yet been eligible for government-backed loans. Eurostar, launched in 1994 and having carried 190 million passengers over the past twenty-six years, has warned that “without additional funding from government there is a real risk to the survival of Eurostar”. Has the Eurostar met its Waterloo?

Posted in Uncategorized | Tagged | Leave a comment

Everybody Wants To Rule The World!

Everybody Wants To Rule The World!                         

Everybody Wants To Rule The World!                                                          15 January 2021

As Dubai property starts to recover, after nearly six years of bear trading, the value of Q4 Dubai property transactions, at US$ 6.0 billion, was 21.0% higher than the previous quarter; the actual number of transactions was 25% up at 11.1k. As a sure indicator that the sector is in recovery mode – and bearing in mind that the emirate was in lockdown in Q2 and 2020 figures represent say eight months of trading – the value of trades, at US$ 19.7 billion, was only 9.5% lower than a year earlier; similarly, the number of 2020 trades of 35.4k was 11.7% lower on the year. Q4 figures echoed the improvement with the number of deals also climbing nearly 25% to 11.1k, according to listings portal, Property Finder. The figures also indicate transaction values and volumes have more than doubled since the Q2 lockdown, when there were 5.5k transactions worth US$ 2.9 billion.  In December, secondary/ready transactions were 9.7% higher on the month, with 2.5k transactions, valued at US$ 1.7 billion; total transactions numbered 2.5k, worth US$ 2.0 billion. The last two months of 2020 witnessed seven-year highs in the volume of secondary/ready market transactions, whereas April and May were the lowest months historically for such sales.

There is no doubt of the negative impact of Covid-19 has had on the sector, but one interesting feature is that deals for completed homes now account for 72% of the total value, equating to US$ 52.2 billion and 20.7k units, of 2020 transactions; off plan properties accounted for 14.7k transactions, worth US$ 5.5 billion. There have been several reasons put forward why secondary/ready properties have seen a resurgence in demand., including an increased number of lower priced properties available, and with more time being spent at home, there is a positive move away from apartments to villas/townhouses, with bigger space and gardens, proactive government initiatives, and historically low mortgage rates; in 2020, most of the 13k Dubai mortgage transactions, worth US$ 23.8 billion, were for secondary/ready property. Other government measures, including visas for expat retirees, the golden visa scheme and amendments to commercial companies’ law, as well as many new projects having been put on hold (which cuts down the future supply pipeline), will see the supply/demand curve move to some form of equilibrium. The only canary in the coal mine is the pandemic and the possibility of future lockdowns.

Berkshire Hathaway HomeServices Gulf venture has launched its luxury collection division (covering sales of properties above the US$ 5 million level). The global real estate giant is confident that the emirate is witnessing renewed interest in the luxury market sector, as buying activity has increased in recent weeks. The new launch will target high profile locations, such as Emirates Hills, Palm Jumeriah, Bluewaters Island and Bulgari Residence, with positive signs that demand will remain buoyant.

To the surprise of no one, Dubai topped the league in 2020, building more skyscrapers (any building over 200 mt) than any other city in the world. Last year, the emirate saw the completion of a record twelve such buildings, three higher than a year earlier. It seems the reason behind the recent surge in building skyscrapers was down to the upturn in commitment in investment for this type of project around five years ago, aligned with the strong property market at the time – and those projects have finally come to completion. The tallest building completed in Dubai last year was the SLS Tower in Business Bay, which at 336 mt is now the 11th-tallest worldwide, followed by Amna Tower at Habtoor City (307 mt), Jumeirah Gate (303 mt) at JBR, ICD Brookfield Place (282 mt) at DIFC and Boulevard Point (280 mt) in Downtown Dubai.  There was a 20% decline in the number of such buildings to 106 – the lowest number since 2014. For the first time in five years, the year’s tallest building was not to be found in China – this year, the honour went to the Park Tower in New York City (472 mt). China completed more than half the total buildings in the study (56), down from 57 in 2019 and 92 in 2018.

Four months after his September appointment as Emaar Mall’s chief executive, Rajiv Suri has resigned from his position, with immediate effect; he previously worked as chief executive of Shoppers Stop, a department store chain based in India. The retail arm of the emirate’s biggest listed developer, Emaar Properties, has issued a statement advising that Amit Jain will take over until further notice. Q3 profits were 60% down at US$ 66 million, as revenue fell 30% to US$ 321 million.

In December, Dubai’s seasonally-adjusted IHS Markit PMI climbed 2.0 to 51.0 on the month – the first expansion in three months, as companies clawed back business, following the pandemic slowdown, driven by an increase in output and new orders. The monthly rate of expansion was the second quickest in 2020, behind July, but employment continued in decline, (recording job numbers falling for the tenth consecutive month), along with lower levels of inventory; the rate of job shedding has moved higher since November. The survey confirmed continuing weak cost pressures, as average selling prices fell again over the month, with companies continuing efforts to secure more business by offering discounts, but the rate of decline softened.

The local economy has benefitted by the lifting of most of the restrictions put in place last year to contain the spread of the virus. Dubai has begun to roll out a free mass inoculation campaign with the Pfizer-BioNTech Covid-19 vaccine; this is another measure that wlll help boost the economy and business confidence. There is no doubt that the reopening of borders with Qatar will prove a boon for Dubai’s economy, still recovering from the initial impact of Covid-19. Many sectors, such as cross border trade, re-exports, aviation, hospitality and tourism will benefit hugely, after three and half years of almost non-contact with each other’s country. However, this will not happen overnight, and it may be some time before Dubai sees the full effect.

It can only be Dubai that, in a middle of a pandemic, announces that at least twelve iconic restaurants will open their doors and kitchens in 2021. This month, Bla Bla, a massive 9k sq mt venue, opens, with twenty bars, three restaurants and a beach club, in a bid to cater for a wide range of patrons. The three licensed restaurants will also open in the first phase, and serve Italian and Japanese cuisines, and Texas-style barbecue. Another opening in Q1 will be the country’s largest food hall, as Dubai becomes Time Out Market’s seventh international location after Lisbon, Miami, New York, Boston, Montreal and Chicago. Located in Souk Al Bahar, it will feature thirteen restaurants, including Reif Japanese Kushiyaki; Little Earth by Nabz&G, The Mattar Farm Kitchen, Scoopi Café, Two Leaves by Project Chaiwala, Masti, BB Social, Folly by Nick & Scot, Vietnamese Foodies, Pickl, Pitfir, Brix, and Nightjar.

There are reports that one of Cannes’ hotspots, Baoli is coming to the ninth floor at Gate Village in DIFC. Serving a fusion of Mediterranean and Asian fare, with a focus on fresh seafood, it will comprise a restaurant, bar and outdoor terrace. Later in the year, Dubai, specifically the 51st floor of The Palm Tower, will welcome Sushi Samba. With branches already in New York, London, Miami, Las Vegas and Amsterdam, it will serve a blend of Japanese, Brazilian and Peruvian cuisine, culture, music and design.

With Atlantis, The Royal due to open in October, it will be home to a number of new restaurants, bringing with them some major global franchises and internationally acclaimed chefs.

Ling Ling will open its third resto-lounge, after Oslo and Marakesh, on levels 22 and 23, bringing the dining-to-dancing concept that draws inspiration from izakayas, the pairing of craft beverages with Cantonese food; it will overlook the hotel’s 90 mt sky pool. Little Venice Cake Company will introduce celebrity-favourite UK baker Mich Turner to the emirate as she opens her first cake atelier outside the UK. She has created cakes for royalty, including Queen Elizabeth, and famous personalities, and has been described by Gordon Ramsay as “the Bentley of cake makers”. New Andean cuisine will be represented by the Peruvian restaurant, La Mar, the brainchild of chef and restaurateur Gaston Acurio, famed for his Peking guinea or cuy, served with a rocoto pepper hoisin sauce and wrapped in a purple corn pancake. The cevicheria also has branches in Lima, Mexico, Brazil, Argentina and Miami.

Estiatorio Miloswill feature six mt high ceilings, Greek marble, floor-to-ceiling glass doors and an open-show kitchen, as well as rooftop seating. First opened in Montreal in 1979, Greek chef, Costaas Spiliadis,  also has Mediterranean restaurants in New York, Athens, Las Vegas, Miami and London. Following the success of her cookery and travel series, ‘Ariana’s Persian Kitchen’, Iranian-American chef, Ariana Bundy, is set to open her first restaurant in the hotel which will be located on a garden terrace. Spanish chef, Jose Andres, is to bring his first international Jaleo restaurant to Dubai after opening his first in Washington in 1993, followed by branches in Maryland, Virginia, Las Vegas and Florida. It will serve traditional Spanish dishes, using authentic and local ingredients.

Dubai will be the third base for Dinner by the experimental UK chef Heston Blumenthal which will bring to the emirate his unique cuisine of adapting food traditions that date back to the 1300s. His London and Melbourne branches of Dinner, for example, feature roast fruit (c1500), marrowbone (c1720), spiced squab pigeon (c1780), goats’ milk cheesecake (c1390) and a chicken liver parfait dish that looks like an unpeeled mandarin.

Covid-19 has resulted in a 64.4% decline, to 17.9 million, travelling through Dubai airports in 2020; a year earlier, the number of passengers was at 86.4 million. Prior to the onset of the pandemic, Dubai International was the world’s busiest international travel hub. Three months after the UAE went into the lockdown in March 2020, Dubai opened its doors to international visitors on 07 July.

Last year, the Department of Economic Development (Dubai Economy) posted a 4% rise in new licences to 42.6k; the split was 64:35:1 for professional, commercial and others, (tourism and manufacturing activities), respectively. The fact there was an increase in numbers, despite the negative impact of Covid-19, is an indicator of the emirate’s unique resilience. Even in tough economic times, Dubai seems to maintain its growth and development momentum and continues its position as a leading global economic and business destination. During the year, over 346k business registration and licensing transactions were completed, up 3% on the year; licence renewals grew 15% to 162.8k.

2020 was a record year for Dubai South, with 650 new companies starting business, as well as utilising 945k sq mt of space, in its Business Park. Like other free zones, it has relied on a mix of stimulus packages, both to attract new businesses but also to retain 90% of existing tenants. To meet future demand, an additional floor in the Business Centre will be available by the end of Q1. The Business Park has a diverse client base from a variety of sectors such as IT, insurance, education and, online gaming.

Ducab has appointed Mohammed Abdul Rahman Al Mutawa, as its new chief executive, to replace the departing Andrew Shaw, who, after thirteen years of holding the reins, takes on the role of board adviser. The new headman, formerly the chief executive of Ducab’s cable business, becomes the first Emirati to hold the number one position. The UAE cable maker, a subsidiary of Abu Dhabi’s industrial holding company Senaa, has plans to increase its exports to more countries around the world; the Investment Corporation of Dubai also has a stake in the company. Over the past decade, the company has doubled its export markets to take in more than thirty countries, with ventures such as Ducab Aluminium Company and Ducab Metals both contributing to growth. The company has about 1.5k employees and, with 2019 revenue of US$ 1.3 billion, it currently operates six manufacturing facilities, across four sites in the UAE.

Network International estimates that its 2020 revenues will be US$ 284 million – ahead of earlier forecasts. The digital transactions platform noted an improvement in Q4 results and sees the new year starting with positive momentum across all of its business lines. Although Q4’s returns were 19% lower, year on year, they were higher than those of Q3, reflecting the continuing recovery in card and digital transactions across its markets. By the end of the year, its UAE direct acquiring total processed volume had fully recovered to pre-pandemic levels, driven by strong e-commerce spending.

Enoc Link has announced that sales volume for its digital mobile fuel delivery service has grown tenfold in 2020, with its fleet size expanding 46% in the year. Their range of fuels supplied includes EPLUS91, Special 95 as well as diesel, with the company recently launching a dedicated fleet line to offer biodiesel (B5 and B20) – this contributed 20% to Enoc Link’s overall sales volumes. It has also recently launched a fleet of mobile fuelling trucks, equipped with 11k litre tanks, powered with simultaneous multi-product fuelling capability. These trucks can serve large-scale customers who require different fuel products concurrently. The new trucks can contribute to significant savings for customers, by reducing time and expenses spent for fuelling at a traditional service station, and eliminates the need to send two Enoc Link trucks to the customer premises to provide different fuel grades to the same customer. Enoc Link operates a diverse fleet of trucks equipped with varying tank capacities; including 800 litres, 2.6k litres, 4.5k litres and 11k litres.

One of the biggest local retail collapses came with news that the Toy Store owner, Gulf Greetings General Trading, abruptly ceased business at the beginning of the week, leaving suppliers being advised by email of the closure of the business, citing “unavoidable and unprecedented circumstances”. The company, with 400 employees, operated a total retail space of 125k sq mt, and had distribution centres in all six GCC countries. The company held exclusive representative rights for Hallmark Cards in the GCC and is the owner of The Toy Store – a chain of eight branded toy shops operating across sites such as MoE and Dubai Mall.

According to data platform Magnitt, MENA start-ups in 2020 secured record funding of more than US$ 1 billion – 13% higher on the year – despite 13% fewer deals of 496. Most of the funding occurred in H1 – US$ 725 million (29% higher than a year earlier) – with US$ 306 million raised in H2 from 198 deals. Covid has managed to wreak havoc on sectors such as air transport, tourism, supply chains, manufacturing and shipping. In contrast, businesses operating in key sectors, such as healthcare and technology, have seen an uptick in demand. E-commerce and FinTech accounted for about 25% of all deals in 2020, whilst healthcare start-ups more than tripled  in value to US$ 72 million during the pandemic. The UAE, Egypt and Saudi Arabia accounted for 68% of total deals, with the former attracting the largest share of funds raised and ranked first in terms of the number of deals. Furthermore, the country’s start-ups received more than half of the total venture capital into the region and just over a quarter of the total Mena deals, with funding up 5% to US$ 579 million, and total deals dropping by 17%.TheUAE also attracted the two biggest funding rounds with EMPG raising US$ 150 million, in its April Series E round, and Kitopi with US$ 60 million.

Smart Solution Logistics FZE has signed an agreement with Israel-based Allalouf Logistics to explore new growth opportunities for the logistics and general freight forwarding business in both countries. DP World’s port-centric logistics arm, with its global network of ports and terminals, offers a wide range of containerised logistics solutions, whilst its new Israeli partner is one of that country’s largest and longest established shipping agencies. In the UAE, the freight and logistics market is of increasing importance to thenational economy and is expected to increase its contribution to the country’s GDP to 8% of its total this year.

A US$ 308 million buyout by Shuaa Capital has saved the future of troubled Stanford Marine Group which, if it had gone under, would have resulted in over 1.8k retrenchments.  The consequences of the deal see Shuaa buying the debt, held by five local and two international lenders, at a discount and SMG strengthening its liquidity position, so that the company is now trading profitably. The company, one of the region’s major diversified offshore services companies, focuses on chartering, building and repairing offshore support vessels for the oil and gas industry. The deal will result in the company being able to continue to make vessels in its Grandweld shipyard’s facility and to carry out ship repairs, in Dubai Maritime City. Last year saw SMG post exports of more than US$ 27 million. The company was previously owned by private equity firm Abraaj Group, which was placed into liquidation two years ago. Shuaa Capital is hoping to close at least two more debt buyout transactions this year.

The bourse opened on Sunday 10 January and, having gained 134 points (5.4%) the previous week, gained a further 210 points (8.4%) to close on 2,702 by Thursday 14 January. Emaar Properties, US$ 0.11 higher the previous week, traded up again, by US$ 0.02, to close at US$ 1.09, whilst Arabtec is now in the throes of liquidation, with its last trading, late in September, at US$ 0.14. Thursday 14 January saw the market trading at 203 million shares, worth US$ 56 million, (compared to 421 million shares, at a value of US$ 110 million, on 07 January).

By Thursday, 14 January, Brent, US$ 13.44 (32.7%) higher the previous eight weeks, was up US$ 1.68 (3.1%) in this week’s trading to close on US$ 56.20. Gold, US$ 115 (6.4%) higher the previous four weeks, shed half of recent gains, down US$ 56 (2.9%) to close on US$ 1,853 by Thursday 14 January.

After initially issuing a statement saying it was in the “early stage” of talks with Apple, about a possible electric car partnership, Hyundai quickly backtracked with a retraction indicating it was talking with a number of potential partners, without actually naming the iPhone maker. Following the initial statement, Hyundai’s shares jumped 20%. Apple is known for its secretiveness when it comes to new products and partnerships and only last month did it become known that the US tech company was hoping for a 2024 launch date for a self-driving car. Last month, the South Korean car giant took a controlling stake in the mobile robot firm Boston Dynamics, that is valued at US$ 1.1 billion, as it continues to push into new technologies such as electric, driverless and flying cars. Currently, it is in negotiations with Aptiv to establish a US$ 4 billion autonomous-driving JV, with the Irish auto spare parts company contributing 700 engineers and transferring patents and intellectual property to the venture.

UK Foreign Secretary, Dominic Raab, has warned businesses they face penalties if they cannot show that their products are not linked to forced labour in China’s Xinjiang region, where there are more than one million Uighurs, and other minorities, being held in forced labour camps. They have been advised that the government will be monitoring the situation where there is mounting evidence of modern slavery. Only last week, Marks & Spencer, that uses about 40k tonnes of lint cotton each year from various sources, signed onto a call to action on human rights abuses in China’s Xinjiang region. In a related story, it seems that Huawei has introduced a patent for a system that identifies people who appear to be of Uighur origin among images of pedestrians. Having previously denied their technology was being used to identify ethnic groups, the tech giant now plans to alter the patent.

Although there was modest growth in food sales, (like for like sales were up 2.6%), and trading was “robust” over Christmas, Marks & Spencer saw overall performance fall sharply for the thirteen weeks to 26 December, with revenue 8.2%, lower at US$ 3.42 billion; international revenues took a big hit at 10.4% lower, whilst clothing and homes division tanked 24.1%. The retailer blamed “on-off restrictions and distortions in demand patterns” due to the coronavirus crisis. (M&S must know that this is the same for other retailers). The retailer is concerned that potential post-Brexit tariffs may impact on its business in Eire and the Czech Republic, along with its French franchise interest.

M&S has finally announced that it has bought the Jaeger brand, (but not any of its 63 stores and concessions), which fell into administration last November. Last May, it announced that it planned to stock other complementary brands to boost sales, and although this is its first real acquisition, M&S has started to sell products online from the Early Learning Centre, as well as from two designers, Nobody’s Child and Ghost London. The retailer’s MD Clothing & Home, Richard Price, announced “we have set out our plans to sell complementary third-party brands as part of our Never the Same Again programme to accelerate our transformation and turbocharge online growth”.

Meanwhile, Sainsbury’s had a bumper Christmas, as sales came in 9.3% higher during the festive trading period, following a bad November period, when clothing/home sales slumped 40.5% and food sales down 4.5%. Morrison’s posted a 9.3% hike in sales for the three weeks to 03 January and noted a 64% jump in champagne sales and 40% for whole salmon. For the nine-week period, like for like sales were 8.5% to the good. Overall, Research Kantor estimated that December was the busiest month ever for the supermarket sector, with a spend of US$ 15.9 billion; however, US$ 5.4 billion of that total was down to what would normally have been spent on food and drink outside the home over the Christmas season.

A consortium of international investors, led by the existing management team, has injected fresh funds into Edinburgh Woollen Mill, to save the business from closing, after going into administration last year. Although 2k staff will retain their jobs, 85 Edinburgh Woollen Mill stores and 34 Ponden Home stores have been closed permanently, with the loss of 485 jobs. It is expected that 246 EWM and Ponden stores will remain operational, whilst Wakefield-based Bonmarché will retain 72 of its stores. EWM is part of a stable, including Ponden Home and Bonmarché chains, owned by Dubai-based billionaire businessman, Philip Day, who it is thought will effectively lend the group the money to buy the businesses which will be paid back over a number of years.

Permira Holdings, the owner of Dr Martens, is planning an LPO on the London Stock Exchange, as it looks to sell a stake in the iconic British bootmaker; the parent company paid US$ 462 million for the brand in 2014.  The company, that invented its first boot in 1960, now has 130 global stores and had a US$ 907 million revenue stream last year, ending 30 March 2020, after adopting a direct-to-retail strategy, through physical stores and online.  It sold more than eleven million pairs of footwear in the year. During the pandemic, Dr Martens was forced to close some of its shops but still managed to increase its six-month EBITDA by 30.0% to US$ 116 million on an 18.0% hike in revenue to US$ 429 million; during the period, and despite the onset of Covid-19, it sold 700k more boots than the same six months a year earlier, as revenue jumped an impressive 74%.

The wheels have come off UnbeatableHire Limited, a company that borrowed money from lenders, to buy motorhomes, promising to return all the money plus, with returns of up to 10%; the company then hired out the motorhomes to holidaymakers in the UK. People were invited to lend the company US$ 55k, with each loan secured against an individual motorhome that would be bought with their money. The scheme appeared to go well for at least a decade but now investors are facing big losses, as the firm has collapsed not only owing US$ 10 million but that 123 vehicles have gone “missing”. The administrators, who were appointed over a year ago, estimate that the company still has 350 vehicles and found that some motorhomes were found to have more than one chattel mortgage listed against them; in some cases, some were shown as “stolen” in company records, but the administrators said they had never been reported stolen to the police, whilst others had been destroyed in two separate fires at two of the company’s depots. There is no smoke without fire and it seems that the company’s MD, Andrew Hughes, has a lot of explaining to do.

This week saw the value of Postmark reach US$ 7.1 billion in its first day of trading, as it raised about US$ 277 million in the Nasdaq listing; in spring, the second-hand shopping site posted its first ever quarterly profit. There is no doubt that such sites will become even more popular, whilst the pandemic encourages the need for online shopping and as shoppers grow more budget and environmentally conscious. Its shares were listed at US$ 42 at the beginning of Monday’s trading and had risen to US$ 97.60 by the end of the day.

Benefitting from the pandemic, Crocs is on track to report its best annual sales ever, with 2020 revenue expected to top a record US$ 1.4 billion, and at 12%, much higher than the company’s initial 7% estimate. There is no doubt that the company is on a winning streak, with its shares 50% higher last year and 12% up on this Monday’s trading. Crocs expects another record year in 2021, with revenue up to 25% higher, as their product line seems highly suitable for indoor wear during lengthy periods of self-quarantine; the company has also expanded its range to include sleeker designs.

Alimentation Couche-Tard, that owns the Circle K chain, has started “exploratory discussions” on a friendly deal with Carrefour, representing a major strategy shift for the Canadian firm. Shares in Carrefour are already 10% higher in January and, by Tuesday, the supermarket chain had a market cap of US$ 15.4 billion, whilst the friendly suiter is valued a lot higher at US$ 36.0 billion, even though it shed 2.2% in market cap, on the news breaking earlier in the week. The 40-year old Canadian conglomerate has not focused on supermarkets but on convenience stores and petrol stations for its growth, expanding into the US and Europe in 2001 and 2012; of late, it has concentrated its efforts on the Pacific regions and probably would have acquired Caltex Australia if it were not for the onset of Covid-19. Last year, it was one of the unsuccessful bidders for US gas station operator Speedway, which was eventually sold to Seven & I Holdings for US$ 21.0 billion. It currently has a network of more than 9k convenience stores in North America, most of which also offer fuel retail, and It also has about 2.7k locations in Europe. Carrefour has 2.8k supermarkets and 703 larger-format hypermarkets, as well as a presence in Argentina and Brazil, but has lost ground to the likes of Germany’s Aldi and Lidl, as well as to Leclerc. Its international forays have seen mixed results in Latin American and China, where it sold an 80% stake in its Chinese operations to local retailer Suning two years ago.

Although Airbus delivered 34% fewer aircraft in 2020, 566, (compared to a record 863 a year earlier), it still retained its number one spot, as the world’s biggest plane maker.  The Toulouse-based Airbus recorded 268 net orders last year, after adjusting for 115 cancellations, a 65% decline from 768 orders in 2019; by the end of 2020, it had a backlog totalling 7.2k.

 In comparison, its main rival, Boeing, was way behind with only 157 aircraft, (59% down from 2019 and well down from the 806 in 2018), driven by the Chicago-based plane maker struggling with the grounding of its best-selling 737 Max narrow body jet and its 787 Dreamliner; however, it did hand over 27 737 Max in December but did not deliver any 787 widebodies in the last two months of 2020, with the jets undergoing inspections after production flaws were found. The disappointing results from both Airbus and Boeing were a direct result of the onset of Covid-19, which wiped out air travel demand, forcing airlines to ground aircraft and to delay, defer or even cancel jet deliveries to preserve cash.

The Institute of International Finance is concerned about the massive increase brought on by Covid-19, as governments’ debt to GDP in 2020 jumped 15% to 105%; global debt levels rose more than US$ 17 trillion to US$ 275 trillion, driven by a marked rise in sovereign debt issuance. The knock-on effect is that this may have a negative impact on economic prospects this year, with a sharp rise in financial and budgetary imbalances. In 2020, there was a US$ 7 trillion increase in negative-yielding bonds issued to US$ 18 trillion and, with the added impact of abundant liquidity from global central banks, investors have had to move to the new territory of emerging markets to access better returns. The IIF warned that one drawback is that foreign currency debt may exacerbate debt-related vulnerabilities for emerging market borrowers, as “greater reliance on foreign capital could leave emerging market borrowers more exposed to sudden shifts in global risk sentiment”.

According to the Federation of Small Businesses, a record number of small UK firms could close in the next 12 months; it estimates that, without further government aid, more than 250k businesses, (equivalent to 5% of the total number of SMEs – 5.9 million) and effecting 700k – 1.1 million, may go under. It has written to the government with a suggested proposed support scheme, aimed to help many self-employed workers currently excluded from aid. The federation noted those not receiving public support included “company directors, the newly self-employed, those in supply chains and those without commercial premises.” It suggests that grants of around US$ 10k be paid to cover three months of lost trading profits and limited to those who earn less than US$ 70k.

As 2020 sales in physical shops dipped – food by 20%, and non-food by 25% – UK’s retail sales recorded their worst ever year, whilst overall food sales rose 5.4% in the year, non-food sales dropped about 5%. Matters were made worse with the third lockdown clashing with the festive period, usually the best season for the High Street. With the lockdown continuing into January, closures will cost the industry billions of dollars and will result in many retailers having to close their doors. Over the five-week period to early January, thanks to online shoppers, non-food sales rose 44.8%, with online retail overall jumping 33% to account for 46.1%of all sales. Last year, 180k retail jobs were lost – almost 25% up on the 2019 figure, with this year presenting the triple whammy of a new national lockdown, economic downturn and a new relationship with the EU.

Even when the coronavirus dies out, whenever that may be, online shopping will continue to gain popularity, whilst there will be more people working from home, with the inevitability of an increasing number of ‘bricks and mortar’ shops closing, and the possibility of a further 400k redundancies, along with the loss in the High Street of up to 40% of their retail offerings. In the study, which covered 109 UK towns and cities, the report noted that “the reduction in commuter footfall (and) the accelerated shift to online shopping is exacerbating the vacuum in city and town centres, with less people calling in to shop.” Working from home carries many advantages, two of which are that the individual will not only have more time to enjoy life – because of cutting out commuter travel – but also more money to spend because of reducing their commuting expenses.

South Korea’s post pandemic rebound continues with Samsung Electronics reporting a Q4 26% jump in profit, to US$ 8.2 billion, on a 1.9% rise in revenue to US$ 56 billion, still driven by continued remote working and TV-watching which in turn fuelled sales of chips and display panels; full earnings will be available by the end of the month. On Thursday, the company launched a new line-up of its Galaxy S series smartphones – S21, S21 Plus and S21 Ultra – and a slew of other products at a virtual event. Samsung is fighting hard to retain its leading position in the market, with increasing competition from its current main rivals, Apple and Huawei.

In a case relating to Monaco-based consultancy Unaoil, Australian police have arrested a second former Leighton executive over an international bribery investigation. Former COO, David Savage, following that of a previous MD of Leighton Offshore, Russell Waugh, was charged with have knowingly provided misleading information to authorities, contrary to Australian law. Investigators have identified a US$ 77 million suspicious payment, made through third party contractors, and allege that the Leighton subsidiary was used to funnel these bribes through Unaoil and an unnamed ME contractor to “grease palms”. It appears that this refers to Iraqi oil ministry officials and government officials within the South Oil Company of Iraq. As a side note, it is reported that Leighton won contracts, in 2010-2011, valued at US$ 1.5 billion, that needed official approval from the two entities above. In 2019, the two brothers, who ran Unaoil, pleaded guilty to being part of a 17-year scheme to pay millions of dollars in bribes in nine different countries; they later decided to cooperate with authorities which may have had some bearing on the two Australians being arrested. Last year, two Unaoil officials were found guilty by a UK court for paying bribes to secure contracts of more than US$ 1.0 billion.

