Storm Clouds On The Horizon!

Storm Clouds On The Horizon!                                               05 August 2022

The 2,247 real estate and properties transactions totalled US$ 1.44 billion during the week ending 05 August 2022. The sum of transactions was 255 plots, sold for US$ 338 million, and 1,510 apartments and villas selling for US$ 760 million. The top two transactions were for land in Hadaeq Sheikh bin Rashid, sold for US$ 29 million, and the other for US$ 25 million in Island 2. Al Hebiah Fifth recorded the most transactions, with 130 sales transactions worth US$ 85 million, followed by Jabal Ali First, with 40 sales transactions worth US$ 35 million, and Al Yufrah 2, with 26 sales transactions, worth US$ 8 million. The top three transfers for apartments and villas were all apartments – one sold for US$ 102 million in Marsa Dubai, another for US$ 94 million in Burj Khalifa, and a third for US$ 62 million in Business Bay. The sum of the amount of mortgaged properties for the week was US$ 311 million, with the highest being for land in Al Thanyah First, mortgaged for US$ 38 million. Sixty-eight properties were granted between first-degree relatives worth US$ 58 million.

In Q2, Dubai rental rates continued to head north, with quarterly and annual rises of 4% and 15% for apartments and 6% and 23% for villas. Asteco noted that demand for villas, with outdoor areas, and for high-quality apartments remained robust and there was a marked interest in villas, adjacent to the Expo site. It also indicated that “the positive benefits of Expo 2020, including infrastructure upgrades and the repurposing of the site, will no doubt be felt across a wide range of sectors for years to come (‘the Expo effect’).” Although it sees rental rates “remaining elevated” for the rest of 2022, growth is expected to slow, in line with an oversupply of units. CBRE reported slightly different rental increases than Asteco – with apartments up 21.2% and villas 24.7%. It noted that the highest average rentals for apartments and villas were in Palm Jumeirah (US$ 59.5k) and Al Barari (US$ 242.3k). JLL Mena, meanwhile, placed average rental rises at 19%.

Asteco posted that 6k new apartments were delivered in Q1 and a further 7k in Q2, with only 529 villas handed over in that period; most of the new deliveries were concentrated in ‘new’ developments, including Damac Hills, Dubai Hills Estate, Wasl Gate and Port De La Mer. JLL put the Q2 figure at 6.5k, with a further 35k to be added by the end of the year – this figure seems to be a little too ambitious. The uptick in consumer confidence in the Dubai property sector saw a series of new projects launched in H1, with further new releases expected in the coming months. It must be noted that Dubai is in the same world that is now being impacted by surging inflation, higher borrowing rates and a slowing global economy. It is not immune from these economic factors and there will be a property slowdown but hopefully not at the same level as in other developed economies.

When open in Q4 2025, Jumeirah Living Residences Business Bay will   be Jumeirah Group’s fourth branded residence in Dubai, following in the footsteps of Jumeirah Zabeel Sarai Royal Residences, Jumeirah Living World Trade Centre Residences and Jumeirah Living Marina Gate. The 35-storey residence will be one of six premium residential towers within the Peninsula development, on the edge of Dubai Canal, and will comprise eighty-two premium branded residences, including 2-5 B/R units, as well as a unique full-floor, five-bedroom penthouse located on the top floor. It will have concierge services, a residents’ lounge, a teenager lounge, with gaming amenities, and a co-studying area.

dnata has extended its six-year partnership with GOL Airlines to continue to provide a range of passenger, ramp and baggage services to Brazil’s leading low-cost airline that carries nineteen million passengers, on 133k flights, to twenty of the country’s airports. The Dubai company, one of the world’s largest air and travel services providers, is that country’s leading ground services provider, offering a range of passenger, ramp and baggage services to the airline. dnata has recently increased its investment in Brazil to become the sole shareholder of its local subsidiary, and currently serves more than fifteen airlines at twenty-nine airports.

The third auction of the UAE’s 1.5 billion dirham-denominated treasury bonds was oversubscribed 5.1 times. It is expected that there will be a further three auctions, all for US$ 409 million (AED 1.5 billion), before the end of the year which will see the government’s T-bonds issuance programme for 2022 reach US$ 2.45 billion (AED 9.0 billion). As with the two previous auctions, there were two tranches for US$ 204 million, (AED 750 million), each – one for two and the other for three-year notes. The prices were at a spread of a 16 basis points (bps) over US Treasuries for two years, and a spread of 15 bps over US Treasuries for three years.

Latest figures to 31 May see the value of gold reserves of the Central Bank of the UAE 1.63% higher at US$ 3.30 billion; at the end of 2019, the value was at US$ 1.09 billion, 31 December 2020 at US$ 2.44 billon and at US$ 3.25 billion on 31 December 2021.

