Wake Up And Smell The Coffee

Chestertons paint a gloomy picture of the Dubai real estate landscape and forecast further pressure on property sales prices and rental rates, as the addition of new stock and tough economic conditions take hold. It estimated that the emirate recorded its highest quarterly fall since 2014 in apartment sales prices at 5% in Q1, with the same figure for villas. Rentals also fell in both categories at 2%. The report also noted that there was a 10% rise in recorded transactions for completed residential units, whilst the off-plan sector was 19% lower. Locations that witnessed the biggest falls in apartment sales prices were Business Bay and Silicon Oasis (both 9% lower), with 8% falls recorded in Dubai Sports City, Jumeirah Village Circle and The Greens; in the villa market, the big losers were Palm Jumeirah, the Meadows and Springs all shedding 8% in value.

Azizi Developments continue to award construction contracts – this week for three low rise buildings to Tasmeem Building Contracting. The US$ 28 million deal covers 242 1-2 B/R apartments in its Meydan Avenue development – Azizi Gardens, Azizi Park Avenue, and Azizi Greenfield. The Dubai-based company is currently working on more than 200 projects this year.

Hilton has no qualms about the state of the hospitality sector as it announced plans to triple the number of its ME properties to 122, from its current number of 41 by 2023. Over 50 of the new properties will be found in the UAE (including four opening in the country this year) or Saudi Arabia.

By adding further properties – especially in City Walk, Downtown and Dubai Marina – fäm Properties will more than treble its portfolio value of Dubai holiday homes to US$ 272 million by year-end. The Department of Tourism and Commerce Marketing has recently launched a plan to develop a timeshare market in Dubai to help broaden the tourism sector.

A fairly rare event took place in Q1 – UAE hotel demand (at 5.2%) outpaced the supply line of 4.0% which resulted in improved occupancy figures for the sector, 1.1% higher at 83.4%. However, other indicators declined – average daily rates, by 3.4% to US$ 182 and revenue per available room, 2.3% to US$ 152. Overall ME occupancy was up 0.9% to 70.6%, with falls for both ADRs (4.5% to US$ 164) and RevPAR (3.7% to US$ 116).

HH Sheikh Mohammed bin Rashid Al Maktoum has issued Law No. (8) of 2018 in relation to Dubai Health Authority (DHA) that will enhance the emirate’s position as a global healthcare hub. His aims include “to offer the best healthcare facilities and services and attract top healthcare establishments, the best medical personnel and the most advanced technologies.”

Dubai fitness levels will continue their upward trend, as the RTA announce plans to extend the emirate’s cycle lanes to 316 km this year and to 850 km over the next decade. Apart from making Dubai one of the best global cities for cyclists, it will also introduce plans to support other “non-mechanical mobility means.” Any improvement in national fitness levels will be a boost for the Dubai economy – with a more productive and efficient workforce and a reduction in medical expenses and “sickies”.

Nakheel is teaming up with Al Nasr Sports Club to build a US$ 81 million mall in Al Khawaneej district. The JV will result in a three-floor retail, dining and entertainment centre, with a total built up area of 775k sq ft and parking for 700 vehicles.

UK’s export agency is to provide US$ 136 million finance for phase 4 of Dubai World Trade Centre, including an on-site hotel. UK Export Finance has already assisted in the first three phases and the latest will see over 50% of supplies emanating from the May government coffers.

To celebrate the 100th birthday of his father Sheikh Zayed, his son and succeeding UAE President, Sheikh Khalifa bin Zayed Al Nahyan has ordered that all government employees receive a bonus of one month’s salary – estimated to cost US$ 436 million. The bonus applies to both current and retired employees.

DP World’s new cruise passenger terminal in the Cypriot port of Limassol opened this week that will allow for the first time the biggest cruise ships in the world to berth at the island. A three-party consortium led by DP World is hoping manage an inland container depot in Egypt’s 6th of October City. If successful, DP will become the operator to create a central distribution centre and further develop the infrastructure to improve connections to the African continent. Last year, the Dubai-based port operator signed an agreement with SCZone to develop an integrated special economic zone in Ain Sokhna.

Following apparent delays in getting the flying taxi project off the ground in Dubai, Uber Technologies has reopened a contest to select the first “testing” city outside of the US, with Dallas and LA already selected. The company hopes to start demonstrator flights by 2020 and have intra-city operations by 2023.

It is reported that Mediclinic is set to acquire two clinics – City Centre and Me’aisem – from Majid Al Futtaim. The private health-care group is likely to partner with MAF in future locations, including gaining traction in some of the seller’s malls and entertainment complexes, as it further expands its operations.

A statement to the DFM confirmed that Bahrain-based GFH Financial Group had invested up to US$ 150 million for what was a possible 85% stake in the Dubai incentives and lifestyle app The Entertainer, founded by Australian entrepreneur, Donna Benton in 2001. The company had a US$ 35 million+ turnover last year and is operational in fifteen countries.

ENOC sold 249 million barrels in 2017 and is confident that the US$ 1 billion expansion to its Jebel Ali refinery will result in both a 50% increase in the supply of oil-related products and enhanced production that will meet taxing Euro 5 requirements. In January, work started on a 16.2km pipeline extension that will be able to carry 2k cub mt of jet fuel per hour to the new airport.

There is an interesting hearing in the DIFC, involving a complex matrimonial dispute (involving Russian oil tycoon Farkhad Akhmedov and his ex-wife Tatiana) and a US$ 540 million superyacht impounded in Dubai. The London Court has ruled that the 115 metre ‘Luna’ be given as part of the divorce settlement and its validity is being questioned in the local jurisdiction of the DIFC.

Shuaa Capital registered a 52.9% fall in Q1 profits to just over US$ 3 million, although revenue moved 4.0% higher to US$ 9.0 million. Over the period, the Dubai group’s total asset base stood at US$ 354 million and net assets at US$ 237 million.

Dubai Holding is to set up a next generation digital bank and will spend up to US$ 272 million over the next five years; it already has plans to expand into areas of the MENA region. With the aim to provide an on-demand, fully customisable and engaging experience to both businesses and individuals, it expects to start rolling out services next year. It will also introduce bespoke banking services including a state-of-the-art loan and deposit offerings platform to benefit SMEs.

Q1 passenger traffic at Dubai World Central was only 0.2% higher, touching 334k, driven by a 217% jump in Russian and CIS numbers to 191k. Cargo, over the same period, was 8.9% higher at 230k tonnes. The new airport is currently used by fifteen passenger carriers and twenty scheduled cargo operators, with the number growing.

Emirates posted a 67.0% hike in annual profits (ending 31 March) to US$ 1.1 billion, as revenue rose 8.0% to US$ 27.9 billion. Over the period, its cash balance was 33.0% higher at US$ 6.9 billion. Staff will receive a five-week bonus. Following the release of the figures, Emirates Chairman HH Sheikh Ahmed bin Saeed Al Maktoum confirmed that the airline has never had merger discussions “in any way, shape or form” with Etihad but that they could share facilities and services in the future.

At the same time, dnata, part of the Emirates Group, posted its highest ever revenue figures of US$ 359 million, 7.0% up on the previous year and, more impressively, 68% of the total emanating from its ever-growing overseas assets. The 59-year old air services provider is to invest US$ 163 million in new facilities and possible acquisitions out of its year-end cash balance of over US$ 1.3 billion.

Arabtec posted its highest quarterly profit since Q3 2014 at US$ 17 million (271% higher than in the same period in 2017), with revenue of US$ 654 million. The Dubai builder seems to be operating in much improved circumstances, as its backlog is at US$ 4.4 billion, with almost the same amount in the value of submitted tenders.

Aramex posted a 12.6% jump in Q1 profits to US$ 28 million on the back of a 7.6% rise in revenue to US$ 324 million. The local logistics giant expects to benefit from the huge growth in e-commerce activities and is focusing on boosting its operational efficiencies and enhancing its B2B and freight-forwarding capabilities.

Dubai Investments saw a 25.3% hike in Q1 profits to US$ 99 million, driven by the acquisition of a further 50% of Emirates District Cooling (Emicool); revenue rose 33.0% to US$ 253 million. Over the period, total assets were 12.9% higher at US$ 5.2 billion.

Ithmaar posted a US$ 72 million annual loss last year compared to a US$ 14 million profit a year earlier, driven mainly by unrealised foreign exchange losses; its revenue was 5.0% lower at US$ 392 million.

As a result of falling volumes – and therefore less commission – Dubai Financial Market posted a 52.2% fall in Q1 profit to US$ 13 million, as quarterly trading value slumped 57.3% to US$ 5.6 billion. With the holy month of Ramadan on the horizon, and the onset of summer holidays, it is unlikely that there will be much of an improvement in Q2.

The DFM opened on Sunday (06 May), at 2948, and continued its downward trend, losing another 66 points (2.2%), to close at 2882 by Thursday, 10 May. Emaar Properties was down US$ 0.11 at US$ 1.36 (Dhs 4.99), having shed 28.1% (US$ 0.53) YTD, whilst Arabtec lost US$ 0.04 to close on US$ 0.47. Volumes traded higher, more than doubling to 244 million shares on Thursday, valued at US$ 102 million, (compared to 102 million shares worth US$ 51 million the previous Thursday – 03 May).

By Thursday, Brent Crude, surged during the week – US$ 3.85 (5.2%) higher to close on US$ 77.47, with gold US$ 9 up to US$ 1,322 by 10 May 2018.

BT is to shed 13k jobs over the next three years, with middle management and back office staff being the main targets. The UK’s biggest telecoms operator is to hire 6k front line engineers, as it moves to ultrafast broadband and the next generation of mobile networks. The troubled company has been bedeviled by last year’s Italian accounting scandal and has seen its share value almost halve over the past two years. Although it paid US$ 17.0 billion in 2016 for mobile phone operator EE, the company is seen by analysts to be too slow to the ever rapidly changing environment and needs to become a much leaner organisation to survive.

Another leading UK operator, Vodafone is to buy Liberty Global’s operations – in Czech Republic, Germany, Hungary and Romania – for US$ 22.0 billion. This will help in its target to become a leading “next generation network” in Europe, with 54 million cable and fibre homes on its customer base. The acquisition will see the company’s revenue becoming more European oriented (up to an expected 75% of its total turnover), as well as earning more of a ratio from its fixed line and TV services

Having finally come to an agreement with US regulators and agreed to a US$ 4.9 billion settlement for its nefarious role its packaging and sale of mortgage-backed securities before the 2008 financial crisis, RBS is expected to take a US$ 1.4 billion hit in the next quarter’s accounts. This then should pave the way for the UK government to start ridding itself of its 71% stake, costing US$ 45.5 billion, needed then to bail out the troubled bank. (Only last month, Barclays paid a US$ 2.0 billion fine to the Department of Justice to settle similar claims).

Walmart is to pay US$ 16.0 billion for a 77% share in one of India’s leading web-based retailers, Flipkart, as it continues its on-going battle with Amazon (which holds an estimated 27% of the country’s e-commerce market) and others for market domination. It already operates 21 wholesale cash-and-carry stores across the country.  At the same time, the US retail giant is planning to sell Asda (which it bought for US$ 10.8 billion in 1999) to Sainsbury’s in the UK.