Last August, the US administration listed China State Construction Engineering Corporation as a Chinese military company and this week it appears that the Morrison administration has blocked the same company’s US$ 230 million bid for the Australian construction firm Probuild, and being accused by the Chinese government of further undermining trust between the two countries. Treasurer, Josh Frydenberg, used the national security “card” to stop the bid going any further. China has accused the Australian government of discriminating against Chinese companies noting that “the Australian government has been politicising trade and investment issues, violating market principles and the spirit of the China-Australia free trade agreement, and imposing discriminatory measures on Chinese companies.” The Australian government introduced tough new foreign investment rules, as from the beginning of 2021, giving regulators enhanced powers to review and scrutinise investments that could have national security implications. Last year, bilateral trade sank to new lows with China targeting multiple Australian products, including wine, timber, barley and coal, with severe trade sanctions, whilst investment into Australia has tanked

With the labour market still struggling, applications for US state unemployment benefits surged last week, by 181k to 965k, the most since late March – a sure indicator thatthe impact from the pandemic points to the need for a further massive federal stimulus package and the national vaccination programme to be ramped up.. The increase in numbers surprised analysts, who were predicting littleor no changefrom the previous week, with a median forecast of 789k.Continuing claims in state programs – an approximation of the number of people receiving ongoing benefits – climbed by 199k to 5.27 million in the week ended 02 January. There is no doubt that incoming President, Joe Biden, in true Democratic style, will be considering a massive additional relief package that could further extend unemployment benefits; this could come in as high as a mouth-watering US$ 2 trillion. Furthermore, Federal Reserve Chair, Jerome Powell, confirmed there will be no raising of interest rates anytime soon, whilst also rejecting suggestions the Fed might start reducing its bond purchases in the near term.

The Australian government has urged Google to focus on paying for Australian content instead of blocking it, as Australian news websites were apparently not showing up in searches, Google later confirmed it was blocking the sites for a small number of users, as it was conducting experiments to determine the value of its service to Australian news outlets. With the likes of Amazon, Apple and Google ejecting it from their platforms, Parler is now virtually homeless on the internet. Amazon decided to remove the alternative social media platform, favoured by conservatives, after mounting pressure from the public and Amazon employees, which resulted in the Parler website becoming inaccessible by early Monday. Some will see this as an action to completely remove free speech off the internet – on the apparent whim of  their own employees!

The chief executive of Twitter, Jack Dorsey, is right saying that banning President Donald Trump from its social media platform, after last week’s violence in Washington, sets a dangerous precedent but wrong and arrogant to say it was the “right decision”. Twitter is among several social media platforms and messaging services to ban Donald Trump, with Snapchat also permanently banning the president. Whatever you think of the outgoing US President, the actions of Twitter to permanently ban him for life seems a step in the wrong direction and one has to applaud German Chancellor Angela Merkel for attacking the platform for the ban and calling it a “problematic” beach of the “fundamental right to free speech”. She appears to be taking the correct and logical approach that the US should follow laws that restrict online incitement, rather than leaving it up to the likes of Twitter and Facebook to make up the rules themselves. It is only a small step away for the tech giants, who are fond of flexing their muscles – but no paying their fair share of international taxes – to dictate to the rest of the world what they can and cannot say. Everybody Wants To Rule The World!

Posted in Uncategorized | Tagged , , , | Leave a comment

It’s A Man’s, Man’s, Man’s World!

It’s A Man’s Man’s Man’s World                                                          08 January 2020

The big news of the week (and perhaps the year) was the signing of the AlUla Declaration at the conclusion of the GCC Summit, marking a definitive end to the Gulf dispute with Qatar and restoring full ties with Doha. In June 2017, the UAE, along with Saudi Arabia, Bahrain and Egypt, severed diplomatic, trade and transport ties with Qatar, accusing it of supporting terrorism. Saudi’s Crown Prince Mohammed bin Salman confirmed that leaders of the six-member GCC signed two documents on Tuesday, with the Gulf states, inking an agreement that affirms “our Gulf, Arab and Islamic solidarity and stability”. The Crown Prince singled out “the threats posed by the Iranian regime’s nuclear and ballistic missile program and its plans for sabotage and destruction.”

This is just the fillip that is required to get Dubai speeding forward again. Another positive is the fact that Brent has almost reached US$ 55 – a starting level that will benefit the Dubai economy. By the end of the week, further good news was the fact that the Democrats’ victory in the Georgia Senate run-offs will add further pressure on the US dollar, which this week reached its lowest level since April 2018; a low dollar is often seen as a major plus for the Dubai’s tourism sector which will benefit from overseas visitors getting more for their local currency when buying plane tickets and spending money here.    The only fly in the ointment seems to be the increased lockdowns and rising Coronavirus cases in Europe, and elsewhere which could have a negative effect on the local hospitality sector if tourist numbers were to drop.

For the week ending 07 January, there were 1,546 Dubai real estate and properties transactions valued at US$ 1.2 billion. According to the Department of Land and Property, 1,035 apartments/villas were sold for a combined total of US$ 452 million and 109 plots for US$ 119 million. The top three sales were for land in Palm Jumeirah, (two for US$ 10 million each) and the other in Island 2 for US$ 9 million. The three locations, with the highest number of transactions, were Nad Al Shiba Third (27 – US$ 18 million), Al Hebiah Fourth (20- US$ 12 million) and Nad Al Shiba First (18 – US$ 10 million). The top prices of the week were for a villa in Marsa Dubai, selling for US$ 41 million, a Business Bay apartment for US$ 38 million and another apartment in Nad Al Shiba First for US$ 37 million. Mortgaged properties for the week totalled US$ 545 million, whilst 98 properties, valued at US$ 117 million, were granted between first-degree relatives worth US$ 117 million.

With no figures readily available, Sobha Realty reported a doubling of H2 sales at its eight million sq ft flagship development, Sobha Hartland, situated in Mohammed Bin Rashid Al Maktoum City. The massive development of villas and townhouses at Sobha Hartland includes the Gardenia Villas, Forest Villas, Waterfront Villas and Garden Houses; the master development is slated for completion by 2025. The real estate developer expects to achieve 70% of its 2020 target, as the demand for larger homes and outdoor spaces increases as a result of Covid-19.  Property Finder has indicated that the number of villas and townhouses searches has quadrupled since the onset of the pandemic. In the eight months to November, it estimates that of the 4k villas sold, 63% were for ready units.

Emaar has divested The Sky View, comprising the Address hotel and residential apartments, for US$ 205 million – an indicator that Dubai’s commercial property sector is on the move up. European fund, Evergreen Hospitality, has made the acquisition in one of the biggest deals in Dubai’s property sector for some months. The deal is “in line with the company’s asset-light strategy for hospitality assets.” Two years ago, the Dubai developer sold five properties in its Dubai hotel portfolio to Abu Dhabi National Hotels for US$ 605 million. It is expected that the current management, the Address, will continue operating the property which has 169 rooms and 551 apartments, along with a 70 mt infinity pool and a floating skybridge.

In a bid to help local family businesses prosper, the federal Ministry of Economy is keen to work alongside them to develop a legislative structure. Over the past sixty years, some of these businesses have grown from a one man shop to a multi-business conglomerate, and in some cases employing three generations of the family; others have failed., with one of the main drivers being lack of corporate governance. Earlier in the week, there was a meeting between the Ministry and the Family Business Council-Gulf to discuss how better to organise businesses so that they remain operational for successive generations. Joint work committees are already in place between the two sides working on strategy, research and legislation.

The Dubai Gold & Commodities Exchange had a record 2020, during which it traded 12.73 million contracts. The best performing product, trading over 260k contracts, was DGCX’s AUD Futures Contract, up 4,694%, year-on-year. The two best DGCX launched products were the Weekly INR-US Dollar (USD) Futures Contract, along with the launch of three FX Rolling Futures Contracts – EUR, GBP and AUD against the USD.

This week, Dubai launched its fifth economic package worth US$ 86 million, to mitigate the effects of the global health crisis on businesses, bringing the total value of stimulus packages to date to US$ 1.93 billion. According to the Crown Prince, Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, the package will provide necessary elements for business continuity and accelerate the pace of recovery. Some of the current package will extend the validity of some of the initiatives, announced in the previous stimulus packages, for another six months, until June 2021. It will also continue the market fee exemption to commercial establishments and hotels, that were not included in the previous package, as well non-beach hotels and their restaurants being refunded 50% from the hotel sales fee as well as the Tourism Dirham Fee.

In the tourism, entertainment and events sector, the exemption from the fees charged for postponement and cancellation of recreational and sports events and activities, including conferences and exhibitions, has been extended. Other measures include extending the freeze on fees charged for ticket sales, issuing permits and other government fees imposed on entertainment and business events, as well as extending the cancellation of the 25% down payment requirement for accepting instalments of licensing fees and licence renewal on a monthly basis. Furthermore, nurseries, leasing land lots from the Knowledge Fund Establishment, will continue to benefit from the 50% reduction in land rent.

After a 2020 6.3% contraction, the World Bank has revised slightly downward its UAE economic growth forecast to 2.4% next year, following a 1.0 % increase projected for this year. The bank has forecast a 4.0% expansion this year “assuming an initial Covid-19 vaccine rollout becomes widespread throughout the year,” It predicts a 2.1% economic growth for the MENA region “reflecting the lasting damage from the pandemic and low oil prices.” For the other `GCC nations its forecast shows  2021 and 2022 growth of 2.0% and 2.2% for Saudi Arabia, Kuwait – 0.5% and 3.1%,  Oman – 0.5% and an impressive 9.4%,  Qatar – 3.0% and 3.0% and Bahrain – 2.2% and 2.5%.

2020 was a historic year for the Dubai Multi Commodities Centre, as over 2k new companies joined the free zone, driven to some extent by the introduction of incentives to attract new businesses.; for example, following the onset of Covid-19 in March, DMCC introduced its “Business Support Package”, with offers of a wide range of incentives and value-added services. It was estimated that over 8k member-companies took up 13k offers. Recently, the authority Introduced a limited time offer of allowing virtual licences to be issued in five working days, with zero upfront fees.

With the imminent retirement of banking veteran, Simon Haslam, Network International, has appointed Nandan Mer, Mastercard’s strategy head for international markets, as its new chief executive as from 01 February. The current incumbent, who joined the Dubai-based payment processing firm in 2017, will remain with the company during a six-month notice period to ensure a smooth transition. Network Internaional went public on the London Stock Exchange in 2019, with Mastercard, a 10% stakeholder, pledging to invest a further US$ 35 million in the business over the next five years.

The bourse opened on Sunday 03 January and, having slipped 58 points (2.3%) the previous fortnight, gained 134 points (5.4%) to close on 2,492 by Thursday 07 January. Emaar Properties, US$ 0.02 lower the previous week, traded US$ 0.11 higher at US$ 1.07, whilst Arabtec is now in the throes of liquidation, with its last trading, late in September, at US$ 0.14. Thursday 07 January saw the market trading at 421 million shares, worth US$ 110 million, (compared to 139 million shares, at a value of US$ 47 million, on 31 December).

By Thursday, 07 January, Brent, US$ 10.72 (26.1%) higher the previous seven weeks, was US$ 2.72 (5.2%) higher in this week’s trading to close on US$ 54.52. Gold, US$ 101 (5.6%) higher the previous three weeks, gained a further US$ 14 (0.7%) to close on US$ 1,909 by Thursday 07 January.

In November, Japan imported nineteen million barrels of crude oil from the UAE which equates to 27.5% of the country’s monthly total of just over 69 million barrels.

In a show of flexing its muscles, Saudi Arabia surprised the market by making a large cut in its oil production, an indicator to the rest of the world that the kingdom is still the prime mover in the industry. It could also be seen to be a slap in the face for Russia, which had been targeting a 500k bpd increase in February. On the news breaking, crude prices jumped to ten-month highs and energy shares on the global bourses surged. Saudi Arabia also pledged an additional unilateral cut of one million bpd in February and March, whilst Opec+ allowed both Russia and Kazakhstan to add a token combined 75k bpd for these two months. Whilst the move did paper over cracks in the fragile oil bloc, it was a major blow for the bear investors who read the market badly and had to buy back their bets.

One consequence of the pandemic is that investment in the energy sector fell off a cliff in 2020, with the impact being felt across the sector, from fossil fuels to renewables and efficiency. Driven mainly by the pandemic, and the double whammy of falling prices and slowing demand, capex in international upstream projects. has significantly reduced, with many projects being deferred for better times. The lack of investment will have a negative impact on the future supply line, so it is inevitable that when demand returns to pre-pandemic levels, supply will be unable to meet demand in the short to medium-term, as new projects will take more time for completion.  It is estimated that current production could be ramped up by seven million bpd, using existing facilities, but the market may be in need of twelve million bpd; without any investment now, the market will be five million bpd short because of the dearth of present investment. The short-term impact will be a spike in oil prices for a while until the oil sector recovers, and supply catches up with demand. Last year, global investment in energy fell by 21.0% to US$ 1.5 trillion – and not the US$ 1.95 trillion expected at the beginning of 2020. With revenues down across the board, oil companies still have to cover both their operating and capital costs so the only options for most is to cut costs or take a loan.

It was no surprise to read that the UK car sales last year suffered their largest fall since World War II, declining 29.0%, (equivalent to 680k units), to 1.63 million vehicles, with most of the lost sales occurring during the first lockdown, when showrooms and factories closed, impacting with a loss of a one million in unit sales in the quarter to May. December new car sales sank 10.9%. It is estimated that the industry lost US$ 27.2 billion in lost sales and the government US$ 2.6 billion in lost VAT receipts. 62.7% of new cars were for petrol and mild-hybrid vehicles, whilst mild-hybrid diesel cars comprised about 20% of the market. The big winners were battery and plug-in hybrid electric cars, along with plug-in hybrids (PHEVs), with the former posting a 186% growth to 108k units and the latter jumping 91.2% to 67k. The latest lockdown will continue to add salt to the industry’s wounds, as showrooms remain closed once again. The UK-EU trade deal will also have an impact on the industry since last year about 70% of vehicles were imported from Europe.

The US Justice Department has reached an agreement wit Boeing concerning criminal charges that it hid information from investigators about the safety and design of its 737 Max planes. The shamed US plane maker was fined US$ 2.5 billion (of which US$ 500 million has been earmarked for families of the 346 people killed in the two plane crashes). The DoJ accused Boeing of not cooperating with investigators for six months and concealing information about changes to an automated flight control system, known as MCAS. This resulted In pilot training manuals lacking information about the system, which overrode pilot commands based on faulty data, forcing the planes to nosedive shortly after take-off. In a damning indictment, Boeing was accused of choosing “profit over candour” and impeding oversight of the planes, which were involved in two deadly crashes, which were involved in two deadly crashes, whilst the plane maker acknowledged how the firm “fell short”. Isn’t Life Strange?

Troubled Rolls Royce has another problem to deal with – this time because it has had to put its UltraFan engine programme “on ice”, when testing finishes next year; further investment will be put on hold until a new aircraft is launched and that could be years, bearing in mind the state of the aviation sector, battered by the on-going pandemic. No manufacturer will consider introducing a new model in the present climate until demand for air travel returns to pre-Covid levels. To date, RR has already invested over US$ 680 million in the project, which is expected to be more than 25% efficient than the company’s Trent engines; this is part of a strategy to return to this sector, a decade after leaving a JV with Pratt & Whitney. Last month, the UK aero-engine maker noted that it was burning through cash at a faster rate than expected after raising US$ 6.8 billion – a US$ 2.7 billion rights issue and new credit lines.

Having leased planes since 2016, Amazon has bought eleven used Boeing 767-300s, from struggling airlines Delta and WestJet, to “support Amazon’s growing customer base”. The fact that the company is finally purchasing planes is a good sign that the tech giant will become a credible competitor in logistics, with the added benefits of lowering overall lifetime costs and greater control over the speed, reliability and quality of service. Since 2015, the company has found it more economical to handle logistics itself rather than using third parties, and has built its own global end-to-end logistics network, with its own vans, trucks and aircraft. There seems every possibility that it will overtake, in size, the likes of UPS and Fedex, as a supply chain provider, with the possibility of Amazon Air becoming an independent carrier in the US. It has been estimated by Chicago’s De Paul university that Amazon’s fleet was likely to grow to two hundred aircraft by 2028. Currently, Amazon lifts 2.3 billion packages every year, compared to the 3.1 billion and 2.7 billion carried by Fedex and UPS, but could overtake both by next year.

In what has been an off-on deal for some time, LVMH has finally completed its purchase of US jeweller Tiffany for US$ 15.8 billion, slightly discounted from the initial price of US$ 16.2 billion. The main benefit for the French luxury giant is that it will  be able to expand into the jewellery sector – a fast-growing area of the luxury goods market. Covid-19 and some tough negotiations slowed the deal which was announced over a year ago, leading to Tiffany suing LVMH to force the agreement to go ahead. Chief Executive, Bernard Arnault, has appointed his 28-year old son, Alexandre, as member of the new executiveteam toraise Tiffany’sprofile among younger buyers and customers in China, as well as enhancing online sales as it pushes to revive the iconic brand.

In line with many other store chains,John Lewis, which had offered EU delivery via its website, has scrapped overseas deliveries but confirmed that the decision was not related to Brexit, but because of its new strategy to focus on the UK. It seems that other retailers, including Asos and Fortnum & Masons, have temporarily suspended EU deliveries due to confusion surrounding post Brexit trading. Meanwhile store chain Debenhams has temporarily shut its online business in Ireland.

It is a wonder what the pandemic can do to company valuations. Yesterday, Robolox raised US$ 520 million, in private capital, valuing the children’s online gaming platform at US$ 29.5 billion – a massive sevenfold increase since February 2020. The funding was led by Altimeter Capital and Dragoneer Investment Group, with Warner Music Group one of several current investors. The company first released Robolox in 2006 and has seen revenue climb 91.0% to US$ 242.2 million. The company is planning a direct listing – rather than the more orthodox IPO route – where a company typically does not raise capital and investors do not have to wait for a lockup period to expire before selling their shares.

In a bold prediction JP Morgan estimates that Bitcoin could top US$ 146k, if it were to become a safe-haven asset. There is no doubt that it has caught investors’ attention, viewing it as a hedge against inflation and an alternative to the depreciating greenback. The bank noted that for Bitcoin to match the value of private gold holdings, it would have to reach US$ 146k but considers that it is likely to outshine gold, with the younger generation’s propensity for “digital” – rather than physical – gold, as millennials become a more important component of the investment market. If there were a move to oust gold as an ‘alternative’ currency, that could leave the door open for Bitcoin to move even higher, looking long-term.

On Thursday, Bitcoin reached US$ 40,367, lifting the total value of the entire cryptocurrency market to over US$ 1 trillion, (and Bitcoin to over US$ 740 billion), before falling back in later trading to hover around the US$ 38k level. So far in the seven days of 2021, the digital coin is up over 30% – and over 400% since the beginning of 2020. Not an investment for the faint-hearted, there is every chance that Bitcoin could top US$ 100k but along the way there will double-digit weekly gains and double-digit weekly losses. Until it becomes part of the “establishment”, it will remain volatile, with every possibility of its price dropping as quickly as it rises. Real risk-seekers could look at investing in rival cryptocurrency Ethereum which sank more than 10% to as low as US$ 1,087 yesterday.

The latest big IPO in the US will be Max Levchin’s Affirm Holdings, with a probable US$ 9.0 billion valuation; he also co-founded PayPal Holdings. The IPO is pitching the share price between US$ 33 to US$ 38 which would rake in funding of up to US$ 935 million. The company, established in 2012, gives people, without credit history or savings accounts, access to small loans, offering monthly pay-back financing for online purchases. Its major investors include Singapore’s SWF, VC firm Spark Capital and Peter Thiel’s Founders Fund, and at its last private funding round, the company was only valued at US$ 3 billion. 2021 will be another boom year for the IPO sector, which last year raised US$ 167.6 billion, its highest level since 1999. This year will be more of the same, with major players, such as Robinhood, Instacart and Coinbase, joining the New York bourses.

MGM Resorts International has failed in a bold US$ 11.1 billion bid for Entain, which includes a number of gambling sites in its portfolio, such as Bwin, Coral, Ladbrokes, Partypoker, Eurobet, Gala and Foxy Bingo. The Las Vegas casino operator is keen to add such attractive on-line sites, ever since sports betting was legalised in US in 2018. An earlier US$ 10 billion all-cash bid from MGM failed last year and this time, the London-listed Entain noted that the bid undervalued the company, which has benefitted from a boom in online betting since the onset of the pandemic. Last September, MGM’s rival Caesars Entertainment agreed to buy UK-based William Hill for US$ 5.2 billion. With the FTSE 100, the worst performing major bourse in the world last year, it is inevitable that other US companies will be trawling around the City to pick up some basement bargains.

There are concerns about Nvidia’s 2020 acquisition of Arm for a reported US$ 40 billion. The UK’s competition regulator has invited interested parties to forward their views on the US tech company’s purchase from SoftBank of the British chip designer. The Competition and Markets Authority, which has the authority to stop the sale if it considered it would reduce competition, has a track record of blocking more deals than its peers in other countries, and of being one of the world’s most aggressive antitrust enforcers. The formal investigation is start towards the end of the year.

After years of on-going negotiations, the proposed US$ 52 billion merger, between Fiat Chrysler and France’s PSA Group has been approved by both sets of shareholders and will create the world’s fourth biggest carmaker, behind VW, the Renault-Nissan-Mitsubishi alliance and Toyota. The new entity, to be called Stellantis, will be home to fourteen different brands such as Peugeot, Citroen, Vauxhall, Fiat, Jeep and Chrysler, as well as the upmarket brands such as Maserati and Alfa Romeo. Although the new group will have spare production capacity of almost six million cars, PSA has pledged not to close factories after the merger, but there are concerns about the future of the 3k Vauxhall workers in the UK. Like with most mergers, the hope is that the two partners can pool expertise and resources – and save costs. Reality usually turns out differently.

A deal, signed at the beginning of last year, seemed to indicate the demise of Ford in the Indian market, in which the US carmaker planned to transfer most of its local operations, including two factories, into a JV to be majority-controlled by Mahindra & Mahindra. Now, it has announced that it will pull out of the accord, with both partiers agreeing to the termination after reassessing in part due to the global coronavirus pandemic. Ford has confirmed that “the company is actively evaluating its businesses around the world, including in India” and it is public knowledge that the company has struggled for more than twenty years to grow in the world’s fourth-largest car market. Last year, Ford took a US$ 799 million asset impairment charge – based on “fair value less cost to sell” – ahead of the expected Mahindra transfer and the recent termination of the agreement will have no bearing on that particular transaction.

One consequence of the boom in online shopping can be seen in the US, as consumers there are expected to return unwanted goods, valued at US$ 115 billion, with retailers having to process millions of extra items. It is estimated that “online returns” are normally three times greater in number compared to “normal retail sales”. For example, online buyers are more likely to buy more clothes than needed to try out size etc, only to return those not fitting the bill. Returns are expected to be 15% higher this year. Two other surprising facts are that 50% of returned goods have little or no salvage value and that almost 2.7 billion kg of these returns – enough to fill 7.7k fully-loaded Boeing 747s – found their way to a landfill. Whilst retailers take a beating, the big winners are the logistics companies gaining because of the two-way traffic.

Good news for the global economy came from South Korea – considered a bellwether for global trade – reporting December exports jumping at their fastest race since October 2018, driven by robust growth for computer chips and an improving global economy. December exports grew by 12.6%, year on year – a lot higher than the expected 5.6% expansion or the previous month’s 4.1% return. Sales of IT products, including semiconductor exports, (30% higher on the year), were prominent, accounting for eleven of the fifteen major export items posting growth; mobile devices, displays and computers all reported impressive growth – at 39.8%, 28.0% and 14.7% respectively. Exports to its prime market, China, were 3.3% higher, whilst exports to the US and EU jumped 11.6% and 26.4% respectively. December imports were 1.8% higher – compared to a 1.9% decline in November.

It seems that Donald Trump is leaving the White House, with all guns blazing having, this week signed an executive order banning transactions with eight Chinese apps, including popular payments platform Alipay, QQ Wallet and WeChat Pay, on the grounds of them being threats to US national security. The ban becomes effective after forty-five days, by which time Joe Biden will be sitting in the Oval Office. As his four-year presidential stint comes to an end, President Trump has signed executive orders against a range of Chinese firms – including TikTok and Huawei – arguing they could share data with the Chinese government. Even his sternest critics should be able to see that he has a valid point to make. Only last month, the Commerce Department added to its trade blacklist many Chinese companies, including the country’s top chipmaker SMIC and drone manufacturer DJI Technology, as well as restricting a number of companies, with alleged military ties, from buying sensitive US goods and technology.

In December, the number of US private jobs declined for the first time since April by 123k – an indicator of the impact of the recent rise in Covid-19 cases across the country and the slow introduction of the vaccine; November had seen a 304k gain. The sectors that suffered most were leisure, retail and hospitality. By the end of the year, private payrolls were some ten million off pre-pandemic levels and the unfortunate fact is that this will get even worse, with winter ahead and national lockdowns increasing. Meanwhile, the US manufacturing sector grew at its strongest pace since August 2018, as the Institute for Supply Management index for tracking Factory activity was up 3.2 to 60.7. In December, new orders were 2.8 higher at 67.9 and supplier deliveries by 6.5 to 67.6, with employment moving from negative territory by 3.1 to 51.5.

The eurozone saw November retail sales sink 6.1%, as much of the bloc was in some sort of lockdown, as the next wave of the pandemic led to heightened movement restrictions. This followed a 1.4% rise the previous month and was 2.9% and 3.25 lower on the same month in 2019 and in February just before the pandemic’s onset; in April, it was 20% down. France performed the worst of the 19-country bloc eurozone, with overall retail trade down 18.0%, led by falls of 10.6% and 8.9% in demand for automotive fuels and for non-food products. Belgium was not far behind with a 15.9% decline. The IHS Markit/CIPS construction PMI slipped 0.1 to 45.5 in December – the 10th straight month of contraction in construction activity with France reporting its steepest fall since May. Across the bloc, reduced workforce numbers rose at a slightly quicker rate. This is in contrast to the UK where construction continues with its recovery, although its PMI data did drop 0.1 to 54.6 in December.

In the past ten months, the ECB has invested US$ 2.3 trillion in monetary stimulus packages to prop up companies and households, including US$ 613 billion last month. For the fourth month in a row, inflation was in negative territory, at minus 0.3%; this is likely to move higher – albeit well short of the bloc’s 2.0% target – driven by higher energy prices. The ERC sentiment index in December rose 2.7 to 90.4, as economic confidence rose among consumers and in the industrial sector; strangely, some of the strongest gains were witnessed in Italy and Spain. Any immediate economic recovery will be thwarted by the fact that, in contrast to the UK, there has been a slow and uneven start to the implementation of vaccination campaigns.

November UK mortgage approvals hit their highest monthly level since August 2007, as UK lenders approved nearly 105k mortgages, with year on year unsecured consumer lending dipping 6.7% – its biggest fall since monthly records began in 1994. Driven by pent up demand, as well as the Stamp Duty Land Tax holiday, resulting from the lockdown effects of the first wave, the UK property market experienced a surge over the summer. Notwithstanding the impact of Covid-19, November saw 715k house purchase approvals. Although prices rose 7.3%, year on year, in December, (their biggest increase in six years), the market will inevitably slow after the Chancellor withdraws the tax break in March.

However, the general UK economy has not been performing to the same level, as output falls whilst unemployment rises. Unsecured lending to consumers fell in November at a record pace because of the lockdown, when many non-essential retailers having to shut up shop, along with the likes of bars and restaurants. In the same month, year on year net consumer lending declined 6.7% to US$ 2.1 billion – the biggest monthly fall since monthly records began in 1994. The December IHS Markit/CIPS manufacturing PMI rose 1.9 to 57.5 – its strongest growth since November 2017, as factories rushed to complete work before the end of the post-Brexit transition period on December 31, with manufacturers stockpiling materials at the fastest rate since March 2019 amid fears of disruption to trade with the EU. In November, non-financial corporates borrowed US$ 2.7 billion, (90% – SMEs and 10% – larger businesses), well short of the March figure of US$ 42.2 billion.

Just as the country enters its third lockdown in ten months, UK Chancellor of the Exchequer, Rishi Sunak has introduced a US$ 6.2 billion support package. Businesses in the retail, hospitality and leisure sectors will be able to claim up to US$ 13k to help them through the beginning of the year. This comes at a time when the country was facing a highly contagious new coronavirus variant that was spreading so fact that the NHS could buckle under the pressure by the end of the month.

2020 has been a good year for the world’s five hundred richest people who saw their combined wealth jump 31% to US$ 7.6 trillion, at a time when the remaining 99.99999% of the population had to make do with the impact of the pandemic, such as rising unemployment and global economic contraction. Much of the gain was thanks to the burgeoning stock markets that have risen by US$ 3 trillion from their March nadir. The top five richest people each have wealth of more than US$ 100 billion, with the top two, Jeff Bezos and Elon Musk, gaining an extra US$ 217 billion during the year. This week, Musk, who started 2020 barely making the top 50, is now considered richer than Bezos, with personal wealth of US$ 185 billion.  A further twenty had assets in excess of US$ 50 billion, including Zhong Shanshan who saw his wealth reach US$ 71 billion this year; known as the “Lone Wolf”, and a low-profile water-bottle tycoon”, he became Asia’s richest person replacing India’s Mukesh Ambani. Although the Chinese members of this exclusive ‘club’ gained a total US$ 569 billion in 2021, some of the others, with mega e-commerce and tech giants, including Jack Ma of the Alibaba Group, did not fare as well. In these days of egalitarianism, when it comes to obscene wealth, It’s A Man’s Man’s Man’s World.

