A Change Is Gonna Come!                                                       02 June 2023

No statistics were readily available for real estate and properties transactions for the week ending 02 June 2023.

This week witnessed the most expensive sale of a penthouse on Palm Jumeriah with Luxhabitat Sotheby’s International Realty orchestrating a US$ 60 million sale for a shell-and-core mega penthouse at AVA on Palm Jumeirah, Dorchester Collection. The penthouse has a built-up area of 33.0k sq ft and occupies four floors, featuring a 360-degree infinity lap pool, (with views of Palm Jumeirah, Burj Al Arab, and Ain Dubai), a four-floor 200 mt indoor garden, a private panoramic elevator and private lobby, with a roof terrace. The actual AVA development comprises only seventeen residences, with direct access to private terraces with a pool, floor-to-ceiling windows, and a stunning 270-degree floor-to-ceiling view private beach and all the five-star amenities of the Dorchester collection.

Property Finder reports that May real estate transactions were 77.6% higher on the year, at 11.7k, driven by robust economic growth; last month, the aggregate value of property deals rose 28.3% to US$ 9.26 billion. Off plan sales continue to rise as a percentage of the total sales – accounting 49% of the total sales transaction volume and 43% of the value. The value of off-plan properties, rose 135.8% to more than US$ 3.95 billion, whilst the volume of off-plan property sales surged 109.9% to more than 5’7k transactions. Dubai’s property market trend in May follows a 53% surge in the value of deals and a 45% rise in the volume of transaction in April.

With construction starting twenty-one years ago, Palm Jebel Ali started well and by 2006, it already had a 17 km breakwater, 200 mt wide. Ten million tonnes of rock were brought in from Ras Al Khaimah to be dumped into the sea to form the barrier; a further two hundred sq mt of cap rock, sand, calcarenite and limestone came from the Jebel Ali Entrance Channel dredging works.  By 2008, offshore work had begun on the six km “trunk” and the seventeen fronds, and all was on track for the project – twice the size of The Palm Jumeirah, with a projected population of 250k – to go ahead. That year, the GFC changed everything and Dubai – in line with the rest of the world – was impacted and it was no surprise then to see the mega project suspended. For more than a decade, Jebel Ali Palm lay dormant. In 2018, Nakheel’s then chief executive, Sanjay Manchanda, confirmed the project was still in long-term development but that there were no current plans to resume work. In 2022, it was announced that the project was to relaunch and be rebranded.

On Wednesday, the Dubai Ruler did not disappoint announcing the updated Palm Jebel Ali project, destined to be twice the size of the already iconic Palm Jumeirah, and how he sees this new destination as part of an ambitious plan to make the emirate “the most beautiful city in the world”. It will span an area of 13.4 sq km and have beaches that will spread for over 110 km and that “its marine, green pastures will provide housing, (estimated to house 35k families), with the highest quality of life.” HH Sheikh Mohammed added that “we announced our goal to double Dubai’s economy by 2033 .   .   .   and every day we add a new brick in building the most beautiful city in the world.” More than eighty hotels and resorts will be built on the island, expected to draw in tourists and families from around the world.

Indians have lost their long-standing number one position in Dubai’s luxury residential property sector; prior to the onset of Covid, the top three property investors were Indians, Emiratis and Saudis. According to a report by Knight Frank, the top two positions now belong to the Chinese and British, with Indians now trailing in third place. The state of the UK economy – and indeed the country – has seen UK investors looking for safe havens to invest and, at the moment, Dubai ticks all the right boxes because of its booming economy, progressive government initiatives and high returns on property investment. Latest figures from Betterhomes point to the fact that, in Q1, there had been a 60%, year on year, hike in the number of UK investors, making them Dubai’s biggest source market so far this year.

In the first four months of 2023, the number of visitors to Dubai rose by over 18% to more than six million – and if this trend continues for the rest of the year, Dubai will be one of the three best cities in the world, economically, in accordance with the “D33” Economic Agenda. Over the past twelve months, the number of hotel rooms has increased by 6.1% to 148.9k, as the number of hotels rose 5.8% to 814. The source location markets – Western Europe, South Asia, Russia, CIS and Eastern Europe, GCC and MENA – remained the same, with total percentages of 22%, 16%, 15%, 14% and 13%. The top four source countries were India, Russia, UK and Saudi Arabia, with totals of 806k, 474k, 391k and 352k, with the first three countries recording visitor increases of 46%, 101% and 6%. YTD to 30 April, Dubai recorded an average occupancy rate of 80%, with the average duration of hotel guests’ stay about four nights, and the number of reserved rooms reaching 14.09 million overnight stays, compared to 12.65 million overnight stays in the comparative 2022 figures.

An initiative by Dubai’s Department of Economy and Tourism has made it mandatory for owners of holiday homes to display a QR code on the main entrances of their properties. The twin aims of the exercise are to improve transparency and increase confidence among investors and visitors in this real estate sector. It will also help facilitate DET’s inspections and ensure strict compliance with procedures. In a booming market, this sector witnessed an increase of 6.6k units (45.5%) to 21.1k, with room growth of 9.5k to 32.8k rooms. In Q1, these properties hosted 137.1k guests.

Flydubai is expected to recruit at least 1k more staff this year, as it continues to ramp up operations to over 110 destinations. The appointments will be needed across all the airline’s divisions, including pilots, cabin crew, engineers and support. Pilots, requiring 2.5k hours flying time on modern (EFIS), multi-crew, multi-engine aircraft and five hundred hours on B737-300 to 900 (NG/EFIS) type aircraft, will have remuneration including US$ 8.7k basic salary + housing allowance + transportation allowance, with variable flying pay of US$ 3.1k. Cabin crew will be on a  US$ 2.0k basic salary + housing allowance + transportation allowance, with variable flying pay of US$ 1.0k (monthly average).

Virgin Atlantic will restart flights from London to Dubai in October, with bookings opening next week; the airline will run four Boeing 787-9 flights a week between October and March, with the plane having thirty-one upper class seats, thirty-five premium seats and 192 seats in economy. The service will also allow Dubai travellers to connect, via London, to Virgin Atlantic and Delta destinations in North America. The airline had discontinued its daily Dubai service in March 2019, after twelve years, citing economic reasons.

A report by Arthur D Little sees demand for EVs continuing to head northwards, with the UAE market expected to expand at a 30% compound annual rate over the next six years. The Minister of Energy, HE Suhail Al Mazrouei, noted that electric vehicle sales are “rapidly” increasing in the UAE, with EVs making up more than 1% of the overall car market in the country, as options for those who are going to own an EV have increased significantly with aggressive competition from Europe, the US and also from … China, [South] Korea, Japan and others.” The report also ranked the UAE eighth globally in terms of electric mobility readiness. Since 2020, the country has increased the number of charging stations across the country by about 60% to eight hundred, with DEWA stating that it is aiming for 1k public charging stations in Dubai by 2025, an increase from 620 at the end of 2022. On a global stage, electric car sales this year are expected to grow by 40% to fourteen million, driven by government subsidies and the tightening of carbon dioxide emissions standards, with EV market share jumping 4% to 18%.

The Ministry of Energy, as usual, adjusts fuel prices in the UAE on the first day of every month. According to the government, the UAE liberalised fuel prices, introduced in August 2015, help to rationalise consumption and encourage the use of public transport in the long run and incentivise the use of alternatives. The UAE Fuel Price Committee decreased all June retail petrol prices:

• Super 98: US$ 0.804 – down by 6.65% on the month and up US$ 0.63 (6.21%) YTD from US$ 0.757  
• Special 95: US$ 0.774 – down by 6.89% on the month and up 6.46% YTD from US$ 0.727
• Diesel: US$ 0.730 – down 7.79% on the month and down 18.53% YTD from US$ 0.896
• E-plus 91: US$ 0.752 – down by 7.08.% on the month and up 6.52% YTD from US$ 0.706

The Ministry of Finance waited until yesterday to announce two major decisions relating to the new corporate tax legislation. Cabinet Decision No 55 of 2023 detailed the scope of Qualifying Income, being income from transactions with other free zone entities, as well as domestic and foreign-sourced income derived from conducting any of the qualifying activities. Ministerial Decision No. 139 of 2023 addressed qualifying activities and excluded activities covered qualifying activities and excluded activities. Excluded activities are transactions with natural persons, regulated banking/insurance/financing/certain leasing activities, ownership or use of intellectual property assets and ownership or use of UAE immovable property. Earning income from excluded activities, or earning any other income that is not a qualifying income, will result in the free zone company being disqualified from the corporate tax regime, subject to “de minimis requirements”; this allows a qualifying free zone person to earn up to 5% of their non-qualifying revenue, or US$ 1.36 million (AED 5.0 million), without being disqualified from the free zone corporate tax regime. As expected, the legislation clarified that a qualifying free zone company must maintain “adequate substance” in the country. Businesses can contact their free zone authority to confirm whether their free zone is eligible for the zero rate.

The Ministry listed nearly a dozen qualifying activities which include:

• the manufacturing of goods or material
• the processing of goods or material
• reinsurance services; holding of shares and other securities
• ownership, management and operation of ships
• fund management services
• wealth and investment management services
• headquarter services to related parties
• treasury and financing services to related parties
• financing and leasing of aircraft including engines
• distribution of goods or materials in or from a designated zone
• logistics services
• any ancillary activities to the activities listed above.

In Q1 and following an inspection of eight hundred and forty companies, for failing to comply with the anti-money laundering and combating the financing of terrorism legislation, the Ministry of Economy imposed fines worth US$ 18 million on 137 companies operating in the UAE’s designated non-financial business or professions sector. The investigations are part of the Ministry of Economy’s remit to monitor the operations of designated non-financial business or professions sector companies that are subject to its supervision, which include real estate agents and brokers, precious metals and gemstone dealers, auditors and corporate service providers. The law stipulates that such companies have to ensure the sector’s full compliance with the provisions stipulated by Federal Decree-Law No. 20 of 2018, with adherence to the law is necessary to ensure the country’s full compliance with the international standards issued by the Financial Action Task Force. Companies were found to have failed to establish internal policies and procedures to check customer databases and transactions against names mentioned on the terrorism list.

With a strategy of targeting the “adoption of crypto globally across twenty countries”, Gemini, founded by cryptocurrency pioneers and identical twins Cameron and Tyler Winklevoss, will “soon” start the process of buying a crypto licence to operate in the UAE. It seems that the Gemini management has been having discussions with regional stakeholders to learn more about local regulatory requirements. No timetable has been released.

The Investment Corporation of Dubai posted impressive 2022 financial returns, with record consolidated revenue 58.0% higher at US$ 72.86 billion and a record five-fold surge in profit to US$ 9.84 billion; the Net Profit attributable to the equity holder was US$ 8.12 billion. ICD’s portfolio also includes Emirates, Emirates NBD, Commercial Bank of Dubai, Dubai Islamic Bank, National Bonds Corporation, Enoc, dnata, flydubai and DAE. Margins also improved because overall revenues grew faster than operational costs. Assets grew 6.9%, reaching a record US$ 320.65 billion, and liabilities totalled US$ 247.44 billion, and with borrowings and lease liabilities declining 9.0%, the Group’s share of Equity rose 13.6% to US$ 58.99 billion.

In 2022, the Dubai World Trade Centre hosted sixty-three major events that generated US$ 3.54 billion in economic output, with US$ 2.02 billion (56.9%) being retained in the local economy; these events welcomed nearly 1.2 million attendees, with 405k being from overseas. The knock-on effect on Dubai’s economy was seen in various sectors – including entertainment, accommodation, restaurants, retail, transport, and government services – and a support for 48k jobs. The main sectors – healthcare, medical/scientific and IT – accounted for 57%, (US$ 1.17 billion), of the gross value added to the emirate’s economy.

In a press release that would bring a smile to Scrabble players, CBUAE (Central Bank of the UAE) has issued new guidance on AML/CFT, (anti-money laundering and combatting the financing of terrorism), for LFIs (Licensed Financial Institutions); its main aim is to assist such entities’ understanding of their legal obligations – it will also take FATF ( (Financial Action Task Force) standards into account. It will come into effect within one month. Among the discussion items are the risks of dealing with VA (virtual assets) and VASP (virtual asset service providers). The guidance outlines CDD (customer due diligence) and EDD (enhanced due diligence) for LFIs towards potential VASP customers and counterparties.

With its main aim of boosting the country’s manufacturing sector, the government has announced thirty innovative industrial projects worth over US$ 1.63 billion. The announcement, made at the beginning of the second Make it in the Emirates Forum, included a 9.1% increase of procurement opportunities in the domestic industrial sector, taking the total value of products targeted for localisation to US$ 32.70 billion. Furthermore, ADNOC will also allocate US$ 5.45 billion for the purchase of structures and metal products from national companies. It was also announced the provision of 5k sustainable job opportunities for UAE nationals in the industrial sector as FAB and Mashreq banks making available competitive financing solutions to the value of US$ 1.36 billion and US$ 272 million.

In DMCC’s latest Future of Trade 2023 report, it predicts that gaming revenue in the MENA will double to top US$ 6.0 billion over the next five years; it is estimated that the region now represents 15% of the global player base. The four main pillars behind the surge include high levels of digital connectivity, sufficient government support, the presence of a young and digital-savvy population, and high levels of digital connectivity. The DMCC is in the throes of enhancing Dubai’s position as “a global trade and economic hub, efficiently activating opportunities within the gaming sector will prove essential.” By 2025, there will be more than 318 million e-sports enthusiasts worldwide – 47.8% higher than the 2020 figure, with the global gaming market to reach US$ 304 billion, (a 71.4% increase) over the next four years. It is expected that the UAE and Saudi Arabia will continue to lead the region, supported by “high income levels, strong digital engagement, and public investment initiatives”.

The latest Alvarez & Marsal report notes that the combined Q1 net profit of the country’s ten largest banks rose by 35% on the quarter, driven by cost efficiencies, relatively low inflation rates, rising interest rates and lower impairment charges; their aggregate net income nudged 0.4% higher to US$ 5.0 billion, with a 12.5% rise in non-core income. The cumulative loans and advances (L&A) of the UAE’s top banks increased by 2% in Q1 over the same period last year, while deposits were up 6.2% on a quarterly basis, The consultancy expects that the UAE banking sector will maintain the gains of the first quarter, as the UAE’s economy is expected to grow 3.9% and 4.3% in 2023 and 2024, after expanding 7.6% last year – its highest rate since 2011. The UAE’s ten largest listed banks covered in A&M’s survey are First Abu Dhabi Bank, Emirates NBD, Abu Dhabi Commercial Bank, Dubai Islamic Bank, Mashreq Bank, Abu Dhabi Islamic Bank, Commercial Bank of Dubai, National Bank of Fujairah, National Bank of Ras Al Khaimah and Sharjah Islamic Bank.

Brokerage companies at the Dubai Financial Market added 22.7k new investor accounts YTD to 31 May – well up on comparative 2022 returns of 15.4k accounts. The two months, with most activity, were March and May with 6.6k and 5.3k new accounts.

The DFM opened on Monday, 29 May 2023, 42 points (1.2%) lower the previous three weeks, gained 62 points (1.7%) to close the week on 3,603, by 02 June 2023. Emaar Properties, US$ 0.07 lower the previous week, gained US$ 0.06 to close the week on US$ 1.66. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.67, US$ 3.72, US$ 1.41, and US$ 0.39 and closed on US$ 0.68, US$ 3.76, US$ 1.44 and US$ 0.39. On 02 June, trading was at 369 million shares, with a value of US$ 221 million, compared to 142 million shares, with a value of US$ 96 million, on 26 May 2023.

The bourse had opened the year on 3,438 and, having closed on 31 May on 3,577 was 139 points (3.1%) higher. Emaar started the year with a 01 January 2023 opening figure of US$ 1.60, to close the first five months at US$ 1.68. Four other bellwether stocks, DEWA, Emirates NBD, DIB and DFM started the year on US$ 0.59, US$ 3.54, US$ 1.55 and US$ 0.41 and closed YTD at US$ 0.68, US$ 3.72, US$ 1.48 and US$ 0.40.   On 31 May, trading was at 264 million shares, with a value of US$ 262 million, compared to 66 million shares, with a value of US$ 18 million, on 31 December 2022.

By Friday, 02 June 2023, Brent, US$ 3.04 higher (4.1%) the previous three weeks, shed US$ 0.96 (1.2%) to close on US$ 76.22.  Gold, US$ 69 (3.9%) lower the previous three weeks, gained US$ 18 (0.9%) to US$ 1,964 on 02 June 2023.

Brent started the year on US$ 85.91 and shed US$ 13.33 (15.50%), to close 31 May on US$ 72.58. Meanwhile, the yellow metal opened 2023 trading at US$ 1,830 and gained US$ 132 (7.2%) to close on US$ 1,962.

Latest figures indicate that Singapore’s state investor, Temasek Holdings, had investment in failed FTX cryptocurrency exchange accounting for 0.09% of its net portfolio value of US$ 304 billion and that it has had to write off US$ 275 million. Accordingly, it has announced that it has reduced compensation for the team responsible for recommending this investment, as well as its senior management team. Although it did not disclose the specific amount of the compensation cut, it did confirm that it currently held no direct exposure to cryptocurrencies, and that “there was no misconduct by the investment team in reaching their investment recommendation.

Last Saturday, 27 May, Arabsat launched Badr-8 from the Cape Canaveral Space Force Station, Florida, as SpaceX’s Falcon 9 rocket lifted off with Arabsat’s communications satellite. It is estimated that the Badr 8 project, comprising the spacecraft manufacturing contract with Airbus, the launch agreement with SpaceX, insurance, and ground infrastructure, has cost US$ 300 million. The 4.5 metric ton communications satellite will provide television broadcast services, video relay, and data services across the Mena, Europe and Central Asia.

In relation to its prior exposure with disgraced financier Jeffrey Epstein, JP Morgan have been the recipient of two suits brought by two groups – one representing Epstein’s victims and another on behalf of the government of the US Virgin Islands, where he owned a private island. The bank had a fifteen-year relationship with Epstein from 1998 – 2013, during which time, in 2008, the disgraced financier had pleaded guilty to soliciting a minor for prostitution. Both its CEO, Jamie Dimon, and the bank have denied any wrongdoing and liability, with prosecutors alleging that the bank ignored warning signs about their lucrative client and continued profiting off him. Epstein, who reportedly committed suicide in 2019, kept hundreds of millions of dollars in more than fifty accounts at the bank until he was dropped as a client. Not surprisingly, it was alleged that Epstein had a high degree of familiarity with, and easy access to, JP Morgan executives, with the bank laying the blame on its former executive, Jes Staley, an Epstein ally, and Mary Erdoes, who, at the time, headed up the bank’s asset and wealth management division. Despite being aware of his conduct and his ongoing legal troubles, with a reported forty-eight employees flagging their suspicions about Epstein’s transactions, it is claimed that JP Morgan kept him on as a customer. Only recently, Deutsche Bank, who took Epstein on as a client, after JP Morgan cut ties with him, settled for US$ 75 million with Epstein accusers; to date, the Epstein estate has paid over US$ 150 million in settlements to more than one hundred victims.

By settling for a US$ 6.0 billion payment fine, Purdue Pharma has received full protection from future lawsuits relating to the massive US opioid crisis. The family-owned company, which filed for bankruptcy in 2019, when it was facing thousands of lawsuits, has finally got what it wanted – the Sackler family was awarded full immunity from civil suits. The US$ 6.0 billion will be used to address opioid addiction, with the money going to local and state governments, individuals who sued the company, as well as funding rehabilitation programmes and other addiction treatments. While the ruling protects the family from any future civil cases, they could still face potential criminal charges. Latest research points to the fact that there were more than 75k opioid overdose fatalities in 2021 and that Purdue Pharma promoted opioids as non-addictive painkillers.

The Australia-based aviation safety and product rating agency, in its latest survey, has ranked Air New Zealand the airline of the year, followed by Qatar Airways, Etihad, Korean and Singapore; Emirates came in at number ten, (but it did pick up awards for being the best-in-flight entertainment and best premium economy). The Qatari carrier, which had been number one in 2022, won the Best Business Class, Best Catering and Excellence in Long Haul Travel – Middle East awards. Singapore won the Best First Class award. The survey noted that 2022 was a year of recovery, after two years of reduced air travel, as most airlines suffered declines in passenger approvals as the industry struggled to get into the air. The study takes into account twelve key criteria that include fleet age, passenger reviews, profitability, investment rating, product offerings, and staff relations.

Air New Zealand has announced that it will be weighing passengers before they board international flights, as part of a survey to determine average passenger weight, pointing to the fact that, it would improve fuel efficiency in the future. The weight will be anonymously recorded in a database but not be visible to airline staff or other passengers. The carrier also noted that knowing the weight of everything that goes on its aircraft is a “regulatory requirement”. The survey, which started on Monday and will end on 02 July, will involve 10k passengers.

Despite Twitter having pulled out of the EU’s voluntary code to fight disinformation, the tech giant has been warned that the new laws would require compliance from all players and that Twitter will be legally required to fight disinformation in the EU from 25 August. Dozens of tech firms, including   have already signed up to the EU’s disinformation code including Meta – which owns Facebook and Instagram – TikTok, Google, Microsoft and Twitch. The main aims of the code, introduced in June 2022, are to prevent profiteering from disinformation and fake news, as well as increasing transparency and curbing the spread of bots and fake accounts. Alongside the voluntary code, the EU has also brought in a Digital Services Act – a law which obliges firms to do more to tackle illegal online content; as from 25 August, compliance is compulsory for any platform, with more than forty-five million users in the bloc, with all having to comply legally with the new law.

Australian mining giant BHP has confirmed that it has underpaid 28.5k current and former employees indicating that they had received less holiday pay over a period of thirteen years; four hundred workers did not get additional allowances “due to an error with the employment entity.” The company has reported the incident to the authorities and confirmed that the errors will cost US$ 182 million before taxes. It appears that some affected employees had their leave incorrectly deducted on Australian public holidays, and they were owed a total of six days of leave on average. The world’s biggest miner has apologised for this embarrassing error and has commissioned a review of its payroll systems.

The RBA has confirmed that extremely high population growth is resulting in higher rents and that Australia needs to build more housing units. Since this cannot be carried out in the short-term, and the country facing rental vacancies at near record lows in most areas, there is no immediate fix to the problem, but that one short-term solution is for people to consider economising on their housing, (as many are forced to do), as rents and mortgage rates head higher. With this price mechanism at work, more people on average have to live in each dwelling, so that young adults moving back with their parents and co-sharing is becoming more prevalent. Meanwhile, the RBA had recently warned that the outlook for rent inflation has strengthened, and that higher rates were unfortunately driving rents higher, and that was feeding inflation in other areas of the economy; it expects that rents will be 10% higher by the end of the year which will cause even more problems especially because rents were the single largest component of the consumer price index (CPI); an ANZ study noted that low income earners are now paying more than 50% of their pay on housing. Simple economics show that if the Australian population is to grow 2.0% this year, at least 2.0% more housing units are needed – and, even more, bearing in mind the current shortage of stock. Until some sort of equilibrium reaches the market, higher rents will become a fact of everyday Australian life.

In Australia, the independent Fair Work Commission approved a 5.75% pay rise for workers on awards, with wages linked to movement in the minimum wage. With a technical reclassification for the national minimum wage, 0.7% of the country’s workforce will get an8.6% pay hike. The actual award will impact more than two million workers. Some analysts are concerned with this pay increment because it could be a catalyst to push inflation levels higher again, along with rising interest rates that could move 0.5% northwards before the end of July. The Australian Chamber of Commerce and Industry has estimated that this initiative would add an estimated US$ 8.34 billion in costs for businesses.

Iraq’s Development Road has launched a US$ 17.0 billion project to link its Grand Faw Port, in Iraq’s oil-rich south, north to Turkey, with a modern rail and road system, with the aims of transforming the country’s economy, (after decades of war and political/economic crises), and turning the country into a transit hub by shortening travel time between Asia and Europe. The project will see passenger and goods trains travelling at speeds up to 300 kph, new oil and gas pipelines to link the oil fields of the south to north of the country, and initiate links with other parts of Iraq and other countries. The country’s transport system is aged and inefficient, with a handful of lines and slow oil freight engines, and a single overnight passenger train that trundles from Baghdad to Basra, taking ten to twelve hours to cover five hundred km. Many of the country’s roads, rails and bridges are in a state of disarray. If all goes to plan, the project would be completed in 2029.

On the side-lines of last week’s Asia-Pacific Economic Cooperation conference in Detroit, China and South Korea agreed to strengthen dialogue and cooperation on semiconductor industry supply chains. China agreed to work with South Korea to deepen trade ties and investment cooperation at a time when there is an ongoing trade war between the world’s two superpowers – US and China – with concerns over chip supplies, sanctions and national security. South Korea requested China to stabilise the supply of key raw materials, (over all sectors and not just semiconductors), and asked for a predictable business environment for South Korean companies in China. About 40% of South Korea’s chip exports go to China, whilst US technology and equipment are necessary for South Korean chipmakers Samsung Electronics and SK Hynix.

The Commercial Aircraft Corporation of China launched its maiden commercial flight, MU9191 – Shanghai to Beijing – with the first ever “made in China” commercial plane. It has taken the manufacturer fourteen years to reach this milestone, having first started developing the narrow-body airliner in 2008, with production following three years later. However, it took another eleven years before the C919 received official certification to fly. China Eastern Airlines is the C919’s launch customer, with an order for five planes. It has taken the Chinese sector decades to start to compete with the two global leaders – Boeing and Airbus – in commercial jetliner manufacturing; both companies have a full order book going forward to 2030 so that any carrier, including Chinese customers, wanting narrow-body jets sooner, will have to seek an alternative. Comac has received more than 1k orders for the C919, though the majority are not confirmed, and many are from Chinese aircraft lessors yet to place the jet with an airline. The C919 – priced at US$ 99 million – remains certified only to fly within China, with the European certification process under way. Whether the manufacturer is in a position to fulfil orders remains a question, because of its reliance on overseas products from major suppliers such as GE, Honeywell International and, for the engines, CFM International – a venture between GE and France’s Safran.

A day after Recep Tayyip Erdogan won the run-off election against Kemal Kilicdaroglu, the Turkish lira slumped to a record low on Monday, trading at 20.20 to the greenback. Despite ongoing interventions by the Central Bank, including limiting the value of dollars that could be bought, the currency has struggled in 2023. In his victory speech, Erdogan acknowledged that inflation was the most urgent issue for the country, but the president noted that it would fall in line with the policy rate which stands at 8.5% and has fallen from 19.0% over the past two years. However, a main area of concern is the marked decline in the country’s foreign exchange reserves which will soon reach levels that could have a negative impact on the lire. However, it seems that the country is recovering from February’s earthquake which has reportedly cost the economy US$ 104 billion. There is no doubt that the president has tried to rewrite basic Economics – and has failed. Whilst the rest of the world has been raising interest rates to combat surging inflation, Turkey has headed in the other direction – reducing rates quicker than other nations were raising them. This policy has seen rampant inflation and the country’s foreign exchange drying up which, if it continues, may see a necessary but reluctant U-turn with belated hikes in interest rates. His current policy has limited the country’s access to sourcing international loans. The country has posted healthy growth figures of 11.4% in 2021, 5.6% last year and 3.0% in Q1 but there will be an inevitable slowdown for the rest of 2023, attributable to several factors including not only sinking foreign reserves but also a currency continuing to dive to record lows and a Q1 current account deficit of more than 6.0%.

There is no doubt that the Irish economy has benefitted greatly from the influx of major international tech and pharmaceutical companies drawn to Dublin because of its favourable taxable regime. New research indicates that just three companies accounted for 33% of all corporation tax collected in the Republic between 2017 – 2021; the Irish Fiscal Advisory Council confirmed that the three, including Apple which is reportedly the largest taxpayer in the country, contributed US$ 5.55 billion to the exchequer. In 2022, US$ 24.9 billion was collected in corporation tax collections – up over US$ 8.82 billion in the past five years. Little wonder that Ireland is oner of the few western countries with a budget surplus, but how longer this windfall will continue remains to be seen.

With a 63-36 vote for, the US Senate passed legislation lifting the government’s ceiling debt from US$ 31.4 trillion and averting a first-ever debt default. Earlier, the Treasury Department warned that it would be unable to pay all the government bills after 05 June. With this legislation, the statutory limit on federal borrowing will be suspended until 01 January  2025.

May’s US robust job creation numbers of 339k new positions continued to confuse analysts, who were expecting a much lower figure, as rising prices and marked increases in borrowing costs continue to cause concern and surprise to economists; the unemployment rate nudged 0.3% higher, on the month, to 3.7%. – its highest rate in seven months. However, inflation at 4.9% is more than double the Fed’s 2.0% target. To the casual observer, it seems that if the labour market continues to move higher, inflation will move in the same direction and rate increases are all but inevitable – with the next one maybe not this month but in July.

