Missed Opportunity?

Missed Opportunity                                                                                17 June 2022

For the past week, ending 17 June 2022, Dubai Land Department recorded a total of 2,423 real estate and properties transactions, with a gross value of US$ 1.82 billion. A total of 213 plots were sold for US$ 280 million, with 1,652 apartments/villas selling for US$ 1.04 billion. The top two transaction sales were for plots of land – one in Palm Jumeirah for US$ 15 million, and another sold for US$ 12 million in Al Barsha First. The three leading locations for sales transactions were Al Hebiah Fifth, with 75 sales worth US$ 44 million, followed by Jabal Ali First, with 37 sales transactions worth US$ 33 million, and Al Merkadh, with 30 sales transactions, worth US$ 82 million. The top three apartment sales were one sold for US$ 119 million in Marsa Dubai, another for US$ 117 million in Burj Khalifa, and third at US$ 116 million in Palm Jumeirah. The sum of mortgaged properties for the week was US$ 455 million, with the highest being for land in Al Karama, mortgaged for US$ 50 million. One hundred properties were granted between first-degree relatives worth US$ 64 million.

Posting the highest volume of transactions for the month of May in the past decade, Mo’asher noted that the emirate posted 6,652 May transactions, valued at US$ 5.01 billion. Dubai’s official sales and rental performance index showed a 51.6% increase in volume and a value growth by 66.1%, compared to May last year. The index was launched in January 2012, with the monthly index starting on 01 January that year and the base quarter being Q1 2012. The May 2022 index was at 1,296, and an index price of US$ 343.7k, with villas and apartments showing 1.338 (US$ 586.0k) and 1.368 (US$ 320.3k). Mo’asher recorded a 0.962 monthly index for rentals at an index price of US$ 141.7k, with villas and apartments showing 0.867 (US$ 36.1k) and 0.966 (US$ 13.1k). The secondary market accounted for 58.5% in terms of volume and 66.3% in terms of value, with the balance from the off-plan sector. Apartments accounted for 82.3% of total transactions, with villas/townhouses representing the 17.7% balance. On a comparison with the first five months of 2021, YTD transactions, at 34,126, were up 64.8%.

This week, Damac Properties has launched its second high-rise tower, Safa 2, at its twin-tower project near Safa Park, with the developer again teaming up with Swiss jeweller de Grisogono on the luxury project, with more than eighty floors. March saw the unveiling of Safa 1, also in partnership with de Grisogono, which the developer acquired last month for an undisclosed fee. No price deals were given. Both towers will be interlinked at the base, middle and crown by unique defining features, including a “ruby heart” at the centre and a floating pool on the 60th floor. It will also have a “Fog Forest” at the crown of the tower, featuring lush landscape and man-made fog.

The latest CBRE report shows Dubai property prices, (and transaction volumes), continuing their upward trend into May, as the emirate’s real estate market makes a strong rebound post the Covid-induced slowdown. The consultancy reported that property prices in the twelve months to May jumped 10.9% on the year, with villas up 19.8% and apartments 9.6% higher; on the month, the rises were 1.2% and 0.4% respectively, with the May volume of transactions, at 5.5k, 33% higher on the year. The five-month YTD figure of 30.9k transactions was the highest return since records started in 2009. It also noted that “price growth has also remained robust, despite the rate of growth slowing marginally from a month earlier.”

Meanwhile Allsopp & Allsopp recorded the fact that there was a 50% May dip in the ultra- prime properties coming to the market, compared to a year earlier, and that whilst demand was on the up, the supply chain remained dull. Following similar increases of 4.2%, (apartments), and 5.0% villa increases in April, last month saw similar staggering monthly growth levels on Palm Jumeirah. There were also May prices increases in Meydan City and Jumeirah Golf Estates. The highest average sales rate per sq ft for apartments and villas were at Downtown Dubai – US$ 557 per sq ft – and Palm Jumeirah at US$ 874 per sq ft. Interestingly, the average per sq ft prices for apartments, at US$ 300, and US$ 356 for villas, were still 25.9% and 9.5% lower than witnessed at the 2014 peak.

This week, Damac Properties launched its second high-rise tower, Safa 2, at its twin-tower project near Safa Park, with the developer again teaming up with Swiss jeweller de Grisogono on the luxury project, with more than eighty floors. March saw the unveiling of Safa 1, also in partnership with de Grisogono, which the developer acquired last month for an undisclosed fee. No price deals were given. Both towers will be interlinked at the base, middle and crown by unique defining features, including a “ruby heart” at the centre and a floating pool on the 60th floor. It will also have a “Fog Forest” at the crown of the tower, featuring lush landscape and man-made fog.

Good news for the country and for the local property market is a forecast in the Henley Global Citizens Report that 4k millionaires, (compared to 1.3k in 2019) will migrate to the UAE this year, surpassing the big traditional big players such as Australia, Canada, Israel, Singapore, Switzerland, UK and USA; it is set to attract the largest number of millionaires in the world in 2022.  Its HNWI migration figures only count those who have truly moved to the country and reside here for at least half of the year. It estimated that the total private wealth in the country stood at US$ 966 billion, including 92.6k millionaires, with over US$ 1 million wealth, 251 centi-millionaires with over US$ 100 million-plus wealth and 4k individuals with US$ 10 million wealth. Three drivers behind this impressive growth are the success of the recent six-month Expo, the introduction of longer-term visas and the government’s exemplary handling of the Covid protocol. Furthermore, other factors that have pushed figures higher include UAE’s low crime rates, competitive tax rates, and attractive business opportunities, not to mention the likes of world-class shopping malls and restaurants, excellent international schools, many beaches with yachting, water sports, and other leisure activities, a first-class healthcare system, renowned luxury hub, with top-end apartments and villas and its position as a regional (and global) hub.

Official data sees Dubai inflation reaching 4.6% in April, compared to 2.5% registered at the end of last year, and if this is the case, Knight Frank were right to post that the level is “relatively tame compared to the rest of the world”. In a bid to contain rising inflation, the country’s Central Bank raised its interest rates by 50 bp last month – and a further whopping 0.75% on Wednesday, in line with the Federal Reserve’s similar move. Knight Frank said it does not expect rate increases to affect the stability of the Dubai residential market, noting that YTD to May, mortgage buyers accounted for about 18% of the residential market, by value of deals, compared to about 40% last year and 52% in 2007. It estimates that at the higher end of the market, cash sales are still dominant as investors from a myriad of countries continue to pile into the emirate. The consultancy sees 2022 mainstream property price growth slowing to between 5% – 7%, with more than double that increase for prime properties.

May witnessed a 28.3% hike in the value of exports and re-exports of Dubai Chamber members to US$ 6.3 billion in May 2022 – its highest level since August 2018. YTD, members’ exports and re-exports climbed 15.8%, to US$ 28.4 billion, as more than 291k certificates of origin were issued by the Chamber – a year on year growth of 7.1%. In the first five months of 2022, Chamber member exports and re-exports to GCC markets increased by 11.1% to US$ 15.1 billion, and by 12.1% to US$ 3.4 billion, on the month, equating to 55% of the total exports and re-exports of the members in May.

At its latest meeting, the Federal National Council approved a US$ 335 million increase in the 2022 federal budget which will be covered by the federal government’s general reserves. The UAE general budget revenues for this fiscal year are estimated to increase by US$ 102 million while the general budget expenses for are estimated to increase by US$ 335 million

A survey, by the US online education company’s Global Skills Report, places the UAE the world’s leading country for business skills; the study assessed more than 100 million learners in more than one hundred countries over a twelve-month period. Coursea rated the UAE highly in several areas such as leadership and management, strategy and operations, communication, human resources and entrepreneurship., noting that the country “has been preparing for the post-oil era with a more diversified, high-skill economy,” However, it did advise education leaders to “focus on addressing gaps in technology and data science skills, which are a strategic imperative to accelerate digital transformation.”

The UAE Central Bank has fined an unnamed financial company, operating in the UAE, and ordered it reform after it had missed its deadline to submit its audited financial statements and failed to abide by their guidelines. It gave the company one month to rectify its shortcomings.

With the introduction of two new equity futures contracts on individual stocks, DEWA and GFH Financial Group, it brings the total number of companies that the DFM provides futures’ contracts on their individual stocks to twelve listed companies; all have tenures of between one and three months. This is part of the DFM’s strategy to attract more business and boost liquidity, by diversifying investment opportunities strategy. Earlier in the month, Oman crude oil futures began trading on the emirate’s stock market.

Dubai’s road toll operator Salik is now a Public Joint Stock Company, as it prepares to become the third government body entering the DFM via an IPO; this came with HH Sheikh Mohammed bin Rashid Al Maktoum approving Law No. (12) of 2022. The Salik Company, with all shares owned by the Dubai government, will have legal, financial and administrative autonomy to carry out its activities and achieve its objectives; it will have a term of ninety-nine years, with the term renewing automatically for the same period as per the company’s articles of association. The MoA states that, in case of an IPO, the government should continue to own at least 60% of the capital, and that the Executive Council of Dubai is authorised to decide the percentage of shares that can be offered for subscription either through an IPO or private placement.

The DFM opened on Monday, 13 June, 10 points (0.3%) lower on the previous week, and shed 115 points (3.4%), to close on Friday 17 June, on 3,377. Emaar Properties, US$ 0.01 lower the previous week, lost US$ 0.12 to close on US$ 1.45. Dewa, Emirates NBD, DIB and DFM started the previous week on US$ 0.71, US$ 3.69, US$ 1.60 and US$ 0.54 and closed on US$ 0.71, US$ 3.68, US$ 1.54 and US$ 0.50. On 17 June, trading was at 225 million shares, with a value of US$ 139 million, compared to 53 million shares, with a value of US$ 37 million, on 10 June 2022.

By Friday 17 June 2022, Brent, US$ 11.61 (10.5%) higher the previous four weeks, tanked and lost US$ 11.55 (9.5%) to close on US$ 110.16.  It had started the trading Friday morning on US$ 118.75 but contracted on growing concerns that the US Federal Reserve’s plans to continue with interest rate hikes could lead to an economic downturn. Gold, US$ 65 (3.6%) higher the previous four weeks, shed US$ 33 (1.8%), to close Friday 17 June, on US$ 1,842.  

Hybrid Air Vehicles has received a ten-plane order from European-based Air Nostrum Group for its ten Airlander airships for delivery from 2026. Currently operating out of an airfield in Bedfordshire, it expects to move its manufacturing base to South Yorkshire, which will create some 1.8k jobs. The airships, which could hold one hundred passengers, will use helium and electricity to stay afloat and will cut flight emissions by up to 90% for journeys across Air Nostrum’s regional routes in Spain.

At this August’s AGM, it is reported that Tesla will submit thirteen proposals, one of which is to introduce a three-for-one stock split, making Tesla more accessible for its retail investors; two years ago, the tech giant voted for a five-for-one stock split and since then its share value has climbed 43.5%. The company also noted that this “would help reset the market price of Tesla’s common stock so that its employees will have more flexibility in managing their equity”. Tesla also posted that its success has relied on attracting and retaining excellent talent, by offering outstanding benefits and highly competitive compensation packages, and that every employee is offered an option to receive equity.

The US$ 6.17 billion, (AUD 8.9 billion), takeover of troubled casino operator Crown Resorts, by the Blackstone Group, the world’s second biggest private equity firm, has been approved by the Australian Federal Court. With a 37% stake in the firm, James Packer will pick up US$ 2.33 billion (AUD 3.36 billion). The sale will mean that, with Crown Resorts becoming a private, it will no longer trade on the ASX. In recent years, the company has been beset by various scandals including being fined for illegally promoting gambling in China, (where fourteen staff were jailed), as well as several damaging inquiries which found that the casino operator enabled money laundering and had links to criminal gangs. Blackstone’s takeover paves the way for Crown’s US$ 1.52 billion, (AUD 2.2 billion) Sydney casino at Barangaroo to fully open and be able to take bets for the first time. The US firm owns the MGM Grand, Mandalay Bay and Bellagio hotels and casinos in Las Vegas, as well as Spanish company Cirsa, which operates 147 casinos in Spain, Italy and Latin America.

Cryptocurrency investors are having sleepless nights as the likes of Bitcoin sink to values last seen in December 2020; by early Tuesday trading, it was values at US$ 20,987, and closed on Friday at US$20,422, way down on the US$ 64,400 mark of last November. An early casualty of the current crisis sees major US cryptocurrency lending company Celsius Network freezing withdrawals because of “extreme market conditions” and transfers between accounts, “to stabilise liquidity and operations while we take steps to preserve and protect assets”. Only last November, it raised US$ 750 million in funding when the company was valued at the time at US$ 3.25 billion. Questions are being asked about the sustainability of crypto lending firms which have boomed in an era of low interest rates and booming crypto markets. Celsius Network posted that it had US$ 11.8 billion in assets, down by more than half from October. This week, it was reported that it was offering interest rates of up to 18.6%. Last month, the crypto industry was shaken by the collapse of the so-called stable coin terraUSD and its sister token luna, with mounting pressure on markets driven by panic, surging and seemingly unstoppable inflation and mounting interest rates. Meanwhile, cryptocurrency exchange Coinbase Global is laying off about 18% of its workforce because of the slump in prices of digital tokens and a wider stock market sell-off.

In contrast to the terms of both the Good Friday Agreement and the Brexit agreement, the Johnson administration announced that it would be overriding international law, as it claims that the protocol’s implementation has damaged trade within the United Kingdom and has threatened political stability in Northern Ireland. Initially, the agreement effectively kept Northern Ireland in the EU single market and customs union to preserve the open border with Ireland specified in the Good Friday peace agreement. The EU argue that any unilateral change could breach international law, and if this were to happen, they would launch legal action and introduce sanctions such as increased tariffs. The plan is for a “green channel” for goods moving from Britain to Northern Ireland, as well as scrapping rules that prevent the province from benefiting from tax assistance and ending the role of the European Court of Justice as sole arbiter. To add to Boris Johnson’s tribulations, many of which have been self-inflicted, the House of Representatives Speaker Nancy Pelosi has said there will be no US-UK trade deal if London scraps the protocol.

Sunday saw the big hitters in a titanic battle contending for the 2023-2027 digital and television rights for the media rights to the IPL matches. The next period will see an additional two teams to expand the IPL to a ten-team tournament. Among them were the likes of Disney (the current provider), and India’s Reliance all wanting the action from the world’s richest cricket league. There is no doubt that it will still remain a bonanza for the winning bidder, Sony Network, and remain a certainty to draw high TV ratings and growth in India’s booming online streaming space. Disney paid US$ 2.09 billion for the IPL rights from 2017-2022, and as expected the successful bid was more than double that at US$ 5.10 billion.

Covid was a godsend for the wealthier people in the world, as their fortunes soared and the world’s population of high-net-worth individuals (HNWIs) rose about 8%. The latest report by Capgemini World Wealth indicates that much of that gain is now disappearing, mainly because of the impact of soaring inflation, that could easily top 10% by the end of Q3, and rising interest rates. Now, it is reported that the five hundred wealthiest people in the world have lost a combined US$ 1.4 trillion this year, including US$ 206 billion on Monday alone, according to the Bloomberg Billionaires Index.  It estimates that the four richest people in the world – Elon Musk, Jeff Bezos, Barnard Arnault and Bill Gates – have lost a cumulative US$ 219.5 billion YTD – US$ 73.2 billion, US$ 65.3 billion, US$ 56.8 billion and US$ 24.0 billion; they are now worth US$ 197.0 billion, US$ 127.0 billion, US$ 121 billion and US$ 144.0 billion. The current crypto meltdown will inevitablysee these figures continue to head south.

The new Albanese administration has lifted the Australian minimum wage by US$ 0.73 an hour, a 5.2% increase from its $20.33 base, from 01 July, a 5.2% increase to US$ 14.82 (AUD 21.38) an hour. Workers on award rates will go up 4.6%, (a cut in real wages), with a minimum US$ 27.72 weekly increase for workers on award rates below US$ 602.72 per week. Estimates are that these latest rises will add US$ 5.48 billion (AUD 7.9 billion) in costs to the affected businesses which will obviously result in higher prices for the consumer and lower margins for businesses affected. There are some businesses that have been against the pay rise as they have to battle a combination of supply claim problems and cost pressures, but some analysts argued that the current labour market was strong enough that the pay increase would not have a “significant adverse effect” on the economy.

Last year, the Australian government angered the French when it pulled out of a US$ 36.82 billion deal to build a fleet of diesel-powered submarines, after belatedly deciding to build up to eight nuclear-powered vessels with the US and the UK in the so-called Aukus deal. (Aukus is a security pact between the three nations, allowing for a greater sharing of intelligence, and is seen as a response to the growing power of China in the region). Now the new administration, following the defeat of Scott Morrison, headed by Labour’s Anthony Albanese, has announced a US$ 585 million settlement package with France’s Naval Group, saying it was a “fair and an equitable settlement”. The new Prime Minister noted that the failed French submarine contract will have cost Australian taxpayers US$ 2.4 billion, with almost nothing to show for it.

As trade relations with China sank to historic lows in the latter years of the Liberal Coalition government, the new administration has begun tentative steps to conduct ministerial-level talks with China. The relationship deteriorated after the then government riled Xi Jinping by calling for a probe into the origins of coronavirus and banning Chinese firm Huawei from building its 5G network. Retaliation was quick and sanctions saw the introduction of trade barriers, increased duties and other measures that badly hit Australian barley, wine, lobster timber, coal and other sectors’ exports. Defence Minister Richard Marles commented that “Australia values a productive relationship with China. China is not going anywhere. And we all need to live together and, hopefully, prosper together.”

The Fed raised its interest rates by 0.75% this week – its third rate hike in three months and the biggest since 1994 – and confirmed that more rate increases are on the horizon. It comes at a time when inflation had reached a new 40-year high, at 8.6%, with its chairperson, Jerome Powell, belatedly saying that “my colleagues and I are acutely focused on returning inflation to our 2% objective.” It may be too late to stop an inevitable major downturn in financial markets and a mini global recession.

The Institute of Grocery Distribution has forecast that UK prices will soar at a rate of 15%, as households pay more for staples such as bread, meat, dairy and fruit and vegetables, leaving the people that already skip meals the most vulnerable. In line with this blog, it estimates that prices will rise faster for longer than Bank of England estimates. The body also sees the Ukraine crisis as the main driver placing the country into facing the highest cost of living pressures since the 1970s, mainly because the protagonists supply over at third of global wheat supplies as well as other grain products. On top of that, current high energy costs have also pushed food prices northwards, whilst fertiliser prices have also nearly tripled since last year.  Furthermore, as much of the foil and wood pulp normally comes from Russia, this has seen high increases in the packaging prices of those materials, as well as plastic packaging, which is made from oil, becoming more expensive. The other problem facing the UK is that it is estimated that over 67% on the Seasonal Agricultural Workers scheme come from Ukraine, and now men between 18 – 60 have to stay at home to fight.

Further dismal economic news from the UK is that regular pay is falling at the fastest rate in more than a decade with real pay, (after adjusting for inflation), and excluding bonuses, 2.2% down in the quarter to April; when bonuses are included, pay is 0.4% higher. Rishi Sunak said the latest figures showed the UK’s jobs market “remains robust”, with redundancies at an all-time low, but there is no doubt that many UK households are reeling from the triple whammy of soaring inflation, record high energy costs and increased taxes. In the three-month period to May, the number of job vacancies in the UK rose to a new record of 1.3 million, with the unemployment rate nudging slightly higher to 3.8%, and the employment rate steady at 75.6% – still lower than before the pandemic.

UK Chancellor, Rishi Sunak, has to deal with claims by the National Institute of Economic and Social Research that he failed to insure against interest rate rises, and that he could have saved billions of taxpayers’ money that has been used to pay interest on government debt. QE saw the Bank of England create US$ 1.1 trillion (GBP 895 billion) of money, with most of this being utilised to buy government bonds from pension funds and other investors. According to the think tank, Mr Sunak’s failure to act had left the country with “an enormous bill and heavy continuing exposure to interest rate risk”, and that by not taking out insurance, when the rate was at 0.1%, on the cost of servicing this debt against the risk of rising interest rates, the loss over the past year could have been as high as US$ 13.6 billion. With rates rising even further this year, this omission could cost the taxpayer hundreds of billions. Maybe an expensive case of a Missed Opportunity?

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Tomorrow Never Knows!

Tomorrow Never Knows!                                                                  10 June 2022

For the past week, ending 10 June 2022, Dubai Land Department recorded a total of 2,369 real estate and properties transactions, with a gross value of US$ 2.37 billion. A total of 262 plots were sold for US$ 343 million, with 1,572 apartments/villas selling for US$ 926 million. The top two transaction sales were for plots of land – one in Al Merkadh for US$ 30 million, and another sold for US$ 21 million in Wadi Al Safa 2. The three leading locations for sales transactions were Al Hebiah Fifth, with 159 sales worth US$ 117 million, followed by Jabal Ali First, with 30 sales transactions worth US$ 25 million, and Al Yufrah 2 with 11 sales transactions, worth US$ 4 million. The top three apartment sales were one sold for US$ 142 million in Burj Khalifa, another for US$ 89 million in Marsa Dubai, and third at US$ 60 million in Um Suqaim Third. The sum of mortgaged properties for the week was US$ 948 million, with the highest being for land in Jumeirah Second, mortgaged for US$ 545 million. Seventy-four properties were granted between first-degree relatives worth US$ 159 million.

It will surprise many to know that Dubai is the world’s top trading hub for rough diamonds, having taken the mantle from Antwerp last year. Dubai Diamond Exchange is the largest diamond-tending facility in the world and is home to more than 1.15k diamond companies. Located in the DMCC, it posted a 36% Q1 annual increase in the value of rough and polished diamonds, driven by an 80% surge in the value of the polished diamond trade in the UAE, topping US$ 4 billion. Last month, the UAE signed a bilateral trade agreement with Israel which included investments within the diamond industry. Furthermore, Emirates has enhanced routes to various countries to consolidate the diamond supply chain, including African and Australian mining countries, and manufacturing centres including Israel, India and Europe. It is also home to the two Kimberly Process offices – set up in 2003, the 85-nation bloc, which includes all major rough diamond producing, exporting and importing countries, was established to cut the flow of conflict diamonds in the global trade.

The latest S&P Global study reports that the emirate’s non-oil business conditions rose to a near three year high, with the Dubai PMI up 1.0 at 55.7 on the month – its highest reading since June 2019. The travel/tourism sector was the main driver in boosting this figure but ongoing volatility in the global economy – and especially energy – saw a quickening in cost pressures. The study focuses on three categories – travel/tourism, wholesale/retail and construction. The former has bounced back with a global easing of restrictions, seeing a lifting in bookings. In contrast, the second listed category witnessed a marked slowdown in new order growth, whilst construction posted its first decline, in nine months, in new works inflows.  60%+ increases in fuel prices, were cited as the biggest cost burden but rising prices of steel, aluminium, chemicals and timber did not help the cause. Companies expanded their workforce last month, after a slight reduction in April. With input costs steadily heading north, this has impacted on margins with many entities having to continue discounting to try to maintain their competitiveness; this in turn has resulted in a deterioration in business confidence going forward.

Following an agreement between Falcon Aviation Services and Eve Holding, Dubai will see the arrival of thirty-five flying taxis by 2026. The Brazilian subsidiary of plane maker Embraer will then be able to introduce eVTOL (electric vertical take-off and lift) tourist flights from the Atlantis, The Palm. The UAE-based charter flight operator is but one player helping Dubai develop its urban air mobility plans, with it noting that “the launch of this concept fully aligns with the Smart Dubai vision and will contribute to positioning Dubai as a global leader.”

Emirates Glass, a wholly owned subsidiary of Dubai Investments, has celebrated its silver jubilee. The company, which has two glass processing units and a warehouse spread over 1,360 sq mt across the country, employs 330; over the past twenty-five years, it has supplied about 27 million sq mt of glass. Emirates Glass plans to expand in the GCC and the wider ME region. Currently, it has a US$ 36 million order book, with projects across the region, Africa and the UK.

According to the Federal Competitiveness and Statistics Centre. last year, the UAE’s non-oil trade surplus, with the five other Gulf Cooperation Council countries, was valued at US$ 36.7 billion. The data indicated that there was a 25.7% jump in trade, valued at US$ 67.3 billion, weighing 68.7 million tonnes, compared to US$ 53.5 billion in 2020, with a weight of 59.9 million tonnes. Imports, exports and re-exports all came in higher by 28.5% to US$ 15.3 billion, by 47.3% to 19.6 billion and by 14.7% to US$ 32.4 billion respectively and weighing 27.9 million tonnes, 36.4 million tonnes and 4.3 million tonnes.

The UAE’s FDI flows increased from US$ 19.9 billion in 2020 to over US$ 20.7 billion) in 2021, with the country’s inflows jumping 64% on the year to US$ 1.58 trillion – and also recovering to pre-pandemic levels.

ECA International’s latest survey of the most expensive global cities ranks Dubai 22nd, moving up six places over the year, and just one place behind neighbour Abu Dhabi. There was no surprise to see Hong Kong continue to be the most expensive city in the world, ahead of New York, Geneva, London and Tokyo. The study weights a range of goods and services from nearly five hundred locations in over two hundred cities in 120 countries.

DP World and Canadian fund Caisse de Depot et Placement du Quebec have announced a US$ 5 billion investment in three of the Dubai port operator’s local assets – the Jebel Ali Port, the Jebel Ali Free Zone and the National Industries Park. The new JV will see the overseas investor hold a 22% stake, with the remainder of the transaction being financed by debt. It is expected that other investors could hold stakes of up to US$ 3 billion, with the value of the three assets, home to 8.7k companies, estimated to be worth US$ 23 billion, and generated pro-forma 2021 revenue of US$1.9 billion. The three assets will remain fully consolidated businesses, within the DP World Group, and day-to-day operations, customers, service providers and employees will not be affected. According to its CEO Sultan bin Sulayem, the transaction “achieves our objective of reducing DP World’s net leverage” to below four times net debt to EBITDA. The Canadian fund’s stake in the JV will be through a sub-concession of up to 35 years.

Figures from the country’s central bank reported that the UAE economy grew last year at 3.8%, (after a Covid-driven 4.8% contraction in 2020) and is expected to better this in 2022 with growth of 5.4%, (well up on their April estimate of 4.2%); next year, the growth will be lower at 4.2%. The three-year figures for the non-oil economy, for the period 2021-2023, see growth levels of 5.3%, 4.3% and 3.9%. Higher energy prices are the main driver behind the country’s oil economy’s growth spurt, with an expected 2022 8.0% hike and 5.0% next year. In 2021, the country’s current account surplus rose 127% to US$ 48.0 billion, with marked increases in both oil and non-oil exports.

According to a recent UN report, last year, the UAE was ranked as the best country in the Arab world in attracting foreign direct investment, being its largest recipient, with flows increasing 4.1% to US$ 20.7 billion on the year. The increase was not as high as the global return which posted a 64% hike to US$ 1.58 trillion. However, there has to be concerns about the state of the sector this year, with the global economic environment being adversely affected a gamut of drag factors including the Ukraine war, almost double-digit inflation, surging energy prices, rising food costs increasing interest rates, to mention just five.

Following the listing of DEWA in April, the second government-owned entity to proceed with an IPO on the DFM will be COM Group PJSC, (TECOM), that includes ten strategic, sector-focused business districts across the emirate, including Dubai Media City and Dubai Internet City. It will issue 625 million shares, (equating to 12.5% of TECOM Group’s issued share capital). As with DEWA, shares will be offered to three groups – Qualified Institutional Offering, the Exempt Offer, and the UAE Retail Offer – with all shares being sold by the Selling Shareholder, Dubai Holding Asset Management; DHAM LLC is TECOM Group’s majority shareholder, and Dubai Holding is its ultimate holding company. Trading on the local bourse is expected to start on 05 July, following a two-week subscription period starting late next week.

The DFM opened on Monday, 06 June, 90 points (2.7%) higher on the previous week, and shed 10 points (0.3%), to close on Friday 10 June, on 3,377. Emaar Properties, US$ 0.09 higher the previous week, lost US$ 0.01 to close on US$ 1.57. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.69, US$ 3.77, US$ 1.62 and US$ 0.58 and closed on US$ 0.71, US$ 3.69, US$ 1.60 and US$ 0.54. On 10 June, trading was at 53 million shares, with a value of US$ 37 million, compared to 93 million shares, with a value of US$ 67 million, on 03 June 2022.

By Friday 10 June 2022, Brent, US$ 10.10 (9.2%) higher the previous three weeks, was up US$ 1.51 (1.3%), to close on US$ 121.77. Gold, US$ 44 (2.4%) higher the previous three weeks, gained US$ 21 (1.1%), to close Friday 10 June, on US$ 1,875.  

Despite the war in Ukraine and travel restrictions in China, demand for international air travel sky-rocketed in April – 332% higher than in the same month last year and up 290% on the month. The ME was one of five regions that demand now exceeds pre-pandemic levels, with local airlines recording a 265% year-on-year surge in demand, 12% higher than in March. However, domestic travel demand dipped 1.0% in April on the year but at a lot higher – 10.6% – on the month, attributable to ongoing strict travel restrictions in China. Overall travel demand, measured in revenue passenger kilometres, was 2.7% higher on the month at 78.7%. In the twelve months to April, carriers have increased capacity by 101%, with load factors more than doubling from 33.2% to 71.7%. Meanwhile, global air cargo demand in April fell and capacity contracted, as the effects of the Omicron coronavirus variant in Asia and the Ukraine war were the two main drivers for global air cargo declining 11.2% on the year – and 1.0% lower than in pre-pandemic April 2019. ME carriers posted an 11.9% decline.

A KPMG report indicates that the average Gulf bank posted a 35.8% surge in its net profit to US$ 34.5 billion, in 2021, driven a marked growth surge in their loan books and a reduction in the costs of funds. It estimated that Kuwait led the field with an unbelievable 91.4% growth expansion last year to US$ 2.9 billion. Impressive as the figures are, they are still behind the cumulative US$ 37 billion return on equity figure recorded in 2019. The report also noted that Saudi and UAE-listed banks reported healthy profit growth of 40.2% and 52.6% last year. The listed bank share prices also witnessed a 36.6% rise, while the total assets, return on equity, and return on assets grew by 6.4%, 2.8%, and 0.3% respectively.

Following his surprise US$ 44.0 billion takeover last April, Elon Musk has threatened to walk away, because Twitter has been actively resisting “thwarting” his information rights and requests to learn more about its user base, as he thinks he is entitled to do his own measurement of spam accounts. The Tesla chief is of the opinion that spam and fake accounts represent a far greater share, possibly as high as 20%, than the less than 5% of daily users that Twitter reports publicly. His advisers noted that “this is a clear material breach of Twitter’s obligations under the merger agreement and Mr Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement.” The tech giant retorted that “Twitter has and will continue to cooperatively share information with Musk to consummate the transaction in accordance with the terms of the merger agreement”. Some analysts think this is a Musk ruse to try to renegotiate the price lower, or even walk away. In early trading on Tuesday, Twitter shares were trading at US$ 38.07, compared to the US$ 54.20 a share when the deal was agreed., which at the time was at a 38% premium on the then closing price. To this observer, it seems that Elon Musk will walk away from the deal and pay the US$ 1 million break-up fee.