Posted in Uncategorized | Tagged , , , | Leave a comment

Magical Mystery Tour

Magical Mystery Tour!                                                                      01 January 2021

Located in the heart of Jebel Ali, Azizi Developments officially inaugurated Aura, a 479-unit, 18-storey development, comprising 349 studio, 87 1 B/R and 43 2 B/R apartments. The project is a freehold residential development, featuring a comprehensive range of amenities, including two swimming pools, a fully equipped gym, a health club with sauna, open recreational areas, concierge service, covered parking, and a podium level with over 9k sq ft of retail space.

DP World’s interest in Africa continues with this week’s news that the port operator is in discussions with the Angolan government to operate the terminal in the Port of Luanda. It has been granted a twenty-year concession and plans to invest US$ 190 million into the multi-purpose terminal which will increase annual throughput to 700k TEUs (twenty-foot containers). The Dubai-based company already has African investments in Algeria, Djibouti, Egypt, Mozambique, Rwanda, and Somaliland, along with its biggest port investment deal in Africa last week, to develop Senegal’s Ndayane deep-water port.

HH Mohammed bin Rashid Al Maktoum has approved Dubai’s 2021 general budget which allocates US$ 15.6 billion for spending, with an estimated US$ 14.3 billion coming into the government’s coffers, despite a reduction in fees. The new budget takes into account the “exceptional economic conditions” of the 2020 fiscal year and the repercussions of the Covid-19 pandemic on the global economy. (This is in contrast to last year’s budget which assigned a record US$ 18.1 billion in spending). On the spending front, 80% of the total will be expensed on payroll (35%), grants and public support for community development and public services (25%), and general and administrative expenses (21%). The balance will be spent on investments in infrastructure (9%), servicing public debt (6%), capital expenses (3%) and private reserve (1%). A further analysis of spending sees a breakdown of 41% on developing infrastructure and transportation, 31% on health, education, housing, women and children’s care, 22% to be allocated to support security, justice and safety and the balance of 6% on innovation, creativity and scientific research. A breakdown of the revenue stream is split into non-tax revenue (59%), tax revenue (31%), return on government investment (6%) and oil revenues (only 4%). The government noted that the budget “sends a clear message to the business community that Dubai is pursuing an expansionary fiscal policy, which contributes to strengthening confidence in the emirate’s economy and attracting more direct investments.”

Having awarded construction and expansion contracts totalling US$ 379 million this year, Emirates Central Cooling Systems Corporation is looking forward to a bumper 2021, with an expected surge in the number of clients and contracts. Empower posted a 23.0% hike in the value of contracts and with the addition of new districts cooling plants and the expansion of its district cooling networks, as well as enhancing its internal processes, it is well prepared to service new business in the new year and improve its top line. The company, which holds 76% of the district cooling market in the Dubai city, has also ensured that its expansion policy is in line with the growing demand for environmentally friendly district cooling services. Its two latest contracts, valued at US$ 96 million, are for new district cooling plants in Za’abeel and Business Bay, with a total capacity of 100k refrigeration tons (RT).

Having received regulatory approval last week to operate a real estate investment fund, Al Mal Capital raised US$ 96 million, through the public float of its real estate investment. The asset management subsidiary of Dubai Investments will see the Al Mal Capital Reit begin trading next month on the DFM subject to final approvals. The new Reit will focus on long-term assets and lease agreements with investments expected in healthcare, education and industrial property sector assets, both locally and offshore. It is targeting Sharia compliant assets, with a return of around 7%, 80% of which will be income to investors.

In a blow to some in the country, TransferWise will no longer provide multi-currency accounts, (that allow customers to buy and sell and hold accounts in different currencies) to customers with a UAE address. The nine-year old UK-based fintech offers low-cost foreign exchange services allowing users to hold funds in over fifty currencies at very competitive rates. The firm, whichhas fourteen global offices, seven million global customers and processes US$ 5 billion in customer payments every month, is registered with Abu Dhabi Global Market’s Financial Services Regulatory Authority and started operations last April. Transferwise has noted that “our team on the ground is working hard on a solution and we hope to bring bank transfers back soon.”

Dubai Aerospace Enterprise has announced it has bought back US$ 100 million of its outstanding common shares. The region’s biggest plane lessor, which is owned by the Investment Corporation of Dubai, posted a 35.8% decline in nine-month profit to US$ 167 million, with revenue dipping 8.7% to US$ 984 million, to 30 September. The aviation sector has been one of the biggest casualties of the pandemic, which has seen air travel demand tank, and although the introduction of vaccines will prove beneficial, there are worries about what has been the first of many new strains, that is reportedly 70% more transmissible, and has seen the introduction of draconian lockdown measures in many countries. Earlier in the month, DAE delivered the first of eighteen Boeing 737 Max 8 aircraft to American Airlines as part of a purchase and leaseback agreement, signed in the third quarter of 2020.

DXB Entertainments has replaced its chief executive, Mohamed Al Mulla, with its chief financial officer Remi Ishak, who will also retain his current portfolio. He joined the theme park last April and he will hold his new position and will “focus on ensuring the smooth continued operations of the company while the board of directors continues its search for a permanent CEO.” The company is currently considering the ramifications of an offer by Dubai property company Meraas, which owns 52.29% of DXBE, to buy the remaining shares and take it private; this week, it has hired KPMG and Shuaa Capital, as financial advisers, and Allen & Overy, as legal adviser, to evaluate the buyout offer. The offer comprises acquiring US$ 1.2 billion of the DXB’s debt and converting its US$ 403 million bond for newly issued shares in the business, resulting in increasing its stake to 93.92%, following which it will buy out the remaining 6.08% shareholders.

The bourse opened on Sunday 27 December and, having slipped 22 points (0.9%) the previous week, shed 36 points (1.4%) to close on 2,492 by Thursday 31 December. Emaar Properties, US$ 0.02 higher the previous week, traded US$ 0.02 lower at US$ 0.96, whilst Arabtec is now in the throes of liquidation, with its last trading, late in September, at US$ 0.14. Thursday 31 December saw the market trading at 139 million shares, worth US$ 47 million, (compared to 154 million shares, at a value of US$ 57 million, on 24 December).

For the month of December and for the year 2020, the bourse had opened on 2,420 and 2,765 and, having closed the month on 2,492 was up 72 points (3.0%) in December but well down by 273 points (9.9%) YTD. Emaar traded lower from its 01 January 2021 opening but higher from its 01 November starting figures of US$ 1.10 and US$ 0.87 – down by US$ 0.14 but up by US$ 0.09 – to close December on US$ 0.96. Even at the beginning of the year, Arabtec was struggling, trading at US$ 0.35 and by the time stumps were drawn in late September, was trading at US$ 0.14 – a major fall from grace, considering that in May 2014 one Arabtec share was worth US$ 8.03. 

By Thursday, 31 December, Brent, US$ 10.21 (22.6%) higher the previous six weeks, was US$ 0.51 (1.0%) in this week’s trading to close on US$ 51.80. Gold, US$ 89 (5.0%) higher the previous fortnight, gained a further US$ 12 (0.6%) to close on US$ 1,895 by Thursday 31 December.

Brent started the year on US$ 66.67 and lost US$ 14.87 (22.3%) during 2020 but, having started December on US$ 47.59 gained US$ 4.21 (8.8%) during the month of December to close on US$ 51.80 Meanwhile, the yellow metal gained US$ 378 (24.9%) in 2020, having started the year on US$ 1,517 to close at the end of December on US$ 1,895, with the December price up US$ 118 (6.6%) from its month opening of US$ 1,777.

2020 will see a record write down in assets for the world’s oil companies and independent producers, as illustrated by seven super major oil companies and independent producers in the US and Canada writing off over US$ 150 billion this year. Asset values have diminished because of the short-term price impact on their property but also the long-term implications of the energy transition, (including the rise of renewables and electric vehicles), and socially responsible investing. With the prospect of relatively low oil prices in the short-term, and the move to renewable energy more long term, they would seem to be the main drivers behind these impairments, equivalent to 10% of the companies’ collective market value.

2020 was the second best ever, after 2007, for companies raising monies via stock market listings, collecting a global total of about US$ 300 billion; the US was the biggest contributor to the total with US$ 159 billion, along with Asia that witnessed a 70% year on year growth, to US$ 73 billion. The US blank cheque business accounted for US$ 76 billion of the cash raised in the country. In contrast, European listings disappointed, with a 10% decline to a total of US$ 24 billion.

With companies raising more than US$ 5 trillion this year, to raise cash to soften the pandemic economic blow, it is no surprise that investment banks around the world picked up nearly US$ 125 billion in fees for underwriting debt and equity offerings. Lenders earned US$ 43 billion arranging debts, 25% higher on the year, whilst fees underwriting IPOs skyrocketed 90% to US$ 13 billion, as overall equity underwriting revenue came in 75% higher at US$ 32 billion. The main beneficiary of the tech listings was Goldman Sachs, which led the likes of DoorDash, Snowflake and Unity Software IPOs to grab more than 10% of the market. One sector that saw a decline was M&A, with business down 10% on the year, but still earning around US$ 30 billion for the bankers. There was no surprise that the US Big five banks – JP Morgan, Chase, Goldman Sachs, BoA, Morgan Stanley and Citigroup – accounted for just under US$ 37 billion of the investment banking revenue, equating to 30% of the total.

Tata Group has paid Air Asia US$ 38 million to increase its JV stake in AirAsia India from 51% to 84%, as it looks to increase its stake in India’s airline industry; last week it submitted a bid to take over the struggling national carrier, Air India. The Tata Group, which actually founded Air India in 1932, only to sell it to the government in the 1950s, also operates the Vistara airline, in partnership with Singapore Airlines. Air Asia’s Tony Fernandes has been scaling back and trying to reduce its cash burn, with the Indian JV struggling in one of the toughest markets in the world made worse by high fuel taxes and fierce competition. In November, Air Asia’s Japanese unit filed for bankruptcy. However, Air Asia believes that cutting back in “a non-core market” will allow it to focus more on its key sectors – Malaysia, Thailand, Indonesia and the Philippines.

In order to protect their status as majority EU-owned companies, two airlines, Ryanair and Wizz Air, are to take away the voting rights of UK shareholders (and other non-EU investors). Ryanair posted that “these resolutions will remain in place until the board of the company determines that the ownership and control of the company is no longer such that there is any risk to the airline licences.” Meanwhile, the Hungarian-based carrier estimates that if no action were taken, 80% of Wizz Air’s shares would be held by non-EU nationals. (Wizz Air Abu Dhabi, a JV with Abu Dhabi state holding company ADQ, will begin operations from 15 January, flying to Athens, with fares starting at just US$ 35!).

It has not been a good year for some German tech companies, with their flagship Wirecard entering into liquidation, with several stakeholders facing the court in 2021 for fraud and money laundering. Now it seems that the Berlin-based Delivery Hero’s hopes of acquiring Woowa Brothers, which owns Baedal Minjok, in a US$ 4 billion has fallen foul of South Korean antitrust regulators who will only let the deal go through if the German company sold its existing South Korean, Yogiyo. There were concerns raised that if the deal went through, Deliver Hero would control up to 90% of the country’s burgeoning online food delivery market.

The Pope has finally decided to strip the Vatican’s central administration office of a tainted investment portfolio that has resulted in massive losses and has led to the arrest of Gianluigi Torzi, who acted for the Secretariat in London; he has been arrested and charged by the Vatican with “extortion, embezzlement, aggravated fraud and self-laundering”. Last month, the Vatican requested the Italian financial police to execute a search warrant against a group, associated with the Secretariat’s investments, including a suspended Vatican official and Raffaele Mincione who oversaw a luxury Chelsea property development. At the same time, the Pontiff has decided that the management of “Peter’s Pence” charitable donations would also be transferred to Apsa’s control, with this centralised asset manager also taking over the London investment portfolio.

Coinbase, the world’s second-biggest crypto exchange by volume, has suspended trading in the world’s third-biggest cryptocurrency XRP, after the US Securities and Exchange Commission accused Ripple Labs of conducting an unregistered security offering; it classified it as a security, subjecting it to a much stricter set of regulations governing how it is sold and traded. It was alleged that Ripple managed to raise US$ 1.3 billion in cryptocurrency markets over seven years through the sale of XRP, without submitting the proper documentation required for such sales. On Tuesday, the stock had slumped 27.7% to US$ 0.21821 on the Luxembourg-based Bitstamp exchange, with the cryptocurrency’s market cap 66% lower than its 24 November high. Investors seem to be transferring funds to Bitcoin, which jumped US$ 7k, over the week to  US$ 29k, and other digital coins.

Following a recent crackdown by the Chinese administration on his e-commerce and financial empire, founder Jack Ma has seen his Alibaba shares slump 9%, or losing US$ 116 billion in its market cap, on Monday, to its lowest level since June.  His upsized US$ 10 billion attempt to buy back shares failed to convince the market, which is also concerned that the antitrust investigation into the firm may carry heavy penalties and any negative conclusion would greatly change its valuation. The situation has not been improved by news that China’s central bank had requested his other company, Ant, to shake up its lending and other consumer finance operations, after suspending its US$ 37 billion IPO last month. Jack Ma must be ruing the fact that he publicly criticised the regulatory system for stifling innovation and now it is payback time for the government.

There are three main drivers behind the recent rise of gold on the global stage – massive stimulus from both the Fed and the Trump administration, optimism about the positive impact of the Covid vaccine and Joe Biden’s presidential victory. With the expectations next year for reflation trade, this will see the greenback trading lower, which in turn will have a positive impact on the gold price, which ended the year edging closer to the US$ 2k level, as US real yields hover below zero. However, if the pandemic peters out – an unlikely event at the time of writing – and there is a major roll-out of Covid-19 vaccines, then any major advance in price will be limited. Meanwhile, there is every chance that silver has the momentum to hit US$ 30 per oz. having currently more than doubled since it sank to US$ 12 per oz at the height of the pandemic; apart from the same drivers listed for gold, silver also will benefit from the expected pick-up in industrial demand next year and further development of renewable energy technology, likely to be introduced by the incoming Biden administration.

Covid-19 is one reason why property prices in both the UK and US moved higher in 2020. The UK registered its highest annual rise in six years – up 7.3% to US$ 314k, also helped by the government’s decision to nullify stamp duty on most properties until March 2021. December saw prices nudge 0.8% higher, whilst since the onset of the pandemic in March, prices are 5.3% higher, as there has been a shift in how people want to live, e.g., bigger properties or homes with gardens or in less densely populated locations. However, with the stamp duty holiday expiring in March, and an estimated one million joining the country’s dole queue in H1, there is no doubt that this will have an adverse effect on prices which could fall by 5% by June 2021.

Likewise, US house prices moved at their highest rate since 2014, with strong demand and limited supply pushing prices 7.9% higher in October, driven by similar drivers seen in the UK, as Americans seek more space for home offices, bigger kitchens and working out. The latest trend reported is that potential buyers are wanting to move from urban apartments to suburban homes, The three cities with the biggest growth rates were Phoenix (12.7%), Seattle (11.7%) and San Diego (11.6%).  In November, the number of homes for sale fell to record lows of 1.28 million, equivalent to last just 2.3 months at the current pace of sales.

For the sixteenth time in 2020, US interest rates slipped to a record low, with the average for a 30-year fixed loan falling one notch to 2.66%. Such low rates have proved a catalyst for a housing rally that, in turn, has managed to boost an economy beset with pandemic problems. However, as the number of cases move higher, there is some reason for concern if the rally can continue and a lot will depend on the efficacy of any vaccine and which direction the coronavirus will take. These lower rates, combined with demand for more space to ride out the pandemic, have pushed buyers into the market, whilst existing homeowners have managed to save money by renegotiating current loans in line with better rates. A low inventory of homes to buy, combined with the surging demand, has driven up prices but this could change quite quickly if rates started moving north again. Meanwhile, new-home sales in the US tumbled to a five-month low last month dropping 11% in a sign the market is cooling off as coronavirus cases surge, with the median selling price jumping 14.6%, the fourth straight month of double-digit increases.

In one of his last acts as President, Donald Trump seems to be doing his level best to delist China Mobile, China Telecom and China Unicom Hong Kong from the NYSE. Shares in the three tech giants, which earn all of their revenue in China and have no significant presence in the US, will be suspended next week whilst the regulators begin proceedings to move them off the bourse. Last month, the President barred American investments in Chinese firms, owned or controlled by the military and has been targeting a number of Chinese companies including TikTok, Huawei and Tencent on the grounds of national security; in a tit for tat move, China responded with its own blacklist of US companies.

US jobless claims in December fell by 19k to 717k, surprising the market that expected a figure in the region of 835k. The approximate number of citizens claiming state unemployment benefits also declined to 5.37 million. The damage afforded by the pandemic can be seen from comparing 2020 figures with those of the previous year; this year, the average weekly number has been 1.45 million, compared to 220k in 2019. The figures will remain roughly the same into January, with the recent stimulus package making a short-term impact but then the economic fall-out will see numbers heading north again.

Having criticised its “wasteful spending” and calling for higher pay outs to people hit by the pandemic, Donald Trump left it to the last minute before signing a US$ 900 billion coronavirus relief and spending package bill, averting a partial government shutdown; this was part of a US$ 2.3 trillion spending package, that includes $1.4tn for normal federal government spending. If he had not signed the bill, which he did reluctantly, more than fourteen million would not have received unemployment benefit payments and new stimulus cheques.  The departing US President described the package as a “disgrace” and full of “wasteful” items and would have preferred to give Americans a payment of US$ 2k instead of US$ 600. He also argued that the annual foreign aid money would be better served going to Americans, struggling by the impact of the pandemic.

According to the Centre for Economics and Business Research, China is set to overtake the US as the world’s largest economy by 2028; this is five years earlier than a previous forecast, mainly because it controlled the initial pandemic, through swift and extremely strict action, meaning it did not need to repeat economically paralysing lockdowns as seen elsewhere. Because of its “skilful” management of Covid-19, it is the only major economy to avoid an economic recession in 2020, whilst its relative growth, compared to the US and Europe, in coming years will be boosted.  It notes that China’s share of the global economy has risen from just 3.6% in 2000 to 17.8% now and the country will become a “high-income economy” within three years. The UK-based thinktank estimates the India will become the third biggest global economy by 2030, by overtaking the UK, Germany and Japan by 2024, 2027 and 2030 respectively.

Forecast%age
Jun 21Unit    20202020201920182017201620152014
2,050GoldUS$oz24.92%1,8951,5171,2851,3051,1511,0601,186
165Iron OreUS$Lb70.11%155.7091.5371.371.28754773
57.5Oil -BrentUS$bl-22.30%51.8066.6753.866.6256.8236.457.33
130CoffeeUS$Lb-0.70%128.25129.2101.9126.2133124161
79.2CottonUS$Lb13.30%78.1268.9572.278.5696462
30.5SilverUS$oz47.87%26.4117.8615.5616.991613.8215.77
3.6CopperUS$Lb25.71%3.522.82.643.32.482.142.88
0.79AUDUS$9.69%0.7700.7020.70.780.720.730.81
1.38GBPUS$2.49%1.3591.3261.271.351.241.481.53
1.22EuroUS$8.75%1.2181.121.141.21.051.091.21
0.014RoubleUS$-15.38%0.0140.0160.0140.0170.0160.0140.017
6,650FTSE 100-14.07%6,4817,5426,7217,6887,1426,2426,548
5,300CSI30027.22%5,2124,0973,1424,0313,3103,7313,532
3,780S&P 50016.25%3,7563,2312,5072,6742,2382,0442,091
2,850DFMI-9.87%2,4922,7652,5303,3703,5313,1513,774
6,600ASX-3.16%6,5876,8025,6526,1715,6655,3455,415
23,000BitcoinUS$303.32%29,0437,2013,69413,081998427302

From the above, it can be seen that Brent, the rouble and the FTSE 100 posted the worst returns in 2020 – by 22.3%, 15.38% and 14.07% respectively. Notwithstanding Bitcoin more than tripling in value to over US$ 29k, the standout performer was iron ore climbing by 70.11%, with silver, copper, gold and cotton returning double digit growth. This year, most commodities will move north albeit at a slower rate. When it comes to currencies, the greenback is expected to take a backseat and that sterling, (thanks to Brexit) and the Aussie dollar (courtesy of record iron ore prices) will move higher at a much quicker rate than say the euro which will be beset by internal squabbling and higher unemployment. Markets will be largely flat after a volatile 2020.

In 2021, Dubai needs two events to occur – Brent to move at least 10% higher and the vaccine to take effect.  That being the case, Dubai will be the place to be, as it will have had a head start on most of the rest of the world. A weak dollar makes Dubai exports cheaper and will be a boom for the tourism sector, as European visitors will have more money to spend. It still needs to encourage SMEs and tech start-ups that will form the basis of Dubai’s new economy. The population mix will slowly change, with construction numbers falling, whilst population growth will soften. 2019 population growth stood at 5.1% at 3.356 million, whilst last year, because of Covid, growth was at 1.6% to end 2020 on 3.411 million. In 2021, optimum growth should be around 3.5%, to end the year with a population of 3.530 million. With the new economy, it will be a case of quality rather than quantity, which will see more money in circulation being spent supporting the local economy. Furthermore, there is the prospect of a successful Dubai Expo starting in October, with the emirate also benefiting from the fact the UAE celebrates its golden anniversary in 2021. Here in Dubai, one thing we know is that, in 2021, we are going on a Magical Mystery Tour!

Posted in Uncategorized | Tagged , | Leave a comment

Go Your Own Way!

Go Your Own Way!                                                                        25 December 2020

For the latest week ending 24 December, real estate and properties transactions were valued at US$ 1.25 billion, including 92 plots selling for US$ 131million, along with 808 apartments/villas for US$ 360 million. The top two land deals involved a US$ 16 million sale in Palm Jumeirah and one for US$ 15 million in Saih Shuaib 4. When it came to villas/apartments, the top three deals all involved apartments – Marsa Dubai (US$ 63 million), Business Bay (US$ 29 million) and Burj Khalifa (US$ 26 million). Total value of mortgages was US$ 817 million, with one mortgage, (for land at Al Yelayiss 2), at US$ 272 million, whilst there were 43 properties involving first-degree relatives worth US$ 53 million.

A week earlier, for the week ending 17 December,  there had been 1.3k real estate transactions, valued at US$ 872 million; in the week, 857 apartments/villas were sold, totalling US$ 411 million, and 74 plots for US$ 81 million. The leading land sales was seen in Saih Shuaib (US$ 6.7 million) whilst the top three sales for residential units were for a Business Bay apartment selling for US$ 56 million in Business Bay, another one in Marsa Dubai (US$ 51 million) for AED 186 million, and a US$ 25 million villa in Dubai Investment Park First. The amount of mortgaged properties for the week was US$ 272 million, with a total of 70 properties were granted between first-degree relatives, worth US$ 48 million.

The latest Property Finder report confirms what many already knew – that there has been an increase in user demand for units in the suburbs this year as tenants sought more spacious homes amid the Covid-19 pandemic, noting that certain communities – including Tilal Al Ghaf, Al Muhaisnah, Wasl Gate, Town Square, Mira, Rukan and Dubai Harbour – reported increases. It also notes that, with prices falling, prime locations such as The Springs, Dubai Marina, JLT and Arabian Ranches saw a rise in demand as they became more affordable.

According to Property Finder, November saw the highest number of sales registrations since February – 3.9k, valued at US$ 2.1 billion – bringing the YTD total to 33.5k at US$ 18.8 billion. More interestingly, secondary property sales registered last month reached their highest level in nearly seven years – and the highest ready apartment sales in sixteen months. Based on the number of property listings on their portal, the greatest number of apartments currently available are in Al Jaddaf, Jumeirah Heights, Al Barari and Al Kifaf, while the most villas and townhouses can be found in Nad Al Sheba, Meydan and Mudon. It was also noted that demand increased for 3-4 B/R villas. JLL estimate that a further 26k new homes were scheduled for completion in Q4 – this figure does seem on the high side

Hussain Sajwani, Chairman of Damac Properties, reckons that 2021 is going to be yet another challenging one for the property market and that big developers should avoid “dumping” properties in an already oversupplied market. He notes that his company will “not be going to bring new products to the market, maybe a few hundred or less than a hundred just to keep the momentum going. We have no intention of expanding because the situation doesn’t look rosy going forward.” With the government having set up a committee to oversee supply and demand, this has helped the market to try to attain a demand-supply balance, which he expects to be achieved by 2022.

Magic has hit the local property sector with Kleindienst Group announcing that prices of its US$ 5 billion The Heart of Europe project have more than quadrupled; it noted that the cost of a Floating Seahorse Villa at US$ 5.4 million (Dhs 20 million), has now increased to US$ 24.5 million (Dhs 90 million), while a Beach Palace on the Sweden island has jumped from US$ 21.8 million (Dhs 80 million) to US$ 97.5 million (Dhs 358 million). The developer noted that these prices are becoming more in synch other with sought-after global property hubs such as Monaco, London, Moscow, Geneva, Vienna and Paris, where prime property prices can range between US$ 16k up to US$ 64k per sq mt.  According to recent research by Knight Frank, luxury properties in Dubai are almost 10 times cheaper than in some of the world’s most expensive cities, with US$ 1 million buying 16.4 sq mt in Monaco, 21.3 sq mt in Hong Kong and 30.4 sq mt in London, whereas it would be 154 sq mt in the emirate.

HH Sheikh Mohammed bin Rashid Al Maktoum has issued Decree No. (32) of 2020, transferring the ownership of certain educational lands (granted to government entities and real estate developers, including lands leased to third parties, and undeveloped lands granted to individuals and private entities that have not been developed within five years of the date of the grant or those that have ceased to have education activity) in Dubai, to the Knowledge Fund Establishment. The educational lands excluded from the articles of this Decree included those granted to public education facilities, lands within education zones like Dubai Academic City and Dubai Knowledge Park, mortgaged lands and common lands that include educational lands. However, developers can retain these lands if they are willing to pay 75% of the land’s market value (determined by the Department of Land and Property in Dubai) to the Knowledge Fund Establishment, in annual instalments, within a period not exceeding 34 years.

UAE-based Blends & Brews Coffee Shoppe has signed an agreement with Sultan Saad Seed Al Qahtani Trading Est, to open its first outlet in Saudi Arabia. The brand, part of the Thumbay Group’s Hospitality Division, already has a number of coffee shops in the UAE and in Hyderabad.

This week saw DP World sign an agreement, its biggest ever African port investment, with Senegal. DP World Dakar will invest a total of US$ 1.1 billion over two phases of the project, to develop its Ndayane deep-water port; it is located about 50 km from the existing Port of Dakar and near the Blaise Diagne international airport. The first phase, costing US$ 837 million, will include a new container terminal with 840 mt of quay and a new 5 km marine channel. It is expected to invest a further US$ 290 million during the second phase which will include 410 mt of additional container quay and a further dredging of the marine channel. This will boost Dakar’s position as a major logistics hub and gateway to west and north-west Africa, and, according to Sultan bin Sulayem, DP World’s Chairman, “will create jobs, attract new foreign direct investment to the country and enable new trading opportunities that bring about economic diversification.”

Etihad Credit Insurance has estimated that the UAE has extended US$ 114 million worth of trade credit to support SMEs in the first eleven months of the year to help companies protect their liquidity amid the coronavirus-induced economic slowdown. It also noted that this figure translated into US$ 272 million “secured turnover” for the firms. ECI’s measures have been able to support exporters by helping those businesses, impacted by the pandemic facing payment and supply chain disruptions, with export credit insurance and additional funding. The two-year old firm provides credit guarantees and insurance to mitigate the political and commercial risks of exporting by offering financing or refinancing for export transactions on behalf of the UAE government.

The ECI came out with interesting SME statistics and their contribution to the national economy. In 2018, such firms contributed 49% to the UAE GDP, rising to 53% a year later. It was noted that “their delicate lifespan is the reason SMEs are considered as high-risk by financial institutions, leading these businesses to have difficulty getting access to credit.” It estimates that only 50% of “new” firms survive more than five years, with only a third making it past a decade in business.

Following an agreement with NMC administrators, Germany’s Fresnius Helios is expected to pay US$ 526 million for the Eugin Group, comprising Spain’s Luarmia group of fertility clinics and US-based Boston IVF. This is in line with administrators’ aim to focus on NMC Health’s core local assets and divest of other “non-essential” assets to pay off debts or fund ongoing operations. UAE’s biggest privately-owned healthcare group was placed into administration last April, following the discovery of more than US$ 4 billion worth of previously undeclared debts at the group. A final decision on whether there will be a lender-led restructuring, or an outright sale, will take place before April, but in the meantime, an investigation report into missing money from the company will be concluded by the end of December and a litigation strategy recommended to recover assets.