The overall rate of May inflation at UK grocers reached a new high of 9%, mainly attributable to raised prices of coffee, cocoa, chocolate and non-food goods. To try and alleviate the economic pain, the Sunak government is discussing the possibility of asking supermarkets to cap prices on food items to help limit the cost of basic foods such as bread and milk. But talks are likely to end in stalemate because the British Retail Consortium is opposed to “recreating 1970s-style price controls” and suggested that the authorities try to cut the red tape so resources could be “directed to keeping prices as low as possible”. The latest survey sees overall food inflation 0.3% lower, on the month, at 15.4%, whilst the pace of price rises for non-food goods grew from 0.3% in the year to 5.8% in May, with fresh produce slowing 0.6% to 17.8%. Despite supermarkets cutting milk prices by US$ 0.062 last month, they are still almost double that of pre-Covid 2020 prices. Although April inflation figures – at 8.7% – fell from double digit territory for the first time in ten months, it was still a lot less than what the market was expecting – and still more than quadruple the BoE’s 2.0% target, despite the fact that rates have been raised twelve consecutive times, now standing at 4.5%. Because of this, there is a school of thought which says that the rate may go up a further 100 bp to 5.5% by year end. There will be a lot more mortgage holders running for cover if that were to happen!

The latest Nationwide report indicated that UK May house prices edged 0.1% lower, with the average property price at US$ 326.8k – 4.0% lower than its August 2022 peak. Despite house prices being lower, the higher mortgage charges are making it more difficult for many first home buyers to get on the housing ladder. The BoE posted that the amount of mortgage debt in April was at its lowest level on record, with borrowers repaying US$ 1.74 billion more on their mortgages than banks lent out, and that net mortgage approvals for house purchases fell 5.4% to 48.7k on the month. Figures indicate that the current average interest rate on a two-year fixed-rate mortgage is now 5.49% – up from 3.25% from a year earlier. Official data sees nearly 10% of UK mortgages taken off the market last week and that the number of April transactions 25% down on the year to 82.1k. It does not take much imagination to see that mortgage rates will continue to head higher as official inflation data sees rates dipping to 8.7% – at a much slower rate than the market expected; currently at 4.5%, it will be at least 5.0% by Q4. The end result is that the UK property market is in trouble.

A report by the International Labour Organisation shows concern that soaring debt levels, compounded by high inflation and rising interest rates, have impacted on jobseekers’ hopes in developing countries. In its Monitor on the World of Work report, the ILO noted that only 8.2% of workers in high income countries willing to work are jobless, whilst this figure climbs to 21.0% in low-income countries; the figure is even higher in low-income countries in debt distress where the figure is more than 25%. The survey noted that this year, the global unemployment rate – at 5.3% or 191 million people – will be lower than pre-Covid figures. The 2023 global jobs gap, which refers to those who want to work but do not have a job, is projected to rise to 453 million people, with women 1.5 times more affected than men. The global labour situation is becoming worse, as time goes on, and it is highly unlikely that A Change Is Gonna Come!

The 3,321 real estate and properties transactions totalled US$ 3.02 billion, during the week, ending 26 May 2023. The sum of transactions was 220 plots, sold for US$ 692 million, and 2,398 apartments and villas, selling for US$ 1.59 billion. The top three transactions were all for plots of land, one in Madinat Al Mataar, sold for US$ 37 million, and the second in Business Bay for US$ 14 million, and the third in Hadaeq Sheikh Mohammed bin Rashid also for US$ 14 million. Wadi Al Safa 3 recorded the most transactions, with sixty-one sales, worth US$ 198 million, followed by forty-one sales in Al Hebiah Fifth, for US$ 14 million, and eighteen sales in Jabal Ali First, valued at US$ 19 million. The top three transfers for apartments and villas were all for villas in Al Safouh First, valued at US$ 20 million, followed by two villa sales in World Islands, for US$ 19 million and the other for US$ 17 million. The mortgaged properties for the week reached US$ 490 million, with the highest being for a plot of land in Al Thanayah Fourth mortgaged for US$ 39 million, whilst one hundred and fifty-four properties were granted between first-degree relatives worth US$ 254 million.

On Wednesday, Bugatti Residences was launched, marking the first ever global residential project by the iconic French luxury carmaker, in partnership with local developer, Binghatti. Located in Business Bay, the 43-floor tower will house 171 mansions and eleven sky mansion penthouses, with each sky mansion penthouse occupying an entire floor; prices will start at US$ 5.2 million (AED 19.09 million, with 1909 being the year that Bugatti cars first hit the market). The development will boast a Riviera-inspired beach, private pool, jacuzzi spa, fitness club, chef’s table, private valet, private members club and two garage-to-penthouse car lifts. One unique feature sees residents being able to drive into the lift and then straight to their floor as each unit will have a dedicated parking space – with the highest penthouse having twenty slots for parking. The project is slated for completion by the end of December 2026. It is reported that Dubai is the top location for branded residences globally, based on the supply of completed and pipeline schemes.

Because of very high demand, allied with a very limited supply chain, there is no doubt that Dubai’s ultra-luxury properties is set to continue to grow strongly at least until the end of 2024.  Another record-breaking deal was recorded this week when a buyer paid US$ 114 million for a penthouse in Marsa Al Arab; this equated to US$ 4,632 per sq ft. This beat the previous record set in February – US$ 112 million in Bvlgari Lighthouse, Jumeirah Bay Island. The penthouse is situated on the highest floor at the Marsa Al Arab Hotel, (which will feature 386 rooms/suites, four penthouses and eighty-three luxury hotel apartment suites, spanning an impressive 24,628 sq ft).

Khansaheb has been appointed as the main contractor, by Palma Development, for its Serenia Living project, a luxury beachfront development located on the first plot of the west crescent of Palm Jumeirah. The luxury beachfront development will consist of 226 exclusive apartments and penthouses, including one of the most exclusive Sky Mansions in Dubai valued at over US$ 54 million. Serenia Living is the developer’s second project with Khansaheb, following the successful completion of Serenia Residences The Palm in 2018. Completion date is slated for Q4 2025, with handover happening in Q1 2026.

This week, Nakheel announced the launch of Nakheel Marinas Dubai Islands, that can accommodate a total of thirteen superyachts; located on the northern coastline at Dubai Islands; the marina itself will accommodate 248 wet berths for vessels of up to 47 mt and forty dry berths for trailers of up to 20 mt. The project will feature dock assistance, club car transfer, utilities, waste collection, pump-out services and Wi-Fi, and will be in walking distance of the marina. In August 2022, the developer unveiled a master plan for Dubai Islands, the project formerly known as Deira Islands, in tandem with the Dubai 2040 Urban Master Plan. The development includes five islands spread over an area of 17 sq mt., with each island having its own offerings, with cultural centres, recreational beaches and beach clubs. The islands will be home to more than eighty resorts and hotels.

HH Sheikh Mohammed bin Rashid Al Maktoum approved the ‘Dubai Master Plan for Public Beaches‘ that aims to increase the total length of public beaches in the emirate by 400%. The new scheme, part of the Dubai 2040 Urban Master Plan, will see the opening of new beaches and the development of existing ones, with advanced facilities. The Dubai Ruler also noted that the emirate is committed to ensuring the highest standards of excellence in urban development and that the government places the utmost priority on improving the quality of life and ensuring the happiness of citizens, residents and visitors. By 2040, it is expected that the total length of Dubai’s public beaches will increase from 21 km to 105 km, and that public beaches spanning 84 km will be added to cater to the growth in the emirate’s population and the influx of tourists. Sheikh Mohammed was briefed on Phase I of the Master Plan spanning 54 km of public beaches, which includes the development of the Jebel Ali Public Beach in collaboration with Nakheel. A direct public bus route will be launched to link Jebel Ali Metro Station to the new Jebel Ali Public Beach.

According to the latest report by the World Travel and Tourism Council, the travel and tourism sector is expected to contribute US$ 49.2 billion – equating to 10% of the country’s GDP; the latest figure is now only 1.6% lower than record pre-Covid levels. The WTCC noted that “the sector is recovering at a rapid pace, proving the UAE continues to grow in popularity amongst international travellers,” and that the sector will top pre-Covid numbers this year, and that the 758k jobs will include 7k new positions; last year, the sector added 89k jobs. Over the next decade, the industry expects to contribute US$ 64.2 billion, (representing 10.2% of the country’s GDP) and employ 872k, (about 12.0% of the country’s workforce). Interestingly, last year domestic spend in this sector surged by 36% to US$ 12.8 billion, (up 19% on 2019 pre-Covid levels), whilst international visitors contributed US$ 32.0 billion to the economy – a 65.3% year-on-year growth, but still down 19.0% from 2019 levels. The DDTCM is confident that international visitor numbers will top the pre-Covid number by the end of this year.

Dubai Festivals and Retail Establishment has announced the return of its biggest shopping weekend, starting today, 26 May. The 3 Day Super Sale will see up to 90% off on brands in outlets and malls across the city, with deals on fashion, beauty, lifestyle, furniture, electronics and more. Brands include KIKO Milano, Sephora, Bath & Body Works, 1915 by Ahmed Seddiqi, Rivoli, Homes R Us, Ikea, Jashanmal, Marks & Spencer, Lacoste, Better Life, Sharaf DG, Aldo and Al Jaber Optical, among others. Participating shopping centres and destinations include Mall of the Emirates, City Centre Mirdif, City Centre Deira, City Centre Me’aisem & City Centre Al Shindagha, Dubai Festival City Mall, Dubai Festival Plaza, Nakheel Mall, Ibn Battuta, Circle Mall, Mercato, Town Centre, The Beach, Bluewaters, City Walk and The Outlet Village.

Emirates has announced that it will be offering free Wi-Fi to all passengers on its flights, as a new enhancement to the carrier’s inflight connectivity means that all its passengers in every class of travel can enjoy some form of free connectivity once they sign up to Emirates Skywards.  To date, Emirates has invested US$ 300 million to improve inflight connectivity and, with recent enhancements, an average of 450k passengers use the service. Any Skyward member – in whatever category – and in any class, can make use of free app messaging. Platinum Skywards members have complimentary internet access in all classes, whilst first class passengers will have unlimited free internet if they are Skywards members, as will Silver, Gold and Platinum Skywards members travelling in Business Class. The airline also announced that it will offer new high-speed, inflight broadband powered by Inmarsat’s GX Aviation, onboard fifty new Airbus A350 aircraft – scheduled to enter service next year.

Prior to a major international auction in New York early next month, the Dubai Diamond Exchange has hosted the unveiling of two extraordinary gemstones – Estrala de FURA and the Eternal Pink. The former will be the largest, (at 55.22 carat), ever to appear at an auction and is slated to sell for more than US$ 30 million at its Dubai Diamond Exchange (DDE). Meanwhile, the Eternal Pink, the most vivid pink diamond to come to market, is expected to sell at north of US$ 35 million. It is estimated that, last year, the country posted a 17.0% growth, on the year, in the value of diamonds traded at a combined total of US$ 37.4 billion for rough and polished diamonds. – up by 7.0% and 42.0% respectively. Not satisfied to be a leading global hub in rough and polished diamonds, the DDE is working on adding further value to the coloured gemstone industry and has recently hosted tenders with leading coloured gemstone companies. The DDE currently has over 1.2k member companies.

With corporate tax starting on 01 June 2023, the federal Ministry of Finance announced on Monday further clarifications on private pensions, social security and participation, and accountancy methods. The first covered further conditions for private regulated pension funds and social security funds in the UAE to be exempt from the tax and is in tandem with international tax practices, so that UAE private pension or social security funds exempt status is also recognised when investing internationally, and double tax treaty benefits can be obtained. The second decision of the day confirmed that International Financial Reporting Standards are the applicable accounting standards in the UAE and must be used by larger businesses that have revenues of more than US$ 13.6 million (AED 50 million). Businesses with revenue under that threshold, can apply IFRS, whilst those whose revenue fall below US$ 817k (AED 3 million) can use the cash basis for their accounts. The decision on Participation Exemption provides for Corporate Tax exemptions on dividends, profit distributions, and capital gains from a Participating Interest, which is defined as a 5% or greater ownership interest in another entity’s shares or capital, held for at least twelve months.

S&P Global Ratings expects that Dubai government’s debt burden, as part of its GDP, will decline this year, driven by a continued improvement in the local economy, despite an apparent slowdown in global economic growth. It forecasts that the emirate’s gross general government debt will fall from its cyclical high of 78% of GDP in 2020 to 51% this year – and could be even better if “the government’s debt stock could fall even faster if the reduction in nominal debt, which occurred in 2021 and to a more significant extent in 2022, continues over the coming years.” Over the past three years to March 2023, the government has repaid US$ 2.9 billion in bonds and has reduced its loan balance with Emirates NBD by 30% over that period; loans from this bank account for 44% of the government’s gross debt, with loans from Abu Dhabi and the Central Bank accounting for 30% of the total. Despite a declining government debt burden, its public sector debt is at 100% of GDP.

Yesterday, it was announced that Micky Jagtiani, the founder of the retailer Landmark Group, had passed away at the age of seventy. He set up the company fifty years ago in Bahrain and was responsible for turning it into one of the largest retail and hospitality conglomerates in the MENA and India. The Group operates more than 2.2k outlets, encompassing more than 2.7 million sq mt, across twenty-two countries and employs 50k staff. The company’s brands, include Centrepoint, Babyshop, Splash, Lifestyle, Home Centre, Shoemart and Emax, and includes a total warehouse space of more than 9.3 million sq ft. He was the third-richest businessman in the UAE and was ranked the 511th wealthiest person in the world on the latest Forbes’ 37th magazine’s annual world’s billionaires list.

Latest data from the Central Bank indicates that the assets of UAE-based Sharia-compliant banks grew 6.5%, on the year, in February to US$ 165.6 billion – and 1.7% (US$ 2.9 billion) on the month. There were also improvements in deposits, credit and total Islamic bank investments, with annual increases of 3.9% to US$ 119.9 billion, 3.0% to US$ 108.1 billion, and 20.7% to US$ 29.8 billion respectively.

This week, the UAE Central Bank has used its powers to remove the Board of an unnamed insurance company, because of regulatory violations, replacing them by a temporary committee of experts for six months. The sanction was in line with Article 41 of Federal Law No (6) of 2007 on the Regulation of Insurance Operations, with the regulator noting that “the committee will carry out business and dispositions on behalf of the company in accordance with its mandate.” Last December, it issued new guidelines for licensed financial institutions operating in the insurance sector, including discussions on money-laundering and financing of terrorism risks relevant to life insurance and other investment-related insurance products, and how insurance operators can identify, assess, manage and mitigate them.

Fitch Ratings confirmed that Islamic banking grew at a faster rate last year than conventional, driven by growing investor demand for Islamic products and deep distribution networks; whilst “other” banks grew 3.0% in 2022, Islamic banking roared in 8.0% higher. The report also noted that much of the same will happen this year, as high oil prices and solid economic conditions will continue to support UAE Islamic banks’ credit fundamentals. Another selling point is that Islamic banks have a product offering, almost on par with conventional banks, but on top of that they can offer Islamic banking to those who require Sharia-compliant products. Furthermore, Islamic banks have a higher financing/deposits ratio, at 91%, and have more of their total funding, at 86%, from customers’ deposits. Meanwhile S&P expects a similar 10% 2023 growth in the global Islamic finance industry, mainly led by GCC countries, with Moody’s adding that demand for Sharia-compliant financing is set to outpace conventional funding, driven by strong regional growth and higher energy prices.

This week witnessed the opening of ‘The House’, the new permanent hub for HBS alumni worldwide. The Harvard Business School Club of the Gulf Cooperation Council (GCC) was officially inaugurated by HE Abdullah bin Touq Al Marri, Minister of Economy. “The House” will serve as a hub for over 400k Harvard Business School alumni worldwide, including the 1.4k alumni in the region.

This week saw Majid Al Futtaim Holding raise US$ 500 million, via a green Sukuk – its fourth such issue over the past four years as one of Dubai’s biggest private sector companies, like others, continues to diversify its funding base. The ten-year Sharia-compliant issuance is part of MAF’s US$ 2 billion financing programme, in line with the UAE Net Zero by 2050 strategic initiative. The money raised will be used to refinance an old US$ 800 million bond. Its chief executive, Ahmed Ismail, noted that “the issuance of today’s green Sukuk is a testament of the global investment community’s continued confidence and robust support in our company, the sustainability   of our debt portfolio and the inherent strength of our long-term strategic focus.” One of the reasons why companies are favouring green financing is to be in a better position to meet their net-zero commitments. The company remains on track to meet its target of having a positive water and energy footprint by 2040 and eliminating single-use plastic in all its operations by 2025.

DP World announced it has completed its US$ 260 million Centerm Expansion Project in Vancouver, Canada’s global gateway to over one hundred and seventy trading economies that seeks a 60% increase throughput, and position British Columbia as a leader in sustainable trade. This latest expansion sees the terminal being able to handle 1.5 million TEUs – an increase of 66.7%. DP World Vancouver handles an impressive third of the country’s trade in goods outside of North America, equating to a value of US$ 305 billion in goods, whilst generating US$ 11.9 billion of Canada’s GDP and 115.3k jobs.

Emirates Central Cooling Systems Corporation has extended its already impressive portfolio by adding the right to operate a further five district cooling units of Dubai International Airport, following a US$ 300 million agreement. Empower confirmed the acquisition, with a total of 110k refrigeration tonnes, from Dubai Aviation City Corporation, in a notification to DFM last Friday. Its impressive portfolio includes the DIFC, DWTC, Dubai Healthcare City, Meydan City, Dubai Studio City, Dubai Maritime City, Dubai Land, Palm Jumeirah, JBR, Bluewaters Island and Business Bay. The twenty-year old company, a JV between DEWA and Emirates Power Investment of Dubai Holding, serves more than 110k corporate and individual customers in more than 1.4k buildings, with a connected capacity of about 1.4 million refrigeration tonnes and a contracted capacity of 1.5 million refrigeration tonnes; last November, it sold two billion shares (equating to 20% of its share capital), through an IPO on the DFM.

The DFM opened on Monday, 22 May 2023, 38 points (1.1%) lower the previous fortnight, shed 4 points (0.1%) to close the week on 3,541, by 26 May. Emaar Properties, US$ 0.05 higher the previous three weeks, lost US$ 0.07 to close the week on US$ 1.60. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.68, US$ 3.77, US$ 1.46, and US$ 0.39 and closed on US$ 0.67, US$ 3.72, US$ 1.41 and US$ 0.39. On 26 May, trading was at 142 million shares, with a value of US$ 96 million, compared to 89 million shares, with a value of US$ 47 million, on 19 May 2023.

By Friday, 26 May 2023, Brent, US$ 1.62 higher (2.2%) the previous week, gained US$ 1.42 (1.9%) to close on US$ 77.18.  Gold, US$ 35 (2.2%) lower the previous fortnight, shed US$ 34 (1.7%) to US$ 1,946 on 26 May 2023.

Oil prices fell yesterday on the back of increased concerns the US debt ceiling impasse and as Russia played down the chances of further Opec+ production cuts. The benchmark for 67% of the world’s oil, Brent, was trading at US$ 76.95 in late Thursday afternoon trading. The US is five days away from a potential debt default and the ramifications of this happening would see the US economy in freefall, whilst shockwaves will be felt across the world. Brent has lost about 10% of its value YTD amid demand concerns and a regional banking crisis in the US, which spooked financial markets. Last week, US stockpile fell by 12.5 million barrels, whilst total petroleum stocks dipped by 2.1 million barrels.

Bernard Arnault has probably had better Tuesdays because his LVMH shares fell by over 5.0% and his personal wealth dipped to US$ 191.6 billion on the day. With mounting concerns on the state of the weakening US economy – and the subsequent slowing demand for luxury goods –US$ 30.0 billion was erased from the market value of European luxury shares. However, the founder of LVMH, renowned for its prestigious brands such as Louis Vuitton, Moet & Chandon and Christian Dior, had witnessed his wealth surge throughout 2023 as share prices of European luxury companies soared – and prior to Tuesday’s slump, he had accrued an additional US$ 29.5 billion this year alone, as its share value jumped 23.0%. However, he still remains the richest person – still US$ 11.4 billion ahead of Tesla Inc.’s Elon Musk, the world’s second-richest person.

Two years after it lost its bid to Elon Musk’s SpaceX, NASA has awarded Jeff Bezos’ Blue Origin US$ 3.4 billion to build a spacecraft to fly astronauts to and from the moon’s surface; it beat a rival bid from defence contractor Dynetics, including Northrop Grumman Corp. The 16 mt Blue Moon lander will be built, with help from Lockheed Martin Corp, Boeing Co, software firm Draper and robotics firm Astrobotic. Blue Origin confirmed that it will be investing “well north” of the US$ 3.4 billion figure to develop the spacecraft, with NASA indicating that it selected Blue Origin’s proposal for its lower price, extra lander capabilities and a plan to execute two test landing missions on the moon in 2024 and 2025, at the company’s expense.

Last year, Virgin Orbit was worth US$ 3.7 billion when it debuted on Nasdaq New York. This week, the rocket company, founded by British billionaire Richard Branson,  permanently ceased operations, just months after a major mission failure, and having sold its assets for a paltry US$ 36 million. Rival firm Rocket Lab acquired Virgin Orbit’s headquarters rocket factory and equipment for US$ 16.1 million, aerospace firm Stratolaunch paid US$ 17 million for its converted Boeing 747, whilst space company, Launcher Inc, bought Virgin Orbit’s launch site and lease in the Mojave Desert for US$ 2.7 million. The California-based firm filed for Chapter 11 bankruptcy protection in the US in early April, just weeks after the company paused operations after running short of finances. In January, Virgin Orbit failed in its  attempt to be the first ever satellite mission launched from UK soil which ended any hope of the UK becoming a global player in space exploration, including  manufacturing satellites to building rockets and creating new spaceports.

Ireland’s Data Protection Commissioner has fined Meta a massive US$ 1.3 billion for continuing to transfer data beyond a 2020 EU court ruling that invalidated an EU-US data transfer pact. The record fine – which surpassed the US$ 820 million 2020 penalty handed out by Luxembourg on Amazon – highlighted Meta’s handling of user information; it was also given five months to stop transferring users’ data to the United States. The DPC recently noted that EU and US officials hoped that the new data protection framework – agreed by Brussels and Washington in March 2022 – may be ready by July. The Irish regulator, which has now fined Meta a total of US$ 2.8 billion for breaches under the bloc’s General Data Protection Regulations, introduced in 2018, also commented that it did not consider fining Meta in this case, but with four other EU supervising authorities disagreeing, the record fine was added after a ruling by the European Data Protection Board.

In 2020, Meta acquired animated-gif search engine Giphy in a US$ 400 million deal – now it has been forced to sell the company to Shutterstock for US$ 53 million. Last year, the UK’s Competition and Markets Authority reissued an order to sell Giphy on competition grounds, especially in the social media and advertising fields, after originally ordering the sale in November 2021. Giphy is the main supplier of animated gifs to social networks such as Snapchat, TikTok and Twitter, and part of the deal will still allow Meta platforms Facebook, Instagram and WhatsApp access to Giphy’s content. It is estimated that every day, it receives more than 1.3 billion search queries and sees various bits of its content shown a total of fifteen billion times.

Ryanair has announced its first profit, at US$ 1.55 billion – since Covid decimated air travel -driven by a marked rebound in ticket prices, (with average prices 50% higher to US$ 45), and passenger numbers – up 74% to 168.6 million. The immediate future is bullish but with a caveat that fuel prices are set to rise, reducing future margins. This summer, the carrier will operate 3k flights every day, with CEO Michael O’Leary commenting that despite the high fuel costs, he was “cautiously optimistic” that this would be covered by higher revenues, delivering a “modest year-on-year profit increase”, and that this summer, demand is “robust and peak summer 2023 fares are trending ahead of last year”. Meanwhile, EasyJet came out with a H1 loss to March of US$ 510 million, but that the business was entering the summer “with confidence”, having flown more than thirty-three million customers – up 41% compared with a year earlier; over that period average ticket prices rose 24% to US$ 76.

This week, China has announced that products made by US memory chip giant Micron Technology are a national security risk and has meant that firm’s products will be banned from key infrastructure projects in China. With tensions between the two super-powers deteriorating by the day, it seems that the row over technology crucial to economies around the world is ramping up tensions, with this latest episode being China’s first major move against a US chip maker. The Biden administration has imposed a series of measures against Beijing’s chip making industry and has invested billions of dollars to boost America’s semiconductor sector. Now the Cyberspace Administration of China has posted that “the review found that Micron’s products have serious network security risks, which pose significant security risks to China’s critical information infrastructure supply chain, affecting China’s national security.” China is a key market for Micron and generated around 10% of its full-year sales. In 2022, Micron reported total revenue of US$ 30.7 billion, of which US$ 3.3 billion came from mainland China. It also has manufacturing facilities in the country. Last week, the company said it would invest around US$3.6 billion to develop technology in Japan.

A multi-billion-dollar agreement between Apple and Broadcom will see both US companies using more locally made ,parts when developing components for 5G devices that will be designed and manufactured in the US. This is part of Apple’s strategy, launched in 2021, to invest US$ 430 billion in the local economy, and comes at a time when a tech industry trade row is blowing up between the world’s two superpowers – the US and China. The Biden government has introduced several measures against the Chinese chip-making industry, as well as well as investing billions of dollars to boost its  semiconductor sector. In recent times, it has been seen that Apple – and other tech companies – have been moving some of its supply chains from China to the likes of India and Vietnam, as well as sourcing semiconductors from a factory being built in the Arizona by Taiwanese chipmaking giant TSMC. Last year, Apple also announced plans to make the iPhone 14 in India, in an attempt to diversify manufacturing outside of China.

The Hiroshima G7 leaders’ meeting, which ended last Saturday, a new initiative to counter economic coercion was agreed, with the meeting also pledging action to ensure that actors attempting to weaponise economic dependence would fail and face consequences. Having noted “the world has encountered a disturbing rise in incidents of economic coercion that seek to exploit economic vulnerabilities,” it also affirmed the Coordination Platform on Economic Coercion initiative. In the past, certain countries have used its economic power in political disputes, with the most notable being two years ago when Australia started asking China about its human rights record and its Covid protocol. China retaliated by banning or increasing duty on several Australian products, including coal, timber lobsters, wine and barley.  The leaders also agreed to deepen cooperation on hardening supply chains and enhance cooperation in information sharing to establish new standards for next-generation technologies, including AI.

After only acquiring failed US lender First Republic Bank last month, JP Morgan Chase is cutting around 1k jobs, equating to 15% of its workforce. The Wall Street giant confirmed that the affected employees will receive pay and benefits for sixty days, along with a package which includes a lump sum payment and other benefits. Earlier in the month, the buyer confirmed that it would be paying US$ 10.6 billion to take over the troubled bank – the fourteenth biggest lender in the country – valued at US$ 20.0 billion at the beginning of April; during that month there was a run on the bank that saw customers, increasingly worried about the state of the US banking sector, and the collapse of several banks earlier in the year, withdraw more than US$ 100 billion in deposits, This bank failure, the second largest in US history, reopened for business in eight states as branches of JP Morgan Chase Bank.

Also this week, First Citizens, which bought the US unit of Silicon Valley Bank, announced five hundred job cuts, equating to 3% of the workforce. All seventeen former SVB branches opened under the First Citizens brand. Thought to be the country’s biggest family-controlled family bank, SVB’s UK operations were bought, for a nominal US$ 1, by HSBC in a deal led by the UK government and the BoE. Earlier in May, HSBC confirmed its profits had got a US$ 1.5 billion boost from the takeover!

It seems that recent remarks by Federal Reserve Chairman, Jerome Powell point to a pause in rate hikes in June, despite some officials opining the opposite view. He commented that “we’ve come a long way in policy tightening and the stance of policy is restrictive and we face uncertainty about the lagged effects of our tightening so far and about the extent of credit tightening from recent banking stresses,” and “having come this far, we can afford to look at the data and the evolving outlook to make careful assessments.” Even though the Fed has raised rates by 5.0% in a little over a year, inflation seems yet to be beaten and with prices not cooling as fast as many would hope, rate hikes should continue.

Australia is reeling from the fact that PwC has used confidential government information to help its global clients avoid tax.   It would be naïve to think that this has not occurred before either in Australia or any other country where it is common for governments to pay leading accounting firms to help establish new tax laws. It is alleged that PwC collected information from the government when the firm was advising it on developing international tax avoidance laws – to help global clients avoid tax. It does seem a little sanctimonious to see rival firm KPMG sending an email to its staff reminding its partners and staff to act “ethically and in the public interest”.  (This is the same firm that was involved in a cheating scandal where more than 1.1k staff were accused of sharing test answers from 2016-2020 in a scheme involving people “at all levels of the firm”: the tests were designed to ensure partners and staff act with integrity!)  On Wednesday, Treasury called in the federal police to investigate the leaking of confidential tax briefings by PwC and particularly its former head of international tax Peter Collins. The government is alleging that this former employee “improperly used confidential Commonwealth information”, with emails tabled in parliament by the Tax Practitioners Board highlighting “the significant extent of the unauthorised disclosure of confidential Commonwealth information and the wide range of individuals within PwC who were directly and indirectly privy to the confidential information”. There is no doubt that the PwC tax leak is a serious abuse of confidence and trust with the federal government, with an estimated fifty-three current and former PwC partners and staff having received emails revealing confidential tax information. PwC could do little else but to agree with the government’s request to “stand down” any staff who knew about Treasury tax leaks from working on any existing or future government contracts.