New York’s iconic 110-year old Plaza Hotel is about to change hands, with Dubai-based Indian Shahal Khan and US partner agreeing to pay US$ 600 million for the Central Park property. It is reported that UK billionaire brothers, David and Simon Reuben, will finance 69% of the deal. This could be scuppered if the owners of the remaining 25% stake (Kingdom Holdings and Ashkenazy) decide to take up the right of first refusal and buy at the same valuation. The hotel, formerly owned by the current US president who sold it for US$ 325 million was featured in. numerous films including Home Alone in which Donald Trump had a cameo role.

According to IATA, ME passenger traffic (measured in revenue passenger kilometre) continues its upward trajectory, rising 9.5% in March compared to a year earlier, as capacity (measured in available seats kilometre) grew at the slower rate of 6.4%; load factor was 2.3% higher at 82.4%. On a global comparison, all three indicators were higher – passenger demand (10.6%), capacity (6.6%) and load factor, 2.9% up to 81.5%. Higher fuel prices in Q2 will present problems to airlines if prices rise to cover the extra costs incurred.

In China, the April Caixin composite output index rose 1.5 to 52.3, month on month, with increases noted in both the service (which was 0.6 higher to 52.9) and manufacturing sectors. Driven mainly by service providers, new business rose at a slightly faster rate. With the dollar regaining some lost ground in April, China’s foreign reserves took somewhat of a hit by falling US$ 18.0 billion to US$ 3.1 trillion, caused by falling asset prices. It seems that despite positive economic vibes, some are backing that the yuan – which shed 0.9% against the greenback in April – will weaken further, after registering its highest quarter-on-quarter gains in a decade in Q1.

With weaknesses seen in both consumer spending patterns and private sector activity growth, there was only a marginal increase in April eurozone retail sales. When the latest composite PMI – down 0.1 to 55.1 – is factored in, then there is bound to be a slowing in the bloc’s GDP, growth following a sluggish Q1. Despite the disappointing figures, the economy should still hit its 2018 target growth of 2.3%. However, the lack of inflation growth in the eurozone continues to worry the authorities as the level fell to 1.2% in April – still some way off the bank’s 2.0% target.

April UK retail sales fell at their quickest year on year monthly rate – 3.1% (and 4.2% on like for like basis) – since 1995. Although there is a marked weakening in the sector, the biggest driver was the fact that Easter started in March (compared to April last year). However, with the recent demises of stores such as Maplin, New Look and ToysRUs there is no doubt that the downward spiral will continue until there is more of an equilibrium between inflation and wage growth

Once again, a prediction by the Bank of England Governor, Mark Carney did not materialise. Over the past five years, he has signaled likely rate hikes only to find that economic data headed in the opposite direction. With sterling sagging and some weak economic indicators, it seems that any rate hike, that looked a certainty only a few weeks earlier, is off the cards for some time. The Canadian banker has just over a year before he leaves his position and there is every chance that he may have already seen his last rate hike.

Not satisfied with two leading brands, Nescafé and Nespresso, Nestle (the world’s largest food and drinks company) is to pay Starbucks US$ 7.1 billion to sell its coffee in retail outlets outside the café’s chain. The Swiss-based company, with its huge distribution network, hopes that this deal will see a significant boost in the sector’s revenue from its current level of US$ 2.0 billion. Nestle also expects to strengthen its fairly weak position in the US market (where it has only 3% share and Starbucks – 15%) and probably move away from its “boring instant coffee tag” and focus more on the “roast and ground” side. It is estimated that a US$ 8 jar of Nescafé instant coffee makes 158 cups, (US$ 0.051 per cup), whereas a US$ 8 bag of Starbucks coffee beans yields 34 cups – US$ 0.235 per cup. Nescafé has finally realised that the sleeping giant has had to Wake Up And Smell The Coffee.

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Say What You Want

Azizi Developments has awarded Zahrat Al Safa Contracting two contracts (each valued at US$ 60 million) to construct Fawad Azizi and Mirwais Azizi in Dubai Healthcare City. The former will have 396 studio, 1-2 B/R apartments and the latter will house 383 units.

In a bid to reach its target of 500k medical tourists by 2020, Emirates Holidays and the Dubai Health Authority’s Health Tourism Council are to offer tailor-made health and wellness holiday packages for overseas visitors. The package will include return flights and stays in hotels with tailor-made premium health and wellness programmes; initially, two properties will be used for the trial – DNA Health at Madinat Jumeirah and Rayya Wellness Retreat by Sofitel.

The Ministry of Energy and Industry has announced new petrol prices for the month of May. Special 95 will be 6.8% higher at US$ 0.646, with diesel 5.3% up at US$ 0.698.

In 2015, Al Ahli Group signed a global licensing deal with Twentieth Century Fox, allowing it to build four Fox parks anywhere outside the US. The first one, a four million sq ft area located adjacent to the Outlet Mall, scheduled to open in 2020 has now been shelved because of “a serious supply of theme parks in Dubai.” The company is planning to double the size of the famous discount mall to three million sq ft by the end of next year but has also expressed concern about the rising number of shopping centres in the area.

DP World and Richard Branson’s Virgin Hyperloop One are planning a global entity – DP World Cargospeed – to build high-speed cargo delivery systems. Despite the very high entry costs to create this revolutionary tube-based technology to deliver goods and link existing road, rail and air transport infrastructure, there are already interested parties in India, Saudi Arabia and the UAE. There are firm plans for a 142 km link between Pune and Mumbai and the company is confident of having three projects in progress by 2020; the first full super-fast rail network is expected to be in commercial use five years later.

Four-year old UK tech company, Quiqup is to launch its first international base in Dubai. Based in Al Qouz Logistics Park, the start-up, offering last-mile logistics services to retailers of all sizes and sectors, is currently working on a trail run with 125 local entities. Last year, Quiqup received US$ 28 million Series B funding to finance overseas expansion and expects to roll out across the GCC in the future.

Spinneys has opened its 52nd regional store (2.6k sq ft) at Terminal 1, Dubai International Airport. It is reported to be the first such airport outlet in the region and is part of the supermarket’s ambitious plan to grow by 40% in less than three years.

The Egyptian division of Emaar Properties is planning to invest over US$ 454 million to operate hotels in Marassi, which they are currently developing, including Al Alamein Hotel and Marassi Golf Resort and Spa. Emaar Misr expects the former to open this summer and the latter by 2020.

More locally, Emaar Hospitality has signed a Management Agreement with Shurooq (Sharjah Investment and Development Authority) to open the 100-room Vida Al Qasba Sharjah. Emaar Properties with its JV partner, Meraas Holding, have signed an agreement with RAK developer, Al Hamra, to manage a 250-key Rove Hotel, Manar Mall due to open in 2020 in that emirate. Rove Hotels already operate five properties in Dubai. No further details were readily available.

The UAE Cabinet has effectively cancelled VAT for investors in gold, diamond and precious metals in a move that is bound to stabilise the sector that was badly hit by its January introduction. Last year, the World Gold Council indicated that gold demand in the country was at its lowest level this century, with local estimates that Dubai wholesale gold jewellery sales fell over 50% in Q1, compared to the same period in 2017.

MaisonPrive expects to double the number of clients who use their services to rent residential units out to corporate and leisure guests on short-term stays. The company estimates that using their services can add over 30% to a user’s revenue and that, without the hassle of managing guests. This is one part of the hospitality sector that is booming, following a 2016 change in the law governing the leasing of holiday homes in the emirate.

MAF is to invest US$ 82 million in a Carrefour Regional Distribution Centre. Located in JAFZA’s National Industries Park, it will be four times larger than any other of the supermarket chain’s distribution centres and is a key factor in ensuring the brand’s regional growth plans become reality. It will also ensure that customers in their 90 UAE stores will have the freshest produce possible with its seven temperature zones within the facility.

It is reported that Mitsubishi Corporation has taken a minority stake in the locally-based halal frozen food company, Islami Foods, Dubai Cooperative Society. The company, which has the second largest market share in the frozen meat products in the country, hopes to tap into the Japanese conglomerate’s extensive regional distribution network. With this investment, the company is looking to double digit annual growth, whilst expanding its share of the global halal food sector that is expected to top US$ 1.7 trillion by 2020.

Itqan Investments – owned by Sheikh Hamad Al Sulaiman, Tamar VPower Energy Fund and CITIC Pacific – have bought the remaining shares in the Byrne Group, a leading regional supplier of rental equipment in a US$ 272 million deal. Over the past five years, Byrne has experienced 20% annual growth and the new owners could be looking at an IPO but probably no earlier than 2021.

Shuaa Capital has finally acquired Integrated Securities (IS) and Integrated Capital (IC), following regulatory approval that will see the firm with an additional 3k retail and institutional clients. The deal will see its assets under management grow to over US$ 1.2 billion and will give the Dubai-based firm an entrée into the burgeoning Egyptian market.

Shareholders of Drake & Scull International will consider increasing the company’s capital by US$ 136 million, via a new share issue, with a par value of US$ 0.341. A further option to issue convertible bonds (up to a value of US$ 272 million) is under consideration.

Transguard Group, with over 90% of the country’s ATM network business, posted a US$ 44 million annual profit to 31 March, on the back of a 22.0% hike in revenue to US$ 629 million. The business services provider saw its payroll increase by 16.9% to 64.8k. Last year, it launched its US$ 1 billion Centre of Excellence in Dubai Investment Park which is scheduled to train 100k Transguard staff by 2020.

Marka recorded its first ever quarterly profit since listing on the DFM in September 2014. Despite posting a 39.4% fall in revenue to US$ 5.4 million, it managed to slash operating costs by 91.8% to just US$ 0.7 million, compared to a year earlier. It posted a gross profit of US$ 3 million and slashed its operating loss from US$ 8 million to under US$ 1 million.

Nakheel reported a 5.0% hike in Q1 profit to US$ 422 million, during which time it handed over 200 properties and sold the remaining villas in its Warsan Village community of 934 homes. The developer also signed construction contracts totalling US$ 1.4 billion in the first three months of the year.

Etisalat announced a Q1 net profit of US$ 572 million, after payment of the federal royalty, on the back of a 5.0% increase in revenue to US$ 3.6 billion. Its global subscriber base was 3.0% higher at 144 million, including 12.9 million in its domestic market where revenue was higher at US$ 2.1 billion.

Emaar Malls announced a 1.7% increase in Q1 profit to US$ 149 million, as revenue rose 24.2% to US$ 283 attributable to the consolidation of Namshi revenue in 2018. The company’s malls recorded 95% occupancy levels in Q1 whilst its flagship, Dubai Malls, attracted 21 million visitors over the period.

Mega results from Commercial Bank of Dubai saw the lender’s Q1 profits surge 74.7% to US$ 76 million driven by falls of 32.2% in impairment provisions and 5.1% in operating expenses to US$ 58 million, as well as a 4.8% increase in operating income. With net interest income 6.5% higher at US$ 125 million and non-interest income 1.0% up to US$ 54 million, the bank’s operating income rose 4.8% to US$ 179 million. However, its non-performing loans ratio was 1.5% up – to 7.5%. Total assets, loans/advances and customer deposits were all higher year on year – by 5.1% to US$ 19.1 billion, 5.0% to US$ 12.8 billion and by 5.0% to US$ 13.1 billion respectively; however, all were marginally lower compared to the December year-end figures.