It is reported that local start-up, Trukker could be considering a potential listing, as it aims to raise fresh funds to propel regional growth. The company provides an Uber-like service for trucks and averages more than 1.2k daily transactions. Earlier in the month, it raised US$ 10 million venture debt from Silicon Valley-based Partners for Growth. The firm is looking at a further funding round early next year, to be mainly used for enhancing payroll numbers and regional expansion. The company has a fleet of more than 25k trucks and 500 B to B operators, with some of the funds being used to finance the “instant payment of thousands of transporters” operating on the firm’s network in the UAE, Saudi Arabia and Egypt.

Because of recent changes to local governance rules of public companies, (by the market regulator, the Securities and Commodities Authority), that company chairmen should not hold executive positions, former chairman of Emaar Developments, Mohammed Alabbar, has had to stand down. He is to be replaced by Emirates airline executive Adnan Kazim. Only last week, Jamal Al Theniyah took over the same position from him with Emaar Properties. The former chairman will “continue to be devoted to the executive management matters and the day-to-day affairs of Emaar”, as well as continuing as an executive board member. Although it has moved higher in recent weeks, Emaar Properties’ share value had fallen 12% YTD, trading on Sunday at US$ 0.97; over the same period, the market has seen a 14.4% decline.

Following their September request to all its creditors to submit proof forms to register their claims, Drake & Scull International announced that it had completed the first phase of a restructuring plan and will present the second phase next month. These claims, currently under review by their Financial Reorganisation Committee, will shortly be published in local newspapers. The company will share the results with its creditors in January and then have a vote on it. DSI posted a US$ 35 million nine-month profit to September, compared to a US$ 330 million loss a year earlier; for Q3 there was a US$ 19 million loss.

In a statement to the local bourse, Damac Properties has advised it is looking at increasing its shareholding in the Nine Elms project in London. The UAE’s third-biggest property developer by market capitalisation, posted a Q3 loss of US$ 148 million, following a US$ 158 million write-down, amid the coronavirus pandemic, although revenue was markedly higher at US$ 349 million.

There are reports that indebted theme parks operator DXB Entertainments will benefit from a capital restructuring exercise led by its 52.29% majority shareholder, Meraas Leisure and Entertainment; this will inevitably lead to the company to undertake a capital restructuring plan, by converting most of the company’s outstanding debt into newly issued shares. This will lead the Dubai Holding subsidiary to holding 93.92% of the park operator, in a move that would also lead to it taking the company private, as it will also launch a tender offer to buy out remaining stakeholders, who will be offered US$ 0.0218 a share.  Meraas will convert their US$ 403 million bond into new DXBE shares at a conversion rate of US$ 0.283 and will also take on nearly US$ 1.2 billion of senior debt owed by DXB Entertainments in return for new shares and will also take on US$ 1.17 billion of senior debt owed by DXB Entertainments in return for new shares. As of 30 September, DXB Entertainments had accumulated losses of US$ 1.7 billion, including a YTD deficit of US$ 289 million.

The bourse opened on Sunday 20 December and, 263 points (17.9%) to the good the previous six weeks, finally gave up a little of that gain, slipping 22 points (0.9%) to close on 2,528 by Thursday 24 December. Emaar Properties, US$ 0.02 lower the previous week, traded US$ 0.02 higher at US$ 0.98, whilst Arabtec is now in the throes of liquidation, with its last trading, late in September, at US$ 0.14. Thursday 24 December saw the market trading at 154 million shares, worth US$ 57 million, (compared to 160 million shares, at a value of US$ 59 million, on 17 December).

By Thursday, 24 December, Brent, US$ 10.27 (22.6%) higher the previous five weeks, was almost flat in this week’s trading to close US$ 0.06 on US$ 51.29. Gold, US$ 43 (2.3%) higher the previous week, gained a further US$ 46 (2.5%) to close on US$ 1,883 by Thursday 24 December.

It has taken copper seven years to return to a value of over US$ 8k – a possible indicator of the start of a new commodities super-cycle, (the last one being earlier in the century), as supply-side investment falls short of an expected surge in demand. The metal’s price has rallied 80% since its March low, driven by China’s appetite for commodities, supply snags in the early stages of the pandemic, expectations for a deficit, the weaker greenback, and copper’s role in green technology. In line with other industrial commodities, including oil and iron ore, copper will benefit from China’s increasing economic activity, after its apparent success at containing the coronavirus pandemic and optimism about global economic growth.

Last week, Tesla’s share value topped US$ 600 billion and now it has unveiled its second US$ 5 billion capital raise Investors in three months, as the Elon Musk company cashes in on a stellar rise in its shares this year. By the end of last week, Tesla shares had skyrocketed by 670%, which in turn saw Elan Musk’s net worth nearly sextuple to US$ 155 billion. Depending on which source is used, when it comes to global production, last year, the number of vehicles dipped 5.2% to 91.8 million, with the five biggest manufacturers – Toyota, VW, Hyundai, GM and Ford – accounting for 41.3 million (45.0%) of the total; the next ten accounted for 36.6 million (39.9%), so that almost 85% of global production was carried out by the fifteen of them. Tesla, in that period, managed to produce 367.5k or just 0.4% of the global total.

Although its production levels fell well short of the legacy car makers, it is by far the most valuable auto company in the world, with its value more than the combined market cap of the nine largest car companies globally. The jury is out on the future value of Tesla, with many analysts forecasting even more upside for the electric vehicle maker heading into 2021. On the other side, are those who believe Tesla’s share value is in a bubble and will head south now that it has been added to the S&P 500 index since Monday, 21 December, where it now accounts for about 1% of the total index value; it has replaced property firm, Apartment Investment, which was worth 0.02% of the index.

The US Securities and Exchange Commission has charged crypto-currency, Ripple with conducting investments without proper licences, indicating that Ripple XRP is a tradeable asset, known as a security, and thus subject to its regulations; the firm counterclaims that XRP is a currency and therefore does not have to be registered as an investment contract, with digital currencies being under the umbrage of another US regulator – the Commodity Futures Trading Commission. When news was broken, the value of XRP, the third largest crypto currency after Bitcoin and Ether, fell by more than 30%. Whilst the two major currencies have been ruled out of trading exchanges, following a 2018 decision by the US Commodity Futures Trading Commission ruling that both could be traded as commodities, like currencies or oil, XRP has not.

Tech giant Alibaba is being investigated by China’s State Administration for Market Regulation over monopolistic practices, having previously warned Jack Ma’s company about forcing merchants to sign exclusive deals which prevent them from offering products on rival platforms. The alleged monopolistic behaviour involves pressure over the so-called “choosing one from two” practice which sees sellers signing exclusive cooperation pacts, preventing them from offering products on rival platforms. On another front, regulators are also meeting to discuss Alibaba’s financial technology offshoot Ant Group.  In November, the firm was just launching what would have been the largest IPO in the world, only to be ordered to halt its listing about its micro-lending services. The People’s Bank of China noted that the meeting was “to guide Ant Group to implement financial supervision, fair competition and protect the legitimate rights and interests of consumers”. Chinese authorities, worried about the growing size and power of mega tech firms such as Alibaba and Tencent, have since introduced new anti-trust laws.

Within a fortnight of its 13 October launch, Apple’s iPhone 12, priced at US$ 817, became the world’s best-selling 5G smartphone, with a 16% share of the total sales, ahead of Samsung and Huawei that had launched their rival models a year earlier. By the end of that month, it had captured 16% of the 5G smartphone market. By the end of October, Samsung’s Galaxy Note 20 Ultra had lost its September number one placing to drop to third place, with only 4% of the market, behind iPhone 12 Pro that grabbed 8% of the market.

Apart from being the dominant force in the 5G smartphone sector, Apple, utilising its own LFP (lithium iron phosphate) battery technology – that could radically reduce the cost of batteries and increase the vehicle’s range – is targeting 2024 to produce its first electric car. Apple aims to be a major player in the electric car market, joining the likes of Tesla, Audi and General Motors, and will use a third-party manufacturing partner to build the vehicles. Other tech giants, such as Amazon and Alphabet, are also backing autonomous-electric initiatives but they are more focused on mass transport. The former has Zoox, an autonomous ride-hailing fleet Industry which can also use automated cars to deliver goods to customers. Meanwhile, Alphabet’s Waymo is operating a commercial self-driving taxi service.

SsangYong, 75% owned by Indian automaker, Mahindra & Mahindra, has filed for bankruptcy after failing to repay US$ 55 million to creditors. The South Korean carmaker has warned of massive disruptions to its operations and is highly unlikely to receive state aid, because of its overseas ownership; however, it is possible that the company’s suppliers may receive public financial support. Any further investment from its Indian owners, who acquired the company that specialises in SUVs a decade ago, has been looking for a buyer since June, is improbable, bearing in mind that SsangYong had posted losses for the past fifteen quarters.

Just when they have the troubled 737 Max aircraft flying again, after a twenty-month hiatus, Boeing has been accused of “inappropriately coaching” test pilots during efforts to recertify the company’s troubled plane. US Senate investigators have accused both the manufacturer and Federal Aviation Administration officials of “attempting to cover up important information”. The Senate Commerce Committee’s report noted that based on “corroborated whistle-blower information and testimony during interviews of FAA staff”, it concluded that FAA and Boeing officials involved in the test had “established a pre-determined outcome to reaffirm a long-held human factor assumption related to pilot reaction time” and that “Boeing officials inappropriately coached test pilots in the MCAS simulator testing contrary to testing protocol.” If this were to be true, it will be another damaging blow to the integrity and already-tarnished reputations of both Boeing and the US watchdog, the FAA.

One company is in hot water with the Australian consumer watchdog for trying to sell clothes they said could protect against coronavirus. Activewear brand Lorna Jane has been prosecuted for trying to sell clothes they said could protect against coronavirus. In June it claimed that “LJ Shield breaks through the membrane shell of any toxic diseases, bacteria or germs that come into contact with it, not only killing that microbe but preventing it from multiplying into anymore,” and was fined US$ 30k for making these claims. Now, the Australian Competition and Consumer Commission is taking the private company to the Federal Court over alleged false or misleading claims, alleging “that the statements made by Lorna Jane gave the impression that the COVID-19 claims were based on scientific or technological evidence when this was not the case.” The twenty-year old company, with 108 stores in Australia, as well as a number of international stores, is to defend itself in Court.

Another month and another record for the UK economy – with government borrowing topping US$ 96 billion, this was the highest ever November figure, as well as the third-highest figure for any month. In the first eight months of the UK fiscal year, starting in April, borrowing has almost tripled to a massive US$ 335 billion, compared to a year earlier. By the end of the year in March, it is estimated that the annual borrowing will top US$ 500 billion. The government has also seen tax receipts slump by US$ 51 billion in the eight months to November year-on-year. The increase has resulted in the national debt rising to US$ 2.8 trillion, with the current debt now reaching 99.5% of GDP. Revised figures by the Office of National Statistics show that the UK economy slumped 18.9% in the June quarter (slightly lower than the initially posted one of 19.8%) with a bounce back of 16.0% in the next quarter. With everything dependent on the vaccine efficacy, the UK could go into a double dip recession – if restrictions and lockdowns extend into early 2021 – or could stage a monumental rebound in H2 2021.

After many months of bitter wrangling, US lawmakers have finally agreed to a US$ 900 billion pandemic aid package which includes financial help for businesses and unemployment programmes; this is expected to run in tandem with a US$ 1.4 trillion funding for government operations over the next nine months. This arrives as many Covid-19 economic relief programmes were set to expire at year end which would have seen twelve million Americans at risk of losing access to unemployment benefits. The latest funding will be spent on supporting business (US$ 300 billion), direct stimulus payments to most citizens (US$ 600 billion) and money for vaccine distribution, schools and renters facing eviction. The bill does not include substantial aid to local governments, which had been a top priority for many Democrats.  Last March, US$ 2.4 trillion was injected in economic relief, including US$ 1.2k stimulus cheques, funds for businesses and money to boost weekly unemployment payments by US$ 600.

1,664 days after the UK voted to leave the EU, a trade deal has been finally agreed that will ensure tariff and quota free trade between the two. The deal still needs approval from the UK parliament and the 27 EU member states. The 500-page agreement will mean there are no quotas or tariffs on the goods trade that makes up half of the annual commerce between the UK and EU, worth more than US$ 1 trillion. The deal will also support the Northern Ireland peace agreement which will please the incoming US President-elect Joe Biden, who had warned Mr Johnson the Irish status quo had to be maintained. However, it must be remembered that it does not include services which account for about 80% of the UK economy so this may cause problems for UK financial institutions requiring access to the EU stage. A euphoric Downing Street commented “Deal is done,” and “We have taken back control of our money, borders, laws, trade and our fishing waters.” Time To Go Your Own Way!

Posted in Uncategorized | Tagged , , , | Leave a comment

Time Is Running Out!

Time Is Running Out!!                                                                       17 December 2020

The latest Valustrat report points to a stabilisation in property prices in 2021 with two caveats – the economy recovers from the pandemic-induced slowdown and government initiatives, including overseas visas for expatriate retirees and the expansion of the ten-year golden visa scheme, attracts foreign professionals. The report further adds that it expects increased buying activity from China and higher business activitie,s brought on by the delayed six-month Dubai 2020 Expo, starting next October, as well as the 50-year anniversary of the UAE.. Furthermore, the recent reforms in commercial and inheritance laws, along with the easing of certain other social restrictions, have done much to improve both business and expat confidence, which has a knock-on impact on the realty sector.

Although Chesterton’s Mena expects stability to return to the sector in 2021. It stlll sees moderate declines next year, although there will be differences between property types and locations. ValuStrat estimates that November property prices are down 13.8% on the year, but only 0.2% month on month, making it still a buyers’ market.  Villa prices in Jumeirah Village and Dubai Sports City recorded the biggest falls of 14.8% and 14.4%, whilst Discovery Gardens, Dubai Production City, Jumeirah Village, Business Bay, Burj Khalifa and Dubai Marina dropped 16.8%, 16.4%, 16.0%, 14.5%, 15.2% and 13.8% respectively. However, with such low prices, there has been strong buying interest in certain locations, including Dubai Marina, International City, Jumeirah Lake Towers, Arabian Ranches, Jumeirah Village, Meadows, Business Bay and Downtown Dubai.

Next year, Cavendish Maxwell expects the Dubai market portfolio to increase by 50k, but this does seem to be on the high side. There is no doubt that with developers, such as Emaar and Damac, curbing new supply, by temporarily curtailing all future developments, market equilibrium will soon come into play. Two major trends which started in 2020 will continue into the new year – the secondary market will dominate transactions and increased demand for villas in selected locations will continue.

The following uses official data from the Government of Dubai’s Statistics Centre. In the past five years, to mid-December 2020, Dubai’s population has increased 40.5% from 2.43 million to 3.41 million but only by 0.07 million, 0.2%, over the past year because of the impact of Covid-19. Meanwhile, the number of units at the end of 2015 totalled 481.6k (397.6k apartments and 84.0k villas), increasing by 168.3k (23.4%) to 649.9k (537.4k apartments or by 35.2% and 112.5k villas or by 33.9%). Over that four-year period, the population, expanded by 38.3%., at a slightly quicker rate than the rise in residential units.

A new law, introduced by HH Sheikh Mohammed bin Rashid Al Maktoum, sees the establishment of a special tribunal to oversee the liquidation of unfinished and cancelled projects, as well as the settling of related claims; this will supersede the 2013 law, dealing with cancelled projects, and will also take up existing cases that the previous committee has not settled. Decisions made by the special tribunal will be “final and uncontestable”, If the Dubai Land Department’s Real Estate Regulatory Agency has confirmed a project cancelled, the tribunal will be responsible for liquidating the assets and will “define the rights of investors and purchasers”.  More importantly for the end user – and in a step that will encourage increased investment into the residential sector -a second decree states that if a developer fails to start a property project for reasons beyond their control, or if it has been cancelled by Rera, the developer in question “must refund the entire amount paid by purchasers”.

The Dubai Ruler also issued Law No. (14) of 2020 regulating the timeshare industry in the emirate, with the aims of strengthening the pertinent legal framework, along with stimulating both the tourism and real estate sectors. As tourism matures in the emirate, timeshare is increasing its footprint, giving adequate alternative residential alternatives for tourists and visitors, whilst encouraging investments in the vacation ownership sector. The management of the emirate’s timeshare industry has been handed to Dubai’s Department of Tourism and Commerce Marketing who will coordinate with the Dubai Land Department and Dubai International Financial Centre in all matters related to the timeshare-related activities of developers and brokers, and registration of timeshare contracts and right of usufruct. Timeshare permits will be valid for a renewable period of one year.

Emaar has named Mohammed Alabbar as its new MD, with him being replaced by Jamal Al Theniyah as Chairman, in a move brought on by new regulations that prohibit combining the chairmanship of a company with another executive position; Ahmed Jawa becomes the new vice-chairman. The move comes a week after Dubai’s largest property developer announced that it was holding back on new launches in a bid to overcome the current oversupply in the market. One consultancy reckoned that Dubai has 585k homes at the end of Q3 and nobody really seems to know how many will come to completion for the year 2020, with estimates ranging from 35k to 55k.

Reportage Properties is set to develop ten real estate projects, delivering 4k units, in both Dubai and Abu Dhabi. The Abu Dhabi-based developer noted that the real estate sector market is beginning to show positive developments, resulting in increased sales during the current year, particularly for residential units in Rukan Tower, which is being developed in Dubailand, in cooperation with the Continental Investment. Comprising 488 units of studio to 2 B/R apartments, with prices of US$76k, US$ 106k and US$ 163k respectively, the project will be ready for handover by the end of 2022. Last year, the developer launched Rukan Tower, consisting of two phases of 349 and 305 residential villas; 20% of the construction work has been completed.

It is estimated that the UAE has injected support packages of US$ 107 billion to try and support the economy, battered by the pandemic, with a selected committee formed to administer and oversee the process. Two of the packages included the Central Bank’s Targeted Economic Support Scheme in March, (to boost liquidity in the financial and banking sectors), and the US$ 13 billion Tess programme, offering zero-cost collateral funding to banks to encourage lending to the broader economy.  Other governmental measures have been added to ease the cost of doing business in the country. These include a major overhaul of commercial companies’ law and that, in most cases, the need for onshore companies to have an Emirati shareholder has been removed. Other ‘legal’ initiatives include major changes to the commercial transactions and bankruptcy laws, as well as the decriminalisation of bounced cheques.  The government has also allocated grants and incentives to tourism establishments and reduced tourism sector fees and taxes. To date, it is estimated that such measures have benefitted 10k SMEs, 1.5k private sector companies and more than 310k of the population.

The seasonally adjusted November IHS Markit PMI fell 0.9 to 49.0, on the month, with only titbits of positive news, such as job losses being at their lowest since February, as business picked up in the wholesale and retail sector. News of vaccines being available could result in a quicker than expected economic recovery.

In a move that intends to ease access to credit insurance and reduce exporters’ non-payment risk, Etihad Credit Insurance and the Israel Foreign Trade Risks Insurance Corporation (Ashr’a) have signed a deal to strengthen bilateral trade ties that will encourage exports and investments. According to the ECI, the annual exchange of trade between the UAE and Israel is expected to reach $4 billion, with the deal expected “to ease access to export credit facilities” for exporters and minimise risks associated with non-payment. Both parties will also explore mutual opportunities for co-insurance services for exporters and facilitating market access to SMEs.

In 2019, the UAE’s US$ 414 billion economy was driven by Abu Dhabi and Dubai, accounting for 59% and 28% of that year’s GDP. The latest report from S&P Global Ratings estimates that, because of the pandemic, the economy will lose 5.7% in value but will post a 3.1% expansion in 2021. However, the International Finance the Corporation expects the country to experience a contraction of 5.7 % this year, followed by a modest recovery of 3.1% in 2021.  It is not expected that the economy will recover fully until 2023, as sharp falls in key sectors – tourism and real estate – will take time to recover. The ratings agency indicated that Dubai’s economy would contract sharply on the back of the pandemic battering that the travel and tourism sectors have taken, as well as broad declines across the rest of the economy. However, there is every chance that the delayed Expo 2020 will prove a catalyst for some sort of economic recovery in Q4 2021.With the hydrocarbon sector production being boosted from 2022, with Opec+ oil production limits being lifted and new gas production coming on stream, the non-oil sector recovery will be driven by public investment in manufacturing particularly petrochemicals, logistics, and construction. Credit agencies have been hopelessly wrong in the past and there is every chance that this will be the case this time, with Dubai recovering much quicker and returning to pre-pandemic levels (and more) well before S&P’s 2023 mark.

UAE Q3 sales of mobile phones saw Chinese company Xiaomi joining the pack of the three main suppliers – along with Samsung and Huawei – as sales rose 6.4% to one million, quarter on quarter, partly driven by pent-up demand. The GCC witnessed a slight 0.2% decline in the period to 4.97 million units, with UAE sales accounting for 24.1% of the total, behind Saudi Arabia’s 52.6%; Saudi sales dipped because of the tripling of their VAT rate to 15%, pushing prices higher. Samsung remained the region’s leading provider, accounting for a 44.6% share. In units shipped, but second with a 30.8% share of the monetary value, indicating that the market preference is for the entry-level and mid-range price brands; this explains Samsung’s market share discrepancy between units sold and their monetary value. Q4 and Q1 sales will probably see similar quarterly unit increases, at around 6.5%, with brands like Apple (reportedly planning to increase iPhone production by 30% in H1 2021), and Samsung selling more with their newly released models.

It is estimated that the UAE accounts for 11% of the total global gold exports, with the country becoming increasingly important on the world stage. Trading in the yellow metal accounts for more than 29% of the total national non-oil exports and that, despite the pandemic, the gold trade was 6% higher, year on year to August. The federal government has introduced a new policy for the gold sector, aimed at enhancing the UAE’s governance of gold trade so as to align with best international practice. The new policy covers four areas – establishing the UAE’s standard for good gold delivery, development of a federal platform for gold trade, establishing a committee for the UAE bullion market, and building a database for companies and individuals involved in the gold trade.

Disgraced payments firm Finablr, which owns a number of foreign exchange and digital payments companies, including UAE Exchange, Xpress Money, Unimoni, Remit2India and Bayan Pay, has been sold to Global Fintech Investments Holding for a nominal US$ 1. GFIH – an affiliate of Israel-based Prism Group – has formed a consortium with Abu Dhabi’s Royal Strategic Partners to purchase Finablr and will provide the company with working capital to help it operate and support its creditors and employees; it will also undertake to support and facilitate the company’s continued efforts to recover funds from third parties  The BR Shetty  company was listed on the London Stock Exchange in May 2019, at which time it also owned the Travelex foreign exchange business,  which has since been divested to another lender Then it was valued at US$ 1.5 billion but was hit with two major problems – a cyberattack on Travelex, along with the unfolding collapse of its parent firm, BRS Investment Holdings. In May, with it being disclosed that its debt was US$ 1 billion more than what was accounted, itappointed a law firm to “investigate historic potential malfeasance within the Finablr Group and any misappropriation of assets” in July.

A JV with the Republic of Rwanda will see DP World launch its new global B2B and B2C e-commerce platform, DuBuy.com,  following a Memorandum of Understanding with the Rwanda Development Board. Apart from making it easier for Rwandan companies to trade on the international stage, it will also strengthen commercial trading links between the UAE and Rwanda. The platform will enhance the promotion of exports of coffee, tea, and horticulture from the African country. DP World, which has already invested in world class port and logistics facilities in Kigali, will also assist with improvements to the country’s supply chain logistics, including in rural areas, and access to digital tools to help businesses become more efficient and expand their reach to local, regional, and global markets.

A new law enacted this week sees the granting of more autonomy to the Dubai Civil Aviation Authority, in tandem with the UAE’s General Civil Aviation Authority. Whilst also boosting sectorial safety, security and sustainability, its twin aims are to consolidate the emirate’s global leadership in the civil aviation sector, and also to enhance its attractiveness as a destination for aviation businesses. A government spokesman commented that “under the new law, DCAA is authorised to sign agreements … related to air traffic rights to operate via Dubai airports, and implement them in co-ordination with the GCCA.” The local agency will represent Dubai in all civil aviation matters, including all nature of negotiations, including air traffic rights, and accident investigations. Dubai will no longer have to seek approval from the GCAA, and report Dubai’s air traffic data to the federal regulatory body.

Dubai Aerospace Enterprise has a deal with American Airlines to deliver eighteen Boeing 737 MAX 8 aircraft, with the first of those arriving to the airline this week. DAE’s owned and committed fleet includes twenty-two Boeing 737 MAX 8 aircraft, which has just been allowed to return to US skies, some twenty-one months since two fatal crashes saw the plane being grounded. This is part of the Purchase and Leaseback agreement signed with the US carrier in Q3.

Following governmental directives, Dubai-based district cooling provider Emirates Central Cooling Systems Corporation has started reducing fuel surcharge on electricity and water for more than 140k of its customers,  reducing charges by US$ 13.1 million. Empower, which has an availability of a total cooling capacity of 1.53 million refrigeration tonnes, is keen to increase the share of renewable and clean energy in Dubai’s energy mix, in line with government targets of 25% from renewable sources by 2030 and 50% by 2050.

Recent figures indicate that foreign interests have invested US$ 5.8 billion, totalling 8.4 billion shares, in the six real estate companies listed on the Abu Dhabi and Dubai financial markets as on 09 December. As with most listed companies, foreign ownership of up to 49% of a company is allowed and perhaps this has helped the Dubai bourse jump 17.9 % over the previous four weeks. The significant rise in the number and value of shares owned by foreign investors in real estate companies has followed a surge in their share prices in recent months. Three of the Dubai listed companies – Emaar, Damac and UP – accounted for 35.51%, 33.83% and 17.06% of all real estate companies’ shares listed. It is expected that the percentage of foreign share ownership will continue to move north in the future.

The bourse opened on Sunday 13 December and, 260 points (17.9%) to the good the previous five weeks, nudged 3 points higher to close on 2,550 by Thursday 17 December. Emaar Properties, US$ 0.11 higher the previous week, traded US$ 0.02 lower at US$ 0.96, whilst Arabtec is now in the throes of liquidation, with its last trading, late in September, at US$ 0.14. Thursday 17 December saw the market trading at 160 million shares, worth US$ 59 million, (compared to 456 million shares, at a value of US$ 80 million, on 10 December).

By Thursday, 17 December, Brent, US$ 9.30 (22.6%) higher the previous four weeks, gained a further US$ 0.97 (1.9%) in this week’s trading to close on US$ 51.35. Gold, US$ 2 (0.1%) lower the previous week, gained US$ 43 (2.3%) to close on US$ 1,837, by Thursday 17 December.

Bitcoin has once again hit a new record. with the cryptocurrency having tripled in value this year, trading at US$ 22,945 by the end of Thursday trading. With bitcoin’s supply capped at 21 million, investors see it as a hedge against the risk of inflation, with governments and central banks turning on the stimulus taps to tackle the negative impact of Covid-19. When this particular “tap” is turned off, there will be those who will search for alternative currencies due to constant fiat money debasement. Only four years ago, it came close to topping the US$ 20k mark but since then has hit extreme lows and even falling below US$ 3.3k. Despite BoE Governor Andrew Bailey (and he has been wrong before) cautioning over its use as a means of payment, it is being widely utilised as a form of payment with PayPal among the most recent adopters of the digital currency.

In a cash deal of over US$ 3.9 billion, Zurich Insurance is planning to acquire MetLife’s US property and casualty business, extending its reach of its Farmers subsidiaries; it is expected that the cost of the purchase will be divided between Zurich’s Farmers Group and Farmers Exchanges subsidiaries in the US. Zurich, which saw its gross written premiums declining 3% to US$ 15.3 billion in Q3, hopes that with the Farmers businesses gaining a nationwide presence and access to MetLife’s distribution channels to 3.8k companies for ten years, will see a boost in its revenue stream. The MetLife deal, which includes 2.4 million policies and a reported US$ 3.6 billion net written premiums, is expected to contribute a 10% return on investment to Zurich’s earnings from 2023.

UK’s video-game-maker Codemasters, in a deal worth an estimated US$ 1.2 billion, has been acquired by games giant Electronic Arts which owns the global franchise to Need for Speed. Codemasters, also involved in racing games, including the Dirt Rally series and Formula 1 licences, had earlier rejected a US$ 973 million offer from New York-based Take-Two Interactive and has indicated that it would recommend its shareholders accept the offer. However, there is still a chance that Take-Two could respond with a better offer, which would see the two US gaming giants raising the stakes for Codemasters, founded in 1986 by two schoolboy brothers.  

Cyberpunk 2077, touted as one of the biggest gaming releases of the year, has been pulled from PlayStation stores after complaints of bugs, compatibility issues and even health risks; its long-awaited arrival had already been delayed twice. This will be a major blow for Sony Interactive Entertainment, as this is one of the most expensive video games ever made,  The company has indicated that it will “begin to offer a full refund for all gamers who have purchased Cyberpunk 2077 via PlayStation Store”. It will also remove the game until further notice.