It is reported that PwC collects at least US$ 215 million for government consulting work carried out in Canberra and that the scandal first came to light in January. It appears that PwC did not report on the seriousness of the problem and did not advise government that the breach was broader than what was being publicly reported until 02 May. Currently, only one person, Peter Collins, is being prosecuted in this case and the only sanction could well be that PwC will only have to conduct more training for its partners and staff.

New evidence has been released about how interest rates were rigged during the 2008 GFC, and that UK and US regulators were told of a state-led drive to “rig” interest rates but covered it up. Documents suggest lenders sharply dropped their interest-rate estimates after pressure from central banks. It seems that the UK government and the BoE were involved in the manipulation of lowering interest rates but that it was part of a broader, international drive not just by the BoE but by the likes of the Banque de France, the ECB, Banca d’Italia, Banco de Espana and the Federal Reserve Bank intervening on a large scale in the setting of Libor and Euribor. The aim of the exercise was to keep rates low as this was meant to lead to investor confidence – and the higher the rate, the more doubts the market had about the viability of that bank. It seems that, in November 2010, the FBI and the UK financial regulator were made aware of these illegal developments but decided to remain mum.

Latest data sees Germany slipping into recession in Q1, not helped by persistent inflation, still hovering around the 7.2% mark, (well above the euro area’s average), and the impact of Russian gas supplies drying up. Europe’s largest economy contracted by 0.3% last quarter, and with a 0.5% fall in Q4 2022 GDP, the country goes into technical recession. Household spending was 1.2% lower last quarter, driven by higher prices and falling consumer spend, whilst industry has suffered because if the higher energy prices. What saved the country from even worse economic news were a mild European winter and the reopening of China’s economy. More of the same is on the horizon with the IMF predicting that Germany will be the weakest of the world’s advanced economies, contracting by 0.1% this year.

The IMF has again shown that it could be the world’s worst forecaster especially when it comes to the UK economy. Only last month, it expected that the economy would contract by 0.3% and has changed its tack by saying that the economy will now grow 0.4% in 2023. It indicated that growth would be helped by “resilient demand”, improved financial stability and falling energy prices, but noted that inflation “remains stubbornly high” and that higher interest rates will need to remain in place if it is to be brought down. The IMF report noted that the risks for the UK economy were “considerable”, with the biggest danger coming from “greater-than-anticipated persistence in price- and wage-setting”, which would keep inflation higher for longer, but congratulated the Sunak government for taking “decisive and responsible steps in recent months”. There was another note of caution that the outlook for growth “remains subdued”, with growth rates of 1%, 2% and 2% for the years 2024-2026, and that the BoE’s 2% inflation target will not be met for at least another two years. With global supply chain problems apparently easing, sticky inflation, and especially food price inflation, is an ongoing problem for the BoE, who eighteen months ago were doing very little to tackle the growing inflation level by saying it was only ‘transient’ and would soon go away. The vibes coming out of the UK are not good and, with a procrastinating BoE and a weak government, it seems that tough times are still ahead for the population. The people expect positive action and are growing Tired of Waiting!  

Let’s Get Together and Feel All Right – One Love

The 3,105 real estate and properties transactions totalled US$ 2.48 billion, during the week, ending 19 May 2023. The sum of transactions was 191 plots, sold for US$ 311 million, and 2,284 apartments and villas, selling for US$ 1.64 billion. The top three transactions were for plots of land, one in Island 2, sold for US$ 37 million, and the second in Business Bay for US$ 14 million, and the third in Hadaeq Sheikh Mohammed bin Rashid also for US$ 14 million. Al Hebiah Fifth recorded the most transactions, with fifty-four sales, worth US$ 50 million, followed by thirty-four sales in Madinat Hind 4, for US$ 14 million, and fourteen sales in Al Hebiah Third, valued at US$ 15 million. The top three transfers for apartments and villas were for an apartment in Island 2, valued at US$ 33 million, followed by a US$ 29 million apartment sale in Palm Jumeirah, and for a villa in World Islands for US$ 20 million. The mortgaged properties for the week reached US$ 458 million, with the highest being for a plot of land in Business Bay mortgaged for US$ 95 million, whilst seventy-seven properties were granted between first-degree relatives worth US$ 72 million.

Dubai property owners should not be too concerned when they see reports that Dubai real estate sales, in April, had fallen for the first time this year. It is true that, on the month, sales transactions fell 33%, allied with an 18.3% decrease in sales value. But this is an annual trend that occurs during the main holiday season, which is in line with Eid, which goes back every year by up to ten-twelve days. Apart from the usual factors, such as reduced work hours, Ramadan and Eid, this year saw the Christian feast of Easter fall in the same month. This resulted in fewer new properties coming to the market, followed by a drop in property sales viewings and less new sales transactions by the Dubai Land Department. The situation has returned to normalcy, as seen in early May data.

April total property transactions – at 7,615 – were 16.2% higher on the year, bringing the four months’ YTD figure to 36,946 – 43.2% higher, compared to 2022, and a record four-month total. The main driver behind this surge was the off-plan market, up 42.5% in sales, whilst the secondary market witnessed a 2.4% dip in activity. Last year, the value of property deals – at US$ 143.9 billion – reached a new high – and was up 76.5% annually, with the number of transactions rising 44.7% to 122,658.

According to CBRE’s latest report, Dubai property prices increased by an average of 14.5% annually in April – with apartment prices 14.5% higher, at US$ 342 per sq ft, and villa prices up 14.9% to US$ 404 per sq ft; on the month, apartment and villa prices rose by 1.8% and 2.0%. It is estimated that average apartment prices are sill 15.6% lower than they were in 2014, whilst villa prices are 2.7% higher; it is noted that apartment prices in several neighbourhoods have already surpassed 2014 levels. Jumeirah is still the most expensive area to buy an apartment at US$ 645 per sq ft – but this is down 3.1% on the month, and no surprise to see Palm Jumeirah heading the villa segment at US$ 1,263 per sq ft, and 4.0% higher on the month. Downtown Dubai, Palm Jumeirah, Dubai Hills Estate and The Old Town make up the five most expensive areas for apartments, while Jumeirah, Emirates Hills, District One and Jumeirah Islands are the highest for villas.

The latest Knight Frank report noted that Dubai is projected to be the leading location in the luxury global residential market sector in 2023, with an expected growth of 13.5%, driven by a resurgent local economy, the government’s positive and successful response to the impact of the pandemic, and a demand/supply imbalance in the sector that sees demand easily outstripping supply. It also noted that the city’s appeal is its relative “affordability”, with prime homes selling for around US$ 800 per sq ft, “making Dubai one of the most ‘affordable’ luxury residential markets in the world.” In Q1, the sector witnessed eighty-eight sales of luxury homes, (at US$ 10 million or above), valued at US$ 1.63 billion.  Over this period, the main markets – Palm Jumeirah, Emirates Hills and Jumeirah Bay Island – accounted for 64% of total sales, with average transaction prices nearing US$ 2.4k per sq ft.

In the rental market, average rents in 2023 have risen by 25.7% and 26.1% through to April with average rentals for apartments and villas at US$ 28.0k and US$ 84.1k. Palm Jumeirah has the highest average annual apartment rents, at US$ 71.9k, and Al Barari’s US$ 274.7k for villas. Two of the main drivers behind the surge in rents are the introduction of a new visa programme and an influx into Dubai of high-net-worth individuals. There are signs that rentals may be tapering off but still moving higher at a slower pace.

The tenants of The Pointe on Dubai’s Palm Jumeirah have been served eviction notices, with restaurants and other outlets being given a twelve-month period by Nakheel to vacate their businesses on The Pointe, as the developer wishes to redevelop the whole area.  The developer noted that “it remains committed to ensuring the smoothest transition possible for its tenants during this time.” As part of this redevelopment, The Fountain at The Pointe already closed on 15 May.

Dubai Holdings Entertainment, owner of Global Village, Ain Dubai, Coca-Cola Arena, Dubai Parks and Resorts, The Green Planet, Roxy Cinemas and others, has indicated its attention to focus on “enhancing” its existing attractions, as Dubai ramps up to welcome increased visitors as numbers slowly edge to pre-Covid levels. Last year, it closed Bollywood Parks Dubai, which had opened in 2016, but the company has a “master plan” for Dubai Parks and Resorts for the next few years. Its Chief Executive, Fernando Eiroa, has commented that all of the company’s venues were performing “much better” than pre-pandemic levels in terms of revenue, and that the company was “open” to acquisitions if there were any good opportunities. He also added that “the number of attractions we have here are second to none in terms of quality and size, so I believe that we have a lot of room for improvement.”

This week, flydubai and Air Canada signed a new partnership agreement that will give passengers flying between Canada, the ME, East Africa, Indian Subcontinent and Southern Asia more convenient travel options, which will include nine of the local carrier’s routes – including Bahrain, Colombo, Dammam, Jeddah, Karachi, Madinah and Muscat. Pending final regulatory approval, Air Canada’s marketing code will be placed on nine routes operated from Dubai by flydubai, as well via an interline arrangement, from which customers will be able to seamlessly connect in Dubai to all of flydubai destinations. Of these destinations, more than thirty are unique to flydubai and not flown by other partners of Air Canada. Both airlines are keen to improve the connection process in Dubai and hope to expand features and benefits for one another’s loyalty programme members in the near future.

It is reported that Dubai continues to lead the world when it comes to attracting Greenfield FDI projects, with capital inflows 89.5% higher on the year at US$ 12.8 billion – equating to 4.0% of the global total. Dubai’s Crown Prince, Sheikh Hamdan bin Mohammed, tweeted that “these exceptional achievements support the strategic vision outlined by the Dubai Economic Agenda D33” and raises the commitment “to further raise Dubai’s status as a leading global business and investment destination”.

Dubai has been ranked ninth globally in a Brand Finance City index, with the top three locations being London, New York and Paris. The emirate was first for future growth potential, second in strong and stable economy, and third behind only New York and London as a city of global significance. In a wide-ranging survey, respondents were asked about the general reputation and their personal consideration of each city as a place to live, work locally, work remotely, study, retire, visit, or invest in. Other regional locations were included in the survey with Abu Dhabi, Doha, Jeddah and Riyadh being placed 28^th, 65^th, 77^th and 78^th respectively.

This week, the federal Ministry of Finance posted that business owners will be subject to the new corporate tax only if their income is above the US$ 272k (AED 1 million) threshold, and also confirmed that personal income, notably from employment, investments and real estate (without licensing requirements) will not be liable for tax, being out of scope.

Eight unnamed banks, operating in the country, have been hit with sanctions for violating Central Bank regulations. It appears that they have been penalised for failing to comply with guidelines on not granting loans or credit facilities to certain beneficiaries. The decision is based on Article 137 of the Decretal Federal Law No. (14) of 2018 relating to the Central Bank & Organisation of Financial Institutions and Activities and the Central Bank notices regarding the beneficiaries of the Nationals Defaulted Debts Settlement Fund (NDDSF) facilities. The Central Bank noted that “the administrative sanctions take into account the banks’ failures to comply with the CBUAE’s instructions not to grant any loans or credit facilities to the beneficiaries of loans granted by the NDDSF, including credit cards.”

With the latest listing – a US$ 272 million (AED 1.01 billion) Islamic Treasury Sukuk – Nasdaq Dubai enhanced its position as one of the leading global centres for Sukuk listings, with a total of US$ 77.7 billion. This T-Sukuk listing was the launch of a series of issuances, by the Ministry of Finance, in collaboration with the Central Bank, in order to attract a new category of investors and support the sustainability of economic growth. It was positively received by the market, being 7.6 times oversubscribed, with the final allocation seeing US$ 136 million (AED 550 million) for both the two year and three-year tranches. Further issues will include other tranches, with various tenures of up to five years initially, followed by a ten-year Sukuk at a later date.

The DFM opened on Monday, 15 May 2023, 24 points (0.7%) lower the previous week, shed 14 points (0.4%) to close the week on 3,545, by 19 May. Emaar Properties, US$ 0.02 higher the previous fortnight, gained US$ 0.03 higher to close the week on US$ 1.67. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.68, US$ 3.81, US$ 1.47, and US$ 0.40 and closed on US$ 0.68, US$ 3.77, US$ 1.46 and US$ 0.39. On 19 May, trading was at 89 million shares, with a value of US$ 47 million, compared to 255 million shares, with a value of US$ 106 million, on 12 May 2023.

By Friday, 19 May 2023, Brent, US$ 17.36 lower (19.2%) the previous four weeks, finally gained US$ 1.62 (2.2%) to close on US$ 75.76.  Gold, US$ 9 (0.4%) lower the previous week, shed US$ 26 (1.8%) to US$ 1,980 on 19 May 2023.

Having previously rejected any allegations, former Audi boss Rupert Stadler accepted his role in committing fraud by negligence in the diesel emissions scandal. He had been on trial since 2020, after parent group Volkswagen and Audi admitted in 2015 to having used illegal software to cheat on millions of emissions tests. Earlier in May, the judge in the case indicated that Stadler would face a suspended prison sentence of up to two years, and a fine of US$ 1.2 million, if he were to confess to a charge of fraud by negligence – lesser mortals would probably have been facing prison sentences for contempt of court and also a more severe charge than ‘fraud by negligence’! He had been on trial since 2020, after parent group Volkswagen and Audi admitted in 2015 to having used illegal software to cheat on millions.

Vodafone, founded by Gerry Whent and Ernest Harrison in 1991, has announced a massive 11% cut, (over the next three years) in its current workforce of some 100k – the biggest job reduction in the company’s history. The twin aims of the strategy, as outlined buy their new CEO, Margherita Della Vale, are to simplify the telecoms group and regain its competitive edge, as it forecast a US$ 1.6 billion drop in free cash flow this year. She also noted that Germany, Vodafone’s biggest market, was underperforming, while Spain, which has suffered cut-throat competition in recent years, was under strategic review. On the news this week, Vodafone shares traded 4.5% lower – and at their lowest level since January.

Another tech giant in the throes of tightening costs has announced 55k job cuts over the next decade. BT, currently employing 130k staff and contractors, said most of the job losses would be in the UK of which some 11k will come in customer services, as staff are replaced by technologies including AI, which would account for about 10k of the total retrenchments. BT, the UK’s largest broadband and mobile provider, is currently continuing to expand its fibre network as it moves away from copper and said that once the work was completed it would need about less than 15k staff to build and maintain its networks; an additional bonus is that the maintenance of new networks would require 10k fewer people.

The Legend of Zelda: Tears of the Kingdom had become the fastest-selling Zelda game so far, having already sold ten million in just three days; this compares to its highest rated game, The Legend of Zelda: Ocarina of Time, only selling 7.4 million copies over its entire run. It seems that its record 2017 Breath of the Wild, selling thirty million units,  will soon be superseded. Tears of the Kingdom has turned over US$ 600 million gross sales to date and is this year’s biggest physical video game launch, selling twice as many physical copies as Hogwarts Legacy. However, it is still some way off Grand Theft Auto V which posted US$ US$ 1.0 billion in sales in its first three days.

Strike has taken over rival embattled troubled online estate agent Purplebricks, founded in 2012, for the token sum of GBP 1, which in its heyday was valued at US$ 1.0 billion. As part of the deal, Strike will take over its US$ 42 million in liabilities. The company’s aim was to create a lower-cost, more flexible estate agent by charging house sellers a flat rate; its customers had to pay the fee regardless of whether the property sold. After initial success, it has seen its share value slump 98% over the past five years. In February, the business had posted that it expected to lose up to US$ 25 million this year, with reports that the company is burning cash to the tune of US$ 3 million on monthly costs, including staff, hosting and marketing. Over the past twelve months, it has been reducing its payroll which now stands at around 750.

Late last week, the founder of Autonomy was finally extradited to the US to face criminal charges over the US$ 11.1 billion sale of his firm to Hewlett-Packard. Mike Lynch is accused of overinflating the value of his software firm when he sold it to HP. At the time of the 2011 sale, Autonomy was the UK’s biggest software company but, within a year of the sale, HP had written off US$ 8.8 billion in the value of Autonomy, claiming it had been duped into overpaying for the company. The man, once described as “Britain’s Bill Gates”, will stand trial on charges including fraud, which he denies, and has been ordered to pay bail of US$ 100 million.

The owner of Vice and Motherboard, Vice Media Group, has filed for Chapter 11 bankruptcy protection and could be acquired by a group of lenders for US$ 225 million – a massive fall from grace when it had been valued at US$ 5.7 billion in 2017. Its investors include Fortress Investment Group, Monroe Capital and Soros Fund Management, and the youth-focused digital publisher said it will continue to operate during the bankruptcy process, and “expects to emerge as a financially healthy and stronger company in two to three months”. The twenty-nine-year-old company, which at the time was part of vanguard of companies set to disrupt the traditional media landscape with edgy, youth-focused content spanning print, events, music, online, TV and feature films. Their portfolio includes My Journey Inside the Islamic State, in which a Vice journalist filmed alongside the terror group in Syria, basketball star Dennis Rodman and the Harlem Globetrotters on a “sports diplomacy” trip to North Korea, and a film about Ukraine’s president, Volodymyr Zelenskiy, by actor Sean Penn. Despite their best efforts, it appears that most of the sector’s advertising spend ended up in the pockets of Google, Meta and other tech giants. It is not the only disruptor in the industry to fall on bad times – BuzzFeed, recently announced the closure of its news division and the laying off of 15% of its workforce, amid serious financial challenges and a slump in advertising revenue.

Following the demise of troubled Swiss lender, Credit Suisse and its apparently enforced takeover by UBS, expects to have to pay an impairment charge of US$ 13 billion and up to US$ 4 billion in potential litigation and regulatory costs stemming from outflows. The bank also estimated that it would take a one-off gain stemming from the so-called US$ 34.8 billion “negative goodwill”, as it acquired the bank at a fraction of its book value. It has been reported that it was rushed into buying Credit Suisse, (given less than four days for due diligence), in a deal it did not want.

Another victim from the Jeffrey Epstein’s alleged sex trafficking ring, Deutsche Bank has agreed to pay US$ 75 million to settle a lawsuit claiming that it had enabled the international paedophiliac. Filed by an unnamed woman, who alleged that the banking giant continued to do business with Epstein, despite knowing that his accounts were used to facilitate the abuses, and that she herself had been trafficked by Epstein, the class action was on her behalf and other women who had allegedly been abused by the late American financier. The German bank has previously sought to have the lawsuit dismissed, and, although declining to comment on the actual settlement, did add that the bank had invested more than US$ 4.3 billion to improve its controls, training and operational processes, and grown its team dedicated to fighting financial crime.

Despite RBA governor Philip Lowe repeatedly saying that Australia is walking a “narrow path” to lower inflation without a recession, an internal September 2022 report estimated that Australia’s risk of recession over this year and next could be as high as 80%; it also indicated that more aggressive efforts to bring inflation down, through faster rate rises, would see unemployment rise more quickly. The report concluded that “if a recession does occur, it is most likely sometime over the next four quarters”. There are indicators that the RBA is unlikely to raise rates much further, as the latest Statement on Monetary Policy does not expect inflation to fall within its target until June 2025 and the unemployment rate only reaching 4.5% by then.

China reckons that, in Q1, it surpassed Japan as the world’s biggest exporter of cars, at 1.07 million vehicles – 58.0% higher than in the same period a year earlier – 11.2% higher compared to Japan’s 954k. Only last year, China beat Germany to second place on the world chart with 3.2 million vehicles to 2.6 million. China’s exports were boosted by demand for electric cars and sales to Russia. Last, year, Chinese carmakers – including Geely, Chery and Great Wall – saw their market share in Russia jump, after rivals, including Volkswagen and Toyota, quit the country following the invasion of Ukraine. China’s Q1 exports of new energy vehicles, which includes electric cars, rose, on the year, by more than 90%. Among the country’s top brands are Tesla’s China arm, SAIC – the owner of the MG brand – and BYD, which is backed by veteran US investor Warren Buffett, with Tesla’s huge newly-opened Shanghai manufacturing plant capable of producing 1.25 million vehicles.

Having already committed to making EVs in the UK, Stellantis, owner of Vauxhall, Peugeot, Citroen and Fiat is concerned that it could change its mind because of the threat of having to pay tariffs of 10% on exports to the EU due to rules on where parts are sourced from. Stellantis warned that if the cost of EV manufacturing in the UK “becomes uncompetitive and unsustainable, operations will close”. In 2021, the world’s fourth biggest car maker had pledged that the future of its Ellesmere Port and Luton plants was secure. Because it was “now unable to meet these rules of origin”, (as 55% of the value of an electric car should originate in the UK or EU to qualify for trade without tariffs), due to the recent surge in raw material and energy costs, this has become impossible. The UK government’s standard response continues to be that it was “determined” UK car making would remain competitive.

The other major problem facing UK carmakers concerns the lack of electric car battery plants in the UK, when compared with the US, China and EU which are pouring subsidies into the sector. Recently, former Nissan executive and battery start-up businessman Andy Palmer said the UK was “running out of time” to develop its own battery manufacturing industry. Whilst Whitehall fiddles it seems that the French opportunist, President Emmanuel Macron, has this week met with Tesla’s Elon Musk, to discuss the possibility of investing in a battery plant – or gigafactory – in France. The Spanish government is currently trying to woo the UK’s biggest car manufacturer, Jaguar Land Rover, into building a gigafactory in Spain. If there is no production in the UK by 2027, then there is every chance, with a tightening of regulations, UK exporters will find it impossible to sell cars overseas tariff free.

One possible bright light is that Tata Jaguar Land Rover is looking at building a multi-billion-dollar electric car battery factory in Somerset; if this were to happen, 9k jobs would be created. Any investment would be reliant on government support in the way of subsidies and incentives, because several European countries would pay such grants to entice this level of investment. The Sunak government is facing pressure from the MV sector to increase the capacity of battery production in the country, amid fears car making plants may leave the UK.

Latest data shows that global debt – at US$ 305 trillion – is US$ 45 trillion higher than its pre-Covid level and is expected to continue to head north in the future; Q1 saw a US$ 8.3 trillion hike. the Institute of International Finance said in its latest Global Debt Monitor report was concerned over leverage in the financial system as the debt balance nudges to record highs. In Q2 and Q3 2022, there were marked falls in a period of almost global monetary policy by national banks; in Q4, the global debt pile started moving higher again, as central banks started to slow the pace of rate rises because of fragile market sentiment. The latest quarterly increase was mainly attributable to government borrowing remaining high over a potential credit crunch following the recent turmoil in the US and Swiss banking sectors.

On Saturday, the three-day meeting of the G7 finance leaders ended with a warning of heightening global economic uncertainty, overshadowed by a US debt ceiling stalemate, recent US bank failures, a slowdown in China’s economy and the ongoing war in Ukraine. The G7 central bank chiefs also discussed ways to fight stubbornly high inflation. One of the main topics on the agenda related to supply chains, with host nation Japan spearheading efforts to diversify supply chains and reduce their heavy reliance on China; it was decided to set a year-end deadline for launching a new scheme to diversify global supply chains. The meeting also reiterated its condemnation of Russia’s invasion of Ukraine and pledged to strengthen monitoring of cross-border transactions between Russia and other countries. It is about time that the G7 unite, (not only in words but also by action) and agree to Let’s Get Together and Feel All Right – One Love!

More Than You Deserve!                                                                       12 May 2023

The 3,112 real estate and properties transactions totalled US$ 2.56 billion, during the week, ending 12 May 2023. The sum of transactions was 170 plots, sold for US$ 515 million, and 2,261 apartments and villas, selling for US$ 1.46 billion. The top three transactions were for plots of land, one in Al Sufouh 2, sold for US$ 82 million, and the second in Saih Suhaib 4 for US$ 40 million, and the third in Jumeirah Island 2 for US$ 35 million. Al Hebiah Fifth recorded the most transactions, with fifty-seven sales, worth US$ 38 million, followed by twenty-three sales in Madinat Hind 4, for US$ 8 million, and thirteen sales in Al Hebiah Third, valued at US$ 15 million. The top three transfers for apartments and villas were all for apartments, the first in Burj Khalifa, valued at US$ 41 million, followed by a US$ 16 million sale in Palm Jumeirah, and the third in Umm Suqeim 2 for US$ 14 million. The mortgaged properties for the week reached US$ 515 million, with the highest being for a plot of land in Al Karama, mortgaged for US$ 64 million, whilst one hundred and forty-four properties were granted between first-degree relatives worth US$ 74 million.

Nakheel has launched a seventy-one floor, 300 mt residential tower on Palm Jumeirah. Como Residences will only have seventy-six residences starting with 2–7 B/R apartments, encompassing from 10k sq ft of indoor and outdoor living space; it will also house a spacious duplex penthouse. Each floor will be occupied by only one or two homes – served by access-controlled elevators leading to individual private lobbies –  that will have their own private sandy beach, a 25m lap pool, and a rooftop infinity pool. It will also feature multiple swimming pools, padel courts, squash courts, and a gymnasium, as well as a spa and wellness centre.

Having already been delayed for several years for a variety of reasons, including from the impact of Covid, the Kleindienst Group, announced that the first phase of its ‘The Heart of Europe’ will be completed by the end of this year, when forty-eight floating “seahorse villas” will be handed over. This is part of the developer’s US$ 5 billion project, which includes palaces, with private beaches, hundreds of smaller villas and apartments, sixteen hotels, as well as floating “seahorse” villas on the six-island cluster. Located four km off the Dubai coast, completion is expected by 2026. The first property on the project, the Cote d’Azur Monaco Hotel, opened to the public at the start of the year; a further seventy properties are currently under construction.

MAG, one of the leading real estate developers in the UAE, has announced the launch of sales for residential homes at The Ritz-Carlton Residences, Dubai, Creekside, part of the Keturah Resort. The launch follows the successful sales of over 54% of units, including four penthouses at the Butterfly buildings and 16 units at the L-shaped buildings. Keturah Resort by MAG is located on Dubai Creek, facing Dubai’s wildlife sanctuary in Ras Al Khor.

The Founding Chairman of the Al Habtoor Group, Khalaf Al Habtoor, announced the launch of the world’s largest residential building – Habtoor Tower Dubai. Located on the banks of the Dubai Water Canal the 81-floor project will comprise 1,701 keys, with a built-up area of 3.517k sq ft. The Group is in the final stages of selecting the main contractor for the project and expects completion within three years, with the Chairman adding “this new project befits our country’s vision to always be at the forefront of innovation, responsible development and preserving our world for the next generations”.

It appears that Emirates has almost fully recovered from the impact of Covid as it posted a record US$ 2.9 billion profit, (following a US$ 1.1 billion loss the previous year), as revenue came in 81.0% higher, on the year, to US$ 29.3 billion. The group said it will pay the Investment Corporation of Dubai a dividend of US$ 1.23 billion for the fiscal year and will also prematurely repay US$ 817 million of debt raised during the Covid-19 pandemic. The world’s largest long-haul airline carried 43.6 million passengers – 123% higher, year on year – as it ramped up its flight schedules. Currently, the carrier is operating its full fleet of Boeing 777s and eighty-six of its 116 Airbus A380s and expects to return to its full pre-pandemic network over the next twelve months; it also saw its seat capacity jump from 58.6%, to 79.5%, with passenger yields coming in 7.0% higher. The carrier also announced a generous profit-sharing plan for employees, which works out to twenty-four weeks’ worth of salary. Nobody can argue that this was not deserved.

Dnata, its cargo and ground handling, catering and retail, and travel services businesses, tripled its annual profit to US$ 90 million, as revenue was 74.0% higher, at US$ 4.06 billion, with new investments during the year at US$ 127 million. It was inevitable that air freight was unlikely to replicate the exceptional performance post Covid, reporting a 21.0% revenue decline to US$ 4.69 billion – equating to 16.0% of the Group’s total revenue. Workforce numbers for the Group rose 20.0% to 102.4k. Chairman and chief executive, Sheikh Ahmed bin Saeed, commented that “this reflects the strength of our proven business model, our careful forward planning, the hard work of all our employees, and our solid partnerships across the aviation and travel ecosystem.”

With traffic numbers touching 95.6% of pre-Covid 2019 levels, Dubai International (DXB) posted 21.26 million passengers in Q1 – 55.8% higher, compared to the same period in 2022; last year, it had retained its title as the world’s busiest airport, for the ninth consecutive year, with 66.0 million passengers. March saw the highest monthly traffic – at 7.83 million – since January 2020’s 7.8 million. The forecast for 2023 is 83.6 million passengers, almost reaching 2019 levels. The airport is connected to 234 destinations across ninety-nine countries via eighty-nine scheduled international carriers. The top five destination countries continue to be India, Saudi Arabia, UK and Pakistan – with three million passenger traffic, 1.6 million, 1.4 million and 1.0 million respectively – and the top four cities being London, Mumbai, Jeddah and Riyadh, (890k, 645k, 641k and 604k). Whilst cargo handled dropped by 23.0% to 400k tonnes in Q1, total flight numbers headed skywards to 100.9k – 23.0% higher on the year and 1.6% up on pre-Covid 2019 returns.