The DFM opened on Sunday (29 April), at 3043, and continued its downward trend, losing 95 points (3.1%), to close at 2948 by Thursday, 03 May. Emaar Properties was down US$ 0.05 at US$ 1.47, whilst Arabtec lost US$ 0.06 to close on US$ 0.51. Volumes traded moved lower to only 102 million shares on Thursday, valued at US$ 51 million, (compared to 143 million shares, worth US$ 52 million the previous Thursday – 26 April).

By Thursday, Brent Crude, had had a flat week – down US$ 0.03 to close on US$ 73.62, with gold also lower by US$ 5 to US$ 1,313 by 03 May 2018. During the month of April, Brent traded US$ 5.58 (8.0%) higher to US$ 74.92, whilst gold headed in the opposite direction losing US$ 17 (1.3%) to US$ 1313.

Movenpick Hotels and Resorts, found in 1973, and 33% owned by Kingdom Holdings, has been acquired by AccorHotels in a deal valued at US$ 567 million. The Swiss-based hotel group currently has 84 properties in 27 countries, with plans for a further 42 by 2021. The French buyer, which already has brands such as Mercure, Novotel, Pullman and Raffles in its portfolio, recently sold a 55% interest in the subsidiary that owns its hotels to a group of international investors including the sovereign wealth funds of Saudi Arabia and Singapore for US$ 5.4 billion.

Public sector net borrowing (excluding public sector banks) in the UK recorded its lowest ever March level since 2004. The country’s budget deficit fell by US$ 1.1 billion to US$ 1.8 billion as public sector net debt stood at US$ 2.5 trillion, equivalent to 86.3% of GDP. The annual figure fell 7.6% to US$ 59.2 billion – the lowest annual net borrowing since the 2007 financial year.

Disappointing February returns showed that Japan’s all industry activity bounced back at a slower than expected rate, up by just 0.4%, month on month, after a 0.1% contraction in January. Although the construction activity index lost 0.3%, year on year, all industry activity growth fell to 1.1%, industrial production expanded 2.0 % over the month.

Germany recorded impressive construction figures for the first two months of the year, with new orders 9.0% higher than a year earlier.

Although still comparatively high, eurozone March unemployment rates have fallen from 9.4% to 8.5% over the past twelve months; this equates to its lowest level since December 2008. Eurozone unemployment stabilised at 8.5% (13.8 million) in March compared to February, recording the lowest figure since December 2008. The total number of unemployed in the larger 28-member EU bloc was 17.5 million. There was a wide variance between states with the Czech Republic, Malta and Germany returning the lowest number of unemployed at 2.2%, 3.3% and 3.4% respectively, whilst at the other end of the spectrum came Greece and Spain with 20.6% and 16.1%.

Meanwhile, Q1 GDP in the eurozone and the 28-member European Union (EU28) increased by 0.4%, equating to  seasonally adjusted GDP growths of 2.5% and 2.4% respectively, having grown 2.8% and 2.7% the previous quarter.

The US manufacturing sector had a strong April with a PMI reading 0.9 month on month rise to 56.5 – its highest increase since September 2014. The main drivers were an increased inflow of new orders and acceleration in goods production. Furthermore, both input prices and output charge inflation rose at their quickest rate since mid-2011.The level of outstanding business moved higher as a result of new order growth outstripping output expansion.

Inflation levels are edging ever closer to the Fed’s target, as US consumer spending rose 0.3% month on month to 2.0%. The three main factors behind the splurge in consumer spending continue to be the ever-tightening labour market, a jump in home prices and higher energy costs. The end result is an imminent rate hike probably of 0.25%, although key rates were kept on hold at 1.50% to 1.75% following this week’s Fed meeting.

President Trump has given a 30-day reprieve to the EU, Canada and Mexico on introducing controversial tariffs on steel (25%) and aluminium (10%); temporary exemptions that had been granted to these three parties in March were due to expire on Tuesday. Thus the dangers of a trade war have been averted until at least June. Meanwhile, a trade deal has been finalised with South Korea and Washington has “agreements in principle” with Argentina, Australia and Brazil. Despite his many critics, Donald Trump has tried to deliver what he promised to do before he became president – e.g. North Korean demilitarisation, Iran nuclear treaty, The Wall, Tax cuts, financial deregistration, TPP, climate change etc. He was voted in by the American voters and, unlike former incumbents, he has kept to many of his pre-election pledges – Say What You Want!

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For A Better Day

HH Sheikh Mohammed bin Rashid Al Maktoum’s vision to make Dubai the “Silicon Valley for the region” is slowly becoming reality, as Dubai Internet City continues to expand. The emirate’s free zone for technology and media companies is targeting 10% annual growth in numbers over the coming years, as it starts a 167k sq mt expansion later in the year. The 18-year-old entity is home to over 1.6k operating companies, of which 60% are in the SME category, in such classifications as AI, e-commerce, computer gaming and cyber security. It is expected that this ratio will continue to increase in the coming years making the free zone a hotbed for innovation hubs and tech entrepreneurs.

The Dubai Ruler also met with senior officials at the weekend and later announced a number of measures, with the aim of boosting three essential economic sectors – housing, SMEs and retail. He wants to ensure that the country has “the ability to absorb rapid changes in an unstable global economy in order to achieve sustainable economic growth and enhance its competitiveness at all levels”.

To attract more investment in the property sector, the introduction of time-sharing ownership of property in the emirate is under consideration which could involve overseas residents being able to own a fractional share of an apartment or villa for personal use for a set period each year; the Department of Tourism and Commerce Marketing is looking at up to 1k such units coming to the market. SMEs continue to be another target with Dubai’s Department of Finance expected to allocate 20% of tenders to this sector’s entities as well as additional incentives to attract more tech entrepreneurs to the emirate.

Dubai’s Moosa Enterprises is set to open three new properties – Hilton The Palm (608 keys), TAJ Exotica Resort & Spa (325 rooms) and Marriott The Palm (608 rooms) – by Q1 2019. This will increase the company’s Dubai room portfolio by 48.2% to over 4.7k.

Citymax Hotels, a division of the Landmark Group, is planning to double the size of its properties to eight this year, with room numbers 68.6% higher at 2.3k. Two of the properties will be located in Dubai, with the other two in the burgeoning emirate of Ras al Khaimah which is growing its hospitality sector at a rate of knots.

Four-year old Roda Hotels and Resorts added a new property, Roda Links Al Nasr, to its Dubai portfolio bringing its total to seven, with 1.5k rooms. The hotel group has several other properties under development and expects that the Roda brand will have 4.5k rooms under management by 2020.

Damac Hotels & Resorts estimates that its portfolio of rooms will top 15k by 2021 – currently 13k are in development.

Nakheel and U City PCL have signed an agreement in Bangkok to build the First Vienna House in the ME – the 600-room Vienna House Deira Beach. Located in Deira Islands, and part of the Dubai developer’s new 15.3 sq km master planned waterfront city, it will be Nakheel’s third hotel there following previous JVs with Spain’s RIU Hotels and Resorts and Thailand’s Centara Hotels and Resorts.

Nakheel has also awarded a US$ 162 million contract to Metac General Contracting Company for the construction of its 1.4 million sq ft Nad Al Sheba Mall. Due for completion by 2021, the mall will be the centerpiece of Dubai’s Nad Al Sheba district that will have more than 11k villas, 1.6k of which are being built by Nakheel themselves.

FIM Partners, a Dubai-based emerging and frontier markets investment management specialist, have appointed Strategic Housing Group (SHG), to manage the building of The Myriad Dubai in International Academic City (DIAC). The urban-styled student housing community will have 1.8k fully furnished en-suite rooms, with common lounges on each floor and retail outlets, as well as the requisite add-ons of multi-sporting facilities.

Arabtec has announced that its engineering service offshoot has been awarded a US$ 118 million, 30-month Dubai Municipality contract for infrastructure work for the authority’s DS188 Jebel Ali Industrial Sewerage and Drainage System.

MAF becomes only the second company to attain a license for a movie theatre in Saudi Arabia and will soon open a four-screen multiplex cinema in Riyadh. The Dubai-based group is planning to invest US$ 553 million and to open 600 theatres there over the next five years.

Careem confirmed that the company was a victim of a cyber-attack in January, resulting in the theft of the personal data of some 14 million people in the region. Over three months later, the ride-sharing platform indicated that it has “no evidence of fraud or misuse related to the incident” and “it is our responsibility to be open and honest with you. . . “.

To enhance its position as one of the world’s leading cruise destinations, Dubai is to add more capacity at DP World’s two million sq mt Mina Rashid Cruise Terminal that would make it the biggest in the world. Currently, the facility, which welcomed 625k passengers last year (compared to 320k just three years earlier) and 156 cruise ship calls, is able to handle 25k passengers and seven cruise liners at the same time.

Dubai International recorded a 4.5% increase in March traffic, as passenger numbers reached 7.85 million, with Q1 numbers 1.1% higher at 22.7 million, compared to the same period in 2017. Despite monthly flight numbers falling 1.5% to 34.1k, passengers per flight increased by 2.7% to 230. As in the past, London, Mumbai and Bangkok were the top city destinations with numbers totalling 348k, 217k and 209k respectively, with India (1.0 million), UK (572k) and Saudi Arabia (566k) the three leading countries. In March, freight handled dipped 5.7% to 236k tonnes.

Dubai tourist numbers in March rose 2.0% to 4.7 million, boosted by a growing number of Russian and Chinese visitors being 106% higher at 259k and 12.0% up to 258k respectively. The three main markets continued to be India (up 8.0% to 617k), Saudi and the UK which saw an 8.0% fall in numbers.

With the use of AI for the first time, Dubai Police caught a 10-man Asian gang involved in a Bitcoin-scam armed robbery, involving US$ 2 million. Two brothers had been lured into a trading office on the promise of a Bitcoin deal when they were assaulted and robbed.

As the impact of lower housing rentals and fuel prices take effect, Dubai’s inflation rate declined 1.8% month-on-month in March on the back of falls in prices of housing, water, electricity, gas, and other fuels However, there were increases in transportation (6.6%) and telecommunications (5.4%).

Official data showed that Dubai’s 2017 economic growth slowed marginally to 2.6% (2.8% – 2016), as its GDP rose to US$ 106 billion. However, the economy’s two largest segments showed increases – wholesale/retail (accounting for 26.6% of GDP) was 0.9% higher and transportation/storage (11.8%) grew by 4.5%. Meanwhile the third largest contributor to the economy, financial/insurance services remained flat at 10.4%. Manufacturing, generating US$ 10.0 billion, contributed 9.4% of GDP, whilst real estate, accounting for 7.1% of the emirate’s GDP (US$ 7.5 billion), recorded a 7.3% growth. The construction sector grew by 3.5% and accounted for 6.3% of Dubai’s GDP, equating to US$ 6.7 billion.

There was also trade growth, with a 2.2% rise in total imports and re-exports.  This year, it is expected that Dubai’s economy will expand by 3.5% and 3.8% in 2019. Last year, the UAE labour market saw over five million people in employment, including 1.4 million in the private sector.

April’s Emirates NBD’s UAE PMI data saw the country’s economy grow 0.3 to 55.1, as business growth confidence was at its highest in nearly three years; the main drivers were a recovery in export orders and strong output/new order growth, with increased government spending, spurred by Expo 2020. Expansion is also being helped by oil prices topping US$ 70.

The UAE Central Bank reported a 10.3% hike in Q1 foreign asserts to US$ 92 billion, attributable to a 51.6% quarter on quarter increase in the current account balances and deposits with banks abroad to US$ 74 billion.