It seems that the huge on-going financial scandal, bedevilling Germany, may claim another victim, Ralph Bose, who has headed Apas, the country’s accounting regulator, since 2016; before that, he was a senior partner at the Big Four firm, KPMG.  He has confessed that he had bought and sold shares in Wirecard last April, at the same time, his own watchdog was investigating the fraudulent payments company auditor, EY. It seems that many were aware of Wirecard’s problems even before Apas opened a preliminary probe into EY’s audit work in October 2019 and it took the watchdog a further eight months to open a full investigation, whilst in September it filed a criminal case against three EY auditors. It looks highly likely that another one will bite the dust.

Covid-19 has not been kind to AMC Entertainment Holdings, the world’s largest movie theatre operator, which has seen attendances slump by 92% in the US and 86% internationally. It has secured a further US$ 100 million in emergency funds – but that will only see it to the end of December at best, as its average monthly cash burn has been 25% higher at US$ 125 million. Whist most of the cinemas have been closed, the growth of streaming has becoming so popular that there is no doubt it will continue to present a major problem, even when some sort of normalcy returns to the screen. Both Warner and Disney have plans to push more of their new releases through streaming services – the former confirming that all of its 2021 films will be released online on the same day, with Disney also indicating that it plans to push more of its films to its Disney+ streaming service.

Ride-hailing firm Uber Technologies Inc was fined $59 million on Monday for failing to provide the California Public Utilities Commission (CPUC) with information on certain sexual assault and harassment claims between 2017 – 2019.

Following the earlier success of DoorDash, Airbnb hit the jackpot this week when its IPO share price of US$ 68.00 ended its first trading day 112.8% higher at US$ 144.71, proving the resilience of the home sharing company, during a year when global travel ground to a halt; a year earlier, 54 million guests stayed at an Airbnb. The closing price gave the company a valuation of just over US$ 100 billion, although Airbnb only raised US$ 3.7 billion in its offering, making it the biggest US IPO this year.  It still is a mystery how a company can be so valued even though it has never made a profit – and its nine-month revenue to September was down 32% to US$ 2.5 billion. It is reported that Airbnb controls around 39% of the global short-term rental market and is the market leader in Europe but trails VRBO, a vacation rental company owned by Expedia, in North America. It has 7.4 million listings in 22 countries and operated by four million hosts.

Another week, another IPO and another jackpot for investors but this time it was not in the US but India where Burger King jumped 87.5% on its market debut on Monday, with each US$ 0.82 share closing on US$ 1.53.  At the beginning of the day, the company, that runs the franchise of Restaurant Brands International Inc’s US chain Burger King, was valued at US$ 583 million and ended worth almost US$ 1.1 billion. The IPO raised about US$ 110 million and was an indicator that the country’s food service sector was moving forward.

A rarely known fact is that sportswear firm Reebok started life almost seventy years ago in Bolton, England, but was later bought by an enterprising US entrepreneur. The company became a global player in 1982 on the back of its development of the Reebok Freestyle aerobics shoe, the first athletic shoe designed for women, at the start of the aerobics fitness trend. Adidas, which acquired the company in 2006 for US$ 3.8 billion, is now possibly in the market to sell it and will decide by March; it seems that interested parties could include the private equity firm Permira, which owns the Dr Martens footwear company, and Timberland brand owner, VF Corp. 2019 figures of an increase in revenue to US$ 2.1 billion only account for 7% of Adidas’ total annual sales. Currently, Reebok, based in Boston, currently has a six-year US$ 70 million deal with Ultimate Fighting Championship.

McLaren is to sell as much as 33% in its racing unit to a US consortium led by MSP Sports Capital and is set to receive US$ 245 million – funding that will be spent to refinance bonds due in 2022 and repair its finances to continue developing new models. At this level of investment McLaren’s racing unit is valued at US$ 740 million. To raise extra financing, the company is considering a sale of its Woking headquarters. Continuing the F1 connection in the week that saw the Abu Dhabi Grand Prix closing the 2020 season, Ferrari was in the news ,with the sudden departure of its chief executive Louis Camiller;  he was quickly replaced by an Agnelli family descendant, John Elkann, on an interim basis.

Aiming to help Americans, who were struggling because of the pandemic, MacKenzie Scott, has donated more than US$ 4 billion to food banks and emergency relief funds in four months; this brings her total charitable donations to over US$ 6.0 billion with 380 charities benefitting from her largesse. The ex-wife of Amazon founder Jeff Bezos, and now the world’s 18th-richest person, has seen her personal wealth jump 156% this year to US$ 60.7 billion. Latest figures show that the US poverty rate has surged since June to reach 7.8 million citizens.

By the end of the week, once again, all three US markets hit record highs, with the Dow Jones gaining 147 points (0.5%) to close at its highest ever level of 30,302 points, whilst the benchmark S&P 500 closed 0.6% higher at 3,722, with the tech-heavy Nasdaq 0.8% to the good to 12,764 points.  The main drivers continue to be rising unemployment rates, surging pandemic cases and confidence that the US Government would need to pass a stimulus bill to bolster the economy. Latest data also points to manufacturing activity in the mid-Atlantic region cooling, with factories reporting a sharp slowdown in new orders and job growth.

There are reports that indicate that Spain will be the main beneficiary of the EU’s US$ 920 billion coronavirus fund, with a possible US$ 172 billion in project financing. Some of the country’s blue-chip companies – including Seat, Telefonica and Iberdrola – are making plans to ensure that they will receive funding. Other countries in the line-up include “old favourites” – Croatia, Bulgaria, Greece, Portugal and Romania – some of them which have had economic well documented woes in the past.

Meanwhile, the bloc’s stand-out economy, Germany, is heading for a double-dip recession, as the Merkel administration has imposed a severe four-week lockdown, which could knock off 4% from the country’s growth rate, compared to the 2.5% from the first lockdown earlier in the year.

The EU is to introduce a pair of laws – the Digital Services and Digital Markets Acts – focusing on competition and making platforms responsible for hosted content. The new laws will “overhaul” the digital market, including how tech giants operate, with transgressors facing heavy penalties. Driven by Competition Commissioner, Margrethe Vestager, and Internal Market Commissioner, Thierry Breton, they have noted that much of the current outdated law goes back to the start of the century and that “the business and political interests of a handful of companies should not dictate our future”, adding “that our rules and principles are respected everywhere. Online as well as offline.” In the past, the EC has taken swipes at the US tech giants, such as Google and Facebook, and their market dominance along with their preponderance to utilise the data they gather from one service to “improve or develop” a new one in a different area, making it difficult to compete with them. Labelling such firms “gatekeepers”, that “set the rules of the game for their users and their competitors”, the EU will surely have a battle on their hands.

Cuba is set to devalue its peso to US$ 0.24 on 01 January 2021, as the government struggles with its worst economic crisis since the collapse of the Soviet Union. For years, the currency has been artificially set at parity to the greenback. The Miguel Diaz-Canal government plans to raise state wages and pensions fivefold to compensate for the almost-certain jump in inflation, driven by the devaluation. However, this move will only benefit 60% of the working population, with the 40% balance working in the private and informal sectors.

In a rare setback for the Australian medical research centre, Australia has cancelled plans to proceed with CSL’s promising Covid vaccine, as clinical trials, being developed by the University of Queensland and CSL, have been abandoned because some participants returned what are called false positive test results for HIV. (Importantly, the participants did not develop HIV or any of its symptoms, but in tests for disease they returned results that incorrectly looked positive for it). The federal government had already signed deals with four companies for the supply of a Covid vaccine including 51 million doses from CSL. CSL is one of the country’s most valuable companies, having started the century, with a share value of US$ 5.30, and, having doubled its price over the past five years to US$ 255, last March it temporarily become the largest market cap on the ASX; last year, it posted a profit in excess of US$ 1.6 billion.

Once a geological survey and fundraising are finalised, work is planned to start in 2026 in Western Australia on a US$ 27 billion project to mass-produce hydrogen, from renewable power sources; this could present the country a major revenue generating opportunity to move away from coal to clean energy exports. When completed, it will churn out 1.75 million tons of hydrogen annually, equating to enough fuel for thermal power plants equivalent to six nuclear reactors Utilising a leased space of 6.5k sq mt, (six times the size of Hong Kong), the Asian Renewable Energy Hub plans to build wind turbines and photovoltaic systems generating 26k megawatts. The four-company consortium, including a private investment company affiliated with Australia’s Macquarie Group, aims to meet Canberra’s hydrogen production cost target of US$ 1.50 per kg; this would inevitably generate massive demand, as the current cost in Japan is US$ 7.20. The country aims to become a hydrogen powerhouse by 2030 and expects the hydrogen sector to contribute as much as US$ 19.5 billion to GDP in 2050.

The Financial Conduct Authority, which was then led by the current Bank of England Governor, has been reprimanded for failing to “effectively supervise and regulate” London Capital and Finance which collapsed in January 2019. Records show that some 11.6k investors had lodged US$ 330 million before its failure, with many who lost all their investment may now receive a one-off compensation; the firm was offering 8% for people investing for more than three years. Former Court of Appeal judge, Dame Elizabeth Gloster, who wrote the review, noted that FCA’s “flawed approach” allowed LCF to look respectable, even regarding its non-regulated products and that Its failure to regulate properly was due to “significant gaps and weaknesses” in its practices and policies. It concluded that “responsibility for the failure in respect of the FCA’s approach to its perimeter rests with the executive committee and Mr Bailey”. Belatedly the current governor, appointed in March 2020, was gracious enough to apologise to those, many of whom were first-time investors, who lost life savings whilst he got promoted to the top job in the banking world. To make matters worse, several independent financial advisers had warned the FCA, some four years earlier, about what they felt were “misleading, inaccurate and not clear” adverts, often promoted on social media.

By the end of the week, hopes of a Brexit deal grew, as it was reported that the EC President, Ursula von der Leyen had told the European Parliament that that “there is a path to an agreement now”, albeit a narrow one. Boris Johnson later joined in the farce telling UK lawmakers that there was “every hope, every opportunity” of a deal if the EU were to recognise the country’s sovereignty in important areas. Even MPS, who were yet on another holiday, were put on standby to approve any last-minute deal.  Sterling responded well to the news reaching two-year highs of US$ 1.35 and even bookies now estimate there is an 81% chance of a deal. It does seem incongruous that the original referendum was in June 2016 and it has taken so long to come to this stage. But the EU does have form when it comes to last minute deals but Time Is Running Out!

Posted in Uncategorized | Tagged | Leave a comment

Found Shelter From The Storm

Found Shelter From The Storm                                                       10 December 2020

Because of an oversupply in the Dubai market, Emaar Properties announced the halting of all new projects. For the past six years, the sector has laboured through a construction boom, that has led to an oversupply, and just when it appeared that the bottom had been reached, along came Covid-19. Its chairman, Mohamed Alabbar, speaking at a UAE-Israel conference in Dubai confirmed that “we as a group have stopped supply,” although noting that demand was improving, and that Dubai property was reasonably priced. Undoubtedly, any moratorium on construction will help stabilise the real estate sector, and it is highly likely that other developers will follow the lead of Mohammed Alabbar (Emaar) and Hussein Sajwani (Damac) and abandon future projects until a supply/demand equilibrium is reached in the sector.  It is estimated by Cavendish Maxwell that 220.2k units have been handed over since 2008, of which 140k have been delivered since 2014 – equating to under 24k a year, a lot lower than some figures that have been bandied around over the past few years.

Having broken ground in 2019, phase 1 of Dubai Holding’s flagship 54-building residential development, Madinat Jumeirah Living, is on course for delivery within six months. The initial phase of the exclusive 3.85 million sq ft project, comprising two residential buildings, includes a range of 1-4 B/R apartments, with prices starting at US$ 460k; this is already 99% sold out. Construction of phase 2, comprising three buildings, is well under way, being 42% complete and slated for a Q3 2021 handover. Madinat Jumeirah Living is the first freehold residential development in Umm Suqeim and is handily located opposite the Burj Al Arab.

Acknowledging that Israel is a “very well-established market” with traders, Sultan bin Sulayen Group Chairman of DP World, has “estimated at least US$ 5 billion trade in the beginning between the UAE and Israel” which will increase further in time. He further commented “there are plenty of opportunities”, especially in technology, logistics and other industries. In addition, it is expected that at least 10k Israelis will visit the country this month. There were many Israeli technology companies taking part at the Gitex Technology Week and who see Dubai as a hub to cater to the wider Gulf, Africa and Asia regions. There are strong growth prospects for established Israeli companies, as well as a number of start-ups attending Gitex, to establish a presence in the region, with Dubai an obvious hub.

A May 2020 survey carried out by cybersecurity company Proofpoint indicated that 80% of respondents in the UAE claimed that they had been subject to at least one cyber-attack the previous year. The most common forms of attack were phishing and credential theft and it is estimated that attacks have become more prevalent since the onset of Covid-19, with Iran being the common source for many. The UAE’s cyber security chief, Mohamed Al Kuwaiti, also reckoned that the country had become more of a target for cyber-attacks after establishing formal ties with Israel No other details were made available but he did confirm that Israel has the “best talent in the field” and that the two countries will work together to combat future threats.

Despite the aviation sector facing the brunt of the pandemic, with flight schedules being decimated, and only now marginally improving, Emirates has taken delivery of three new Airbus 380s to be used when their new premium economy class takes to the skies. The first of the three, the airline’s 116th jumbo, arrived this week with the other two set to join the fleet by the end of the year.

Typical of its cavalier approach to marketing, Emirates is to run a multi-million-dollar global campaign to promote Destination Dubai. The multi-channel advertising campaign, which will initially launch in the UK and key European markets on television, online and social media channels, will send the message that Dubai is open for business and tourism; its target is to show the emirate’s diverse attractions to those seeking a winter getaway. The airline will also partner with Dubai’s Department of Tourism and Commerce Marketing to offer complimentary stays at the JW Marriott Marquis to all Emirates customers visiting Dubai from now until 21 February 2021. Emirates, which has reinstated passenger flights to more than one hundred destinations, is the first and only airline to offer all its customers multi-risk travel insurance and COVID-19 medical cover, free of cost, as well as offering visas on arrival for citizens of over fifty countries.

As per a new law introduced by HH Sheikh Mohammed, Dubai is establishing a framework for regulating procurement at all the emirate’s government entities. The Law on Contracts and Warehouse Management, to be introduced on 01 January 2021, will ensure unified processes to obtain the “highest level of financial efficiency” and to “foster integrity, transparency and equal opportunities among suppliers”.

Moody’s has confirmed that it considers the UAE has the best sovereign rating in the region, assigning a credit rating of AA2, with a stable outlook. HH Sheikh Mohammed bin Rashid Al Maktoum notes that this is thanks to “interior stability, wise financial policies, strong international relations and well-established economic diversification”. The international rating agency indicated that the UAE’s credit strength was supported by the country’s financial strength and a high per capita GDP, along with its internal stability and strong and broad international relations. It also added that the country had demonstrated strong institutional effectiveness by spearheading reforms and diversifying its revenue base.

At a virtual UAE-UK ministerial briefing this week, Abdulla Bin Touq Al Marri, UAE Minister of Economy, confirmed that the UAE was looking forward to a Free Trade Agreement between the UK and the GCC. He noted that “the UK is the UAE’s third leading partner in non-oil commodities trade today. The UAE was UK’s top Arab trade partner in 2019, accounting for 32% of the UK’s foreign trade with other countries.” In the meeting with UK Minister for Investment, Lord Grimstone, they also discussed the importance of strong bilateral trade and investment ties in promoting a sustainable economic rebound and deepening links post-Brexit. The UK ambassador also said the UAE will have a greater role in a free-trade framework between the UK and the GCC, when the FTA is materialised. In the first eight months of 2020, non-oil foreign trade between both countries was valued at approximately US$ 5.5 billion, whilst the UAE’s non-oil export to UK accounted for nearly US$ 500 million.

As part of its global expansion plans, California’s Diamond Foundry, has opened its office in Dubai Multi Commodities Centre. The company, which specialises in laboratory-grown diamonds, noted that the free zone was “the logical choice” for its international office, given its expertise in diamonds and the ease of its set-up process. Another plus point for the emirate was that “Dubai is a strategically important location for us, providing us direct access to some of the world’s most important diamond markets such as India, Israel and Europe.” Dubai has become a major trading centre for precious stones, with US$ 23.0 billion of rough and polished diamonds being traded last year. The eight-year old company is one of a number of makers of lab-grown diamonds to set up in the DMCC, which last year held the first laboratory-grown diamonds tender, offering more than 50k carats worth of stones.

The local bourses had a field day at the Sunday start of trading, following the five-day National Day holidays, adding US$ 4.4 billion to the market cap – an indicator that the UAE economy is displaying positive signs of recovery. The DFM rose 2.37% on the day, on the back of 627 million shares, valued at US$ 275 million, closing at a several-month high 2,481 points. There is renewed investor confidence following recent changes to company/bankruptcy laws and what could be seen as an easing of certain regulations in laws affecting expats, including wills and inheritance.There is no doubt that investor confidence has moved higher and this, in turn, has had a positive impact on the DFM. As this could be seen as the beginning of a post-Covid recovery, the local capital markets will witness even greater growth when the economy returns to some form of normalcy; the local economy will also benefit when oil prices head north again and when the global economy returns to pre-pandemic levels.

The bourse opened on Sunday 06 December and, 260 points (12.0%) to the good the previous four weeks, climbed a further 127points (5.2%) to close on 2,547 by Thursday 10 December. Emaar Properties, US$ 0.02 lower the previous week, traded US$ 0.11 higher at US$ 0.98, whilst Arabtec is now in the throes of liquidation, with its last trading, late in September, at US$ 0.14. Thursday 10 December saw the market trading at 456 million shares, worth US$ 80 million, (compared to 307 million shares, at a value of US$ 162 million, on 03 December).

By Thursday, 10 December, Brent, US$ 7.55 (18.4%) higher the previous three weeks, gained a further US$ 1.75 (3.6%) in this week’s trading to close on US$ 50.38. Gold, US$ 33 (1.8%) higher the previous week, shed US$ 2 (0.1%) to close on US$ 1,837, by Thursday 10 December. Because of encouraging news on the Covid vaccine front, gold lost a little of its lustre this week but still has much to offer the savvy investor.

It seems that the US$ 86 billion global toy market is set for a major shake-up, as Miniso Group, the newly New York-listed Chinese budget retailer, is poised to make its first foray on the global stage. The group, better known for low-cost items, ranging from household goods to electronic gadgets, will open the first store of its new chain Toptoy in Guangzhou. The group, which has benefitted as the pandemic has led to a boom for discount retailers, now hopes that its low prices and popularity can give it a foothold in China’s US$ 12 billion toy market, which its founder Ye Guofu reckons is split between “old-fashioned”, higher-end retailers like Toys ‘R’ Us, and cheap, low-quality goods, peddled at small stores and supermarkets. Toptoy will differentiate itself from its competitors by focusing on specific products, popular among children and young adults in China, and introduce ”a good home-grown toy brand to serve children”. Miniso, which has 25.2k stores in China and 16.8k in eighty other countries, hopes to cash in on the expanding global market, with its domestic market said to become the biggest in the world by 2022, surpassing the US$ 25 billion US industry, according to Bloomberg Intelligence.

Google’s US$ 2.1 billion bid for health tracker Fitbit is set to be approved by the EU more than a year after it announced plans to purchase the smartwatch maker to improve its lagging hardware business. It appears that the US tech giant has had to agree to certain concessions, which have not been made public, to allay EU anti-trust concerns about its move into wearable fitness devices. Long gone have the days of very loose regulation, when it came to antitrust issues, but that is rapidly changing, and it is becoming more difficult to blind side regulators and for them to expand into new industries. Meanwhile, Australia’s Competition and Consumer Commission published an offer from Google, that could be similar to the European commitments. It pledged that it would maintain health and fitness apps’ access to Google and Fitbit data and ensure Android phones could keep working with other wearable devices until 2030.

To nobody’s surprise, Uber has abandoned efforts to join the self-driving sector themselves and has decided that its cash would be better spent by acquiring a 26% stake in Aurora, a self-driving start-up already interesting both Amazon and Sequoia. The deal sees the company transferring its 1.2k payroll to Aurora, as well as investing US$ 400 million. With Uber’s investment, the US$ 2.5 billion company will quadruple to a US$ 10.0 billion valuation. Further investor interest by current Uber stakeholders will see Uber and its partners holding 40% of Aurora, a company that has worked in the past with big petrol car makers, such as VW, Hyundai and Fiat Chrysler; none of these dealings have progressed any further. Aurora will also benefit from the new arrangement not only because Uber runs the world’s largest ride-hailing fleet, it also has a close relationship with Toyota, a potential partner in the future.

What a debut for DoorDash on its first day of trading on the New York Stock Exchange where it traded 86% higher on Monday which valued the company at a mouth-watering US$ 60 billion. The US’s largest food delivery service proved a lifeline for SoftBank following a muted Uber IPO and September’s WeWork debacle when its value fell by almost 75% to around US$ 10 billion. SoftBank has a torrid time but has benefited to the tune of US$ 11.2 billion for an initial US$ 680 million investment; that will go a long way to soften the blow of a US$ 12.7 billion loss last financial year. However, better times lay ahead for the Japanese conglomerate, which has cash reserves of US$ 80 billion, as it has stakes in seven companies that are expected to go public by the end of 2021.

Shares of JD Health, the online pharmaceutical and healthcare spinoff of China’s second-biggest online retailer JD.com, traded 34% over its IPO price of US$ 9.11, valuing the company at US$ 29.0 billion. The holding company is China’s second-biggest online retailer and JD.com will still retain a majority stake in JD Health, which, in turn, will remain a subsidiary of the e-commerce giant. It is estimated that China is the world’s second-largest market for health care, nearing US$ 1.0 trillion last year. As one of China’s biggest pharmaceutical retailers, it has seen active annual users jump by 35.5% to 72.5 million. It is highly likely that the parent company may hive off two more subsidiaries, JD Digits, (a consumer credit and supply chain financing company), in which it has a 37% stake and its logistics arm. The group’s Q3 revenues were US$ 25.7 billion – 29.2% higher year on year, an increase of 29.2% over the same quarter in 2019.

Following late November’s announcement that Arcadia was going into administration, it now appears that Mike Ashley’s Frasers Group is considering buying some of its brands, including Topshop, Burton and Dorothy Perkins, as well as being in discussions about acquiring Debenhams. Frasers Group posted a 17.8% jump in H1 profits to 25 October of US$ 141 million, partly due to business rates relief, despite a 7.0% decline in revenue because of temporary store closures during the coronavirus lockdown; other drivers for the increased profit were its growing online business and the opening of new Flannels stores. Frasers Group owns 491 Sports Direct stores and 46 Flannels outlets across the UK.

November saw global food prices at their highest level in six years, driven by adverse weather conditions, with the Food and Agriculture Organisation noting that prices were up across the board that, in turn, put extra pressure on the forty-five countries that rely on outside aid to feed their populations; their food index was 3.9% higher on the month to 105 points – and 6.55% higher compared to twelve months earlier. Rises were seen in vegetable oil (up 14.5% because of low palm oil stocks), sugar – 3.3% higher because of “growing expectations of a global production shortfall” – and cereal prices (2.5% higher but up nearly 20% over the past twelve months because of reduced harvest prospects in Argentina).

By the end of last week, Indian shares had risen to a record high, led by finance stocks and market heavyweight Reliance Industries. The boost was also driven by news that the UK became the first Western country to approve a Covid-19 vaccine. Further positive economic data also helped the markets, with news that India’s trade deficit in November narrowed 21.9%, year on year, as imports fell sharply compared to the drop in exports.

The November Caixin/Markit Services PMI posted growth in China’s services sector, with new business rising at the fastest pace in over a decade – an indicator of a further recovery in consumer demand post Covid-19. The PMI rose 1.0 to 57.8, the second highest reading since April 2010, driven by new export business expanding for the first time in five months. Furthermore, business confidence improved to its highest since 2010, whilst services firms hired more workers for the fourth straight month and at a much faster pace. Both the manufacturing and service sectors recovered at a faster pace, as overseas demand kept expanding and employment saw substantial improvement. Caixin’s composite manufacturing and services PMI also rose 1.8 to 57.5, signalling the steepest increase in total Chinese output since March 2010. Analysts expect China’s economy to grow about 2% in 2020, the weakest since 1976, but still far stronger than any other major economy.

China is definitely cutting back on its overseas lending programme, as seen by the fact that its two largest policy banks, China Development Bank and Export-Import Bank of China loaned US$ 75 billion to overseas countries in 2016 which has slumped to just US$ 4.0 billion last year.   The two banks’ lending prowess can be seen by the fact that between 2008-2019, they lent US$ 462 billion, just US$ 5 billion short of the US$ 467 billion from the World Bank coffers. Over that period, ten recipient countries received 60% of Chinese funds, with Venezuela the leading recipient with 12.5% of the total, followed by Pakistan, Russia and Angola. The Chinese approach to lending in the past has received string criticism for lending to low-income countries with shaky finances and little hope of repaying all the loan, as well as lack of transparency with its feasibility studies. Another driver behind the funds drying up was the ongoing trade war with the US, which may have convinced Beijing to keep dollars in home vaults.               

Last week, the number of US unemployment benefits rose for first time in three months by 137k to 853k, on the back of new shutdowns, as Covid cases do not show any sign of reducing. Continuing claims rose 230k to 5.76 million – the first weekly increase seen since August. Numbers were on the high side of analysts’ forecasts and indicate that fresh job losses are occurring, as more businesses are forced to close due to new lockdown regulations in some states.

Having hit a 20 March low of US$ 0.574, the Australian dollar is now flyng high at over US$ 0.750, now that both confidence and conditions are above average, and stronger than pre-pandemic levels. However, the country is still not out of the woods and it will take some time for the economy to return to normal, with unemployment remaining at high levels, wages stagnating and the government inevitably having to cut back on subsidies. If the dollar continues to rise, it will act as a major barrier to any quick fix recovery. There are several factors for the dollar’s increase, the main one being the rising prices of commodities, particularly iron ore, which is at an eight-year high US$ 142 per tonne, and the fact that China cannot get enough of the commodity; it is estimated that the cost to the Australian producer is as low as US$ 15. Since China needs AUD to purchase Australian products, demand for the currency increases, pushing its value higher. Even at historic lows, Australian rates are relatively higher than comparable global rates – especially in the United States. Money normally goes to what will give the highest return and its move to the AUD adds further pressure on the currency to move north. However, there will be a time when the authorities will have to dampen the demand for the currency as a high currency makes imports cheaper, it has the opposite effect on exports, and this will have a negative impact on Australian trade. That being the case, it is only a matter of time that the Australian dollar will return to what could be considered an appropriate rate.

It has to Australia when the tax authority there confirms that hundreds of companies have reduced their tax bills to zero but that the proportion of entities with nil tax payable has decreased over the past three years, by 2% to 32% in 2016–17. However, the ATO confirmed that it had, for the first time, invoked the Diverted Profits Tax law to fight multinational tax avoidance. Of the 2.3k entities in scope for the 2018-2019 transparency report, 741 did not pay any tax. Of the balance, the 1.6k entities did pay tax totalling US$ 42.0 billion – US$ 2.8 billion higher, year on year, driven by mining companies with increases in commodity prices. However, the tax authority has finally utilised powers in relation to Diverted Profits Tax and has already taxed one major company, with several others in their radar. Also known as the “Google tax”, it allows the ATO to tax companies, it deems to be engaging in “contrived arrangements”, with a 40% tax on all profits. However, a plan to tax digital giants has been delayed due to the pandemic, with Google Australia still counting lucrative advertising revenue offshore.

Australia was quick to recover from its first recession since 1991, with Q3 growth at 3.3% but with Treasurer Josh Frydenberg noting that the country still had a lot of ground to make up from the Covid-19 economic downturn; he added that “Australia’s recession may be over, but Australia’s economic recovery is not”. With the economy recording contractions of 0.3% and 7.0% in the first two quarters of 2020, this still shows that the economy has contracted 3.8% annually. What may eventually prove to be a bigger curse on the Australian economy, than the pandemic, is its relationship with China, which worsens week on week. Australia cannot continue to take the high ground on all global issues and should be clever enough to pick its battles and should be more wary of continual criticism of its biggest trading partner.

Late last month, China landed a knock-out punch on the Australian wine trade by imposing anti-dumping tariffs of over 200% – this week, it added salt to the wounds by applying a further 6.3% tariff, due to claims that Australian winemakers have been subsidised and are dumping their product on the Chinese market. It is estimated that the US$ 850 million trade has already ground to a halt and the new tariff will have no further impact.

The Australian government will have to learn when to choose its battles and is now facing the consequences of taking on China on a number of important international issues such as backing a global inquiry into the origins of the coronavirus, apparent support of Hong Kong democracy and the Uighur Muslims. It seems that bilateral relations are at their worst in over fifty years. To date, Beijing has targeted Australian imports, starting in May with barley being hit with an 80% tariff, followed by cotton, timber, coal, sugar and rock lobster. Some abattoirs were hit and, in September wheat exporters were suspended from trading. This week, the import of more Australian beef was suspended. One sector that will not face any problems would be commodities.