It is not a good time for any chief executive to receive what many would consider an obscene amount especially during an economic crisis. This is exactly what has happened to Simon Roberts, head of supermarket chain Sainsbury’s, who reportedly received a US$ 4.8 million pay-out last year, including a US$ 3.5 million bonus, comprising a US$ 2.1 million annual bonus and the balance from a long-term incentive scheme shares; customers and staff must be shaking their heads at why his remuneration is over 150 times that of some of his workers. To make matters worse for his customers, the current dividend of US$ 375 million is up 24% on the year, and the highest since 2015. There are calls, by the High Pay Centre, for the supermarket to “do the right thing by shareholders, customers and workers”; next month investors will vote calling for the chain to pay the “real living wage” to all its workers by July 2023. Since last month, Sainsbury’s has done just that for direct staff, but their largesse does not yet include third-party contractors, such as cleaners and security guards. To placate its customers, it is planning to invest more than US$ 625 million into cutting prices by March 2023. This comes at a time when April food inflation nudged higher to 6.8% and wider inflation topped 9.0%. Both should reach double digit figures by the end of Q3.

To date, the biggest payday for a Hollywood actor has been the US$ 114 million received by Bruce Willis for his 1999 film, ‘Sixth Sense’, which took US$ 673 million at the worldwide box office. Now, Tom Cruise is on his way to beat that record with his latest blockbuster, ‘Top Gun Maverick’, which had box office takings, of an estimated US$ 160 million; in its first four days of release, it has already topped the 2007 US$ 153 million, excluding inflation, release of ‘Pirates of the Caribbean: At World’s End’. Unlike many in the acting profession, Cruise not only earns a US$ 14 million base salary but has also negotiated a 20% share of final – or back-end – profits, known in the trade as “first-dollar gross”; he will also take potential revenue from streaming sales. In the US alone, it is estimated that the film could generate over US$ 300 million in revenue, not bad when the production budget was set at US$ 170 million.

The South African government has announced that two brothers – Atul and Rajesh – from the now infamous and wealthy Gupta family have been arrested and now face extradition back to South Africa. The brothers had fled the country after a judicial commission began probing their involvement in corruption in 2018. They are accused of profiting from their close links with former president Jacob Zuma and exerting unfair influence, as well as paying financial bribes to gain lucrative state contracts and influence powerful government appointments. The Gupta family, which only arrived in the country in 1993, from Uttar Pradesh, is accused of using their close links with former president Jacob Zuma to wield enormous political power across all levels of South African government – winning business contracts, influencing high-profile government appointments and misappropriating state funds. It is alleged that the association between the two families, that became known as the Zuptas, saw one of the disgraced president’s wives, a son and a daughter holding senior positions in Gupta-controlled companies. Many of the companies benefitted from a myriad of public companies that were instructed to take decisions that would advance the brothers’ business interests. A four-year investigation by the country’s top judge concluded that the wealthy brothers had become deeply embedded in the highest levels of government and Mr Zuma’s ruling African National Congress party, whilst other investigations accuse the brothers of being linked to racketeering activity through the procurement of rail, ports and pipeline infrastructure.

With the assistance of academics from Oxford and Cambridge universities, as well experts from the US Boston College, think tank Autonomy is carrying out an experiment to study the benefits of a four-day working week in the UK. Initially, this will involve seventy companies, ranging from office-based software developers and recruitment firms to charities and a local fish and chip shop. The experiment, which will last six months, (during which employees will receive their normal pay for working 80% of usual hours), to see whether productivity improves or not. It is only a matter of time before a four-day week becomes the norm.

The economic damage that the Ukraine crisis has wreaked, has seen the World Bank slashing its 2022 global growth forecast by nearly a third to 2.9%, lowering to 1.5% next year. In its Global Economic Prospects, the report notes that the world economy is now entering what could become “a protracted period of feeble growth and elevated inflation”, with every chance that the outlook could worsen. It warned that the world economy could slip into a period of stagflation – a period of weak growth and high inflation – reminiscent of the 1970s, and that “for many countries, recession will be hard to avoid,” It estimates that over the three years to 2024, the pace of global growth is projected to slow by 2.8%, more than twice the deceleration seen between 1976 and 1979.

In May, the US consumer price index continued its upward trend, moving to 8.6% on the year, and rising 1.0% on the month, driven by higher-than-expected increases in the prices of shelter, food and petrol. Along with many global central banks, the Fed seemed reluctant to raise rates and only began in March; since then, the rate has increased by 75 basis points, with another 50bp (0.50%) increase expected next week. Not only has the Fed been slow to use fiscal policy, as a means to beat inflation, the Biden administration has also been far too generous with government aid packages and have been slow to rein in their generosity. What is certain is that the Fed will have to start using the brakes – hard and quickly – and only hope it is not too late, since there is every chance of stagflation. With so much liquidity in the market, the Fed will also have to run a firm quantitative tightening measure in tandem with lifting rates. With a 2% inflation target, the question is why it has waited so long to act?

If people think the Fed has been slow to act, then they should start questioning why it has taken the ECB so long to consider raising interest rates. Christine Lagarde has indicated a 0.25% rise in rates next month – the first increase in over eleven years – and also an end to its very generous bond-buying stimulus programme on 01 July. With the same 2.0% target, that many global central banks had as policy, it has finally decided to take action only when inflation has hit 8.1%! The Bank also noted that “high inflation is a major challenge for all of us. The governing council will make sure that inflation returns to its 2% target over the medium term”. It is hard to believe in their estimates for the bloc’s inflation for 2022 and the following two years to be 6.8%, 3.5% and 2.1%. If there is a chance of stagflation in the US, it is almost certain to hit the EC, impacted by a toxic mix of higher rates, soaring living costs, continuing high inflation, sharp policy tightening and lower real wages. Civil unrest could soon return to Europe and then what will happen? Tomorrow Never Knows!

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Passing The Buck/Someone Else To Blame!

Passing The Buck / Someone Else To Blame!                       03 June 2022

There were no statistics available, from the DLD, for the past week, ending 03 June 2022.

A Reuters report has estimated that Dubai house prices are set to mostly rise steadily over the next two years, driven by demand from foreign investors, with the caveat which cautioned that rising mortgage rates, and lack of affordable stock, could curb activity. On the plus side, the local real estate market will continue to benefit from the economic rebound, the uplift in the hospitality sector and the surging hike in energy prices. The latest data sees a median YTD rise of 7.5% in Dubai house prices, unchanged from the previous poll taken two months earlier. Dubai Land Department noted that Q1 sales transactions were the best seen in over a decade with many expecting growth to continue but at a slower rate of 4.5% and 3.0% over the next two years. It is noted that many analysts, excluding this one, still consider prices are still well below their last peak in mid-2014.

Some experts are looking at double-digit growth in rentals and this will have an impact, with the cost of living inevitably moving higher; areas highlighted for marked growth include Dubai Marina, Jumeirah Breach Residence, Jumeirah Lake Towers and Palm Jumeirah but interestingly more affordable locations such as Deira, Dubai Sports City and Jumeirah Village are also increasing at double-digit rates. A recent Asteco report indicated 20% – 25% rental increases in Dubai Marina, Palm Jumeirah, Jumeirah Beach Residence and Jumeirah Lake Towers, with Jumeirah Village (21%), Dubai Sports City (15%) and Deira (11%) having seen high annual hikes. In the past, most of the demand for the property has been witnessed in the mid-to-high-end segment but the trend is now heading towards affordable areas. CBRE noted that in the twelve months to 30 April, the average Dubai rental rise was 16.2% – with average apartment and villa rents increasing by 15.1% and 23.5%, respectively.

As expected, Damac Group has acquired de Grisogono, with its founder, Hussain Sajwani noting that it was “in line with our ambitions to expand our business into the luxury and high-end fashion realm, bidding for de Grisogono came to us naturally”; no financial deals were made available. It had already linked up with de Grisogono for its Safa One twin tower project in Dubai, designed to replicate a masterpiece necklace. The Swiss jeweller is known for its “Creation I” necklace, which featured the largest D flawless diamond in the world which fetched US$ 34 million at a 2017 auction. The Swiss jewellery brand filed for bankruptcy in 2020 and the latest deal confirms the Dubai-based developer’s strategy to expand its portfolio by adding distressed luxury assets and making them profitable. In 2019, it purchased Italian fashion house Roberto Cavalli.

Dubai-based Binghatti Developers will sell properties against cryptocurrencies, becoming the second developer in the emirate to accept this new form of payment this year, following Damac’s decision to do likewise in April. Binghatti noted that “we are going to accept cryptocurrencies — Bitcoin and Ethereum — either this week or the next for both existing and upcoming projects”, and that customers will be protected through a specific payment process where they will not be exposed to market volatility. The developer, which has delivered 5k units to date, expects to launch twelve projects and deliver around a further 3k by Q3 2023.

Dubai government-owned energy giant ENOC Group’s marine lubricants division has seen a 350% growth during the period 2019 – 2021. Over the years, it has grown from supplying just a local market to an international network covering 126 marine ports across twenty countries, supplying 1.7k vessels with lubricants. So far this year, it has added twenty new ports to its existing network. So far this year, it has added twenty new ports to its existing network.

Meraas repaid its five-year US$ 600 million Sukuk at maturity, after its issue in May 2017, with the payment following the settlement of a long-term credit facility of  US$ 1.1 billion, related to the Dubai Holding subsidiary’s acquisition of DXB Entertainment, the parent company of Dubai Parks and Resorts, in 2021. In its portfolio, Meraas carries more than eighty million sq ft of total developed land, 3.5k homes, 2k retail units, and 15 destinations. Some of its real-estate properties include Al Seef, Bluewaters, Boxpark, City Walk, Dubai Harbour, Jumeirah Bay, Kite Beach, La Mer, Last Exit, Pearl Jumeirah, The Beach and The Outlet Village.

In a process that used to take a lot of time, and stress, Dubai Municipality has introduced an app that has made it a lot easier for contracting companies and consultancies to obtain building permits. Now a contractor can carry out the process by utilising the UAE Pass digital identity and can request for a building permit, followed by a unified inspection, and ending by the execution and delivery of services. In future, all contractors and consultants will be able to conduct building permit transactions, with all licensing agencies, through a single window, instead of using multiple systems as was previously the case, and also to deal with the likes of Dubai Municipality, Dubai Development Authority and Trakhees, and Dubai Integrated Economic Zones Authority; it is also electronically linked with the Dubai Engineering Qualification System of the Municipality. The new system also carries links with service providers such as the Civil Defence, RTA, DEWA, and telecommunications operators.

The small number of not-for-profit schools, including DESC, Dubai College and JESS, has fallen by one with news that Jebel Ali School, founded in 1977, has been sold to local education provider, Taleem Group. The school’s landlord, Emirates REIT, confirmed that it had sold the property, that it had held since 2015 when it funded the development of the state-of-the-art school facility. It noted that Taleem had paid US$ 64 million which included the last market value of the property and the settlement of the school’s outstanding liabilities towards Emirates REIT. It is estimated that it will make 1.4 times its initial investment upon receipt of the full consideration. The school had had a long-standing dispute with its landlord. Parents have been advised that fees for the next school year will remain unchanged, in line with the fee freeze mandated by the Knowledge and Human Development Authority (KHDA), and that the school’s debenture policy will be changed. The new owners need to make a profit and it will be interesting to see what measures are taken so that an appropriate return on investment is made.

Following last week’s scare that one-way tickets from Dubai to Qatar for the World Cup matches could top US$ 1.9k, it came as a relief to many local fans, based in the emirate, that flydubai will be selling economy and business class tickets for US$ 258 and US$ 998 respectively; tickets will include hand baggage allowance, a snack on board and complimentary transportation between the airport and the stadia.  Fans must also register for their Hayya card (Fan ID), ahead of their flight, as this will be required for travel on all Match Day Shuttle flights and for entry to Qatar. For passengers who do not hold match day tickets, flydubai’s scheduled flights between Dubai International (DXB) and Hamad International Airport (DOH) will continue to operate during this period.

Brand Finance has ranked Emirates first regionally, and fourth globally, in a list of fifty of the world’s most valuable airline brands, behind the US trio of Delta, American Airlines and United; it values the brand at US$ 5.0 billion. Apart from acknowledging that the industry has returned to growth post-Covid, the report also evaluated airlines on the basis of their brand strength, in addition to the rate at which they are growing.

With energy prices soaring, it was no surprise to see the UAE fuel price committee announcing 13%+ increases in petrol and diesel prices for the month of June 2022, following minor price reductions a month earlier. Super 98 rose 13.4% to US$ 1.131, Special 95 – 13.5% to US$ 1.098, E-Plus – 91 13.8% to US$ 1.079 – and diesel – 0.1% to US$ 1.128. Petrol prices in the UAE have jumped over 56% since January 2022 due to an increase in global crude oil prices In the first five months of the year. Super 98 has jumped 56.6% from US$ 0.722 to US$ 1.131, Special 95 by 59.4% from US$ 0.689 to US$ 1.098 and diesel by 61.8% from US$ 0.697 to US$ 1.128.

Dubai Police has announced the arrest of a 52-year old UK national alleged to have been the mastermind in a massive US$ 1.7 billion dividend-tax fraud case in Denmark. Following the signing of a bilateral extradition treaty between Denmark and UAE in March 2022, it could result in the suspect being sent to the Scandinavian country to face prosecution. The local police had received an international arrest warrant from the Danish authorities, via the Ministry of Justice, and took action to arrest the suspect in coordination with the Dubai Public Prosecution. It is reported that the case against S.S. involves a scheme, in which foreign businesses pretended to own shares in Danish companies to claim tax refunds for which they were not eligible.

Last year, the Investment Corporation of Dubai posted a 24.5% surge in revenue to US$ 46.2 billion, as the net profit attributable to its owner climbed to US$ 1.50 billion, following a US$ 5.15 billion net loss in 2020. The main drivers behind this improvement were enhanced performances across all sectors, higher revenue, (helped by rallying crude prices, higher levels of activity in transport and strong momentum in other sectors as coronavirus-induced curbs were eased) and lower impairments mainly in the banking, hospitality and the property sectors. Its assets and liabilities at year end were US$ 51.50 billion and US$ 23.5 billion. ICD owns stakes in some of Dubai’s biggest and best-known names, including Emirates airline and Dubai’s biggest bank, Emirates NBD. It also owns the Emirates National Oil Corporation, holds a minority stake in developer Emaar Properties and in the Dubai Airport Free Zone and the World Trade Centre.

This week, Abdulla Bin Touq, federal Minister of Economy, and Orna Barbivay, Minister of Economy and Industry for the State of Israel, signed the UAE-Israel Comprehensive Economic Partnership Agreement; this was the second CEPA trade deal signed by the UAE, following a similar agreement signed last month with India. The UAE-Israel CEPA is expected to enhance bilateral trade to over US$ 10 billion by 2027 and add US$ 1.9 billion to the UAE’s GDP. It will see the lowering or eliminating tariffs on more than 96% of tariff lines and 99% value of trade, enhancing market access for exporters, attracting new investment, and creating opportunities in key industries, including energy, environment, and digital trade. The deal will also support service sectors such as hospitality, financial services, distribution, and construction and provide a platform for SMEs in both countries to expand internationally. Since the signing of the Abrahams Accord in September 2020, non-oil trade has surpassed US$ 2.5 billion.

A report by the International Congress and Convention Association has ranked Dubai as the top destination globally for meetings organised by international associations, covering both the number of association meetings and estimated participants at these events. Dubai was one of the first global destinations to resume in-person business events following the pandemic, in October 2020. The emirate was well represented at this week’s IMEX Frankfurt, the world’s leading meetings industry exhibition, with thirty-two co-exhibitors flying the flag for the emirate; they included the likes of Emirates, Jumeirah Group, Dubai World Trade Centre and Emaar Hospitality, as well as a wide range of other hotels, attractions and destination management companies.

Aramex has announced that it has obtained the necessary approvals to officially increase the Foreign Ownership Limit from 49% to 100%, making it the first entity trading on the DFM to allow full ownership of its free-floating shares by foreign investors. The company, a global provider of comprehensive logistics and transportation solutions, is a constituent of the FTSE Emerging Market Index and the MSCI Small Cap Emerging Market Index. This change to the foreign norm is expected to increase the stock’s weight in these indices which in turn will directly raise the amount of passive money from funds that track the FTSE and MSCI. Also, this week, Aramex has agreed to acquire Florida-based MyUS for a cash price of US$ 265 million, as part of its strategy to grow its e-commerce operations. It is expected that the deal will provide benefits for both parties including operational synergies, improved efficiencies, shared technology platforms and the opportunity to serve new markets.

The DFM opened on Monday, 30 May, 699 points (17.5%) down on the previous four weeks, regained 90 points (2.7%), to close on Friday 03 June, on 3,387. Emaar Properties, US$ 0.12 lower the previous week, gained US$ 0.09 to close on US$ 1.58. Dewa, Emirates NBD, DIB and DFM started the previous week on US$ 0.70, US$ 3.54, US$ 1.61 and US$ 0.62 and closed on US$ 0.69, US$ 3.77, US$ 1.62 and US$ 0.58. On 03 June, trading was at 75 million shares, with a value of US$ 42 million, compared to 93 million shares, with a value of US$ 67 million, on 27 May 2022.

For the month of May, the bourse had opened on 3,719 and, having closed the month on 3,347 was 372 points (10.0%) lower. Emaar traded US$ 0.18 lower from its 01 May 2022 opening figure of US$ 1.74, to close the month at US$ 1.56. Four other bellwether stocks, Dewa, Emirates NBD, DIB and DFM started the month on US$ 0.77, US$ 4.16, US$ 1.76 and US$ 0.66 and closed on 31 May on US$ 0.69, US$ 3.58, US$ 1.62 and US$ 0.59 respectively. The bourse had opened the year on 3,196 and, having closed May on 3,347, was 151 points (4.7%) higher, YTD. Emaar traded US$ 0.23 higher from its 01 January 2022 opening figure of US$ 1.33, to close May at US$ 1.56. Four other bellwether stocks, Dewa, Emirates NBD, DIB and DFM started the year on US$ 0.00, US$ 3.69, US$ 1.47 and US$ 0.72 and closed on 31 May on US$ 0.69, US$ 3.58, US$ 1.,47 and US$ 0.72 respectively.

By Friday 03 June 2022, Brent, US$ 4.91 (4.5%) higher the previous fortnight, was up US$ 5.19 (4.5%), to close on US$ 120.26. Gold, US$ 41 (2.3%) higher the previous fortnight, gained US$ 3 (0.1%), to close Friday 03 June, on US$ 1,854.  

Brent started the year on US$ 77.68 and gained US$ 37.81 (48.7%), to close 31 May on US$ 115.49. Meanwhile, the yellow metal opened January trading at US$ 1,831 and has gained US$ 6 (0.3%) during 2022, to close on US$ 1,837. For the month, Brent opened at US$ 107.59 and closed on 31 May, US$ 115.49 (7.3%) higher. Meanwhile, gold opened May on US$ 1,897 and shed US$ 60 (3.2%) to close at US$ 1,837 on 31 May.

OPEC+ has agreed to raise output by 648k bpd from next month, noting that this action was the result of the recent reopening from lockdowns, in major global economic centres including cities in China, and that global refinery intake is expected to increase after seasonal maintenance.Oil climbed above the US$ 120 level on Monday and was trading at over US$ 115 by the end of the month, driven by the latest EU continued efforts to ban Russian energy supplies – to the extent that it will only be buying 10% of its supplies from that country come 31 December – and the prospect that there could be a Chinese economic uplift as Beijing eases pandemic-related restrictions. Furthermore, US inventories continue to head lower as demand grows faster than production.

After waiting over a month to unload its cargo, of 90k tonnes of Siberian light crude because it could not afford the US$ 75 million to pay for it, the state-run Ceylon Petroleum Corporation refinery has restarted operations after the shipment was acquired on credit from intermediary Coral Energy. It is reported that energy minister Kanchana Wijesekera had made an official request to the Russian ambassador for direct supplies of crude, coal, diesel and petrol despite US-led sanctions on Russian banks. Despite there being no interest in Sri Lanka’s oil tenders, as the refinery was already in arrears of US$ 735 million to suppliers, the country will call for fresh supply tenders in two weeks before this stock of Siberian light runs out. The country is in an economic meltdown, with the population facing continued shortages of fuel and other vital goods, record inflation and lengthy daily power outages. It can only be a matter of time before President Gotabaya Rajapaksa belatedly leaves office.

Marriott has joined McDonald’s, Starbucks and other companies to exit Russia, as Western economic sanctions tighten. The hotel chain has been in the country for the past twenty-five years, having closed its Moscow office and paused investment in Russia in March.  It concluded that newly announced US, UK and EU restrictions will make it impossible for Marriott to continue to operate or franchise hotels in the Russian market,” but that its twenty-two hotels in the country, owned by third parties, will remain open.

Tesla chief executive Elon Musk has made it patently clear that he expects staff to return to their office to work and that working from home is a thing of the past. In emails to employees, the Tesla CEO said staff must complete “40 hours in the office per week”, in contrast to many of the major tech firms in California. Musk retorted that “there are of course companies that don’t require this, but when was the last time they shipped a great new product? It’s been a while.”  There are some employees unhappy with this decision but the outspoken Tesla founder further commented that “if you don’t show up, we will assume you have resigned.” He further commented that “the more senior you are, the more visible must be your presence,” and “that is why I lived in the factory so much – so that those on the line could see me working alongside them. If I had not done that, Tesla would long ago have gone bankrupt.” Meanwhile, Tesla has reportedly called a halt to hiring and has warned that 10% of its salaried workforce may need to be cut, with a worried Elon Musk commenting he had a “super bad feeling” about the economy.

As is the case with its peers, fashion brand, Missguided, has been impacted by the trifecta of surging inflation, supply chain problems, and “softening” consumer confidence in an increasingly tough market. It had been reported that the retailer had appointed Teneo Financial Advisory as administrators to sell its business and assets after suppliers filed to shut it down over unpaid debts. The Manchester-based online retailer, launched in 2009, has planned to continue operating and trading while it looked for a buyer, and, although it appears that rivals were better, cheaper and faster, it was confident there is “a high level of interest from a number of strategic buyers”, including Boohoo, Asos and JD Sports, By the end of the week it was reported that Mike Ashley’s Fraser Group, which also owns Sports Direct and House of Fraser, had acquired the intellectual property of Missguided, and its sister brand Mennace, for US$ 25 million.

The thirty-three OECD countries posted a 9.2% April inflation rate, 0.4% higher than a month earlier, driven by a rise in the cost of services, (4.4% higher), and food, (up 11.5%), pushing up consumer prices; there was some relief to see a deceleration in energy prices to 32.5%, year-on-year – 1.2% lower than in March. Nine OECD countries recorded double-digit inflation rates, with the highest experienced in Turkey and Estonia, with inflation dipping in five OECD countries, including Italy, Spain, and the US.

In a bid to slow soaring inflation rates, currently at 17%, and to prevent the hryvnia, its currency, collapsing any further, Ukraine’s central bank has more than doubled its interest rate from 10% to 25% – the highest level for any European country. Since Russia’s February invasion, many businesses have had to close and major supply chains cut, with the knock-on effect of an economy contracting by at least 45% in 2022. It has been estimated that over US$ 100 billion of infrastructure damage has occurred in the first one hundred days of the invasion and that 4.5k civilians have died with more than fourteen million citizens having been forced to flee their homes. The war has seen Ukraine’s May budget deficit jump US$ 7.7 billion, month on month. Furthermore, about 50% of the world’s supply of neon gas comes from just two Ukrainian companies, with more than 18% of global barley exports, 16% of corn, and 12% of wheat, produced in Ukraine.

Of all European countries, it seems that Turkey – now known as Türkiye having this week changing its name at the UN – has the highest inflation rate of 73.5%, a twenty-four year high. The three main drivers have been the war in Ukraine, a weak currency and high energy prices. Over the year, food costs have skyrocketed by 92%, making basic goods unaffordable for many, despite government interventions.

With the unemployment rate of 3.6% remaining flat for the third consecutive month, the US added a higher-than-expected 390k new jobs to the national payroll; the increase was the slowest for a year. However, surging inflation and fast-rising prices are causing concern with companies like Walmart and Amazon indicating that, having hired too aggressively earlier in the year, they may have to slow, or even freeze, future recruitment plans, ahead of a possible economic downturn. Margins are also being hit, as it is getting more difficult for many firms to pass on extra production/supply costs to the end user.

The Nationwide Index for May saw house prices 11.2% higher on the year, down from 12.1% in April, indicating signs of the UK property market softening, as mortgage rates start to move off historic lows. It seems that there is a growing number of sellers cutting prices and the average time it takes to sell a home is increasing. With consumer spending declining, not helped by surging inflation rates almost touching 10%, higher energy/food prices and recently increased tax, there has been a drag on the housing sector. The slowdown would have been more noticeable if there had been more properties on the market, as the stock of available homes for sale remains low.

It does seem that UK and French administrations have something in common in the way that the French Interior Minister Gerald Darmanin and the UK’s blundering Minister of Transport Grant Shapps both play the same blame game. Last Saturday saw the French minister singling out British fans, falsely indicating that “thousands of British ‘supporters,’ without tickets or with fake tickets, forced the entrances and, sometimes, attacked the stewards.,” with his colleague, the Sports Minister, adding that had been “attempts to intrude and defraud” by Liverpool fans, with reports that there had been some 50k fraudulent tickets and a “massive, industrial-scale” counterfeiting operation in place. Within hours, UEFA had joined the French in their premature condemnation of Liverpool supporters, announcing an independent enquiry by the French government and UEFA – some enquiry that would have been with both judge and jury having already made their verdict. There is no doubt that the French failed in their run-up trial to next year’s Rugby World Cup and 2024’s Olympic Games and questions will have to be asked whether they will be able to cope with these two much bigger and longer events.

On the other side of La Manche is Transport Minister, Grant Shapps accusing airlines and operators of “seriously overselling flights and holidays”, noting a shortage in staffing capacity to deliver some of these trips. This week, it is reported that the Transport Secretary rejected a request by the aviation industry to allow them to recruit workers from overseas to solve the immediate problem of understaffing. For several months, there have been well publicised disruptions at UK’s major airports, even before the easing of the UK’s Covid travel restrictions in March, with the issue broadly attributed to the sector’s inability to staff up sufficiently following the pandemic. It is documented that the country had been subject to one of “the most restrictive travel regimes in the world”. Tim Alderslade, who heads up Airlines UK, commented that, “the sector has had only a matter of weeks to recover and prepare for one of the busiest summers we’ve seen in many years,” and “without the ability to know when restrictions would be completely removed or predict how much flying would be possible over the summer.” It is not obvious to the minister that it is impossible to shut down an entire global industry, destroy its image, switch it on then off, destroy families, lives, businesses and then try and find someone to blame. On Wednesday, he called for urgent steps to address the causes of mayhem at check-in desks and security – an issue that he should have addressed some time ago.

(This is the same minister who last September branded the UK fuel shortage a “manufactured situation”, created by a road haulage association, seemingly blaming hauliers for the crisis, claiming they leaked details to the media which then prompted panic buying. He was also highly critical of P&O’s management and modus operandi but when he tried to force legislation through, aimed almost entirely at P&O, it was rejected by the industry, with even the man himself belatedly commenting that his original plan to legislate for shipping companies to pay the minimum wage was not feasible).

Football has been beset by scandals for so many years and the shenanigans at FIFA for well over fifty years have been well documented.  Another footballing body with “form” is UEFA which has also been caught up in the mire of corruption that has swept through world football. In January 2011, Michel Platini demanded FIFA pay him backdated extra salary of US$ 1.4 million, for working as a presidential adviser during Blatter’s first term, from 1998 to 2002 which Blatter authorised at a time when he was preparing to campaign for re-election and needed European backing, where Platini’s presence was influential. Later this month, the two protagonists face a Swiss court on trial for fraud and other offences. Platini was an obvious successor to the eventually disgraced Blatter but his involvement with Blatter precluded him from taking over, with the mantle passing to Gianni Infantino, who had been with UEFA since 2000 and was appointed as the Director of UEFA’s Legal Affairs and Club Licensing Division in January 2004, becoming Secretary-General five years later. In 2016, he was elected as FIFA President to replace the disgraced Blatter who had virtually run his football fiefdom for over thirty years.

That year the now infamous Panama Papers were released with documents implicating UEFA with claims that it had undertook deals with indicted figures where previously they had denied any relationship. The now FIFA supremo stated he was “dismayed” at the reports and that he has never personally dealt with the parties involved.

Following the debacle at last week’s UEFA Champions League final last week It did not take long for UEFA to suggest that thousands of Liverpool fans had been caught out and tried using ‘fake tickets’ that did not work at the turnstiles, and within hours had called for an official enquiry to be held by UEFA and French authorities. It took the footballing body longer – over six days – to admit their error and to issue a statement apologising “to all spectators who had to experience or witness frightening and distressing events”. It seems that nothing has been heard from the French minister, Darmanin. Now the governing body has eventually called for an inquiry from French officials into the use of teargas on fans at the Stade de France.

It seems that Gerald Darmanin, Grant Shapps and UEFA are past masters in not only Passing The Buck but also finding Someone Else To Blame!

 

 

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Whatever It Takes!

Whatever It Takes!                                                                                  27 May 2022

For the past week, ending 27 May 2022, Dubai Land Department recorded a total of 2,884 real estate and properties transactions, with a gross value of US$ 2.37 billion. A total of 297 plots were sold for US$ 433 million, with 2,116 apartments and villas selling for US$ 1.29 billion. The top three transaction sales were for plots of land – one in Al Wasl for US$ 59 million, another sold for US$ 30 million in Al Warsan First and a third for US$ 10 million in Saih Shuaib 2. The three leading locations for sales transactions were Al Hebiah Fifth, with 89 sales worth US$ 59 million, followed by Jabal Ali First, with 57 sales transactions worth US$ 51 million, and Al Merkadh, with 37 sales transactions, worth US$ 80 million. The top three apartment sales were one sold for US$ 173 million in Burj Khalifa, another for US$ 153 million in Business Bay, and third at US$ 135 million in Al Wasl. The sum of mortgaged properties for the week was US$ 55 million, and eighty-nine properties were granted between first-degree relatives, worth US$ 113 million.

With consumer confidence heading north, the economy recovering well and on-going government initiatives, Dubai’s realty sector is booming once again. It is estimated that 6.3k new apartments were handed over in Q1 (compared to 4k in Q4), but only 250 villas, and that the number will be 29k apartments and 3.3k villas by year end – somewhat lower than most estimates at the beginning of the year, some of which were well over 50k. For years, the tendency for so-called experts has invariably been to forecast new builds on the high side – and this year seems to be no exception. Because of demand for villas remains strong – with a limited supply – occupancy rates and annual average rents have surged by up to 25%, with average apartment rentals almost half that figure at 14%. Asteco report that Q1 office rental rates grew by 4.0% on average – and 6.0% on an annual basis.

Dubai’s real estate market posted almost 7k sales transactions in April, 45.5% higher compared to a year earlier, and the highest April return in a decade. Mo’asher, the emirate’s official Sales Price and Rental Performance index – launched by Dubai Land Department (DLD) in cooperation with Property Finder – uses 2012 as its base year. Last month, the index recorded a 1.273 monthly Index for sales and a quarterly index price of US$ 337k., split by villa/townhouse indices of 1,318 and US$ 579k and 1,331 and US$ 311k for apartments. In April, it recorded a 0.957 monthly index for rental and an index price of US$ 14.1k; the apartment monthly index posted 0.96, with an index price of US$ 13.0k, and the villa/townhouse monthly index recorded 0.872 and an index price of US$ 36.2k. The index noted that the secondary market for sales transactions continued to dominate the real estate market, with a steady percentage of 60.3% in terms of volume and 70.7% in terms of value. Apartments represented around 79% of total transactions, with villas/townhouses accounting for the 21% balance. In the first four months of the year, there were 27.5k total sales transactions in terms of volume – an impressive 68.33% growth rate, year on year.