Dubai Investment Company is to launch a US$ 817 million real estate investment trust to be listed on the DFM. DIC will fund 45% of the capital base, with the balance from investors via an IPO (initial public offering). Money raised will be used to finance a number of local properties and assets.

Noor Dubai listed its second US$ 500 million sukuk on Nasdaq Dubai this week following its initial listing in 2016. The five-year instrument was 2.1 times over-subscribed and brings the total of sukuk paper on the local bourse to US$ 59.7 billion.

Aramex, the region’s largest courier firm, posted a 15% rise in Q1 profits to US$ 28 million, as revenue jumped 8.0% to US$ 32 million. The Dubai-listed company expects to benefit from the boom in the GCC e-commerce market, forecast to grow to US$ 24 billion by 2020, and the fact that the global market could increase by 112% to US$ 4.9 trillion over the next five years.

Depa posted a 69.4% decline in Q1 profits to just US$ 2 million, resulting from a resolution of a long-standing receivable; revenue climbed 11.0% to US$ 111 million. The Dubai interior contractor is confident in future business, with a backlog of projects improving 6.0% to US$ 515 million.

Mashreq posted a 9.5% rise in Q1 profits to US$ 163 million despite a 5.2% fall in commissions’ income to US$97 million and a 4.0% increase in operating expenses to US$ 161 million. Total operating income was 4.1% higher at US$ 414 million.

Nakheel posted a 5.0% hike in Q1 profits to US$ 422 million as its retail, hospitality and leasing divisions performed well. No other financial details were made readily available. In Q1, the developer signed about US$ 1.4 billion worth of contracts, the largest of which was for the Deira Mall at over US$ 1.1 billion.

The country’s biggest listed developer, Emaar Properties, recorded a 20.0% increase in Q1 profits to US$ 452 million (or US$ 409 million if the impact of the Developments IPO was excluded). The revenue surge was driven by “significant progress achieved on projects under construction”, with revenue 37.3% up at US$ 1.5 billion.

Meanwhile, Emaar Developments posted an even more impressive 61.9% jump in Q1 profits to US$ 223 million, as revenue almost doubled to US$ 891 million. The real estate arm of Emaar Properties, which floated its shares on the DFM in Q4 2017, has a sales backlog of US$ 11.2 billion, equating to 27.2k residential units, due to be delivered over the next five years.

The DFM opened on Sunday (22 April), at 3082, and was 1.3% lower (39 points) as it inexorably falls towards the dangerous 3,000 level to 3043 by Thursday, 26 April. Emaar Properties was off US$ 0.02 at US$ 1.52, whilst Arabtec lost US$ 0.01 to close on US$ 0.57. Volumes traded moved marginally higher at only 143 million shares on Thursday, valued at US$ 52 million, (compared to 78 million shares worth US$ 45 million the previous Thursday – 19 April).

By Thursday, Brent Crude, having risen 7.9% the previous week, shed US$ 0.10 (0.1%) to close on US$ 73.65, with gold losing some of its luster, falling 2.0% (US$ 27) to US$ 1,318 by 26 April 2018.

Apple will start to pay the Irish government US$ 15.4 billion relating to a tax bill issued by the EU in 2016. The commission ruled that tax the tech giant paid in that country was so low that it was tantamount to illegal state aid. As there is an on-going appeal, that could take up to five years, the money will be paid into an escrow account. For obvious reasons, the Irish have been reluctant to receive any payment but have agreed to comply with its legal obligations.

It cost GKN a fruitless US$ 150 million in its unsuccessful attempt to fend off the recent Melrose takeover. Now the UK government has ruled that it will not intervene on national security grounds, after receiving several commitments from the US company, allaying any concerns raised, including not divesting the GKN’s core aerospace business for at least five years.

One argument in favour of Bitcoin (and other cryptocurrencies) results from news that the cost of global remittances rose 7% last year, to a staggering UD$ 613 billion. The World Bank estimates that in Q1 2018, the cost of sending US$ 200 was 7.1% – more than double the 3% set as a sustainable development target. The top five destinations were India, China, Philippines, Mexico and Nigeria with totals of US$ billions 696, 646, 336, 31 and 22 respectively. In some of the poorer countries remittances can account for up to 35% of a country’s GDP, whilst costs can easily touch 10% or more of the actual remittance amount. What a difference Bitcoin can make with minimal transfer costs and immediate transfer of funds. No wonder the banks are moaning but the global economy could easily double if the disrupters took over.

Nearly forty years after BA forced Freddy Laker to bankruptcy, it seems ironic that IAG, that includes the British flag carrier in its portfolio, is considering an offer for troubled budget carrier, Norwegian. The Scandinavian carrier seems to have taken over the Laker mantle for being a disrupter in the aviation sector and introducing cheap fares for international travel. Founded in 1993, it started with three planes and concentrated on short-haul flights but in 2013 decided to fly further afield and ordered 222 new jets. Within four years, it was flying 145 aircraft on 512 routes but had seen its 2016 profit line of US$ 136 million turn to a US$ 36 million loss last year, with a net debt 14 times its gross operating profit (compared to just 0.7 and 0.4 for EasyJet and Ryanair). Now the vultures are circling and, like events in 1979, are out to destroy a major rival.

From an economic viewpoint, Poland, led by Jaroslaw Kaczynski, is one of the leading states within the EU. However, it seems to be leaning away from the democratic principles that the bloc espouses, as other former East European countries test the boundaries. For example, in Hungary, the newly re-elected president Viktor Orban seems to be silencing any criticism by taking what some would consider inappropriate action against courts and media, as well as allegedly using public funds to nurture oligarchs. Romanian politicians also hope they will not be found out by continually weakening anti-graft legislation.

Now Polish democracy is being sorely tested with the ruling Law and Justice Party filling both the courts and the bureaucracy with its own supporters, as well as introducing judicial reforms that are in contravention of EU regulations. With at least three countries not playing to “the rules”, action has to be taken before the union falls apart. Three would-be autocrats are three too many.

To the outsider it seems that Tesla has a lot of catching up to do. Latest reports from the company, that posted a Q1 US$ 710 million loss (as vehicle revenue was 1.0% higher at US$ 2.7 billion), indicate that net reservations for its Model 3 stand at 450k, whilst the latest weekly production level is only 2.3k! As at the end of April gross margins on that model are still in negative territory. No doubt Elon Musk, his team, investors and customers are all hoping For A Better Day!

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Summertime Blues

The week started with HH Sheikh Mohammed bin Rashid Al Maktoum meeting senior government officials. The Ruler later announced that he had instructed the “relevant entities to facilitate business procedures, reduce the cost of doing business and dedicate all possible resources to ease investment activities”. Consequently, expect a waiving of some DED penalties and fines, 20% of tenders given to SMEs and the introduction of instalment payments for some government services. Although Dubai’s GDP is expected to be 3.5% higher this year, the emirate still intends to boost growth to compensate for a regional trade slowdown.

Las Vegas Caesars Entertainment Group has joined with Meraas to build a 178-key Caesars Palace Bluewaters Dubai (only the second in the world) and a 301-room Caesars Bluewater Dubai. Both facilities, sharing a 450 mt private beach and housing a variety of live entertainment and gourmet celebrity restaurants, will help boost the emirate’s burgeoning tourism sector.

Q1 saw Dubai Land Department record 13.8k real estate transactions, valued at US$ 15.7 billion, including 9.1k sales deals (worth US$ 5.2 billion) and 3.7k mortgage transactions worth US$ 7.7 billion. The three main contributing countries were the UAE, India and Saudi Arabia; Business Bay and Dubai Marina were the two leading locations, with 973 and 720 transactions respectively.

What will become the world’s largest cantilever, when it connects the two towers of The Lynx, is to house a One&Only Urban Resorts on opening in 2020. Located in the mixed-use development, One Za’abeel, it will have luxury residences, offices and a retail podium, The Gallery. Ithra Dubai, a fully-owned subsidiary of the Investment Corporation of Dubai, will be the main developer.

wasl Asset Management Group hopes to complete the construction of its Mandarin Oriental Hotel, Jumeirah Beach by year-end. The property, with 246 rooms and six F&B outlets, will have its own private yacht-docking facilities and will be the Hong Kong operator’s first branded hotel in the emirate.

Amlak Finance is to develop a mixed-use project in Nad Al Hamer, covering 700k sq ft. The US$ 79 million, 14-floor tower is slated for a 2020 handover. Last year, the company, which posted a 51.4% decline in annual profits to US$ 14 million, is hopeful that the project will have a positive impact on its future profitability.

MAF has announced a nine-year project, Talal Al Ghaf – a three million sq ft development that will include 6.5k residences and a 70k sq mt swimmable lagoon. No financial details were readily available but the lifestyle destination will also feature commercial, retail and leisure outlets. This will be the Dubai developer’s fourth regional community project following Al Zahia in Sharjah, Al Mouj Muscat and Waterfront City in Beirut.

Dubai Investments, 11.54% owned by the Investment Corporation of Dubai, is planning a US$ 68 million “Crazy Garden”, a domed leisure park featuring gardens, cafes and sporting facilities. Covering 33k sq mt, and located in the Meydan area, almost half the area will be entirely covered by a 14 mt high glass dome so as to ensure 365 days a year usage for visitors.

Having already a 95% share of the auction markets in both this country and Bahrain, Emirates Auctions is to open operations in Saudi Arabia and Kuwait. Initially, the company will focus on vehicle, real estate and unique number plates which has already seen over 1.3 million on-line bidders.

With this week’s launch of Tourism 2.0, the Department of Tourism and Commerce Marketing has introduced a blockchain-enabled marketplace to directly and transparently link potential buyers to the emirate’s tour operators and hotels. This is another step to ensure that Dubai will become the prime destination for global travel, business and events by 2021.

In a bid to establish Dubai as a leading player in the video-gaming sector, an alliance between Tecom and Dubai Media Office is to open Dubai X-Stadium. Globally, the industry is worth US$ 100 billion and this government-backed initiative will place the emirate as a key player for hosting future international e-sports events.

Dubai-based Landmark Group is expanding its Oasis Mall brand across the region, with four slated for this year to bring its total to eleven. The company is one of the largest retail and hospitality companies in the region.

Dubai Duty Free posted a credible 11.0% hike in Q1 turnover to US$ 1.9 billion, with liquor, perfumes and tobacco again being the biggest sales contributors.

Shanghai Electric and Saudi’s ACWA Power have signed a US$ 1.1 billion EPC (engineering, procurement and construction) contract, encompassing phase 4 (700 MW) in the final piece of the jigsaw that is the Mohammed bin Rashid Al Maktoum Solar Park. The whole development, costing US$ 3.9 billion, will deliver the world’s lowest levelised cost of electricity (LCOE) for solar power at US$ 0.073 per kilowatt hour.

The emirate posted a 1.99% increase in its Q1 Consumer Price Index, driven by an 8.2% hike in restaurant/hotel prices and a 5.9% rise in transportation costs (both impacted by the recent 5% VAT introduction). On an annual basis, inflation was 2.27% higher on the back of restaurant/hotel, transport and F&B – rising 12.2%, 8.9% and 5.5% respectively.

The federal Ministry of Economy expects the country’s per capita GDP to increase by 4.0% to US$ 41.7k this year. It also forecasts that foreign direct investment will be 2.4% higher at US$ 10.5 billion.