Last month saw UK new car registrations slump by 27.4%, year-on-year, with the country spending most of November in a partial national lockdown that closed showrooms. With monthly sales of 113.8k vehicles, the car market “lost” sales of 42.8k vehicles, valued at over US$ 1.7 billion. In October, UK car manufacturing was 18.2% lower (24.5k vehicles), year on year. The Society of Motor Manufacturers and Traders is hoping that business will pick up in December, now a vaccine has been approved which in turn will see business and consumer confidence improving. YTD, the car market has contracted 30.7%, equivalent to 663.8k units. Overall, private demand has slumped by 32.2% and registrations by large fleets saw a 22.1% decline. The top selling vehicle for the YTD has been the Ford Fiesta (45.8k units) and for November, Vauxhall Corsa (3.7k units), VW Golf (3.6k) and Mercedes Benz A Class (3.2k).

Driven by a surge in house prices, (rising 6.5% in November, year on year), the UK’s construction industry grew faster than expected in November, with the IHS Markit/CIPS construction Purchasing Managers’ Index (PMI) rising 1.6 to 54.7, month on month. There are signs that the main growth driver is moving from catch up work to new projects. Although house building remained the sector’s mainstay, commercial construction continued to lag behind, as the Covid-19 pandemic still holds back any real progress for office space, retail developments and other corporate projects.

In contrast the EU PMI figures paint a duller picture, with a November PMI reading of 45.6, as French building firms recorded the most marked contraction, along with a disappointing contraction in Germany. The bloc also reported a quicker fall in new orders, as businesses continued to lower staffing numbers for the ninth straight month. IHS Markit noted that construction businesses in the bloc are pessimistic for 2021, due to the second wave of Covid-19 and the lack of projects coming to tender over the coming months.

In another bid to shore up the battered eurozone economy, the ECB injected a further US$ 605 billion stimulus package, bringing its total, since the onset of the pandemic, to US$ 2.3 trillion. The bank indicated that this latest measure would contribute to preserving favourable financing conditions during the pandemic by “supporting the flow of credit to all sectors of the economy, underpinning economic activity and safeguarding medium-term price stability”. This comes after the bloc’s economy in Q3 rose at its fastest ever pace of 12.5% but this will not be repeated, as lockdowns measures have been reintroduced in most of the twenty-seven countries – and the lack of progress in Brexit talks will have a further negative impact on any progress.  Negotiators have giving themselves until this Sunday to seal a new trading pact, with some US$ 1 trillion in annual trade at risk of tariffs if no deal can be reached by then. Interest rates remain unchanged at record lows as the euro hits a 30-month high of US$ 1.218.

In October, the UK economy grew by just 0.4%, compared to 1.1% a month earlier – a sure indicator that recovery continued to slow in the face of tougher coronavirus restrictions, which will see November returns even lower because of the reintroduction of lockdowns. However, following April’s record 19.5% contraction, the economy has continued to improve for the sixth straight month, driven by marked growth in education, retail and car manufacturing, but it is still 8.0% off pre-pandemic levels. Although the arrival of a vaccine, and a potential mass rollout, will boost the economy somewhat, the Brexit transition remains a drag on any economic recovery. 2021 will see the country’s biggest economic decline in over three hundred years and, at this rate, the country will not return to pre-pandemic levels until the end of 2022, at the earliest.

Bob Dylan has become the latest singer-songwriter, after the likes of the Leonard Cohen, Bruce Springsteen, John Lennon, Kurt Cobain, Stevie Nicks and Billie Eilish, to sell the rights to his entire back catalogue to Universal Music Group (UMG), which will acquire over six hundred Dylan tracks. In probably the biggest deal of its kind, the company will pay the 79-year old up to US$ 450 million for rights to all future income from the songs, including all royalties and control of all future income from the songs. Both parties have yet to confirm actual details of the deal. The Minnesota-born star, whose self-titled first album was released in 1962, released his latest – his 39th, entitled ‘Rough and Ready Ways’ – earlier in the year and became the first songwriter to receive the Nobel Prize for Literature in 2016. He is still touring and last year co-headlined a UK festival with Neil Young, at London’s Hyde Park. Finally, Bob Dylan has Found Shelter From The Storm.

Posted in Uncategorized | Tagged , , | Leave a comment

Ain’t No Stopping Us Now!

Ain’t No Stoppin’ Us Now!                                                                      03 December 2020

By the end of October, the Dubai Land Department (DLD) had recorded a total of 3.4k monthly sales transactions, worth US$ 1.9 billion, and a ten-month total of 27.8k, valued at US$ 15.6 billion – a positive indicator that the property market may have reached its nadir. 62.8% of October transactions were in the secondary market (and the balance for off plan sales). According to Property Finder’s data, in October, there was a 7.2% hike in the transfer of secondary or ready to move in villas/townhouses at 665. In that month, 1.0k villas/townhouses were transferred in both the off plan and secondary market, and a total of 2.0k apartments were transferred with 1.1k in the secondary market and 0.9k in the off-plan market. Since June, each month has witnessed a new all-time high which has come a long way from May’s return of just 110 transactions. The most popular areas for secondary or ready-to-move-in villas/townhouses in October were Nad Al Sheba (11.8%), Town Square (7.8%), International City (6.7%), Arabian Ranches (6.4%) and Dubai Hills Estate (5.9%). 39.0% of the transactions were for 4 B/R units, 34.7% for 3 B/R units and 14.8% for 5 B/R units.

For the thirteenth straight year, Mina Rashid has been awarded the World’s Leading Cruise Port at the World Travel Awards (WTA) 2020. Since it first won the accolade in 2008, the DP World facility has undergone extensive development and significant upgrades and its growing stature mirrors Dubai’s status as a facilitator from traditional dhow-enabled trade to a global community hub for the maritime sector. The port, with a 2.3 km quay wall, is able to simultaneously service seven cruise vessels (or 25k passengers) in a single day. The facility’s flagship is the Hamdan bin Mohammed Cruise Terminal, which is the world’s biggest single, covered cruise terminal operation, with the capacity to receive 14k passengers a day.

A positive indicator that the emirate is rebounding from the negative impact of Covid-19 can be gleaned from the news that customs transactions have jumped by 24.5%, to 11.2 million transactions, over the first nine months to September. Over the same period, customs declarations were 33.0% higher at 9.7 million, whilst the number of business registration transactions rose 84.5% to reach 201k. Dubai Customs also completed 648k refund claims, 358k certificates and report requests, and 257k inspection-booking requests as of the end of September 2020. After a torrid summer, these figures indeed show that Dubai’s strong and resilient economy can weather external economic shocks.

In the first twenty years of the century, Dubai’s non-oil external trade has increased more than ninefold from between 2000 and 2019, rising from US$ 38.9 billion in 2000 to US$ 346.3 billion in 2019; in HI, total trade reached US$ 150.1 billion. Customs transactions, completed by Dubai Customs, grew 44% in 5 years (2015-2019) to 13 million transactions at the end of 2019, compared to 8.9 million transactions in 2015. The growth reflects the resilience of the national economy and the pivotal role Dubai plays in the global trade. Customs transactions in H1 2020 grew 41% to 7.252 million transactions compared to 5.138 million transactions in the corresponding period in 2019.

Dubai’s Supreme Council of Energy had good news for residents, with the announcement of reductions in the fuel surcharge for both electricity – 23.0% lower at US$ 0.0136 per kilowatt hour – and water, down 33.3% to US$ 0.0109 per Imperial Gallon. The fall in prices was driven by an increase in solar energy production, with clean energy accounting for 9% of the emirate’s energy mix. The Dubai Clean Energy Strategy 2050 aims to see it account for 75% of energy needs by then.

For the ninth consecutive month, prices at UAE pumps will remain unchanged in December, with Special 95 and Diesel retailing at US$ 0.561 and US$ 0.670 per litre. The Fuel Price Committee has kept the prices at the same level almost since the start of Covid-19. By last Friday, global oil prices had seen four consecutive weekly gains, including last week’s 7.2% ending 27 November. There has been a new addition to some of Dubai’s petrol forecourts – E-PLUS 91 to be used for low compression engines. The new range will be available across 44 existing ENOC service stations and 20 Emarat stations, catering to the specific fuel requirements of customers who primarily operate commercial fleets, including buses, taxis and buses.

The region’s largest financial technology hub, DIFC FinTech Hive, has signed an historic agreement with Israel’s FinTech-Aviv, established in 2014, and which already counts 6k start-ups and 330 R&D centres among its 30k+ Israeli and worldwide members. Both parties will work together on events, knowledge sharing, talent development and facilitating mutual introductions and referrals for firms keen to expand in each respective jurisdiction. The agreement can only cement DIFC, as one of the world’s top ten FinTech hubs, and the partnership with its Israeli counterpart can only further support the UAE in facilitating economic growth via the global technology and innovation sectors.

Pursuant to a five-day hearing in April, the Financial Markets Tribunal (FMT) has upheld a DFSA enforcement action against Dr Mubashir Ahmed Sheikh for serious misconduct, including misleading and deceptive behaviour, and knowingly acting dishonestly. The decision, which was final, saw him fined US$ 225k and having to pay restitution of more than US$ 645k; the latter represented interest and the cash he had previously withdrawn in a deceptive way from MAS of which he had been the chairman, senior executive officer and majority beneficial owner; MAS had been a DFSA authorised firm before entering liquidation in November 2015.

Following a presidential directive from President His Highness Sheikh Khalifa bin Zayed Al Nahyan and HH Sheikh Mohamed bin Zayed Al Nahyan, 6.1k Abu Dhabi citizens will receive disbursement of US$ 1.9 billion of housing loans, exempting retired low-income citizens from repaying the loans. This largesse is the second part of the emirate’s 2020 housing packages of US$ 4.2 billion, coinciding with the celebrations of the 49th National Day.

After seeking a continuation of its business, and a reversal of an earlier decision to liquidate, more than 5% of the shareholders of Arabtec Holding failed and the proceedings will now continue. The company will be liquidated through a “controlled and efficient programme” to maximise value for stakeholders and “over the coming weeks, the company’s board and management will work closely with regulators and stakeholders.” Latest figures show that Arabtec had total liabilities of US$ 2.8 billion, including US$ 490 million to banks and over US$ 1.4 billion to trade creditors.

The bourse opened, for a shortened two-day week, owing to National holidays, on Sunday 29 November and, 260 points (12.0%) to the good the previous three weeks, closed flat to close the same on 2,420 by Monday 30 November. Emaar Properties, US$ 0.18 higher the previous four weeks, traded US$ 0.02 lower at US$ 0.87, whilst Arabtec is now in the throes of liquidation, with its last trading, late in September, at US$ 0.14. Monday 30 November saw the market trading at much improved levels of 307 million shares, worth US$ 162 million, (compared to 280 million shares, at a value of US$ 66 million, on 26 November).

For the month of November and YTD, the bourse had opened on 2,188 and 2,765 and, having closed the month on 2,420, was up 232 points (10.6%) in November but well down by 345 points (12.5%) YTD. Emaar traded lower from its 01 January but higher from its 01 November starting figures of US$ 1.10 and US$ 0.78 – down by US$ 0.23 but up by US$ 0.09 – to close November on US$ 0.87. Even at the beginning of the year, Arabtec was struggling, trading at US$ 0.35 and by the time stumps were drawn in late September, was trading at US$ 0.14 – a major fall from grace, considering that in May 2014 one Arabtec share was worth US$ 8.03. 

By Thursday, 26 November, Brent, US$ 3.90 (9.7%) higher the previous fortnight, gained a further US$ 3.65 (9.3%) in this week’s trading to close on US$ 48.63. Gold, US$ 81 (4.1%) lower the previous fortnight, regained US$ 33 (1.8%) to close on US$ 1,839, by Thursday 03 December.

Brent started the year on US$ 66.67 and has lost US$ 19.08 (28.6%) YTD but gained US$ 4.93 (11.6%) during the month of November to close on US$ 47.59. Meanwhile, the yellow metal gained US$ 260 (17.1%) YTD, having started the year on US$ 1,517 to close at the end of November on US$ 1,777, with November prices down US$ 201 (10.1%) from its month opening of US$ 1,978.

Copper is in top gear this week, surging to 30-month highs as several factors, including better than expected data from China, push the metal northwards, at a time when many base metals and iron ore continue to move higher, the main driver being the imminent global release of Covid vaccines. In October, economic data from the world’s second largest economy, including industrial output and fixed-asset investment, beat analysts’ expectations; the latter is of particular interest as it would seem to point that market support will continue into 2021. Last week’s trade deal with fourteen other neighbouring countries is another sign of China opening up its economy even further. Copper will also benefit not only from the increase in regional trade but also by the weaker greenback as it makes the metal, trading in US$, cheaper for overseas buyers. The copper price has been also been pushed artificially higher because of recent supply disruptions in Peru and Chile, which also moved inventory levels to historic lows.

Amazon is to pay bonuses, totalling over US$ 500 million, for its front-line staff, as its supremo, Jeff Bezos, praised them for “serving customers’ essential needs” during the pandemic. Permanent warehouse workers in the UK and the US will receive between US$ 400 to US$ 600, whilst part-time staff will be US$ 200 better off. The bonus comes at a time when Amazon – and similar companies – are under the spotlight for “dodgy” working practices in its warehouses during the coronavirus pandemic. Labour activists are calling for more worker protection as pandemic cases begin to surge again at the same time of the holiday shopping rush; they would prefer that more emphasis be placed on hazard pay, paid sick leave and better communication about outbreaks. The retail giant has seen sales (and profits) skyrocket (at the expense of the brick and mortars retailer) which will be further boosted by events like Black Friday and the upcoming holiday season; for example, Q3 sales at the internet giant were 37.0% higher at US$ 96.1 billion, with profits tripling to US$ 6.3 billion. This festive season sees Amazon creating 20k seasonal jobs in the UK.

In what its boss, Marc Benioff, called a “match made in heaven”, Salesforce is set to spend US$ 27.7 billion to acquire workplace messaging app Slack in what would be one of the biggest ever tech mergers – and the largest in the soaring cloud software industry, surpassing the US$262 billion Microsoft paid for LinkedIn in 2016. With a deal involving a cash payment of US$ 26.69, and .0776 of a Salesforce share, this would indicate a 55% premium paid to Slack’s shareholders. This is a lot of money for a company that posted a US$ 139 million loss in 2019. Founded in 2009, as an alternative to email, the company was interesting Bill Gates’ tech giant some five years ago, but which decided to go inhouse and developed its own Microsoft Teams platform, now a major rival; this is bundled in with its Office Software. At its 2019 IPO, Slack was valued at around US$ 20 billion but since then, it has gone in the other direction compared to the many other tech firms; Slack saw its share value slide on Wednesday by 10.7%. It seems that time is running out forMarc Benioff, who now has to expand and acquire a major asset, rather than growing internally by expanding the company’s software offerings. In this day and age, the big boys will simply eradicate smaller competitors just because of their size and dominance in the market.

You will rarely see such figures as Zoom’s Q3 results, with net profit surging 90 times, year on year, to over US$ 198 million (compared to just over US$ 2.2 million in Q3 2019), as revenue nearly quadrupled to US$ 777 million. No surprise then to see its YTD share value jump from US$ 69 to US$ 478; however, on Tuesday they slid 16% lower. The company has revised its full year revenue to almost US$ 2.6 billion, with Q4 forecast at US$ 811 million. By 30 September, the video communications platform was servicing 434k customers, with more than ten employees. Zoom has seen an 80% rise in R&D expenditure to US$ 25 million, equating to 3% of revenue.

Having fallen over 8.0% last Friday, Bitcoin soared to a record high on Monday to touch almost US$ 19.9k, as its 2020 rally steamed ahead, now 170% higher over the year; the main drivers continue to be that it is seen as a safe haven, an apparent acceptance that it is fast becoming mainstream, as well as being a hedge against inflation. Smaller players have also benefitted with the likes of ethereum and XRP, moving in tandem, gaining 5.6% and 6.6%, respectively. There are reports that Square’s Cash App and PayPal, which recently launched a crypto service to its more than three hundred million users, have been in the market for all new bitcoins.

It is reported that German prosecutors are closely evaluating evidence supplied by Apas, an independent government watchdog, that indicates that auditors, EY, may have broken the country’s laws during its audit of the disgraced Wirecard. The firm had been the auditors for a decade and had never given a qualified audit in that time, before discovering this year that US$ 2.3 billion in the accounts did not exist. In a special audit, carried out by another big four firm, KPMG, it was reported that EY was asked whether they had followed normal procedures when checking bank account balances – he said the firm had not confirmed this, adding that “what we did (in the special audit) was not rocket science. It wasn’t done (before by EY).” In 2017, Apas also alleged that EY was just days away from qualifying the German payments company accounts and on 29 March warned its client that a qualified audit was imminent – and sent them a draft copy; the qualification was around alleged accounting manipulations at an Indian subsidiary and that its investigation was being stonewalled by Wirecard executives. However, by 05 April, the Wirecard audit report concluded that “our audit has not led to any reservations”. It appears that Andreas Loetscher, one of EY’s auditing partners at the time, left EY in 2018 to become Deutsche Bank’s head of accounting. The following three paragraphs form part of a media release by the bank on 26 October 2018.

“The Supervisory Board of Deutsche Bank (XETRA: DBKGn.DE/ NYSE: DB) has decided to recommend the appointment of Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft as external auditor. This recommendation will be put to shareholders at the 2019 Annual General Meeting (AGM).

New European and national regulations require a rotation of the external auditor at regular intervals. Therefore, it is not possible to extend the mandate of the bank’s current external auditor, KPMG AG Wirtschaftsprüfungsgesellschaft. The tender process for a new external auditor was announced in February 2018. An extensive and rigorous evaluation process held over the last seven months was run independently by the Audit Committee of the Supervisory Board.

Deutsche Bank anticipates that following the appointment, the new external auditor will review the interim financial statements of the first quarter of 2020 and will be recommended at the 2020 AGM as external auditor for the full financial year 2020. The auditor’s mandate will cover both Deutsche Bank AG and the Deutsche Bank Group.”

On 31 August 2020, the bank decided it would not propose EY as auditor for 2020, according to AGM invitation.

Since hitting 25-year lows in September, UK’s biggest bank, HSBC has seen its share price skyrocket more than 50% in the ensuing three months; however, its share price is still down about a third YTD.  Although head-quartered in London, more than 50% of its profits emanate from Asia. Despite increasing regulatory and economic pressure in its two key markets – Europe and Asia – it posted better than expected Q3 figures, even though profits were 46% lower, they were still at US$ 3.2 billion. Although its cost-cutting measures and an improved business environment are the main drivers behind the recent share boost, another is that the bank may resume paying dividends.

Dyson is planning to invest US$ 3.7 billion over the next five years, mainly on new technologies and products, as part of its strategy to double the number of products it sells and to expand into new areas. Although currently known for its vacuum cleaners, air purifiers and hair dryers, future investment will see more engineers and scientists in fields such as software, machine learning and robotics.

Any chance of Arcadia escaping collapse disappeared when a potential life-saving US$ 67 million loan from Mike Ashley’s Frasers Group fell through. Philip Green’s retail empire Arcadia – which includes Topshop, Burton and Dorothy Perkins in its stable of clothing brands – was put into administration on Tuesday, with Deloittes appointed administrators; its collapse will see the end of 13k jobs and 500 shops. It was only five years ago that Arcadia’s owner, said to be worth US$ 1.6 billion, sold BHS for just US$ 1.30 to Dominic Chappell, a former bankrupt businessman, with no retail experience, only for it to collapse within a year leaving 11k out of a job, along with a huge hole in its pension fund.

Debenhams has joined Arcadia to make it a black week for the UK retail sector, after the failure of last-ditch efforts to rescue the chain’s 124 shops; the closure, brought about by the last remaining bidder, JD Sports, withdrawing from negotiations, will see 12k employees likely to lose their jobs. Restructuring firm, Hilco has already started the process of clearing stock but Debenhams outlets will continue to accept the firm’s store cards and process returns as normal. The two main drivers behind the failure were the negative impact and subsequent movement restrictions caused by Covid-19 and the fact that it was too slow to embrace the arrival of on-line shopping.  (The ME franchise owner of Debenhams, Kuwait’s Alshaya Group, has confirmed that its regional outlets, including six in the UAE, will continue business as normal.)

For the third time in a year, Bonmarché has fallen into administration, with the possibility of 1.5k job losses and the closure of 225 outlets. The women’s fashion chain was owned by retail tycoon Philip Day, whose other brands – Edinburgh Woollen Mill, Peacocks and Ponden Home Stores – all falling into administration last month. The administrators confirmed that the chain’s shops would continue to trade for the time being, whilst options are being explored.

Following on from Tesco and Morrisons promising to repay a total of US$ 1.15 billion for business rates pandemic relief they received as support, Sainsbury’s and Aldi have confirmed they will hand back a combined US$ 725 million of business rates relief. Some of them have been criticised for taking government support of US$ 2.6 billion, while paying dividends to shareholders, at a time when sales boomed in the crisis. However, some big-named chains have decided to hold on to their government funds, including Marks and Spencer, Co-op and Waitrose, for a variety of reasons. M&S indicated that most space in its shops was for clothing and homeware which had to close down during the lockdown.  The Co-op said the amount it had spent on protecting staff and customers outweighed the savings from rates relief, whilst Waitrose claimed the relief would help offset the “significant” sales lost while its John Lewis shops were closed.

The recent trend of consolidations of the bigger data providers continued this week with news that S&P Global is to pay about US$ 39.0 billion in stock to buy IHS Markit; its offer price of US$ 0.2838 per share equates to a 4.7% premium, resulting in S&P shareholders owning 67.75% of the combined company on a fully diluted basis. The newly enlarged entity will have an enterprise value of about US$ 44.0 billion, including the assumption of US$ 4.8 billion in net debt. This deal is the world’s second-largest acquisition of 2020, surpassed only by the US$ 56.0 billion merger among some of China’s biggest oil and gas companies, selling their pipeline networks to a new national carrier. The deal has to pass through regulatory scrutiny which may prove to be a problem, as antitrust is rapidly becoming a hot topic with government agencies.

As coronavirus restrictions limit attendances at Walt Disney theme parks, the company has announced that it will have to lay off some 32k workers, 4k more than anticipated just two months ago. Last month, Disney announced it was furloughing additional workers from its theme park in Southern California, whilst theme parks in Florida and overseas – Shanghai, Hong Kong and Tokyo – reopened earlier in the year, with strict protocols in place, although its Paris facility was forced to close again last month.

Certainly not the first – and certainly not the only corrupt – UN body, the UN Development Programme is facing several allegations of fraud. The latest circles around its Global Environment Facility, established in 1991, as part of the World Bank to fight environmental challenges. Since then, it has become an independent body and has dispersed over US$ 21 billion in 170 countries, including US$ 7 billion in projects managed by the UNDP. A recent draft report notes that there had been “financial misstatements”, worth millions of dollars, across the GEF portfolio.  It commented that there were signs of “fraudulent activities” at two country offices along with “suspicions of collusion among various project managers”. The latest audit comes five years after the last one carried out in 2013 and comes on the back of concern expressed by various donor countries, including US, France, Australia and Japan, who have called for an independent enquiry.

It is reported that Kuwait’s Gulf Insurance Group is in line to acquire Axa’s insurance operations in the Gulf region for US$ 269 million, subject to regulatory approvals; this will include the company’s stakes in Axa Gulf, Axa Cooperative Insurance Company and Axa Green Crescent Insurance Company. Upon completion of the transaction, probably by Q3 2021, Gig will own 28.05% of the shareholding of Axa GCIC, as well as Axa Group’s entire shareholding interests in Axa Cooperative Insurance Company in Saudi Arabia and 100% of the share capital of Axa Gulf in Bahrain. Gig, 43.6% owned by Canada’s Fairfax Financial Holdings, is also the largest insurance group in Kuwait and listed on Boursa Kuwait; it has over one million customers and thirty branches in the GCC. Just as what is happening in the banking sector, the Gulf insurance industry is set see an era of consolidations, as digital transformation, amid Covid-19, is placing renewed importance on scale among insurers, whose profits are under pressure because of the pandemic.

An InterNations study, using data from 15k global expats collected just before the advent of Covid-19, ranked sixty-six cities based on five criteria – Quality of Urban Living, Getting Settled, Urban Work Life, Finance & Housing, and Local Cost of Living. Valencia came out on top, followed by Alicante, Lisbon, Panama City and Singapore. Strangely, Dubai only made 20th, with Abu Dhabi (10th) and Muscat (14th) ahead of the emirate. To an ex-resident of Kuwait, it was both a surprise and a disappointment to see Salmiya named the worst city in the world for expats to live and work. It came in at the bottom of the pile in two categories – climate/leisure and health/environment, along with local transportation coming in marginally better at 61st. In what you used to be one of the better locations in Kuwait, it serves as a warning that in any walk of life, if you take the foot off the accelerator, you will soon fall behind. One of the drivers behind Salmiya’s demise could be the fact that the Kuwait administration has been running a campaign to cut the number of expats to redress the current imbalance of 71:29 expats. Prime Minister Sheikh Sabah Al-Khalid Al-Sabah wants to reverse that ratio to 30:70.

Latest figures from the Australian Bureau of Statistics show that capital city house prices, already making a strong Covid-19 recovery, are likely to increase even further in the new year. Perth is expected to be the star performer, with a possible double-digit growth in 2021, driven by recovering commodity prices and increased capital investment, followed by Sydney (because of proposed changes to land tax law and stamp duty) and Adelaide. The forecast sees price rises starting from 5%, with Melbourne being the weakest, due to its extended second wave lockdowns, higher numbers of business failures and a slowing job market. In October, Australians borrowed a new record US$ 16.9 billion in the month to buy property, made “easier” by historic low rates, aggressive government stimulus and the winding back of responsible lending laws.

One of Australia’s leading companies, cereal and snack-maker Freedom Foods is being investigated by the corporate regulator ASIC for a series of “significant” accounting problems, with it revealing that its earnings would be impacted by US$ 420 million in write-downs. On Monday, the beleaguered company announced that its US$ 8 million 2018-19 profit has been downgraded to a US$ 103 million loss, not helped by the write-downs. Its auditors, Deloittes, have noted that over the past five years, some executives had paid themselves extra (without getting board approval). The Perich family, Australia’s largest dairy farming family, owns 54% of Freedom Foods., whose share trading has been suspended since June when they were trading at US$ 2.10, down from its September 2018 peak of around US$ 5.00 Things came to a head at Monday’s shareholders’ meeting, with questions asked about company oversight and the scope of the write-downs, including US$ 53 million and US$ 43 million in relation to goodwill/brands and for “out-of-date, unsaleable and obsolete inventory”. To fix its balance sheet, the company shareholders have been asked to stump up US$ 200 million, through capital raising, but some are asking what Deloittes, their auditors, have been doing, as a forensic accounting investigation by PwC has discovered some “significant” accounting problems for the company, dating back a few years.

Starting last Saturday, China has imposed taxes of up to 212% on Australian wine, indicating that these measures were temporary (but no dates were given) to stop subsidised imports of Australian wine. Their argument has always been that some Australian wine is being dumped by being sold cheaper than in its home market, through the use of subsidies. China is Australia’s biggest market for its wine, accounting for 39% of the total exports. Following last Friday’s news, Treasury Wine Estates, one of the world’s biggest winemakers, with leading brands such as Penfold and Wolf Blass, saw its share price slump more than 13%, whilst other firms, including Casella Wines and Australian Swan Vintage, have been singled out by Chinese regulators. In recent months, Beijing has targeted Australian imports including coal, sugar, barley and lobsters amid growing political tensions, not helped by Australia’s stances on backing a global inquiry into the origins of the coronavirus, apparent support of Hong Kong democracy and the Uighur Muslims. Even before the onset of the pandemic, the writing had been on the wall, as Chinese authorities have been warning Chinese students and tourists against travelling to Australia, citing fears of racism.

Having contracted 24.0% in Q2 and 7.5% in Q3, the Indian economy formally went into technical recession for the first time since 1996. In March, Narendra Modi imposed one of the world’s strictest lockdowns which had such a negative impact on the economy, and the end result resulted in a marked decline in domestic demand and consumer confidence. Despite the Prime Minister’s efforts, the country now is second to the USA when it comes to Covid-19 infections, with 9.3 million cases. In Q3, Asia’s third largest economy reported trade, hotels, transport and communication declining 15.6%, whilst the likes of electricity/gas, agriculture and manufacturing moved into positive territory by 4.4%, 3.4% and 0.6% respectively. Since the onset of the pandemic, the government and central bank have introduced various stimulus packages totalling US$ 405 billion, equating to 15% of the GDP, with the Reserve Bank of India cutting rates by 115 basis points.

No surprise that the OECD is not too bullish on any UK recovery, forecasting that only Argentina will perform worst on the global stage and that, by the end of 2021, its economy will still be 6% lower than its pre-pandemic level; this is in contract to the global economy that will be back at this level by then. This year, the UK economy will contract by 11.2% followed by expansions of 4.2% and 4.1% in 2021 and 2022. It expects that unemployment will rise from its current level of 4.0% to 7.4% next year – but other countries will see worse declines. It ends with its old chestnut that it is important for a Brexit trade deal to occur this year and failure would “entail serious additional economic disturbances in the short term and have a strongly negative effect on trade, productivity and jobs in the longer term”. Time will tell that they might have got their forecasting wrong again.