Dubai average warehouse lease rates are recovering, at a pace, on the back of a surge in demand driven by changes in company ownership laws, a rise in e-commerce sales and the government’s efficient response to the Covid-19 pandemic. Knight Frank has indicated that this is mainly attributable to the manufacturing, logistics and automotive sectors, requiring more space as business confidence improves and the economy rebounds from the pandemic. Although dipping 0.8 to 54.7 in April, Dubai’s non-oil economy is still advancing, albeit at a slower rate, with output expanding at its second-fastest rate since mid-2019 along with new business rising sharply. The Knight Frank study noted that industrial grade A rents in Al Quoz recorded their sharpest increase both on a quarterly and annual basis, at 8.6% and 15.2%, with warehouse rents in the location, now the most expensive in Dubai, at US$ 10.35 per sq ft, only 0.4% shy of pre-pandemic levels. Of the nine industrial submarkets all but two – B rents in JAFZA and National Industries Park – have increased so far in 2022.

Danube Properties has launched a US$ 95 million project – a pyramid-shaped architecture Gemz in Al Furjan – the company’s sixteenth in its twenty-five-year history. It has a development portfolio of 8.3k units, valued at US$ 1.55 billion, and to date has delivered 4.6k units, worth US$ 989 million. The 14-storey project, with a built-up area of 530k sq ft, will be on a plot area of 101k sq ft, with a completion date slated for Q4 2024. With thirty amenities, it will house 270 apartments, (1B/R to 3B/R), with unique convertible layouts that allow expansion within each unit, most of which will come with an in-built swimming pool that is equipped with aqua gym and anti-current machine. The usual company payment plan is available – a 10% advance plus 1% per month – and prices will start at US$ 150k.

Damac Properties is launching two new clusters – Malta and Venice – to add to Santorini, Costa Brava, Nice and Portofino at its water-inspired Lagoons development. The developer noted that the villas and townhouses will be built around “extravagantly large pristine water lagoons with white sanded beaches”. Not surprisingly, Venice will feature gondola rides, arching bridges over canals and waterside cafes, whilst the Malta cluster will have a virtual reality park. The overall Lagoons development is set to open in 2024.

Last June, a forty-year-old, twelve-storey, South Florida condominium collapsed killing ninety-eight inhabitants. The families of the victims have made a near US$ 1 billion settlement with local officials, but investigations, by the National Institute of Standards and Technology into the cause of the collapse, could take years. Although there seemed to be hundreds of potential buyers for the 1.8-acre Surfside plot, none could match Hussain Sajwani’s bid. It seems that Damac Properties’ founder is expanding his already impressive property portfolio.

In Q1, the country’s non-oil foreign trade reached a record US$ 74.6 billion, growing by 20.5% on last year’s return. The report by the Federal Competitiveness and Statistics Centre confirmed that the three leading trading partners remained China (valued at US$ 15.5 billion), India (US$ 12.6 billion) and Saudi Arabia (US$ 8.9 billion). The main trading commodities continued to be gold, diamonds, telecom devices, mineral oils, ornaments/jewellery and cars with totals of US$ 23.0 billion, US$ 10.9 billion, US$ 10.1 billion, US$ 6.7 billion, US$ 5.7 billion and US$ 5.3 billion.

Drydocks World has signed a contract with Yinson Production to upgrade, refurbish, and convert a floating production storage and offloading (FPSO) vessel, to be delivered to Brazilian independent oil and gas company Enauta by Q3 2023. The Malaysian company  designs, constructs, and operates industry-leading production assets for the offshore oil and gas industry. This project will be fully operational by 2024 and will support the Brazilian company’s goal of producing up to 50k bpd from the field.

Last month, Dubai Chamber of Commerce, one of the triumvirate of chambers operating under Dubai Chambers, posted a 55.4% surge in membership, bringing its total to 300k companies, and making it the largest chambers of commerce in the world. During the past twelve months, its members’ exports and re-exports were 16.7% higher at US$ 5.50 billion; certificates of origin issued numbered 57.7k, up 8.2% on the year.

Probably to the surprise of many, the UAE is now one of the top five tea-exporting countries in the world, behind China, Sri Lanka, Kenya and India. With total 2020 exports reaching US$ 327 million, UAE trades with some 154 countries. The Federal Competitiveness and Statistics Centre noted that the total 2021 trade stood at US$ 507 million, with exports, reexports and imports totalling US$ 264 million, US$ 35 million and US$ 208 million respectively. In Q1, total trade was at US$ 160 million split US$ 85 million, US$ 14 million and US$ 61 million. As a nation, the UAE spends US$ 79 million on tea and that there are almost 15k coffee & tea kiosks in the country.

For the year ending 31 March, ENBD Reit posted a 4% occupancy increase in its property portfolio, to 80%, with its total value dipping 1.1% to US$ 356 million, whilst its Net Asset Value at US$ 167 million was 7.4% lower than the year before due to capital expenditure on the buildings. Its loan-to-value ratio was 2.0% higher at 54%. The Shari’a compliant real estate investment trust, managed by Emirates NBD Asset Management Limited, reduced its operating, (by 10.9%), fund, (19.3% lower) and finance costs by 10.9%, negotiated revised lease terms, and increased the average length of its leases during the fiscal year. A final US$ 5.0 million dividend was proposed for H2 of the fiscal year, 13.6% higher than a year earlier, bringing the annual dividend to US$ 9.5 million.

There was some good news for Emirates NBD this week with Moody’s upgrading its long-term ratings to A2 from A3 and short-term ratings to P-1 from P-2., whilst maintaining a stable outlook. The improved rating was driven by an upgrade in the bank’s Baseline Credit Assessment and an enhanced loan diversification.

The DFM opened on Monday, 23 May, 602 points (8.5%) down on the previous three weeks, and shed a further 97 points (2.9%), to close on Friday 27 May, on 3,297. Emaar Properties, US$ 0.07 higher the previous fortnight, shed US$ 0.12 to close on US$ 1.49. Dewa, Emirates NBD, DIB and DFM started the previous week on US$ 0.71, US$ 3.61, US$ 1.63 and US$ 0.62 and closed on US$ 0.70, US$ 3.54, US$ 1.61 and US$ 0.62. On 27 May, trading was at 93 million shares, with a value of US$ 67 million, compared to 76 million shares, with a value of US$ 62 million, on 20 May 2022.

By Friday 27 May 2022, Brent, US$ 0.19 (0.1%) higher the previous week, was up US$ 4.72 (4.3%), to close on US$ 115.07. Gold, US$ 25 (1.4%) higher the previous week, gained US$ 16 (0.9%), to close Friday 27 May, on US$ 1,851.  

Having entered the Russian market in 2007, Starbucks Corp has become the latest international company to leave the country, withdrawing its brand.  The chain, with 130 coffee shops, owned and operated by the Kuwait-based Alshaya Group, had suspended its operations at the onset of the war in March, and had stopped shipments to the country. The ME conglomerate noted that the decision to leave was a “Starbucks announcement” and referred questions to the coffee chain. No details were given of the financial impact but said it would continue to pay nearly 2k staff at Starbucks shops in the country for six months and provide assistance to partners “to transition to new opportunities outside of Starbucks”. Only last week, McDonald’s announced that it was selling its nearly 850 restaurants in Russia to a current licensee, Russian businessman Alexander Govor, who already operates twenty-five McDonald’s restaurants in Siberia, and will take on the firm’s restaurants and staff, operating them under a new brand.

Following Microsoft’s US$ 69.5 billion buyout of video game maker Activision Blizzard, Broadcom has announced what would be the second biggest deal of the year, with the acquisition of cloud computing company VMware in a US$ 61.6 billion cash-and-stock deal. In a bid to diversify its business into enterprise software, this agreement will give the chipmaker access to VMware’s cloud clients and data centres VMware shareholders will get US$142.50 per share, resulting in a healthy 49% premium on the stock’s 22 May close, when talks of the deal were first reported. Broadcom will assume US$ 8 billion of VMware net debt. Since 2018, when it acquired CA Technologies for almost US$ 27 billion and Symantec’s security division for US$ 15 billion a year later, software had become a major sector in Broadcom’s business strategy.

With the government’s”zero-Covid” policy – and subsequent countrywide ongoing lockdowns – Airbnb has decided to close its domestic rentals in China, with the app carrying no listings for homes and experiences in the country within weeks.  Since its launch in 2015, some 25 million guests have booked stays there through the online home rental company. It is estimated that revenue accounted for 1% of Airbnb’s total turnover. However, the tech giant is still hopeful that the number of Chinese residents travelling overseas will continue to grow at the same rate as in the past – over the decade to 2019, Chinese travellers tripled to 155 million journeys.

Prince Waleed’s Kingdom Holding received US$ 1.5 billion from the Public Investment Fund, Saudi Arabia’s sovereign wealth fund in a sale of a 16.87% stake, (625 million shares at US$ 2.42 a share), in the company. Since the beginning of the year, it has shed 9% in value, and following this divestment, Prince Waleed still retains a 78.13% share in Kingdom Holding, with a market value of about US$ 8.0 billion. The conglomerate’s portfolio is wide and varied and includes a myriad of sectors as well as international names such as CitiGroup, JD.com, global hospitality company Accor and ride-sharing companies Uber, Careem and Lyft. In its home base, Kingdom Hospitals and Kingdom Schools, Saudi petrochemicals company Tasnee, budget airline flynas, private aviation company NasJet and digital services company Deezer are among its many interests. Earlier in the year, it finalised a US$ 1.5 billion deal to sell half of its stake in global hospitality company Four Seasons, where it now has a 23.75% stake.

A Glencore subsidiary has pleaded guilty to seven counts of bribery in a London court, with the mining giant pleading guilty to seven counts of bribery and agreeing to pay more than US$ 1 billion to resolve similar claims with US and Brazilian authorities. The penalty details will be made next month, with the miner having already set aside US$ 1.5 billion to cover the investigations it has faced in the UK, US and Brazil. The case arose after the UK’s Serious Fraud Office said it had exposed “profit-driven bribery and corruption” across Glencore Energy UK’s oil operations in five African countries – Cameroon, Equatorial Guinea, Ivory Coast, Nigeria, and South Sudan. The SFO discovered that the company’s agents and employees paid bribes worth over US$ 25 million for preferential access to oil, with approval by the company between 2011 and 2016.

Over the past eighteen months, Airbus and one of its major customers, Qatar Airways, have been locked in a dispute after the airline complained about cracks in paintwork exposing in an anti-lightning mesh beneath, resulting in it grounding more than 20 of its A350 planes. The carrier has claimed that it is a maintenance issue and indicated that it will not take any further deliveries until the issue had been resolved; it has also revoked a separate contract for the delivery of the smaller A321neo jets. Now the case is to be taken to court in the UK in what could be a long-winded three-month trial to settle the dispute, with Judge David Kaksman saying that “I am in absolutely no doubt that this case should be tried as soon as is practically possible,” and “the costs for both sides are way over the top, in my judgment.” It is noted that Airbus has acknowledged quality issues but insisted the planes are safe and has continued to attempt to force the airline to take delivery of more planes as they are built. Other airlines continue to fly the A350, without grounding them, after European regulators said the paint problem did not affect their airworthiness.

There are reports that UAE-Qatar November/December airfares have surged ahead of the FIFA World Cup, with economy class fares jumping by nearly 1.9k%. It showed that a one-way air fare booked for 25 May would cost US$ 98 but that fare for 20 November would be US$ 1,937. It is expected that many football fans with tickets, (and only people with match tickets will be allowed into Qatar), will use Dubai as a base for a variety of reasons including the fact that there would not be enough accommodation options in Qatar. There are direct flights operated by flydubai, Etihad, Air Arabia and Qatar Airways  between the two Gulf countries and there are reports that Israel is requesting direct flights during the football extravaganza which runs from 21 November until 18 December. The first random selection draw for tickets attracted 23.5 million tickets, and successful applicants will find out whether they have been lucky enough on 31 May, with the biggest number of ticket applications coming from Argentina, Brazil, England, France, Mexico, Qatar, Saudi Arabia, and the US.

Later in the week, Flydubai confirmed that, as part of an agreement with Qatar Airways and other GCC carriers, it would be operating up to sixty special daily flights to Qatar as part of the one-day shuttle service to ferry football fans during the FIFA World Cup. The Dubai carrier will move 2.5k fans every day with Saudia, Oman Air and Kuwait Airways carrying 5k (in forty daily flights), 3.4k fans (forty-eight flights) and 1.7k (twenty flights) respectively. This is in addition to increased flights by Qatar Airways and the probability that Etihad and Air Arabia may also join the scheme. Good news for local football fans is that flydubai’s CEO, Ghaith al Ghaith, indicated that these shuttle flights are “not about making money” and that economy class return air fares will be much lower than that listed above. Tickets will only be open to FIFA World Cup ticket holders, with fans having to arrive five hours before kick-off and tickets will include on-ground transportation to/from stadia.

Although declining through the “Covid-period”, the gap, between the haves and the have nots, continues to head north with a study from The High Pay Centre, seeing the gap widening again this year now that Covid restrictions have eased markedly. It reported that pay ratios were widest in retail and lowest in media and financial services. The High Pay Centre’s most recent chief executive pay analysis said the average FTSE 100 boss was paid US$ 3.36 million, (GBP 2.69 million), in 2020. The figure was 86 times the average full-time UK worker but was a 17% drop from US$ 4.07 million, (GBP 3.25 million) in 2019. Across 69 companies that disclosed pay ratios in the first months of this year, the average chief executive to average employee pay ratio was 63:1 – almost double the ratio for the same group of companies in 2021, at 34:1. It seems a little incongruous that the BoE governor, Andrew Bailey, had already urged workers not to ask for big pay rises to try and stop inflation spiralling out of control. Perhaps he should look higher up the ladder at the fat cats at the top.

According to the EC President, there could be a deal on introducing a total EU-wide ban on Russian oil imports. Three weeks ago, Ursula von der Leyen, had introduceda phased-in embargo on Russian oil as part of a sixth round of sanctions, allowing some member nations six months to phase out purchases of Russian crude oil. This did not impress some land-locked countries, including Hungary, Slovakia, the Czech Republic and Bulgaria, who asked for tailor-made exceptions to have more time to eliminate several technical issues and further cushion the economic impact. It is noted that since all members have to agree to the resolution, Hungary may be playing ‘hard-ball’ and trying to capitalise on the oil impasse to force the approval of its recovery package. This week, Hungary’s Prime Minister Viktor Orbán raised the ante by requesting that the proposed oil embargo be excluded from next week’s EU summit, until the EC approved the country’s national recovery package, submitted a year ago.

In a move to help ease its crippling economic crisis, Sri Lanka has increased fuel and transport prices, by up to 24% for petrol and 38% for diesel, but the hikes are bound to have the opposite impact pushing the soaring inflation rates even higher; since October, petrol and diesel prices have soared by 259% and 231%. The price hikes will add to government revenues In the short-term, with the population being encouraged to work from home “to minimise the use of fuel and to manage the energy crisis”. Last month, the inflation rate jumped 12.3% from 21.5% to 33.8%. The economic crisis has been the result of many factors including the COVID-19 pandemic pummelling the tourism-reliant economy, rising oil prices, populist tax cuts by the government of President Gotabaya Rajapaksa and gross mismanagement.

A week after restricting wheat exports to ten million tonnes, the Modi government has done the same with the sugar trade so as to prevent a surge in domestic prices, after mills sold a record volume on the global market, and to ensure steady supplies in the domestic market. It has also requested that exporters notify the authorities for any overseas shipments between 01 June and 31 October. Benchmark white sugar prices in London rose 1% on the news. India is the world’s biggest sugar producer, (expected at 35.5 million tonnes this year), and the second biggest exporter behind Brazil.

For the 22nd straight month, Lebanon’s inflation posted a triple-digit increase, with April witnessing a monthly 7.1% rise and 206% over the past twelve months. Over that period, transportation costs were 492% higher, the health segment – 431%, water, electricity, gas and other fuels 409%, and food and non-alcoholic beverages rose 375%. Lebanon, which has the fourth highest debt-to-GDP ratio at 212% behind Japan, Sudan and Greece, has also seen its public debt rise to US$ 100 billion, or about 212% of GDP last year. The government is hoping to secure an initial US$ 3 billion rescue package from the IMF which is dependent on the future government putting in place various reforms approved by the outgoing Cabinet. Lebanon’s economy contracted about 58% between 2019 and 2021, with the GDP plummeting from US$ 52.0 billion to US$ 21.8 billion over that two-year period – the largest contraction on a list of 193 countries.

It seems that the former Australian Prime Minister has bequeathed a host of economic problems to his successor, Anthony Albanese, who won last weekend’s federal election for the Labour Party. Scott Morrison had been in charge since August 2018, with his Liberal Party, (in coalition) running the country since 2013, following six years of Labour rule.  Over the past nine years, and despite repeated promises to the contrary, his administration never produced a budget surplus and even managed to double the country’s debt in its first six years in government that had risen to US$ 590.1 billion, (AUD 834.0 billion), as the national debt stood at US$ 182.1 billion, (AUD 257.4 billion). The lucky country will probably have to face at least a decade of deficits and a national debt continuing to skyrocket and almost certain to top US$ 1 trillion within the next three years.

When the Liberal Party regained power in 2013, the Mining Tax Repeal Bill finally was passed, repealing the 2012 Mineral Resources Rent Tax, levied on 30% of the “super profits”, with a company having to pay when its annual profits topped US$ 53.1 billion, (AUD 75.0 billion). The Australian population lost a nest egg that would have been better spent on Australian health, education and other services, rather than much of it landing in the banks of foreign investors. A year later, Australia repealed the 2012 Gillard government’s carbon tax, after only nine months of the carbon tax. Over that period, it is estimated that Australian emissions from electricity generation fell by 5.4% and renewable electric generation spiked by 28%. To make matters worse, this repeal was replaced by a massive and inefficient subsidy, handing out billions of dollars to polluters in a scheme that now has been transformed into a carbon price. JobKeeper, a US$ 64.2 million scheme introduced at the onset of Covid-19, saw a large number of recipients unnecessarily receiving millions of dollars that they did not need. In addition, the country spent a further US$ 171.3 billion on additional Covid spending, as well as introducing the stage-three tax cuts, costing US$ 26.4 billion, last month. Just before the election, data showed the unemployment rate at just 3.9%, the lowest rate since 1974. However, the conundrum is, that with such low unemployment levels, why do real wages continue to head south as the gap between inflation, at 5.1%, and real wages, only 2.4% higher, continues to widen. The end result is a fall in real consumer spending at a time when inflation is only going one way – up – but the economy is heading in the other direction and slowing down.

Better late than never, the UK has introduced a 25% temporary tax on energy companies’ profits, (set to raise US$ 6.3 billion), as the government sought to raise funds for special household payments to offset the rising cost of utility bills. The tax is expected to remain in place whilst energy prices remain high. The Chancellor noted that “the oil and gas sector is making extraordinary profits, not as a result of recent changes to risk taking or innovation or efficiency, but as a result of surging global commodity prices, driven in part by Russia’s invasion of Ukraine.” All the country’s 8.4 million households will benefit from lump-sum payments worth up to US$ 822, on top of US$ 506 discounts on energy bills. These new payments will cost the Exchequer US$ 6.3 billion and was accompanied by more support for pensioners and people with special needs. The total package worth US$ 19 billion, funded in part by the exceptional levy on soaring profits enjoyed by the likes of BP and Shell, brings the full cost of addressing the crisis almost equivalent to the 2% of GDP the UK spends on defence. In a change of tack, it seems that finally the Johnson administration has to face reality and realise that the poorer sector of the country require immediate economic assistance and Rishi Sunak has to do Whatever It Takes!

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Where Can We Go From Here?

Where Can We Go From Here?                                              20 May 2022

HH Sheikh Mohamed bin Zayed, Ruler of Abu Dhabi, has been elected the country’s president, following a meeting in Abu Dhabi of the seven rulers of the Emirates. He becomes the third president in UAE’s history, following last Friday’s death of Sheikh Khalifa. The President, Sheikh Mohamed “expressed his appreciation for the dear trust that his brothers, their highnesses, members of the Federal Supreme Council, have entrusted him with, praying that Almighty God helps him succeed, helps him in taking on this great responsibility and meeting it in serving the UAE and its loyal people”. Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, offered his congratulations, tweeting, “Today, the Federal Supreme Council elected my brother, His Highness Sheikh Mohamed bin Zayed Al Nahyan, as President of the State. We congratulate him and we pledge allegiance to him, and our people pledge allegiance to him.”

For the past week, ending 20 May 2022, Dubai Land Department recorded a total of 2,043 real estate and properties transactions, with a gross value of US$ 1.96 billion. A total of 228 plots were sold for US$ 311 million, with 1,328 apartments and villas selling for US$ 975 million. The two top transaction sales were for plots of land – one in Hadaeq Sheikh Mohammed Bin Rashid for US$ 35 million, and another sold for US$ 23 million in Al Merkadh. The three leading locations for sales transactions were Al Hebiah Fifth, with 117 sales worth US$ 85 million, followed by Al Merkadh, with 22 sales transactions worth US$ 60 million, and Al Yufrah 2, with 19 sales transactions, worth US$ 7 million. The top three apartment sales were one sold for US$ 231 million in Burj Khalifa, another for US$ 214 million in Palm Jumeirah, and third at US$ 95 million in Marsa Dubai. The sum of mortgaged properties for the week was US$ 612 million, with the highest being for a plot of land in Al Muteena, mortgaged for US$ 126 million. 171 properties were granted between first-degree relatives worth US$ 78 million.

Last month, Dubai real estate posted a massive 45.5% hike in transactions and a 66.2% surge in value compared to a year earlier – and this despite a marked rise in property prices. Home sales recorded year-on-year growth of 55.9% in April, as the demand for villas and apartments continued in positive territory, but transactions registered a 17.4% decline on a month-on-month basis. According to Valustrat, month on month, cash and mortgage sales of ready properties declined 13.0% and off-plan Oqood (contract) registrations were down 23.3%. Property Finder indicated that Dubai posted almost 7.0k real estate sales transactions, worth US$ 4.96 billion, the highest ever for the month of April since 2009. Of that total, secondary market sales transactions accounted for 4.2k, (60% of transactions), valued at US$ 3.51 billion, while off-plan properties, comprising the remaining 40 %, (2.8k), was worth a total of US$ 1.45 billion. In April, both the number of transactions and the value were higher compared to a year earlier – up by 45.5% and 66.6% respectively. Off plan sales volume transactions and values were 44.0% and 73..7% higher, with secondary transactions up 46.2% and 63.9%.

By the end of April, the residential price index came in 1.0 higher to 79.8, compared to the January 2014 base period; the index, recorded nineteen transactions for residential units over US$ 8.2 million (AED 30 million), including one for US$ 26.2 million (AED 96 million) in Dubai Hills. It was noted that the latest ValuStrat Price Index showed a slowing in the capital value growth for Dubai villas, which represent 13% of the market, slowing to 95.7, with apartments flat at 69.7. On the month, capital value was up 1.8%, with average year-on-year villa prices surging 33.8% in April. The five locations, with the biggest annual increases, were  Arabian Ranches (40.6%), Jumeirah Islands (38.8%), The Lakes (36.6%), Jumeirah Village (34.9%), and Palm Jumeirah (34.6%).

Apartment prices rose, over the past twelve months, at a much slower rate – recording an average 8.1% increase. Over the year, the four locations registering the highest price increases were Palm Jumeirah (20.8%), Burj Khalifa (16.4%), JBR (15.6%), and The Views (10.3%). At the other end of the spectrum were Jumeirah Village and Dubai Sports City, both only recording 1% growth, with Dubai Production City (0.5%) being one of the lowest annual growth in April. It is expected that the gap between the percentage growth of apartment and villa prices will continue to narrow in 2022. The top five developers – accounting for 53.0% of the total sales in April – were Emaar (24.2%), Damac (15.1%), Nakheel (6.3%), Select Group (3.7%), and Dubai Properties (3.7%). Location-wise, Business Bay (12.7%), Dubai Creek Harbour (8.8%), and Downtown Dubai (8.8%) were the leading off-plan locations, while Damac Lagoons (13.4%), Jumeirah Village (8.4%), Dubai Marina (7.0%) and Business Bay (4.7%) were the most transacted areas for ready homes. Meanwhile, Property Finder posted that the top areas of interest in terms of transactions for villas or townhouses in April 2022 were Dubai Hills Estate, Palm Jumeirah, Arabian Ranches, Damac Hills and The Springs. Marina, Downtown Dubai, Palm Jumeirah, Business Bay and Jumeirah Village Circle led the charge for apartments.

In Q1, UAE’s tourism sector welcomed over six million visitors, who spent 25 million hotel nights, with this figure up 10%, compared to the same pre-Covid period in 2019. Hotels’ revenue came in almost 20% higher than its 2019 comparative figure, at US$ 2.9 billion. The federal Ministry of Economy noted it was “one of the best years in terms of economic growth in general and tourism in particular”. The UAE economy and hospitality sector recovered quicker than most others because it executed one of the world’s fastest inoculation campaigns that boosted economic recovery and helped to attract tourists over the past year. Other government measures, including large-scale advertising campaigns and the introduction of long-term and multiple-entry tourist visas, have also aided growth. It was also noted that the average duration of hotel guest stays rose from three nights to four, while the occupancy rate of hotels touched global highs of 80%. The top four source markets continued to be India, Saudi Arabia, the UK and Russia.

A decree by HH Sheikh Mohammed bin Rashid Al Maktoum sees the dissolution of a special 2009 tribunal that was set up to resolve disputes pertaining to financial settlements related to Dubai World and its subsidiaries that hit the buffers during the GFC. The statement noted “all cases and claims related to the financial settlement of Dubai World and its subsidiaries, filed after this decree comes into effect, will be referred to specialised courts.” All cases and requests that have not been resolved by a final judgment before December 2022 will be referred to the special courts, in line with judicial legislation in Dubai, without any new fees being charged; until then, the tribunal will continue to review all pending cases and claims during a transition period.

Sheikh Hamdan bin Mohammed has issued directives in relation to the latest developments in the digital economy in a move to enhance Dubai’s position in the metaverse. The Crown Prince noted that “the move will help us fully understand reality and explore unique ideas that will shape a brighter future for Dubai and the UAE, maximising future business opportunities.” He has directed the formation of a higher committee to supervise technological developments in the emirate that will oversee developments in the digital economy. The committee will work on the objectives of the Dubai Metaverse Strategy, with the target of increasing the contribution of the metaverse sector to Dubai’s economy to US$ 4 billion by 2030 and increase its contribution to the emirate’s GDP to 1%.

With almost 2.5k commercial dhows in operation, and Dubai authorities keen to revitalise the sector, Q1 saw activity 8.0% higher, compared to the same period in 2021.The traditional wooden vessels, that have been a cornerstone of Dubai trade for centuries, will continue to further economic growth in the emirate. Dubai’s Ports, Customs and Free Zone Corporation set up the Marine Agency for Wooden Dhows in 2020 to streamline and regulate the activities of traditional vessels in the emirate’s waters, with the three key hubs being Dubai Creek, Deira Wharfage and Al Hamriya Port.

In a bid to diversify its global operations network, e& has acquired a 9.8% stake, (some 2.766 billion shares) in UK mobile carrier Vodafone Group, for US$ 4.4 billion, as it seeks to diversify operations globally. The UAE’s biggest telecoms operator, formerly known as Etisalat, commented that “we are looking forward to building a mutually beneficial strategic partnership with Vodafone with the goal of driving value creation for both our businesses, exploring opportunities in the rapidly developing global telecom market and supporting the adoption of next-generation technologies.”

The DFM opened on Tuesday, (following the death of President His Highness Sheikh Khalifa bin Zayed Al Nahyan), 17 May, 301 points (8.5%) down on the previous fortnight, and shed a further 301 points (8.9%), in another torrid week of trading, to close on Friday 20 May, on 3,394. Emaar Properties, US$ 0.20 lower the previous fortnight, gained US$ 0.07 to close on US$ 1.61. Dewa, Emirates NBD, DIB and DFM started the previous week on US$ 0.73, US$ 3.72, US$ 1.63 and US$ 0.63 and closed on US$ 0.71, US$ 3.61, US$ 1.63 and US$ 0.62. On 20 May, trading was at 76 million shares, with a value of US$ 62 million, compared to 96 million shares, with a value of US$ 126 million, on 13 May 2022.

By Friday 20 May 2022, Brent, US$ 2.99 (2.6%) lower the previous week, nudged up US$ 0.19 (0.1%), to close on US$ 110.35. Gold, US$ 165 (8.5%) lower the previous four weeks, gained US$ 25 (1.4%), to close Friday 20 May, on US$ 1,835.  

With downstream margins improving on the back of soaring energy prices, with Brent at US$ 110.35 at the tail end of last week, and increased volumes, Saudi Aramco posted Q1 net profit, (after zakat), 81.7% higher on the year, and 22.0% on the quarter, at US$ 39.47 billion. The world’s largest oil company is planning to reward investors by paying a Q1 dividend of US$ 18.8 billion and distributing one bonus share for every ten shares held in the company. Its chief executive, Amin Nasser, noted that “against the backdrop of increased volatility in global markets, we remain focused on helping meet the world’s demand for energy that is reliable, affordable and increasingly sustainable.”  Because of the ongoing Ukraine war, and other production disruptions, it is expected that Brent will trade at over US$ 100 for the remainder of the year – and could easily hit US$ 135 – and this despite the expected global slowdown. The Saudi energy minister, Prince Abdul-Aziz bin Salman, expects the Kingdom’s oil daily oil production to increase by over 8% within the next five years, to a daily output of thirteen million bpd.

To end its reliance on Russian fuel fossils, and to speed up its transition to green energy, the EC is planning to invest US$ 233 billion into extra energy investments by 2027; currently, Russia supplies 40% of the Europe’s gas and 27% of its imported oil, and this dependence see EU nations struggling to agree to certain sanctions on Russia. Apart from the increased monetary input, (with investments of US$ 91 billion, US$ 59 billion, US$ 31 billion and US$ 29 billion for renewable energy, energy savings/heat pumps, power grids and hydrogen infrastructure), measures will include a mix of EU laws, non-binding schemes, and recommendations to governments in the EU’s 27 member countries. Some money will still need to be spent on fossil fuel infrastructure – US$ 11 billion for a dozen gas and liquefied natural gas projects, and up to US$ 2 billion for oil, targeting land-locked Central and Eastern European countries. EC president, Ursula von der Leyen, noted that “RePowerEU will help us to save more energy, to accelerate the phasing out of fossil fuels and, most importantly, to kickstart investments on a new scale.” The EC has replaced its current 40% target by an additional 5% to 45% relating to using renewable energy by 2030, and to double that capacity to 1.236k gigawatts (GW) by then, via laws allowing simpler one-year permits for wind and solar projects. The EU also proposed phasing in obligations for countries to fit new buildings with solar panels. Another objective is to cut EU energy consumption by 13%, (up from the current 9% aim), over the next eight years.

Ryanair posted an almost tripling of revenue to US$ 4.1 billion, but a US$ 369 million loss for its fiscal year ending 31 March – an improvement on the US$ 1.0 billion deficit recorded a year earlier. Europe’s biggest discount airline, which carried 165 million passengers over the year, commented that it was hoping for a return to “reasonable profitability” this year, and that it was “cautiously optimistic” that peak-season fares will be somewhat ahead of 2019 levels. Chief executive, Michael O’Leary, also noted that getting through airports will be “challenging” this summer, and that there are “pinch-points” at airports, such as Heathrow and Manchester, where he said “too many people” have been sacked. On the day, Ryanair shares traded at US$ 14.16, 30% lower than three months ago.