Of the 7.2 million cheques (valued at US$ 95.7 billion) handled in Q1 by the UAE Clearing Cheque System, US$ 4.3 billion (4.3%) of them bounced. Up to last year, anyone signing a dishonoured cheque faced almost immediate incarceration but a new law allowed for any value under US$ 54k to be dealt via fines.

Dubai-based Al Kasir Group launched three crypto-assets, backed by IGS certified real diamonds – Al Mas, Al Haqeek and Al Falal. Public trading will start in August, with investors able to purchase a variety of packages ranging from US$ 250 to US$ 250k.

Abraaj has offered to resign from its management of a US$ 1 billion healthcare fund that has caused the private equity firm so much recent angst. It has been alleged that it had misused investors’ money, some of whom have raised concerns that the investment was not being used for its stated purpose. The Dubai-based management firm conducted an internal review that concluded nothing amiss had occurred and that the money had been properly accounted for.

Emaar’s chairman, Mohamed Alabbar, has indicated that he expects that the property division should double over the next five years, with the developer focussing on the UAE, Saudi and Egyptian markets. In relation to further IPOs, following Emaar Malls and Emaar Development, there is every possibility that the Indian business and hospitality divisions could be listed before 2021.

Nasdaq Dubai saw its total value of listed sukuk increase 1.5% this week to US$ 59.2 billion, with two new listings – Sharjah Islamic Bank (US$ 500 million) and Damac Properties – US$ 400 million; the Dubai property developer now has three listings on the bourse totalling US$ 1.5 billion.

Whilst still making losses, probably in the region of US$ 80 million, DXB Entertainment has reported a 45% increase in Q1 visitor numbers to 851k. The park operator, 52.3% owned by Meraas, has posted losses of US$ 302 million and US$ 132 million over the past two years.

Deyaar recorded a welcome 25.0% hike in Q1 profits to US$ 11 million, as revenue headed up at same rate to US$ 48 million. The developer, majority owned by the Dubai Islamic Bank, also announced that it expects to deliver The Atria – a 4-star hotel and residential tower in Business Bay – this quarter.

Dubai Islamic posted a 16.4% improvement in Q1 profits to US$ 330 million, with revenue up 9.4% to US$ 537 million, as operational expenses remained flat at US$ 161 million. In 2017, its annual profit was 25.3% higher at US$ 1.2 billion.

Emirates Islamic recorded a more modest 2.0% hike in Q1 profits to US$ 57 million, as its total income dipped 1.0% to US$ 161 million. The bank’s total assets were 7.0% lower at US$ 15.7 billion.

Emirates NBD reported a 27.3% jump in Q1 profits (compared to 10.0% in Q4) to US$ 654 million on the back of a 13.0% rise in net income to US$ 1.6 billion, driven by an increase in loans and the impact of the recent rate hike. At the same time, total assets grew 1.0% to US$ 129.6 billion, whilst its impaired loan ratio was 0.2% lower at 6.0%.

The DFM opened on Sunday (15 April), at 3094, and was 0.4% lower at 3082 by Thursday, 19 April. Emaar Properties was off US$ 0.05 at US$ 1.54, whilst Arabtec lost US$ 0.01 to close on US$ 0.58. Volumes traded were wafer thin at only 78 million shares on Thursday, valued at US$ 45 million, (compared to 176 million shares worth US$ 77 million the previous Thursday – 12 April).

By Thursday, Brent Crude, having risen 5.4% the previous week, gained a further US$ 5.42 (7.9%) to close on US$ 73.75, with gold also on the up by US$ 3 to US$ 1,345 by 19 April 2018.

It is reported that Unilever is to consider abandoning its 89-year old Anglo Dutch structure and base itself in the Netherlands, moving from London to Rotterdam. With a vote to be taken in September, 75% of UK and 50% of Dutch shareholders have to approve the move. The main reason appears to be related to Kraft Heinz’s unsuccessful US$ 143 billion take-over last year and the need for the European conglomerate to simplify its corporate structure.

Morgan Stanley posted stellar Q1 results as revenue climbed 14.1% to US$ 14.1 billion and earnings per share came in at US$ 1.45 (against an expected US$ 1.25).

Netflix is to spend over US$ 1 billion on original productions this year in attacking the European market. This comes at the same time that the company announced that international revenues have exceeded US turnover for the first time. Its rapid expansion will inevitable result in a raft of media mergers in both continents as other providers try to lure back former customers.

According to the IMF, global growth is expected to reach an annual 3.9% over the next two years (0.2% higher than the previous October 2017 forecast); advanced economies are expected to grow at the lesser rates of 2.5% and 2.2% over the two years – both higher than the earlier returns of 2.0% and 1.8%. India and China will witness 7.4% and 6.6% expansions this year, followed by 7.8% and 6.4% in 2019. Growth in the world’s powerhouse has been amended higher to 2.9% and 2.7%.

Driven by President Trump’s recent tax cuts, the Institute of International Finance expects the 2018 global economy to grow at the faster rate of 3.5%, as the US GDP increases by 2.9% (compared to 2.3% last year and an earlier 2.4% forecast for this). This is slightly lower than the IMF forecasts. The world body has expressed concern about the level of global debt – at US$ 164 trillion, it is higher than it was at the height of the GFC; it is also urging the US to reverse tax reductions which continue to keep public borrowing at high levels.

Meanwhile the World Bank has forecast that MENA growth this year will more than double to 3.1% on the back of higher energy prices, government reforms and global economic growth. Another important factor, that will have a positive impact on the global stage, is the US boosting of its domestic consumption and investment.

US retail sales in March climbed 0.6% with a strong rebound noted in the auto sector, up by 2.0%, having contracted by 1.3% a month earlier. The upbeat economic news seems to indicate that the slowdown earlier in the year was a mere blip and that business confidence, backed by strong indicators such as high employment and rising wage levels, is on the rise again.

China’s economy grew at 1.5% in Q1 – slightly down on the 1.6% recorded the previous quarter but was up at 6.8% on an annual basis. Other major indicators – industrial production, retail sales and fixed asset investment – headed north by 6.0%, 10.5% and 7.5% respectively. However, with its March exports falling 2.7% as imports grew 14.4%, China posted a rare monthly trade deficit of US$ 5.0 billion in Q1.

UK inflation dipped again in March falling to 2.3% as it inexorably moves to the Bank of England’s 2.0% target, having recently topped a worrying 3.0% level. On the other side, eurozone’s month on month inflation nudged slight higher to 1.3%, still some way off the 2.0% ECB target but is heading in the right direction. Inflation across the bloc ranged from minus 0.4% in Cyprus to 4.3% in Estonia.

The average price of a UK home has risen 0.4% month on month to a record US$ 427k in April. Latest UK unemployment levels fell to 4.2%- its lowest since 1975 – down from 4.7% a year earlier; the number of jobless fell to 1.42 million. At the same time, weekly earnings came in 0.2% higher.

Recent data still confound the many “experts” who predicted that the economy would fall off a cliff, following the Brexit referendum nearly two years ago. With inflation moving lower, wage levels higher, sterling still hovering around the US$ 1.40 level and a booming stock market, there are a lot of positives. There is no doubt that there will be difficulties in the coming months for the UK but there will be bigger problems facing some of its European neighbours, including France, with its labour troubles, Italy – with its failing banks – and Greece’s on-going high unemployment levels. Summertime Blues!

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It’s Now Or Never

HH Sheikh Mohammed bin Rashid Al Maktoum has ordered Dubai Municipality to allocate 10k land plots – in Al Ruwayyah 3rd, Mushrif and Wadi Shabak – for Emirati families. The Dubai Ruler that it was part of his strategy to “promote the wellbeing and prosperity of Emirati citizens in Dubai”.

A Cavendish Maxwell report estimates that over the past twelve months, property prices and rents have fallen on average by up to 2% and 5% respectively. The rental market has been hit by a shrinkage in the number of tenants at the high end of the sector, with company redundancies and cut backs in housing allowances. It estimated that the Dubai property portfolio increased by 3.8k in Q1, as developers ensured that a tight grip in supply is maintained.

According to Luxhabitat, 7,050 apartments and 622 villas were transacted in Q1, covering both secondary residential and off plan markets, with the former posting a 14.9% quarter on quarter decline to US$ 2.3 billion; over the same period, off-plan sales dipped 28.0% to US$ 1.6 billion. In the prime residential sector, quarterly sales came in at US$ 1.4 billion, with off-plan sales a lot lower than secondary villa sales.

Omniyat has secured a US$ 40 million construction finance for its twin tower project, The Sterling, set to house 385 units.

Dubai hotels reported their first increase in average daily rates in March for almost a year – up 0.5% to US$ 205.Occupancy rates rose 0.6% to a credible 85.7%, as RevPAR (revenue per available room) dropped marginally by 0.1% to US$ 176. Supply continued to outstrip demand by a net 0.7%, as room numbers increased by 5.4% but paying guests rose by the lesser amount of 4.7%.

Al Futtaim has already started work on its new Jebel Ali Festival Plaza that will host 100 retail outlets, a hypermarket and a food court as well as being home to the emirate’s second Ikea. The lifestyle shopping destination, located inside wasl Gate, will be ready by the end of 2019, well in time to benefit from Expo 2020.

Known as Dubai’s first smart city project, the 150k sq mt mixed use development in Silicon Oasis should be completed within the next twelve months. Al Shirawi Interiors has started fit-out work in Silicon Park’s 19 buildings including its business centre, hotel and fitness centre. It will include street charging docks for smart devices, electric vehicle charging stations as well as smart pop-up furniture and digital play tables.

A year after a US$ 1 billion launch, noon is to introduce an online auction platform, in cooperation with both UAE and Saudi government entities. The online site, using the latest technology, will hope that it performs better than Souq.com which closed shortly after opening a similar functionality. Although not really established in the region, with only several small players, it will surely take off when considering over 30% of global e-commerce is accounted for by online auctions.

As demand for public transport increases, the RTA is to buy 316 multi-size buses for US$ 127 million that will see the fleet increase by 18.1% to 2.1k. The ultra-modern vehicles, including 143 Volvo buses for inter-city use, will have low-floor access, roomy seats, high-end interiors, as well as Wi-Fi.

It is reported that Qantas is to sell its catering division to dnata to raise money to spend on upgrading its premium lounges and long-haul routes. The acquisition will result in 1.2k employees transferring to the Dubai aviation-services company, a division of the Emirates Group. No financial information was made available but the deal, initially for ten years, includes Qantas’ subsidiaries, Q Catering Limited, which operates in four Australian cities, and Snap Fresh Pty Limited.

Spanish operator Parques Reunidos, which already runs over fifty animal parks and other leisure facilities worldwide, has been appointed to manage Dubai Safari, opened last December. The facility, which cost US$ 270 million, was built by Dubai Municipality to replace the ageing Dubai Zoo in Jumeirah.

Gems Education reported a 5.2 % hike in H1 profits to March at US$ 203 million on the back of a 9.5% jump in revenue to US$ 602 million. The region’s largest school provider expects to see a 5.5% increase in enrolments by August year end to 121k, allied with a 4.5% rise in average revenue per student to US$ 8.45k.