Good news for the Dubai economy came via April’s S&P Global PMI, with the results indicating that, driven by impressive the travel/tourism sector, business conditions improved at one of the fastest rates since mid-2019, reaching an eight-month high in April. The index reading, at 56.4, was 0.9 higher on the month, driven by a marked increase in sales, (mainly because of new clients, lower prices/increased market activity, and new orders, as demand growth quickened. There were improvements noted in the supply chain, as average lead times on inputs shortened for the fourth straight month, along with sustained efforts by companies “to build inventories in the light of a promising demand outlook, as well as recruiting staff to support higher workloads”. The rate of job creation remained high but had slowed from March’s five year high, as companies added to their workforce in the light of higher output requirements. The rate of charge discounting was “the quickest recorded in three and a half years”, whilst the average prices paid for inputs were broadly unchanged from the previous survey period.

The UAE’s first auction of 2023 dirham denominated Sukuk, worth US$ 300 million, was oversubscribed 7.6 times, as bids worth US$ 2.26 billion were received, with the federal government continuing to diversify its funding resources and supports the growth of the Islamic economy. Two months ago, it raised the same amount from the sale of treasury bonds. Deputy Prime Minister and Minister of Finance, Sheikh Maktoum bin Mohammed, commented that the oversubscription reflected the “UAE’s prudent strategic investment policies and objectives, as the country continues to solidify its position as a global investment destination and one of the most competitive and advanced economies in the world”.

According to UAE’s Central Bank, the country’s GDP climbed 7.6% last year, attributable to significant activity across all sectors, at a time when most international markets reported a slowdown in economic growth due to increases in interest rates and geopolitical tensions. As a bonus, the country’s inflation rate was well below the 4.8% international inflation average in 2022, as was classed as one of the world’s best-performing economies. Some of the factors behind these impressive results were down to the decisions and directives of the wise leadership, as well as its undertaking of proactive measures and the reopening of the economy following the Covid-19 pandemic.

In a move to confront various cyber-attacks by vital sectors, the UAE Cybersecurity Council has appealed to everyone in the public and private sector entities to be on the lookout for cyber-attacks that may target “national digital infrastructure and assets”. In the event that any entity becomes aware of a cyber-attack, it should exercise caution and share data with the competent authorities in order to prevent possible malicious attacks. According to the government’s head of cybersecurity, Mohammed Hamad Al Kuwaiti, it prevents more than 50k cyberattacks each day.

United Properties continued along its recovery path in Q1 announcing a net profit of over US$ 3 million, (compared to a US$ 3 million deficit in 2022), with revenue 18.0% higher at US$ 33 million, driven by Dubai’s robust real estate sector and its subsidiaries returning impressive results. Over the period, as admin expenses dipped 21.0% to under US$ 5 million operating profit skyrocketed by 335% to over US$ 5 million. As at 31 March, its book value was flat at US$ 0.125 per share.

Dubai Investments has posted a 55.2% jump in Q1 2023, year on year, net profit to US$ 86 million, as total income was 34.7% higher at US$ 278 million. Although total Shareholder Equity rose 7.2% to US$ 3.59 billion, Total Assets remained flat at US$ 5.71 billion. The figures were helped by “the response to Danah Bay, our premium beachfront development in the emirate of Ras Al Khaimah, has exceeded all expectations and we are looking forward to launching the next phase”. The Dubai-listed company is bullish on its future growth because of the local economy experiencing robust growth and the current boom in the real estate sector.

Deyaar posted a mega 125.6% increase in Q1 net profit to over US$ 15 million, mainly due to the current boom in the local realty sector, with revenue up 93.0% to US$ 85 million. Over the past few months, the developer has seen successful sales of its recent launches – Regalia at Business Bay, Tria in Dubai Silicon Oasis and Mar Casa at Dubai Maritime City, whilst it has seen its revenue “growing significantly” over the past few months due to construction progress at Regalia and the “exceptional performance” of its developments such as Noor and Mesk in Dubai Production City. The Dubai-based company is majority owned by Dubai Islamic Bank and last June carried out a US$ 510 million capital restructuring programme by writing off accumulated losses from previous years. It also received a payment of US$ 54 million arising from a land dispute with master developer Limitless.

In Q1, Salik posted its highest level of quarterly revenue-generating trips and toll usage revenue in its sixteen-year history, at 113.6 million trips and US$ 124 million, respectively, with toll usage revenue, accounting for 87% of the total increasing by 7.9%; driven by a complete lifting of Covid restrictions, and the marked upturn in the local economy, the Dubai toll operator posted a net profit of US$ 75 million.

Although revenue slipped 5.1% to US$ 1.63 billion, Emaar Properties posted a 42.9% surge in Q1 net profits to US$ 871 million; by the end of March, its backlog stood at US$ 15.18 billion. EBITDA rose 25.0% to US$ 1.09.   Last week, Dubai’s largest listed developer confirmed it will open eight new hotels in the UAE, Saudi Arabia and Egypt, in H2 or in 2024. Late in 2022, Emaar increased its share capital by 8% to US$ 2.40 billion and also increased the foreign ownership limit of its shares to 100%, from 49%, to capitalise on high interest from international investors.

The company’s build-to-sell property development business, majority-owned by Emaar Properties, posted flat Q1 profit, at US$ 271 million, with its revenue stream down 33.0% to US$ 649 million, as EBITDA slipped 9.0% lower to US$ 311 million. Mainly because of business in Egypt, Emaar International, the group’s overseas arm, posted revenue of US$ 114 million revenue – equating to about 7.0% of total revenue – on the back of property sales of US$ 171 million. Emaar’s shopping mall, retail and commercial leasing operations posted a 7.0% hike in Q1 revenue of US$ 171 million. The company’s hospitality, leisure and entertainment businesses posted a 17.0% hike in year-on-year revenue, hitting US$ 241 million, attributable to the boom in Dubai’s tourism sector and high domestic spending. Its hotels in the country attained 75% occupancy rates in Q1.

In Q1, Emaar Development saw a 25.7% hike in property sales to US$ 2.34 billion and a net profit of US$ 288 million, with EBITDA at US$ 311 million. The UAE build-to-sell property development business, majority owned by Emaar Properties, has a sales backlog of US$ 12.45 billion – to be recognised as revenue in the coming years. During the quarter, it successfully launched seven projects – Elora in The Valley, Elvira in Dubai Hills Estate, Palace Residence North, Cedar and Savanna in Dubai Creek Harbour, Anya and Anya 2 in Arabian Ranches III. In Q1, the company, delivered about 1.6k residential units in prime locations such as Dubai Hills Estate, Dubai Creek Harbour, Downtown Dubai, Emaar Beachfront, Arabian Ranches, and Emaar South. To date, it has delivered 59.5k residential units, with over 28.5k currently under development in the UAE.

The DFM opened on Monday, 08 May 2023, 91 points (2.6%) higher the previous fortnight, shed 24 points (0.7%) to close the week on 3,559, by 12 May. Emaar Properties, US$ 0.01 higher the previous week, nudged US$ 0.01 higher to close the week on US$ 1.64. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.68, US$ 3.83, US$ 1.52, and US$ 0.42 and closed on US$ 0.68, US$ 3.81, US$ 1.47 and US$ 0.40. On 12 May, trading was at 255 million shares, with a value of US$ 106 million, compared to 266 million shares with a value of US$ 113 million on 05 May 2023.

By Friday, 12 May 2023, Brent, US$ 16.24 lower (17.7%) the previous three weeks, shed a further US$ 1.12 (1.5%) to close on US$ 74.14.  Gold, US$ 31 (0.2%) higher the previous fortnight, shed US$ 9 (0.4%) to US$ 2,016 on 12 May 2023.

Saudi Aramco posted an 18% fall in Q1 profit to US$ 32.0 billion, mainly down to lower crude prices in the quarter, as revenue dipped 10.6% to US$ 111.3 billion on an annual basis. Aramco’s annual capital expenditure rose 18% annually to about US$ 38 billion last year from 2021, due to continuing crude oil increments and other development projects, with 2023 capex estimated at between US$ 45.0 billion – US$ 55.0 billion. Cash flow, at US$ 39.6 billion, was nearly 4.0% higher in Q1, compared to the same period in 2022, with free cash flow remaining steady at US$ 30.9 billion. The world’s largest oil-producing company plans to pay a US$ 19.5 billion dividend in the current quarter, indicating that it plans to introduce performance-linked dividends, (based on between 50% – 70% of its annual free cash), in addition to the base dividend that it currently distributes.

Ryanair has announced a massive US$ 40 billion deal with Boeing for the purchase of three hundred new planes – half of which will be the 737-MAX-10s and the remainder to be decided later; phased deliveries will occur between 2027-2033. The updated 737 will have 21% more seats – 228 – burn 20% less fuel and will be 50% quieter. Chief executive, Michael 0’Leary is expecting the airline to grow by 80% over the next decade, with traffic numbers topping three hundred million and payroll numbers 10k higher. He also commented that “we are committed to delivering for Ryanair and helping Europe’s largest airline group achieve its goals by offering its customers the lowest fares in Europe”. The deal is still subject to shareholders’ agreement.

LinkedIn becomes the latest tech giant, following in the footsteps of Amazon, LinkedIn’s parent Microsoft, and Alphabet, to announce a culling of its payroll, with its 20k workforce being reduced by 3.5%; at the same time, it is planning to phase out its local jobs app in China, (with its only remaining app being phased out by this August), in a move to streamline its global operations.  In 2021, it mostly withdrew from China, after seven years in the country, where it had been the only major Western social-media platform operating in China; it indicated that it had been operating in a “challenging environment”.

Following the latest Reserve Bank of Australia’s report, it seems that the country’s economy is much weaker, and households are suffering much more, since its February forecast; on the flip side, it appears that inflation is declining at a faster rate than posted three months ago – this was driven by a fall in real household incomes and consumer spending. Three months ago, the central bank forecast fiscal 2023 (year ending 30 June 2023) growth at 2.2% – this has been slashed to just 1.7% – and for the calendar year ending 31 December 2023 from 1.6% to 1.2%. There is no surprise to see household spending remaining stagnant after the 3.0% slump recorded in 2022. Over this year, the RBA had estimated wage growth at 4.7% – now it has been pared back to 2.5%. With any wage growth falling well behind inflation levels, it is obvious that any consumer spending will have to come out of savings or an increase in debt, which has been for some time at one of the highest levels in the world. It is estimated that the 7.0% inflation level seen at the beginning of 2023 will decline to around 4.0% by 31 December which will still be above the RBA’s 2-3% target range. In other words, many analysts are of the opinion that the RBA prime short-term aim is to get the inflation level moving lower on a quicker timescale.  Its governor, Philip Lowe, says Australia remains on its “narrow path” to avoid a recession, at a time when living costs are the highest, they have been on record, and, having risen by between 7.1% to 9.6%, are higher than the current 7.1% rate of inflation. Food, housing and mortgage interest charges were the biggest contributors to the cost-of-living increases, with employee households recording a 78.9% increase in mortgage interest charges in the past 12 months.

The recent Ai survey only reiterated what most analysts already knew – Australian business has hit the buffers, having contracted every month since April 2022 – the same time the RBA started hiking rates. The report by the Australian business group posted that its Industry Index had fallen by 14 points to -20.1 points – an indicator of deeply contractionary conditions – with activity and sales down -18.9 points in March and exports slumping by -24.1 points. There is no doubt the Australian business is caught in a web of supply constraints and falling demand, caused by price pressures and shortages for supply chains and labour. Any further rates hikes, by the RBA, will only make matters worse, with its Governor, Philip Lowe noting that rising  “interest rates, while necessary to contain inflation, will add more pain to businesses facing a worsening economic outlook.”

A lot can happen in two years as illustrated by the current state of the US economy, which has come down from boom status, with economic growth at 5.9%, to a marked slowdown, and a probable recession on the near horizon. In H1, the economy struggled to attain 1.1% growth mainly because of the Fed finally deciding to tweak rates higher so as to hit the brakes to cool the economy. Over the past fourteen months, the central bank has raised rates by 5.0% which has brought the economy to a shuddering stop. The economy is in trouble, with big banks – including Silicon Valley Bank, Signature Bank and First Republic – failing and having to be bailed out to prevent a banking meltdown, whilst big companies, (including Amazon, Disney, Ford and Tyson Foods), that were posting record profits just two years ago, have been slashing their workforces in a bid to preserve margins, as demand declines and other costs move higher. One major casualty of the interest rate hikes is the housing sector, which accounts for 15% of the country’s GDP, which saw a 20% slump in the number of homes sold, with hundreds of mortgage bankers losing their jobs. Other sectors, such as tech, finance and crypto, that boomed in an era of low interest rates, are now struggling, and will suffer even further in a slowdown.

By early next month, and if Congress does not act to raise the US’s debt ceiling, to US$ 31.4 trillion, the consequences could be dire and that without an agreement, it could run out of money by early June. Treasury Secretary Janet Yellen, noted that the federal government might not be able to make wage, welfare and other payments and that “it’s Congress’s job to do this. If they fail to do it, we will have an economic and financial catastrophe that will be of our own making.” In April, the House of Representatives passed a bill to raise the ceiling, currently roughly equal to 120% of the country’s annual economic output but included in the bill sweeping spending cuts over the next decade, with US President Joe Biden against any conditions. This will not be the first – or last – time that negotiations have gone down to the wire which has often been the case in the seventy-eight times the debt ceiling has been raised or amended since 1960. Even with a slowdown, the IMF expects growth of 1.6% in the US this year – the fastest of the seven major advanced economies, viz., Canada, France, Germany, Italy, Japan and the UK.

Yesterday, and as widely expected, the Bank of England raised interest rates, by 25bp to 4.5%, (for the twelfth consecutive time and to their highest level in fifteen years), as it belatedly tries to stop prices rising so quickly and put a stop to surging inflation which is still hovering in double digit territory, exacerbated by food prices increasing at their fastest rates for forty-five years. The increased bank rate will impact 1.4 million on tracker and variable rate deals who will see an immediate increase in their monthly payments of some US$ 30 per month; mortgage rates started moving north in December 2021, and since then average tracker mortgage customers is paying about US$ 525 more a month, and variable rate mortgage holders about US$ 332 extra. According to the Financial Conduct Authority, an estimated 356k mortgage borrowers could face difficulties with repayments by July next year. The BoE is facing a fine balancing act, weighing up whether to move rate higher to curb inflation and dampen economic growth or cut rates with the possibility of the opposite effect.

The good news, if there is any, is that the BoE’s chief noted that the UK, helped by the fact that average energy prices are expected to drop to US$ 2.7k by the end of the year, is no longer expected to go into recession. The change in outlook for the economy contrasts sharply with the Bank’s forecast six months ago when it said the UK would enter the longest recession on record. This is the same character who said inflation would “fall sharply in April” but not as far or as fast as it previously thought. It seems to the casual observer that if the BoE were a company, the senior managers would have all been sacked for mismanagement long ago, for not keeping to their targets. In this case, the BoE’s inflation target had been 2.0% for several years and for some time hovered below that figure. In August 2021, inflation reached the magical 2.0% mark but after that, it started moving higher and by the end of that year was at 5.1%, but the bank rate was still at 0.25%! The question nobody seems to want to answer is why the BoE did nothing when it was obvious to anyone that inflation had climbed 155% to 5.1% and that increasing rates would be a formality to bring inflation down. By August 2022, inflation had nearly doubled to 9.9% but still little bank action with the rate having only moved to 1.75%. Over the next four months inflation went even higher to 10.1%, with the BoE finally taking some action – but far too little and far too late – pushing rates up to 3.50% by the end of December 2022. By March 2023, inflation was still in double digit territory whilst the interest rate had risen to 4.25%. It was some consolation to see that the BoE’s chief economist said that the UK citizens needed to accept that they are poorer, or inflation will keep rising.

The latest in the episode of claims that UK male business leaders have acted inappropriately in the presence of members of the other sex have been brought against John Allan, a former president of the now disgraced CBI, between 2018 – 2020, and chairman of Tesco for the past eight years. He has strongly denied claims in the Guardian newspaper that that he touched women’s bottoms on two separate occasions – one at last year’s Tesco AGM and the other in 2019 at a CBI event. Tesco has confirmed that it has never received any complaints and that his conduct has “never been the subject of a complaint during his tenure as chair of Tesco”. The Guardian also claims that Mr Allan commented on a CBI employee’s dress and bottom in 2021 – an incident that he said he does not recall – but admitted he had made a comment to a female CBI worker in late 2019 about a dress suiting her figure. It does seem that sordid behaviour from the past will be continued to be dug up well into the future, and that several will be caught and brought to some form of justice. Just as for the likes of Jimmy Savile, Rolf Harris, Gary Glitter and Stuart Hall, who probably thought they would be immune from any legal action, the clock is ticking, and if you get caught it is no More Than You Deserve!

Sunday Morning Coming Down!                                                         05 May 2023

The 3,050 real estate and properties transactions totalled US$ 2.83 billion, during the week, ending 05 May 2023. The sum of transactions was 189 plots, sold for US$ 325 million, and 2,239 apartments and villas, selling for US$ 1.39 billion. The top three transactions were for plots of land, one in Al Thanayah Fourth, sold for US$ 14 million, and the second in Saih Suhaib 2 for US$ 11 million, and the third in Palm Jumeirah for US$ 10 million. Al Hebiah Fifth recorded the most transactions, with sixty-three sales, worth US$ 51 million, followed by twenty-two sales in Madinat Hind 4, for US$ 8 million, and sixteen sales in Jabal Ali First, valued at US$ 16 million. The top three transfers for apartments and villas were all for apartments, the first in Al Merkadh, valued at US$ 25 million, followed by a US$ 21 million sale in Jumeirah Second, and the third in Burj Khalifa for US$ 18 million. The mortgaged properties for the week reached US$ 1.00 billion, with the highest being for a plot of land in Al Barshaa South Third, mortgaged for US$ 178 million, whilst one hundred and ten properties were granted between first-degree relatives worth US$ 135 million.

Majid Al Futtaim Properties announced that it had sold a luxury mansion at Lanai Islands, in the Tilal Al Ghaf project, for over US$ 54 million, as demand for premium property continues to surge in the emirate. Lanal Island comprises only thirteen luxury villas on a private island in a 150k sq mt recreational lagoon. South African architects Saota designed the homes, with interiors by Kelly Hoppen.

With the emirate and the country fast recovering from the impact of Covid, Azizi Developments has plans to invest US$ 16.3 billion on building fifty luxury hotels and resorts, including a seven-star hotel, in Dubai. The developer reckons that this will add 20k new keys to Dubai hotel rooms over the next five years; construction will start later in 2023. The company is keen to become a major player in Dubai’s promising future as a global hub for tourism, with the Tourism Strategy 2031 aiming to leverage PPS and seeking to attract over US$ 27.2 billion in new investment in the tourism sector. This strategy will see the tourism sector’s contribution to a GDP increase to US$ 122.6 billion by 2031. The company posted that it has one hundred ongoing projects and, last year, bought a large tract of land in Dubai South to build a mixed-use development, worth about US$ 3.27 billion, to expand its portfolio of assets.

The Ministry of Energy, as usual, adjusts fuel prices in the UAE on the first day of every month. According to the government, the UAE liberalised fuel prices, introduced in August 2015, help to rationalise consumption and encourage the use of public transport in the long run and incentivise the use of alternatives. The UAE Fuel Price Committee increased May retail petrol prices, except for diesel.:

• Super 98: US$ 0.861 – up by 5.00% on the month and up US$ 0.63 (13.74%) YTD from US$ 0.757  
• Special 95: US$ 0.790 – up by 5.19% on the month and up 14.30% YTD from US$ 0.727
• Diesel: US$ 0.793 – down 4.00% on the month and down 12.50% YTD from US$ 0.896
• E-plus 91: US$ 0.809 – up by 5.34.% on the month and up 14.58% YTD from US$ 0.706

Whilst touring this week’s ATM, HH Sheikh Mohammed bin Rashid Al Maktoum noted that tourist spending in the UAE had increased by 70% to top US$ 33.0 billion, which is the highest in the region. Dubai’s Ruler also reiterated the UAE’s 2030 target of reaching 40 million visitors and increasing the sector’s contribution to the country’s GDP to US$ 122.6 billion. He commented that “our vision is to make Dubai the preferred global destination for business and investment. We seek to build on our exceptional economic achievements to open new horizons of growth,” and stressed the importance of the tourism sector, as one of the key pillars of Dubai’s economy, and a vital driver of its growth agenda over the next decade.

According to its president, Tim Clark, Emirates will deliver a strong set of annual financial results for its fiscal year ended 31 March, when results are published later this month. He noted that “we moved quickly, and we moved first, and we have a set of results which are exceptionally good this year,” as the airline was probably the first major carrier to ramp up its operations and added capacity as demand rebounded following the pandemic. In H1, ending 30 September 2022, the world’s largest long-haul airline posted a US$ 1.09 billion profit (compared to a massive US$ 1.58 billion deficit a year earlier). The airline currently has 165 aircraft on order “and probably more coming” as it continues to grow its business over the coming years and to take advantage of the increased demand for international air traffic and growth in leisure bookings.

A sure indicator that Dubai, and its travel/tourism sector, has recovered well from the impact of Covid sees flydubai carrying 50% more passengers – 3.37 million – in Q1 than in the same period in 2022. In Q1, the carrier operated 25.8k flights and saw its fleet reach seventy-six jets – all Boeing 737s.The upcoming summer period is set to see a massive traffic growth, with the local airline ramping up capacity, by 20%, to five million, to cater for the increased demand between July and September; as it will also need additional employees, it is currently undergoing a recruitment drive. New destinations include Corfu and Cagliari, whilst summer favourites such as Bodrum, Dubrovnik, Mykonos, Santorini and Tivat will be added to the schedule; flight frequency will be added to already popular destinations such as Krabi, Milan-Bergamo, Pattaya and Pisa.

The General Civil Aviation Authority has confirmed that the number of passengers travelling through the country’s airports in Q1, increased by 56.3% on the year, to 31.87 million, indicating the success of the aviation sector in restoring pre-Covid-19 passenger traffic levels. The authority is bullish about the future, noting that the national airlines’ number of destinations reached 536, including joint destinations, and had registered 894 Organisation/Operators (professional use) and around 21.3k registered unmanned aircraft for leisure (hobby). It also noted that the aviation sector in the country contributes about 14% of the GDP, compared to only up to 3% in other global aviation sectors.

On Wednesday, the US Central Bank raised its benchmark overnight interest rate to the 5.00% – 5.25% range; this was its tenth consecutive increase since March 2022. Almost in tandem, the GCC banks followed suit with the UAE raising the Base Rate applicable to the Overnight Deposit Facility (ODF) by 25bp – from 4.90% to 5.15%, effective from Thursday, 04 May 2023. It also decided to maintain the rate applicable to borrowing short-term liquidity from the CBUAE through all standing credit facilities at 50bp above the Base Rate. The Central Bank of Saudi Arabia, the Central Bank of Bahrain and the Qatar Central Bank decided to raise interest rates by 25bp.

e& posted a Q1 consolidated profit of US$ 599 million, (with EBITDA at US$ 1.69 billion, at 48% margin), on the back of a 6.6% hike in revenue to US$ 3.54 billion. On a year-on-year basis, aggregate subscribers topped 164 million, including 13.9 million in the UAE – 6.0% higher. As one of its main aims is to become a leading global technology player, it sees expanding its digital offering and launching innovative new solutions and partnerships with leading technology companies as a means of driving growth.

TECOM Group PJSC posted a 34.0% Q1 increase in net income to US$ 69 million, as revenue climbed 6.0% to US$ 144 million, attributable to sustained occupancy levels and high retention rates. The creator of specialised business districts and communities also noted that Q1 occupancy increased by 7.0% on the year – its fifth consecutive quarter of growth – to 87.0%.   Last October it paid an interim US$ 55 million dividend, followed by a similar amount last month. Like many other entities, the company owes a lot to underlying business confidence in Dubai and the thriving business ecosystem in the emirate; it is also bullish on future prospects and sees revenue climbing on the back of increased rents and an expected expansion in occupancy levels to nearer 90%.

As it lowered its GCC region’s overall real GDP growth forecast, the Institute of International Finance commented that the upcoming new corporate income tax, that will be effective from 01 June 2023, will help boost the UAE’s non-hydrocarbon revenues over the next two years. That being the case, the fiscal break-even oil price will be US$ 65 per barrel – and this despite OPEC’s recently announced oil output cut; as from 01 May, the UAE has cut production by about 150k bpd to a daily total of 3.21 million barrels. The world body estimated that although oil will drop to an average US$ 85 and US$ 80, this year and next, non-hydrocarbon real growth in the country will remain strong at 4.8 %, as the local economy will be shielded from some of the tighter global financial conditions. The IIF estimates that inflation will be at 2.4% by the end of the year, driven by lower commodity prices and manufacturing unit value. It expects the 2023 fiscal surplus will drop from 10.7% to 6.7% of GDP; last year, revenues increased by 29%, driven by higher oil prices and a large increase in revenues from VAT, with spending 1.0% lower.

DAE Capital posted a 48.5% hike in Q1 profit to US$ 19 million, attributable to an increase in the size of its fleet, as revenue moved 5.8% higher to US$ 19 million. One of biggest plane leasing players on the global stage noted that other factors behind the improved results included “a strong operating environment for airlines, an improving collections and credit profile, and profitable divestment activity.” Following its Q4 2022 acquisition of Sky Fund l, the company’s fleet of owned, managed and committed aircraft, as well as those it has a mandate to manage, has grown to about five hundred aircraft. During the period, the company took advantage of interest rate volatility and repurchased US$ 205 million of its bonds. Because of problems with its Russian operations, DAE wrote off US$ 538 million on aircraft operating in the fleet of Russian airlines, indicating that it had “no way” to determine whether the aircraft it had leased to Russian aviation operators would be returned.

Having introduced new market procedures on Direct Deal Transactions in March, the DFM saw two major deals – valued at US$ 134 million for 525 million shares – involving Amanat Holdings PJSC. DDTs are off-market transactions executed outside the Order Book and are considered a type of block trade.

Dubai Financial Market posted a Q1 net profit of just under US$ 10 million – a 29.5% improvement compared to a year earlier – as revenue climbed 13.1% to US$ 24 million and total expenses rose 4.3% to US$ 14 million; revenue was split to just over US$ 11 million and under US$ 13 million – investment returns/other income and operating income. Over the period, trading value was 16.7% lower, at US$ 5.18 billion, whilst the DFM General Index ended the quarter 2.1% to the good, as the market cap rose 2.4% to US$ 162.4 billion. The market has proved a magnet for overseas investors, who held a 56% share of trading value in Q1, with net purchases of US$ 174 million, with ownership accounting for 19.0% of the market cap on 31 March 2023. 78% of new investors were from overseas, with the DFM having a total investor base of 1.185 million from 215 countries. During the period, DFM attracted 14.6k new investors, of which 78% were foreign investors, resulting in a total investor base of 1.18 million representing 215 nationalities.

The DFM opened on Monday, 01 May 2023, 53 points (1.5%) higher the previous week, gained a further 38 points (1.1%) to close the week on 3,583, by 05 May. Emaar Properties, US$ 0.08 lower the previous fortnight, nudged US$ 0.01 higher to close the week on US$ 1.63. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.68, US$ 3.84, US$ 1.51, and US$ 0.41 and closed on US$ 0.68, US$ 3.83, US$ 1.52 and US$ 0.42. On 05 May, trading was at 266 million shares, with a value of US$ 106 million, compared to 161 million shares with a value of US$ 113 million on 28 April.

By Friday, 05 May 2023, Brent, US$ 11.25 lower (12.3%) the previous fortnight, shed a further US$ 4.99 (5.0%) to close on US$ 75.26.  Gold, US$ 5 (0.2%) higher the previous week, gained US$ 26 (1.3%) to US$ 2,025 on 05 May 2023.

Following the Fed’s decision to raise rates again and hinting that this could be the last one in this present cycle, gold prices traded near record-high levels on Thursday, as US yields and the dollar dipped. Spot gold touched US$ 2,040 per oz, after hitting US$ 2,072, with US gold futures reaching US$ 2,050, Slightly lower increases were seen with silver, platinum and palladium rising 0.9% to US$ 25.82, 1.0% to US$ 1,060 and by 1.4% to US$ 1,411 respectively.

Despite a slide in energy prices, Shell has reported a stronger than expected Q1 profit of US$ 9.6 billion – higher than comparative figures in 2022. The energy giant announced that it would be returning US$ 4billion to shareholders, by buying back some its shares. Last year, it posted profits of US$ 39.9 billion for 2022, which was double the previous year’s total and the highest in its 115-year history, after prices spiked at the start of the war in Ukraine, touching US$ 130 a barrel but lately oil prices have dropped to around US$ 80 a barrel.

Although quarter on quarter deliveries slowed, Q1 saw Tesla reaching record highs, with 422.9k EVs hand over to customers, helped by price cuts; the numbers were 36% higher compared to a year earlier and 4% higher on the quarter. In Q1, Tesla delivered 6% more of its mainstay Model 3/Model Y vehicles on the quarter but there was a 38% slump in numbers for its higher-priced Model X/Model S vehicles slumped by 38%.