Not helped by factors such assupply chain problems, rising raw material costs, surging energy prices and the war in Ukraine, food shopping has become more expensive. Iceland has come up with an innovative way to assist shoppers over the age of sixty – they have  launched a 10% discount for this consumer sector  every Tuesday as surging prices have hit dwindling household budgets. With prices rising at their fastest pace in forty years – and up 5.9% on the year – some supermarket chains, including Morrisons and Asda, which have been losing shoppers to discounters, Aldi and Lidl, have already introduced discounting on a big scale. Last Christmas, the retailer also ran a regional trial offering US$ 37 vouchers to those receiving a state pension and could also roll our something similar this summer. Matters can only get worse for most of the population, including pensioners and the poor, who will be more badly impacted, as inflation, which rose from 7% to 9% on the month in April, heads inexorably towards double digit territory, as energy prices rose a further US$ 870 last month.

With the UK ending all forms of restrictions, and demand for overseas holidays soaring, airlines are struggling to return to pre-Covid staffing levels. Budget airline EasyJet is even offering new and existing cabin crew a US$ 1.23k, (GBP 1k) bonus at the end of the summer holiday season. With an ongoing airline battle to retain and recruit staff, and a limited supply of staff, even BA is offering the same amount to new joiners, as a “golden hello”. With a current shortage of staff, airlines have had to cancel hundreds of flights, exacerbated by the recent hiatus in the Omicron variant pushing staff absences higher. To add to holidaymakers’ woes, some have missed flights because of the lack of staff at airports, including Manchester and Luton, resulting in long queues and many disappointed passengers not making their flight. Another problem facing airlines is that it can take months to train and get security clearance for new staff. One innovative measure sees EasyJet considering taking out the back row seats on some aircraft that would allow the carrier to fly with three cabin crew – and not four.

Another sector with staff shortage problems is found in Wall Street, where many of the financial institutions there face problems to retain talent in a heated job market. The latest is Goldman Sachs that has decided to allow senior staff an unlimited number of annual leave days – they can take time off when needed “without a fixed vacation day entitlement”. More junior employees still have limits on holiday but will be given at least two extra days off each year. All Goldman employees will be required to take three weeks off each year, starting in 2023, and that includes at least one week of consecutive time off.

Probably not before time, McDonald’s has decided to exit Russia, after having closed its 847 restaurants in the country. It plans to sell all its Russian restaurants, of which 84% are owned by the world’s largest burger chain, and that it will take a related non-cash charge of up to US$ 1.4 billion. There is no doubt of the popularity of McDonald’s among Russians, even though when it opened its first branch on 31 January 1990 the cost of one burger was several times higher than many city dwellers’ daily budgets. Last year, revenue from Russia and Ukraine generated US$ 2.0 billion, equating to about 9% of its total sales. McDonald’s confirmed it would ensure its 62k employees in Russia continue to be paid until the close of any transaction and that they have future jobs with any potential buyer. This week, French car maker Renault posted that it would sell its majority stake in Avtovaz to a Russian science institute.

Having earlier posted impressive Q1 results, driven by a recovery in its ride-hailing and delivery businesses, Uber unveiled new products and services to enhance its product range and boost its bottom line. They include hotel/flight reservations, charter bus bookings, electric vehicle options for customers, and electric vehicle hub and charging map for drivers. Its travel service, initially limited to North America, will allow users to reserve rides for each leg of their itinerary, with Uber assisting with the organisation of hotel, flight and restaurant reservations; users will receive 10% for each reserve ride. Users will also be able to access the new Uber charter service app and be able to book a party bus, passenger van or a coach bus. Initially the new comfort electric service will only be available in four locations, including Dubai, along with three Californian cities – Los Angeles, San Francisco and San Diego. Uber is still looking at 2040 as the deadline to become a zero-emissions mobility platform, and in 2021, it made an agreement with Hertz to take up to 50k Tesla vehicles available for drivers to rent by 2023.

According to the IIF, global debt grew US$ 3.3 trillion in Q1 to a record high of US$ 305 trillion, driven by increased borrowing by the world’s two largest economies, US, (US$ 1.8 trillion higher) and China, (up US$ 2.5 trillion), and an economic slowdown attributable to the war in Ukraine. This figure equates to more than 348% of global GDP, with the debt about 15% below its Q1 peak. It is expected that soaring inflation will also play a role in global debt and will continue to help reduce debt ratios in general, as the global debt-to-GDP ratio declined for the fourth consecutive quarter. The IIF did warn that “as central banks move ahead with policy tightening to curb inflationary pressures, higher borrowing costs will exacerbate debt vulnerabilities,” This will have a more damaging impact on poorer economies around the world, as high interest payments push them into more debt, at the same time when food and energy prices are also surging. There is no doubt that interest expense is becoming an increasingly heavy burden for global central banks and this debt has to be repaid – another expense to be repaid probably via increased taxation. It is estimated that rising finance costs, coupled with heightened geopolitical risks, erased more than US$ 16 trillion from global stock markets this year, and that 33% of all SMEs are now facing difficulty covering interest expenses. The outlook is a bit like Dubai’s strange overcast weather this week.

With its lockdowns rising by the day, and its economy slowing in tandem, China’s jobless rate rose to 6.1% last month, its highest level since the 6.2% pre-Covid peak of February 2020. The two sectors hardest hit were retail, (11.1% down on the year in April), and manufacturing 2.9% lower on the back of the two-month long full or partial lockdowns imposed in dozens of cities, including the country’s commercial centre Shanghai. March had seen retail decline by 3.5%, whilst industrial production had been 5.0% higher. The government’s jobless rate target remains at 5.5% for the year, as next week Shanghai sets out to return to some form of normalcy after six weeks of complete lockdowns.

Wheat importers received another setback this week following Russia’s invasion of the Ukraine which saw that country’s wheat exports plunge.  (Russia and Ukraine were the third and eighth leading producers in the world at 85.9 million tonnes and 24.9 million tonnes). At the time, India, the world’s second largest producer after China, with 107.6 million tons, was looking at exporting ten million tonnes to partially fill the void but has banned any exports because a heatwave has slashed output, leading to domestic prices surging to a record high, reaching US$ 323 per tonne, 24.1% higher than the government’s minimum support price of US$ 260. Even though India is not one of the top exporters, this ban will no doubt push global prices even higher and will hit the poorer countries in Asia and Africa hard.

After Wall Street suffered its worst daily sell off in two years, the Australian market tanked on Thursday, with the ASX 200 and the All Ordinaries both dipping to 1.7% to 7,065, and 7,303 respectively. On Wall Street, the Dow Jones index shed 1,165 points, or 3.6 per cent, to 31,490, its heaviest single-day loss since June 2020. It was the lowest close for the Dow since March 2021. The S&P 500 shed 4.0% to 3,924, its worst drop since June 2020, and down 17.0% YTD, whilst the Nasdaq lost 4.7% to 11,418, which has plunged about 27% already in 2022. Nearly all sectors were affected, led by consumer stocks with the likes of Wesfarmers (-7.8%), JB Hi-Fi (-6.6%), Super Retail Group (-6.0%), Woolworths (-5.6%) and Harvey Norman (-5.5%). The big players also saw smaller losses including Westpac (-4.1%), Graincorp (-4.0%), REA Group (-3.7%) and Rio Tinto (-2.1%). After announcing that it was fighting an apparent losing battle with inflation and had seen quarterly profit halved, US retailer Target lost 25% in value on the day. Retailers are realising that they are being hit with a double whammy of rising fuel, supply and freight costs and that there will be an ever-increasing problem, as inflation results in eroding consumer purchasing power.

The Bank of England Governor continues to act like an alien who has no understanding on the state of the economy and the negative impact it has on most of the nation. Andrew Bailey, who is paid a salary of US$ 708k last year, has advised people, particularly those on higher incomes, not to ask for a pay rise this year and told a meeting of MPs that he does not think the bank “could have done anything differently” to avoid sharp price rises. He reiterated that he felt “helpless”, as he defended the Bank’s monetary policy despite the country facing soaring inflation; the current 9% level – and certain to reach double digits by year end – is well above the 2% BoE target. Inflation targeting is based on the assumption that the BoE’s monetary policy is to use interest rates, with pushing rates higher will slow a heating economy to cool it down and rein in inflation, with reducing rates having the opposite impact – accelerating the economy and boosting inflation. In this way, economic growth is best supported by price stability, and that is best attained by controlling inflation. The argument is that the UK central bank has left it too late and should have begun to move rates higher when inflation began to surge away from its 2% target. A year ago, the CPI was at just over 2%; the bank expects it reach 8% this month and to top out at over 10% in Q4.

Another person completely out of touch with reality is Rachel Maclean MP and Parliamentary Under Secretary of State at the Department for Transport. This week, she told Sky News “over the long-term, we need to have a plan to grow the economy and make sure that people are able to protect themselves better – whether this is by taking on more hours or moving to a better-paid job”.  Prior to becoming an MP in 2017, the Oxford graduate had high-flying jobs, including HSBC, and in 2005, she founded a publishing company, specialising in IT, with her husband; last year, the firm made a US$ 2.2 million profit. It is reported that, as an MP last year, she claimed over US$ 266k in expenses on top of her combined salary of US$ 132k. The good lady has had annual rent of over US$ 29k paid on her London home paid by the taxpayer, a US$ 2k working from home allowance to pay for equipment during Covid and took out a US$ 3.4k loan from standards body IPSA to avoid having to pay the deposit on the London home herself. All claims are within parliamentary guidelines.

Debt ridden, and apparently corrupt-led Sri Lanka defaulted on its debt for the first time in its history as the country struggles with its worst financial crisis in more than 74 years; this week, it failed to repay US$ 78 million of unpaid debt interest and is in a “pre-emptive default”. In recent weeks, there have been large, sometimes violent, protests against President Gotabaya Rajapaksa and his family due to the growing crisis. The Indian Ocean Island is mired in turmoil and civil unrest, with inflation possibly topping 40% later in the year, its currency tanking, losing almost half in value in recent weeks, and an almost penniless exchequer, with no foreign reserves.

(The Rajapaksa family had become too powerful during Mahindra Rajapaksa’s presidency, which began in 2005, when many members of the family occupied senior positions in the Sri Lankan state but he was defeated in the 2015 election. In 2005, the president appointed his brother Gotabayar as Defence Secretary whilst another Basil became Senior Presidential Advisor. Things got even worse after the 2010 election, with three of his brothers, Basil, Namal and Chamal occupying five government ministries and reportedly directly controlled 70% of the national budget. After the defeat of Mahinda Rajapaksa, some of his brothers reportedly fled from the country to avoid being arrested).

At the time, there were reports of authoritarianism, corruption, nepotism and bad governance during the decade he was in charge. Surprisingly, his brother Gotabaya became president in 2019. Numerous other members of the extended family have also been appointed to senior positions state institutions, including former president Mahindra returning to the fold as Prime Minister for over three years until earlier this month when he was replaced by Ranil Wickremesinghe. No wonder that in recent weeks, there have been large, sometimes violent, protests against President Gotabaya Rajapaksa and his family due to the growing crisis. Sri Lankans must be asking Where Can We Go From Here?

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What You Waiting For?

What You Waiting For?                                                             13 May 2022

President His Highness Sheikh Khalifa bin Zayed Al Nahyan passed away today, 13 May. In a statement issued today, “The Ministry of Presidential Affairs mourns the death of the nation’s President His Highness Sheikh Khalifa bin Zayed Al Nahyan”. He was the second President of the UAE, (and sixteenth ruler of the emirate of Abu Dhabi), succeeding his late father, who died on 02 November 2004.

The Ministry has also declared an official mourning period for the late His Highness Sheikh Khalifa bin Zayed Al Nahyan, with the flag flown at half-mast for forty days starting from today. Work in ministries, departments, federal and local institutions and the private sector will be suspended for three days starting from Saturday, 14 May, and work will resume on Tuesday, 17 May.

As required by law, the rulers of the seven emirates have to meet within thirty days and will probably convene tomorrow Saturday 14 May. Until then, the constitution appears to appoint HH Sheikh Mohammed bin Rashid Al Maktoum as interim president.

With today’s sad news of the passing of the UAE President Sheikh Khalifa bin Zayed Al Nahyan, the public sector entered a three day mourning period, so there is no Dubai Land Department weekly property report yet available for the week, ending 13 May 2022.

According to Knight Frank, some locations in Dubai’s prime residential market, including Palm Jumeirah, Emirates Hills and Jumeirah Bay Island, have seen prices skyrocket 60% over the past twelve months. The consultancy reported that Palm Jumeirah and Emirates Hills have posted annual rises of 38% and 20%, and 11% and 6.5% in Q1. Last year, the agency sold ninety-three ultra-private homes, (valued over US$ 10 million) and a further thirty-two in Q1.

As the Dubai economy improved quicker from the pandemic, than most expected, and with 26k property transactions recorded in Q1 – the highest number of quarterly deals since 2010 – overall, local house prices in Dubai were 10.6% higher on the year, with the market up 2.6% in Q1. However, the study also estimated that average prices are still almost 25% lower on their 2014 peak, with villas 12.9% lower than in 2014. It also noted that there had been a slowdown in the rate of growth in certain market segments, as the average Q1 villa price rose 3.2% – 0.2% lower than the 3.4% growth registered in Q4 –  the slowest quarterly increase in more than two years. The results came with a caveat that Dubai’s most expensive locations have been witnessing surging prices, driven by the influx of overseas UHNWIs (ultra-high net worth individuals) looking for suitable accommodation. Knight Frank forecasts another 100k units, (75k apartments and 25k villas), will enter the market by the end of 2025, including 50k due to be completed by the end of the year. These figures seem to be a little skewed.

In a deal to promote Emirati start-ups, in the healthcare and allied sectors, Dubai Healthcare City is offering a five-year 20% rental discount to Emirati entrepreneurs when they establish their business at the free zone. Other SME-related incentives include the health authority dedicating 10% of its procurement budget for purchases from national companies listed with Dubai SME, as well as assigning locations within the free zone to host food truck projects free of charge and give access to marketing and customer service support.

Emirates has announced that tickets for its much-vauntedfull Premium Economy offering will start from next month and that, as from 01 August, it will be introduced on A380 flights to London, Paris and Sydney, with Christchurch on board from December. The new cabin class will offer passengers luxurious seats, more legroom, and a service to rival many airlines’ business class offering; Emirates is the only regional airline to offer a Premium Economy cabin. In November, it will begin its retrofit programme to install Premium Economy on 67 A380s and 53 Boeing 777s. Last year, the airline introduced Premium Economy seats in January 2021.

Emirates Airline anticipates there will be no changes to the costs of flying on Emirates this summer, as they have already built in the increased fuel cost into ticket prices to absorb further costs within the company. As indicated earlier in the month, the carrier is operating on 90% of pre-COVID routes and at 70% capacity, as the recovery gains momentum; it hopes to top 85% of pre-COVID capacity by year end and 100% in 2023. The airline’s chairman, Sheikh Ahmed bin Saeed Al Maktoum, also confirmed that Emirates is planning to repay the US$ 4.1 billion it received from the government as a rescue package at the onset of Covid-19. Speaking at this week’s ATM, he intimated that it will be in the form of dividend starting this financial year. At the event, Emirates also picked up four Business Traveller Middle East industry awards – ‘Best Airline Worldwide’, for the ninth consecutive time, ‘Best Premium Economy Class’, ‘Best Economy Class’ and ‘Best Frequent Flyer Programme’.

With its fiscal year ending 31 March, Emirates Airline posted a 91% surge in annual revenue to US$ 16.13 billion, with the carrier expanding global capacity as Covid restriction were eased. Over the year, with its network growing to over 140 destinations by 31 March, and an extra five A-380s added to its fleet, the airline managed to reduce its annual loss from US$ 5.53 billion to US$ 1.06 billion. Group revenue, helped by dnata’s “significant revenue growth”, was 86.0% higher at US$ 18.04 billion, with a closing cash balance of US$ 7.03 billion – 30.0% higher on the year.

 Dubai International has posted its busiest quarter since 2020 with 13.6 million passengers, 15.7% higher than recorded in the previous quarter, and 238% higher than Q1 2021 – a sure indicator that business is slowly returning to pre-pandemic levels. It is looking at an annual total of 58.3 million by year end. The facility handled 520k tonnes of cargo, 15.5% lower than the previous quarter. Flight movements were 5.8% higher on the previous quarter at 82.0k. Four countries accounted for 34.0% of the total traffic, equating to 4.63 million passengers – India (1.6 million), Saudi Arabia (1.1 million), Pakistan (997k) and UK (934k). The four leading city destinations were London, Riyadh, Jeddah and Istanbul with totals of 617k, 517k, 337k and 324k.

Dubai’s hospitality sector continues to recover strongly from the pandemic recording a massive 214% improvement in Q1 to 3.97 million international overnight visitors, with hotel occupancy rates at global highs of 82%, compared to the likes of London (56.0%), New York (55.3%) and Paris (51.2%), according to data from hotel management analytics firm STR. March proved a stellar month with 1.78 million international visitors, 11.0% higher on pre-pandemic figures. 73% of visitors came from three markets – Mena/GCC (35%), Western Europe (24%) and South Asia (14%). All key hospitality metrics in Q1 were markedly higher on pre-pandemic returns – Average Daily Rate of US$ 177 (30.3%), Guests’ Length of Stay at 4.3 nights, (22.9%) and Occupied Room Nights of 10.22 million (18.4%).. There has been an 8.0% increase in the number of hotel establishments to 769 and a 19.4% hike in the number of rooms to 140.2k. From these figures, there is no doubt that Dubai is well on its way to becoming the world’s most visited destination.

Another factor that will benefit the emirate’s hospitality sector is that TripAdvisor Travellers’ Choice Awards 2022 selected Dubai as the world’s most popular destination, the No.1 destination for ‘City Lovers’ and the fourth destination for ‘Food Lovers’. This will be enhanced by announcements that Michelin Guide Dubai will open in June, followed by the arrival of the renowned fine dining food critique brand Gault&Millau. Dubai is also home to over 12k restaurants and cafes. The emirate, with more than 97% of the population vaccinated, is one of the safest cities in the world and is ranked third globally in Bloomberg’s Covid Resilience Ranking.

On Monday, Sheikh Ahmed bin Saeed Al Maktoum officially inaugurated Arabian Travel Market (ATM) 2022 – the 29th edition of the Middle East’s largest travel and tourism exhibition. At the opening, he noted that Dubai continues to strengthen its position at the forefront of global travel and tourism recovery by hosting such global events, and lauded Dubai’s ability to provide a safe environment for both tourism and prominent global events post-Covid. The four-day event, 85% larger than last year, with an expected 20k attendance, attracted 1.5k exhibitors from 158 global destinations. This year sees the introduction of the ATM Draper-Aladdin Start-up Competition, which has fifteen travel, tourism, and hospitality innovators pitching for up to US$ 500k of funding – as well as the possibility of a further US$ 500k of investment as part of the hit TV show, Meet the Drapers.

At the ATM, the Dubai Health Authority revealed that, last year, Dubai received 630k international health tourists who spent an estimated US$ 2.0 billion in the emirate. A breakdown of these figures indicates that:

  • a total of 38% from Asia, 24% from Europe and 22% from Arab and GCC nations
  • 55% were male and 45% were female
  • a total of 70% received treatment at multidisciplinary clinics, 16% at hospitals, and 14% at one-day surgery centres
  • a total of 43% were from Asia, 24% from Europe and 22% from Arab/GCC nations
  • the three medical specialties that attracted the most health tourists were dermatology (43%), dentistry (18%), and gynaecology (16%)

Blockchain consultancy, ColossalBit, announced that The Alves Trophy Collection NFTs will be launched next month at Dubai’s MetaTerrace. The Brazilian international footballer, who also played for Barcelona, PSG and Juventus, will be launching a line of luxury watch non-fungible tokens, created in collaboration with UK watchmaker Backes & Strauss. The collection, with forty three virtual timepieces , will commemorate each trophy Dani Alves won in his illustrious career. The launch will only enhance Dubai’s growing reputation in the world of NFTs, (which are unique digital properties in the form of art or media bought using blockchain technology). It is estimated that in 2021, NFT collectors sent a global US$ 40 billion worth of digital assets to NFT marketplaces, with the this year’s figure already topping US$ 37 billion.

Based on data from the Financial Times Ltd. ‘fDi Markets’, Sheikh Hamdan bin Mohammed, revealed that last year, Dubai was ranked first in the world in attracting foreign direct investment, with a record number of 418 greenfield FDI projects. The Crown Prince noted that, “Dubai has created a stable, sustainable economic environment and a vibrant business ecosystem for companies and entrepreneurs to launch new ventures, tap new opportunities and expand their business both in the country and beyond its borders”. The annual ‘Dubai FDI Results and Rankings Highlights Report 2021’ confirmed that the emirate had surpassed London and Singapore for the first time, registering more than fifty FDI projects than its two main rivals. The share of global greenfield FDI projects attracted into Dubai came in 0.7% higher on the year to 2.8%. Dubai continued to perform well across a broad range of metrics

  • first in the Mena and third globally in FDI capital inflows
  • first in the Mena and third globally in First In Reinvestment FDI projects
  • first in the Mena and fifth globally, for FDI job creation
  • first in the Mena and tenth globally in Global Venture Capital FDI Projects

There was significant annual growth in all key FDI indicators where the estimated value of 2021 FDI capital flows into Dubai was 5.5% higher at US$ 7.1 billion from a total of 618 announced FDI projects. FDI job creation, at 2.9k, was 35.7% higher on the year. Only Singapore surpassed Dubai, as the emirate attracted forty-three Headquarters FDI projects in the year, whilst it also ranked third globally in terms of HQ FDI capital flows, which amounted to US$ 763 million. It was also reported that eighty-four Dubai-based start-ups successfully attracted Venture Capital Backed FDI, worth US$ 638 billion during the year.

In a bid to further enhance the participation of Emirati talents in the private sector, the UAE Cabinet has introduced a package of incentives to increase the competitiveness of the Emirati workforce. They include an 80% reduction in the service fees of the Ministry of Human Resources and Emiratisation for private sector establishments, which accomplish major achievements in terms of recruitment and training of Emirati citizens, and an increase to an annual 2% of the Emiratisation, (and to reach the target of 10% by 2026), from high-skilled jobs in establishments that employ fifty workers or more. It is expected that this will attract over 12k job opportunities annually for citizens in all economic sectors. This is in line with the federal Nafis programme (meaning to compete in Arabic), that aims to increase the competitiveness of the Emirati workforce and to facilitate the private sector employment of UAE citizens. The programme also offers benefits such as the Emirati Salary Support Scheme, where UAE citizens will be offered a monthly US$ 2.2k (AED 8k) one-year salary support during training and a monthly support of up to US$ 1.4k (AED 5k) will be paid for up to five years for university graduates. The program also has other incentives including subsidised five-year government-paid contribution on the company’s behalf against the cost of pension plans for Emirati staff and full support for the Emirati’s contribution across the first five years of their employment. Its Private Sector Child Allowance Scheme is a monthly US$ 218 (AED 400) grant made to Emirati staff working in the private sector. Since its launch last September, 5.6k new Emiratis have joined the private sector, involving 1.8k companies. Non-compliance will result in monthly fines of US$ 1.6k, (AED 6k), for every citizen who has not been employed.

April figures confirm that Dubai’s business activity climbed at its second-fastest improvement in almost three years, although the headline S&P Global Dubai PMI dipped 0.8 to 54.7 on the month; it was the seventeenth consecutive month that the figure remained over the neutral 50 threshold which differentiates between expansion and contraction. One of the main drivers is the fact that overall new business grew, including in the travel and tourism industry, remaining strong in post-Covid April. During the month, output growth, markedly in wholesale and retail segment, was supported by a sharp rise in customer sales as the emirate’s economy continued to recover from the easing of pandemic-related restrictions. Monthly dips were seen in construction and travel and tourism sectors from post-pandemic highs in March, whilst volumes of new orders headed higher but at a slower pace. The country’s non-oil economy had expanded an annual 7.8% in Q4, driven by the easing of Covid-related restrictions and travel curbs.

Last month, the first federal auction government announced that it would be launching the country’s first auction of the dirham denominated federal Treasury Bonds. Reflecting investor confidence in the buoyant UAE economy, the first T-Bond issue of AED 1.5 billion, (US$ 409 million), was 6.3 times oversubscribed.  The strong demand was equally spread across both the two year, (with a spread of 28bps), and three year tranches (29bps).  This initial trade is part of the AED 9 billion (US$ 2.45 billion), T-Bonds issuance programme for 2022. This auction will be followed by a series of subsequent periodic auctions, with the T-Bonds being issued initially in two, three, and five year tenures, followed by a ten-year bond at a later date. Sheikh Maktoum bin Mohammed commented that “this successful first issuance is a milestone towards building a dirham denominated yield curve and providing safe investment alternatives for investors which contributes to strengthening the local financial market and developing the investment environment”; UAE’s Deputy Ruler also invited international investors to participate in the T-bonds issuance programme. There is no doubt that this successful issue will enhance the UAE’s position as an attractive hub for investment, its strong creditworthiness and economic and competitive capabilities at the global level.

Under Law No 8 of 2022, HH Sheikh Mohammed bin Rashid has announced the establishment of a Debt Management Office, to be regulated and managed by the emirate’s Department of Finance which has been invested with several responsibilities. They include meeting the government’s financing requirements, managing the sovereign debt portfolio, setting strategic objectives and policies, pursuing risks to ensure government financial sustainability, as well as maintaining high levels of transparency to enhance investor confidence and develop robust relationships with stakeholders. Rashid Ali bin Obood Al-Falasi has been appointed the Chief Executive Officer of the DMO.

Shuaa Capital posted a 76%, year on year, slump in Q1 net profit to just US$ 1.6 million but this included an US$ 8.4 million write down in intangible assets. The region’s leading asset management and investment banking platform noted EBITDA (earnings before interest, taxes, depreciation, and amortisation) was 10.6% higher, on the year, at almost US$ 23 million, and a major improvement on the Q4 negative return of US$ 5 million. In Q1, “it acquired another vessels company within the Thalassa fund, launched Shuaa Venture Partners and successfully raised a US$ 100 million SPAC during the quarter, demonstrating our ability to effectually execute in a challenging environment.”

Emaar Properties posted more than a threefold increase in Q1 net profit to US$ 610 million, on revenue 12.0% higher at US$ 1.80 billion, driven by a property market rebounding from the pandemic; property sales were up 17.0% to US$ 2.26 billion. Dubai’s leading developer also posted a 22.0% hike in international real estate operations to US$ 400 million, with revenue of US$ 269 million from its business operations in Egypt and India, also contributing to 15% of the company’s total revenue. It has a sales backlog at a high US$ 12.32 billion.

It noted that its “hospitality and shopping malls have recorded a solid performance in the first quarter of this year,” and will  “continue to capitalise on the very attractive supply and demand dynamics” in the sector. Although revenue declined 7.0% to US$ 954 million in Q1, Emaar Development reported a 34% hike in profit at US$ 286 million as property sales grew 16 per cent to US$ 1.85 billion. Earlier in the year, the developer said it planned to increase its stake in Emaar Developments “by up to 3%.” Its shopping malls and retail arm also reported higher net profit, up 136%,  during the first quarter. as revenue grew 336.0% to US$ 327 million. Its hospitality, leisure, entertainment and commercial leasing businesses saw revenue 120% higher at US$ 230 million, with average occupancy in its managed hotels standing at 80%.

Dubai Investments PJSC has posted a 63.6% surge in Q1 consolidated net profit to US$ 55million, as revenue, at US$ 207 million, was 19.4% higher on the year, attributable to strong results in the property and the manufacturing, contracting and services segments. By the end of March, both Total Assets and Total Equity remained relatively flat at US$ 6.0 billion and US$ 3.4 billion. Last month, DI divested a 50% stake in Emirates District Cooling, with the deal being finalised by the end of Q2, with ‘profit on the sale of an asset’ bring included in that quarter’s results.

Deyaar posted a massive 67% increase in Q1 net profit to US$ 7 million on the back of a 9.0% hike in revenue to US$ 44 million. The Dubai property developer advised that the results did not include any revenue from the company’s Regalia project but noted that it was expecting “an increase in revenues in the coming months attributable to … our Regalia project, which was successfully sold out with a total value of nearly AED1 billion (US$ 272 million)”. Deyaar has also managed to expand its revenue portfolio by “diversifying into areas such as strengthening its projects portfolio, property and facilities management services, and in the hospitality sector.”

Union Properties posted its Q1 financials indicating a 7.6% hike in revenue to US$ 29 million, attributable to the continued rebound in Dubai’s real estate sector, and its subsidiaries showing marked performance results. Despite the one-off gains of almost US$ 2 million due to the sale of assets in 2021 and additional legal costs of US$ 0.6 million related to claims from a prior period in Q1 2022, EBIT remained flat at US$ 1.4 million; administration expenses fell 21.2%. Helped by the launch of Motorsport Business Park 2 warehouse complex, Dubai Autodrome recorded a 38.0% hike in revenue, with profit 61.2% higher, whilst the merging of property management and cold store management operations with EDACOM saw a notable decline in costs, allied with improved operational efficiencies.

Amanat Holdings posted an 11.7% rise in Q1 revenue to US$13 million. Its healthcare platform revenue more than quintupled to US$ 4 million, driven by a full quarter contribution of Cambridge Medical and Rehabilitation Centre, (which only contributed to March’s result in Q1 last year on a compariave basis), a narrowing of losses at the Royal Hospital for Women and Children in Bahrain – with Q1 revenues doubling on the year – and a marked improvement in the performance of Sukoon, driven by a successful turnaround. With Middlesex University Dubai showing a 13.0% rise in Q1 revenue, the firm’s education platform saw a 3.0% rise in income to US$ 9 million.

Dubai Electricity and Water Authority posted a 15% jump in Q1 revenue to US$ 1.38 billion, with profit at US$ 188 million, driven by an increase in consumption across all sectors and the transition to a normalised tariff structure at the beginning of this year. Sector-wise, all three segments rose – electricity by 17.5%, water – 20.2%, and district cooling 17.6%. The utility’s consolidated gross fixed assets grew 1.3% to US$ 55.64 billion over the period.

The DFM opened on Monday, (after the Eid Al Fitr holiday), 09 May, 24 points (0.6%) down on the week, and shed 277 points (7.5%), in a torrid week of trading, to close on Friday 13 May, on 3,695. Emaar Properties, US$ 0.02 lower the previous week, lost US$ 0.18 to close on US$ 1.54. Dewa, Emirates NBD, DIB and DFM started the previous week on US$ 0.77, US$ 4.11, US$ 1.76 and US$ 0.72 and closed on US$ 0.73, US$ 3.72, US$ 1.63 and US$ 0.63. On 13 May, trading was at 96 million shares, with a value of US$ 126 million, compared to 171 million shares, with a value of US$ 66 million, on 06 May 2022.

By Friday 13 May 2022, Brent, US$ 11.40 (11.2%) higher the previous fortnight, dipped US$ 2.99 (2.6%), to close on US$ 110.16. Gold, US$ 92 (4.6%) lower the previous three weeks, lost US$ 73 (3.9%), to close Friday 13 May on US$ 1,810.

Blaming rising interest rates and political instability, Japan’s SoftBank Group became the latest mega tech group to post a loss, reporting a record quarterly US$ 26.2 billion loss; last year, it posted a then record profit. No doubt questions are being asked of chief executive, Masayoshi Son’s penchant for apparently relying on riskier, high-growth stocks. Three of his investments – South Korean e-commerce company Coupang, and ride-hailing companies, Didi Global and Grab, have seen dramatic falls, with the former 70% off its March 2001 IPO price. Vision Fund has 475 companies in its portfolio and made forty-three investments during the quarter but is slowing the pace of investment. It has a loan to value ratio of 20.4% but with pledges not to push that over 25% in 2022, it is inevitable that its investments will be at least 50% lower in the coming twelve months.