With the reintroduction of restrictions, as a second wave of Convid-19 sweeps across Europe, it is no surprise to see that economic data showed that business activity both in the UK and Eurozone headed south in November.  The UK composite PMI declined 3.1 to 49.0, whilst the IHS Markit’s composite Purchasing Managers Index for the eurozone sank 4.7 to 45.3. (50.0 is the line that separates contraction from expansion). A separate PMI, covering the eurozone’s services, slipped from 46.9 to 41.7, whilst a similar index in the UK recorded a fall of 3.8 to 47.6. Having suffered a massive 25% slump, following the first outbreak in March/April, the BoE is forecasting a 2% contraction in Q4. However, some sort of confidence returned towards the end of November, with news of effective vaccines which saw business confidence rise to its strongest since February’s five-year high.

Figures were worse in France with marked falls in boththe composite PMI, down 6.9 to 40.6 and the PMI services sector dropping from 46.5 to 38.8. As expected, Germany performed better with the composite index, still in positive territory, at 51.7, down from 55.0, whilst the IHS Markit’s final services PMI fell to 46.0 from 49.5. Meanwhile, results from Spain were dour, where its service sector activity shrank from 41.4 to 39.5 in November and Italy where its services sector contracted 7.3 to 39.4 and its composite PMI dipped 6.5 to 42.7. With figures like these, it is hard to argue that the UK would be better off within the EU umbrella.

To further add to the EU’s woes, it seems that German politicians are worried about whether the country can afford such generosity when it comes to emergency coronavirus aid. The 2021 budget indicates a near doubling of new borrowing to US$ 218 billion which comes on top of the US$ 264 billion of debt this year, their highest in history. The age-old policy of ‘schwarze null’, ‘black zero’ has had to fall by the way because of the catastrophic impact of Covid-19. The government money piled out – a US$ 1.6 trillion programme of subsidies and grants, followed by a US$ 160 billion add-on in June, as well as the suspension of the constitutional ‘debt brake’ which traditionally limits the budget deficit to just 0.35% of GDP. A new uptake on when Germany sneezes, the EU will catch a cold.

Meanwhile, the EU continues negotiations in the UK, with reports that some European countries, surprisingly(?) led by France but also including the Netherlands and Denmark, are urging M Barnier to be tougher and obtain more concessions from the Johnson administration. It is reported that the PM is “feeling optimistic” but was also “confident and comfortable without a deal”, whilst the EU team noted that there was still much work to be done on fishing and the level playing field. Maybe there could be major developments over the weekend.

The EU is still in turmoil, as Hungary and Poland (with the possibility addition of Bulgaria) continue with their veto of the EU US$ 2.2 trillion budget pandemic recovery fund which can only be approved with all 27 member states agreeing; the fall-out is the two countries’ protest at a rule-of-law condition that ties payments to compliance with EU values. To some, it seems that the Brussels bureaucrats want to ensure that all countries will be tied to the community because of their financial constraints of accepting the terms of such a huge payment which has to be repaid. Then there are concerns that if no solution is found, this will see billions of euros of aid for some of the bloc’s struggling economies being frozen which will derail any immediate EU recovery.

It seems highly likely that the UK will be the first country in the world to obtain and start using vaccine to fight against Covid-19. Approval has been given for the use of the BioNTech/ Pfizer’s vaccine to start a crucial mass inoculation programme but prime Minister, Boris Johnson, has warned of the massive logistics challenge to vaccinate the entire 67 million population. According to available data, it is 95% effective in preventing the disease. In contrast, the EU could be up to two months behind the UK, as the European Medicines Agency has said it is highly unlikely to decide on approval of the jab until the end of the month. The country was the first to secure an order in July for 30 million doses, later topped up by a further 10 million. There is every chance that this news could surprise the global doomsayers and that the UK could see a final lifting of restrictions which in turn would see an economic recovery at least two months ahead of Europe. A mix of pent-up demand, high savings levels and a massive jab in the arm for business confidence could see the UK retuning to “normal” business quicker than expected by many so-called experts.  Ain’t No Stoppin’ Us Now!

Posted in Uncategorized | Tagged | Leave a comment

I Read The News Today, Oh Boy, 4,000 Holes In Blackburn, Lancashire 26 November 2020

I Read The News Today, Oh Boy, 4,000 Holes In Blackburn, Lancashire

In hopefully what is a minor blip, October saw Dubai property prices dipping 1.0% to US$ 222 per sq ft, as there were lower transactions of 3.5k, (down 27.3% on the year and 9.7%, month on month). The Cavendish Maxwell’s Property Monitor report indicated that such low prices were last seen in May 2009. For the month, the sale of ready homes accounted for 62.8% of all sales, whilst off-plan made up the balance, but recorded its share declining for five months in a row. Interestingly, resale transactions took 48.8% market share, the highest level in more than three years, and well above the annual 30.1%-month average. (Resale properties are those completed units that are not part of initial developer sales). Although capital values continue to struggle, driven by excessive existing or supply coming on stream, there is evidence that the more sought-after and already established communities are, in certain cases, displaying signs of stabilisation and even marginal price rises.

October mortgage transactions, at 1.6k, were 6.7% lower month-on-month, whilst loans granted to finance villa purchases grew 9.8% on the month and 76.8% year-on-year, reflecting the increasing demand for larger homes. The two leading master developments for resale transactions, were Dubai Marina, with 7.5% of the total, followed by Emirates Living at 6%. There is no doubt that certain sectors, within the established property market, are coming off the bottom, whilst it is only a matter of time that demand catches up with a slowing supply of new units. Once oil puts its head above the parapet and prices hit US$ 55 a barrel, then the property market will once again be in the ascendancy.

For the week ending 19 November, the DLD reported over 1.1k transactions and 64 plots, valued at US$ 900 million, with 785 apartments/villas selling for US$ 384 million. The top three land transactions occurred at Nad Al Hamar and Al Thanayah Fourth, both selling for US$ 30 million each, followed by land that was sold for US$ 13 million in Al Thanayah Fourth. Most transactions for the week were found in Al Hebiah Third – with sixteen, valued at US$ 8 million – Jebal Ali First – twelve sales transactions worth over US$ 3 million – and Nad Al Shiba Third, with nine sales transactions worth over US$ 6 million. The three most expensive transactions in the week were for apartments – in Burj Khalifa (US$ 53 million), Marsa Dubai (US$ 43 million) and US$ 41 million in Business Bay.

Construction has started on Deyaar Development’s third and fourth phases, within its Midtown community, with contracts of US$ 100 million, and appointing Gammon & Billimoria as its primary contractor. Noor District, phase 3, is now open for sale with an initial 10% deposit and a ten-year Deyaar Flexi Programme; the seven-building project will comprise a range of units from studio to 3 B/R apartments – as well as a host of retail and F&B options, and other amenities, and should be completed by the end of 2022. To date, the company has completed and delivered two districts – Afnan and Dania – which is 50% of the Midtown development and constitutes a total of thirteen buildings, with more than 1.2k apartments.

According to the DED, there was a 6.0% increase in the number of new trade licences to 32.2k during the first ten months of the year; 57% were professional and 42% commercial. Of the total, the three main contributors were sole establishments (38% of the total), LLCs (32%) and civil works companies with 26%.

On Monday, there was a major surprise when President His Highness Sheikh Khalifa bin Zayed Al Nahyan approved wide-ranging changes to corporate ownership laws that will undoubtedly benefit the country by facilitating business set-ups and attracting more foreign investment. Probably the biggest takeaway from the announcement was the removal of the requirement for a local sponsor for companies that operate onshore. The last few months have seen many other changes, including positive amendments to personal and family laws and reforms to UAE visa rules, all of which are meant to make the country even more attractive for foreign investment and to encourage more people to make the country their home base.

Apart from the fact that onshore companies will no longer be required to have an Emirati national as a majority shareholder, the need to have a UAE national or a local company as registered agents, has also been eradicated. The new law sees some sectors, including oil/gas, utilities and transport exempt. In a move that will add more liquidity to the local bourses, companies may now sell 70% (up from the previous 30%) of their shares in an IPO. It is highly likely that the new law will supersede Federal Law by Decree No. 19 of 2018 regarding FDI. The new clauses will see fifty-one articles, mostly covering limited liability companies and joint stock companies in the current Commercial Companies Law, amended. In Dubai, it would appear that the Department for Economic Development will be the obvious authority to regulate participation levels of Emiratis in certain company structures.

Other amendments included permitting electronic voting at general assembly meetings and stakeholders given the right to sue a company in a civil court, over any failure of duty that results in damages. In future, companies will be able to increase their capital base through issuing bonds and converting them into shares. Another notable change now allows the appointment of board members who have the requisite expertise but are not stakeholders.

What Covid-19 and recent deregulation has done is to push Dubai at least two years ahead of schedule when it comes to deregulation and “opening up” its economy. This week’s announcement will make Dubai (and the UAE) a more “secure” place for both new companies and new residents and when added to other recent changes in the law involving property, personal status, foreign direct investment and inheritance, has made Dubai an even more attractive destination; it has also removed certain obstacles that could have been considered unwelcoming to new entrants, whether they were legal entities, families or individuals. There is no doubt that the inflow of new financial and human capital will be drawn into Dubai which in turn will boost the emirate’s growth and longer-term future.

With the Dubai government in a hurry to move all payment transactions to cashless platforms, it has formed a ‘Cashless Dubai Working Group’ to develop a roadmap for the transition. At its first meeting, the group, which encompasses various government agencies – including Dubai, Dubai’s Department of Finance (DOF), the Supreme Legislation Committee, Dubai Economy, Dubai Police, Dubai Economic Security Centre, Dubai Chamber, and Dubai Tourism and Commerce Marketing – aims to ensure a secure and seamless transition towards a cashless society. It will launch a series of ambitious initiatives, involving all community segments, to create the infrastructure and favourable conditions for eliminating the use of cash. This strategy of   full digital transition is part of the wider aim to make Dubai the world’s smartest and happiest city, in line with the directives of the UAE’s leadership and the objectives of the UAE Centennial 2071 plan.

The federal government announced a five-day weekend starting next Tuesday, 01 December to celebrate National Day and Commemoration Day. This week, both RAK and Ajman announced a 50% discount on all the traffic fines across the emirate to mark the 49th National Day. In addition, all black points along with the fines incurred, due to vehicles being impounded, will be cancelled. The aim of the exercise is evidently to bring happiness to the public and reduce their financial burdens during these troubled times.

Emaar has launched its first foray into the Sharjah property market, with its hospitality arm releasing the first phase of off-plan sales for Vida Residences Aljada. It will also be the emirate’s first ever branded residences, consisting of over 250 apartments, (from 1 -3 B/R units and penthouses) and will be owned and developed by Arada, with Vida Hotels and Resorts responsible for operations. Construction on Vida Residences Aljada, and the adjacent Vida Aljada hotel, will commence in Q2 2021 and scheduled to be completed within two years; it will be located in the heart of Aljada, Arada’s US$ 6.4 billion master community.

Amazon is on the move in the UAE and expanding its services, by increasing its storage capacity, by over 45% across its fulfilment network, and opening a new delivery station, as well as creating more than 2k new permanent and seasonal jobs. Including its own network, and third-party space, it now utilises over 2.4 million cu ft of storage capacity. On Tuesday, the tech giant began its seven-day White Friday sale in the region, offering customers up to 70% in discounts when shopping online.

To oversee the reintroduction of the 737 Max’s to the local skies, the General Civil Aviation Authority has set up a Return to Service Committee. The committee includes a range of specialists who will work with members of the US Federal Aviation Administration and the European Aviation Safety Agency, to ensure a smooth and safe transition.

Covid-19 and low interest rates have wreaked havoc on the top ten UAE banks, with Q3 net income down 3.0%, and total interest income 7.7% lower, according to Alvarez & Marsal’s latest “UAE Banking Pulse for Q3 2020.” (Of late, this firm has been receiving plenty of press including backing out of Lebanon’s enquiry into its Central Bank dealings and being the administrator in the local NMC debacle.) Also impacted was non-performing loans climbing to 3.6% and still rising. During the quarter, loans and advances remained broadly flat which was the slowest growth in the last six quarters, while Q3 deposit growth improved to 4.2%. It concluded that there is a distinct risk of an increase in NPLs and that “we expect the economic conditions in the UAE and the region generally to remain challenging in the near term, which would likely limit credit and earnings growth.” To an outsider, it sems that the only way banks’ profits will continue to head north, in an uncertain future, is either via consolidation or introducing digitalisation at a greater pace.

Monday saw the region’s largest Global Gold Convention (GGC) taking place at the Armani, Burj Khalifa. The event comprised a global combination of gold industry companies, mines, refiners, traders, authorities, government officials and regulators meeting under one platform; this was the first ‘hybrid’ industry-led event this year in Dubai in strict compliance with Covid-19 protocols and guidelines.  The main objective of this one-day meeting was to showcase the entire gamut of gold trade, with a longer-term aim of supporting the region’s non-oil sector diversification programmes.

By the end of Q3, the value of total assets of banks held by the Central Bank was 2.0% higher at US$ 886 billion, quarter on quarter, or 7.6% higher, year on year. Gross credit moved north to US$ 492 billion, by 0.8%, quarter on quarter, and 4.9% for the past twelve months. As of 30 September, total deposits of resident and non-resident customers, with banks operating in the UAE, rose by 2.2% on the quarter to nearly US$ 520 billion, of which resident deposits, (up 3.0% on the quarter), accounted for US$ 467 billion and non-resident deposits, (4.5% lower), the balance. On an annual basis, both Money Supply M1 (Currency in Circulation outside Banks plus Monetary Deposits), and M2 (M1 plus Quasi Monetary Deposits), increased by 11.0% to US$ 155 billion and by 7.9% to US$ 400 billion respectively. YTD, gold reserves held by the Central Bank have jumped 121% to US$ 2.4 billion.

The bourse opened on Sunday 22 November and, 156 points (7.2%) to the good the previous fortnight, jumped 104 points (4.5%) to close on 2,420 by Thursday 26 November. Emaar Properties, US$ 0.12 higher the previous three weeks, traded up US$ 0.06 at US$ 0.89, whilst Arabtec is now in the throes of liquidation, with its last trading, late in September, at US$ 0.14. Thursday 26 November saw the market trading at 280 million shares, worth US$ 66 million, (compared to 159 million shares, at a value of US$ 63 million, on 19 November).

By Thursday, 26 November, Brent, US$ 3.90 (9.7%) higher the previous fortnight, gained a further US$ 0.75 (1.7%) in this week’s trading to close on US$ 44.96. Gold, US$ 81 (4.1%) lower the previous fortnight, lost a further US$ 73 (3.9%) to close on US$ 1,806, by Thursday 26 November. (Meanwhile ADNOC – the Abu Dhabi National Oil Company – has announced the finding of a 22 billion field of recoverable barrels).

In a bid to strengthen both its global, but specifically US, presence, Bertelsmann has agreed to purchase publisher Simon & Schuster for almost US$ 2.2 billion in cash from ViacomCBS, and in the process beat Rupert Murdoch’s News Corp to the post. This was the second major acquisition, over the past twelve months, for the 185-year old German media group which took full control of Penguin Random House. The latest purchase of Simon & Schuster, with a reported revenue stream of US$ 814 million and employing 1.5k, will have to obtain US antitrust approval but that should be a formality as it will still have less than 20% country market share.

There seems to be a lot of skulduggery around the fringes of Australian public service. Over the past month, both the Australian Securities and Investments Commission and Australia Post have been in the news for the wrong reasons. The corporate regulator’s head of enforcement, deputy chairman Daniel Crennan QC, has resigned after it was revealed he received almost $70,000 in rental payments that may have exceeded public sector pay limit, whilst his boss, James Shipton, has stood aside after an adverse Audit Office report. Meanwhile Christine Holgate, chief executive of the national postal service since 2017, has resigned, after authorising a US$ 14k gift of luxury watches to four employees as a work reward which many saw to be a waste of public money.

Former politician Robert Cavallucci has been hired on nearly double the pay of the last chief executive at Football Queensland (FQ) — almost US$ 230k a year. To make matters worse, he was recruited following a two-month consultancy that earned the president of the board, (purportedly a voluntary role), Ben Richardson US$ 32k, an amount sanctioned and approved by the same board. The new CEO, used to be an assistant minister in the Newman government and latterly was managing partner at PwC Brisbane, as well as already being on the board of Football Queensland. It was in his office that Mr Richardson handed a termination letter to the previous CEO, who says he was given no reason for his sacking.

The still scandal-ridden global football body, FIFA, has banned the head of African football, Ahmad Ahmad, from the sport for five years, following an ethics investigation. The departing incumbent president of the Confederation of African Football (CAF) had intended to stand in an election in March, but this will not be happening, following charges of offering and accepting gifts and other benefits, and misappropriation of funds. He was undone by an internal whistle-blower, former CAF general secretary Amr Fahmy, who died earlier this year from cancer; he had been dismissed, after he made corruption allegations against Ahmad last year in a document sent to FIFA. An audit report by PwC concluded that “the accounting records of CAF are unreliable and not trustworthy.”

It is reported that Qantas will require passengers to be vaccinated against Covid-19 before they will be allowed to travel on an international flight, with the airline considering expanding this to its domestic market. According to its supremo, Alan Joyce, the carrier is looking into the possibility of requiring passengers to have a vaccination passport which would allow them to travel. On Monday, Qantas reinstated flights between Sydney and Melbourne after the reopening of the border between New South Wales and Victoria. Meanwhile, IATA is in the final stage of developing a Travel Pass, to be trialled in Q1 2021. The digital health document, that will prove passengers have tested negative for Covid-19, or have had a vaccine, will manage and verify the secure flow of testing or vaccine information among governments, airlines, laboratories and travellers.

According to IATA’s latest air connectivity index, Shanghai has dethroned London to become the world’s most connected city (to other cities) as the coronavirus shakes up international travel; the leading four countries are from China – Shanghai, Beijing, Guangzhou, and Chengdu. Over the past five years, London has witnessed a 67% fall in connectivity in air travel, with the report noting that the pandemic has “undone a century of progress” for connectivity between cities, with large transport hubs including London, New York and Tokyo having been hammered by the dramatic reduction in flights, in and out of their cities. The fact that air travel in China has almost returned to historic norms can be seen from the fact that during its Golden Week holiday season 425 million people travelled around the country. Whilst China is steaming ahead, other Asian countries are suffering, with the likes of Bangkok and Hong Kong both recording steep 81% drops in connectivity. For the five-year period to 2019, the UAE was the region’s most connected country and, on a global scale, came in 20th; over that period, its connectivity only increased 22% compared to the likes of Oman, Saudi Arabia and Qatar with percentage growths of 121%, 49% and 28% respectively.

IATA’s latest estimate on the financial damage that Covid-19 has wreaked on the airline  industry can be seen from their estimate of the industry’s current debt, topping US$ 651 billion. It is encouraging governments to support the industry and estimates that bridging loans will save jobs and kick-start the recovery in the travel and tourism sector. One glimmer of hope is that, if the vaccines are successful in the near term, the sector could well turn cash positive by Q4 2021, having already lost five times more money than what occurred at the height of the 2008-2009 GFC. 2019 has seen passenger traffic slump from 4.5 billion to 1.8 billion, with a forecast passenger figure of 2.8 billion for next year.

There are reports in the FT that big 4 audit firm EY, already embroiled in the BR Shetty scandal, may have acted criminally during its work for Wirecard and is being investigated by German regulators. The German payments group self-imploded last year after revealing a multiyear and multi-million dollar fraud in what has become one of the biggest accounting scandals seen in Europe. It is apparent now that many important clients of the firm never existed, and that the auditor never checked some of the listed bank accounts. EY Germany “vehemently rejects” any suspicion that it acted criminally and noted that it “has been fully supporting the investigations of the relevant government agencies”.

It seems that internal bickering within the EU continues unabated, and this time it involves skiing. Germany is pressing for the industry to close all its ski resorts completely this season in a bid to limit the spread of Covid-19. Not surprisingly, Angela Merkel is facing opposition from other member countries who rely so much on “snow income”, led by Austria which is already gearing up for a full season of visitors; the ski sector contributes 4% to the country’s GDP and 8% of its employment during the winter months. Meanwhile, France is planning to open its resorts but keep the ski lifts shut.

 However, air cargo has done its fair share to help airlines’ finances, as the grounding of flights pushed freight prices higher. Consequently, global revenue is expected to jump 15% to US$ 117.7 billion this year, despite an 11.6% decline in volume to 54.2 million tonnes. The advent of various vaccines early next year will prove a boon for the sector and that air cargo carriers can absorb the extra demand next year. One interesting fact is that IATA estimates it will take about 7k Boeing 747 equivalents to distribute one dose of the vaccine to every person in the world today.

Bitcoin is nearing its all-time high as it edges closer to US$ 19k, having gained 40% in November alone and 160% YTD. The main drivers appear to be the demand for riskier assets, amid unprecedented fiscal and monetary stimulus, designed to counter the economic damage of the Covid-19 pandemic. It is also being helped by the facts that there is every chance that cryptocurrencies will eventually become mainstream, as well as Bitcoin being seen by some to be resistant to inflation.

The latest Institute of International Finance’s report notes that, over the past four years, global debt has risen more than nine-times to US$ 52 trillion, with worse to come, as many countries are still throwing money at the Covid-19 problem, in the hope that some of it will “stick”. Of the US$ 52 trillion, US$ 15 trillion was recorded over the first nine months of the year; total debt is estimated at US$ 272 trillion and now stands at 103% of global GDP. It is estimated that since governments have not been shy to spend money on financial policy, to reduce the negative impact of the pandemic, the ratio of government interest payments to revenues reached a near-record high of 10% in emerging markets.  Lower down the food chain, small businesses have seen margins smashed, whilst larger entities report earnings estimates hovering around 20% below pre-Covid levels. Because of massive government support in most countries, corporate insolvencies have not been as bad as would be normally expected in these circumstances. This is not to last for much longer, as the second wave takes hold and there is no doubt that low liquidity and rising corporate debt levels will manifest as future insolvencies.

One of the biggest mysteries for some time is why stock markets are exploding whilst the global economy is mired in one of the worst-ever recessions, brought on by Covid-19. Do investors know something that the rest of the world is unaware of? Economists will always talk about cycles and how economic history will always repeat itself. The common thread found for most of the major recessions – from the Wall Street Crash and the Great Depression (1929 -1939), the 1973 OPEC oil price shock, Japanese asset price bubble (1986-1992), Black Monday (1987), the 1997 Asian financial crisis and the 2008 GFC – is that the stock markets took a pounding and then some years to recover. This time, it is different – most bourses started tanking in February and hit rock bottom around the start of the fourth week in March, but what happened next beggars belief. This time, instead of taking the usual two or three years to recover to previous levels, the rebound started from day one and has continued for the past eight months, during which time the global economy headed in the other direction at the same speed.

There is only one simple answer to an event that has turned simple economics on its head and that is the sheer amount of money that global central banks and worldwide governments have injected onto the economic system to counteract the impact of Covid-19. There are two factors to consider. The first is that central banks have been printing money in a fashion never witnessed before and, at the same time, have butchered interest rates to historic low levels either just above or even below zero.  Quantitative easing sees central banks buying government debt (usually bonds) that results in lowering rates and flooding the market with “readies”, with the added effect of devaluing their currencies. Now what happens when central banks find themselves holding debt belonging to governments, (usually bonds),the public (mortgages) and corporate (loans)? Nobody really knows but what is known is that the US$ 8 trillion owned by banks after the GFC has tripled to US$ 24 trillion and, despite the red flags, more and more financial stimulus packages are being pumped into the global economic system. Basically, the world is awash with surplus cash and now a lot of that is being pumped into the global bourses, leading to a feeding frenzy. In normal times, if a Chancellor had come out and announced a 60%+ hike in unemployment, the stock market would be first to head south; likewise, an IMF warning that the economic recovery appeared to be on a slippery slope has fallen on investors’ deaf ears.

101 Economics teaches that if a government ploughs money into their economy and interest rates were lowered, the economy would improve because individuals and businesses would borrow more (at the lower rate) and invest. Both business confidence and consumer confidence would move higher, the job market would turn positive and government coffers would fill, with extra tax revenue and lower unemployment costs. This has patently not happened in 2020 – business and consumer confidence has never been lower, the job market is crashing and government coffers are being depleted at rates rarely seen before. However, the stock markets are in seventh heaven, thanks to incompetent management by governments and central banks on a global scale that has continued to feed the rich whilst the rest continue to suffer. The stock market boom has to end and the longer it goes on the bigger will be the fall-out when the crash happens. What needs to happen is to stop pumping unlimited amounts of money, on the pretext of fighting the pandemic; it is time to turn off the “money tap” and return the world away from zero interest rates and back to the real world.

It seems that China is holding about US$ 500 million worth of Australian coal because of “environmental quality” problems, as bi-lateral trade between the two countries begins to suffer. It is thought that coal is but one of seven Australian imported products targeted with restrictions and bans by Chinese authorities, as diplomatic tensions begin to worsen. It appears that Australian exporters were informally warned at the beginning of the month that their Chinese buyers had been told to stop buying specified Australian exports, including barley, beef, coal, cotton, lobster, timber, and wine. Australia has had tiffs all year with the communist government on a number of issues; they included the calling of an independent inquiry into the origins of Covid-19, condemning Beijing’s treatment of Muslim Uyghurs in Xinjiang, criticising Hong Kong national security law and the curtailing of freedoms in the special administrative region.

A former head of America’s central bank, 74-year-old Janet Yellen, is the bookie’s favourite to lead the treasury department; that being the case, she will become the first woman to hold this position. She previously served as a top economic adviser to the then President, Bill Clinton, and is widely credited with helping steer the economic recovery after the 2007 financial crisis and ensuing recession. Since leaving the Fed in 2018, she has spoken out about climate change and the need for Washington to do more to shield the US economy from the impact of the coronavirus pandemic.

Tuesday saw the Dow Jones rocket past the 30,000 level for first time in history, and the S&P touching record highs to close on 3,635, with investors banking on a double whammy of a peaceful handover of power and raised hopes of a speedier recovery, with Covid vaccines almost ready for distribution. Global bourses rose in tandem, with London’s FTSE 100 trading 1.5% higher, Japan’s Nikkei 2.0% to the good and Hong Kong’s Hang Seng Index up 1.4%; other indices in South Korea, Australia, New Zealand and Singapore all nudged higher. Wall Street witnessed shares in some of their bigger clients rising – Chevron, JP Morgan Chase, Goldman Sachs and Boeing climbing 5.0%, 4.6%, 3.8% and 3.3% respectively. It does not take a genius to see that the higher these bourses go, the quicker they will fall – this could happen on either a Monday or Friday this year.

South Africa has seen its credit rating cut even further into junk territory, to Ba2, by Moody’s Investors Service, expecting the continent’s second largest economy to weaken again because of the continuation of Covid-19; the agency maintained its negative outlook, as the battered economy slips two levels below investment grade. The agency noted that the pandemic would impact “both directly on the debt burden and indirectly by intensifying the country’s economic challenges and the social obstacles to reforms” and that the GDP would be 8% lower by year end. More worryingly, is that government debt to GDP would come in at 110%, by the end of 2024, equivalent to a burdensome 40% increase from its 2019 financial year.

The latest blow to hit the Lebanese economy was the withdrawal of auditing firm Alvarez & Marsal from an agreement with the Aoun government to conduct a forensic review of the nation’s central bank. The auditor pulled out of the assignment because they were unable to obtain the necessary information to carry out their work and “are not hopeful that they will be able to get additional information in the coming three months to carry on with their work.” The IMF has insisted that it will only release a US$ 10 billion bailout package, (and other donors US$ 11 billion), only if the financial assessment is carried out. It is difficult to imagine a bleaker picture for any other global economy – defaulting US$ 31 billion of eurobonds in March, September inflation at 131%, currency down 80% against the greenback on the black market since March, the economy expected to slump 25% this year and public debt topping US$ 94 billion.

October UK retail sales moved forwards, 1.2% higher on the month, driven by early Christmas shopping and discounting by stores. As has been the case since the onset of Covid-19, online stores did well, but clothing sales weakened after five consecutive months of increased sales, mainly because of local coronavirus restrictions leading to reduced footfall for the bricks and mortar outlets. Fuel sales remained flat, and still below their pre-March lockdown level, due to reduced traffic on the roads. However, retail sales in November will inevitably head south because of the fresh lockdown.