In a move that may well disrupt air travel, US authorities have confirmed that it was going ahead with its 01 July deadline for airlines to refit planes with new sensors to address possible 5G interference; the estimated cost to upgrade planes is put at US$ 638 million. The Federal Aviation Administration and aviation companies have previously raised concerns that C-Band spectrum 5G wireless could interfere with aircraft altimeters, which measure a plane’s height above the ground. Even though they have been warned that they will be unable to meet the deadline and may be forced to ground some planes, Transport Secretary Pete Buttigieg has confirmed that the 01 July deadline would remain in place and advised them to work aggressively to retrofit their planes before the deadline. Telecom firms, including Verizon and AT&T, agreed last year to delay the rollout of 5G technology until 01 July 2023 to allow airlines time to retrofit their altimeters. IATA has also indicated that the decision not to extend the deadline makes summer disruptions more likely. The UK’s Civil Aviation Authority noted that “there have been no confirmed instances where 5G interference has resulted in aircraft system malfunction or unexpected behaviour”.

Still being hampered by ongoing supply chain issues, resulting in declines in deliveries, Airbus posted a 63.9% slump in Q1 profit to US$ 516 million, on the year. The European plane maker saw its revenue dip 2.0% to US$ 13.1 billion, as it delivered one hundred and twenty-seven planes – 106 A320s, ten A220s, six A330s and five A350s. It will have to ramp up production if it wants to meet its 2023 delivery target of seven hundred and twenty. The company, which is still the world’s biggest plane maker, posted a 38.0% decline in gross commercial orders at 156, with a 7.0k order backlog. In January, it posted that it planned to hire 13k new workers.

In India, budget airline Go First, owned by conglomerate Wadia Group, has filed for bankruptcy and cancelled all of its flights for the next three days after filing for bankruptcy protection but confirmed that “a full refund will be issued” to all affected passengers. It appears that the carrier is blaming its US engine maker, as it “had to take this step due to the ever-increasing number of failing engines supplied by Pratt & Whitney,” which in turn has led to a major cash flow problem. Go First said that the problem forced it to ground twenty-five aircraft – about half of its fleet of Airbus A320neo planes – which caused about US$ 1.3 billion in lost revenue and expenses, and that the US supplier had not followed an order by an emergency arbitrator, which included supplying “at least ten serviceable spare leased engines by 27 April 2023. (Industry experts have indicated that Go First is not the only local airline affected by engine and aircraft supply chain issues, noting that over a hundred commercial aircraft are grounded in India, including sixty planes of Go First and rival Indigo that are grounded due to a lack of spare parts.

After fifteen years at the helm of Qantas, Ireland’s Alan Joyce is to step down as CEO to be replaced by the carrier’s current CFO, Vanessa Hudson, who has been with the airline since 1994. It would be no exaggeration to say that Joyce had some turbulent periods during his time at the top including record oil prices, the GGFC, record losses following Covid, a 2021 court ruling that Qantas had acted illegally outsourced 1.7k ground staff sever consumer criticism last year over cancelled flights, lost luggage and many delays. The new incumbent has promised to work “very hard” to restore the Aussie carrier to its former glory.

International Consolidated Airlines Group, the parent company of several airlines, including BA, Aer Lingus, Iberia, Level and Vueling, posted its first-ever quarterly profit, since the onset of the pandemic; in Q1, it posted a US$ 10 million profit, as revenue leapfrogged over 71%, on the year, to US$ 5.2 billion. Although fuel prices spiked 35% in the quarter, fares were only 10% higher. With its portfolio of carriers, IAG has also recovered capacity to almost pre-Covid levels.

Despite an obvious industry slowdown, Apple beat Wall Street estimates, posting a marginal 2.5% dip in US$ 94.8 billion, which included a 1.5% rise in Apple’s iPhone revenue despite estimates that the industry experienced a 13.0% slump in Q1 global smartphone shipments; it is reported that the broader consumer electronics industry is struggling, as sales of smartphones, tablets and PCs have declined, attributable to consumers and businesses starting to cut costs as they tighten spending in an era of  rising interest rates and  economic turbulence. Apple now has 975 million subscribers on its platform, which includes both Apple services and third-party apps, 4.3% higher on the quarter and 18.2% higher on the year.

The same week that Arm became the latest UK tech firm to decide to list in New York rather than in London, the Financial Conduct Authority has announced plans to shake up its rules in a bid to attract more companies to list their shares locally by simplifying regulations and making the UK “more competitive” with stock markets abroad. The FCA’s proposals include replacing two listing categories with one single one and removing the requirement for shareholders to have a vote on transactions such as acquisitions. The plans would also allow founders to hold onto controlling shares for longer. The FCA said it wanted to make the rules that companies must follow to be allowed to list their shares in the UK, “more effective, easier to understand and more competitive”. What is certain is that although London remains Europe’s biggest financial hub, listings have dropped by over 40% over the past fifteen years. Many critics opine that the New York stock exchange is “much deeper” than London’s while Brexit had harmed the UK’s image as a place to do business.

Following the government-enforced Credit Suisse merger with larger rival UBS amid fears it could collapse, it was reported that bonds, valued at US$ 17.0 billion, became worthless. This week, it seems that Asian investors have joined a series of landmark international lawsuits being filed against the Swiss government. The bank had issued several types of bonds, including AT1 bonds, also known as contingent convertibles, to raise finance. Such paper normally carries high yields but as every Economics 101 student knows, the higher the return, the greater the risk and AT1 bonds were no exception when they were written down to zero, having been wiped out in a so-called “Viability Event”.  At the time, Finma, the Swiss regulator, confirmed that “the contractual conditions” for a write down were met. However, it seems that thousands of investors are arguing about how the terms of the merger were conducted, and that bondholders are, if possible, supposed to be compensated first, after which come shareholders. In this case, it seems that shareholders were allowed to exchange their Credit Suisse shares for UBS shares, before the bondholders; although the shareholders received almost nothing, they did receive a pay-out whereas the bondholders were left with zero. Episodes like this have seen the reputation of Swiss banks in tatters.

Morgan Stanley is planning a further redundancy package involving 3k jobs, (equating to 5.0% of staff excluding financial advisers and personnel supporting them within the wealth management division). This comes just months after the bank trimmed 2% of its payroll, currently standing at 82k.The bank is battening down its hatches to cut expenses ahead of a probable recession, which would impact both its top and bottom lines. Last month, chief executive, James Gorman, noted that underwriting and merger activity had been subdued and a rebound before H2 or even 2024 was not expected. Driven by a combination of a 22% slump in its equity-underwriting business, a marked slowing in deal making and a 32% fall in merger advisory, Morgan Stanley’s profit fell from a year earlier.

Banks and energy companies are seen to be making rude profits at a time when most companies, (and individuals), are struggling with double digit inflation and rising mortgage rates. HSBC more than tripled its Q1 profit, on the year, to US$ 12.9 billion. The profit figure was boosted by a US$ 2.1 billion reversal of an impairment, relating to the planned sale of HSBC’s retail banking operations in France, net interest income increasing by 38% to nearly US$ 9 billion, and a provisional gain of US$ 1.5 billion on the acquisition of Silicon Valley Bank UK in March, after the collapse of the parent’s lender in the US. Revenue increased by 64% to US$ 20.2 billion, driven by higher net interest income in all of HSBC’s businesses because of interest rate rises. There were significant improvements in both customer lending – US$ 40.0 billion higher in Q1 – and customer accounts by US$ 34 billion. A first interim dividend of US$ 0.10 per share was approved, as were plans to carry out up to a US$ 2 billion share buyback. The bank’s share price was up 4.0% on the day and 13.0% YTD.

As investors continue to be concerned about the state of the global economy, the current banking crisis, and the collapse of First Republic, shares in several US regional banks have dropped sharply. This was the third banking collapse in the country since March. The banking sector has also had to adjust from a period of zero rates to almost 5.0%, in just over a year, that is having a major impact on the US economy, which could damage banks, as both spending and confidence for businesses and households head south. The rise in interest rates could also damage some banks more than others, as higher rates hurt the market value of some debts, issued when borrowing costs were lower. There is no doubt that the US banking system – which has more than 4k banks – could be heading for a turbulent six months, with several facing bankruptcy and others being taken over in a wave of consolidations in the industry, as the economy weakens.

The US is in the midst of a banking crisis of confidence as Investors appear to be moving their funds from the country’s smaller banks to larger financial institutions and jumping ship following the most serious string of banking failures to hit the US since the 2008 GFC.  The Silicon Valley Bank failure in March was the catalyst that resulted in shares in regional banks being battered, with the likes of California-based PacWest plunging 50%, while Western Alliance also tumbled nearly 40%. The next two banks to collapse were Signature Bank, followed a few days later by First Republic this week. These failures were the biggest in US history, except for the 2008 collapse of Washington Mutual. The US Treasury Department continues to steady the ship, confirming it was monitoring developments “closely”.

With certain financial institutions and investors making obscene amounts of money on the back of “falling” financial institutions, there is no surprise to find out that US authorities are now looking into whether big investment firms are targeting, or attacking, otherwise healthy banks to make a profit. There is no doubt that there has to be “market manipulation” behind recent volatility in banking shares, and it cannot be a coincidence that a wave of “short selling” is a prime reason in a mega slump in the share price of several US banks. Belatedly, the White House says it is closely monitoring the situation and has reiterated its intention to monitor “short-selling pressures on healthy banks”. Consumer Bankers Association president and chief executive, Lindsey Johnson, has urged policymakers to call out “unethical behaviour by activist investors” who were taking advantage of market volatility.

Despite all the turbulence in its banking sector, and the ongoing impact of rising interest rates, there was continued robust job creation in the US last month. The unemployment rate dipped to a multi-decade low, at 3.4%, with a further 253k jobs added in April. In today’s report, the Labour Department noted that hiring had been weaker, than previously estimated in the previous two months, but undoubtedly the labour market has stood up well in an environment where benchmark rates have risen from zero to over 5.0% in just over a twelve-month period, as wages came in 4.4% higher. Although the Fed’s head, Jerome Powell, has commented that the US could avoid a downturn, that would throw millions of people out of work., the majority of analysts see the country falling into recession by the end of this year.

At a White House meeting this week, tech bosses, including Google’s Sundar Pichai, Microsoft’s Satya Nadella, and OpenAI’s Sam Altmann were told they had a “moral” duty to safeguard society, and that they have to control the possible damaging impacts from Artificial Intelligence. Over the past few months, there have been many industry leaders who have been calling for improved regulation, whilst earlier in the week, the “godfather” of AI, Geoffrey Hinton, quit his job at Google highlighting his regret of his work, and noting that some of the dangers of AI chatbots were “quite scary”. Earlier in the year, a letter signed by Elon Musk and Apple founder Steve Wozniak, called for a pause to the rollout of the technology. US Vice President Kamala Harris said the new technology could pose a risk to safety, privacy and civil rights, although it also had the potential to improve lives, but that the private sector had “an ethical, moral, and legal responsibility to ensure the safety and security of their products”. There are others, like Bill Gates, who have hit back against calls for an AI “pause” saying such a move would not “solve the challenges” ahead, with some against over-regulation, that could see China take advantage and move well ahead in this field.

During its five-day national May Day holidays, China’s Ministry of Tourism confirmed that tourists made 274 million trips within the country, as its domestic tourism rebounded with latest figures over 20% higher than recorded 2019 pre-Covid figures. Official figures also show that tourists spent US$ 21 billion during the period – also higher than pre-Covid figures. Interestingly, an average of 1.2m Chinese people travelled abroad each day, which was twice last year’s figure, but airline bookings by Chinese tourists travelling abroad were still around half what they were before the pandemic.

According to Eurostat figures, 75% of the EU’s 20–64-year-old are in employment – equating to 193.5 million, the highest number since records started in 2009. Because of Covid, the percentage had dropped to 72% in 2020, with a 2% rebound a year later. Of that total, eleven nations had rates over 78%, including the leading three – Netherlands, Sweden and Estonia, 83%, 82% and 82%. The lowest rates were seen in Italy (65%), Greece (66%), and Romania (69%). Over-qualification, (the percentage of employed with a tertiary education working in a situation that does not require such a high level), seems to be an ongoing problem, with rates of 23% for women and 21% for men. By country, the five lowest returns were seen in Luxembourg (7%), Sweden, Denmark, Hungary, and Czechia (each 14%); at the other end of the scale were Spain (36%), followed by Greece and Cyprus (each 32%).

 In line with most leading global banks, and with the aim of getting on top of rampant inflation, the ECB raised its key interest rate by 0.25% to 3.25%; the twenty-country bloc has seen rates raise by 375bp since July 2022. The ECB, probably the last central bank to start raising rates, commented that “the inflation outlook continues to be too high for too long,” One of the main factors considered by the bank was data indicating the biggest drop in loan demand in over a decade, and a possible sign that previous rate rises have impacted and that policies are indeed restricting growth – nevertheless, consumer prices rose last month, after five consecutive months of decline, nudged 10bp higher to 7.0%.

Meanwhile, preliminary flash figures indicate that, in Q1, the seasonally adjusted GDP increased by 0.1% in the euro area and by 0.3% in the EU, compared to Q4, when GDP had remained stable in the euro area and had decreased by 0.1% in the EU; a year earlier, the seasonally adjusted GDP had jumped 1.3% in both the euro area and the EU. The four nations, with the highest quarter on quarter increase in Q1, were Portugal (1.6%), followed by Spain, Italy and Latvia, all with 0.5% rises. Declines were recorded in Ireland (-2.7%) and Austria (-0.3%) but on a year-to-year basis only Germany posted negative growth at minus 0.1%.

Latest March figures from Rightmove indicate that average monthly London rents now top (US$ 3.12k), and outside the capital US$ 1.37k, mainly attributable to a dearth of property available. Interestingly, the number of rental properties available is 8% higher on the year but still almost half the pre-Covid figure, not helped by no significant influx of new properties becoming available to rent. It also noted that the asking rental price for new tenants, outside London, has risen again for the thirteenth consecutive quarter.

A surprise saw UK April house prices up by 0.5% in April, (to US$ 325k), after seven consecutive months of falls, according to the Nationwide Building Society – when analysts were forecasting an eighth decline. Prices are still 2.7% lower than a year ago, with mortgage rates double the figure compared to April 2022. Nationwide is predicting a “modest recovery” in the housing market, with any improvement being “fairly pedestrian”, as mortgage rates start to come down.

The British Retail Consortium is more confident than most to forecast that the cost of wholesale food prices will start to fall after new data shows that the April cost of wholesale food prices were 15.7% higher on the year, with NielsenIQ shop price index, showing that fresh food prices had accelerated to 17.8%. With both labour costs and energy prices moving higher, it seems unlikely that widespread price falls will be slow to filter down to the supermarket shoppers. While overall food prices continued to rise in April, inflation, which is the rate at which prices rise, both food and non-food, fell marginally to 8.8% last month. However, it must be noted that the World Bank has come out, saying it expects them to drop 8% by the end of this year, and that the BRC has indicated there is a three- to nine-month lag to see a decrease in wholesale prices reflected in-store.

Banks have also warned of a large increase in fraud last year, with the focus originating online, which Barclays saying that it accounts for 77% of total scams are now happening on social media, online marketplaces and dating apps. TSB has seen a large increase in cases of impersonation, (tripling on Facebook), investment and purchase fraud – doubling on the same platform. The depth of the problem is echoed by the likes of Meta noting that fraud is “an industry-wide issue”, a spokesman of Lloyds Banking commenting that banks are facing an “epidemic of scams” and NatWest noting that three million people in the UK were victims of fraud in 2022. Whilst acknowledging the problem is getting worse, some banks appear to be putting increased pressure on the various platforms to clean up their platform to protect consumers, with Paul Davis, TSB’s director of fraud prevention, saying “it’s high time that social media and telephone companies took financial liability for the rising levels of fraud taking place on their platforms.”

Staggering figures in the UK – which could well be replicated in other countries – sees fraud becoming the most common crime in the country, with one in fifteen people falling victim. The government is taking action and is set to ban calls selling financial products as part of a national crackdown on scams; it is hoped that such action could stop fraudsters selling sham insurance products or cryptocurrency schemes. According to media watchdog, Ofcom, forty-one million people were targeted by suspicious calls and texts in 2022. It will also establish a new five hundred-staff fraud squad to control and monitor fraudulent activity, with data showing that most fraud now has an online element. The government is hoping that “anyone who receives a call trying to sell them products such as cryptocurrency schemes or insurance will know it’s a scam”. Furthermore, the government said:

• so-called “Sim Farms”, where people use a large number of Sim cards to send text messages in bulk, will be banned
• intelligence services and police will work with overseas partners to shut down call centres engaged in fraud
• advertising campaigns will warn people about the risk of scam calls
• there will be new measures to tackle phone number “spoofing”, where scammers alter Caller ID information to make calls look genuine.

The Centre for Retail Research estimates that this weekend’s coronation celebrations could add more than US$ 1.75 billion to the UK economy, with more than US$ 265 million being spent on food and drink, and US$ 310 million on Coronation coins, tokens and medallions, celebratory teapots, mugs, cups and other crockery. Furthermore, extended pub opening hours are expected to add a further US$ 130 million to the hospitality sector.  Additional foreign tourists could bring in as much as US$ 405 million, with much of it spent on accommodation, restaurants and shopping in London. Supermarkets are cashing in, with Tesco forecasting that they will sell 675k pork pies, 600k scones and 300k pots of clotted cream, with Aldi selling quiches, the King’s chosen Coronation dish, at the rate of more than thirty every minute and reporting expected scone sales to be 150% higher. On the alcohol side, Tesco anticipate sales of 180k bottles of Pimms and Asda beer sales are expected to be 25% higher. Even if the Coronation were to add a little to the GDP, it would be short-sighted to think that Saturday will change the economy. Sunday will not only see many hang-overs but also the economy returning to its current normalcy – high inflation, on-going strikes, a weak government and high mortgage rates. Sunday Morning Coming Down!

Sunday Morning Coming Down!                                                         05 May 2023

The 3,050 real estate and properties transactions totalled US$ 2.83 billion, during the week, ending 05 May 2023. The sum of transactions was 189 plots, sold for US$ 325 million, and 2,239 apartments and villas, selling for US$ 1.39 billion. The top three transactions were for plots of land, one in Al Thanayah Fourth, sold for US$ 14 million, and the second in Saih Suhaib 2 for US$ 11 million, and the third in Palm Jumeirah for US$ 10 million. Al Hebiah Fifth recorded the most transactions, with sixty-three sales, worth US$ 51 million, followed by twenty-two sales in Madinat Hind 4, for US$ 8 million, and sixteen sales in Jabal Ali First, valued at US$ 16 million. The top three transfers for apartments and villas were all for apartments, the first in Al Merkadh, valued at US$ 25 million, followed by a US$ 21 million sale in Jumeirah Second, and the third in Burj Khalifa for US$ 18 million. The mortgaged properties for the week reached US$ 1.00 billion, with the highest being for a plot of land in Al Barshaa South Third, mortgaged for US$ 178 million, whilst one hundred and ten properties were granted between first-degree relatives worth US$ 135 million.

Majid Al Futtaim Properties announced that it had sold a luxury mansion at Lanai Islands, in the Tilal Al Ghaf project, for over US$ 54 million, as demand for premium property continues to surge in the emirate. Lanal Island comprises only thirteen luxury villas on a private island in a 150k sq mt recreational lagoon. South African architects Saota designed the homes, with interiors by Kelly Hoppen.

With the emirate and the country fast recovering from the impact of Covid, Azizi Developments has plans to invest US$ 16.3 billion on building fifty luxury hotels and resorts, including a seven-star hotel, in Dubai. The developer reckons that this will add 20k new keys to Dubai hotel rooms over the next five years; construction will start later in 2023. The company is keen to become a major player in Dubai’s promising future as a global hub for tourism, with the Tourism Strategy 2031 aiming to leverage PPS and seeking to attract over US$ 27.2 billion in new investment in the tourism sector. This strategy will see the tourism sector’s contribution to a GDP increase to US$ 122.6 billion by 2031. The company posted that it has one hundred ongoing projects and, last year, bought a large tract of land in Dubai South to build a mixed-use development, worth about US$ 3.27 billion, to expand its portfolio of assets.

The Ministry of Energy, as usual, adjusts fuel prices in the UAE on the first day of every month. According to the government, the UAE liberalised fuel prices, introduced in August 2015, help to rationalise consumption and encourage the use of public transport in the long run and incentivise the use of alternatives. The UAE Fuel Price Committee increased May retail petrol prices, except for diesel.:

• Super 98: US$ 0.861 – up by 5.00% on the month and up US$ 0.63 (13.74%) YTD from US$ 0.757  
• Special 95: US$ 0.790 – up by 5.19% on the month and up 14.30% YTD from US$ 0.727
• Diesel: US$ 0.793 – down 4.00% on the month and down 12.50% YTD from US$ 0.896
• E-plus 91: US$ 0.809 – up by 5.34.% on the month and up 14.58% YTD from US$ 0.706

Whilst touring this week’s ATM, HH Sheikh Mohammed bin Rashid Al Maktoum noted that tourist spending in the UAE had increased by 70% to top US$ 33.0 billion, which is the highest in the region. Dubai’s Ruler also reiterated the UAE’s 2030 target of reaching 40 million visitors and increasing the sector’s contribution to the country’s GDP to US$ 122.6 billion. He commented that “our vision is to make Dubai the preferred global destination for business and investment. We seek to build on our exceptional economic achievements to open new horizons of growth,” and stressed the importance of the tourism sector, as one of the key pillars of Dubai’s economy, and a vital driver of its growth agenda over the next decade.

According to its president, Tim Clark, Emirates will deliver a strong set of annual financial results for its fiscal year ended 31 March, when results are published later this month. He noted that “we moved quickly, and we moved first, and we have a set of results which are exceptionally good this year,” as the airline was probably the first major carrier to ramp up its operations and added capacity as demand rebounded following the pandemic. In H1, ending 30 September 2022, the world’s largest long-haul airline posted a US$ 1.09 billion profit (compared to a massive US$ 1.58 billion deficit a year earlier). The airline currently has 165 aircraft on order “and probably more coming” as it continues to grow its business over the coming years and to take advantage of the increased demand for international air traffic and growth in leisure bookings.

A sure indicator that Dubai, and its travel/tourism sector, has recovered well from the impact of Covid sees flydubai carrying 50% more passengers – 3.37 million – in Q1 than in the same period in 2022. In Q1, the carrier operated 25.8k flights and saw its fleet reach seventy-six jets – all Boeing 737s.The upcoming summer period is set to see a massive traffic growth, with the local airline ramping up capacity, by 20%, to five million, to cater for the increased demand between July and September; as it will also need additional employees, it is currently undergoing a recruitment drive. New destinations include Corfu and Cagliari, whilst summer favourites such as Bodrum, Dubrovnik, Mykonos, Santorini and Tivat will be added to the schedule; flight frequency will be added to already popular destinations such as Krabi, Milan-Bergamo, Pattaya and Pisa.

The General Civil Aviation Authority has confirmed that the number of passengers travelling through the country’s airports in Q1, increased by 56.3% on the year, to 31.87 million, indicating the success of the aviation sector in restoring pre-Covid-19 passenger traffic levels. The authority is bullish about the future, noting that the national airlines’ number of destinations reached 536, including joint destinations, and had registered 894 Organisation/Operators (professional use) and around 21.3k registered unmanned aircraft for leisure (hobby). It also noted that the aviation sector in the country contributes about 14% of the GDP, compared to only up to 3% in other global aviation sectors.

On Wednesday, the US Central Bank raised its benchmark overnight interest rate to the 5.00% – 5.25% range; this was its tenth consecutive increase since March 2022. Almost in tandem, the GCC banks followed suit with the UAE raising the Base Rate applicable to the Overnight Deposit Facility (ODF) by 25bp – from 4.90% to 5.15%, effective from Thursday, 04 May 2023. It also decided to maintain the rate applicable to borrowing short-term liquidity from the CBUAE through all standing credit facilities at 50bp above the Base Rate. The Central Bank of Saudi Arabia, the Central Bank of Bahrain and the Qatar Central Bank decided to raise interest rates by 25bp.

e& posted a Q1 consolidated profit of US$ 599 million, (with EBITDA at US$ 1.69 billion, at 48% margin), on the back of a 6.6% hike in revenue to US$ 3.54 billion. On a year-on-year basis, aggregate subscribers topped 164 million, including 13.9 million in the UAE – 6.0% higher. As one of its main aims is to become a leading global technology player, it sees expanding its digital offering and launching innovative new solutions and partnerships with leading technology companies as a means of driving growth.

TECOM Group PJSC posted a 34.0% Q1 increase in net income to US$ 69 million, as revenue climbed 6.0% to US$ 144 million, attributable to sustained occupancy levels and high retention rates. The creator of specialised business districts and communities also noted that Q1 occupancy increased by 7.0% on the year – its fifth consecutive quarter of growth – to 87.0%.   Last October it paid an interim US$ 55 million dividend, followed by a similar amount last month. Like many other entities, the company owes a lot to underlying business confidence in Dubai and the thriving business ecosystem in the emirate; it is also bullish on future prospects and sees revenue climbing on the back of increased rents and an expected expansion in occupancy levels to nearer 90%.

As it lowered its GCC region’s overall real GDP growth forecast, the Institute of International Finance commented that the upcoming new corporate income tax, that will be effective from 01 June 2023, will help boost the UAE’s non-hydrocarbon revenues over the next two years. That being the case, the fiscal break-even oil price will be US$ 65 per barrel – and this despite OPEC’s recently announced oil output cut; as from 01 May, the UAE has cut production by about 150k bpd to a daily total of 3.21 million barrels. The world body estimated that although oil will drop to an average US$ 85 and US$ 80, this year and next, non-hydrocarbon real growth in the country will remain strong at 4.8 %, as the local economy will be shielded from some of the tighter global financial conditions. The IIF estimates that inflation will be at 2.4% by the end of the year, driven by lower commodity prices and manufacturing unit value. It expects the 2023 fiscal surplus will drop from 10.7% to 6.7% of GDP; last year, revenues increased by 29%, driven by higher oil prices and a large increase in revenues from VAT, with spending 1.0% lower.

DAE Capital posted a 48.5% hike in Q1 profit to US$ 19 million, attributable to an increase in the size of its fleet, as revenue moved 5.8% higher to US$ 19 million. One of biggest plane leasing players on the global stage noted that other factors behind the improved results included “a strong operating environment for airlines, an improving collections and credit profile, and profitable divestment activity.” Following its Q4 2022 acquisition of Sky Fund l, the company’s fleet of owned, managed and committed aircraft, as well as those it has a mandate to manage, has grown to about five hundred aircraft. During the period, the company took advantage of interest rate volatility and repurchased US$ 205 million of its bonds. Because of problems with its Russian operations, DAE wrote off US$ 538 million on aircraft operating in the fleet of Russian airlines, indicating that it had “no way” to determine whether the aircraft it had leased to Russian aviation operators would be returned.

Having introduced new market procedures on Direct Deal Transactions in March, the DFM saw two major deals – valued at US$ 134 million for 525 million shares – involving Amanat Holdings PJSC. DDTs are off-market transactions executed outside the Order Book and are considered a type of block trade.

Dubai Financial Market posted a Q1 net profit of just under US$ 10 million – a 29.5% improvement compared to a year earlier – as revenue climbed 13.1% to US$ 24 million and total expenses rose 4.3% to US$ 14 million; revenue was split to just over US$ 11 million and under US$ 13 million – investment returns/other income and operating income. Over the period, trading value was 16.7% lower, at US$ 5.18 billion, whilst the DFM General Index ended the quarter 2.1% to the good, as the market cap rose 2.4% to US$ 162.4 billion. The market has proved a magnet for overseas investors, who held a 56% share of trading value in Q1, with net purchases of US$ 174 million, with ownership accounting for 19.0% of the market cap on 31 March 2023. 78% of new investors were from overseas, with the DFM having a total investor base of 1.185 million from 215 countries. During the period, DFM attracted 14.6k new investors, of which 78% were foreign investors, resulting in a total investor base of 1.18 million representing 215 nationalities.

The DFM opened on Monday, 01 May 2023, 53 points (1.5%) higher the previous week, gained a further 38 points (1.1%) to close the week on 3,583, by 05 May. Emaar Properties, US$ 0.08 lower the previous fortnight, nudged US$ 0.01 higher to close the week on US$ 1.63. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.68, US$ 3.84, US$ 1.51, and US$ 0.41 and closed on US$ 0.68, US$ 3.83, US$ 1.52 and US$ 0.42. On 05 May, trading was at 266 million shares, with a value of US$ 106 million, compared to 161 million shares with a value of US$ 113 million on 28 April.

By Friday, 05 May 2023, Brent, US$ 11.25 lower (12.3%) the previous fortnight, shed a further US$ 4.99 (5.0%) to close on US$ 75.26.  Gold, US$ 5 (0.2%) higher the previous week, gained US$ 26 (1.3%) to US$ 2,025 on 05 May 2023.