Supermarket group Morrisons, beating EG Group’s offer, has won a battle to rescue McColl’s, the convenience store and newsagent chain. The deal included Morrisons paying off McColl’s US$ 10 million debt, retaining all 1.16k shops and its pension scheme with 2k members. and taken on all 16k staff members. PwC put the retailer into administration which was immediately sold to Morrisons. Last week, it seemed that when Morrisons’ initial bid was rejected by the administrator, the Issa brothers’ (owners of Asda), were the frontrunners but then a better deal was offered over the weekend, which pushed the deal over the line.

Despite all its economic woes, US labour figures still remain firm with employers adding 428k jobs to the payroll last month, as the unemployment rate remained flat at 3.6%. The gains, which were better than expected, represent the sixteenth straight month of expansion. Furthermore, certain sectors have found it difficult to find workers and with supply not able to meet demand, wages have risen at their fastest rate in years – up 5.5% on the year. Normally such increases would be welcome but the fact that inflation is running at 8.5% means that real wages are lower. April figures also showed that the number of people in the labour force – working or looking for work – fell by more than 360k, the first decline in months.  Obviously with less people in the labour market, supply issues will only get worse.

Trouble is brewing for Australians with mortgages – and maybe for the big four banks, ANZ, CBA, NAB and Westpac, holding a worryingly high whopping US$ 1.3 trillion in home loans. Little wonder to see these four banking behemoths posting after tax profits of over US$ 10 billion in fiscal H1 ending December. Despite all the warning signs, Australians keep on taking bigger mortgages — including 300k of them with loans worth more than six times their income, with about 25% of home loans of fiscal Q2 loans, representing this segment. There is no doubt that borrowers in this category are at higher risk of mortgage default, when the economy slows.

All pointers see rates rising with the CBA expecting the cash rate to lift to 1.60% within nine months, Westpac, 2.25% by May 2023, NAB 2.60% by August 2024, and ANZ 2.25% by May 2023. It seems that, in a competitive segment, bank margins have been dipping – by 14bp to 1.75% in fiscal H1 – as fixed rate loans have enticed people to move lenders. However, as rates head higher so will the banks’ margins. A study by RateCity estimates that if and when  the cash rate reaches 2.60%, a US$ 350k (AUD 500k) mortgage will see monthly  repayments rise by US$ 470 (AUD 675) and  by  US$ 840 (AUD 1.35k) for a US$ 700k (AUD 1 million) loan. The consultancy sees that with the rate increases, Australian house prices could easily decline by 15% over the next two years.

A widely held belief in Australia is that when their dollar is trading at under $0.75 to the greenback, it is good news for exporters, as international trade becomes cheaper and more competitive. It seems that the rest of nation has to deal with the impact of a falling dollar, with shoppers and businesses having to learn to survive with less purchasing power. Other segments feeling the pinch include business owners, when the cost of purchasing supplies and equipment sourced from overseas rises, and travellers when they go to exchange their dollars for greenbacks and receive 10% less than would have been the case just weeks ago. The ANZ-Roy Morgan consumer confidence index fell by 0.2 last week to a twenty-month low of 90.5. Consumer views on whether it is a good ‘time to buy a major household item’ dropped 2.2% in the past week to a 2-year low of -15.9 points, with the Westpac-Melbourne Institute Index of Consumer Sentiment sliding 6.0 to 90.4 in May – its lowest level since August 2020. Rather belatedly, the RBA has finally realised that surging inflation, that started some eighteen months ago, is no longer transitory and would just fade away over time when post-Covid trading conditions improved. This has not been the case and now the central bank has been forced to launch an aggressive monetary policy tightening program (raising interest rates). The end result is that the cost of borrowing for consumers (and everyone else) will rise and mean a further reduction in consumer spending and that the country’s exports become more expensive (and less competitive) on the global stage; this in turn will slow economic growth and could lead to a marked deceleration in GDP.

This week, the National Institute of Economic  and Social Research think tank warned   that the squeeze on household incomes may cause the UK to fall into recession in H2, as consumer spending continues to slow, with latest data showing that March shop sales were “well below expectations”, along with a downturn in “big ticket, non-essential items”. The services sector was the main contributor to the economy contracting in March, with the worst performer being the motor industry as the month’s new car registrations were the lowest since 1998, as supply chain problems continued to hamper carmakers. The GDP did grow 0.8% in fiscal Q4, performing better than most comparable economies, but when split into individual months, it can be seen that there has been a marked deterioration – all the growth happened in January, with a flat February and a small contraction in March. The bad news will arrive when the impact of April taxes, rising interest rates, and ongoing surging inflation all lead to a slowdown or even a recession before the end of 2022. The UK is flirting with the distinct possibility of a recession, and there is no doubt that higher prices are beginning to drag the economy lower and if the 10% inflation forecasts by year end ring true, allied with ever-increasing fuel, food and energy costs, it is certain to happen.

Monday saw Bitcoin decline to its lowest level of US$ 33.3k since January, when it traded at US$ 33.0k, driven by slumping equity markets. It seems that cryptocurrency trading is considered more of a risky asset and as the tech stocks start to plummet, with Nasdaq already 22.0% lower on the year, so do the likes of Bitcoin. Furthermore, the fact that interest rates continue to move north, and the global economy slowing amid inflation almost reaching double digit levels, the short-term progress for cryptocurrency is limited. On Tuesday, the world’s largest digital token, Bitcoin extended its losses as it fell 3.1% below US$ 30k for the first time since July 2021, putting its decline, at more than 55%, from a November record high amid a global flight from riskier investments.

This week has seen a blood bath in the cryptocurrency market, as exemplified by the Terra Luna token which was trading at US$ 118 last month only to tank this week to be valued at US$ 0.09 yesterday. The market was well and truly spooked and two so-called “stablecoins” soon followed suit – TerraUSD sliding to US$ 0.40 and Tether falling off its US$ peg and sinking to an all-time low of US$ 0.95. (Stablecoins try to remain in parity by being linked to an asset such as the US$, with a token equating to say US$ 1). Even the ‘big boys’ did not escape, with Bitcoin at US$27k, having traded at US$ 70k late in 2021and at its lowest level since December 2020, with Ethereum, the second largest coin by value, shedding 20% in just twenty-four hours. The damage to crypto confidence cannot be exaggerated, with the current value of all cryptocurrencies having sank by over 66% since November, with more than 35% of that deficit occurring this week. This blog suggested some months ago, when Bitcoin was edging US$ 60k, to wait until it fell to under US$ 30k before entering the market and then exit when it climbs back to US$ 50k. It ended the week on US$ 29.3k. What You Waiting For?

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Skating On Thin Ice

Skating On Thin Ice                                                                     06 May 2022

With the public sector on a nine-day Eid Al Fitr break, there is no Dubai Land Department weekly property report for the week, ending 06 May 2022.

There is no doubt there are plenty of landlords rubbing their hands with glee as Dubai property prices shoot north. However, many will be disappointed to hear that their percentage returns on rentals will decrease – sometimes dramatically. For example, a US$ 637.6k, (AED 1.8 million), Springs townhouse rented out pre-Covid at 6.5%, would have given a gross return of US$ 31.9k (AED 117.1k). Rera utilises a rental calculator that will show the “market” value of any location in Dubai which is used to regulate the market and stop it from overheating. Some of its parameters include location, size and current rent.

A look at the rental calculator for the Springs indicates that “no rent increase where the rent of the real property unit is up to 10% less than the average rental value of similar units. The rent for a 2 B/R villa in Springs is in range of AED 97k to AED 119k per year, (does not include water, electricity or any other fees)”. Assume the property has gone up 30% to US$ 828k, (AED 2.34 million) and the landlord wishes to raise the rent likewise to US$ 41.5k (AED 152.2k), then no rent increase is allowed. Instead of receiving a 6.5% return, his investment will now yield just 5.0% – and with inflation at over 5%, real income is flat.

The same conclusion will apply with the updated calculation. A rental increase is allowed under the following protocol when prices are lower than the following parameters:

  • below 10% – no increase
  • between 11% and 20% – a 5% increase
  • between 21% and 30% – 10% increase
  • between 31%and 40% – a 15% increase
  • over 41% – a 20% increase

If a landlord chooses to sell a property, that is being leased by a tenant, the terms of the contract remain intact. To evict an existing tenant, the landlord must provide one of four reasons as to why they are doing so before putting the tenant on a twelve-month eviction notice.

  • If the landlord wants to sell the property
  • If they wish to move into the property, or wish to move immediate family into the property, provided the landlord does not own a suitable alternative property for that purpose (evidence provided in advance)
  • If the property requires extensive modernisation work that would prevent the tenant from living in it while the work is being carried out (evidence of plans or approvals for work provided in advance)
  • If the property needs to be demolished (evidence provided in advance)

Theoretically, it appears that a tenant can only be evicted following a twelve-month written notice served upon expiry of an existing tenancy agreement. However, in practice, it seems that the landlord can give the twelve-month eviction notice at any time during a contract period.

If  landlords want to increase the rent, they also need to give a 90-day notice period, unless the contract states otherwise. If no written communication is served, the rental contract is automatically renewed at the same rental price and based on the same conditions as in the previous agreement.

Sheffield Holdings, founded by Abu Ali Shroff, first started construction of Marina 101 in 2007, with a plan for a 2014 completion, but things did not work out. Dubai’s second tallest building, at 425 mt, with 101 storeys encompassing 1.65 million sq ft, is now “close to completion.” Having run out of cash, the developer left the project, in JBR, uncompleted in 2019, with the three main lenders being the Bank of Baroda, the Indian Overseas Bank and Bank of India. At that time, the building was “almost complete … over 95% work is done”. When this happened, and in line with Article No 15 of the law, concerning escrow accounts for real estate development in Dubai, the account trustee at Bank of Baroda, and the investors met with Rera officials. Although there is no proposed opening date announced, it is reported that Rera has contacted entities such as Dewa and RTA, and that a date has been fixed to make a list of the housing units and to commence issuing certificates of completion. Rera has also urged owners who have not paid up to 90% of their due amounts to do so and is “beginning to issue final warnings to those who are violating the payment plan before starting any other legal procedures against the unit owners who defaulted on payments”.

According to a UK survey, Dubai has become the most profitable and expensive global location for Airbnb landlords. It is estimated that local landlords can earn an average US$ 1.15k per night, equating to US$ 339k per annum; based on this estimate, break-even will take only four months. The survey was based on the price of an average 1 B/R, 450 sq ft apartment, (estimated at US$ 139k or AED 510k) divided by the average Airbnb price for one night. However, the report noted that “the average price to buy an apartment in the city is £112,624 (US$ 139k or AED 510k), meaning just 121 nights need to be sold for this cost to be earned back. However, this is only a profitable location for landlords who have a property near Burj Khalifa, as those further away rent for just £181 (US$ 223 or AED 820) per night.” Maybe the researchers should go back and revise these figures which give potential investors such suspect figures!

Little surprise to see that Dubai has become a haven for fleeing Russians who would have been badly impacted by the sanctions if they had stayed home. The BBC has reported that

Russian billionaires and entrepreneurs have been arriving in the UAE in unprecedented numbers, with Better Homes reporting property purchases by Russians surging 67% in Q1. There are reports that some 200k Russians had already fled in the first ten days of the sanctions (obviously not all to Dubai). Virtuzone has registered five time the usual number of enquiries from Russians since the crisis stated in late February. Most want to set up in Dubai to avoid the almost inevitable economic meltdown in Russia, as well as to secure their wealth.

In Q1, Mena mergers and acquisitions grew 11% to US$ 21 billion, with deals of under US$ 500 million reaching US$ 4.6 billion, marking the strongest start to a year since records began in 1980. Unsurprisingly, UAE was the most active in the region, with the largest deal being NMC’s US$ 2.25 billion sale to its creditors. Furthermore, the country notched up the most deals, volume wise at 303 transactions, with Saudi Arabia turning over the most money at US$ 47.4 billion. Mena witnessed a 66.5% hike in deals, on the year, at 661 deals and 16.2% higher at U$ 99.0 billion.

Sheikh Hamdan bin Mohammed bin Rashid has launched the Dubai Virtual Asset Regulatory Authority in “The Sandbox” – the first global regulators in the Metaverse, with the Sheikh noting “it is a new model for managing and expanding government business”. The Dubai Crown Prince commented that VARA will provide regulatory and supervisory services to a wide audience that crosses borders and with reliable future technologies; he also expects the authority will build a new, powerful economic sector that contributes to the nation’s economy and creates new investment opportunities. It is another step in government strategy to enhance Dubai’s position as an international leader and to be at the forefront of the technological transformation that is sweeping the world.

At this week’s AGM, Union Properties’ shareholders approved a motion to continue the company’s operations, as well as a revised turnaround strategy that will see the developer tapping into its existing real estate portfolio and adjacent services subsidiaries to capitalise on the current momentum in the Dubai property market. Last year, it posted a US$ 263 million loss, compared to a US$ 55 million profit in 2020, resulting from rectifying the value of its property portfolio that “had been inflated in prior years”. Last October, the Securities and Commodities Authority filed a complaint against its senior executives, accusing them of forgery, abuse of authority, fraud and damage to the interests of the company. Accumulated losses to the capital amounted to 68.3% which meant that the company had to decide within 30 days from the date of disclosure, to convene the general meeting to “consider a decision regarding the continuity of the company’s activity or to dissolve the company prior to the expiry of its term”.

The DFM opened on Wednesday, (after the Eid Al Fitr holiday), 04 May, 369 points (11.0%) up on the previous seven weeks, shed 24 points (0.6%) to close on Friday 06 May, at 3,695. Emaar Properties, US$ 0.39 higher the previous nine weeks, lost US$ 0.02 to close on US$ 1.72. Dewa, Emirates NBD, DIB and DFM started the previous week on US$ 0.77, US$ 4.16, US$ 1.76 and US$ 0.73 and closed on US$ 0.77, US$ 4.11, US$ 1.76 and US$ 0.72. On 06 May, trading was at 96 million shares, with a value of US$ 66 million, compared to 129 million shares, with a value of US$ 89 million, on 29 April 2022.

By Friday 06 May 2022, Brent, US$ 5.84 (5.7%) higher the previous week, gained US$ 5.56 (5.2%), to close on US$ 113.15. Gold, US$ 78 (4.0%) lower the previous fortnight, shed US$ 14 (0.7%), to close Friday 06 May on US$ 1,883.

Oil prices moved higher on Friday, as the 23-producer Opec+ alliance stuck with its output plan and ratified a 432k bpd production increase from next month, despite concerns over weak demand in China and as a result of the ongoing the Russia-Ukraine conflict. Whether the market can add that relatively small amount to the market next month is in doubt, as Opec could only add 10k bpd last month against its targeted 274k barrels.

Despite soaring petrol prices, BP posted a US$ 20.4 billion loss in Q1, after taking a major hit by pulling out of Russia, including divesting its 19.75% stake in Russian oil producer Rosneft, with the reported results including items before tax of US$ 30.8 billion. Its underlying profit of US$ 6.2 billion was double that of the same quarter in 2021. The energy giant advised that it would be investing over US$ 22.5 billion in upgrading UK’s energy system and spending US$ 2.5 billon on a share buyback.

Q1 saw Shell reporting its highest ever quarterly profits at US$ 9.1 billion – almost threefold higher than in the same period in 2021 – but announced a loss of US$ 3.9 billion from pulling out of its operations in Russia. Shell’s rivals, including BP and TotalEnergies, have also reported a sharp rise in underlying profits, with Norway’s Equinor, which supplies a quarter of the UK’s gas, also posting record earnings this week.  Oil prices were already rising before the Ukraine war, as economies started to recover from the Covid pandemic, but the war in Ukraine – and its impact on supply – has sent prices through the roof

Two US oil giants returned impressive Q1 results on the back of surging oil prices. Chevron saw profits skyrocket over fourfold to US$ 6.3 billion, as revenue jumped 70% to US$ 54.4 billion. Although ExxonMobil’s Q1 profit more than doubled to US$ 5.5 billion, it would have been greater if it had not written off more than US$ 3.4 billion, as it withdrew from the vast Russian Sakhalin offshore oilfield; revenue rose 52.4% to US$ 87.7 billion. However, it appears that both have yet to increase their capex budgets to fund drilling and development, as ExxonMobil announced an increased spending on share buy-backs by US$ 20 billion, and Chevron doubling its share buy-backs to US$ 10 billion. There is every possibility that, as the oil market tightens with demand moving higher, the market will suffer from a supply shortage because of prior years’ reduced capital expenditure leaving suppliers unable to meet any increase in demand.

This week saw global airlines’ capacity reach its highest level this year, 2.9% (2.5 million seats) higher at 88.5 million passengers, driven by an increase in Chinese traffic despite the recent shutdowns there. In Q2, it is expected that the numbers will gradually move to pre-pandemic 2019 figures of 109 million seats a week. International airlines are ramping up operations, as demand rebounds on the back of easing travel restrictions. It is noted that there were 43% more seats available than in the same week in 2021. NE Asia, driven by China but also with Japan and South Korea moving higher, is the fastest-growing regional market this week, expanding 10% in capacity on the week. South Asia, Central Asia and Central America have had more capacity available in the week than they did in 2019, with India 10% higher than two years ago.

Airbus reported a 237% annual jump in Q1 net profit of US$ 1.3 billion, as revenue rose 15%, on the year, to US$ 12.0 billion, on the back of a solid performance in its commercial aircraft, helicopter and defence businesses. Guillaume Faury, chief executive of Airbus, was confident of future results, noting that “looking beyond 2022, we see continuing strong growth in commercial aircraft demand driven by the A320 family,” but commented that “the risk profile for the rest of the year has become more challenging due to the complex geopolitical and economic environment.” In Q1, the plane maker delivered 142 commercial aircraft – 109 A320s, sixteen A350s, eleven A220s and six A330s – and is looking at increasing monthly production of its workhorse A320 to seventy-five by 2025; it hopes to reach sixty-five a month by 2023. Airbus had a 7k backlog of commercial aircraft at the end of Q1 and saw a 60% increase, to US$ 3.3 billion in the first three months of 2022. The company aims to achieve 720 commercial aircraft deliveries for the whole of this year.

IAG, BA’s owner, posted a Q1 US$ 1.13 billion loss – a slight improvement on the US$ 1.5 billion recorded in the same period in 2021. The airline cited “normal seasonality, the impact of Omicron and costs associated with ramping up operations” for the disappointing figures but noted an improvement in business travel and an uptick in the overall proportion of seats filled on flights. BA expects to return to profitability in Q2 and for the rest of the year, with demand “recovering strongly”.  Q1 flight capacity, at 65% of pre-pandemic levels, is expected to rise to 80%. The carrier also accused Heathrow of underestimating passenger numbers, which means there is  “a lack of resources” at the airport, making it “impossible to operate the capacity that we have in our minds”.

Uber has posted a surprise US$ 5.9 billion Q1 loss due to its share value in other companies, such as China’s Didi and SE Asia’s Grab, plunging US$ 5.3 billion on the New York Stock Exchange this year, since their 2021 listing. In 2016, Uber, having struggled to get a foothold in the world’s second biggest economy, sold its business there to Didi in exchange for an 18% stake. Since it US$ 4.4 billion debut on the New York bourse, its market value has tanked by over 80%, not helped by the Chinese internet regulator ordering online stores not to use the Didi app, claiming it was illegally collecting users’ personal data. In a similar manner to the 2016 Didi agreement, Uber sold its businesses in SE Asia to Grab for a 27.5% stake in the Singapore-based company. Since Grab’s December New York IPO, its market value has collapsed by 75%. To add to its investment woes, Uber acquired a stake in Indian food delivery firm Zomato, in 2020 , in exchange for its Uber Eats operations in India; since going public last July, its shares have almost halved in value.

Starbucks posted a 2.3% hike in quarterly net income, ending 03 April, to US$ 675 million, driven by an improvement in US returns. Launched in 1971, it is the world’s largest coffee chain, with more than 34.6k outlets, in over eighty global counties, of which 51% are company operated and the balance, licensed stores. 61% of the stores are to be found in the US (15.5k) and China (5.7k), and by the end of the reporting period it had opened 313 net new stores. Along with other major US service companies, Starbucks is facing a major unionisation push and has announced US$ 1 billion investment for the fiscal 2022 on salary rises, employees’ training and store improvements but will not offer new benefits to workers at the cafes that have voted to unionise; to date, fifty company-owned stores have voted in favour of unionising. Because of China’s lockdowns, (which have seen store sales 23% lower), escalating inflation and new investments in its stores and employees, Starbucks suspended its fiscal 2022 financial forecast.

G-III Apparel Group, which already has the likes of Levi Strauss & Co and Tommy Hilfiger in its line-up, has bought the remaining 81% stake that it does not already own in Karl Lagerfeld in a US$ 210 million cash deal. As well as expanding G-111’s global presence, it is expected to add US$ 200 million to its top line and generate “in excess of US$ 2.0 billion in sales to end consumers”. The deal also includes Karl Lagerfeld’s existing 10% stake in its established joint venture in China.  Last year, global revenue in the apparel segment was 10.9% higher on the year, with 2022 estimates at US$ 1.7 trillion, rising to US$ 1.95 trillion in 2026.

UK convenience store chain McColl’s has collapsed into administration, putting 16k jobs and 1.4k shops, at risk, with the company confirming that lenders did not want to extend banking agreements in the present economic climate. Appointed administrator, PriceWaterhouseCoopers, will look for a buyer “as soon as possible”, with supermarket giant Morrisons having already proposed a rescue deal to try to safeguard the chain. McColl’s already has a wholesale tie-up with Morrisons, as well as Martin’s newsagents, with a strategy centred around an image of a “neighbourhood retailer”. There is also a chance that EG Group, owner of Asda, has proposed a deal to McColl’s lenders which involved injecting funds to keep the struggling retailer open.

Bernie Ecclestone has been dragged into a court case involving money laundering operations worth millions of dollars to guarantee a series of gold transactions that made “no commercial sense”. The F1 mogul, who has not been accused of any wrongdoing, provided a US$ 12.3 million personal guarantee for a gold deal for his then son-in-law, James Stunt. Prosecutors claim that he and seven others laundered US$ 328 million cash, banked by NatWest, from criminal activity. A financing arrangement, provided by Canada’s Bank of Nova Scotia, was intended to help in paying for branded gold bars and coins, but only a few branded bars were ever made, and no F1 gold coins were minted. It appears that the money was used to acquire gold that would be later melted and broken up.

Despite moves to unseat him as chairman of Berkshire Hathaway, Warren Buffet maintained the position he has held since 1965. The 91 year old also holds the position as chief executive and steps to remove him were also not carried by the meeting, despite the largest US company supporting move; Calpers had earlier in the week invested US$ 460 billion. It also helps that he holds 16% of Berkshire’s stock and controls 32% of its voting power. It is expected that the nonagenarian’s son, Howard, already a Berkshire director, will become non-executive chairman when his father is no longer in charge. The shareholders also rejected moves that the company should disclose more about its climate-related risks and efforts to improve diversity among its diverse portfolio of companies. The chairman also commented on Berkshire investing in Chevron and “Call of Duty” game maker Activision Blizzard, (after Microsoft agreed to buy the company for US$ 68.7 billion); it has now boosted its investment in the two companies sixfold to US$ 31 billion. Its Q1 operating profit was flat at US$ 7.04 billion.

The Suez Canal, which accounts for almost 10% of global trade, has posted its highest ever revenue record, of US$ 629 million, last month – a 13.6% increase on the previous year. It also recorded its highest ever volume of cargo, at 114.5 million tonnes, and this despite the war in Ukraine and surging energy prices. Twice this year, the SCA has already raised passage tolls for transiting vessels, including fuel tankers, and these fees are one of Egypt’s main sources of foreign currency revenues. The country has been badly impacted by the war in Ukraine – as well as other economic factors that have hit the global economy – as its foreign reserves dipped US$ 3 billion to US$ 37 billion. Further worrying economic data sees the pound losing 18% of its value in March and inflation topping 12%. The Sisi government is in loan discussions with the IMF which has already approved three separate loans, totalling US$ 20 billion, over the past six years.

It is certain that UK house prices, which hit a fresh record for the tenth straight month at US$ 353k (GBP 286k), will begin to slow, as the double whammy of increased mortgage rates and surging inflation takes hold and gnaws into household spending. Halifax reckons that house prices rose 1.1% in April and by 10.8% over the past twelve months. Interest rates rose to their highest level since 2009 and even before this week’s 50 bp increase, the house price to income ratio was already at its highest ever level. What is currently stopping any fall in property prices is the lack of supply in the market, with the biggest demand for larger, family homes. If you are thinking of buying property in the UK, wait until the autumn when many of the economic indicators will be in free fall and property prices will be a lot lower.

April Turkish consumer prices surged almost 70% on the year, hitting a two-decade high, with

transport, food prices, (89.1% higher over the past twelve months), and household furnishings, (up 77.4%), recording the highest increase in annual inflation, with transport costs more than doubling over the year; in April, prices came in 7.3% higher. Its economic problems have not been helped by President Recep Tayyip Erdogan prioritising exports over currency stability, and his reluctance to raise interest rates to temper inflation surging – since last September, rates have dropped from 19% to 14%, but have remained flat over the past four months. It seems that the rest of the world’s rates are heading in the other direction and that Erdogan is the only global leader swimming against the tide.

Initial Q1 estimates show that the Saudi economy grew at its fastest pace in a decade, up 9.6%, on the year, driven by a 20.4% hike in oil activities, with a 3.7% increase in non-oil activities and a 2.4% rise in government services.

Not before time, Ursula von der Leyen, the president of the European Commission, has finally unveiled a proposal to impose an EU-wide ban on Russian oil imports. Whilst Ukraine bears the brunt of the Russian might, it seems that some EU nations are still in easy street when it comes to sanctions, as the proposed embargo gives member states up to six months to phase out purchases of Russian crude. The EU, which last year spent almost US$ 77 billion on Russian oil, (and a total of US$ 108 billion in total energy imports), buying around 3.5 million barrels of crude and refined products on a daily basis, is not showing much of being a united bloc. To the outsider, it does seem that the EU is waiting for the time until Germany, which imported 35% of its oil from Russia before the war, is better prepared to cope. Other member states have raised concerns that a total Russian ban would have on their economies, including Hungary and Slovakia, which are highly dependent on Russian oil. Italy, Greece and Austria will need more time to adapt their energy supply chains, while Malta, Cyprus, Belgium and the Netherlands were worried about losses to their respective shipping sectors. There is no doubt that, if the war drags on, the whole European economy, and the world, will suffer from double digit inflation and a period of deceleration.

US markets ended April in a financial quagmire, as Amazon and other major tech companies witnessed a sell-off, with the Nasdaq down over 4% last Friday as investors began to worry that the inevitable collapse may have started. With the bourse tanking 13%, April has become the worst month for the tech-heavy index since the 2008 GFC. The other two major US indices did little to boost investors’ hopes, with the S&P having its worst one-day decline since June 2020, and almost 14% lower YTD, whilst the Dow Jones Industrial Index fell 5% in the  month and 9% YTD. There is no wonder that global markets are having jitters, not helped by the quadruple whammy of surging inflation, (at forty-year highs), rising energy prices, ongoing supply chain problems, and the war in Ukraine. On top of these factors, there is the reoccurrence of Covid, with China bearing the brunt having to close down major parts of their two major cities – Shanghai and Beijing.

Another country trying – better late than never – to combat surging inflation is Australia which lifted its cash rate to 0.35% yesterday; the rise is the first hike in rates for more than a decade. The move is to try and combat inflation which is the highest seen since the turn of the century. This increase may be a game changer in the upcoming general election later in the month as any rise will impact on household budgets – with the rising cost of living being a major player. This could prove Prime Minister ‘s Scott Morrison’s swansong.

As expected, on 04 May, the US Federal Reserve announced a 50bp increase on the Interest on Reserve Balances – a day a later, the Central Bank of the UAE did likewise with the Base Rate applicable to the Overnight Deposit Facility effective from Thursday, 05 May 2022. To fight the Covid impact, the bank probably purchased too many assets, including US government debt and mortgage-backed securities, to boost the economy. Next month, it will start reducing its holdings by US$ 47.5 billion a month until September and thereafter doubling that monthly amount to US$ 95.0 billion. The Fed is another central bank that has arrived late to the party, with the country’s inflation of 8.5% at forty-year highs. Like the BoE, its inflation target had been pegged at 2.0% for far too long! Finally Fed Chair, Jerome Powell has had to admit that “inflation is much too high and we understand the hardship it is causing,” and that “we are moving expeditiously to bring it back down.” The aim of the exercise is to contain spiking costs, which are affecting all the world economies, but this move is definitely too little too late. The Fed has messed up its policies of late and if it continues with its error-ridden moves, the US economy will inevitably slow down and could easily land in recession by next year. The Fed need to get their options spot on as they are now Skating On Thin Ice.

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Who Pays The Price?

Who Pays The Price?                                                                              29 April 2022

For the past week, ending 29 April 2022, Dubai Land Department recorded a total of 2,259 real estate and properties transactions, with a gross value of US$ 1.80 billion. A total of 197plots were sold for US$ 313 million, with 1,628 apartments and villas selling for US$ 959 million. The two top transaction sales were for plots of land – one in Business Bay for US$ 20 million, and another sold for US$ 19 million in Al Thanayah Fourth. The three leading locations for sales transactions were Al Hebiah Fifth, with 76 sales worth US$ 47 million, followed by Jabal Ali First, with 24 sales transactions worth US$ 33 million, and Al Yufrah 2, with 15 sales transactions, worth US$ 6 million. The top three apartment sales were one sold for US$ 157 million in Marsa Dubai, another for US$ 84 million in Burj Khalifa, and third at US$ 66 million in Business Bay. The sum of of mortgaged properties for the week was US$ 471 billion, with the highest being for a plot of land in Al Yelayiss 2, mortgaged for US$ 81 million. 75 properties were granted between first-degree relatives worth US$ 73 million.

The Mo’asher/Property Finder’s official sales price index noted that in Q1, Dubai registered 26.0k property transactions – the highest number of quarterly deals since 2010. During the quarter, 20.5k sales transactions, worth US$ 15.11 billion, were recorded. In March, there were 8.4k sales transactions, 83% higher, and 109% higher on an annualised basis, to US$ 6.15 billion. Property Finder reckoned that Dubai Marina, Downtown Dubai, Palm Jumeirah, Business Bay and Jumeirah Village Circle, were the top areas searched for apartment sales, whilst for villa sales. Dubai Hills Estate, Palm Jumeirah, Arabian Ranches, Damac Hills and The Springs, came out on top. With 60.3% new contracts, and the balance renewals, 44.8k rental contracts were signed in Dubai last month; 61.5% of the total emanated from five locations – Jabal Ali First, Al Warsan First, Business Bay, Naif and Al Karama.

HH Sheikh Mohammed bin Rashid Al Maktoum has approved a new housing package worth US$ 1.72 billion for UAE citizens in Dubai, including housing and land allotments for 4,610 Emiratis in the city, on the occasion of Eid al-Fitr, and as part of the Housing Programme for Dubai Citizens. A new housing complex in Al Khawaneej area 2, will include 1.1k residential villas and a plan for 3.5k plots in Umm Nahad 4 and Al Aweer. The Dubai Ruler emphasised that the housing programmes and social services projects were government priorities, aimed at meeting the needs of Emiratis and their families. Last year, he had approved the allocation of US$ 17.71 billion to an Emirati housing programme in Dubai, to be allocated over the next two decades to provide quality housing for Emiratis, and he also issued directives to quadruple the number of citizens benefiting from the housing programme effective from next year.