Following recent rises in petrol prices, and despite continuing high energy prices, the UAE Fuel Price Committee has decided to allow them to drop in August; at the end of last month, prices were retailing at their highest level since they were liberalised in 2015. At theonset of Covid, prices were frozen by the Fuel Price Committee, but controls were removed in March 2021 to reflect the movement of the market.

August petrol prices all showed monthly decreases of 13%+:

  • Super 98: US$ 1.098 – down by 13.0% on the month and 52.1% YTD from US$ 0.722
  • Special 95: US$ 1.068 – down 13.5% on the month and 55.0% YTD from US$ 0.689
  • Diesel: US$ 1.128 – down 13.0% on the month and 61.8% YTD from US$ 0.697
  • E-plus 91: US$ 1.046 – down by 13.5% on the month

e& (formerly known as Etisalat Group) has posted a 2.5% rise in H1 consolidated net profits to US$ 1.34 billion, on the year, as revenue rose 3.8% to US$ 7.17 billion and EBITDA was flat at US$ 3.65 billion. The number of UAE subscribers topped 13.3 million in H1 2022 – an annual increase of 10%, with aggregate group subscribers up 2.5% to 160 million. The Board approved an interim dividend of US$ 0.109 per share.

Amlak Finance PJSC posted a H1 35.0% net profit hike to US$72 million, despite total income dipping 9.1%to US$ 87 million, as revenues from financing business decreased by 18.8% to US$ 69 million. The company recorded a gain of US$ 61 million on debt settlement arrangements and was able to reduce its debt burden by US$ 154 million, including Mudaraba instrument of US$ 33 million. Operating costs reduced by 4.7% to US$ 11 million, whilst amortisation costs fell 14.1% to US$ 20 million; it also recorded a US$ 27 million impairment reversal compared to a US$ 5 impairment reversal in H1 2021. Over the period, the profit distribution to financiers decreased by 15.2% to US$ 11 million.

Tecom posted a 15.8% rise in H1 revenue to US$ 269 million, driven by an increase in occupancy rates across its various properties, up 4% to 82%, and strong revenue growth from the business and value-added service segment, from its 7.8k customers. EBITDA came in 22.4% higher at US$ 197 million, attributable not only to revenue growth but also to improved operational efficiencies, as H1 profit was up 43.4% to US$ 117 million; Q2 net profit at US$ 65 million was 54.1% higher on the year and 24.7% on the quarter.

Although H1 revenue remained stable at US$ 27 million, Union Properties reported a marked decline in Q2 net profit at US$ 78k, compared to over US$ 7 million a year earlier. With the developer continuing to implement a revised turnaround strategy, to cut costs and boost profitability, following detection last October of forgery, abuse of authority and fraud, it has been weighed down by finance costs, relating to a US$ 16 million legacy debt, and having to revamp three of its existing business units — Edacom Owners Management Association, Uptown Mirdiff Mall and Al Etihad Cold Storage — into a single entity, Edacom Asset Management. Administrative and general expenses declined by 42% on the year to US$ 5 million in Q2, and by 32% on an annual basis to US$ 10 million in H1.

Dubai Aerospace Enterprise posted a credible 186% leap in H1 profit to US$ 140 million, as cash flows from operating activities were 36% higher at US$ 679 million. Noting that it has up to US$ 2.7 billion in available liquidity, DAE’s new capital commitments for aircraft purchases was US$ 750 million and that it had signed a new aircraft management mandate to acquire and manage up to US$ 1.75 billion of aircraft assets.

Amanat Holdings reported a 7.0% hike in adjusted H1 profits to US$ 18 million, a 6.8% increase on the year, and on an adjusted basis, excluding the prior year’s gain on sale and trading results from divested entities, it posted a 13.6% hike in revenue to total income of US$ 26 million. Its healthcare platform recorded a 70.6% jump in income to US$ 7 million, whilst Middlesex University Dubai saw income 13.2% higher to nearly US$ 10 million. Having bought out the remaining 49% stake in Khawarizmi International College, NEMA Holding (formerly Abu Dhabi University Holding Company) acquired 100% of Liwa College of Technology in H1 2022. Amanat’s Chairman Hamad Abdulla Alshamsi said that “with expansions underway across CMRC, MDX, NEMA, and Sukoon, we are excited for the phase ahead where we see Amanat capitalising on further growth opportunities in addition to deploying capital into assets that complement our existing platforms”.

The DFM opened on Monday, 01 August, 280 points (9.2%) higher on the previous three weeks and closed 21 points lower (0.6%) on Friday 05 August, on 3,317. Emaar Properties, up US$ 0.10 the previous three weeks, was down US$ 0.03 to close on US$ 1.47. Dewa, Emirates NBD, DIB and DFM started the previous week on US$ 0.69, US$ 3.76, US$ 1.60 and US$ 0.47 and closed on US$ 0.69, US$ 3.69, US$ 1.58 and US$ 0.46. On 05 August, trading was at 89 million shares, with a value of US$ 38 million, compared to 87 million shares, with a value of US$ 73 million, on 29 July 2022.  