Following the Fed’s decision to raise rates again and hinting that this could be the last one in this present cycle, gold prices traded near record-high levels on Thursday, as US yields and the dollar dipped. Spot gold touched US$ 2,040 per oz, after hitting US$ 2,072, with US gold futures reaching US$ 2,050, Slightly lower increases were seen with silver, platinum and palladium rising 0.9% to US$ 25.82, 1.0% to US$ 1,060 and by 1.4% to US$ 1,411 respectively.

Despite a slide in energy prices, Shell has reported a stronger than expected Q1 profit of US$ 9.6 billion – higher than comparative figures in 2022. The energy giant announced that it would be returning US$ 4billion to shareholders, by buying back some its shares. Last year, it posted profits of US$ 39.9 billion for 2022, which was double the previous year’s total and the highest in its 115-year history, after prices spiked at the start of the war in Ukraine, touching US$ 130 a barrel but lately oil prices have dropped to around US$ 80 a barrel.

Although quarter on quarter deliveries slowed, Q1 saw Tesla reaching record highs, with 422.9k EVs hand over to customers, helped by price cuts; the numbers were 36% higher compared to a year earlier and 4% higher on the quarter. In Q1, Tesla delivered 6% more of its mainstay Model 3/Model Y vehicles on the quarter but there was a 38% slump in numbers for its higher-priced Model X/Model S vehicles slumped by 38%.

In a move that may well disrupt air travel, US authorities have confirmed that it was going ahead with its 01 July deadline for airlines to refit planes with new sensors to address possible 5G interference; the estimated cost to upgrade planes is put at US$ 638 million. The Federal Aviation Administration and aviation companies have previously raised concerns that C-Band spectrum 5G wireless could interfere with aircraft altimeters, which measure a plane’s height above the ground. Even though they have been warned that they will be unable to meet the deadline and may be forced to ground some planes, Transport Secretary Pete Buttigieg has confirmed that the 01 July deadline would remain in place and advised them to work aggressively to retrofit their planes before the deadline. Telecom firms, including Verizon and AT&T, agreed last year to delay the rollout of 5G technology until 01 July 2023 to allow airlines time to retrofit their altimeters. IATA has also indicated that the decision not to extend the deadline makes summer disruptions more likely. The UK’s Civil Aviation Authority noted that “there have been no confirmed instances where 5G interference has resulted in aircraft system malfunction or unexpected behaviour”.

Still being hampered by ongoing supply chain issues, resulting in declines in deliveries, Airbus posted a 63.9% slump in Q1 profit to US$ 516 million, on the year. The European plane maker saw its revenue dip 2.0% to US$ 13.1 billion, as it delivered one hundred and twenty-seven planes – 106 A320s, ten A220s, six A330s and five A350s. It will have to ramp up production if it wants to meet its 2023 delivery target of seven hundred and twenty. The company, which is still the world’s biggest plane maker, posted a 38.0% decline in gross commercial orders at 156, with a 7.0k order backlog. In January, it posted that it planned to hire 13k new workers.

In India, budget airline Go First, owned by conglomerate Wadia Group, has filed for bankruptcy and cancelled all of its flights for the next three days after filing for bankruptcy protection but confirmed that “a full refund will be issued” to all affected passengers. It appears that the carrier is blaming its US engine maker, as it “had to take this step due to the ever-increasing number of failing engines supplied by Pratt & Whitney,” which in turn has led to a major cash flow problem. Go First said that because of the problem. it was forced to ground twenty-five aircraft – about half of its fleet of Airbus A320neo planes. It also claimed that the US supplier had not followed an order by an emergency arbitrator, which included supplying “at least ten serviceable spare leased engines by 27 April 2023”. (Industry experts have indicated that Go First is not the only local airline affected by engine and aircraft supply chain issues, noting that over a hundred commercial aircraft are grounded in India, including sixty planes of Go First and rival Indigo that are grounded due to a lack of spare parts.

After fifteen years at the helm of Qantas, Ireland’s Alan Joyce is to step down as CEO to be replaced by the carrier’s current CFO, Vanessa Hudson, who has been with the airline since 1994. It would be no exaggeration to say that Joyce had some turbulent periods during his time at the top including record oil prices, the GGFC, record losses following Covid, a 2021 court ruling that Qantas had acted illegally outsourced 1.7k ground staff sever consumer criticism last year over cancelled flights, lost luggage and many delays. The new incumbent has promised to work “very hard” to restore the Aussie carrier to its former glory.

International Consolidated Airlines Group, the parent company of several airlines, including BA, Aer Lingus, Iberia, Level and Vueling, posted its first-ever quarterly profit, since the onset of the pandemic; in Q1, it posted a US$ 10 million profit, as revenue leapfrogged over 71%, on the year, to US$ 5.2 billion. Although fuel prices spiked 35% in the quarter, fares were only 10% higher. With its portfolio of carriers, IAG has also recovered capacity to almost pre-Covid levels.

Despite an obvious industry slowdown, Apple beat Wall Street estimates, posting a marginal 2.5% dip in US$ 94.8 billion, which included a 1.5% rise in Apple’s iPhone revenue despite estimates that the industry experienced a 13.0% slump in Q1 global smartphone shipments; it is reported that the broader consumer electronics industry is struggling, as sales of smartphones, tablets and PCs have declined, attributable to consumers and businesses starting to cut costs as they tighten spending in an era of  rising interest rates and  economic turbulence. Apple now has 975 million subscribers on its platform, which includes both Apple services and third-party apps, 4.3% higher on the quarter and 18.2% higher on the year.

The same week that Arm became the latest UK tech firm to decide to list in New York rather than in London, the Financial Conduct Authority has announced plans to shake up its rules in a bid to attract more companies to list their shares locally by simplifying regulations and making the UK “more competitive” with stock markets abroad. The FCA’s proposals include replacing two listing categories with one single one and removing the requirement for shareholders to have a vote on transactions such as acquisitions. The plans would also allow founders to hold onto controlling shares for longer. The FCA said it wanted to make the rules that companies must follow to be allowed to list their shares in the UK, “more effective, easier to understand and more competitive”. What is certain is that although London remains Europe’s biggest financial hub, listings have dropped by over 40% over the past fifteen years. Many critics opine that the New York stock exchange is “much deeper” than London’s while Brexit had harmed the UK’s image as a place to do business.

Following the government-enforced Credit Suisse merger with larger rival UBS amid fears it could collapse, it was reported that bonds, valued at US$ 17.0 billion, became worthless. This week, it seems that Asian investors have joined a series of landmark international lawsuits being filed against the Swiss government. The bank had issued several types of bonds, including AT1 bonds, also known as contingent convertibles, to raise finance. Such paper normally carries high yields but as every Economics 101 student knows, the higher the return, the greater the risk and AT1 bonds were no exception when they were written down to zero, having been wiped out in a so-called “Viability Event”.  At the time, Finma, the Swiss regulator, confirmed that “the contractual conditions” for a write down were met. However, it seems that thousands of investors are arguing about how the terms of the merger were conducted, and that bondholders are, if possible, supposed to be compensated first, after which come shareholders. In this case, it seems that shareholders were allowed to exchange their Credit Suisse shares for UBS shares, before the bondholders; although the shareholders received almost nothing, they did receive a pay-out whereas the bondholders were left with zero. Episodes like this have seen the reputation of Swiss banks in tatters.

Morgan Stanley is planning a further redundancy package involving 3k jobs, (equating to 5.0% of staff excluding financial advisers and personnel supporting them within the wealth management division). This comes just months after the bank trimmed 2% of its payroll, currently standing at 82k.The bank is battening down its hatches to cut expenses ahead of a probable recession, which would impact both its top and bottom lines. Last month, chief executive, James Gorman, noted that underwriting and merger activity had been subdued and a rebound before H2 or even 2024 was not expected. Driven by a combination of a 22% slump in its equity-underwriting business, a marked slowing in deal making and a 32% fall in merger advisory, Morgan Stanley’s profit fell from a year earlier.

Banks and energy companies are seen to be making rude profits at a time when most companies, (and individuals), are struggling with double digit inflation and rising mortgage rates. HSBC more than tripled its Q1 profit, on the year, to US$ 12.9 billion. The profit figure was boosted by a US$ 2.1 billion reversal of an impairment, relating to the planned sale of HSBC’s retail banking operations in France, net interest income increasing by 38% to nearly US$ 9 billion, and a provisional gain of US$ 1.5 billion on the acquisition of Silicon Valley Bank UK in March, after the collapse of the parent’s lender in the US. Revenue increased by 64% to US$ 20.2 billion, driven by higher net interest income in all of HSBC’s businesses because of interest rate rises. There were significant improvements in both customer lending – US$ 40.0 billion higher in Q1 – and customer accounts by US$ 34 billion. A first interim dividend of US$ 0.10 per share was approved, as were plans to carry out up to a US$ 2 billion share buyback. The bank’s share price was up 4.0% on the day and 13.0% YTD.

As investors continue to be concerned about the state of the global economy, the current banking crisis, and the collapse of First Republic, shares in several US regional banks have dropped sharply. This was the third banking collapse in the country since March. The banking sector has also had to adjust from a period of zero rates to almost 5.0%, in just over a year, that is having a major impact on the US economy, which could damage banks, as both spending and confidence for businesses and households head south. The rise in interest rates could also damage some banks more than others, as higher rates hurt the market value of some debts, issued when borrowing costs were lower. There is no doubt that the US banking system – which has more than 4k banks – could be heading for a turbulent six months, with several facing bankruptcy and others being taken over in a wave of consolidations in the industry, as the economy weakens.

The US is in the midst of a banking crisis of confidence as Investors appear to be moving their funds from the country’s smaller banks to larger financial institutions and jumping ship following the most serious string of banking failures to hit the US since the 2008 GFC.  The Silicon Valley Bank failure in March was the catalyst that resulted in shares in regional banks being battered, with the likes of California-based PacWest plunging 50%, while Western Alliance also tumbled nearly 40%. The next two banks to collapse were Signature Bank, followed a few days later by First Republic this week. These failures were the biggest in US history, except for the 2008 collapse of Washington Mutual. The US Treasury Department continues to steady the ship, confirming it was monitoring developments “closely”.

With certain financial institutions and investors making obscene amounts of money on the back of “falling” financial institutions, there is no surprise to find out that US authorities are now looking into whether big investment firms are targeting, or attacking, otherwise healthy banks to make a profit. There is no doubt that there has to be “market manipulation” behind recent volatility in banking shares, and it cannot be a coincidence that a wave of “short selling” is a prime reason in a mega slump in the share price of several US banks. Belatedly, the White House says it is closely monitoring the situation and has reiterated its intention to monitor “short-selling pressures on healthy banks”. Consumer Bankers Association president and chief executive, Lindsey Johnson, has urged policymakers to call out “unethical behaviour by activist investors” who were taking advantage of market volatility.

Despite all the turbulence in its banking sector, and the ongoing impact of rising interest rates, there was continued robust job creation in the US last month. The unemployment rate dipped to a multi-decade low, at 3.4%, with a further 253k jobs added in April. In today’s report, the Labour Department noted that hiring had been weaker, than previously estimated in the previous two months, but undoubtedly the labour market has stood up well in an environment where benchmark rates have risen from zero to over 5.0% in just over a twelve-month period, as wages came in 4.4% higher. Although the Fed’s head, Jerome Powell, has commented that the US could avoid a downturn, that would throw millions of people out of work., the majority of analysts see the country falling into recession by the end of this year.

At a White House meeting this week, tech bosses, including Google’s Sundar Pichai, Microsoft’s Satya Nadella, and OpenAI’s Sam Altmann were told they had a “moral” duty to safeguard society, and that they have to control the possible damaging impacts from Artificial Intelligence. Over the past few months, there have been many industry leaders who have been calling for improved regulation, whilst earlier in the week, the “godfather” of AI, Geoffrey Hinton, quit his job at Google highlighting his regret of his work, and noting that some of the dangers of AI chatbots were “quite scary”. Earlier in the year, a letter signed by Elon Musk and Apple founder Steve Wozniak, called for a pause to the rollout of the technology. US Vice President Kamala Harris said the new technology could pose a risk to safety, privacy and civil rights, although it also had the potential to improve lives, but that the private sector had “an ethical, moral, and legal responsibility to ensure the safety and security of their products”. There are others, like Bill Gates, who have hit back against calls for an AI “pause” saying such a move would not “solve the challenges” ahead, with some against over-regulation, that could see China take advantage and move well ahead in this field.

During its five-day national May Day holidays, China’s Ministry of Tourism confirmed that tourists made 274 million trips within the country, as its domestic tourism rebounded with latest figures over 20% higher than recorded 2019 pre-Covid figures. Official figures also show that tourists spent US$ 21 billion during the period – also higher than pre-Covid figures. Interestingly, an average of 1.2m Chinese people travelled abroad each day, which was twice last year’s figure, but airline bookings by Chinese tourists travelling abroad were still around half what they were before the pandemic.

According to Eurostat figures, 75% of the EU’s 20–64-year-old are in employment – equating to 193.5 million, the highest number since records started in 2009. Because of Covid, the percentage had dropped to 72% in 2020, with a 2% rebound a year later. Of that total, eleven nations had rates over 78%, including the leading three – Netherlands, Sweden and Estonia, 83%, 82% and 82%. The lowest rates were seen in Italy (65%), Greece (66%), and Romania (69%). Over-qualification, (the percentage of employed with a tertiary education working in a situation that does not require such a high level), seems to be an ongoing problem, with rates of 23% for women and 21% for men. By country, the five lowest returns were seen in Luxembourg (7%), Sweden, Denmark, Hungary, and Czechia (each 14%); at the other end of the scale were Spain (36%), followed by Greece and Cyprus (each 32%).

 In line with most leading global banks, and with the aim of getting on top of rampant inflation, the ECB raised its key interest rate by 0.25% to 3.25%; the twenty-country bloc has seen rates raise by 375bp since July 2022. The ECB, probably the last central bank to start raising rates, commented that “the inflation outlook continues to be too high for too long,” One of the main factors considered by the bank was data indicating the biggest drop in loan demand in over a decade, and a possible sign that previous rate rises have impacted and that policies are indeed restricting growth – nevertheless, consumer prices rose last month, after five consecutive months of decline, nudged 10bp higher to 7.0%.

Meanwhile, preliminary flash figures indicate that, in Q1, the seasonally adjusted GDP increased by 0.1% in the euro area and by 0.3% in the EU, compared to Q4, when GDP had remained stable in the euro area and had decreased by 0.1% in the EU; a year earlier, the seasonally adjusted GDP had jumped 1.3% in both the euro area and the EU. The four nations, with the highest quarter on quarter increase in Q1, were Portugal (1.6%), followed by Spain, Italy and Latvia, all with 0.5% rises. Declines were recorded in Ireland (-2.7%) and Austria (-0.3%) but on a year-to-year basis only Germany posted negative growth at minus 0.1%.

Latest March figures from Rightmove indicate that average monthly London rents now top (US$ 3.12k), and outside the capital US$ 1.37k, mainly attributable to a dearth of property available. Interestingly, the number of rental properties available is 8% higher on the year but still almost half the pre-Covid figure, not helped by no significant influx of new properties becoming available to rent. It also noted that the asking rental price for new tenants, outside London, has risen again for the thirteenth consecutive quarter.

A surprise saw UK April house prices up by 0.5% in April, (to US$ 325k), after seven consecutive months of falls, according to the Nationwide Building Society – when analysts were forecasting an eighth decline. Prices are still 2.7% lower than a year ago, with mortgage rates double the figure compared to April 2022. Nationwide is predicting a “modest recovery” in the housing market, with any improvement being “fairly pedestrian”, as mortgage rates start to come down.

The British Retail Consortium is more confident than most to forecast that the cost of wholesale food prices will start to fall after new data shows that the April cost of wholesale food prices were 15.7% higher on the year, with NielsenIQ shop price index, showing that fresh food prices had accelerated to 17.8%. With both labour costs and energy prices moving higher, it seems unlikely that widespread price falls will be slow to filter down to the supermarket shoppers. While overall food prices continued to rise in April, inflation, which is the rate at which prices rise, both food and non-food, fell marginally to 8.8% last month. However, it must be noted that the World Bank has come out, saying it expects them to drop 8% by the end of this year, and that the BRC has indicated there is a three- to nine-month lag to see a decrease in wholesale prices reflected in-store.

Banks have also warned of a large increase in fraud last year, with the focus originating online, which Barclays saying that it accounts for 77% of total scams are now happening on social media, online marketplaces and dating apps. TSB has seen a large increase in cases of impersonation, (tripling on Facebook), investment and purchase fraud – doubling on the same platform. The depth of the problem is echoed by the likes of Meta noting that fraud is “an industry-wide issue”, a spokesman of Lloyds Banking commenting that banks are facing an “epidemic of scams” and NatWest noting that three million people in the UK were victims of fraud in 2022. Whilst acknowledging the problem is getting worse, some banks appear to be putting increased pressure on the various platforms to clean up their platform to protect consumers, with Paul Davis, TSB’s director of fraud prevention, saying “it’s high time that social media and telephone companies took financial liability for the rising levels of fraud taking place on their platforms.”

Staggering figures in the UK – which could well be replicated in other countries – sees fraud becoming the most common crime in the country, with one in fifteen people falling victim. The government is taking action and is set to ban calls selling financial products as part of a national crackdown on scams; it is hoped that such action could stop fraudsters selling sham insurance products or cryptocurrency schemes. According to media watchdog, Ofcom, forty-one million people were targeted by suspicious calls and texts in 2022. It will also establish a new five hundred-staff fraud squad to control and monitor fraudulent activity, with data showing that most fraud now has an online element. The government is hoping that “anyone who receives a call trying to sell them products such as cryptocurrency schemes or insurance will know it’s a scam”. Furthermore, the government said:

• so-called “Sim Farms”, where people use a large number of Sim cards to send text messages in bulk, will be banned
• intelligence services and police will work with overseas partners to shut down call centres engaged in fraud
• advertising campaigns will warn people about the risk of scam calls
• there will be new measures to tackle phone number “spoofing”, where scammers alter Caller ID information to make calls look genuine.

The Centre for Retail Research estimates that this weekend’s coronation celebrations could add more than US$ 1.75 billion to the UK economy, with more than US$ 265 million being spent on food and drink, and US$ 310 million on Coronation coins, tokens and medallions, celebratory teapots, mugs, cups and other crockery. Furthermore, extended pub opening hours are expected to add a further US$ 130 million to the hospitality sector.  Additional foreign tourists could bring in as much as US$ 405 million, with much of it spent on accommodation, restaurants and shopping in London. Supermarkets are cashing in, with Tesco forecasting that they will sell 675k pork pies, 600k scones and 300k pots of clotted cream, with Aldi selling quiches, the King’s chosen Coronation dish, at the rate of more than thirty every minute and reporting expected scone sales to be 150% higher. On the alcohol side, Tesco anticipate sales of 180k bottles of Pimms and Asda beer sales are expected to be 25% higher. Even if the Coronation were to add a little to the GDP, it would be short-sighted to think that Saturday will change the economy. Sunday will not only see many hang-overs but also the economy quickly returning to reality – high inflation, on-going strikes, a weak government and high mortgage rates. Sunday Morning Coming Down!

Times of Trouble!                                                                         28 April 2023

The 2,049 real estate and properties transactions totalled US$ 2.94 billion, during the week, ending 28 April 2023. The sum of transactions was 172 plots, sold for US$ 430 million, and 1,877 apartments and villas, selling for US$ 1.15 billion. The top three transactions were for plots of land, one in Burj Khalifa sold for US$ 50 million, and the second in World Islands for US$ 46 million and the third in Madinat Dubai Almelaheyah for US$ 10 million. Al Hebiah Fifth recorded the most transactions, with fifty-four sales, worth US$ 47 million, followed by twenty-five sales in Madinat Hind 4 for US$ 10 million and twenty-one sales in Al Hebiah Third, valued at US$ 25 million. The top three transfers for apartments and villas were all  for apartments, two located in Palm Jumeirah, valued at US$ 16 million and US$ 15 million, and the third in Al Ras for US$ 14 million. The mortgaged properties for the week reached US$ 1.35 billion, whilst eighty-two properties were granted between first-degree relatives worth US$ 36 million.

This week, Knight Frank posted that it was involved in the sale of a 24.5k sq ft plot of land in Jumeirah Bay for US$ 34 million – becoming the most expensive plot of land sold in the country, easily surpassing the previous record of US$ 25 million. The plot of sand sold for US$ 1,390 per sq ft and was bought by an overseas buyer who is expected to build a custom-built mansion on the plot; the previous owner was Umar Kamani, the 35-year-old founder of UK-based fashion retailer PrettyLittleThing.

In Q1, eighty-eight luxury homes, (classed as any sale of more than US$ 10 million), were sold for a cumulative US$ 1.63 billion; the three main locations for luxury homes continue to be Palm Jumeirah, Emirates Hills and Jumeirah Bay Island, accounting for 64% of the total; average transaction prices topped US$ 2.40k per sq ft. Little wonder then that Dubai has been ranked  number four in the world in this housing sector, behind New York, Los Angeles and London, with every chance of improving its global position this year.

Danube Properties has launched its sixty-five floor, ultra-luxury tower Fashionz in partnership with FashionTV. Located in Jumeirah Village Triangle, and that location’s largest tower to date, the project encompasses over seven hundred apartments, with prices starting at US$ 232k. This is the Dubai-based developer’s second foray into the burgeoning branded residential sector, having allied with Aston Martin for its Viewz project in February. (It is reported that Dubai now is the global leader for branded residences). Last year, Danube launched five projects last year – Pearlz, Gemz, Opalz, Petalz, and Elitz – with 2k residential units and a development value of US$ 559 million, all of them having been sold out. Its latest development brings its total portfolio to include twenty-two projects and 10.7k units.

The latest launch this week is Mykonos Signature from Samaan Developers – a Greek-inspired and cruise ship-styled residential project, located in Dubai’s Arjan district. The US$ 82 million, 276-unit building is targeting the mid-luxury section of Dubai’s burgeoning property market and seen to be a cheaper alternative to staying in hotels; it will also house twenty-four retail units. Completion is expected to be in Q3 2025.This is the Dubai developer’s third project of the year, with another nine to be launched before the end of 2023.

Next week sees the opening of the four-day Arabian Travel Market 2023, featuring over eighty of the world’s top travel technology companies. Taking place at the Dubai World Trade Centre, and opening on 01 May, there will be more than 2k sq mt, of exhibition space, (a 54.7% increase in space compared to last year), dedicated to the technology sector. ATM 2023 will also include a brand-new Sustainability Hub, highlighting the latest environmentally responsible travel trends and innovations. The event, whose theme is ‘Working Towards Net Zero’, will explore the future of sustainable travel and will feature over twenty innovation-focused sessions and events, including the Tech Stage.

This week, DMCC hosted a successful China Business Day at Almas Tower, attended by over two hundred prominent figures from the Dubai-based Chinese business community. The event included a panel discussion, “Building business success in Dubai and the UAE”, with experiences from leading Chinese companies including representatives from China State Construction Engineering Corporation, Bank of China, China Mobile International Middle East & Africa, Dahua Technology, and Yingke & Shayan Legal Consulting. Mohammad Ali Rashed Lootah, President and CEO of Dubai Chambers, expressed his support for the event, stating that the UAE represents one of the strongest economies in the region and has emerged as a prominent global gateway for Chinese businesses. DMCC is home to more than seven hundred and fifty Chinese companies, accounting for over 12% of all Chinese businesses registered in the country.

A landmark this week sees the Dubai Metro carrying its two billionth passenger since it was opened in September 2009; over that period, the Red Line has transported 1.342 billion commuters and the Green Line a further 674 million. Its punctuality record – of 99.7% – is second to none, surpassing international safety standards and demonstrating exceptional operational efficiency. On a daily basis, its average 2022   daily ridership surpassed 616k riders in 2022.

Launched by the federal Ministry of Finance, a US$ 300 million Sukuk has been launched, represented by the Ministry of Finance (MoF) as the issuer in collaboration with the Central Bank of the UAE (CBUAE) as the issuing and paying agent. Mohamed bin Hadi Al Hussaini, Minister of State for Financial Affairs, noted that ”the T-Sukuk are Sharia-compliant financial certificates, and they will be traded to reflect the local return on investment, support economic diversification and financial inclusion, and contribute to achieving comprehensive and sustainable economic and social development goals,” The T-Sukuk will be issued initially in 2/3/5-year tenures, followed by a ten-year sukuk later, and will be denominated in UAE dirhams to develop the local bonds debt market and help develop the mid-term yield curve.

This week saw a further amendment to the upcoming Corporate Tax legislation, with the Ministry of Finance announcing that public benefit organisations, that contribute to the welfare of society, will be eligible for exemptions. These will include entities that focus on activities such as philanthropy, community services and corporate social responsibility. The Ministry added that “this implementing decision is designed to reflect these entities’ important role in the UAE, which often includes religious, charitable, scientific, educational, or cultural value”. The federal corporate tax, with a standard 9% rate on companies reporting a profit of US$ 102k+, will come into effect for businesses whose financial year starts on or after 01 June 2023. Existing free-zone entities are currently exempt from corporate tax.

In a bid to raise the awareness of their tremendous contribution to the global economy, the United Nations General Assembly has designated 27 June as the day of ‘Micro-, Small, and Medium-sized Enterprises’. The world body estimates that MSMEs account for 90% of businesses, 60-70% of employment and 50% of global GDP.  The number of such entities in the UAE is thought to be around the 557k mark, with aims to top one million by 2030.

In Q1, DP World posted a 1.4% hike in handling 19.5 million TEUs (twenty-foot equivalent units) across its global portfolio of container terminals, with gross container volumes increasing by 1.4%, year-on-year on a reported basis, and up 3.7% on a like-for-like basis; since the total global market was down 6.35%, this was an impressive return. A slight weakness in the European and American markets was offset by a strong return in Asia Pacific and India. In the quarter, Jebel Ali handled 3.5 million TEUs – up 2.3% year-on-year. On consolidation, its terminals handled 11.4 million TEUs in Q2 – up 0.7% year-on-year on a reported basis but down 1.3% on a like-for-like basis.

By the end of January, the gross assets of UAE banks amounted to US$ 996.7 million – 11.5% higher on the year. The gross assets of conventional banks operating in the country jumped 12.8% to US$ 830 million, accounting for 83.1% of the total, with Islamic banks, 5.6% higher, making up the balance. The total credit of conventional banks was 4.5% higher at US$ 402.5 while deposits and investments in conventional banks increasing by 15.2% to US$ 490.1 trillion and 12.9% to US$ 117.2 trillion respectively. For Islamic banks the figures showed increases of 3.1% to US$ 118.3 trillion and by 20.1% to US$ 46.6 trillion.

Q1 was a stellar quarter for Dubai’s largest bank – Emirates NBD, posting a record US$ 2.72 billion quarterly return and a doubling of profit to US$ 1.63 billion. The main drivers behind these impressive results included rising interest rates, higher margins, growing non-funded income and a lower cost of risk on significant recoveries, with impairment charges 66% lower. The profit was the highest ever quarterly one delivered by a local bank and the period saw the bank deliver its strongest ever quarter for retail lending with over 144k new credit cards issued and over US$ 2.18 billion of retail loan disbursements. Deposits grew by US$ 9.54 billion, including a US$ 5.18 billion increase in Current and Savings Account balances.

Dubai’s third biggest lender did not disappoint either, posting a 163.1% climb in Q1 profit to US$ 439 million, driven by lower impairments, down 58% on the year to US$ 26 million, and higher interest income, as Islamic financing more than doubled to US$ 474 million; fee and commission income rose about 64% to US$ 159 million. Mashreq saw its total assets grow more than 10% to US$ 54.77 billion, and loans and advances rise about 6% annually to US$ 24.82 billion, whilst customer deposits climbed 15% on the year to over US$ 32.70 billion.

The DFM opened on Monday, 24 April 2023, having shed 21 points (0.6%) the previous week, gained 53 points (1.5%) to close the week on 3,545, by 28 April. Emaar Properties, US$ 0.05 lower the previous week, shed US$ 3 to close the week on US$ 1.62. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.65, US$ 3.60, US$ 1.45, and US$ 0.41 and closed on US$ 0.68, US$ 3.84, US$ 1.51 and US$ 0.41. On 28 April, trading was at 161 million shares, with a value of US$ 113 million, compared to 183 million shares with a value of US$ 113 million on 19 April.

The bourse had opened the year on 3,438 and, having closed on 28 April on 3,545 was 138 points (3.1%) higher. Emaar started the year with a 01 January 2023 opening figure of US$ 1.60, to close the quarter at US$ 1.62. Four other bellwether stocks, DEWA, Emirates NBD, DIB and DFM started the year on US$ 0.59, US$ 3.54, US$ 1.55 and US$ 0.41 and closed the quarter at US$ 0.68, US$ 3.84, US$ 1.51 and US$ 0.41.   On 28 April, trading was at 161 million shares, with a value of US$ 113 million, compared to 66 million shares, with a value of US$ 18 million, on 31 December 2022.

By Friday, 28 April 2023, Brent, US$ 4.87 lower (5.6%) the previous week, shed a further US$ 6.38 (7.3%) to close on US$ 80.25.  Gold, US$ 63 (2.3%) lower the previous fortnight, gained US$ 5 (0.2%) to US$ 1,999 on 28 April 2023.