In what turned out to be a new October record – as well as US$ 14.5 billion higher than the same month last year – government borrowing came in at almost US$ 30.0 billion, with continuous heavy public spending to support the economy; monthly tax receipts were 6.4% lower at US$ 53.0 billion. YTD government borrowing at US$ 287 billion is 469% higher, year on year, and expected to near US$ 500 billion by the end of 31 March, the government’s fiscal year end. Rishi Sunak, the UK Chancellor, has frozen the pay of millions of public sector workers, as he tries to get to grips with the massive fall in private sector earnings this year, and the need for the Exchequer to try and bolster public finances wherever possible. Only the NHS, and the lowest paid, escaped the pay freeze, that will impact 1.3 million public workers; the health service will receive an extra US$ 3.9 billion. The population has been warned that they will soon see an “economic shock laid bare” and that Covid’s impact on the economy must be paid for – and high levels of borrowing could not go on indefinitely.

Other measures, to save costs, include the controversial temporary ditching the UK policy of spending 0.7% of national income on overseas aid – now cut to 0.5% and saving almost US$ 5.4 billion. Millions of pensioners will see the future value of their pensions lower owing to a planned change in the way payments are calculated from 2030. It would seem that the Chancellor will need to find a net US$ 40 billion every year (by increasing revenue and/or cutting costs) to stabilise the UK’s growing debt pile. To add to his problems, he will have to deal with the possibility of a no Brexit deal -or a patched up one – and either will cost money at least in the short-term.

With current unemployment levels 22.7% higher on the year to 1.6 million, the Chancellor has announced that this will rise 62.5% to 2.6 million by mid-2021, reiterating that the “economic emergency” caused by Covid-19 had “only just begun”. He indicated that the government would have to spend US$ 375 billion this year “to get our country through coronavirus” and is expected that its annual borrowing will top US$ 530 billion. Furthermore, there is talk that failure to secure a deal would reduce the size of the UK economy by a further 2% in 2021, with permanent damage to growth and living standards in future years.

The government also announced that it will make a major reform to the way it assesses the value for money of big spending projects which, in the past, has biased the South at the expense of the North.  The Chancellor confirmed that this was part of the government’s “levelling up” agenda and that it would allow those “in all corners of the UK to get their fair share of our future prosperity”. The Chancellor also noted that the Treasury would move some staff to a new base in the north of England next year, as part of a shift of 22k civil servant roles out of London and the South East. Interestingly, US$ 2.1 billion of the proposed US$ 800 billion planned public investment will be spent on tackling potholes on the country’s roads. I read the news today, oh boy, 4,000 holes in Blackburn, Lancashire.

Posted in Uncategorized | Tagged , | Leave a comment

No Face, No Name, No Number.

.

No Face, No Name, No Number.                                                           19 November 2020

According to DLD statistics, the top five nationalities, investing in the local property market last year, were Indians, Emiratis, Saudis, Chinese and the British.  Figures involved were 5.3.k and US$ 3.0 billion, 5.2k – US$ 2.2 billion, 2.2k – US$ 1.3 billion, 2.1k – US$ 1.0 billion and 2.1k – US$ 1.1 billion respectively. The next five nationalities were from Pakistan, Egypt, Jordan, US and Canada. The number of investments last year topped 47k, with a value of US$ 61.6 billion. When it comes to the most popular locations in which to invest, Dubai Marina ranked first, with 3.9k real estate investments in 2019, followed by Business Bay’s 3.5k, Al Khairan First area with 3.1k, Sheikh Mohammed Bin Rashid Gardens’ 2.8k investments and the Burj Khalifa’s 2.7k. Surprisingly, the number of added real estate units last year was noted at just over 17k.

Having initially forecast sales of almost US$ 545 million, (AED 2 billion), equating to 1.5k units, for 2020, (with Covid having driven this down to US$ 381 million), Dubai developer Sobha Realty is confident that, with the launch of new projects, this figure could hit US$ 680 million (AED 2.5 billion) next year. The projects would be part of its massive US$ 4.0 billion, ten-year Sobha Hartland master development in Mohammad bin Rashid City which is being financed through a mix of debt and equity. The developer points to positive changes to visa rules targeting retirees, along with vaccine developments as drivers to a potential boost in realty sales. This week, the emirate’s ten-year golden visa system was extended to embrace a wider range of professionals – another potential boost to the local housing market.

With only US$ 272 million in bank debt and Fitch-rated BB-, with a stable outlook, Azizi Developments is looking at investing nearly US 1 billion over the next two years. Even through this year of Covid, the developer has already launched three projects, with a further two prior to the end of the year, with a total value of US$ 272 million; it plans to deliver 3k property units in 2020. Financing for the forty-five buildings will be carried out by various sources – internal equity, off-plan sales, commercial loans and possibly upsizing its planned US$ 300 million Sukuk. The developer estimates that sales are still 30% lower, year on year.

With the recent introduction of an air corridor between the UAE and the UK, there has been a demand surge resulting in Emirates increasing its Heathrow daily schedule to four A380s, as well as operating the jumbo on the Manchester route to six times a week, and daily to Birmingham and Glasgow. The carrier will also increase the frequency of its Boeing 777s to UK destinations. The so-called air corridor means that passengers entering the UK from the UAE are no longer required to quarantine. This in turn will undoubtedly give the Dubai hospitality sector a much-needed boost, especially with the upcoming holiday season, including Christmas.

On the directives of HH Sheikh Mohammed bin Rashid Al Maktoum, more than 1k ministers, and senior federal/local government officials, have been holding eleven consultative meetings to discuss the path for the economic environment and economic models and sectors for the next fifty years. The meetings were part of the efforts of the fifty-year Development Plan Committee, with the aims of ensuring the country’s leading stature regionally and globally and strengthening government integration to chart the future to implement a comprehensive ongoing development plan. The meetings focussed on issues such as the business environment and stimulating entrepreneurship, foreign trade and partnerships, attracting investments, talents and skills, and building the capabilities of national cadres and qualifying them to lead the future economy.

Another new firm destined for the ever-growing DIFC is robo-advisory platform StashAway, which has just received an asset management licence from the Dubai Financial Services Authority. Although only founded in 2016, and based in Singapore, it has already become one

 of SE Asia’s largest digital wealth managers and has users from more than 145 countries. StashAway sees Dubai as the logical ME hub and expects to tap into a growing segment of affluent investors looking for low-cost ways to build their wealth. It hopes to follow its earlier success where it quickly became the benchmark for the financial services industry by delivering robust returns and low fees. Over the past year, its assets under management have grown more than 4.3 times and, to date, it has raised US$ 36 million in four funding rounds, with backers including Eight Roads Ventures, (the global investment firm backed by Fidelity and an early investor in Alibaba), and Square Peg, the largest venture capital fund in Australia.

Yet another start-up, Fenix, has landed almost US$ 4 million in seed funding from Maniv Mobility, in what is the first venture investment into a UAE company by an Israel-based VC. The co-founders, Jaideep Dhanoa and IQ Sayed, started the company after leaving Circ, a Berlin-based e-scooter hire firm, in January, which had been sold to US-based Bird. The start-up is forecasting that it will have the biggest fleet of e-scooters that have been “purpose-built for continuous shared use”. Scooters will cost US$ 0.27 per kilometre to ride, with a US$ 0.82 unlocking fee. There is no doubt that Fenix has entered a sector that is set to explode with estimates that the shared micro-mobility market – offering e-scooters and electric bikes for hire – is expected to be worth up to US$ 500 billion across the US, Europe and China by 2030. A further US study estimates that start-ups in the sector have attracted about US$ 5.3 billion in funding over the past five years.

Despite the pandemic, and the consequent tightening of liquidity across the board, some start-ups seem to have had no problem raising capital, including a Dubai-based fresh fruit delivery company.  Fruitful Day has managed to raise US$ 820k in two successive fundraising rounds, through global equity crowdfunding platform Eureeca, the last one which saw forty new investors from countries such as the UAE, Saudi Arabia, Switzerland and Singapore. The money raised will help the five-year old company to focus on further horizontal and vertical expansion in the home market. Covid was a driver in pushing its home deliveries higher.

The Ministry of Finance has announced that all companies in the UAE that engage in any of the Economic Substance Regulations, ESR’s relevant activities, within the fiscal year ending 31 December 2019 must submit an annual ESR notification to its Regulatory Authority no later than the end of this calendar year. The ministry will launch the ESR portal early next month and non-compliance will lead to penalties. All reports, notifications and supporting documents will be submitted electronically and interestingly, all companies must also re-submit the reports and notifications that were previously submitted to the regulatory authorities on the ESR Portal by the same deadline.

In a surprise announcement, it appears thatBR Shetty plans to return to the UAE ‘imminently’ to support authorities on the NMC probe, indicating that he hascomplete faith in the justice system of the UAE” and that he was looking forward to the perpetrators of the fraud facing justice.” Mr Shetty said he is returning to the UAE to support “all relevant bodies to correct any injustice done to the companies, their employees, shareholders and other stakeholders and help find solutions to outstanding matters”. The Indian billionaire doctor founded NMC Health in 1975 and grew it to become the country’s biggest privately-owned healthcare operator, and in 2012 took it to a London Stock Exchange listing, with a value of US$ 11.3 billion at its peak. The company was put into administration in April after it declared its debts at US$ 6.6 billon, more than the triple the figure of US$ 2.2 billion stated in its accounts. The DIFC courts have issued a worldwide freezing order on the businessman’s assets, whilst the company’s biggest creditor, ADCB, has started criminal legal proceedings against Mr Shetty and a number of other individuals.

The country’s largest Sharia-compliant lender by assets priced its five-year US$ 1 billion additional tier-1 sukuk, at a profit rate of 4.625% pa, carrying the lowest-ever yield achieved by any bank globally on tier-1 Sharia-compliant bonds. Earlier in the month, Dubai Islamic Bank completed the integration of Noor Bank, ahead of schedule, raising its asset base to more than US$ 81.7 billion. The sukuk is listed on Euronext Dublin and Nasdaq Dubai.

Dubai-listed Gulf Navigation posted a Q3 loss of US$ 3 million – a 37% improvement on comparative figures – bringing its retained losses to US$ 138 million; this was put down to several factors, including a decrease in revenue of all vessels, an increase in net finance costs and fluctuations in vessel rates due to Covid-19. The maritime and shipping company saw Q3 operating costs 23.0% lower at US$ 9 million and wrote off US$ 54 million for a vessel but recovered the same amount from an insurance claim; its Gulf Livestock 1 vessel capsized with 43 crew and almost 6k cattle on board in the East China Sea in September. Its nine-month revenue dipped almost 15% to US$ 30 million, with its loss 36.5% higher at US$ 17 million.

The bourse opened on Sunday 15 November and, 103 points (4.8%) to the good the previous week, rose 53 points (2.3%) to close on 2,316 by Thursday 19 November. Emaar Properties, US$ 0.07 higher the previous fortnight, traded up US$ 0.05 at US$ 0.83, whilst Arabtec is now in the throes of liquidation, with its last trading, late in September, at US$ 0.14. Thursday 19 November saw the market trading at 159 million shares, worth US$ 63 million, (compared to 391 million shares, at a value of US$ 73 million, on 12 November).

By Thursday, 19 November, Brent, US$ 2.64 (6.5%) higher the previous week, gained a further US$ 1.26 (3.1%) in this week’s trading to close on US$ 44.21. Gold, US$ 64 (3.3%) lower the previous week, shed  a further US$ 17 (1.0%) to close on US$ 1,879, by Thursday 19 November.

The UAE confirmed its commitment to proposed production cuts to be discussed by the Opec+ alliance. The country, the third largest OPEC producer accounting for an estimated 4.2% of global output, reported 126% compliance with the Opec+ agreement last month and lowered its crude output by 153k bpd, in line with the current level of curbs. Opec+ will convene online on 01 December and it seems likely that the current level of restrictions will be rolled over and that future agreed incrementally increases in production reversed. A leap in the number of Covid-19 cases, and subsequent reimposition of lockdowns in several parts of the world, have again seen the energy demand slow so this may result in further cuts being implemented.

After more than twenty months of being grounded, following two fatal crashes, in Indonesia and Ethiopia, the US Federal Aviation Administration has finally approved Boeing’s 737 Max to recommence flying. Airlines are now allowed to resume operating the 737 Max, the company’s best-selling jet, and deliveries can be resumed.  Early Tuesday trading saw its share value rally by over 5%. Whether the plane maker has learnt from its past history, of arrogant independence and a self-centred corporate culture, and whether it will focus more on core values of safety, quality and integrity, remains to be seen.  Also, in “the dock” is the US regulator who, at the end of the day, allowed a deeply flawed plane into service, resulting in tragedy.

It has been a mega year for Bitcoin which has leapfrogged by 130% so far YTD and reached US$ 17.3k by midweek – its highest level since January 2018 and up fourfold since its March lows. Whether it beats its all-time December 2017 high of US$ 19.7k remains to be seen. This year’s rally has been driven by some investors’ strong appetite for riskier assets in the wake of massive fiscal and monetary stimulus measures by global governments and central banks and a growing attraction to its purported inflation-proof qualities; with its supply capped at 21 million, this scarcity is alleged by some to shield it from central bank or government policies that stoke inflation. In October, PayPal said it would include Bitcoin and other cryptocurrencies on its platform, a move that has seen it jump in value by almost 50%.

Tata Steel has announced that it plans to keep its UK plants running, without financial support from India, but to sell its European business; a possible buyer is Swedish steel firm SSAB who are in discussions to acquire its interests in the Netherlands, including the steelworks at Ijmuiden. Meanwhile, the Indian conglomerate is dealing with the UK government about the business’s future in the country and the long-term future of Tata Steel UK, which employs 8k; Tata has also indicated that it will separate the UK and Netherlands arms of the business.

Probably the country’s best known bakery chain, Greggs, is to cut more than 800 jobs because of a sales slump, driven by Covid-19, as it would not be “profitable” if action was not taken. The Newcastle-based company noted that its “battle with Covid was intensifying further” and, two months ago, confirmed it was in talks with staff to cut hours to try and minimise job losses, but that has proved that more cost cuts were essential for it to remain a viable and profitable business.

EasyJet has reported its first annual loss, for the year ended 30 September, in the airline’s 25-year history, at US$ 1.7 billion, as the coronavirus crisis continued to ravage the travel sector; revenue more than halved over the twelve months, not helped by its entire fleet being grounded for eleven weeks at the start of the pandemic.  The budget airline believes that the underlying demand for air travel is still robust and, with this week’s news of a vaccine, the carrier saw bookings 50% higher. However, with a second wave hitting, EasyJet is hunkering down for a long hard winter and operating at just 20% capacity. To date, it considers the US$ 4 billion it has raised, through taking on more debt, including a US$ 800 million government loan, selling assets and extra equity financing, will leave it enough funds until Q2 next year.

Despite all the hassle associated with the pandemic, Airbnb has filed papers that will see the lodging website become a publicly listed company. The IPO is expected to raise around US$ 3.0 billion that would rate the twelve-year old company at more than US$ 30.0 billion – a lot of money considering last year it posted a US$ 674 million loss which has already been surpassed in only nine months to September this year. The 30% revenue growth reported in 2019 has all but eroded by September, with a twelve-month 32.4% slump to US$ 3.3 billion.

There are two reports relating to Topshop owner Arcadia; one is that it is in discussions with lenders to secure US$ 40 million in funding and the other that it is drawing up plans to place the business under administration, the latter of which has been refuted by the retailer. Arcadia – owned by the controversial Sir Philip Green – is confident that it will secure financing to continue trading, as phase 2 of the pandemic begins to impact on the retail sector which has been forced to close until 02 December. Topshop – which also owns Miss Selfridge, Evans, Burton and Dorothy Perkins – furloughed most of its 15k workforce in their 500 outlets during the first outbreak.

New Xbox consoles and fresh releases to the Call of Duty games franchise are being blamed for the UK’s leading internet providers – including BT, Virgin Media, Sky, TalkTalk, Vodafone, City Fibre and Zen Internet – recently experiencing record broadband use; it seems that much of the activity was generated by video gamers downloading large files.  For example, the recent release of updates to Call of Duty: Modern Warfare and Warzone and an update to Bungie’s video game Destiny 2   both range up to 65GB in size, whilst pre-loads of Call of Duty: Black Ops Cold War take up to 130GB. The internet service providers will be tested again today, on 19 November, when the PlayStation 5 comes to the UK.

Having been charged by The Securities and Exchange Commission for endorsing and disclosing sales metrics Wells Fargo should have known were false, ex-chief John Stumpf has agreed to pay US$ 2.5 million to settle the charges, whilst Carrie Tolstedt, the former head of its community banking operation, is fighting the fraud claims in court.  The major US financial institution has been under investigation for the past four years, when it was revealed the firm had boosted its sales by opening millions of accounts without authorisation. Earlier in the year, the bank paid US$ 3.0 billion to settle an US Department of Justice and SEC investigation, whilst their ex-chief was fined US$ 18 million and barred from working in the banking industry for life.

In the US, Amazon has introduced its own online pharmacy that will allow customers to buy prescription medicines and give its Prime members free two-day delivery and discounts of up to 80% on generic medicines and 40% on prescribed brand-name drugs. All that the tech company needs to know are the bare facts, such as whether customers are pregnant, date of birth, gender and insurance details. Doctors can send prescriptions directly to Amazon Pharmacy or patients can request a transfer from their existing retailer. Two years ago, Amazon acquired online pharmacy Pillpack for US$ 753 million and confirmed that health data would remain separate and distinct from that on its retail site.

A day after Crown Casinos admitted to an inquiry that accounts it set up for VIP players could have been used for money laundering, NSW’s gaming regulator has banned them from opening its new Sydney casino next month. This has thrown into disarray the gaming conglomerate’s plans to open its US$ 1.5 billion development at Barangaroo, which includes a casino, fourteen bars and opening restaurants, along with a 350-room hotel. A final decision whether Crown can keep its licence will be made within three months and will come a year after the regulator started examining Crown’s fitness to hold its 99-year licence for the casino.  It now seems that “Crown will focus on opening the non-gaming operations at Crown Sydney, in consultation with ILGA, in the absence of the commencement of gaming operations.”  It seems highly likely that Crown will have to ditch its principal shareholder, James Packer, to have any chance of salvaging its core business interest – the casino. Now it seems that questions will be asked by the governments and gambling regulators of both Victoria and Western Australia where Crown has casinos in their capital cities of Melbourne and Perth.

It is reported that one of Australia’s leading builders is in financial difficulties. Grocon, which has built two of the country’s tallest buildings, Eureka Tower and the Rialto Towers, and Melbourne’s casino. Now it seems that almost 100 subcontractors, on its Collingwood office tower development, are owed US$ 4 million, with invoices months in arrears. Sources suggest the company has been impacted by several expensive legal battles, with the NSW and Queensland governments, and not helped by the COVID pandemic which has seen the stalling of some future projects. It has recently won a US$ 55 million contract to help in cleaning up and rebuilding after Victoria’s bushfires.

The latest Economist Intelligence Unit’s survey confirms that the three most expensive cities in the world are Hong Kong, Zurich (overtaking Singapore) and Paris (replacing Osaka), with Tel Aviv moving up two places and ranked alongside Osaka as the world’s fifth costliest city. Surprisingly, Amman is the most expensive ME city, moving down ten places to 27th with both Abu Dhabi and Dubai slipping to 53rd and 66th. Because of a fall in the greenback and the rise in both the euro and sterling, cities in the Americas, Africa and Eastern Europe have become less expensive since last year and western European cities have become costlier. The index uses various measures in their rankings including currency volatility, supply chain problems, the impact of taxes and subsidies, and shifts in consumer preferences.

The world’s third largest economy, which took a battering at the onset of the pandemic in March, has bounced back in Q3. Japan, whose economy jumped 5.0% in Q3, is one of the Asian countries that are leading the way for a global recovery in what has become known as the “Zoom boom” – because of the increased demand for IT equipment from the rising number of people working from home and utilising online meeting platforms like Zoom. After an 8.2% Q2 contraction, Japan’s economy returned to positive territory, because of a rise in domestic demand as well as exports, although some analysts see future growth to be moderate. By the end of Japan’s fiscal year in March, the economy is expected to have slumped by 5.6% over the previous twelve months.

However, there is only one regional country that will end the year in the black and that is Vietnam, with a forecast 2.4% growth. The IMF noted the reason for this positive news was that its government took “decisive steps to contain the health and economic fallout from Covid-19”. To date, it has registered only 35 deaths and 1.3k cases. There are many reasons why the country has appeared to get off so lightly, including that it was quick to develop testing kits, and used a combination of strategic testing, aggressive contact tracing to help control numbers. However, although its tourist trade took a battering, it has benefitted from the global move to work from home which boosted the sales of laptops and office furniture, both of which are manufactured in the country; in the first nine months of the year, exports to the US came in 23% to the good, whilst global electronic exports grew by 26%.

Just as Australians seem to be ditching their credit cards with buy now, pay later cards, there are warnings from the Australian Securities and Investments Commission that some consumers are having to cut back on essentials, such as meals, because of debt they have racked up from using them; it is estimated that 20% are missing payments. Although not yet suggesting that they should be more regulated, the corporate watchdog’s review of six companies found that harm was being done – and that despite concerns from consumer advocates that it is just another form of credit that allows people to take on too much debt. It is reported that the number of buy now, pay later transactions almost doubled to 32 million last year, with missed payment fees up 38%, making up 20% of cards’ total revenue. Almost 70% of those who had taken out another loan to make their buy now, pay later payments – which should be settled every fifteen days – had also missed a payment, and half were under 30. An interim Senate enquiry seems to back self-regulation rather than a ‘one-size-fits- all’ approach.

Following details of the ongoing trade rift between Australia and Chinese – and its negative impact on the wine industry – there are signs that Australia’s multi-million-dollar wine trade with China has effectively been closed, as it appears that none of their wine has cleared China’s customs in the past two weeks. It is estimated that up to 60% of wine that would normally be exported to China remains in Australia and that local winemakers are expecting tariffs to be applied shortly. It is estimated that more than half of all wine exports to China has not left Australian shores due to growing uncertainty in the industry – a major worry with the upcoming maximum export time leading up to the Chinese New Year. There is every chance that tariffs will be levied because authorities believe that Australian winemakers have been selling produce below cost and have been receiving government subsidies. Last year, more than 2.4k exporters sold wine to China worth almost US$ 900 million.

At the weekend, fifteen countries – comprising ten SE Asian nations, as well as South Korea, China, Japan, Australia and New Zealand – signed an agreement forming the world’s largest trading bloc, covering nearly a third of the planet’s total population and accounting for 29% of global GDP. A notable absentee was the US, which withdrew from the then Trans-Pacific Partnership in 2017; India was initially in talks but withdrew over concerns that lower tariffs could hurt local producers. At the time, it was seen to be a counterbalance to China’s surging power in the region but, eight years in the making, the new pact, the Regional Comprehensive Economic Partnership, confirms China’s advancing influence in the region. The venture hopes to eliminate a range of tariffs on imports by 2040 and also covers provisions on intellectual property, telecommunications, financial services, e-commerce and professional services.

Saturday will see the start of a two-day virtual G20 summit, hosted by Saudi Arabia, bringing the twenty leading global economies to discuss the most pressing global socio-economic issues. It will focus on empowering people, safeguarding the planet, and shaping new frontiers. This meeting will occur on the anniversary of Covid-19 being detected for the first time in China and since then the pandemic has ravaged – and continues to do so – global economies. It was on 26 March that the same meeting vowed to “spare no efforts” to overcome the pandemic and to look at ways of reviving the global economy. Since then, a combination of global governments and central banks has poured in almost US$ 20 trillion to fight the negative aspects of the pandemic but it does seem that a lot of that has been poured down the global drain.  The measures have helped shore up the world’s banking system, safeguard financial markets and put a floor under the global economy which still seems to be in a perilous state. The end result will be a 4.4% decline in the global economy this year, with a marginal improvement in 2021 and that the world death rate of 1.34 million to date will continue heading upwards.

Unctad expects international FDI flows to decrease by up to 40% this year, from US$ 1.5 trillion in 2019 – the first time this figure has dipped below US$ 1.0 trillion since 2005.  The first six months of the year saw the figure plummet even further to only US$ 399 billion, with developed economies taking the brunt, down 75% to US$ 98 billion. Some industry experts see global foreign direct investment flows in a gradual U-shaped recovery, with pre-pandemic levels returning by 2022. Global FDI is projected to slip by up to 10% next year before the turnaround the following year. The recovery curve will be in contrast to the U-shaped recovery expected for global GDP and trade in 2021. However, the caveat remains unchanged – prospects for recovery depend on the duration of the pandemic and effectiveness of policy response – and this still remains highly uncertain.

House prices in the US reported their biggest annual increase in seven years, with October figures reflecting a 12% jump in prices over the past twelve months. Even with many people struggling with cash flows, (because of the impact of Covid-19, near record low mortgage rates and the rush to the suburbs for extra space, in the era of restrictions and quarantines), an increasing number of buyers are chasing a limited supply of listings. However, as prices continue to head northwards, more and more first-time buyers are being priced out of the home ownership market. According to Freddie Mac, the average rate for a 30-year mortgage stands at 2.84% and that the nationwide median price of a single-family home in the quarter was US$ 313k. Currently, there are 1.47 million previously owned homes available for sale in the country, 19.2% less than a year ago; it would take just 2.7 months to sell those homes at the current rate of deals.

Saudi Arabia’s Crown Prince Mohammed bin Salman has announced that the kingdom’s Public Investment Fund will inject US$ 40 billion, over the next two years, in a move to further boost economic growth; it is known that the Crown Prince is a proponent for greater diversification of the oil-reliant economy, which is a lynchpin of its Vision 2030 strategy. Investments will be made to enhance many economic sectors, including tourism, sports, industry, agriculture, transportation, mining and space. Earlier in the month, the PIF placed US$ 1.3 billion for a 2.04% stake in Mukesh Ambani’s Reliance Retail Ventures, India’s largest retail chain.

The OECD has seen the 37-country bloc’s economic output in Q3 surge an impressive 9.0%, including the likes of France – up 18.2%, following a 13.7% contraction a quarter earlier – Italy, 16.9% higher following a 13.0% Q2 shrinkage, and the UK’s 15.5% hike following a 19.8% fall the previous quarter; other economies moved north, including the euro area and the EU, up 12.6% and 11.6% after Q2 falls of 11.8% and 11.4% respectively. Canada, Germany, the US and Japan all moved higher in Q3 by 10.0%, 8.2%, 7.4% and 5.0% respectively. By the end of September, the cumulative GDP is still 4.3% below the pre-pandemic high. In October, the OECD has warned that the 2020 UK economy was on track to contract by 10%, attributable to the second wave of Covid-19 and a disorderly Brexit from the EU. (Perhaps they have turned a blind eye that the same rationale applies to the EU). On the world stage, the global economy is expected to contract 4.4% this year due to the economic fallout from the coronavirus pandemic, rebounding to 5.2% in 2021. OECD employment, at 64.6%, fell to its lowest level in a decade in Q2, down 34 million, quarter to quarter to 560 million.

The UK inflation rate jumped 0.2%, month on month, to 0.7% in October as bigger than expected rises in the cost of clothing and food helped to push UK inflation higher; second-hand cars and computer games also saw prices move higher whilst there were declines in the cost of energy and holidays. Past history indicates that prices for clothes and shoes traditionally decline over summer before the new autumn ranges come in, with prices edging higher before falling again with the sales season towards the end of the year. However, the future short-term problem will not be inflation but deflation and the only way to deal with this is to introduce fiscal measures to stimulate and fix a much-scarred economy still reeling from the impact of Covid-19. The Bank of England cannot do much more to stimulate the economy and it is up to the Johnson government to do the shovel work from now on in.

One good reason that the UK is better off outside the European bloc came with the announcement this week that two member states, Hungary and Poland, by voting against the resolution, have blocked approval of the EU’s budget over a clause that ties EU funding with adherence to the rule of law. The other twenty-five countries were for passing the US$ 890 billion financial package for a coronavirus recovery fund. It is not the first time that these two former Communist countries have gone against the majority and both are being investigated for undermining the independence of courts, media and non-governmental organisations. Unlike the 2021-2027 budget, that only required a qualified majority, this resolution had to be passed unanimously. Some outsiders may have some sympathy for the Polish Justice Minister Zbigniew Ziobro, who argued that the rule of law issue was “just a pretext” and “it is really an institutional, political enslavement, a radical limitation of sovereignty.”

It cannot be Christmas without fraudsters upping their game and exploiting festive bargain-hunters who have switched to online shopping owing to coronavirus restrictions. A recent UK study notes that those searching for games consoles, bicycles and clothing may be at a higher risk of encountering a scam, and that the average loss could be as high as US$ 1k. UK Finance has noted that social media platforms, online marketplaces and auction websites are being increasingly used by criminals to carry out scams which see a customer paying in advance for goods or services that do not exist and are never received. Once payment has been made, they are taken off the integrated payment platform and are made through a bank transfer instead, meaning those that have been scammed are unlikely to be refunded. Figures from Barclays indicate a 66% hike in fraud attempts in H1, with UK Finance putting losses in the six months at US$ 36 million. With Black Friday one week away, and one month to Christmas, watch out for these scams; for just one such fraud merchant, there will be thousands of victims, many of whom are still reeling from the impact of Covid-19. If in any doubt, do not proceed with that online sale and remember – No Face, No Name, No Number.

Posted in Uncategorized | Tagged | Leave a comment