By Friday 05 August 2022, Brent, US$ 9.07 (9.0%) higher the previous fortnight, lost US$ 16.55 (14.1%) to close on US$ 94.46. Gold, US$ 66 (3.9%) higher the previous fortnight, gained US$ 19 (1.1%), to close Friday 05 August, on US$ 1,792.

In a trade-off between slower economic growth, (which would normally see oil prices declining), and supply shortages (which normally have the opposite effect), energy prices steadied today after breaching their lowest level since the Russian invasion of Ukraine in late February. Brent, the global benchmark for two thirds of the world’s oil, was trading marginally higher at $94.46 a barrel. Last week has seen nothing but bleak news on the global economy with the likes of the UK forecast to enter five successive quarters of recession, and its GDP falling by as much as 2.1%, and the IMF once again lowering its global economic growth forecast, this time to 3.2%.

With less than four months to go to the FIFA World Cup, Airbus has revoked its entire outstanding order from Qatar Airways for A350 jets, severing all new jetliner business with the Gulf carrier. This is part of an ongoing dispute in which the Gulf carrier has argued that the scarred condition, over premature surface damage, of more than twenty new long-haul jets that the airline says could pose a risk to passengers and which the plane manufacturer insists are completely safe. The carrier, which was the A350 launch customer in 2015, has grounded almost half its fleet and is suing Airbus for at least $1.4 billion, and had refused to take delivery of more aircraft. By the end of June, there were nineteen outstanding orders from Qatar Airways, with a catalogue price of US$ 7 billion, and the latest complete cancellation comes six months after Airbus also revoked the whole contract for fifty smaller A321neo jets in retaliation for Qatar refusing to take A350 deliveries. The dispute is already set for the London law courts next June.

Looney by name and apparently looney by nature, BP chief executive Bernard Looney, having overseen a massive windfall Q2 profit of US$ 8.45 billion, told the world that he would donate US$ 487, from his own funds, to an unnamed charity, having said he was unaware that the UK government was offering direct financial assistance to help families pay their soaring energy bills this winter. His basic annual salary is only US$ 1.7 million. US$ 3.5 billion of the profit will be used to buy back the company’s shares and the dividend will rise by 10%. This is another classic example of the rich getting richer and the poor, poorer, with surging energy prices accounting for a large share of the current UK 9.1% inflation rate. Some analysts expect a typical UK household to pay over US$ 3.7k, until at least the end of next year which could result in extra millions living under the poverty line. BP plans to invest as much as US$ 22.0 billion, into the UK this decade, on fossil fuel extraction, renewable energy production and electric vehicle charging which will create thousands of jobs across the country.

Meanwhile, Shell has decided to give most of its 82k workers a one-off 8% bonus after the company reported record quarterly profits of US$ 11 billion, driven by high oil and gas prices. Shell has also said it would return billions of dollars to its shareholders. UN Secretary General Antonio Guterres has called for energy companies to face special taxes, saying it was immoral for firms to be profiting from the Ukraine war. He may be right for a change!

Because of revaluations in Aurora, Grab and Zomato, Uber reported a Q2 net loss of US$ 2.6 billion, (Q2 2021 – US$ 300 million), whilst revenue increased by 105% to US$ 8.1 billion. Its adjusted pre-tax income was US$ 364 million, compared to a US$ 509 million loss recorded in the same period last year, driven by a jump in gross bookings, up 334% to US$ 29.1 billion, as both mobility and delivery gross bookings rose by 55% to US$ 13.4 billion and 7.0% to US$ 13.9 billion. Having declined by more than 43% over the previous twelve months, its share value rebounded on the news climbing 15.3% to US$ 28.40 in premarket trading on Tuesday. Location-wise, revenue jumped 149% to US$ 4.9 billion, 99% to US$ 1.8 billion, 57% to US$ 481 million and 14% to US$ 810 million in US/Canada, MEA, Europe and Asia Pacific respectively.

​​​​​​​​​​​​​ In 2019, JD Sports paid US$ 110 million for Footasylum, and now three years later, it has sold the business, for only US$ 46 million, to private equity firm Aurelius, which owns Lloyds Pharmacy. Following a ruling by the UK’s Competition and Markets Authority, that the merger could lead to less choice and a “worse deal” for customers, it had no other alternative but to divest it. JD Sports has described the decision to block the takeover as “inexplicable” but admitted “inadvertently” breaking the rules over the sharing of commercially sensitive information, with both firms being fined almost US$ 6 million for the offence and failing to alert the regulator. JD has around 3.4k stores across twenty-nine countries, including 700 in the UK and Ireland, selling brands such as Nike, Adidas and Puma, whilst Footasylum has sixty-five stores across the UK, selling similar sportswear brands. The two companies have a shared history – JD Sports co-founder David Makin established Footasylum in 2005.