Brent started the year on US$ 85.91 and shed US$ 5.97 (6.6%), to close 28 April on US$ 80.25. Meanwhile, the yellow metal opened 2023 trading at US$ 1,830 and gained US$ 169 (7.7%) to close on US$ 1,999.

Oil giant ExxonMobil posted a doubling of Q1 profits, to a record US$ 11.4 billion, on the back of the increased demand for oil and gas, and the positive impact of its cost-cutting measures. It said shareholders would receive US$ 8.1 billion, including dividends and US$ 375 million in share buybacks. The US energy giant also confirmed that it had been the beneficiary of a US$ 3.4 billion after-tax reduction to exit Russia and that it was pursuing a case against the EU to try to stop the bloc imposing a new windfall tax.  

Chevron did not do as well, only posting a 5% upward movement in Q1 profit to US$ 6.6 billion, noting that it had been subject to a US$ 130 million “energy profits levy”, or windfall tax, in the UK.  Next week Shell and BP are both set to report their latest results next week.

Although it accounts for over 90% of all its EV sales, General Motors is to end production of its Chevrolet Bolt electric vehicle later this year, with its emphasis moving to its shifts zero-emission production to trucks and SUVs built on a new battery platform. Last year, the largest US automaker sold 38.1k Bolt EVs in 2022, up 53.5% on the previous year’s production level; in Q1, the figure topped 19.7k. Prices for the vehicle start at US$ 26.5k which qualifies it for a US$ 7.5k federal tax credit. Last year, GM announced that it would invest US$ 4 billion in its Orion Township Assembly plant to produce Chevrolet Silverado EV and electric GMC Sierra using its next-generation Ultium EV platform. By 2024, it will see employment numbers triple and will produce – with its Detroit-Hamtramck and Orion plants – more than 600k electric trucks a year by late 2024, and one million EVs by 2025.

Boeing has managed to cut its Q1 loss to US$ 425 million from a massive US$ 1.20 billion a year earlier, attributable to a marked increase in aircraft deliveries; the plane maker had previously posted seven consecutive quarterly losses mainly because of quality control issues. Over Q1, revenue came in 28.0% higher at US$ 17.9 billion, on the quarter, but still down on pre-pandemic Q1 2019 levels. Boeing has a backlog totalling US$ 411 billion, including more than 4.5k commercial planes valued at $334 billion. In the first three months of 2023, it handed over 130 commercial jets (cf 95 a year earlier), as its commercial planes unit recorded a 60% increase to US$ 6.7 billion down to  higher 737 and 787 deliveries. During 2023, it plans to deliver 400-450 of its 737, though “near-term deliveries and production will be impacted as the programme performs necessary inspections and rework”.

The US$ 68.7 billion deal that would see Microsoft acquire the US gaming firm Activision has been blocked by the UK regulator, the Competition and Markets Authority, in a move that saw a disgruntled Brad Smith attack the move being “bad for Britain” and marked Microsoft’s “darkest day” in its four decades of working in the country. Although the EU and US authorities had yet to make a call on the deal, it is now dead in the water because of the UK’s move, with the CMA noting that “Activision is intertwined through different markets – it can’t be separated for the UK. So this decision blocks the deal from happening globally.” The CMA said Microsoft already had a 60-70% share of the cloud gaming market and combining with Activision would “really reinforce… [its] strong position”. If the deal had gone through, it would have been the industry’s biggest ever takeover, and would have seen Microsoft owning popular games titles such as Call of Duty, Candy Crush and World of Warcraft. Microsoft has already indicated that the decision may have an impact on its future UK investment.

Following Bob Iger’s February’s announcement of a US$ 5.5 billion cost-cutting drive, Walt Disney announced that it had begun a second round of layoffs as part of an earlier announced restructuring expected to result in 7k job losses, (equating to 3% of the company’s 220k workforce). This comes at a time when the entertainment giant is struggling with slumps in both its traditional television and film business revenue figures, with its streaming unit continuing to post big losses. Its sports channel ESPN and film studios will bear the brunt of the job cuts, as Iger goes to work on streamlining its business.

The Department of Justice (DOJ) and the Treasury Department’s Office of Foreign Assets Control has ordered a subsidiary of British American Tobacco to pay US$ 635 million, plus interest, after it admitted selling cigarettes to North Korea in violation of sanctions., between 2007 – 2017. The DOJ said BAT had also conspired to defraud financial institutions in order to get them to process transactions on behalf of North Korean entities, as Jack Bowles, the head of one of the UK’s biggest companies said, “we deeply regret the misconduct”.

Driven by factors such as the recent turmoil in the banking sector, a stabilisation of risk assets, as the US Federal Reserve almost ends its interest rate-hiking cycle, and improved profitability of crypto mining, Standard Chartered has opined that Bitcoin could top US$ 100k by the end of next year. In the first four months of 2023, the crypto currency has topped US$ 30k for the first time in ten months. The currency could benefit from its status as a “branded safe haven, a perceived relative store of value and a means of remittance,” and the fact that the EU is introducing its first set of rules to regulate crypto asset markets. Banks have got their forecasting wrong before – for example, in November 2020, a Citi analyst said that Bitcoin could climb as high as US$ 318k, but by the end of 2022, it closed 65% lower at only US$ 16.5k.

Trading in shares of First Republic Band was halted this morning, (28 April), after the stock collapsed 50%, with its share price now 97% lower YTD.  A CNBC report, claiming that the lender was probably headed for receivership, under the US Federal Deposit Insurance Corporation, did not help matters. Reuters also posted that that the triumvirate of the FDIC, the Treasury Department and the Federal Reserve had commenced meetings with financial companies about a lifeline for the bank. The obvious concern is that of contagion and that a worsening of the situation of FRB could lead to a meltdown in the US banking industry, still breathing an air of relief after the collapse, as it recovers from the earlier demise of Silicon Valley Bank and Signature Bank.

First Republic had experienced “unprecedented deposit outflows,” as customers pulled more than US$ 100 billion – equating to 40% of deposits – from their accounts in Q1, rattled by worries about the health of the global banking system. The bank announced that to strengthen its much-weakened balance sheet, it plans to cut costs by slashing payroll numbers by 25% whilst reducing short-term borrowing. In March, a group of major US banks, led by JP Morgan and Citigroup, injected US$ 30 billion into First Republic to avoid any risk of it failing, with a possible contagion impact on the banking sector.  There was no surprise to see its share value slump by 20% on the announcement.

In Q1, embattled Credit Suisse posted that it faced outflows of US$ 69.0 billion before it was forced to merge with its main Swiss competitor UBS. The country’s second biggest lender noted that deposit outflows represented 57% of its wealth management unit and Swiss Bank net asset outflows in the three-month period and commented that the outflows “have moderated but have not yet reversed” as of 24 April 23.

Credit Suisse, which had already lost about US$ 123.8 billion of assets in Q4, said net income attributable to shareholders was US$ 13.98 billion in Q1, compared to a US$ 307 million net loss in the same period a year earlier and a net loss of US$ 1.56 billion in Q4 2022. Because of the ongoing impact of the merger, “Credit Suisse would also expect the investment bank and the group to report a substantial loss before taxes in Q2 2023”.  At the time of the merger, the Swiss National Bank agreed to lend UBS up to US$ 112.45 billion to help it take over Credit Suisse, while Swiss regulator Finma erased US$ 19.12 billion worth of Credit Suisse’s bonds and scrapped the need for shareholders to vote on the agreement.

Following a year of disappointing revenue figures, tanking by up to 50% in Q1, and numerous failed turnaround plans, major US retailer, Bed Bath & Beyond has filed for bankruptcy protection, confirming that its three hundred and sixty stores and one hundred and twenty Buy Buy Baby stores, along with its websites, will remain open. Having failed to secure further financing, additional to the US$ 240 million from Sixth Street Specialty Lending Inc, the company made the filing “to implement an orderly wind down of its businesses while conducting a limited marketing process to solicit interest in one or more sales of some or all of its assets. It listed estimated assets and liabilities in the range of US$ 1 billion and US$ 10 billion. Only last month, it had notified the Securities and Exchange Commission filing in late March that it planned to sell $300 million worth of shares to avoid bankruptcy filing. Founded in 1971, Bed Bath & Beyond has seen its share value slump from around US$ 17.00 to US$ 0.30 over the past twelve months.

Prezzo has announced that it will close forty-six, (about a third), of its restaurants because of the impact of higher inflated prices for pizza and pasta ingredients and a doubling of energy prices in the past year. The closure of these loss-making stores could result in over eight hundred redundancies. The Italian restaurant chain confirmed that it plans to keep open its restaurants in busier shopping areas, such as retail parks and tourist destinations. Covid had forced Prezzo to go into administration in late 2020, to be bought out by private equity firm Cain International. Other restaurant chains have also been impacted by the cost of living crises, including “double-digit wage inflation”, and have previously announced store closures, including Frankie and Benny’s and Chiquito closing thirty-five restaurants last month.

Better late than never, the CBI, UK’s biggest business group, with 190k member firms, has confirmed that it failed to act, allowing a “very small minority” of staff to believe they could get away with harassment or violence against women; it has now dismissed a number of people. Even worse, it also admitted that it hired “culturally toxic” staff and failed to fire people who sexually harassed female colleagues. Furthermore, it said there was a collective “sense of shame” at “so badly having let down the…people who came to work at the CBI”. To make matters worse, and after receiving a report by law firm, the disgraced body wrote, “our collective failure to completely protect vulnerable employees… and to put in place proper mechanisms to rapidly escalate incidents of this nature to senior leadership…. these failings most of all drive the shame.” It also admitted to its members:

• It “tried to find resolution in sexual harassment cases when we should have removed those offenders from our business”
• The failure to sack offenders had led to a reluctance among women to formalise complaints
• This also allowed a “very small minority of staff with regressive – and, in some cases, abhorrent – attitudes towards their female colleagues to feel more assured in their behaviour, and more confident of not being detected”
• It failed to filter out culturally toxic people during the hiring process
• It promoted some managers too quickly “without the necessary prior and ongoing training to protect our cultural values, and to properly react when those values were violated”
• It paid “more attention to competence than to behaviour”
• It failed to properly integrate new staff

Even its former director-general, Tony Danker, who earned US$ 476k a year, acknowledged he had made some staff feel “very uncomfortable”, and had been the recipient of complaints of workplace misconduct but later apologised. There is no doubt that the CBI has lost the confidence of many of its members and the sooner it closes down, the better for all concerned.

Despite massive losses as a result of Western sanctions, it is reported that the one hundred and ten Russian billionaires added US$ 138.9 billion to their wealth over the past year, driven by high prices for natural resources. According to the Forbes Russian edition, there are twenty-two new additions this year, including oil and metals companies, with new additions having made their fortune in snacks, supermarkets building and pharmaceuticals. Over the year, their combined wealth topped US$ 505 billion, up 40.6% on the year, but US$ 101 billion lower than the 2021 figures.  Andrei Melnichenko, who made a fortune in fertilisers, was listed as Russia’s richest man, with an estimated worth of US$ 37.65 billion, more than double what he was estimated to be worth last year. Over the year, Russia has ‘lost’ five billionaires – DST Global founder Yuri Milner, Revolut founder Nikolay Storonsky, Freedom Finance founder Timur Turlov, and JetBrains co-founders Sergei Dmitriev and Valentin Kipyatkov – with all five having renounced their Russian citizenship.

The US Commerce Department posted that the country’s Q1 growth slowed to 1.1% – a possible indicator that the economy may be slipping into a mild recession, and a surprise to many analysts who were expecting more like a 2.0% expansion; in Q4, growth came in at 2.6%. It was noted that the GDP figure “reflected increases in consumer spending, exports, federal government spending,” along with some forms of investment. These figures do not yet show the impact of the recent collapses of three medium-sized financial institutions including Silicon Valley Bank and Signature Bank – both of which provide finance to the technology sector.

Initial data from the HCOB Flash Eurozone PMI survey points to a 0.7 April rise to 54.4 – reaching an eleven-month high – and an indicator that the economy is heading in the right direction, with the caveat that growth in the bloc is very unevenly spread. For example, there has been a marked widening of the gap between the partly booming services sector, (and this despite the rampant inflation), and the weakening manufacturing sector. Since the beginning of the year, inflation has fallen from almost double-digit levels to 6.9% last month, but still way short of the ECB’s 2.0% target. Interestingly, although the IMF has forecast a “sharp slowdown” in economic growth this year. Germany is the only euro area country it now forecasts will enter recession this year, mainly down to the ongoing economic impact of the war in Ukraine.

Meanwhile, UBS expects the greenback to remain under pressure for the rest of 2023, attributable to several factors including a cooling labour market, (with last month’s US labour report showing a 236k increase in non-farm payrolls – the smallest since December 2020), slowing inflation, at 5.0%, the lowest in two years, and the possibility of rate cuts in H2, after another 25bp hike in May. At the same time the Swiss bank favoured the Australian dollar and Japanese yen to perform well this year, as well as predicting that gold could move 10% to around US$ 2.2k. It noted that the US dollar index is now only slightly higher than its recent one-year low and that it had lost 11% in value since September 2022.

Despite taxpayer massive handouts relating to energy bills and seeing borrowing costs rise, in line with rate hikes last year, the UK government was still able to borrow less than expected, (US$ 189.2 billion), in 2022; the total borrowing – the difference between spending and tax income – came in at US$ 173.3 billion, equating to 5.5% of the value of the UK economy and the highest percentage since 2014. Despite the Chancellor of Exchequer, Jeremy Hunt, noting that borrowing was at “eye-watering sums”, some analysts see that this improvement will give “wiggle room” for possible future tax cuts.

Instead of admitting that taking earlier remedial action would have helped to dampen rising inflation, which had ballooned past the BoE’s 2.0% target early last year, Huw Pill , its leading economist, has come out to preach  that people in the UK need to accept that they are poorer; otherwise prices will continue to rise, and that there was a “reluctance to accept that, yes, we’re all worse off”. Now because of this reluctance, the UK March inflation rate is still in double digit territory at 10.1%. Belatedly rates have gone from almost zero to near 5% which has made the cost of borrowing higher; this, allied with higher food bills and surging energy prices, has seen real wages slumping and businesses charging more, culminating in many workers asking for pay rises to help ease the pressure on budgets.  It is slightly galling to hear these mandarins pontificating to the masses when “earning “US$ 237k plus” – more than seven times the average man in the street’s remuneration of US$ 33k.

The UK has not got a good track record when it comes to helping its citizens in troubled times overseas, and the current situation in Sudan is becoming a good illustration. Stories of their complete mishandling of the Afghan invasion in August 2021, and the Iraqi invasion of Kuwait  in August 1991, spring to mind. At the first sign of trouble, last weekend, the Sunak government rescued twenty-four diplomats, and their families, in a “complex and rapid” operation. These were the first to be airlifted out of the country and, at the time, the number of UK citizens needed to be flown out of Sudan was at around 4k, but this figure was at the lower end of the spectrum. With a four-day ceasefire in place, it seemed that the remaining UK nationals could easily be flown out over the next seventy-two hours. By Wednesday, and according to the Foreign, Commonwealth and Development Office, a total of 536 people had been evacuated from Sudan on six UK flights, according to the Foreign, Commonwealth and Development Office; this number had reached 1.6k by today. Maybe, the UK should have followed the German example, with its Foreign Minister noting that, “it was important to us that the [German] evacuation, unlike other countries, didn’t just involve our diplomatic personnel but all Germans on the ground and their partners.” What has happened this week is just a warning to all UK expats worldwide that they should not rely on the assistance of the UK government in Times of Trouble!

Reasons to be Cheerful!                                                 21 April 2022

By any benchmark, Dubai real estate sector posted stunning Q1 figures with its total transaction value of US$ 42.77 billion, 80.5% higher than the same period in 2022; volume wise, the number of transactions, totalling 26k, was up 40.9% on the year. In 2022, Dubai’s real estate sector registered a 76.5% increase, to US$ 143.87 billion, worth of transactions and a 44.7% increase in volume. The number of new investors entering the real estate market, in Q1 2023, rose to 13.3k, up 25.0%, and a 12% growth, year on year. Non-resident investors accounted for 45% of total acquisitions. Speaking at a meeting of Dubai Economic Agenda D33, Dubai’s Deputy Ruler, Sheikh Maktoum bin Mohammed, noted that “as one of the most important pillars of the economy, the sector is a vital contributor to the emirate’s efforts to achieve the goals of the Dubai Economic Agenda D33. We remain committed to further raising the investment attractiveness of Dubai’s real estate sector and its emergence as one of the world’s pre-eminent real estate investment destinations.”

Some of Dubai’s new projects have noticed a buyer nationality change in that Russians and other Europeans, (including French, German and Swiss), are taking a larger share of the market than they had in the past; two of the main drivers behind this trend are the ongoing war in Ukraine and the fact that the cost-of-living crisis has had a seemingly smaller impact in Dubai than in parts of Europe. The traditional market drivers – Indians, Pakistanis, British and GCC nationals – are still present but to a lesser extent, as the “property cake” grows larger. Furthermore, latest statistics confirm that the bullish local market is a lot more attractive than overseas ones when it comes to capital appreciation and rental returns, averaging 8% in some locations. On top of that, there are other considerations, including a low tax regime, attractive lifestyle, and a cheaper entrée into the sector, as well as political and economic stability and safety.

A CBRE study concludes that residential properties, located close to Dubai Metro stations, have seen their properties returning higher returns and increased rentals than the wider real estate market.  The global real estate consultancy analysed the development of average prices and rents per sq ft for over three hundred residential or mixed-use properties since the 2009 inauguration of the Dubai Metro. It found that on average, over the thirteen years to December 2022, those properties within a fifteen-minute walk of a Red Line metro station recorded price increases of 26.7%, compared to Dubai’s 24.1% average increase; rental increases of 5.7% easily outperformed the minus 4.1% sector’s average.

As Dubai’s hospitality sector continues to be one of the leading global destinations, the bounce back sees hotel occupancy rates in January and February rising 4.4% to 84.4% on the year and now higher than the 84.0% 2019 comparison. Emirates NBD noted that although the average daily rate declined by 0.3 night to 4.0 nights, (2.0%), to US$ 170, average revenue per available room, (RevPAR), jumped 6.0%, year on year, to US$ 140 and 19.0% higher on 2019 returns. Following a 7.0% 2022 growth, the number of total available rooms grew to 148.45k, with five stars accounting for 34% of the total, four star – 29%, and three star – 20%. The sector is expected to add a further 8k keys this year, with the 5.4% increase bringing the total portfolio to over 155k.

In 2022, Dubai welcomed 674k medical tourists, (7.0% higher than a year earlier), with the three main source markets accounting for 82% of the total, being Asia, Europe and the Commonwealth of Independent States, equating to 39%, 22% and 21% respectively; it is estimated that medical tourists spent US$ 270 million during their stay in the emirate. According to the DHA report, dermatology, dentistry and gynaecology, received the highest number of patients. Those from Asia accounted for 35%, 29% and 54% of the dermatology, dentistry and gynaecology totals, from Europe, 26%, 19% and 18%, and from the CIS 20%, 37% and 13%. There is no doubt that Dubai has become a leading hub in this sector, being ranked by the Medical Tourism Index as the number one Arab destination for medical tourism and was sixth on a global scale of forty-six medical tourism countries.

According to the Ministry of Human Resources and Emiratisation, “more than 10.5k Emiratis joined the private sector in Q1, bringing the total number of Emirati employees in the sector to over 66k.” Over the first quarter, there was a 14.3% hike in private sector firms hiring Emiratis, bringing the number of such companies to 16k. The main growth sectors were construction (14%), commerce and repair services (13%), manufacturing (10%), business (10%) and financial brokerage (4%). Under the Nafis programme, private sector firms, with at least 50 employees, must ensure Emiratis form 2% of their workforce.

In Washington, and on the coattails of the recent 2023 Spring Meetings of the IMF and the World, Bank, the UAE was represented by Mohamed Hadi Al Hussaini, Minister of State for Financial Affairs. The MoF participated in the meeting of finance ministers, central bank governors, and heads of regional financial institutions in the ME, N Africa, Afghanistan and Pakistan (MENAP) region. At the meeting, the Minister confirmed that the UAE outlook for this year sees growth reaching 3.9% and inflation declining by a third to 3.2% by December 2023, driven by prices becoming more stable and the receding effects of imported inflation globally.

In the latest Nation Brand Value index, the UAE maintained its first place globally; it was also ranked tenth globally in the Nation Brand Strength index, and first in the Mena in Nation Brand Value index, worth US$ 957 billion. The index surveyed more than 100k from 121 nations. Some of the factors behind this success include its strategic location as a hub and a destination, a strong economy, and its ongoing and successful strategy in implementing economic diversification policies.

After investors had brought a case against KPMG Lower Gulf, claiming that they had lost money, because of the poor quality of its Abraaj Group’s audit, on an infrastructure fund they had invested in, a Dubai court has ordered the firm to pay them US$ 231 million. The court decided that KPMG had broken international auditing regulations by approving financial records of the fund it had been auditing, and that it was “confident that the auditing company had committed many violations when it audited the financial statements of the investment fund.” The firm is to appeal the decision in the Court of Cassation. Only last year, the DFSA had fined the audit firm and its principal partner, US$ 1.5 million and US$ 500k, for failing to follow international standards during audits of Abraaj Capital Limited (ACLD) for a number of years up to October 2017. The DFSA noted that “senior management of Abraaj intentionally sought to mislead or deceive KPMG, the regulator, and investors over a period of years”. The Abraaj Group was managing some US$ 14 billion of assets, at its peak, but was forced into liquidation in 2018 after investors, including the Bill and Melinda Gates Foundation, commissioned an audit to investigate alleged mismanagement of money in its US$ 1 billion healthcare fund.

The Board of Directors of Dubai Aerospace Enterprise has authorised an additional US$ 300 million for bond repurchases which will obviously build on its current US$ 1.13 billion portfolio; currently, DAE has US$ 370 million of available authority to repurchase bonds, having already repurchased approximately US$ 1.13 billion of principal amount of its publicly traded bonds under the previous authorisations of US$ 1.2 billion. As of now, DAE, which serves 170 airline clients in over sixty-five countries, has approximately US$ 3.5 billion of publicly traded bonds outstanding in the capital markets.

Following a restructuring plan, approved by both its creditors, (who account for 67% of the company’s total debt), and shareholders, Drake & Scull International is planning to write off 90% of its debts and convert the remaining 10% balance into mandatory convertible sukuk; the plan still needs regulatory approval and by the Court of Cessation. The expert, appointed by the court, confirmed that the company was in a position to carry on business, after completing the procedures that were submitted to the Financial Reorganisation Committee. In 2022, the embattled Dubai-based company posted a 4.6% increase in accumulated losses to US$ 1.39 billion, whilst revenue was 46.0% lower at US$ 22 million; its order backlog stands at US$ 124 million, driven by continuing operations in the UAE and overseas.

In 2008, the Dubai construction and engineering firm attracted US$ 33.8 billion in an IPO that was 101 times oversubscribed and attracted 45.k investors, with the company using the proceeds to expand in the region and acquire companies. DSI is still accusing its previous management of falsely inflating asset prices ahead of that IPO and has. filed a case in Dubai Courts to reclaim US$ 226 million from them. In 2017, a capital restructuring took place that resulted in US$ 463 million worth of shares being cancelled to expunge historic losses, with private equity firm Tabarak Investment committing US$ 136 million for a stake in the company.

At Tuesday’s Emaar’s Properties’ shareholders’ meeting, it was agreed that dividends, equating to 25% of the share capital, would be distributed; last year, the company posted a net profit of US$ 1.85 billion driven by a revenue stream of US$ 6.78 billion. In 2022, its real estate sales totalled a record US$ 9.56 billion, with a sales backlog of a mouth-watering US$ 14.50 billion. In addition, Emaar reported a sizable sales backlog of over Dh 53.2 billion. It noted that the dividend distribution “demonstrates Emaar’s commitment to maximising shareholder value”, with its founder, Mohamed Alabbar, saying the group sees 2023 as a promising year, “and it is dedicated to improving its operations, increasing its return on investment, and satisfying its clientele.” There is no doubt that 2023 will be another boom year for Emaar, and other major developers, who are in a unique position of “filling their boots” because in a cyclical industry, this “purple patch” cannot go on forever.

Amanat Holdings,’ shareholders have approved a 5% share buyback programme of the company’s outstanding shares as well as a US$ 27 million 2022 dividend distribution, representing 88% of profit and equating to US$ 0.011 per share. The leading healthcare and education listed investment company posted that its “shares are attractively priced and offer a compelling investment opportunity, highlighting our confidence in our business model and growth trajectory.”

Dubai Islamic Bank posted a 12.0% hike in net profit of US$ 410 million, on the year, as its total income jumped 46.9% to US$ 1.21 billion. Net operating revenues were 12.0% higher, at US$ 751 million, with net operating profit, 13.7% higher, at US$ 548 million. The largest Islamic bank in the UAE also registered a 1.0% rise in net financing and Sukuk investments to US$ 65.4 billion, with a Q1 40% increase, to US$ 5.7 billion, in new underwriting. Over the three-month period, the bank’s balance sheet expanded by 1.3% to US$ 79.6 billion, while customer deposits, that account for about 40% of the bank’s deposit base, stood at almost US$ 54.0 billion.  

The DFM opened on Monday, 17 April 2023, having gained 143 points (4.1%) the previous three weeks, lost 21 points (0.6%) to close the shortened week, (because of the Eid Al Fitr holiday), on 3,492 by Wednesday 19 April. Emaar Properties, US$ 0.24 higher the previous four weeks, shed US$ 5 to close the week on US$ 1.63. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.68, US$ 3.54, US$ 1.46, and US$ 0.39 and closed on US$ 0.65, US$ 3.60, US$ 1.45 and US$ 0.41. On 19 April, trading was at 183 million shares, with a value of US$ 113 million, compared to 144 million shares with a value of US$ 77 million on 14 April.

By Friday, 21 April 2023, Brent, US$ 17.96 higher (26.1%) the previous four weeks, shed US$ 4.87 (5.6%) to close on US$ 86.63.  Gold, US$ 39 (2.3%) lower the previous week, dipped a further US$ 24 (1.2%) to US$ 1,994 on 21 April 2023. Earlier, the IEA announced that global oil demand will rise by 2 million bpd this year to a record 101.9 million bpd, with non-OECD countries accounting for 90% of the total, as the big economies have been experiencing weak industrial activity which has seen OECD Q1 demand dip by 390k bpd. This year, global oil production growth will slow by 1.2 million bpd. When news filtered out of further potential interest rate increases, despite tight crude supply prospects, oil prices quickly headed south on Wednesday, with Brent down US$ 2.09 to US$ 83.00. 8

Q1 saw JP Morgan Chase’s profit climb 52.0%, to US$ 12.62 billion, driven by higher interest rates boosting its consumer business; revenue, at its consumer and community banking unit, rose by 80% to US$ 5.2 billion, whilst its net interest income came in 49.0% higher on US$ 20.8 billion. On the flip side, the investment banking business posted a 24.0% decline in revenue, with equity trading revenue down 12.0%, but despite this, the market liked the news with its shares trading 5.0% higher on the day. Chief executive, Jamie Dimon noted that although the US consumer and economy remained healthy “the storm clouds that we have been monitoring for the past year remain on the horizon, and the banking industry turmoil adds to these risks.”

Another US iconic stock saw its share value dip more than 6%, after Boeing disclosed a manufacturing issue affecting its much-troubled 737 Max planes. The US plane maker confirmed that a supplier had revealed that the installation of fittings on the rear of the planes did not follow standards. Although this was not an “immediate safety of flight issue”, it could lead to delivery delays. Boeing said a “significant number” of undelivered 737 Max jets, and some already flying, would be affected by the new issue. Only last February, it was forced to halt deliveries of its widebody 787 Dreamliner due to a problem with its data analysis.

Japan’s Sega Sammy Holdings is paying US$ 773 million for Finland-based Rovio Entertainment, the maker of Angry Birds. The founder of Sonic the Hedgehog character is seeking to tap into Rovio’s experience in mobile gaming, since its iconic game became the first mobile game to be downloaded one billion times; it has also established eight global game studios and has claimed that its stable of games have been downloaded five billion times. The Japanese firm has estimated that the global market will reach US$ 263 billion, over the next three years, with the percentage of mobile gaming expected to increase to 56%, and it has seen the need to “strengthen its position”. Although Rovio’s revenues increased by 11.7% to US$ 347million, in 2022, its operating profit fell by 32.7% to US$ 31 million, compared to a year earlier. There was no surprise to see Its Friday closing stock market valuation of US$ 707 million jump 17% when the bourses reopened on Monday.