Two Dubai-based traders, Ryan Fernandez and Sydney Lemos, involved in the US$ 200 million Extential Group forex scam got more than their come-uppance this week. The court sentenced both to over 500 years in prison, with each year counting for one of their criminal cases. It is a pity that US and European courts do not follow the Dubai example where there too many senior bankers escaped incarceration, despite being involved in bigger frauds that ruined the lives of so many and brought the global economy to its knees.

The Central Bank reports that exports from the country’s 37 free zones rose by 6.6% last year to US$ 61.2 billion, equating to 19.5% of the UAE’s total exports.

According to Dubai-based BNC Network, the value of Expo-related projects is US$ 42.5 billion, with most of the money spent in three sectors – infrastructure (US$ 17.4 billion), housing (US$ 13.2 billion) and hotels/theme parks (US$ 11.0 billion). Big ticket items include the US$ 8.0 billion expansion to the Al Maktoum International Airport and US$ 2.9 billion on the metro Red Line extension.

The Jebel Ali Free Zone reported a 9.1% hike in the number of new companies last year, bringing its total active customer base to 7.5k; of that total, the three main source markets are the ME – 49%, Asia Pacific – 28% and Europe – 15%.

A landmark decision saw the UAE cabinet approving legislation to ensure equal pay between the sexes in the country – the Law on Equal Wages and Salaries for Men and Women. The approval will confirm the government’s commitment that females have equal opportunities as partners in the UAE’s development, as well as their rights being protected.

The March Emirates NBD Dubai Economy Tracker Index pointed to a slight easing, slipping 0.5 to 55.3. With margins becoming tighter, employment moved into contraction for the first time in thirteen months. Travel/tourism – at 56.7 – was a major player keeping the overall economy still in expansionary phase.

A Dubai-based company, launched last year by Jason Philip, has been taken to court by one of the world’s largest companies, China’s Alibaba, claiming that their use of the name of Alibabacoin off its cryptocurrency is illegally trading on the e-commerce giant’s name and reputation. The counterclaim is that the name Alibaba derives from the ME (and not China) and that the regional folklore character’s name is generic and should not be for the sole proprietorship of Jack Ma.

US-based investment bank, Houlihan Lokey Inc, has been hired by the Abraaj Group to assist in negotiations with investors relating to its US$ 1 billion Growth Markets Health Fund. Some stakeholders have raised concerns that the money raised was not being used for its stated purpose.

Amanat Holdings, a local investment company focused on the medical and educational sectors, is to look at projects outside of the GCC. Since its start-up on the Dubai bourse, the company has spent almost half of its US$ 681 million capital base on three local deals in the medical sector.

Dubai-based Depa Limited has been awarded a US$ 35 million contract to fit out a privately-owned super yacht in Europe. Work will be carried out by the company’s subsidiary, Vedder, which has already carved a reputation as one of the world’s leading interior fit-out service provider.

The DFM opened on Sunday (08 April), at 3083, and edged 11 points higher to 3094 by Thursday, 12 April. Emaar Properties, having lost 37.2% in market value since September 2016, reversed its downward trend to close US$ 0.06 higher at US$ 1.58, whilst Arabtec shed US$ 0.03 to close on US$ 0.59. Volumes traded higher at 176 million shares on Thursday, valued at US$ 77 million, (compared to 155 million shares worth US$ 69 million the previous Thursday – 05 April).

By Thursday, Brent Crude rose 5.4% over the week, gaining US$ 3.69 (5.4%) to US$ 68.33, with gold also on the up by US$ 14 to US$ 1,342by 12 April 2018.

Aramco is to join forces with three Indian companies to build a US$ 44 billion refinery complex at Ratnagiri on the sub-continent’s west coast. The Saudi oil giant will provide half of the oil to be processed at the new refinery.

Tesco posted impressive annual results ending 24 February, with profits 770% higher at US$ 1.8 billion with revenues 1.3% to the good at US$ 80.5 billion; 2017 figures were skewed buy one off costs and if these were taken out, underlying profits were still 28% higher at US$ 2.3 billion. It was no surprise to see its share value 7% higher on the day.

On the flip side, Shop Direct, which owns Littlewoods and Very.co.uk, is to close three sites in Greater Manchester which could result in the retrenchment of some 2k. The company is planning to consolidate and enhance operations at its new US$ 280 million warehouse in the East Midlands where 500 new placements will be needed.

The steep decline in the UK high street was brought out by figures from the Local Data Company that indicated that 5.9k high street stores closed in 2017 – an average of 16 per day! Meanwhile only 11 new stores opened every day equating to 4.1k, its lowest figure since 2010. This year appears to see no improvement, with more of the same on the horizon.

German industrial production posted its biggest decline since August 2015, falling 1.6%, month on month. The main driver behind the decline was down to weak construction activity. On an annual basis, the expansion fell to 2.6%, with a weaker growth forecast in the short-term. In February, Germany posted an unexpected fall in month on month exports by 3.2% to US$ 129 billion but was 2.4% higher than a year earlier. Meanwhile as imports were lower by 1.3% (compared to January), its trade surplus rose 6.4% to US$ 22.6 billion. The disappointing results in the first two months of the year were down to the weather, record high employment and low interest rates.

A report by the Congressional Budget Office estimates that the US will have an annual budget deficit in excess of US$ 1 trillion by 2020, warning that this has the potential to have “serious negative consequences”. The two drivers behind this caveat are the recently introduced tax cuts of US$ 1.5 trillion and higher public spending of US$ 1.3 trillion. It expects that the economy will grow by 3.3% this year but the deficit will be 20.9% higher at US$ 804 billion.

The US trade deficit widened in February – up 0.9% on the month to US$ 57.6 billion, as both exports and imports rose by US$ 3.5 billion to US$ 204.4 billion and US$ 4.4 billion to US$ 262 billion. There was a decrease in the services surplus and an increase in the goods deficit to US$ 34.7 billion. Interestingly, the Chinese trade gap shrank 2.3%, on the month. The President has been on record that he wants to see the US/Chinese trade deficit decline by US$ 100 billion.

Following the earlier tough stance taken by the Trump administration on China and its threat of wide-ranging sanctions, it seems that President Xi Jinping has taken a conciliatory stance. He has promised to cut automotive tariffs, with the German car industry the major beneficiary, and to improve intellectual property protection for overseas tech companies. Later in the week, the markets were buoyed by a softening of the rhetoric from the White House which noted that any penalties were not imminent and there would be plenty of time to work out a deal and avoid any trade war.

Last year, the US trade deficit with China was US$ 375 billion, as imports of US$ 506 billion far outweighed the US$ 130 billion figure for exports; this anomaly has been going on for years. There is no doubt that Donald Trump has many critics but there has to be agreement with Steve Bannon’s take on the President’s dealings with China. He reckons that “the elites in America have bailed out the Chinese regime for 25 years. Trump is the first leader to confront this – the first leader of either party to have the backs of the American workers”; it would be hard to disagree. He is also the first US president to try and sort out the 60 year-old Korean problems head on and not keep brushing it under the carpet; it is hard to disagree. Now because of the inactivity (and apparent ineptitude) of the previous incumbent five years ago, he has been landed with the Syrian problem head on; it is hard to disagree. For the world, these problems have to be sorted out immediately – It’s Now Or Never!

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We Won’t Get Fooled Again!

Q1 saw a 37.0 % decline to 4.6k in the number of new launches for Dubai off-plan sales, with an even steeper 46.0% fall in value at US$ 1.6 billion. Over the same period, ready property numbers and values were lower by 17.0% to 3k and 24.0% at US$ 1.3 billion. With the holy month of Ramadan approaching within six months, it is highly like that the decline for H1could top 50%.

Saudi Arabia’s Tanmiyat has awarded Al Adnan Contracting a US$ 163 million contract to build six towers in its Living Legends project in Dubailand; handover is expected by the end of 2019. Last year, Beijing Emirates Contracting was appointed to build two towers for the same location, along with another adjacent to the Dubai Water Canal. On completion, Living Legends will house over 20k residents.

Emaar is expected to soon launch Sunrise Bay, a twin-tower project that will form part of the developer’s massive 10 million sq ft Emaar Beachfront, with twenty residential towers and hotels. The 26-storey buildings will house various sized apartments, ranging from 75 sq mt to 253 sq mt.

Progress Construction is the latest to be awarded a contract by Azizi Developments. It will be building the Dhs 166m Azizi Grand in Dubai Sports City – a 47.1k sq mt development housing 431 studio,1-2 B/R apartments which will resemble four towers merging into one.

DMCC is to join forces with AccorHotels to develop its first SO hotel in Dubai. To be located in Uptown Dubai, in the first super tower to be built there, the luxury brand, with 188 keys and 215 branded residences, will open in 2020.

Jumeirah has launched its first 3-star brand hotel – the new Zabeel House by Jumeirah, with 150 rooms, will open in Al Seef, with room rates starting at a reasonable US$ 95.

Radisson Blu has opened its latest, and fifth, Dubai offering – the 432-room Radisson Blu Hotel, Dubai Waterfront. One of its main features will be the Gotha nightclub, encompassing 16k sq ft, with a 1k person capacity; it plans to replicate the Gotha in Cannes, famous for themed nights and major performers.

With four hotels now operating in Dubai, Emaar’s Rove brand has signed an agreement with Mada’in Properties to operate Rove Mina Seyahi, due to open in 2021. The proposed 50-storey tower will house a 270-key hotel and 443 serviced residences.

United Properties has announced the first phase of its new US$ 2.2 billion scheme to redevelop Dubai Motor City. Zawaya, encompassing 148k sq ft, will house 400 residential units along with retail, F&B and sporting facilities.

Nakheel has tied up with Shurooq to develop a US$ 20 million shopping complex in Sharjah’s Al Rahmaniya district. This will be the Dubai developer’s first project outside its home emirate and will be similar to the seven neighbourhood retail hubs, known as Nakheel Pavilions, already established in Dubai.

DEWA has awarded a US$ 90 million contract to ABB to build a substation that will integrate the upcoming solar power into the emirate’s grid. Last year, the Swiss company completed its first one that integrated 200 MW of electricity into the main supply.

In this day of increased technology and talk of flying taxis, hyperloops and driverless cars, it is refreshing to see that DHL is to re-introduce pedal power to Dubai. The global courier company is set to bring the cubicycle, a 4-wheel bike that can carry loads of up to 125 kg, to the emirate’s streets.

Following a period of some doom and gloom, a mini boom has descended on the local construction sector as, according to a Ventures Onsite report, the UAE can expect contractor awards totalling US$ 50.4 billion, equating to a third of the total awards for the GCC, this year; this is some way ahead of Saudi Arabia’s total of US$ 40.0 billion, accounting for some 27% of the total. The biggest contributor will be the buildings segment, with a year on year increase of 10%, as the UAE’s share comes in at US$ 37.3 billion.

The importance of the expanding MICE (meetings, incentives, conferences and exhibitions) sector to the Dubai economy – including hospitality and retail – cannot be emphasised enough. Last year, the DWTC hosted 353 such events, with a 9% increase in numbers to 3.3 million, a third of which were overseas visitors. During the year, 56.3k companies from 154 countries took part. The knock-on impact is crucial to the progress of Dubai’s economy.

There was a marginal 0.3% February fall to 6.9 million passengers at Dubai International, with YTD traffic falling 0.6% to 14.9 million; at the same time, flight movements were 3.4% lower at 66.8k. India, Saudi Arabia and the UK remained the top three markets, whilst Eastern Europe recorded the largest increase with numbers rising by 17.6%. The top three destinations – London, Mumbai and Bangkok – remained unchanged.