Last October, Samana Developers launched its Park View development which saw 80% of the project sold within four days. This week, the developer broke ground on its US$ 35 million G+6 storey Park Views, comprising 176 apartments, scheduled for hand over within eighteen months. Encompassing over 183k sq ft, it will house studio, 1 B/R and 2 B/R apartments, with private pools. Located close to a community park, Dubai Miracle and Butterfly Gardens, prices for a studio start at US$ 125k, with a flexible payment plan – 10% down payment, 1% every month for seventy months, 10% in the sixth month, 5% in the twelfth month, and 5% in the eighteenth month. The unit sizes range from 361 sq ft for studios, 937 for 1B/R, and 1,301 for 2 B/R apartments.

According to The Best Cities for Retirement Index, Dubai has been ranked fourteenth in terms of living standards for retirees but first for financial security and legacy management. A variety of factors such as quality of healthcare services, financial security, wealth management benefits available to retirees, mobility, connectivity, safety and availability of housing are used to draw up the list of cities. When all factors had been analysed, the top six cities turned out to be Tokyo, Wellington, Singapore, Paris, Vienna and Zurich. Other regional locations did not fare as well as Dubai, with Abu Dhabi in at 51st, Doha -70th and Riyadh 84th. Attracting retirees has become big business and many governments have introduced incentives to entice senior citizens to their shores. Dubai has its retirees’ visa, allowing residents and citizens from around the world to live in the emirate if they fulfil one of three requirements: earn a monthly income of US$ 5.45k, have US$ 272k in cash savings or own a property in Dubai worth at least US$ 545k. A retired expatriate and their spouse can apply for the five-year visa with the possibility of automatic renewal online, provided they continue to meet the criteria. Eligible applicants must be older than 55 and have valid UAE health insurance.

Savills has rated fifteen global cities to ascertain which is the best for digital nomads and it was no surprise to see Dubai third behind Lisbon and Miami. The real estate consultancy’s Executive Nomad Index is based on internet speed, quality of life, climate, air connectivity and prime rents. The Algarve, Barbados, Barcelona Dubrovnik, Saint Lucia, Malta and Antigua & Barbuda make up the top ten cities for long-term remote workers. As Covid accelerated the remote working trend, new technology also helped to encourage more workers to move from their traditional home bases; the government took advantage of the situation and quickly enacted appropriate legislation, such as a one-year residency permit, to entice such a labour sector to ‘set up shop’ in the emirate.

The Emirates Tourism Council confirmed that the country’s hotels welcomed 29% more visitors on the year to nineteen million tourists in 2021, generating a 70% surge in revenue to US$ 7.63 billion. Of the total number of tourists, 58% were domestic. There is no doubt that factors such as a successful vaccination protocol, stringent safety measures and a successful and quick economic recovery programme have benefitted the hospitality sector. During 2021, booked hotel nights jumped 42% to seventy-five million, with occupancy rates of 67% among the highest in the world. There was a 5.0% hike in the number of UAE hotels to 1.14k, whilst room numbers rose to 194k, of which 144k can be found in Dubai. The emirate also posted occupancy rates of 77% in the first two months of 2022.

Dubai’s administration has approved a three-year plan for the Dubai International Financial Centre Courts to establish a new digital economy court, dedicated departments for intellectual property rights, online courts with electronic capabilities, a new will deposit centre, digital will management system and multilingual consultancy services. This strategy is planned to enhance Dubai’s position as a global business and finance centre. Dubai’s Deputy Ruler, Sheikh Maktoum bin Rashid, noted “we approved the new strategic work plan that serves to further instil confidence that the DIFC Courts will forge ahead to shape the new dynamics of global dispute resolution.” The digital economy contributes about 4.3% to the UAE’s GDP which is equal to US$ 27.2 billion, a figure that will inevitably rise significantly in coming years.

Sheikh Hamdan bin Mohammed has launched a new fund targeted at enhancing the emirate as a global FinTech hub. The Crown Prince announced that the US$ 100 million ‘Venture Capital Fund for Start Ups’ will finance SME projects, supporting their development in Dubai and gradual expansion to global markets. The DIFC, a 15% contributor, will manage the fund that will create an integrated funding system with a number of suitable options that can cater to the needs of enterprises. It is expected that during the eight-year implementation period, the Fund will bolster the emirate’s GDP by US$ 817 million, will provide more than 8k jobs for emerging talents, and strengthen Dubai’s position as a regional centre for entrepreneurship and FinTech.

To meet the increased demand for air travel, Emirates is hoping to recruit 6k new cabin crew to boost numbers to an appropriate level. Last August, it announced that it required 3k cabin crew, as well as 500 airport services employees, and received 300k applications so it is certain that its HR division will be working overtime over the coming months. It seems that applicants need to have “a personality that shines, the ability to adapt to any situation and make people feel at ease”. Applicants need to have more than a year’s experience in hospitality and customer service, be a high-school graduate”, and be fluent in in written and spoken English. Entry level starting salary is US$ 2.66k plus housing and other benefits, with height requirements starting at 160 cm and the ability to reach 212 cm, while standing on tiptoes.

There are reports that Emirates is expecting to return to pre-pandemic levels by next year, as demand for global travel and tourism recovers. Currently, the carrier is operating at 70% of its pre-pandemic capacity and it is hoped that this will increase to 80% before the end of the summer, and 85% by the start of the winter season. For the year ending 31 March 2021, the world’s largest long-haul airline posted a loss of US$ 5.5 billion, not helped by the ongoing pandemic and despite a US$ 3.1 billion cash injection by its owner, the Dubai government, with Dnata, its airport services provider, received US$ 218 million in relief from authorities during that fiscal year. The latest 2021-22 accounts will be released shortly, and the airline is expecting a “good set of results” for its fiscal year ended March 31, narrowing losses for the last 12 months; it expects to return to profit in the next fiscal year, 2022-23.

The UAE fuel price committee announced petrol and diesel prices for the month of May 2022 with minor price reductions for both Super 98, down 2.1% US$ 0.022 to US$ 0.997, and E Plus 91 petrol by US$ 0.019 (2.0%) to US$ 0.948. Diesel prices headed in the other direction, with a US$ 0.163 rise to US$ 1.112.

In Q1, more than 10k companies joined Dubai Chamber of Commerce – a 64% hike in numbers compared to the comparative 2021 figure – bringing its total to almost 300k. It is estimated that member exports and re-exports saw 11.3% growth over the year, while their value reached US$ 16.6 billion. The number of certificates of origin issued by the Chamber was 7.1% higher to 179k. The Expo 2020 impact was one of the main drivers behind the much-improved figures that reflect Dubai’s strengthening position as a preferred business hub.

With the six-month extravaganza closing its doors last month, figures show that more than 25% of all Expo 2020 Dubai contracts, in terms of , were won by SMEs; in 2016, the organising committee had made a commitment that at least 20% of all contracts would go to SMEs. More than 3.2k contracts were awarded, of which 66% were SMEs, and of that total 1.39k were local and the balance 760 were from overseas. 52% of the overseas total came from five countries – UK (24%), USA (16%), France (4%), India (4%) and Australia (4%) – and that overall, suppliers from outside the UAE were sourced from ninety-four countries.

Dubai has become the latest emirate to approve a nine-day Eid Al Fitr break for federal government staff which will start on Sunday, 30 April, to 08 May, with work resuming on Monday, 09 May. Recently, the Sharjah public sector saw the same nine-day break, broken down to 30 April to 05 May and the fact that Sharjah has a three-day weekend, Friday 06 May to 08 May. Eid Al Fitr is marked on the first day of Shawwal – the month that comes after Ramadan in the Hijri calendar – and is expected to fall on Monday 01 May, as per astronomical calculations. The Ministry of Human Resources and Emiratisation had earlier announced that private sector staff would have four-day break from Ramadan 29 until Shawwal 3 – Sunday 30 April to Wednesday 03 May.

Last Saturday, in the 74th weekly live Mahooz Grand Draw, forty-five lucky participants shared the US$ 272k, (AED1 million), second prize in the 74th weekly live Mahzooz Grand Draw.  They had picked four of the five lucky numbers, with a further 1.7k claiming US$ 95 (AED 350) for matching three of the five numbers. The total prize money, which also included three lucky raffle prize winners, was US$ 514k.The top prize of US$ 2.72 million (AED 10 million) is still waiting to be won and perhaps tomorrow Saturday 30 April, could be someone’s lucky day; even if not won, someone will drive off in a 2022 Nissan Patrol Platinum V8, 5.6L Engine in an Eid-special Mega Raffle Draw. To enter the draw, entrants will have to register via http://www.mahzooz.ae and by purchasing a bottle of water, for almost US$ 10 (AED 35).

The Emirates Development Bank has agreed with Food Tech Valley, launched last May, to provide financing for SMEs and start-ups operating within Dubai’s food tech hub. Both parties will support tech-based companies operating, or seeking to operate, in the hub with financing, roadshows, seminars, mentorships and knowledge transfer. Al Wasl is developing the project in partnership with the Ministry of Food and Water Security, with the aim of attracting local and foreign direct investments within the field to achieve the government’s mission of transforming the UAE into a global hub for tech-based food and agricultural solutions. It also targets tripling the country’s food production and make the UAE more self-sufficient.

With no financial details of the deal disclosed, Swvl has acquired  the four-year old Turkish company Volt Lines  which provides mass transit solutions to corporate clients working in more than 110 companies, in major cities such as Istanbul and Ankara The Dubai-based shared mobility services provider’s strategy seems to be expansion of its operations in Europe, and it currently offers intercity, intracity, business-to-business and business-to-government transport across more than one hundred  cities in more than twenty countries. It was also the second Arab technology company to be listed on Nasdaq.  Over the past six months, it acquired Argentina’s Viapool and European tech-enabled mass transit solutions, provider door2door.

Husain Sajwani’s Damac Group, recently delisted from the Dubai Financial Market, is planning to invest US$ 100 million to build digital cities, using their own companies, property developer Damac Properties, data centre firm Edgenex, luxury jeweller de-Grisogono and fashion house Roberto Cavalli. As one of the first local entrants into the world of metaverse, it will be in a good position to cater to the needs of the entire Group when it comes to digital assets, including virtual homes, digital property, digital wearables, digital jewellery and a digital treat of Damac’s Mandarin Oriental Resort Bolidhuffaru in the Maldives. The Damac Group has ambitions to move into digital assets and non-fungible tokens and has the ultimate goal to become a leading global digital brand.

With its latest listing – a US$ 1.6 billion Sukuk for the Islamic Development Bank (IsDB) –  Nasdaq Dubai’s portfolio of Sukuks increased to US$ 77.5 billion, making the Dubai bourse  one of the world’s largest Sukuk listing centres. The five-year Trust Certificates were priced at par, with a profit rate of 3.213%, payable on a semi-annual basis. IsDB has currently thirteen issuances, totalling US$ 18.05 billion, with the latest issuance being used to finance projects under the development mandate of the Bank.

Emirates Integrated Telecommunications Company PJSC – du – posted an 8.5% hike in Q1 revenue of US$ 852 million, with EBITDA and net profit both higher – by 13.3% to US$ 346 million and 21.0% to US$ 85 million respectively. A breakdown of revenue sees mobile services up 6.9% at US$ 382 million, fixed services 22.8% higher at US$ 222 million and handset sales coming in on US$ 60 million. Capex was at US$ 83 million and is expected to rise over the rest of the year. There was a 10.4% growth in mobile customers to 7.5 million, with post-paid customers at 1.4 million and prepaid at 6.1 million.

In Q1, the Commercial Bank of Dubai posted a 32.6% hike in net profit of US$ 117 million, as the bank’s operating income rose 17.5% to US$ 234 million, driven by net interest income, fees and commissions, operating expenses dropping 2.1% to US$ 64 million from Q4 2021. Operating profit was US$ 170 million, up 16.4% year on year, while net impairment allowances atUS$ 52 million, were down 8.6%. CBD also posted a record US$ 32.42 billion billion in assets attributable to a 3.4% growth in loans over the quarter. The bank also received a major award during Q1, being ranked by Forbes as the Number One Bank in the UAE in the World’s Best Banks 2022 report.

Via a special resolution, Deyaar’s shareholders approved a directors’ proposal to write off its accumulated losses through the company’s legal reserve, (US$ 82 million) and cancellation of shares, (by US$ 381 million to US$ 1.19 billion), equal to the remaining losses of US$ 463 million at 31 December 2021. The company, majority owned by Dubai Islamic Bank, posted a US$ 14 million profit – following a US$ 59 million loss a year earlier – as revenue grew 22% to US$ 138 million. The company noted that the restructuring will increase “the company’s attractiveness to investors and the possibility of obtaining funds for its future projects, which will reflect positively on the share price in the Dubai Financial Market”.

Dubai Islamic Bank reported a Q1 58% year-on-year surge in net profit to US$ 354 million, as revenue climbed 11% to US$ 672 million, driven by lower impairments and stronger top-line growth. The largest Islamic bank in the UAE, and the second-largest Islamic bank in the world, noted that total income was 6% higher at US$ 822 million, with net operating profit up 10% to US$ 440 million. DIB’s net financing and sukuk investments grew 3.0% to US$ 64.1 billion, with gross new financing of nearly US$ 4.4 billion being driven by strong growth of wholesale bookings on the back of an improved economic outlook. During the quarter, the balance sheet grew 3.0% to US$ 78.3 billion, as customer deposits remained steady at US$ 55.7 billion. Impairment provisions were reduced 44% to US$ 114 million.

The DFM opened on Monday, 25 April, 333 points (7.5%) up on the previous six weeks, moved 36 points (1.0%) higher to close on Thursday 28 April, at 3,719. (The bourse will be closed for the next four trading days and will reopen on Thursday 05 May, after the Eid Al Fitr holiday). Emaar Properties, US$ 0.37 higher the previous eight weeks, nudged US$ 0.02 up to US$ 1.74. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.78, US$ 4.14, US$ 1.71 and US$ 0.73 and closed on US$ 0.77, US$ 4.16, US$ 1.76 and US$ 0.73. On 28 April, trading was at 129 million shares, with a value of US$ 89 million, compared to 115 million shares, with a value of US$ 83 million, on 22 April 2022.

For the month of April, the bourse had opened on 3,527 and, having closed the month on 3,719 was 192 points (5.4%) higher. Emaar traded US$ 0.11 higher from its 01 April 2022 opening figure of US$ 1.63, to close the month at US$ 1.74. Four other bellwether stocks, Dewa, Emirates NBD, DIB and DFM started the month on US$ 0.00, (it only started trading in mid-April), US$ 4.09, US$ 1.68 and US$ 0.66 and closed on 30 April on US$ 0.77, US$ 4.16, US$ 1.76 and US$ 0.73 respectively. The bourse had opened the year on 3,196 and, having closed April on 3,719, was 523 points (16.4%) higher, YTD. Emaar traded US$ 0.41 higher from its 01 January 2022 opening figure of US$ 1.33, to close April at US$ 1.74. Four other bellwether stocks, Dewa, Emirates NBD, DIB and DFM started the year on US$ 0.00, US$ 3.69, US$ 1.47 and US$ 0.72 and closed on 29 April on US$ 0.77, US$ 4.16, US$ 1.,76 and US$ 0.79 respectively.

By Friday 29 April 2022, Brent, US$ 9.95 (8.9%) lower the previous week, gained US$ 5.84 (5.7%), to close on US$ 107.59. Gold, US$ 42 (2.5%) lower the previous week, shed US$ 36 (1.9%), to close Friday 29 April on US$ 1,897.

Brent started the year on US$ 77.68 and gained US$ 29.91 (38.5%), to close 29 April on US$ 100.05. Meanwhile, the yellow metal opened January trading at US$ 1,831 and has gained US$ 66 (3.6%) during 2022, to close on US$ 1,897. For the month, Brent opened at US$ 100.05 and closed on 29 April, US$ 7.54 (7.5%) higher, on US$ 107.59. Meanwhile, gold opened April on US$ 1,943 and shed US$ 46 (2.4%) to close at US$ 1,897 on 29 April.

Driven by a dip in Q1 sales and charges arising from the Ukraine war, Boeing has posted a US$ 1.2 billion net loss, compared to a US$ 519 million deficit a year earlier. Q1 revenue slowed 8.0% to US$ 14.0 billion, driven by “lower defence volume and charges on fixed-price defence development programmes”, partially offset by commercial services volume”. Commercial aircraft sales dipped 3.0% to US$ 4.2 billion, with a delivery of ninety-five aircraft, as well as a 4.2k plane backlog, valued at US$ 291 billion. A 20.6% decline in operating margin reflects “abnormal costs and period expenses, including charges for impacts of the war in Ukraine and higher research and development expense”. Revenue from defence, space and security decreased 24% to nearly US$ 5.5 billion, whilst R&D spend jumped 26% to US$ 633 million. Its global services unit’s first-quarter revenue increased 15% to US$ 4.3 billion, as the unit secured a fuel-saving digital solutions contract for Etihad Airways’ 787 fleet and was awarded a contract for KC-135 horizontal stabilisers from the US Air Force.

Beset by mostly self-made problems over the past decade, and maybe longer, Boeing’s 777X programme could face a new delay that could push deliveries, a year later than earlier expected, to early 2025. The report claims that the certification target will take place in late 2024, with deliveries following nine to twelve months later. Last month, the Federal Aviation Administration warned Boeing that existing certification schedules for the 737 MAX 10 and 777X were “outdated and no longer reflect the programme activities”. It has to be remembered that the 777X has been in development since 2013 and at one point was expected to be operational by June 2020. The plane maker is also hoping to gain approval for the 737 Max 10 by the end of the year and has been requested by regulators to provide a “mature certification schedule”. To complete the trifecta, Boeing is also working to resume 787 Dreamliner deliveries after halting them nearly a year ago over structural flaws.

Californian-based Lease Corporation expects to lose US$ 802 million because of it writing off the value of the remaining twenty-seven aircraft it has in Russia; twenty-one of the planes are company-owned and the remaining six in its managed fleet. The loss will be reflected in accounts due to be published next month.

Last week,  Netflix warned its revenue growth had slowed considerably after it lost subscribers due to stiff competition from rivals and the rising cost of living. This week, there was good news and bad news for Facebook, reporting that it has stopped losing users in Q1, growing its customer base to 1.96 billion, but posted its slowest revenue growth in a decade – 7% higher at US$ 27.9 billion; overall, Meta’s Q1 profits were US$ 7.46 billion.  Last year, the social network noted a decline in users for the first time, and since the news was released in February 2022, its market value has lost billions from the firm’s market value. Since executives disclosed the fall in February, the firm’s share price has nearly halved, but on Wednesday when Meta’s Q1 details were published, shares jumped 19% in after-hours trade. Facebook is facing more competition against the likes of TikTok and Amazon.

Q1 brings some disappointing news for Amazon, as it reported its first loss, (at US$ 3.8 billion), since 2015, as online sales slipped 3%, with the pandemic-induced boom to its business starting to fade; overall sales headed 7% higher to US$ 116.4 billion, driven by a 37% hike in Amazon Web Services and advertising revenue 23% higher. However, growth in other sectors continued but the loss was further exacerbated by its investment in electric carmaker Rivian. Amazon, like many other global conglomerates, is also facing the impact of rising costs brought on by surging inflation, supply chain pressures and the Ukraine war. Its share value sank more than 10% in after-hours trade, with concerns spreading to other online retailers, sending shivers through US markets, which had already started moving south in recent weeks.

Even though iPhone maker Apple posted increases in Q1 sales and profit by 9% to US$ 97.3 billion and 10% to US$ 25.0 billion, it warned of a “challenging macroeconomic environment”, noting that “we are not immune to these challenges”. iPads tablets, which contribute US$ 7.6 billion to total sales was down  2%, and was the only segment that experienced a dip in Q1 sales. It also indicated that the company was more worried about Covid-related shutdowns in China and chip shortages, (that are impacting the firm’s ability to meet demand for its products), than that buyers will cut spending. It was noted that the supply chain frictions would dent Apple’s sales in the current Q2 by up to US$ 8 billion, and that it will be “substantially larger” than its impact in the last quarter. Apple also announced a 5% increase in cash dividend to US$ 0.23 per share.

On Monday, the irrepressible Elon Musk paid US$ 44 billion in cash to acquire Twitter, a social media platform populated by millions of users and global leaders. Twitter said Musk secured US$ 25.5 billion of debt and margin loan financing and is providing a US$ 21 billion equity commitment. The world’s richest person, worth US$ 268 billion, has long been a critic of Twitter on several fronts including its algorithm for prioritising tweets should be public and giving too much power on the service to corporations that advertise. Twitter shares rose 5.7% on Monday to close at US$ 51.70, well below the US$ 70 range where Twitter was trading last year; however, the offer price shows a near 40% premium to the closing price, the day before Musk disclosed he had bought a more than 9% stake, two weeks ago.

Days after Elon Musk acquired the microblogging site, Twitter had posted a seven-fold plus Q1 net income of US$ 513 million, compared to US$ 68 million a year earlier; revenue was 16% higher at US$ 1.2 billion. 92% of the revenue was from advertising sales which expanded by 23% to US$ 1.1 billion but revenue from subscriptions and other streams dropped 31% yearly to US$ 94 million. However, the net income figure included a pre-tax gain of US$ 970 million from the sale of MoPub — a platform for promoting and monetising apps — to AppLovin for US$ 1.05 billion and income taxes related to the gain of US$ 331 million. Daily active users rose 16% in the quarter to 229 million, split between international users (up 18.1% to 189 million) and US ones (6.4% higher at 40 million).

This week, Elon Musk divested US$ 4 billion of his shares in Tesla but indicated that he had no plans to sell anymore, after earlier in the week shares the had fallen, (on Tuesday wiping US$ 125 billion off its market value), on news that he was to sell part of his stake in the firm to help pay for his takeover of Twitter.  This was his first sale of Tesla shares since offloading US$ 16.4 billion worth of stock late last year. Earlier in April, Tesla shares had fallen almost 20% when he earlier announced that he had bought a 9.2% stake in Twitter.

A Californian court has ruled against Zoom Communications and handed out an US$ 85 million penalty, including US$ 21 million in legal fees. The payment is in relation to settle a case stemming from privacy concerns and a number of hacking and video-crashing incidents, with claims that the owner of the popular video conferencing application misled its users about the security of its encryption technology. Further allegations include that Zoom shared their data through third-party software from companies like Facebook, Google and LinkedIn without consumer consent. The global video conferencing market is expected to grow by almost 250% over the next five years to US$ 22.5 billion, at a compound annual rate of almost 20%.

According to research firm Kantar, over the 12 weeks to 17 April, Lidl and rival discounter Aldi were the fastest growing UK grocers. UK’s sixth biggest supermarket, Lidl has 920 sites and wants to grow that number by 19.6% to 1.1k by 2025. This week, Lidl has introduced a finder’s fee, (either 1.5% of a freehold price or 10% of the first year’s rent), to anyone who can find a suitable site for a new store. As it expands its operations, there is no doubt that it is taking market share from the big four supermarket chains, so much so that Asda and Morrisons announced they were cutting prices on hundreds of products as they try to compete.

The biggest shareholder and chairman of retail-to-energy group Reliance Industries is reportedly interested in a potential bid, with US buyout firm Apollo Global Management, for UK high street chain Boots. Billionaire Mukesh Ambani has yet to confirm what the share split will be for the retailer, which has more than 2.2k pharmacies, health and beauty stores in the UK, and that could be valued at US$ 7.5 billion. If successful, the deal would see Boots expand into India, Southeast Asia and the Middle East as well as growing the business in the UK.

Having initiated an investigation last May into suspected fraud and money laundering by parent firm GFG Alliance, the Serious Fraud Office has visited the offices of Sanjeev Gupta’s Liberty Steel. The parent company owns a myriad of businesses, focussing on energy, steel and trading, with a global workforce of some 35k, many of whom are in the UK.  Mr Gupta and Liberty Steel came under the spotlight because its main lender, Greensill Capital, collapsed after its insurer refused to renew cover for the loans it was making. It was the main lender to GFG’s Liberty Steel, which employs 3k people. The parent company, GFG, utilised Greensill’s supply chain finance services, which effectively allowed it to send any of its invoices to its lender and receive almost immediate payment. The problem arises when dummy or fraudulent invoices are used, including related party transactions, as may have been the case; in addition, concerns have been raised as to GFG’s unusual funding and company structures.

UK car production continues to disappoint as it headed south, with Q1 figures of 207k – 32.8% lower on the year. The main drivers behind the fall were the ongoing global supply chain problems, a worldwide shortage of computer chips and rising energy costs for manufacturers. Furthermore, the closure of Honda’s Swindon plant in 2021 did not help matters, having contributed to much reduced UK car exports to the US; US and EU car exports declined by 63.8% and 25.5% respectively. Q2 figures will also be impacted by the Ukraine crisis, as the two combatant countries supply integral parts such as wiring systems.

The UK government has introduced new food laws that Kellogg’s has taken umbrage with and has threatened to take the Johnson administration to court. The issue revolves around some cereals being prominently displayed in stores because of their high sugar content, with data showing that cereals are eaten with milk or yoghurt, in 92% of cases. Including added milk would change the calculation by reducing the proportion of sugar and salt content relative to the weight of the overall serving but the government has remained steadfast as some of their products are high in fat, sugar or salt in their dry form. The new law will come in force in October and would see products covered by the restrictions not being allowed to be displayed in prominent places within a store – and also their online equivalents. The aim of the new law is to halve childhood obesity by 2030.

The latest Putin edict sees countries that refuse to pay for their Russian energy in roubles having their gas flows cut off, starting with Bulgaria and Poland where gas supplies were severed from last Wednesday. Energy may well prove a major economic weapon in the on-going conflict in the Ukraine. On the details being released, European gas prices surged as much as 17%, with traders calculating the risk of other European countries being hit next. As the situation currently stands, European nations will soon have to decide whether to accept Putin’s terms or lose crucial supplies – and face the prospect of energy rationing. It will be interesting to see what the German and Italian governments  do, with both countries heavily dependent on Russian supplies.

Following Vladimir Putin’s March decree earlier that “unfriendly countries” would have to start paying for its oil and gas in roubles to prop up its currency after Western allies froze billions of dollars it held in foreign currencies overseas, one major German energy company, Uniper, has acquiesced to the request and announced that it will pay in euros which will be converted into roubles, meeting a Kremlin demand for all transactions to be made in the Russian currency. To the neutral observer, this seems to be a flagrant disregard of the sanctions, and, with its usual bending of the rules, the EC said that if buyers of Russian gas could complete payments in euros and get confirmation of this before any conversion into roubles took place, that would not breach sanctions. Meanwhile, this week an EU official confirmed that any attempt to convert cash into roubles in Russia would be a “clear circumvention of sanctions” as the transaction would involve Russia’s central bank. Even the EC boss, Ursula von der Leyen, noted that firms could still be breaking the rules. Poland has reiterated that the EU should penalise countries that used roubles to pay for Russian gas and was particularly critical of Germany, Hungary and Austria for resisting the gas embargo.

European leaders branded Russia’s announcement it is cutting off gas supplies to Poland and Bulgaria after they refused to pay for the deliveries in roubles — a measure Moscow imposed on so-called “unfriendly” foreign buyers in response to sanctions over its invasion of Ukraine. Poland imports about 50% of its gas requirements, and Bulgaria, 75%, European Council President Charles Michel, commented that the move was  “another aggressive unilateral; move by Russia with EC chief, Ursula von der Leyen, declaring Gazprom’s decision “yet another attempt by Russia to use gas as an instrument of blackmail” and that it was “unjustified and unacceptable”; the Belgian-born German leader should realise that ‘all’s fair in love and war’. It is hard to justify why European countries are still remitting up to US$ 850 million a day for Russian oil and gas and shows that certain countries are not adhering to the spirit of imposing sanctions.

Even before the onset of the Ukraine crisis, the world had begun to see inflation spiralling and food and energy prices heading north at a quick pace. History teaches that the uptick in energy prices, over the past twenty-four months, have been the highest since the 1973 oil crisis and that for food commodities and fertilisers the largest since 2008; Russia and Ukraine are large producers of both. The World Bank has forecast the average 2022 price of Brent will hover around the US$ 100 mark, down to an average US$ 92 next year, driven by disruptions in both war-related trade and production. The IMF expects 2022 inflation to hit 5.7%, in advanced economies, and 8.7%, in emerging market and developing economies, and next year 2.5% and 6.5% respectively. (Somebody should advise the world body that official inflation rates in the US and UK currently stand at 6.6% and 7.0%).

Q1 saw the US economy contracting – at an annualised rate of 1.4% – driven somewhat by trade disruption from the Ukraine war, and further exacerbated by the double whammy of a surge in imports, as businesses accelerated purchases, and a fall in exports, as overseas demand weakened. This quarter last year posted a 6.9% annualised growth rate. Despite inflation running at a forty-year high, households are still spending but will have to pull pack as economic conditions deteriorate further and growing inflation further erodes purchasing power. Wells Fargo has indicated that it considers that there is a 30% possibility of a US recession next year.

Yesterday, Joe Biden asked Congress for US$ 33 billion in military, economic and humanitarian assistance to support Ukraine so that it could defend itself better in the war with Russia. Most of the money will be used for the military, (US$ 20 billion), economic aid (US$ 8.5 billion), and humanitarian assistance (US$ 3.0 billion). The 78-year old US leader noted that the US had already supplied ten anti-tank weapons for every tank that Russia has deployed to Ukraine but clarified that the US was not attacking Russia. “We are helping Ukraine defend itself against Russian aggression.” Some of the US partners should be asking themselves whether they are shouldering their fair share of the burden in fighting the Russians.

With Australian cost of living 5.1% higher on the year – the most since June 2001 when the 10% GST was introduced – it is highly likely that there will be a chance of a pre-election interest rate hike next week. However, it must be noted thata federal election on 21 May and the timing of the release of quarterly wage figures may delay any rate announcement until June.  Any rate increase could be at 0.5%, rather than the traditional 0.25%. Latest data indicates that consumer prices jumped 2.1% in Q3, of the fiscal year ending in June. Underlying inflation – that takes out the most extreme price moves – came in at 3.7%, (and 1.4% on the quarter), and well above the RBA’s 2%–3% target, and the highest figure seen in twelve years.

Average April UK house prices hit a record high of US$ 458k, (GBP 360k), the third month in a row a new benchmark has been set, with prices rising over a record US$ 24k for the period. Rightmove estimated that 53% of properties are selling at, or over, their final advertised asking price, amid high demand for a limited stock of properties, and that they are achieving 98.9% of the final advertised asking price on average. Two interesting facts were that three years ago, the average time to sell a property was sixty-seven days, but that now stands to thirty-three days, and the recent three-month price rise momentum has been even greater than during the stamp duty holiday-fuelled market of last year. There are some who think that this property balloon is soon set to deflate, (with a probable softer landing than some may expect), and prices will decline (not tank) beginning in June, with the process being sped up by the triple whammy of continuing upward inflationary momentum, declining consumer spend and rising mortgage rates.

Government borrowing – the difference between spending and tax income – in the fiscal year ending last month was 52.2% lower, on the year, at US$ 191.1 billion, as the UK has had to borrow less, with expensive schemes such as furlough having ended  and tax receipts moving 17.9% higher to US$ 780.5 billion. Last month, the Office for Budget Responsibility said it expected borrowing in 2021-22 to be US$ 160.9 billion, which came in 18.8% higher than expected. Although the US$ 22.8 billion borrowed last month was the second-highest amount for the month since records began in 1993, borrowing in March remained well above pre-pandemic levels but was US$ 11.1 billion less than the amount borrowed in March 2021.The total amount the government borrowed equated to about 6.4% of GDP. Despite the fall in government borrowing, it is still the third-highest level for a financial year since records began in 1947. The recent surge in inflation has seen the government debt interest payments to reach a record high for a financial year at US$ 88.0 billion. There are no prizes guessing Who Pays The Price?