Nokia blamed slower consumer spending, and a volatile global economy for a 17.8%  decline in Q1 net profit, to US$ 375 million, with revenue, some 9.0% higher, at US$ 6.42 billion, on a constant currency basis. The Finnish company, one of the world’s largest manufacturers of telecoms equipment and electronics, was slightly bullish on future business, posting “looking forward, we are starting to see some signs of the economic environment impacting customer spending.” It expects that 2023 annual net sales will come in between US$ 26.95 billion to US$ 28.70 billion – indicating a possible increase of between 2% to 8%; Nokia has forecast margin of between 11.5% and 14.0% this year, against latest actuals of 10.9% and 8.2% in 2022 and 2021. Its share value on Helsinki’s Nasdaq Nordic Exchange dipped 3.0% when the news broke; over the past twelve months, shares have lost 12.0% and are flat YTD.

IBM posted a 26.0% hike Q1 profits to US$ 927 million, on the year, despite revenue only nudging up 0.4% to US$ 14.3 billion, as both its software and consulting divisions came in with impressive returns. About 50% of Revenue, equating to US$ 7.2 billion, was generated from the Americas region and the balance from EMEA (US$ 4.3 billion) and Asia Pacific (US$ 2.8 billion). Section-wise, the main contributors were its software business, consulting arm, infrastructure and financing – generating US$ 5.9 billion, US$ 5.0 billion, US$ 3.1 billion and US$ 0.2 billion respectively; t expects that this year, Revenue could be up to 5.0% higher. Its share value was 2.0% higher on the news in afterhours trading.

Those US clients, with an Apple Card, can now open a savings account and earn interest through an Apple savings account, by growing their Daily Cash rewards with a Goldman Sachs savings account, offering APY of a very generous 4.15%; this account requires no fees, no minimum deposits and balance requirements, and can be set up and managed directly from Apple Card. All future Daily Cash earned by the user will be automatically deposited into the account, and there is no limit on how much Daily Cash users can earn.

It is reported that, yet another tech company is slashing its payroll. This time, and in a bid to cut costs, online media outlet BuzzFeed is planning to terminate 180 employees – 15% of staff members – and closing its news unit which had been losing about US$ 10 million a year. This is the second round of layoffs – the first being last December, when the company posted that it was to cut its workforce by about 12%. The New York-based company, founded in 2006, advised the US Securities and Exchange Commission that “the reduction in workforce plan is part of a broader strategic reprioritisation across the company in order to accelerate revenue growth and improve upon profitability and cash flow.” Chief Revenue Officer, Edgar Hernandez, and Chief Operating officer, Christian Baesler, both exited the company. On news of the announcement, the shares of BuzzFeed were down nearly 23%, having already tanked more than 85% over the past twelve months.

Deloitte is planning to lay off 1.2k US staff – equivalent to about 1.5% of its workforce – amid growing fears of a minor recession or an economic slowdown in the world’s biggest economy. Most of the redundancies will be from its financial advisory business, which has been impacted by a marked decline in M&A activity. The global consultancy had seen payroll numbers jump 23.1% to 80k since 2021 but, in line with the likes of Ernst & Young, (3k or 5%), KPMG, (2%), McKinsey (2k jobs) and Accenture (19k jobs), it has started to unwind numbers because of declining demand and growing fears of a recession.

After culling 11k positions last November, Meta is reportedly preparing to undertake another round of mass layoffs, impacting some 10k jobs, involved in “low priority projects”; initial cuts would impact tech departments, (mainly in AI and VR), while next month’s redundancies would impact the business side. This is a continuation of the tech company’s wider restructuring referred to by CEO as the “year of efficiency”. As it moves its focus from developing games for the metaverse to marketing it to traditional gamers. Despite the billions of dollars ploughed into Horizon Worlds, its social VR platform, it has gained little traction, with only about 200k monthly active users.

Tesla reported a 24.0% fall in Q1 net profit, on the year, (and 30.0% lower on the quarter), to US$ 2.5 billion, not helped by the EV company cutting prices across all its models in the period. Total revenue, on the year, jumped 24.0% to more than US$ 23.3 billion, but was 4.0% down on a quarterly basis. The world’s biggest electric vehicle maker has made it known that there will more price reductions over the rest of 2023. During the quarter, Tesla produced more than 440k vehicles and delivered more than 422k, as vehicle production remained flat, but delivery was up by 4.2% on a quarterly basis. It plans to achieve more than 50% growth rate, and produce about 1.8 million cars, this year. A spokesman noted that “we expect ongoing cost reduction of our vehicles, including improved production efficiency at our newest factories and lower logistics costs, and remain focused on operating leverage as we scale”. Shares fell 6.0% in afterhours trading following the news but is still 67% higher YTD, valuing the company at US$ 565.87 billion.

In a recent interview, Twitter’s Elon Musk claimed that he was unaware that the US government had “full access” to users’ private direct messages on the platform, The tech billionaire, who founded the AI company, X.AI, expressed his worries that the technology has the potential to destroy civilisation. He also commented that “the degree to which government agencies effectively had full access to everything that was going on Twitter blew my mind,”

It is impossible to keep Elon Musk out of the news, with the latest being his threat to
sue Microsoft because he claims it has been using data from Twitter without permission; this comes after it was reported that it was planning to remove the app from its corporate advertising platform as from 25 April. The consequence of such action would see ad buyers unable to access their Twitter accounts through Microsoft’s social management tool, whilst others – such as Facebook, Instagram, and LinkedIn – will continue to be available.

Before entering court for a much-awaited six-week trial, Fox News agreed to pay US$ 787 million to settle with the voting machine company, Dominion, in a defamation lawsuit from its reporting of the 2020 presidential election. The Murdoch flagship Fox was accused of spreading false claims that the 2020 Presidential vote had been rigged against Donald Trump, with Dominion arguing its business was harmed by Fox spreading these false claims, whilst noting that Fox had “admitted to telling lies, causing enormous damage to my company”. Some consider this a win for Fox who were staring down the barrel of a US$ 1.6 billion pay-out, after the judge had commented, even before the case, that claims against Dominion had already been proven false, emphasising that the falsehoods were “crystal clear”. However, Fox still face another day in court, with election technology firm Smartmatic brining a US$ 2.7 billion case against the media giant. Meanwhile, Dominion still has litigation pending against two conservative news networks, OAN and Newsmax.

This week, Commonwealth Bank of Australia posted that property rentals were only moving in one direction and that is upwards. CBA said the vacancy rates are “extremely low” across most of Australia, and rental inflation is still moving higher, as a throwback from the impact of Covid. Some of the factors that have had a direct impact on the current situation, and have led to a “dislocated market”, include:

• reduction in average household size
• a massive and “rapid” increase in demand for rentals
• rising interest rates
• less building activity
• more short-term accommodation

Even if circumstances do change, renters will continue to be financially hit for the rest of 2023.

Last week, this blog touched on the global disconnect when central banks raise interest rates, with banks benefitting, at the expense of their customers. Banks tend to move the full rate hike onto their customers almost immediately but tend to offer their savers a lot less – if anything at all. Now, the Australian Competition and Consumer Commission has got into the act by launching a probe into the savings rates offered by banks. it will be looking at how banks pass on changes to their deposit rates in line with the RBA’s cash rates increases, noting that, “while banks have generally increased variable rate home loans interest rates in line with the cash rate increases, increases to the savings interest rates that banks pay their customers have often been smaller or conditional.”

March retail sales dipped by 1.0% on the month – a sure indicator that the US economy is also heading in the same direction; compared to March 2022, sales were up 2.9% at US$ 691.7 billion. This points to the benefit of the Fed belatedly starting to raise rates at the beginning of 2022 to dampen demand and so to start to rein in inflation. Food sales only declined slightly, whilst there were marked contractions in sales of motor vehicles and parts, electronics and appliances, as well as in general merchandise stores. However, the Fed still has a long way to go before rates go south and inflation is put back in its cage.

A UNESCO report indicates that a further US$ 97.0 billion is required to fund its Goal 4 of the 2030 Agenda for Sustainable Development, which aims to ensure inclusive and equitable education and promote lifelong learning opportunities for all. If the money is not forthcoming, countries would be unable to meet their targets, with those nations in sub-Saharan Africa, worst impacted, as students have the furthest distance to travel, with 20% of primary school-age children and almost 60% of upper secondary school-age youth not in school. It is estimated that a third of the required funds could be filled if donors fulfilled their aid commitments and prioritised basic education in the poorest countries. Furthermore, more teachers are required – the current number of pre-primary teachers in low-income countries needs to triple and double in lower-middle-income countries by 2030.

A recant Deloitte’s report, involving UK CFOs of large companies, noted that there were 25% more of them feeling better about the future than worse, compared to 17% more feeling the opposite three months ago – its sharpest rise since 2020. The improvement came in tandem with a dip in energy prices and an easing in the Brexit impasse. The twelve-day survey ended on 03 April and was just after the Silicon Valley Bank implosion and debacle of Credit Suisse having to merge with UBS. The study has its merits but only reflects the views of CFOs of the UK larger companies, that will not be in tandem with those employed in smaller entities, where the going is a lot harder. Interestingly, those surveyed were still feeling risk averse with many saying their priorities were cutting costs and building up cash reserves – a move that will not see much economic growth. However other studies point to an improvement in the national economy – the IMF forecast a 0.3% contraction this year, half of its January figure, whilst the EY Item Club amended its previous 0.7% contraction to 0.2% growth. Although still dismal reading, it does point to the economy turning a corner.

Data from the HCOB Flash Eurozone PMI showed that the eurozone’s April economy accelerated to an eleven-month high expanding 0.7 to 54.4 on the month; any figure above 50 indicates growth, and under 50 points to contraction. Whilst the results seemed to show overall improvement, recovery was patchy and growth was unevenly distributed around the bloc, as seen by the widening gap between the partly booming services sector, (notwithstanding inflation remaining high in the eurozone and incomes that have not kept up with rising consumer prices), compared to the weakening manufacturing sector. Year on year, although inflation has declined to 6.9%, it is still some way off the ECB’s longstanding 2.0% target and comes at a time when the IMF has warned of a “sharp downturn” in Europe’s 2023 economic growth. To the surprise of many, Germany is the only euro area country the IMF now forecasts will enter recession in 2023, (attributable to the ongoing economic impact of the war in Ukraine), whilst a sharp decline in output in France’s manufacturing sector is expected this year.

Despite most analysts predicting UK inflation rate would finally head down into single digit territory, reality took over with March figures dipping 0.3%, on the month, to 10.1%, attributable to soaring food prices – rising at their fastest in forty-five years. It is a common fallacy that falling inflation will result in falling prices but that is not the case – it is an indicator that the rate of price rises is slowing. The Office for National Statistics noted that globally food prices were falling, but that they had not yet led to price cuts. Furthermore, UK inflation remains higher than in other Western countries, including the US, Germany and France, with new figures showing eurozone inflation 1.6% lower, having eased to 6.9% last month, from 8.5% in February. The usual suspects behind UK’s inflation problem remain increased exposure to rises in wholesale gas prices, its reliance on imports of certain foods, worker shortages and wage rises.

On becoming Prime Minister, following a disastrous – and thankfully short – period when Liz Truss strutted on the world stage, Rishi Sunak made several pledges, one of which was to restore trust and integrity after the web of scandals that brought down Boris Johnson, and a bold commitment to govern with “integrity, professionalism and accountability at every level”. Since then, he has had to deal with several scandals that have left many thinking that sleaze is endemic in the corridors of power that has already seen the departure of two of his very senior staff – Nadhim Zahawi and Dominic Raab – and a near miss for his current Home Secretary, Sueella Braverman. To the outsider, it seems that, after thirteen years in power, the Conservatives have become more of an old boys’ club. Greg Hands replaced Zahawi whilst Oliver Dowden took over the Deputy PM mantle from Raab and Alex Chalk became Lord Chancellor. Five of the six went to Cambridge and one to Oxford, the same university the Prime Minister attended.

Rishi Sunak has also promised the electorate that inflation would be halved by the end of 2023, with his Chancellor, Jeremy Hunt, saying, this week, he was still confident that inflation would fall sharply by the end of the year, adding “we have a plan and if we’re going to reduce that pressure on families, it’s absolutely essential that we stick to that plan, and we see it through so that we halve inflation this year as the Prime Minister has promised.” There is more chance of success for Blackadder’s “Baldrick, I have a very, very cunning plan”. Inflation in the UK remains higher than in other Western countries, including the US, Germany, France and Italy. On Wednesday, new figures showed eurozone inflation eased to 6.9% last month, from 8.5%, whilst the UK’s inflation remains in double-digit territory.

The Office for National Statistics posted that “26% of adults experienced shortages of essential food items that were needed on a regular basis” for much of March – an increase of the 18% who reported similar problems in February. The UK has witnessed its worst year-on-year drop in living standards since 2009 – and over two years, the worst since the 1950s – as the price of food and soft drinks – the fastest such inflation since 1977.  When the minutiae of this week’s economic data have been analysed, it is all but certain the BoE will nudge interest rates 25 bp higher, for the twelfth time over the past eighteen months, to 4.50%, because it has yet to get to grips with inflation that is proving “more persistent than it expected”. The UK is in the midst of so many strikes that it is causing not only economic turmoil but a great deal of social unrest. which can only get worse under the present regime. The only problem is that a change in government will not see much improvement for the general public. Having seen the UK slowly becoming a banana republic, for many Dubai expatriates there are so many Reasons to be Cheerful!

Bridge The Gap!                                                                                        14 April 2023

The 2,709 real estate and properties transactions totalled US$ 3.16 billion, during the week, ending 14 April 2023. The sum of transactions was 226 plots, sold for US$ 1.57 billion, and 2,020 apartments and villas, selling for US$ 1.21 billion. The top three transactions were for plots of land, one in Mugatrah, sold for US$ 1.05 billion, and the other two in Al Layan 1 for US$ 172 million and in Al Barsha South for US$ 25 million. Al Hebiah Fifth recorded the most transactions, with seventy-four sales, worth US$ 15 million, followed by thirty-four sales in Madinat Hind 4 for US$ 12 million and twenty-seven sales in Al Hebiah Fourth, valued at US$ 68 million. The top two transfers for apartments and villas were for apartments located in Palm Jumeirah, valued at US$ 16 million and US$ 14 million. The mortgaged properties for the week reached US$ 357 million, whilst sixty-eight properties were granted between first-degree relatives worth US$ 39 million.

According to the latest Luxhabitat Sotheby’s report, the average price of ultra-luxury homes   rocketed by more than 27% in Q1, compared to Q4 2022. The demand for such property continued to head north on the back of a broader economic recovery and an influx of overseas buyer seeing Dubai as a refuge and safe environment in a troubled world. In Q1, Dubai’s average price of a prime property rose to US$ 6.86 billion, with the average price per sq ft of a prime property rising 21% to US$ 919. Highest quarterly growth was seen in Jumeirah Bay, Al Barari and Downtown Dubai – 220% to US$ 559 million, 168% to US$ 252 million and 49% to US$ 926 million. The Consultancy indicates more of the same in Q2. The top five sales in Q1 were:

Jumeriah Bay Island Bulgari Lighthouse        US$ 112 million       Built-up 39.0k

Palm Jumeriah XXll Carat (Club Villa US$     US$ 50 million         Built-up  12.1k

Jumeirah Bay Island Bulgari Lighthouse         US$ 44 million         Built-up  11.7k

Palm Jumeirah The Fronds Frond D              US$ 41 million         Built-up    7.0k

Palm Jumeirah The Fronds Frond F               US$ 34 million           Built-up    7.0k

The recent Knight Frank report pointed to the fact that Dubai has ranked as the fourth-most global active market in the luxury residential segment, with 219 homes, selling above US$ 10 million, and valued at US$ 3.8 billion last year. In Q1 2023, there were sales of eighty-eight units, valued at US$ 1.63 billion, with wealthy buyers snapping up these units valued at more than $10 million Four of the top ten property sales prices in Q1 were in Jumeirah Bay, where the average price of the twenty-two units sold was just under US$ 25 million, equating to US$ 2.88k per sq ft; the most expensive sold were found at Bulgari Lighthouse and Bulgari Resorts and Residences. The prices of the next two highest locations – The Palm Jumeirah and Emirates Hills – were some way behind the leader at US$ 846 and US$ 653.

In Q1, the luxury apartments segment witnessed 1,584 units being sold, valued at US$ 2.67 billion, accounting for 66% of the overall prime market. The top three locations were The Palm Jumeirah, with sales of US$ 1.01 billion, Downtown Dubai – US$ 926 million – and Jumeirah Bay – US$ 490 million. The average cost of a prime apartment jumped 35% on the quarter to US$ 7.73 million, with off-plan sales accounting for 70% of all apartments sold in Q1.  In the prime villa segment, 294 units were sold for a total of US$ 1.53 billion, with the three most popular areas being The Palm Jumeirah, Dubai Hills Estate and Al Barari. In Q1, the average cost of a prime villa rose 37%, quarter on quarter, to US$ 10 million.

Property prices continued their upward journey in March in Dubai, surpassing their 2014 peak level for villas and some apartment areas of the emirate. The latest CBRE report confirms that apartment prices overall are still 17.1% down on 2014 levels but there are certain locations where prices have breached that historic volume. For the villa segment, overall prices are now 0.7% higher over the nine-year period. Last month average prices for apartments were at US$ 336 and US$ 396 per sq ft for villas. The report also noted that over the twelve months to March 2023, apartment and villa prices posted gains of 12.4% and 14.8% respectively. Jumeirah recorded the highest sales rate per sq ft in the apartment category, reaching US$ 665, while Palm Jumeirah villas recorded the highest sales rate per sq ft of US$ 1,214. Realiste estimated that the most expensive area in Dubai is Jumeirah Bay, with an average apartment cost of US$ 5.45 million.

Latest figures from STR show that Dubai hotels ended 2022 on a strong footing, after recovering better than expected from the impact of Covid. Revenue per available room rose about 31% to US$ 186, compared to December 2019 pre-pandemic returns. Dubai’s Department of Economy and Tourism posted that in the eleven months to 30 November 2022, overnight international visitors totalled 12.82 million, equivalent to 85% of 2019 pre-Covid numbers; it was also more than double the 6.02 million people who had visited Dubai over the same period in 2021.

Dubai’s business activity in non-oil private sector economy rose 1.4, to 55.5, to hit a five-month high, driven by output expanding on stronger increases in both jobs and inventories, with growth rates reaching multiyear records; the pace of job creation came in at its fastest pace since January 2018, with construction companies posting strong growth numbers, and there was also a marked improvement in staffing levels. Stocks of inputs registered their fastest rate in nearly five years, as firms purchased greater volumes of raw materials to service new and current projects.  Furthermore, output prices fell for the eighth consecutive month, attributable to discounting by companies keen to maintain their market share, whilst supplier delivery times continued to shorten, as vendors worked to tighter customer requirements. Emirates NBD has posted that it estimates Dubai’s full-year 2022 growth at 5.0% and expects the emirate’s GDP to grow by 3.5% next year.

The UAE’s goods trade with the rest of the world hit $1.024 trillion last year, and it is expected that the emirate will see increased growth for a myriad of reasons including the reopening of the Chinese economy, the government’s progressive action in ensuring the non-oil sector diversifies and consolidates and the increase in bilateral trade deals. In 2022, UAE’s exports grew 41% to US$ 599 billion, with imports topping US$ 425 billion, accounting for 1.7% of global merchandise imports; the country was ranked 11^th globally of the top commodity-exporting countries. Trade has always been an important pillar of Dubai’s economy, with Oxford Economics noting that “we expect trade in goods and services to expand and be stimulative of economic growth”. Since Dubai is now a major economic hub, situated between Europe and Asia, it will be able to benefit from its position to service the Asian economies which are forecast to see robust growth in the coming months, even though business in Europe and US may be dismally flat. Last week, HH Sheikh Mohammed commented that the UAE’s trade is set to surge further this year, following strong growth last year. According to the WTO, the UAE accounted for 2.4% of the world’s goods exports in 2022.

Dubai’s ambitious D33 economic agenda has several objectives for the next ten years to 2033 including to;

• double the size of its economy
• double the size of its foreign trade
• add four hundred cities to its foreign trade map
• establish Dubai as the go to destination for major international companies and investments 
• ensure that Dubai becomes one of the top three global cities

It does seem that certain banks have been reluctant to pass on the benefits of rate hikes to their savers. The last increase was in March when the UAE Central Bank moved its overnight deposit facility 25bp higher to 4.9%, following the Federal Reserve’s 0.25% increase. In the not-too-distant past, any rise in the deposit interest rate for retail investors would move in tandem with the same rate.

The latest bulletin from the federal Ministry of Finance has listed out a number of entities that are not required to register for Corporate Tax. They include government and government-controlled entities, extractive businesses, and non-extractive natural resource businesses. Furthermore, a non-resident person will be exempted if they earn only UAE-sourced income and do not have a Permanent Establishment in the country.

Last year, Dubai Integrated Economic Zones Authority posted increases in both its revenue, by 29.0%, (including commercial licensing and services, 69.0%, and rentals by 9.0%), and operating profit by 42.0%. With 22k companies and over 41k employees, DIEZ contributed 5.0% to Dubai’s GDP and 11.0% to the emirate’s non-oil foreign trade in 2021.

With a US$ 400 million investment, e& has become a majority shareholder in Careem’s super app, along with all three of Careem’s co-founders, subject to regulatory approvals. This investment will allow telecoms and technology provider boost the growth of its consumer digital services, including the expansion of e& life’s fintech vertical, e& money. Careem will also benefit by having the extra finances to expand its core food, grocery and fintech services and as well as adding more partner services.

On Tuesday, e& announced that its shareholders had approved the Board of Directors’ recommendation to distribute H2 cash dividends, at a value of US$ 0.109 per share, with the total annual dividend double that figure at US$ 0.218.

Dubai Electricity and Water Authority PJSC, reported that its shareholders approved the payment of total dividends of US$ 1.30 billion; based on a share price of US$ 0.676, the dividend, to be paid next Thursday, 20 April, equates to a 6.3% dividend yield. The utility posted a total US$ 2.70 billion annual 2022l pay-out.

The DFM opened on Monday, 10 April 2023, having gained 62 points (1.8%) the previous fortnight, gained 81 points (2.4%) to close on 3,492 by Friday 14 April. Emaar Properties, US$ 0.10 higher the previous three weeks, gained US$ 14 to close the week on US$ 1.68. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.67, US$ 3.62, US$ 1.44, and US$ 0.35 and closed on US$ 0.68, US$ 3.54, US$ 1.46 and US$ 0.39. On 14 April, trading was at 144 million shares, with a value of US$ 77 million, compared to 65 million shares with a value of US$ 37 million on 07 April.

By Friday, 14 April 2023, Brent, US$ 11.27 higher (16.4%) the previous three weeks, gained a further US$ 6.69 (8.4%) to close on US$ 86.63.  Gold, US$ 46 (2.3%) higher the previous three weeks, dipped US$ 39 (0.4%) at US$ 2,018 on 14 April 2023.

This week, Bitcoin continued its bounce back to economic health, touching U$ 30k for the first time since last June and trading 80% higher YTD, but still down 50% from its November 2021 all-time high; it is also the first time that it has crossed that level since the collapse of Terra/Luna and Three Arrows Capital. The current price indicates that it has fully recovered from Celsius, FTX and the US regulatory crackdown, but the US regulators seem tb focussing a lot more time on the crypto industry which will be under even more scrutiny in the future. This week, crypto exchange Coinbase Global was cited by US Securities and Exchange Commission, confirming that it was to bring an enforcement action. Meanwhile, the US Commodity Futures Trading Commission has sued Binance founder, Changpeng Zhao, and his crypto exchange for alleged violations of derivatives regulations.

A report by the International Data Corporation has noted a 29% decline, to 56.9 million, in Q1 for global shipments of personal computers, compared to a year earlier Apple took the brunt of the fall in numbers, posting its largest ever year-over-year drop in shipments to 4.1 million, falling 40.5%; this saw Apple’s market share in the personal computer market falling 1.4% to 7.2% on the year. Of the major players, only HP saw an increase of its market share rising from 19.7% to 22.1%. The decline in shipments was attributed to weak demand, excess inventory and a worsening macroeconomic environment, with the report noting that shipment volume also declined to lower than pre-pandemic levels. The current decline in numbers is expected to continue to fall in the short-term but should pick up later in the year if the global economy improves.

According to reports, Twitter has been merged with Elon Musk’s “everything app” and is no longer considered an independent entity.  It seems that in a court filing involving Twitter and its former CEO, Jack Dorsey, one of the documents noted that “X Corp. is a privately held corporation. Its parent corporation is X Holdings Corp. No publicly traded corporation owns 10% or more of the stock of X Corp. or X Holdings Corp.” Elon Musk evidently revealed that his other company – X Corp – has absorbed Twitter Inc.  After finally acquiring Twitter, in a drawn-out US$ 44 billion deal, Musk has said that the move was eventually “an accelerant to building X,” the “everything app”.

Elon Musk is awaiting the Federal Aviation Administration’s approval to launch his Starship rocket, claimed to be the world’s most powerful rocket. The launch is scheduled for this Monday, with the tech billionaire admitting he thinks there is only a 50% chance of success. He confirmed that his company SpaceX is building multiple Starship vehicles at the South Texas site, increasing the likelihood of a successful launch. It is expected that a similar rocket will send humans to the Moon and eventually to Mars. The Starship spacecraft is also designed for everything including from interplanetary exploration to suborbital supersonic flights on Earth.

Alphabet, the parent company of Google, has been fined US$ 31 million by South Korea’s Fair Trade Commission for blocking the release of mobile video games on a competitor’s platform. It had been cited for bolstering its market dominance and impacting on local app market One Store’s revenue and value as a platform, by requiring video game makers to exclusively release their titles on Google Play in exchange for providing in-app exposure between June 2016 and April 2018. Game makers affected by Google’s action included Netmarble, Nexon and NCSOFT. Two years ago, Google had been hit by a a larger fine of US$ 151 million for blocking customised versions of its Android operating system.

Tupperware, founded in 1946 by Earl Tupper, an American chemist, has warned that it could go into liquidation if much-needed funding cannot be raised, as it has “substantial doubt about its ability to continue as a going concern”. On the news, the US maker of food storage containers saw its share value tank 50% on Monday; it had made its fortune, mainly in the sixties and seventies, by employing a direct sales force including people holding “Tupperware parties” in their homes to sell plastic containers for food storage. The company, which has failed in its strategy to reposition itself to a younger audience, still maintains a direct sales force – who earn a percentage of all the goods they sell – as well as selling goods on its website;  that number  dipped by 18% in 2022 compared to the previous year. Analysts, including GlobalData, concur that it has “failed to change with the times in terms of its products and distribution”, and that the method of selling direct to younger customers, through Tupperware parties, “was not connecting”. Because it has yet to file its annual report, Tupperware could be delisted from the New York Stock Exchange and has also warned that it had to renegotiate its loans after already amending its loan agreements three times since August 2022. It is also known that its 2021 and 2022 financial results had been “misstated” due to how the firm accounted for taxes and leases.

When there are problems, the French police have history in blaming anybody else but themselves. Now the French border police have accused the Port of Dover of failing to prepare properly for last weekend’s holiday rush, when many travellers encountered lengthy delays. Noting that the gendarmerie “had taken the necessary measures to cope with this flow,” it later posted that `’this was not enough to absorb the number of buses announced for one day, due to the structural organisation of the control queues at the port of Dover, on the British side.”

Q1 witnessed Türkiye’s budget deficit was at US$ 13.65 billion, with revenue up 30.8% on the year to US$ 42.4 billion and expenditure, 57.0% higher at US$ 55.7 billion; privatisation moves added a further US$ 169 million. The monthly March budget came in with a US$ 1.68 billion deficit, whilst the primary balance – excluding interest payments – was at minus US$ 9.1 billion) in the three-month period.

Latest February, Eurostat data indicate that there were production increases in both the EU and the euro area by 1.4% and 1.5% on the month and by 2.1% and 2.0% on the year. Over the month, the EU and the euro area saw growth in capital goods by 2.1% and 2.2%, non-durable goods by 2.4% and 1.9%, energy by 1.2% and 1.1% and intermediate goods by 0.5% and 1.1%. The highest monthly increases were registered in Belgium (6.1%), Luxembourg (4.9%) and Greece (4.8%), with the largest decreases seen in Slovenia (3.6%), Finland (2.3%) and Portugal (2.0%).

It does not take an expert to confirm that debt-ridden developing countries are in a mega economic mess, exacerbated by factors such as the global growth slowdown, high interest rates and reduced investment. However, the UN Conference on Trade and Development confirmed this fact and warned that annual growth across large parts of the global economy will be below pre-pandemic levels in 2023; it estimated that rising interest rates, allied with soaring debt levels, will cost developing countries over the coming years, at least US$ 800 billion “in foregone income”. The report noted that last year, borrowing costs increased 3.2% to 8.5% for sixty-eight emerging markets, and over the last decade that “the number of countries spending more on external public debt service than healthcare increased from thirty-four to sixty-two. The situation will get even worse as public investment in developing countries continue to suffer as countries pay more to their external creditors than they receive in new loans, as was the case in 2022, with thirty-nine countries in this bracket. More worryingly, eighty-one developing countries (excluding China) lost US$241 billion in international reserves in 2022, or 7.0% on average. It is a fact that the gap between the so-called rich nations and the poorer developing ones is getting wider by the year; it is about time that global bodies start making a concerted effort to Bridge The Gap!