A sign that business is returning to normal for Emirates is the fact that the airline is to undertake a cabin staff recruitment drive not only in Dubai but also in the region, Africa and Europe. With operating 269 planes (and being the largest global operator for Airbus 380s and Boeing 777s), it flies to 159 destinations.

There was a slowdown in the Emirates NBD March PMI March figures with a 0.3 month on month decline to 54.8, driven by sluggish new order numbers, slower output (at  a 23-month low) and dismal foreign demand for the locally produced goods. As has been the norm for past months, there has been a continued easing of output charges with the aim to encourage more demand; this should bear fruit by mid-year. The rate of employment growth is at a 17-month low.

The fragility of the local markets last year was reflected by the number and value of MENA’s mergers and acquisitions declining by 2.3% to 126 deals and by 57.7% to just US$ 16.0 billion; a significant driver for this downturn was construction, with its value dropping from US$ 1.3 billion to US$ 59 million. 72.5% of M&As originated from three sectors – Financial Services (US$ 4.5 billion), Industrials/Chemicals – US$ 3.9 billion and Telecommunications – US$ 3.2 billion.

The Ministry of Economy expects the country’s economy to grow 3.4% this year to US$ 436 billion, with the non-oil sector now accounting for around 70% of the total, as the reliance of oil continues to fall to just 20% by 2020. With the industrial sector expected to invest US$ 75 billion over the next eight years, with Dubai spending significant amounts on the upcoming Expo 2020 and the capital catching up with its infrastructure projects, the overall UAE growth is all but guaranteed.

Research by Euromonitor International indicates a possible 7.7% growth this year to US$ 2.8 billion for the country’s consumer electronics market, driven mainly from inflation in inventories. However, the brick and mortar retailers are still the dominant force in this sector, although it is slowly losing ground to e-commerce which now accounts for 19% of total revenue, with growth of 6% to US$ 259 million this year.

Nasdaq Dubai’s latest sukuk is a Dar Al Arkan Real Estate US$ 500 million issue; this is the Saudi company’s fourth listing on the Dubai bourse, bringing its total listing to US$ 1.85 billion. The money raised will help finance the company’s latest project, I Love Florence, in Downtown.

Having raised US$ 850 million from 94 investors in February, Dubai-based Telegram Group was again in the market last week, raising a further US$ 850 million and planning to use the funds to further develop the Telegram Open Network blockchain, including its cryptocurrency Gram. The encrypted messaging app was founded by the Russian exile, Pavel Durov, and has a reported 200 million active monthly users.

The DFM opened on Sunday (01 April), at 3109, and again moved south over the week, closing 26 points (0.9%) lower at 3083 by Thursday, 05 April. As some analysts continue to show concern about the state of the local property sector, Emaar Properties continued its downward trend, and has lost 37.2% in value since September 2016, shedding another US$ 0.06 to close at US$ 1.52, with Arabtec US$ 0.01 higher at US$ 0.62. Volumes traded lower at 155 million shares on Thursday, valued at US$ 69 million, (compared to 231 million shares worth US$ 80 million the previous Thursday – 29 March).

By Thursday, Brent Crude dipped over the week, shedding US$ 0.58 (2.3%) to US$ 68.33, with gold down US$ 2 at US$ 1,328 by 05 April 2018. For the month of March, both commodities traded higher with Brent up US$ 4.61 (7.1%) to US$ 69.34 and the yellow metal by 1.0% to US$ 1,330.

In the US, VW has spent US$ 7.4 billion in buying back some 350k of its vehicles tainted by the diesel emissions control system scandal. Only a tiny portion of the vehicles has been sold (13k) and a further 28k have been destroyed. The rest are currently stored in 37 storage areas until it is decided either to repair the damage caused or destroy them. It has become a long ongoing problem, for which the German carmaker has already paid US$ 4.3 billion in federal penalties.

With some surprise, GKN has been finally acquired by Melrose Industries, in a deal worth US$ 11.3 billion, with a further US$ 1.4 billion to support the pension fund – 14.1% higher than its original bid in January. Many stakeholders, including unions, customers (particularly Airbus) and government, opposed the takeover but 52% of shareholders voted for the change on the promise that it would increase the company’s profitability after five years of declines. Labour called the buyer, which specialise in turning round troubled manufacturing businesses before selling them off, a “short-term asset stripper”.

The world’s fifth and Australia’s largest wine producer, Accolade Wines, has been acquired by the US private equity firm, the Carlyle Group, for US$ 769 million. The company, established in 2011 with the purchase of two separate divisions from Constellation Brands for US$ 223 million, delivers 38 million cases to over 140 countries, including China, every year. In 2017, Australia saw wine exports to China increase by 64% to US$ 652 million.

As Chinese companies try to expand their local food delivery services, Alibaba has acquired from Baixu Inc the remaining 57% share it did not hold in Ele.mem, which values the company at US$ 9.5 billion. The company will be competing in a sector that is dominated by Meituan Dianping which it backed by Tencent Holdings and could be valued at US$ 60 billion if it goes public later in the year. Both Chinese giants see the delivery of food and other services will benefit their online payment services.

Spotify went public on Monday and within an hour had seen its market value jump by 28.7% before closing the day 14.0% higher, with a closing price of US$ 149.01, after opening the session at US$ 132.00. The Swedish music streaming service, that has never posted a profit, has a market value of US$ 30 billion.

The ailing UK car industry received a welcome boost this week with the announcement that Vauxhall will make its new Opel/Vauxhall Vivaro model in Luton, this saving 1.4k jobs (and possibly creating a further 450). The brand’s owner PSA Group is expected to invest US$ 238 million in the upgraded plant that could produce 100k units from next year.

Latest February figures from IATA indicate that air freight markets increased by 6.8 % over the year, as capacity expanded at the lower 5.6% level; accordingly, demand outstripped capacity growth for the 19th straight month. Figures were dampened and distorted by the Chinese Lunar New Year in February. However, the ME data pointed to less impressive returns with just a 3.4% hike in demand, as capacity was at a higher 3.9%.  Over the same period, international passenger traffic jumped 7.2%, with total capacity 5.9% higher and load factor nudging 1.0% higher to 79.3%.

March Eurozone inflation figures increased by 0.3% to 1.4%, month on month, and this despite core prices – excluding alcohol, energy, food and tobacco – remaining steadfastly flat.

The latest manufacturing PMI data in March nudged slightly higher to 55.1, with output growth on the rise, offset by slower rises in both employment and new orders.

In a bid to appease regulators as it attempts to take over Sky plc, the US media group, 21st Century Fox (already a 39% Sky shareholder), has offered to sell Sky News to Disney. The regulators have reservations about the takeover could result in the Murdoch Family Trust – which has major interests in Fox, News Corporation, The Sun, The Times and The Sunday Times – wielding too much influence on the UK media sector. Last December, Disney tabled a US$ 66 billion offer for Fox’s entertainment assets, including Sky. 21st Century Fox has suggested two options to ensure regulatory approval for it to sell Sky News to Disney.

This blog has in the past recorded that many of the US mega companies seem to be abrogating their responsibilities by parking their cash and profits outside of their home base, where tax rates were less onerous. Luxembourg was one of the favoured locations where the then Prime Minister, Jean Claude Juncker, actively encouraged companies to set up in the duchy to avoid paying higher tax rates in their home countries. One of the main recipients of the now EU President’s magnanimity was Amazon so it was no surprise (and not before time) to see Donald Trump take a pot shot at them earlier this week.

There was a slowdown in the US manufacturing sector in March as the ISM PMI fell 1.5, month on month, to 59.3 – still a very healthy figure. The main drivers behind the fall were a 2.4 drop to 57.3 in the employment index, new orders by 2.3 to 61.9 and production by 1.0 to 61.0. There was an upturn in February construction spending to US$ 1.27 trillion, with spending on private construction came in 0.7% higher at US$ 982 billion, split 54.3:45.7 between residential and non-residential.

Barely a week after the Trump announcement of scything tariffs on China, retaliation has come in the form of duties of up to 25% on US producers and in proportion to the US$ 3 billion introduced by the US on 23 March. At the same time, China’s Ministry of Commerce confirmed it was suspending its WTO (World Trade Organisation) obligations to reduce tariffs on 120 US goods. Whether this turns into a fully-fledged trade war – and its negative impact on global trade – is unlikely.

Last Sunday saw April Fools’ Day which coincided with Emirates announcing that its new 777s would incorporate a SkyLounge with transparent walls and ceilings. Who said We Won’t Get Fooled Again!

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Gone Fishin’

Launched by Minor Hotels seven years ago, AVANI Hotels & Resorts has announced the signing of its third Dubai property – AVANI Hotel Suites & Branded Residences, a 48-storey tower, due to open in 2020. It will comprise 527 units, with 264 serviced apartments and 263 residences. The hotel management company currently has a portfolio of 23 properties in fifteen international locations.

Emaar Hospitality has launched a 220-key Vida Za’abeel hotel which will form part of a twin tower (68 and 70 storeys) mixed-use development for Emaar and Meraas; it will also include 1-3 B/R serviced apartments, as well as various amenities, including 3k of retail space. No further details, including cost and timeframe, were made available.

The latest EY report confirms that the Dubai hospitality sector is still holding its own, even though some indicators are dipping. Although 2017 occupancy rates averaged 77.7% (falling 1.4%), average room rates of US$ 243 (down 4.4%) and revenue per available room of US$ 189 (down 6.2%) all declined, they are still the highest in the MENA.

As indicated in an earlier blog, and after a decade in Dubai, the QE2 has finally been moved to Dubai Drydocks for refurbishment that will see the famous ocean liner become a floating hotel as early as next month. The operator of the upcoming 5-star property will be PCFC Hotels.

Green Modelling Contracting has won a US$ 48 million contract to build Azizi Developments’ new HQ in Meydan Avenue, as the developer continues to expand its real estate portfolio at a rate of knots. The 520k sq ft building will have an apparent wave-shaped crystallised fabric exterior.

Enoc Group has opened the first of sixteen new service stations for 2018, located at Al Marmoum; over the next three years, it expects to add a further 54 stations. As with similar installations, the 72.7k sq ft station has a Zoom convenience store, Pronto, a drive-thru McDonalds, a drive-thru ATM, a cafeteria and a prayer room.

With the introduction of the Contingency Approach Control Room and other restructuring enhancements, costing US$ 16 million, capacity at Dubai International has increased by 25%. This has also resulted in a marked reduction in the number of delays, caused by planes having to wait for air traffic control clearance to land; it was estimated that in 2015 airline delays in the ME caused losses of US$ 2.5 billion. Last year, the airport dealt with 500k air traffic movements, set to rise by 20% to 600k over the next five years.

In the first two months of the year, Al Futtaim Motors – with government assistance – has confiscated a reported 179k fake car parts, valued at over US$ 1 million, in eight raids across the country.

GFH Capital is planning to sell its 70% stake in Dubai’s Philadelphia Private School, founded in 2006 and valued at US$ 35 million. No other details were readily available.

The UAE and Kazakhstan have signed six separate investment and business agreements, two of which involved DP World. The deals covered the acquisition, governance and management of Special Economic Zones in Aktau (the country’s main cargo and terminal hub) and Khorgos, with plans to acquire 49% and 51% stakes respectively. Both locations will play major trade roles along the New Silk Route.