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Who Pays The Price?

Who Pays The Price?                                                                              29 April 2022

For the past week, ending 29 April 2022, Dubai Land Department recorded a total of 2,259 real estate and properties transactions, with a gross value of US$ 1.80 billion. A total of 197plots were sold for US$ 313 million, with 1,628 apartments and villas selling for US$ 959 million. The two top transaction sales were for plots of land – one in Business Bay for US$ 20 million, and another sold for US$ 19 million in Al Thanayah Fourth. The three leading locations for sales transactions were Al Hebiah Fifth, with 76 sales worth US$ 47 million, followed by Jabal Ali First, with 24 sales transactions worth US$ 33 million, and Al Yufrah 2, with 15 sales transactions, worth US$ 6 million. The top three apartment sales were one sold for US$ 157 million in Marsa Dubai, another for US$ 84 million in Burj Khalifa, and third at US$ 66 million in Business Bay. The sum of of mortgaged properties for the week was US$ 471 billion, with the highest being for a plot of land in Al Yelayiss 2, mortgaged for US$ 81 million. 75 properties were granted between first-degree relatives worth US$ 73 million.

The Mo’asher/Property Finder’s official sales price index noted that in Q1, Dubai registered 26.0k property transactions – the highest number of quarterly deals since 2010. During the quarter, 20.5k sales transactions, worth US$ 15.11 billion, were recorded. In March, there were 8.4k sales transactions, 83% higher, and 109% higher on an annualised basis, to US$ 6.15 billion. Property Finder reckoned that Dubai Marina, Downtown Dubai, Palm Jumeirah, Business Bay and Jumeirah Village Circle, were the top areas searched for apartment sales, whilst for villa sales. Dubai Hills Estate, Palm Jumeirah, Arabian Ranches, Damac Hills and The Springs, came out on top. With 60.3% new contracts, and the balance renewals, 44.8k rental contracts were signed in Dubai last month; 61.5% of the total emanated from five locations – Jabal Ali First, Al Warsan First, Business Bay, Naif and Al Karama.

HH Sheikh Mohammed bin Rashid Al Maktoum has approved a new housing package worth US$ 1.72 billion for UAE citizens in Dubai, including housing and land allotments for 4,610 Emiratis in the city, on the occasion of Eid al-Fitr, and as part of the Housing Programme for Dubai Citizens. A new housing complex in Al Khawaneej area 2, will include 1.1k residential villas and a plan for 3.5k plots in Umm Nahad 4 and Al Aweer. The Dubai Ruler emphasised that the housing programmes and social services projects were government priorities, aimed at meeting the needs of Emiratis and their families. Last year, he had approved the allocation of US$ 17.71 billion to an Emirati housing programme in Dubai, to be allocated over the next two decades to provide quality housing for Emiratis, and he also issued directives to quadruple the number of citizens benefiting from the housing programme effective from next year.

Last October, Samana Developers launched its Park View development which saw 80% of the project sold within four days. This week, the developer broke ground on its US$ 35 million G+6 storey Park Views, comprising 176 apartments, scheduled for hand over within eighteen months. Encompassing over 183k sq ft, it will house studio, 1 B/R and 2 B/R apartments, with private pools. Located close to a community park, Dubai Miracle and Butterfly Gardens, prices for a studio start at US$ 125k, with a flexible payment plan – 10% down payment, 1% every month for seventy months, 10% in the sixth month, 5% in the twelfth month, and 5% in the eighteenth month. The unit sizes range from 361 sq ft for studios, 937 for 1B/R, and 1,301 for 2 B/R apartments.

According to The Best Cities for Retirement Index, Dubai has been ranked fourteenth in terms of living standards for retirees but first for financial security and legacy management. A variety of factors such as quality of healthcare services, financial security, wealth management benefits available to retirees, mobility, connectivity, safety and availability of housing are used to draw up the list of cities. When all factors had been analysed, the top six cities turned out to be Tokyo, Wellington, Singapore, Paris, Vienna and Zurich. Other regional locations did not fare as well as Dubai, with Abu Dhabi in at 51st, Doha -70th and Riyadh 84th. Attracting retirees has become big business and many governments have introduced incentives to entice senior citizens to their shores. Dubai has its retirees’ visa, allowing residents and citizens from around the world to live in the emirate if they fulfil one of three requirements: earn a monthly income of US$ 5.45k, have US$ 272k in cash savings or own a property in Dubai worth at least US$ 545k. A retired expatriate and their spouse can apply for the five-year visa with the possibility of automatic renewal online, provided they continue to meet the criteria. Eligible applicants must be older than 55 and have valid UAE health insurance.

Savills has rated fifteen global cities to ascertain which is the best for digital nomads and it was no surprise to see Dubai third behind Lisbon and Miami. The real estate consultancy’s Executive Nomad Index is based on internet speed, quality of life, climate, air connectivity and prime rents. The Algarve, Barbados, Barcelona Dubrovnik, Saint Lucia, Malta and Antigua & Barbuda make up the top ten cities for long-term remote workers. As Covid accelerated the remote working trend, new technology also helped to encourage more workers to move from their traditional home bases; the government took advantage of the situation and quickly enacted appropriate legislation, such as a one-year residency permit, to entice such a labour sector to ‘set up shop’ in the emirate.

The Emirates Tourism Council confirmed that the country’s hotels welcomed 29% more visitors on the year to nineteen million tourists in 2021, generating a 70% surge in revenue to US$ 7.63 billion. Of the total number of tourists, 58% were domestic. There is no doubt that factors such as a successful vaccination protocol, stringent safety measures and a successful and quick economic recovery programme have benefitted the hospitality sector. During 2021, booked hotel nights jumped 42% to seventy-five million, with occupancy rates of 67% among the highest in the world. There was a 5.0% hike in the number of UAE hotels to 1.14k, whilst room numbers rose to 194k, of which 144k can be found in Dubai. The emirate also posted occupancy rates of 77% in the first two months of 2022.

Dubai’s administration has approved a three-year plan for the Dubai International Financial Centre Courts to establish a new digital economy court, dedicated departments for intellectual property rights, online courts with electronic capabilities, a new will deposit centre, digital will management system and multilingual consultancy services. This strategy is planned to enhance Dubai’s position as a global business and finance centre. Dubai’s Deputy Ruler, Sheikh Maktoum bin Rashid, noted “we approved the new strategic work plan that serves to further instil confidence that the DIFC Courts will forge ahead to shape the new dynamics of global dispute resolution.” The digital economy contributes about 4.3% to the UAE’s GDP which is equal to US$ 27.2 billion, a figure that will inevitably rise significantly in coming years.

Sheikh Hamdan bin Mohammed has launched a new fund targeted at enhancing the emirate as a global FinTech hub. The Crown Prince announced that the US$ 100 million ‘Venture Capital Fund for Start Ups’ will finance SME projects, supporting their development in Dubai and gradual expansion to global markets. The DIFC, a 15% contributor, will manage the fund that will create an integrated funding system with a number of suitable options that can cater to the needs of enterprises. It is expected that during the eight-year implementation period, the Fund will bolster the emirate’s GDP by US$ 817 million, will provide more than 8k jobs for emerging talents, and strengthen Dubai’s position as a regional centre for entrepreneurship and FinTech.

To meet the increased demand for air travel, Emirates is hoping to recruit 6k new cabin crew to boost numbers to an appropriate level. Last August, it announced that it required 3k cabin crew, as well as 500 airport services employees, and received 300k applications so it is certain that its HR division will be working overtime over the coming months. It seems that applicants need to have “a personality that shines, the ability to adapt to any situation and make people feel at ease”. Applicants need to have more than a year’s experience in hospitality and customer service, be a high-school graduate”, and be fluent in in written and spoken English. Entry level starting salary is US$ 2.66k plus housing and other benefits, with height requirements starting at 160 cm and the ability to reach 212 cm, while standing on tiptoes.

There are reports that Emirates is expecting to return to pre-pandemic levels by next year, as demand for global travel and tourism recovers. Currently, the carrier is operating at 70% of its pre-pandemic capacity and it is hoped that this will increase to 80% before the end of the summer, and 85% by the start of the winter season. For the year ending 31 March 2021, the world’s largest long-haul airline posted a loss of US$ 5.5 billion, not helped by the ongoing pandemic and despite a US$ 3.1 billion cash injection by its owner, the Dubai government, with Dnata, its airport services provider, received US$ 218 million in relief from authorities during that fiscal year. The latest 2021-22 accounts will be released shortly, and the airline is expecting a “good set of results” for its fiscal year ended March 31, narrowing losses for the last 12 months; it expects to return to profit in the next fiscal year, 2022-23.

The UAE fuel price committee announced petrol and diesel prices for the month of May 2022 with minor price reductions for both Super 98, down 2.1% US$ 0.022 to US$ 0.997, and E Plus 91 petrol by US$ 0.019 (2.0%) to US$ 0.948. Diesel prices headed in the other direction, with a US$ 0.163 rise to US$ 1.112.

In Q1, more than 10k companies joined Dubai Chamber of Commerce – a 64% hike in numbers compared to the comparative 2021 figure – bringing its total to almost 300k. It is estimated that member exports and re-exports saw 11.3% growth over the year, while their value reached US$ 16.6 billion. The number of certificates of origin issued by the Chamber was 7.1% higher to 179k. The Expo 2020 impact was one of the main drivers behind the much-improved figures that reflect Dubai’s strengthening position as a preferred business hub.

With the six-month extravaganza closing its doors last month, figures show that more than 25% of all Expo 2020 Dubai contracts, in terms of , were won by SMEs; in 2016, the organising committee had made a commitment that at least 20% of all contracts would go to SMEs. More than 3.2k contracts were awarded, of which 66% were SMEs, and of that total 1.39k were local and the balance 760 were from overseas. 52% of the overseas total came from five countries – UK (24%), USA (16%), France (4%), India (4%) and Australia (4%) – and that overall, suppliers from outside the UAE were sourced from ninety-four countries.

Dubai has become the latest emirate to approve a nine-day Eid Al Fitr break for federal government staff which will start on Sunday, 30 April, to 08 May, with work resuming on Monday, 09 May. Recently, the Sharjah public sector saw the same nine-day break, broken down to 30 April to 05 May and the fact that Sharjah has a three-day weekend, Friday 06 May to 08 May. Eid Al Fitr is marked on the first day of Shawwal – the month that comes after Ramadan in the Hijri calendar – and is expected to fall on Monday 01 May, as per astronomical calculations. The Ministry of Human Resources and Emiratisation had earlier announced that private sector staff would have four-day break from Ramadan 29 until Shawwal 3 – Sunday 30 April to Wednesday 03 May.

Last Saturday, in the 74th weekly live Mahooz Grand Draw, forty-five lucky participants shared the US$ 272k, (AED1 million), second prize in the 74th weekly live Mahzooz Grand Draw.  They had picked four of the five lucky numbers, with a further 1.7k claiming US$ 95 (AED 350) for matching three of the five numbers. The total prize money, which also included three lucky raffle prize winners, was US$ 514k.The top prize of US$ 2.72 million (AED 10 million) is still waiting to be won and perhaps tomorrow Saturday 30 April, could be someone’s lucky day; even if not won, someone will drive off in a 2022 Nissan Patrol Platinum V8, 5.6L Engine in an Eid-special Mega Raffle Draw. To enter the draw, entrants will have to register via http://www.mahzooz.ae and by purchasing a bottle of water, for almost US$ 10 (AED 35).

The Emirates Development Bank has agreed with Food Tech Valley, launched last May, to provide financing for SMEs and start-ups operating within Dubai’s food tech hub. Both parties will support tech-based companies operating, or seeking to operate, in the hub with financing, roadshows, seminars, mentorships and knowledge transfer. Al Wasl is developing the project in partnership with the Ministry of Food and Water Security, with the aim of attracting local and foreign direct investments within the field to achieve the government’s mission of transforming the UAE into a global hub for tech-based food and agricultural solutions. It also targets tripling the country’s food production and make the UAE more self-sufficient.

With no financial details of the deal disclosed, Swyl has acquired  the four-year old Turkish company Volt Lines  which provides mass transit solutions to corporate clients working in more than 110 companies, in major cities such as Istanbul and Ankara The Dubai-based shared mobility services provider’s strategy seems to be expansion of its operations in Europe, and it currently offers intercity, intracity, business-to-business and business-to-government transport across more than one hundred  cities in more than twenty countries. It was also the second Arab technology company to be listed on Nasdaq.  Over the past six months, it acquired Argentina’s Viapool and European tech-enabled mass transit solutions, provider door2door.

Husain Sajwani’s Damac Group, recently delisted from the Dubai Financial Market, is planning to invest US$ 100 million to build digital cities, using their own companies, property developer Damac Properties, data centre firm Edgenex, luxury jeweller de-Grisogono and fashion house Roberto Cavalli. As one of the first local entrants into the world of metaverse, it will be in a good position to cater to the needs of the entire Group when it comes to digital assets, including virtual homes, digital property, digital wearables, digital jewellery and a digital treat of Damac’s Mandarin Oriental Resort Bolidhuffaru in the Maldives. The Damac Group has ambitions to move into digital assets and non-fungible tokens and has the ultimate goal to become a leading global digital brand.

With its latest listing – a US$ 1.6 billion Sukuk for the Islamic Development Bank (IsDB) –  Nasdaq Dubai’s portfolio of Sukuks increased to US$ 77.5 billion, making the Dubai bourse  one of the world’s largest Sukuk listing centres. The five-year Trust Certificates were priced at par, with a profit rate of 3.213%, payable on a semi-annual basis. IsDB has currently thirteen issuances, totalling US$ 18.05 billion, with the latest issuance being used to finance projects under the development mandate of the Bank.

Emirates Integrated Telecommunications Company PJSC – du – posted an 8.5% hike in Q1 revenue of US$ 852 million, with EBITDA and net profit both higher – by 13.3% to US$ 346 million and 21.0% to US$ 85 million respectively. A breakdown of revenue sees mobile services up 6.9% at US$ 382 million, fixed services 22.8% higher at US$ 222 million and handset sales coming in on US$ 60 million. Capex was at US$ 83 million and is expected to rise over the rest of the year. There was a 10.4% growth in mobile customers to 7.5 million, with post-paid customers at 1.4 million and prepaid at 6.1 million.

In Q1, the Commercial Bank of Dubai posted a 32.6% hike in net profit of US$ 117 million, as the bank’s operating income rose 17.5% to US$ 234 million, driven by net interest income, fees and commissions, operating expenses dropping 2.1% to US$ 64 million from Q4 2021. Operating profit was US$ 170 million, up 16.4% year on year, while net impairment allowances atUS$ 52 million, were down 8.6%. CBD also posted a record US$ 32.42 billion billion in assets attributable to a 3.4% growth in loans over the quarter. The bank also received a major award during Q1, being ranked by Forbes as the Number One Bank in the UAE in the World’s Best Banks 2022 report.

Via a special resolution, Deyaar’s shareholders approved a directors’ proposal to write off its accumulated losses through the company’s legal reserve, (US$ 82 million) and cancellation of shares, (by US$ 381 million to US$ 1.19 billion), equal to the remaining losses of US$ 463 million at 31 December 2021. The company, majority owned by Dubai Islamic Bank, posted a US$ 14 million profit – following a US$ 59 million loss a year earlier – as revenue grew 22% to US$ 138 million. The company noted that the restructuring will increase “the company’s attractiveness to investors and the possibility of obtaining funds for its future projects, which will reflect positively on the share price in the Dubai Financial Market”.

Dubai Islamic Bank reported a Q1 58% year-on-year surge in net profit to US$ 354 million, as revenue climbed 11% to US$ 672 million, driven by lower impairments and stronger top-line growth. The largest Islamic bank in the UAE, and the second-largest Islamic bank in the world, noted that total income was 6% higher at US$ 822 million, with net operating profit up 10% to US$ 440 million. DIB’s net financing and sukuk investments grew 3.0% to US$ 64.1 billion, with gross new financing of nearly US$ 4.4 billion being driven by strong growth of wholesale bookings on the back of an improved economic outlook. During the quarter, the balance sheet grew 3.0% to US$ 78.3 billion, as customer deposits remained steady at US$ 55.7 billion. Impairment provisions were reduced 44% to US$ 114 million.

The DFM opened on Monday, 25 April, 333 points (7.5%) up on the previous six weeks, moved 36 points (1.0%) higher to close on Thursday 28 April, at 3,719. (The bourse will be closed for the next four trading days and will reopen on Thursday 05 May, after the Eid Al Fitr holiday). Emaar Properties, US$ 0.37 higher the previous eight weeks, nudged US$ 0.02 up to US$ 1.74. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.78, US$ 4.14, US$ 1.71 and US$ 0.73 and closed on US$ 0.77, US$ 4.16, US$ 1.76 and US$ 0.73. On 28 April, trading was at 129 million shares, with a value of US$ 89 million, compared to 115 million shares, with a value of US$ 83 million, on 22 April 2022.

For the month of April, the bourse had opened on 3,527 and, having closed the month on 3,719 was 192 points (5.4%) higher. Emaar traded US$ 0.11 higher from its 01 April 2022 opening figure of US$ 1.63, to close the month at US$ 1.74. Four other bellwether stocks, Dewa, Emirates NBD, DIB and DFM started the month on US$ 0.00, (it only started trading in mid-April), US$ 4.09, US$ 1.68 and US$ 0.66 and closed on 30 April on US$ 0.77, US$ 4.16, US$ 1.76 and US$ 0.73 respectively. The bourse had opened the year on 3,196 and, having closed April on 3,719, was 523 points (16.4%) higher, YTD. Emaar traded US$ 0.41 higher from its 01 January 2022 opening figure of US$ 1.33, to close April at US$ 1.74. Four other bellwether stocks, Dewa, Emirates NBD, DIB and DFM started the year on US$ 0.00, US$ 3.69, US$ 1.47 and US$ 0.72 and closed on 29 April on US$ 0.77, US$ 4.16, US$ 1.,76 and US$ 0.79 respectively.

By Friday 29 April 2022, Brent, US$ 9.95 (8.9%) lower the previous week, gained US$ 5.84 (5.7%), to close on US$ 107.59. Gold, US$ 42 (2.5%) lower the previous week, shed US$ 36 (1.9%), to close Friday 29 April on US$ 1,897.

Brent started the year on US$ 77.68 and gained US$ 29.91 (38.5%), to close 29 April on US$ 100.05. Meanwhile, the yellow metal opened January trading at US$ 1,831 and has gained US$ 66 (3.6%) during 2022, to close on US$ 1,897. For the month, Brent opened at US$ 100.05 and closed on 29 April, US$ 7.54 (7.5%) higher, on US$ 107.59. Meanwhile, gold opened April on US$ 1,943 and shed US$ 46 (2.4%) to close at US$ 1,897 on 29 April.

Driven by a dip in Q1 sales and charges arising from the Ukraine war, Boeing has posted a US$ 1.2 billion net loss, compared to a US$ 519 million deficit a year earlier. Q1 revenue slowed 8.0% to US$ 14.0 billion, driven by “lower defence volume and charges on fixed-price defence development programmes”, partially offset by commercial services volume”. Commercial aircraft sales dipped 3.0% to US$ 4.2 billion, with a delivery of ninety-five aircraft, as well as a 4.2k plane backlog, valued at US$ 291 billion. A 20.6% decline in operating margin reflects “abnormal costs and period expenses, including charges for impacts of the war in Ukraine and higher research and development expense”. Revenue from defence, space and security decreased 24% to nearly US$ 5.5 billion, whilst R&D spend jumped 26% to US$ 633 million. Its global services unit’s first-quarter revenue increased 15% to US$ 4.3 billion, as the unit secured a fuel-saving digital solutions contract for Etihad Airways’ 787 fleet and was awarded a contract for KC-135 horizontal stabilisers from the US Air Force.

Beset by mostly self-made problems over the past decade, and maybe longer, Boeing’s 777X programme could face a new delay that could push deliveries, a year later than earlier expected, to early 2025. The report claims that the certification target will take place in late 2024, with deliveries following nine to twelve months later. Last month, the Federal Aviation Administration warned Boeing that existing certification schedules for the 737 MAX 10 and 777X were “outdated and no longer reflect the programme activities”. It has to be remembered that the 777X has been in development since 2013 and at one point was expected to be operational by June 2020. The plane maker is also hoping to gain approval for the 737 Max 10 by the end of the year and has been requested by regulators to provide a “mature certification schedule”. To complete the trifecta, Boeing is also working to resume 787 Dreamliner deliveries after halting them nearly a year ago over structural flaws.

Californian-based Lease Corporation expects to lose US$ 802 million because of it writing off the value of the remaining twenty-seven aircraft it has in Russia; twenty-one of the planes are company-owned and the remaining six in its managed fleet. The loss will be reflected in accounts due to be published next month.

Last week,  Netflix warned its revenue growth had slowed considerably after it lost subscribers due to stiff competition from rivals and the rising cost of living. This week, there was good news and bad news for Facebook, reporting that it has stopped losing users in Q1, growing its customer base to 1.96 billion, but posted its slowest revenue growth in a decade – 7% higher at US$ 27.9 billion; overall, Meta’s Q1 profits were US$ 7.46 billion.  Last year, the social network noted a decline in users for the first time, and since the news was released in February 2022, its market value has lost billions from the firm’s market value. Since executives disclosed the fall in February, the firm’s share price has nearly halved, but on Wednesday when Meta’s Q1 details were published, shares jumped 19% in after-hours trade. Facebook is facing more competition against the likes of TikTok and Amazon.

Q1 brings some disappointing news for Amazon, as it reported its first loss, (at US$ 3.8 billion), since 2015, as online sales slipped 3%, with the pandemic-induced boom to its business starting to fade; overall sales headed 7% higher to US$ 116.4 billion, driven by a 37% hike in Amazon Web Services and advertising revenue 23% higher. However, growth in other sectors continued but the loss was further exacerbated by its investment in electric carmaker Rivian. Amazon, like many other global conglomerates, is also facing the impact of rising costs brought on by surging inflation, supply chain pressures and the Ukraine war. Its share value sank more than 10% in after-hours trade, with concerns spreading to other online retailers, sending shivers through US markets, which had already started moving south in recent weeks.

Even though iPhone maker Apple posted increases in Q1 sales and profit by 9% to US$ 97.3 billion and 10% to US$ 25.0 billion, it warned of a “challenging macroeconomic environment”, noting that “we are not immune to these challenges”. iPads tablets, which contribute US$ 7.6 billion to total sales was down  2%, and was the only segment that experienced a dip in Q1 sales. It also indicated that the company was more worried about Covid-related shutdowns in China and chip shortages, (that are impacting the firm’s ability to meet demand for its products), than that buyers will cut spending. It was noted that the supply chain frictions would dent Apple’s sales in the current Q2 by up to US$ 8 billion, and that it will be “substantially larger” than its impact in the last quarter. Apple also announced a 5% increase in cash dividend to US$ 0.23 per share.

On Monday, the irrepressible Elon Musk paid US$ 44 billion in cash to acquire Twitter, a social media platform populated by millions of users and global leaders. Twitter said Musk secured US$ 25.5 billion of debt and margin loan financing and is providing a US$ 21 billion equity commitment. The world’s richest person, worth US$ 268 billion, has long been a critic of Twitter on several fronts including its algorithm for prioritising tweets should be public and giving too much power on the service to corporations that advertise. Twitter shares rose 5.7% on Monday to close at US$ 51.70, well below the US$ 70 range where Twitter was trading last year; however, the offer price shows a near 40% premium to the closing price, the day before Musk disclosed he had bought a more than 9% stake, two weeks ago.

Days after Elon Musk acquired the microblogging site, Twitter had posted a seven-fold plus Q1 net income of US$ 513 million, compared to US$ 68 million a year earlier; revenue was 16% higher at US$ 1.2 billion. 92% of the revenue was from advertising sales which expanded by 23% to US$ 1.1 billion but revenue from subscriptions and other streams dropped 31% yearly to US$ 94 million. However, the net income figure included a pre-tax gain of US$ 970 million from the sale of MoPub — a platform for promoting and monetising apps — to AppLovin for US$ 1.05 billion and income taxes related to the gain of US$ 331 million. Daily active users rose 16% in the quarter to 229 million, split between international users (up 18.1% to 189 million) and US ones (6.4% higher at 40 million).

This week, Elon Musk divested US$ 4 billion of his shares in Tesla but indicated that he had no plans to sell anymore, after earlier in the week shares the had fallen, (on Tuesday wiping US$ 125 billion off its market value), on news that he was to sell part of his stake in the firm to help pay for his takeover of Twitter.  This was his first sale of Tesla shares since offloading US$ 16.4 billion worth of stock late last year. Earlier in April, Tesla shares had fallen almost 20% when he earlier announced that he had bought a 9.2% stake in Twitter.

A Californian court has ruled against Zoom Communications and handed out an US$ 85 million penalty, including US$ 21 million in legal fees. The payment is in relation to settle a case stemming from privacy concerns and a number of hacking and video-crashing incidents, with claims that the owner of the popular video conferencing application misled its users about the security of its encryption technology. Further allegations include that Zoom shared their data through third-party software from companies like Facebook, Google and LinkedIn without consumer consent. The global video conferencing market is expected to grow by almost 250% over the next five years to US$ 22.5 billion, at a compound annual rate of almost 20%.

According to research firm Kantar, over the 12 weeks to 17 April, Lidl and rival discounter Aldi were the fastest growing UK grocers. UK’s sixth biggest supermarket, Lidl has 920 sites and wants to grow that number by 19.6% to 1.1k by 2025. This week, Lidl has introduced a finder’s fee, (either 1.5% of a freehold price or 10% of the first year’s rent), to anyone who can find a suitable site for a new store. As it expands its operations, there is no doubt that it is taking market share from the big four supermarket chains, so much so that Asda and Morrisons announced they were cutting prices on hundreds of products as they try to compete.

The biggest shareholder and chairman of retail-to-energy group Reliance Industries is reportedly interested in a potential bid, with US buyout firm Apollo Global Management, for UK high street chain Boots. Billionaire Mukesh Ambani has yet to confirm what the share split will be for the retailer, which has more than 2.2k pharmacies, health and beauty stores in the UK, and that could be valued at US$ 7.5 billion. If successful, the deal would see Boots expand into India, Southeast Asia and the Middle East as well as growing the business in the UK.

Having initiated an investigation last May into suspected fraud and money laundering by parent firm GFG Alliance, the Serious Fraud Office has visited the offices of Sanjeev Gupta’s Liberty Steel. The parent company owns a myriad of businesses, focussing on energy, steel and trading, with a global workforce of some 35k, many of whom are in the UK.  Mr Gupta and Liberty Steel came under the spotlight because its main lender, Greensill Capital, collapsed after its insurer refused to renew cover for the loans it was making. It was the main lender to GFG’s Liberty Steel, which employs 3k people. The parent company, GFG, utilised Greensill’s supply chain finance services, which effectively allowed it to send any of its invoices to its lender and receive almost immediate payment. The problem arises when dummy or fraudulent invoices are used, including related party transactions, as may have been the case; in addition, concerns have been raised as to GFG’s unusual funding and company structures.

UK car production continues to disappoint as it headed south, with Q1 figures of 207k – 32.8% lower on the year. The main drivers behind the fall were the ongoing global supply chain problems, a worldwide shortage of computer chips and rising energy costs for manufacturers. Furthermore, the closure of Honda’s Swindon plant in 2021 did not help matters, having contributed to much reduced UK car exports to the US; US and EU car exports declined by 63.8% and 25.5% respectively. Q2 figures will also be impacted by the Ukraine crisis, as the two combatant countries supply integral parts such as wiring systems.

The UK government has introduced new food laws that Kellogg’s has taken umbrage with and has threatened to take the Johnson administration to court. The issue revolves around some cereals being prominently displayed in stores because of their high sugar content, with data showing that cereals are eaten with milk or yoghurt, in 92% of cases. Including added milk would change the calculation by reducing the proportion of sugar and salt content relative to the weight of the overall serving but the government has remained steadfast as some of their products are high in fat, sugar or salt in their dry form. The new law will come in force in October and would see products covered by the restrictions not being allowed to be displayed in prominent places within a store – and also their online equivalents. The aim of the new law is to halve childhood obesity by 2030.

The latest Putin edict sees countries that refuse to pay for their Russian energy in roubles having their gas flows cut off, starting with Bulgaria and Poland where gas supplies were severed from last Wednesday. Energy may well prove a major economic weapon in the on-going conflict in the Ukraine. On the details being released, European gas prices surged as much as 17%, with traders calculating the risk of other European countries being hit next. As the situation currently stands, European nations will soon have to decide whether to accept Putin’s terms or lose crucial supplies – and face the prospect of energy rationing. It will be interesting to see what the German and Italian governments  do, with both countries heavily dependent on Russian supplies.

Following Vladimir Putin’s March decree earlier that “unfriendly countries” would have to start paying for its oil and gas in roubles to prop up its currency after Western allies froze billions of dollars it held in foreign currencies overseas, one major German energy company, Uniper, has acquiesced to the request and announced that it will pay in euros which will be converted into roubles, meeting a Kremlin demand for all transactions to be made in the Russian currency. To the neutral observer, this seems to be a flagrant disregard of the sanctions, and, with its usual bending of the rules, the EC said that if buyers of Russian gas could complete payments in euros and get confirmation of this before any conversion into roubles took place, that would not breach sanctions. Meanwhile, this week an EU official confirmed that any attempt to convert cash into roubles in Russia would be a “clear circumvention of sanctions” as the transaction would involve Russia’s central bank. Even the EC boss, Ursula von der Leyen, noted that firms could still be breaking the rules. Poland has reiterated that the EU should penalise countries that used roubles to pay for Russian gas and was particularly critical of Germany, Hungary and Austria for resisting the gas embargo.

European leaders branded Russia’s announcement it is cutting off gas supplies to Poland and Bulgaria after they refused to pay for the deliveries in roubles — a measure Moscow imposed on so-called “unfriendly” foreign buyers in response to sanctions over its invasion of Ukraine. Poland imports about 50% of its gas requirements, and Bulgaria, 75%, European Council President Charles Michel, commented that the move was  “another aggressive unilateral; move by Russia with EC chief, Ursula von der Leyen, declaring Gazprom’s decision “yet another attempt by Russia to use gas as an instrument of blackmail” and that it was “unjustified and unacceptable”; the Belgian-born German leader should realise that ‘all’s fair in love and war’. It is hard to justify why European countries are still remitting up to US$ 850 million a day for Russian oil and gas and shows that certain countries are not adhering to the spirit of imposing sanctions.

Even before the onset of the Ukraine crisis, the world had begun to see inflation spiralling and food and energy prices heading north at a quick pace. History teaches that the uptick in energy prices, over the past twenty-four months, have been the highest since the 1973 oil crisis and that for food commodities and fertilisers the largest since 2008; Russia and Ukraine are large producers of both. The World Bank has forecast the average 2022 price of Brent will hover around the US$ 100 mark, down to an average US$ 92 next year, driven by disruptions in both war-related trade and production. The IMF expects 2022 inflation to hit 5.7%, in advanced economies, and 8.7%, in emerging market and developing economies, and next year 2.5% and 6.5% respectively. (Somebody should advise the world body that official inflation rates in the US and UK currently stand at 6.6% and 7.0%).

Q1 saw the US economy contracting – at an annualised rate of 1.4% – driven somewhat by trade disruption from the Ukraine war, and further exacerbated by the double whammy of a surge in imports, as businesses accelerated purchases, and a fall in exports, as overseas demand weakened. This quarter last year posted a 6.9% annualised growth rate. Despite inflation running at a forty-year high, households are still spending but will have to pull pack as economic conditions deteriorate further and growing inflation further erodes purchasing power. Wells Fargo has indicated that it considers that there is a 30% possibility of a US recession next year.

Yesterday, Joe Biden asked Congress for US$ 33 billion in military, economic and humanitarian assistance to support Ukraine so that it could defend itself better in the war with Russia. Most of the money will be used for the military, (US$ 20 billion), economic aid (US$ 8.5 billion), and humanitarian assistance (US$ 3.0 billion). The 78-year old US leader noted that the US had already supplied ten anti-tank weapons for every tank that Russia has deployed to Ukraine but clarified that the US was not attacking Russia. “We are helping Ukraine defend itself against Russian aggression.” Some of the US partners should be asking themselves whether they are shouldering their fair share of the burden in fighting the Russians.

With Australian cost of living 5.1% higher on the year – the most since June 2001 when the 10% GST was introduced – it is highly likely that there will be a chance of a pre-election interest rate hike next week. However, it must be noted that a federal election on 21 May and the timing of the release of quarterly wage figures may delay any rate announcement until June.  Any rate increase could be at 0.5%, rather than the traditional 0.25%. Latest data indicates that consumer prices jumped 2.1% in Q3, of the fiscal year ending in June. Underlying inflation – that takes out the most extreme price moves – came in at 3.7%, (and 1.4% on the quarter), and well above the RBA’s 2%–3% target, and the highest figure seen in twelve years.

Average April UK house prices hit a record high of US$ 458k, (GBP 360k), the third month in a row a new benchmark has been set, with prices rising over a record US$ 24k for the period. Rightmove estimated that 53% of properties are selling at, or over, their final advertised asking price, amid high demand for a limited stock of properties, and that they are achieving 98.9% of the final advertised asking price on average. Two interesting facts were that three years ago, the average time to sell a property was sixty-seven days, but that now stands to thirty-three days, and the recent three-month price rise momentum has been even greater than during the stamp duty holiday-fuelled market of last year. There are some who think that this property balloon is soon set to deflate, (with a probable softer landing than some may expect), and prices will decline (not tank) beginning in June, with the process being sped up by the triple whammy of continuing upward inflationary momentum, declining consumer spend and rising mortgage rates.

Government borrowing – the difference between spending and tax income – in the fiscal year ending last month was 52.2% lower, on the year, at US$ 191.1 billion, as the UK has had to borrow less, with expensive schemes such as furlough having ended  and tax receipts moving 17.9% higher to US$ 780.5 billion. Last month, the Office for Budget Responsibility said it expected borrowing in 2021-22 to be US$ 160.9 billion, which came in 18.8% higher than expected. Although the US$ 22.8 billion borrowed last month was the second-highest amount for the month since records began in 1993, borrowing in March remained well above pre-pandemic levels but was US$ 11.1 billion less than the amount borrowed in March 2021.The total amount the government borrowed equated to about 6.4% of GDP. Despite the fall in government borrowing, it is still the third-highest level for a financial year since records began in 1947. The recent surge in inflation has seen the government debt interest payments to reach a record high for a financial year at US$ 88.0 billion. There are no prizes guessing Who Pays The Price?

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And The First One Now Will Later Be Last!

And The First One Now Will Later Be Last!                                                22 April 2022

For the past week, ending 22 April 2022, Dubai Land Department recorded a total of 2,145 real estate and properties transactions, with a gross value of US$ 1.72 billion. A total of 225 plots were sold for US$ 305 million, with 1,436 apartments and villas selling for US$ 872 million. The two top transaction sales were for two plots of land – one in Hadaeq Sheikh Mohammed Bin Rashid for US$ 26 million, and another sold for US$ 14 million in Palm Jumeirah. The three leading locations for sales transactions were Al Hebiah Fifth with 114 sales worth US$ 69 million, followed by Jabal Ali First, with 33 sales transactions worth US$ 39 million, and Wadi Al Safa 5, with 11 sales transactions worth US$ 13 million. The top three apartment sales were an apartment sold for US$ 126 million in Marsa Dubai, another for US$ 96 million in Burj Khalifa, and third at US$ 77 million in Palm Jumeirah. The sum of the amount of mortgaged properties for the week was US$ 474 billion, with the highest being for a plot of land in Nad Al Shiba Third, mortgaged for US$ 47 million.

Latest figures from March’s ValuStrat Price Index reported property prices surging 18.8%, year-on-year, and 1.2% month-on-month. When split between villas/townhouses and apartments, the profits were up 34.1% and 2.1% and 8.4% and 0.4% for apartments respectively.  In the villa sector, the four leading locations, with the highest price rises, were Jumeirah Islands (40.3%), Arabian Ranches (40.3%), The Lakes (37.1%) and Jumeirah Village (35.5%). Some areas such as Mudon and Green Community West, performed better and recorded above average price growth of 0.5% and 0.8%, respectively. The index, which measures Dubai’s residential capital value performance, also reported that the leading locations for apartment price rises were Palm Jumeirah (21.9%), Jumeirah Beach Residence (16.0%), Burj Khalifa (15.3%), The Views (10.9 per cent), and The Greens (9.7%). The study also noted that “the villa capital values index reached 94.1 points last month, just 5.9 points below the price index base of January 2014.’ as the weighted average capital value for villas grew 6.3% quarterly and 34.1% annually. Meanwhile apartment capital values index reached 69.5 points in March, 30.5 lower than the price index base of January 2014. As Dubai’s global popularity grows, there is no doubt that Dubai’s property sector will benefit from the fact that its property prices are very cheap, when compared to those of their international rivals. The outlook for both segments remains positive, with villa prices moving faster and are expected to cross 2014 peak levels by the end of 2022.

CBRE noted that Dubai’s total Q1 transaction volumes reached 19k, the highest ever recorded in any first quarter of the year. Total transactions volumes recorded 75.1%, year-on-year growth, with off-plan and ready transactions increasing by 114.9% and 52.9% respectively. Secondary market transactions accounted for 56.1% of total transactions, with off-plan transactions accounting for the 43.9% balance, but that 68.6% of total Q1 sales were initial sales from the developer, and 31.4% of sales were for subsequent sales of properties. Over the remainder of 2022, an additional 42k units are expected to be completed to meet rising demand for residential units.

According to Luxhabitat Sotheby – utilising data from the Dubai Land Department – Dubai luxury property prices dipped 6.0% in Q1, with an average price of prime property at US$ 1.23 million. In this sector, it estimated that 5.3k apartments and 742 villas were sold, with the three leading locations, in terms of sales volume, being Mohammed Bin Rashid City at US$ 869 million, Palm Jumeirah at US$ 845 million and Downtown Dubai at US$ 708 million. In the prime residential market, the Jumeirah Islands area sales more than doubled to US$ 55 million, followed by Mohammed Bin Rashid City and Al Barari. During Q1, there was a 32.3%, quarter on quarter, jump in the prime villa market, with total sales of US$ 1.12 billion at an average villa price of US$ 2.89 million. The most popular areas for villa transactions in Q1 were Mohammed bin Rashid City, followed by Palm Jumeirah and Emirates Living. Sales volume of apartments decreased by 10% to US$ 2.97 billion with the average prime apartment selling at US$ 654k, equating to an average price of US$ 390 per sq ft. The three most popular ‘apartment areas’ were Downtown Dubai, Business Bay and Palm Jumeirah. The top six villa transactions in Q1 were Palm Jumeirah – Frond N (US$ 76 million), Jumeirah Bay Island (US$ 24 million), Palm Jumeirah Frond J (US$ 24 million), Emirates Hills – Sector L (US$ 20 million), Burj Khalifa apartment (US$ 20 million) and Business Bay Dorchester Collection (US$ 19 million).

Having invested US$ 272 million in a plot of land in Dubai South, and signing an exclusive agreement with the local authority, Discovery Land is planning to build an ultra-luxury golf community. The US-based developer indicated that the project will consist of a two sq mt golf community with mansions, villas, an 18-hole golf course and other premier amenities. This will become the fifth golf community in the emirate, following Emirates Hills, Arabian ranches Jumeirah Golf Estates and Dubai Hills.

Launched in 2006, Dubai South was planned to be an emerging 145 sq km, master-planned city which also includes Al Maktoum International Airport and the Expo 2020 site, which is currently being transformed into District 2020. This will become the country’s first fifteen-minute city, a cycle-friendly, traffic-free suburb of the growing metropolis, and will include an autonomous-vehicle route, a 10 km cycling track, interconnected, wide pedestrian pathways and a 5 km jogging track. The former Expo village will house fifteen mid-rise residential buildings, in four clusters, which will open “in different phases between now and October”.

HH Sheikh bin Mohammed announced further changes in the government’s residency visa law, making it easier, for skilled professionals, earning more than US$ 100k a year, as well as those purchasing a property worth more than US$ 545k, to apply for a ten-year ‘Golden Visa’. Undoubtedly, Dubai property sector will be a beneficiary of the ten changes made this week, as the initial introduction of the scheme in 2020, (which saw 44k visas issued in Dubai), was one of the main drivers in the sector’s post-Covid bounce back.Most analysts agree that the new changes are a further step in opening up Dubai to foreign investors and will likely lead to a significant influx in property buyers in both the residential and commercial sectors. Another change was that off-plan investors can also apply for residency, with buyers no longer restricted having to have a title deed of a ready property in hand.

The latest Knight Frank report indicates that, in Q1, Dubai office rents, in five out of the twenty-seven locations, have returned to pre-pandemic levels. The best performing location was Business Bay where rents were 33.0% higher, on the year, at US$ 28 per sq ft, with the major sector being technology business, many of which are set-ups, which seem to be filling in the space left by the likes of global international entities – professional services, banks and blue-chip companies – that have been shrinking their occupancy footprint in a move to hybrid working models. Average Grade A rents in the CBD were up 9.0%, year-on-year, to US$ 500 per sq mt per annum in Q1 2022; financial and technology firms remain the main drivers of demand for Grade A office space. There is no doubt that the local booming economy is helping growth in this sector – it is estimated that Q4 GDP growth came in at 7.8%. The Federal Competitiveness and Statistics Centre confirmed that the country’s non-oil sector contribution to the 2021 GDP equated to 72.3% – 1.0% higher than in 2020, and 3.8% at constant prices. The hotels & restaurants, wholesale & retail and health & social services sectors contributed 21.3%, 14.1% and 13.8% respectively. JLL’s Q1 2002 market review confirmed that the UAE’s hotel market performed strongly, driven by Expo 2020 Dubai and returning international visitors, with both upper-upscale and midscale hotels witnessing higher average daily rates.

This month saw Dubai’s population top the 3.5 million mark, according to Dubai Statistics Centre’s latest data and that despite the pandemic, it has increased by over 100k since 2020, driven, of late, by an influx of foreigners, especially the high net worth individuals. 69.2% of the population, 2.4 million, is male. The quicker than expected economic recovery has resulted in the labour-intensive industries, such as retail, hospitality, aviation, tourism and real estate increasing their payroll numbers. Despite the population continuing to grow, the DSC estimates the unemployment rate in Dubai stood at just 0.5%, resulting in the emirate having one of the world’s lowest unemployment rates.

With the NFT market booming, (with some exceptions as noted later), Emirates is hoping to cash in by planning to launch collectible and utility-based non-fungible tokens, with a launch expected in the coming months; it will also build brand experiences in the metaverse. Five years ago, Emirates Introduced Virtual Reality technology on its website and app, and last year, it became the first airline to launch its own VR app on the Oculus store, offering users cabin interior experiences on board the carrier’s A380 and Boeing 777-300ER aircraft. The airline’s chairman, Sheikh Ahmed bin Saeed, noted that “Dubai and the UAE are blazing the way in the digital economy, having a clear vision supported by practical policies and regulatory frameworks in areas such as virtual assets, artificial intelligence and data protection.”

With global trade picking up, the resultant higher volumes in the Asia Pacific – 1.2% up at 8.5k TEUs (twenty-foot equivalent units), Middle East, Europe and Africa (1.4% higher to 8.0k TEUs), and Americas regions, (up 4.0% to 2.8k TEUs) – pushed DP World’s gross container shipping volumes 1.7% higher in Q1 to 19.3 million TEUs. In Q1, the company signed two important deals in Africa – one acquiring South Africa’s Imperial Logistics, an integrated logistics and market access company, for US$ 890 million, and a preliminary agreement with the Angolan government to develop the country’s trade and logistics sector. DP World is “looking ahead, the near-term outlook is mixed given the geopolitical environment, but we remain positive on the medium to long-term fundamentals of the industry,”

This week, the Ministry of Finance, the Issuer, in collaboration with the Central Bank of the UAE, as the issuing and paying agent, launched conventional AED denominated Treasury Bonds of the Government of the UAE (T-Bonds), with a benchmark auction size of US$ 409 million; the first auction date is scheduled next month, followed by a raft of periodical auctions. Initially the securities will be in 2/3/5-year tenures; followed later by a ten-year bond. The main purpose for the issuance of T-Bonds is to assist in the building of a local currency bond market, diversifying financing resources, and boosting the local financial and banking sector. Apart from the issuance providing a pricing reference for other UAE markets (bond and equity), it enhances the ability to cover future funding needs in UAE dirham and provides opportunities for foreign investors to invest in UAE dirham-denominated bonds (in local currency). It will also help in the development of a Dirham local market for securities issued by the public sector in the country.

Following the success of the initial fifty-dirham polymer note, enhanced by advanced technical characteristics and security features. the Central Bank of the UAE has launched two new banknotes, The ten-dirham banknote entered circulation yesterday 21 April and the five dirham note is out next Tuesday 26 April. Current banknotes of both denominations will remain in circulation, along with the new polymer notes which are more durable and sustainable which will last two or more times longer in circulation.

This week, HH Sheikh Mohammed bin Rashid Al Maktoum issued Decrees No. (15) forming the Supreme Committee to Supervise the Expo 2020 Dubai District, and No. (16) of 2022 extending the terms of the Expo 2020 Dubai Preparatory Committee, and the Expo 2020 Dubai Bureau and its Director General by six months. The new Committee will be chaired by Sheikh Ahmed bin Saeed Al Maktoum, with members of the Supreme Committee to Supervise the Expo 2020 Dubai District being Mohammed Ibrahim Al Shaibani, Reem bint Ebrahim Al Hashimy, Abdul Rahman Saleh Al Saleh and Helal Saeed Al Marri. Their main roles and functions include general policy for the Expo 2020 Dubai District’s development and supervising the implementation, governance and development of all projects, initiatives, programmes and activities within the District. It will supervise the rehabilitation of the Expo 2020 Dubai District’s infrastructure and the provision of investment opportunities in the area in partnership with the private sector.

Sheikh Maktoum bin Mohammed, Deputy Ruler of Dubai, chaired the second meeting of the year of the Board of Directors of the Federal Tax Authority (FTA) which adopted the FTA’s financial statements for 2021. It noted the number of VAT registrants grew 2.4%, on the quarter, to 367.2k by the end of Q1, with the number of Excise Tax registrants 3.0% higher at 1.4k, and the number of Tax Agents increasing 3.0% to 446.  It also discussed new applications from UAE citizens to recover VAT (that came in 56.1% higher in Q1 to over US$ 50 million), incurred on building their new residences. The FTA board also examined the progress made on developing the draft corporate tax law, due to be implemented in 2023. Sheikh Maktoum also commented that “the Federal Tax Authority is committed to strengthening its relations with all entities involved in implementing the tax system in the government and private sectors, and to fulfilling its role in driving nationwide economic diversification policies through the administration and collection of federal taxes, in line with best practices.”

In December 2021, there were increases in M1 M2 and M3 Money Supply by 2.3% to US$ 186.9 billion, 3.0% to US$ 425.9 billion and 1.5% to US$ 505.9 billion respectively. The rise in M1 was due to an AED 16.6 billion increase in Monetary Deposits, with the increase in M2 down to the rise in M1, and an US$ 8.2 billion uptick in Quasi-Monetary Deposits. Although Government Deposits shed US$ 5.3 billion, M3 headed north because of the increases seen in M1 and M2. Gross banks’ assets, including bankers’ acceptances, increased by 0.8%, to US$ 905.0 billion at the end of December 2021. Gross banks’ assets, including bankers’ acceptances, increased by 0.8%, US$ 905.0 billion. Gross credit increased by 0.3% to US$ 488.8 billion due to 0.1% and 2.6% increases in Domestic Credit and Foreign Credit, respectively. Total Bank Deposits increased by 1.5% to US$ 544.0 billion because of 1.6% and 0.6% rises in both Resident Deposits and Non-Resident Deposits.

Saeed Al Tayer, MD of Empower and Chief Executive of Dewa, confirmed that Dubai’s leading district cooling provider – a nineteen-year old JV between Dewa and Tecom Investments – will probably go public by the end of the year; it seems likely that Salik and Tecom Investments may be at the front of the queue.  The company, which has a 79.5% share of Dubai’s district cooling market, serving 1.4k residential, commercial, healthcare, hospitality, education, retail and entertainment buildings. Empower posted a 4.0% increase in its 2021 profit to US$ 255 million, driven by a 9.0% revenue growth to US$ 682 million, resulting in a US$ 136 million dividend.

According to its MD, Saeed Al Tayer, Dewa is set to announce its Q1 results next month and has recorded a “strong performance”, and that “Dewa has strong cash flows and will not need to take on debt … We have no issues for the next five years and we will not seek loans”. It expects 2022 profits to be in the region of US$ 2.0 billion. Based on today’s close of trading figures, the utility has a market value of US$ 39 billion. It has projects valued at US$ 23.4 billion over the next five years, that will help it meet the increase in demand for electricity and water as the emirate’s population continues to boom; last year alone, energy demand rose 11%, nearly triple the company’s estimates.

At this week’s AGM, Emaar shareholders approved the dividend distribution proposal from the board of directors representing 15% of the share capital, along with the board of directors’ 2021 report on the company’s activities and financial position and the auditor’s report. Last year, it recorded total revenue of US$ 7.7 billion, with an EBITDA of US$ 2.5 billion. In 2021, the company posted real estate sales of US$ 9.2 billion – its highest on record – and an impressive sales backlog totalling more than US$ 12.5 billion.

Emirates NBD posted an 18.0% hike in Q1 net profit to US$ 735 million, as revenue came in 3.0% higher at US$ 1.74 billion, driven by stronger non-interest income, 4.0% higher to US$ 1.17 billion and declining impairment allowances, by 20%, to US$ 381 million. Expenses rose 5.0%, year on year, to US$ 545 million, driven by staff costs, Dubai’s biggest lender by assets also recorded its customer loan balance was 1.0% higher at US$ 115.8 billion and deposits 2.0% higher at US$ 127.8 billion; total assets remained flat at US$ 189.1 billion. The bank raised its interest rate by 15bp because of a similar decision by the Central Bank of the UAE, following the Fed’s move last month; it is expected that rates could be raised five more times this year. Despite rates moving higher, it is felt that local lending growth is likely to accelerate, underpinned by the UAE’s economic growth.

Emirates Islamic recorded a 62% increase in net profit to US$ 93 million, driven by a 14% growth in income and a 72% improvement in provisions; operating expenses surged by 10% on the year. There were increases across the board, with operating profit 17% higher, total assets up 8% to US$ 19.1 billion, customer financing rising 66% to US$ 12.3 billion and customer deposits 9% to the good at US$ 14.0 billion.

The DFM opened on Monday, 18 April, 252 points (7.5%) up on the previous five weeks, moved 81 points (2.2%) higher to close on Friday 22 April, at 3,683. Emaar Properties, US$ 0.31 higher the previous seven weeks, nudged US$ 0.06 higher to US$ 1.72. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.78, US$ 4.03, US$ 1.71 and US$ 0.71 and closed on US$ 0.78, 4.14, US$ 1.71 and US$ 0.73. On 22 April, trading was at 115 million shares, with a value of US$ 83 million, compared to 170 million shares, with a value of US$ 142 million, on 15 April 2022.

By Friday 22 April 2022, Brent, US$ 12.28 (3.4%) higher the previous fortnight, had shed US$ 9.95 (8.9%), to close on US$ 111.70. Gold, US$ 48 (2.5%) higher the previous fortnight, lost most of that gain, losing US$ 42 (2.1%), to close Friday 22 April on US$ 1,933.

Yesterday, Elon Musk confirmed that he has secured a funding commitment of US$ 46.5 billion to finance his bid to buy Twitter, of which US$ 33.5 billion has been personally committed by means of US$ 21 billion of equity and another US$ 12.5 billion coming from margin loans Furthermore, banks, including Morgan Stanley and “certain other financial institutions”, have committed to offer a further US$ 13 billion in debt secured against Twitter. Last week the Tesla founder offered to buy Twitter for US$ 43 billion.

Tesla shares jumped 5.2%, to US$ 1,028, when the electric vehicle maker posted a record US$ 3.3 billion Q1 profit, driven by an increased delivery of cars, despite Covid-induced supply disruptions and a global shortage of semiconductors; the profit figure dwarfed the 2021 comparative figure of US$ 500 million. This is the eleventh straight profitable quarter and the fourth consecutive three-month period with more than US$ 1 billion profit. Revenue was 81% higher at US$ 18.7 billion and a record 310k vehicles were delivered – 68% up on an annual basis; of that total, 295k were either Model 3 or Model Y, with the 15k balance being its more expensive Model S and Model Y. Tesla commented that  its cash and cash equivalents “increased sequentially by US$ 300 million to US$ 18 billion”, driven mainly by free cash flow of US$ 2.2 billion, partly offset by debt repayments of US$ 2.1 billion, with its total debt of less than US$ 100 million, excluding vehicle and energy product financing. It has ambitious expectations and is looking at a 50% average annual growth in vehicle deliveries, although they could be scuppered by external factors such as continuing supply chain problems, chip shortages and further lockdowns.

With French prosecutors investigating claims that fugitive former head of Nissan, Carlos Ghosn, had syphoned millions of euros from Renault through Suhail Bahwan Automobiles., there was no surprise to hear that French authorities have eventually issued an international warrant for his arrest. Ghosn fled Japan in 2019, when facing charges for financial misconduct and is now holed up in Lebanon from where he is unable to leave, as he is the subject of an Interpol Red Notice issued by Japan. It is thought that he would prefer a trial in Lebanon, on any charges brought against him by the French and Japanese courts – and was “totally confident” he could prove his innocence.

Having reported a Q1 loss of 200k subscribers, (against its forecast of a 2.5 million growth in numbers), and quarterly profit down 6.4% to US$ 1.5 billion, Netflix share value plunged 35%, and lost more than US$ 50 billion off its market value, in after-hours trading on Tuesday, making it the worst performer in the S&P 500 this year; YTD, the stock is down 62%. This was the first time in over a decade that the global streaming giant reported losing subscribers, whilst it predicted more contraction in Q2. The Ukraine crisis has seen it suspend service in Russia, resulting in a loss of 700k members. Netflix attributed some of the declineto “relatively high household penetration — when including the large number of households sharing accounts — combined with competition, is creating revenue growth headwinds;” it also noted that other drivers included various macro-economic factors such as sluggish economic growth, increasing inflation, geopolitical events and some continued disruption from the Covid-19 pandemic have affected its growth. Its global paid subscribers stood at 221.64 million at the end of Q1, with the company forecasting a Q2 1% fall in numbers to 219.6 million. It also announced the purchase of Helsinki-based gaming company Next Games. It does indeed face a major struggle to get back on track.

Bill Ackman’s Pershing Square Capital Management, one of the company’s twenty largest shareholders, has ditched his stake in troubled Netflix. The US billionaire investor and hedge fund manager disclosed that, in January, his firm had acquired a US$ 1.1 billion stake in Netflix, just after it had fallen 30% following a disappointing Q1 outlook. At the time, he praised Netflix’s “best-in-class management team” and said he long admired Netflix CEO Reed Hastings and the “remarkable company he and his team have built.” It is estimated that this investment, comprising 3.1 million shares, has lost him US$ 430 million in less than three months.

It is reported that Next has acquired a 46% stake in baby goods retailer JoJo Maman Bebe, with the majority 56% taken by companies managed or advised by hedge fund Davidson Kempner.  Its founder, Laura Tenison, will leave the business that she founded nearly thirty years ago. No financial details were made available but there will be no immediate job losses at the retailer, with 950 employees, which has eighty-seven brick-and-mortar shops across the UK. Next will also spend US$ 21 million in the brand, using its own cash, and plans to keep the JoJo brand distinct and grow the business globally using its online shopping infrastructure.

Workers at Apple’s Grand Central Station store in New York could become the first union at one of the tech giant’s US stores – and if successful it will follow the “union trend” started by Starbucks and Amazon. To qualify for a union election, the so-called Fruit Stand Workers United need to obtain signatures of support from 30% of colleagues at the store to qualify for a union election. The group is looking at a US$ 30 minimum hourly wage for all workers, additional holiday time and information on more robust safety protocols at the Grand Central location. Employees working in at least three other Apple stores are also attempting to organise a union.

Last year, Sina Estavi, invested US$ 2.9 million when purchasing a non-fungible token of the first tweet posted on Twitter by co-founder Jack Dorsey. Last month, the Malaysian entrepreneur decided he would sell the NFT, (and was expecting to receive at least US$ 25 million for the sale), with half of the proceeds earmarked for the charity GiveDirectly. By the beginning of the week the highest bid was at 10.1 Ether, equal to about US$ 29k.

In Australia, global hotel booking giant Trivago has been fined US$ 33 million (AUD $45 million), plus legal costs, for misleading customers with advertising that claimed it made it easy to find “the best price” for rooms. The case was brought against the company by the Australian Competition and Consumer Commission, which was pushing for a penalty twice that amount. It was estimated that consumers, who have yet to receive any compensation to date, lost around US$ 22 million. The Federal Court found the company had breached Australian Consumer Law over a “lengthy period of time”, and noted that “the television advertising conducted by Trivago during the early part of the relevant period was highly misleading,” It was noted that the firm did not make clear that it was being paid by the online booking sites and that more often or not the hotels listed at the top of the search results were not the best or cheapest deal., with Trivago promoting hotels that paid it the biggest fees.

Laying the blame at the doors of Covid lockdowns in China, shortages of materials and sky-high shipping costs, Appliances Direct warned that even though the prices of fridges, freezers and dishwashers are up by a third since last year, they are set to climb higher, as wholesale prices have jumped a further 9% in Q1.The company also noted that the cost of shipping  a fridge used to cost US$ 16, with a six-month lead time; now the cost has skyrocketed to US$ 104, with a led time of up to fourteen months. The sector does not see any improvement over the rest of the year and that factors such as shipping costs, material input prices and consumer price will continue to push prices higher, with consumer spending set to decline. Indeed, the price comparison site, Price Runner, found that prices of white goods and gadgets had soared by nearly 50% in just two years.

Not helped by yet another lockdown – this time in Shanghai – China’s March consumer spending fell, (with retail sales down 3.5% on the year), and unemployment rose, to 5.8%, (the highest level since May 2020), as Covid lockdowns confined millions of people to their homes. Meanwhile, the Q1 country’s economy grew at a faster pace than expected, with GDP up by 4.8%, compared to a year earlier. The impact of the latest lockdown measures, which started in mid-March, was initially limited but will result in a significant drag on economic growth for at least the next three months, not helped by the war in Ukraine. Analysts estimate that technology, industrial and automobile supply chains “will come to a complete halt” if Shanghai does not resume production by early May.  It is safe to report that some of the city’s residents are not happy with the situation.

Since the start of the Ukraine war, the EU has paid US$ 37.8 billion for Russian energy but any embargo on oil and gas seems a long way off, at a time when European ministers have been discussing a potential sixth round of sanctions against Russia; last year, the EU imported roughly 40% of its gas and 25% of its oil from Russia. The countries that would suffer most from a full embargo would be Germany, Italy, Austria and Hungary in particular, with their dependence on Russian gas – one thing is certain is that the EU will not throw Germany under the bus. Ukraine’s President Zelenskyy has urged the EU to impose sanctions on Russian oil and to set a deadline for ending gas imports from the country, but in reality, this is some time off. What seems likely is that coal may be banned by the end of Q3.

With pressure mounting at home, Prime Minister Boris Johnson may have found some relief in his two-day visit to India where he met with Narendra Modi to discuss a free trade deal. In recent weeks, the Indian government has signed such deals with both the UAE and Australia. However, there is every chance that this will take time and much discussion between the two parties but if it comes to fruition, it could double total trade between the UK and India to US$ 73 billion by 2035. Strangely, it seems that the UK currently sells less to India, with a population of 1.4 billion, than it does to Belgium and its 11.5 million people. Bargaining chips will include the likes of the UK wanting increased access to India’s manufacturing and services sector, areas in which India has traditionally resisted foreign involvement, as well as doing away with the protection that trade barriers have provided for Indian industries and workers. On the other side, there may be more Indian visas being allowed for Indian workers and pressure to allow Indian products, such as medicines into its market. If a free deal went through, two UK industries would benefit – Scotch whiskey, which currently attracts a 150% tariff – and the motor vehicle makers, as foreign cars attract tariffs of up to 100%. A trade deal with India would add just 0.2% to the UK’s GDP – and that’s over the course of a decade, and only if there is a substantial reduction in trade barriers. Is it worth all the bother?

As the rise in the cost of living begins to hit home in the UK, March retail sales dropped 1.4%, with online sales falling sharply, as consumers cut back on non-essentials because of lower levels of discretionary spending, and fuel sales were reduced, as people cut travel amid record petrol prices. Food sales dipped for the fifth consecutive month, as rises across the board have seen inflation rising above 7.0% and at its highest level in over thirty years. It is to be noted that although the current Ukraine crisis is a major inflationary driver, energy and fuel prices had been rising even before the onset of the war. The situation is likely to worsen, as the data was collected before April’s 54% hike in gas and electricity bills and the fact that consumer confidence continues to tank – now at its lowest level in fourteen years and the GFC.

Known for constantly changing its economic forecasts, the IMF has lowered its 2022 forecast from its January’s estimated 4.4% to its much amended 3.6%, driven by the triple whammy of surging inflation, war in Ukraine and a lingering pandemic. (The World Bank also said it was lowering its growth forecast from 4.1% to 3.2%). Global inflation pressures continue unabated and most central banks have been behind the eight ball for too long and future drastic action could weigh down on output and economic activity. Inflation is higher in most countries and is expected to persist longer; there is the possibility of social unrest as energy and food prices head inexorably higher. Meanwhile the Ukraine crisis, (which will see  the embattled nation hit with a massive 35% contraction this year), has led to increasing energy and commodity prices around the world and is resulting in less output and more inflation. On top of this comes yet another slowdown of the Chinese economy with more frequent lockdowns due to Omicron, with the latest being Shanghai in lock down further exacerbating the ongoing supply chain problems.

The IMF has not only cut global forecasts but has also cut that for the UK by 1.0% to 3.7% this year, noting that the war in Ukraine will “severely set back” the global economic recovery, with the UK hit harder than most.; a direct consequence of the conflict is that prices for energy and food have moved markedly higher. In 2021, the IMF placed the UK as the fastest growing G7 economy – a year later it is marked as the second fastest growing economy, whilst in 2023, it is slated to be the slowest growing member of the G7, at 1.2%, (down from the initial 2.3%), driven by price pressures forcing households to cut spending, while rising interest rates are expected to “cool investment”. Although part of the reason was that the UK rebounded quicker from the pandemic than its G7 peers, a bigger problem seems to be the fact that inflation could top 9% later this year – don’t forget that the BoE still had a 2.0% target as late as last month. UK inflation is expected to be 5.3% next year – the highest in the G7, and higher than all EU members, and only exceeded in the G20 by crisis-ridden Argentina, Turkey and Russia. Another dampener for consumer confidence is the inevitable rise of interest rates that will slow economic progress in the UK. Sixty-one years later, Bob Dylan’s words come to mind – And The First One Now Will Later Be Last!

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