With the country recently appointing a dedicated Minister of Artificial Intelligence, and with Dubai introducing a fully functional robot police, it is no surprise that the emirate will host the first edition of the World AI Show next month. This is just part of Dubai’s mission to become the world’s smartest location.

Government-controlled Dubai Aerospace Enterprise, which bought Dublin-based AWAS last year, is set to arrange a US$ 400 million syndicated loan. Last year, it also issued senior bonds of US$ 2.3 billion to partly pay for the acquisition. The leasing and maintenance company is now one of the biggest in the world, with about 400 aircraft, valued at US$ 14 billion.

April will see no change in Special 95 gas prices which remain at US$ 0.605 per litre but diesel will retail 1.2% lower than March prices, at US$ 0.654.

There are reports that Abraaj Group, founded in 2002, is to divest part of its fund management business, which oversees funds globally for institutional investors, to raise cash. At the same time, Dubai market regulators are discussing with Abraaj some investors’ concerns about improper allocation of capital in a healthcare fund. There has also been a raft of senior managers recently leaving their positions, including the global head of private equity, the global head of impact investing and the CFO.

It was announced that Drake & Scull International will issue a five-year convertible sukuk in Q2, with a probable value of US$ 122 million. Conversion, after expiry in 2023, will be at a set price of US$ 0.82 per share or at a 25% discount of the market price.

As expected, Emirates NBD shareholders have given the green light to the bank to increase its capital base, via a rights issue, to US$ 2.0 billion; some of the money raised could be used for a proposed purchase of Turkey’s Denizbank. At this week’s AGM, various other resolutions were passed including increasing the foreign ownership of shares to 20%, as well as agreeing to a US$ 12.5 billion euro medium term notes programme, a US$ 1 billion structured note programme and a US$ 1.5 billion Australian dollar debt issuance.

Last year, UK Export Finance financed an approximate US$ 2.8 billion of GCC projects, the government’s largest single regional allocation. The British government’s export agency is to open only its fourth dedicated global office in the country, following Brazil, Indonesia and Turkey. UKEF has indicated that it has up to US$ 7.0 billion available to project sponsors in the UAE, as well as an additional US$ 5.6 billion for Dubai projects. It has already supported a number of the emirate’s developments, including the US$ 308 million Dubai Arena, (a 17k-person multipurpose stadium contracted by British construction firm Kier), DWTC One Central and Bluewaters. Back in 2015, the UKEF helped Emirates purchase four Airbus 380s, becoming the first export credit agency to develop a guarantee for sharia-compliant sukuk in the debt capital markets.

With a US$ 327 million finance facility from its major 52.3% shareholder, Meraas, and a three-year moratorium on principal repayments on debt of US$ 1.1 billion, DXB Entertainments is confident that it will not have to make any further cost cuts. The theme park operator, with a set-up cost estimated at US$ 3.6 billion, has posted two successive losses – of US$ 132 million and US$ 300 million – since its 2016 opening and welcomed 2.3 million visitors last year. Next year, it will open both the Legoland Hotel and the US$ 708 million Six Flags theme park.

Since its 2014 launch, Marka has failed to post an annual profit, with the latest 2017 figures showing a US$ 66 million loss, on the back of lacklustre revenue of US$ 27 million. The company has been on an active cost cutting exercise and a restructuring programme that has seen a more efficient and leaner retailer, as well as the exiting of certain unprofitable units. On Thursday, its share value was at US$ 0.128, less than half of its September 2014 opening of US$ 0.272.

The DFM opened on Sunday (25 March), at 3150, and fell a further 41 points this week to close 1.3% lower at 3109 by Thursday, 29 March. Emaar Properties again disappointed, trading US$ 0.02 down at US$ 1.58, with Arabtec also US$ 0.02 lower at US$ 0.61. Volumes traded higher at 231 million shares on Thursday, valued at US$ 80 million, (compared to 144 million shares worth US$ 71 million the previous Thursday – 22 March). For the month of March, the market lost 135 points (4.2%) with both Emaar and Arabtec lower – by US$ 0.10 and US$ 0.05 respectively.

By Thursday, Brent Crude dipped over the week, shedding US$ 0.55 (0.8%) to US$ 68.91, with gold up US$ 3 at US$ 1,330 by 29 March 2018.

According to Saudi Crown Prince Mohammed bin Salman, his country and Russia, the two largest global oil producers, are discussing a longer-term pact to extend the January 2017 agreement to curb world crude supplies.

In a move to wean itself off oil dependency, Saudi has signed a US$ 200 billion MoU with Japan’s SoftBank Group to build the world’s biggest solar power development. It is estimated that the plant will reach full capacity by 2030 and could cost around US$ 1 billion a gigawatt, whilst cutting energy costs by US$ 40 billion. The massive project has the potential to create 100k jobs and will be a major factor in diversifying the oil-dependent Saudi economy. It is also expected to spend US$ 80 billion on building 16 nuclear reactors to meet the surging demand for electricity which has risen on average 9% per annum since the turn of the century.

The head of an organised crime ring, suspected of stealing US$ 1.2 billion over the past five years, by the use of Carbanak and Cobalt malware, has been arrested in Spain. Having infiltrated over 100 banks, its modus operandi was to siphon off cash via bank transfers or dispensed automatically through cash machines.

Asia’s largest company, Tencent Holdings, slumped 4.4% on Friday following its warning that it would sacrifice short-term margins to solidify future growth, by investing in content and technology.

Once planned to be the world’s biggest global player, Uber continues to retreat from the Asian market. After selling its Chinese and Russian businesses to Didi Chuxing in 2016 and to Yandex, it is now divesting its SE Asian ride share and food delivery company, covering eight countries, to Grab; it will however retain a 27.5% stake. No financial details were available but the deal – that could top US$ 6 billion – covered all of its operations, including Uber Eats. Last year, it has to be remembered that Uber did lose US$ 4.5 billion and it has to take steps to move into positive territory – one of which is to exit loss-making markets.

Having just pulled out a planned acquisition of Pfizer’s consumer healthcare unit, GSK is to pay Novartis US$ 12.9 billion for its 36.5% stake in the Consumer Healthcare Business, with US$ 10.9 billion sales in 2017. This will give the pharmaceutical giant full control of a JV which owns products such as Sensodyne, Panadol and Nicotinell patches. To help pay for this purchase, it plans to sell its Horlicks brand, as well as MaxiNutrition and other of its nutrition products.

The EU has approved Bayer to buy its US competitor, Monsanto, for US$ 62.5 billion which will see the enlarged entity control 25% of the world’s seeds and pesticides market. This is the third merger of its kind following the earlier Dow/DuPont and ChemChina/Syngenta consolidations. No wonder then that many are concerned about the power and potential misuse of assets these three mega companies may, or possibly will, bring to the global arena.

On Friday, Dropbox shares jumped 35% on its first day of trading, valuing the company at US$ 12.7 billion. The eleven-year old tech company has yet to post a profit, although its 2017 losses narrowed to just over US$ 100 million, whilst revenue was up 31.4% to US$ 1.1 billion.

The latest in a long list of struggling UK retailers is fashion chain Next, posting its second consecutive annual profit fall (of 8.0%) to US$ 1.1 billion, with more bad news on the horizon. Whilst actual stores sales fell by 9.1%, (leading to an expected closure of ten outlets this year), on-line revenue increased by 11.2%.

Yet another UK retailer in trouble seems to be the House of Fraser with the banks calling in EY to see whether it can be rescued, as the crisis extends along the country’s high streets. With 59 department stores, it is saddled with debt, including a US$ 490 million publicly traded bond. The major 51% shareholder is Nanjing Xinjiekou who is apparently keen to sell his controlling share to a Chinese tourism group – Wuji Wenhua. During the Christmas period, it reported a 2.9% decline in store sales and a more worrying 7.5% fall in online sales.

The UK’s biggest independent furniture retailer, DFS, has reported a 58% fall in H1 profits to US$ 10 million, although there was improvement noted in the last two months of the period; revenue was 4.0% higher at US$ 555 million. Despite the sluggish market conditions, the retailer did acquire smaller rivals Sofology for US$ 35 million and Multiyork.

Conviviality, which includes Bargain Booze, Wine Rack and Matthew Clark in its portfolio, is the fourth UK retailer to announce financial problems this week. The troubled company, which supplies 700 off-licences and 23k pubs, has drafted in PwC to help with a turnaround in fortunes as it looks for a US$ 175 million lifeline, from a share issue; the company is currently valued at US$ 260 million.

The problem is not confined to British shores, with the world’s second biggest clothing chain, Sweden’s H&M, posting a 61% profit decline to US$ 151 million, in its latest quarterly report. The retailer, with 4.7k stores employing 171k in 69 countries, also saw sales fall for the second successive quarter. Apart from its own H&M stores, the retailer has mid-market chains such as & Other Stories, Monki and Cos in its portfolio and expects to open a further 220 outlets this year. Weak sales have seen an increase in stock levels (by 7%) that will result in the need for further future discounting, which will again negatively impact future margins. (It seems highly probable that the local Dubai retail sector will be undergoing similar problems as are being experienced elsewhere).

No wonder Zambian President Edgar Lunga is keen to see First Quantum Minerals settle a massive US$ 7.9 billion tax bill (including US$ 5.7 billion in interest).  The Canadian miner derives 84% of its turnover in the African country and accounts for over 50% of the country’s copper production.

After successfully carrying out stipulated economic reforms, Greece will finally receive a US$ 8.0 billion loan installment as part of the third international rescue package to service public debt and clear domestic arrears. Greece has been reliant on massive loans since 2010 but if all goes to plan, it should exit the ESM programme in Q3. During that time, the country has witnessed its economy contracting by 25% and unemployment levels of between 20% – 30%.

For the first time since October 2016, Germany has posted a decline in import prices which fell 0.6%, year on year, in February, compared to a 0.7% rise a month earlier; excluding oil products, import prices fell by 1.0%. Over the same period, year on year export prices gained 0.5%, slightly lower than January’s 0.7% return.

On Friday the US President signed a US$ 1.3 trillion federal spending measure to maintain the running of government services. The finance package included additional spending on defence but did not fully pay for his planned Mexican border wall and did not extend protection from deportation to some 700k “Dreamer” immigrants. Earlier in the day, he had used one of his famous tweets to threaten a veto that would have resulted in a government shutdown.

The US current account deficit (the net sum of income flows from goods and services) moved 26.3% higher, quarter on quarter, in Q4 at US$ 128 million, equating to 2.6% of GDP. Most of the deficit in goods derives from non-oil trade, whilst the oil and gas trade balance is nearing zero, accounting for 4.1% of the country’s economy. In February, both exports and imports rose month on month – by US$ 2.9 billion to US$ 136.5 billion and US$ 3.0 billion to US$ 211.9 billion. Whether the recently introduced Trump trade tariffs (along with the massive tax cuts) have the effect of reducing the deficit remains to be seen but is likely to see the balance go in the other direction.

It can only be Dubai when you read that the first Happiness Platform has been built to allow visitors to fish in a “positive and stimulating atmosphere”. At 125 mt long, the distinctively-designed facility on the Jumeirah-3 Beach is equipped with solar-powered lighting poles (for 24-hour use) and houses a beach library for general use. No doubt April will see a lot more residents and visitors have Gone Fishin’.

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