Some 1.9k workers at the UK’s biggest container port in Felixstowe are to strike for eight days in a dispute over pay, as from 21 August, with the Unite union indicating that the 7% pay offer was “significantly below” the rate of inflation. Unite noted that “both Felixstowe docks and its parent company CK Hutchison Holding Ltd are both massively profitable and incredibly wealthy. They are fully able to pay the workforce a fair day’s pay. The company has prioritised delivering multi-million pound dividends rather than paying its workers a decent wage.” Around half of containers brought into the UK are transported via the port which posted that it was “disappointed” and that it was “determined” to help workers tackle rising costs – whilst continuing to invest in the port.

The Reserve Bank of Australia has downgraded its economic growth forecast on the back of house prices falling, surging inflation, mortgage rate hikes and a dismal global outlook – and despite expecting unemployment to fall to a low of 3.25%, before rising back to 4.0% by the end of 2024. Despite this leading to a modest pick-up in wage rises to about 3.5% in 2023, the Reserve Bank still expects real wages to fall for at least the next year. After peaking at 7.75%, by the end of this year, inflation is still expected to be about 6.2% by the middle of next year, and 4.3% at the end of 2023, driven by further significant rises in retail electricity prices next year.

It has also scaled back its forecasts for household consumption, which accounts for about 60% of Australia’s economy, from 4.4% to 2.8%, as consumer sentiment approaches recessionary levels. It also notes that there are “downside risks” to its forecasts due to the economic slowdowns in China and Europe. The RBA has based its forecasts on an assumption that its cash rate would climb from its current level of 1.85% to hit 3.0% by 31 December –before nudging lower by the end of 2024. Its GDP forecast for the end of the calendar year has been cut by 25% to 3.0%, with the economy expected to grow just 1.75% for the next two years. Falling house prices, combined with the previous construction boom inspired by ultra-low interest rates, and the previous government’s HomeBuilder grant, will result in dwelling investment contracting 4.8% over 2024.

UK property prices have been defying the law of gravity by still moving northwards, despite the growing cost of living crisis; in June, Nationwide indicated that prices were only 0.1% higher on the month at US$ 330.1k, indicating a slowdown in growth, but 11.0% on the year. The main drivers behind these figures are the relatively strong labour market conditions and the limited stock of homes on the market. However, Thursday’s BoE announcement of a 50bp rate, pushing bank rates to 1.75%, will inevitably cool the market but by how much remains to be seen and it may take further cuts to see a major impact on the sector. The rate for a two-year 75% loan-to-value fixed-rate mortgage had already jumped YTD from 1.57% to 2.88% by June, (the fastest six-monthly increase since 1995), that could rise to about 3.1% by the end of the year. Another factor that will have a drag on the market would be a continuing surge in the cost-of-living squeeze, and, further down the track, the property market could take a battering if a recession occurs later this year.

The UK rate increase may prove to be good news for UAE investors wishing to buy UK property there, as economic conditions point to an inevitable slowdown, and more rate hikes. The overseas buyer will benefit from the double whammy of falling prices and a strong currency which will make UK prices more attractive. This week witnessed the BoE raise rates by 50 bp to 1.75% and issue a warning of a looming recession.

House prices slipped for the first time since June 2021 in monthly terms and the market is likely to weaken further as rates move higher. The annual rate of price growth slowed by 0.7% to 11.8%, having risen by 1.4% in June, and this comes after a two-year boom driven by the pandemic, the switch to working from home and historically low mortgage rates. Now when the major impact of Covid has largely become part of history, the working population is returning to office work and rates are moving higher, house prices will come under more pressure. Property website, Zoopla sees house price rises down to 5% from 8.3%, by the end of 2022.

The Bank of England has warned the UK will fall into recession as it raised interest rates by the most in 27 years, with the ominous forecast that the economy will contract in Q4 and keep shrinking until at least the end of 2023; at the same time, it expects inflation to top 13%, driven by soaring energy prices. After months of burying their heads in the sand, the BoE actually did something else – it warned that the country is facing a recession, maybe longer than the GFC of 2008, and maybe worse than economic slump of the 1990s. If this blog could see stagflation – the combination of a stagnating economy and high inflation – happening early last year, why did it not occur to the nine wise experts, on the Bank’s MPC, who dictate monetary policy? The UK population will take little solace from the Bank’s governor, Andrew Bailey, who he had “huge sympathy and huge understanding for those who are struggling most” with the cost of living. He also added that he knew the cost-of-living squeeze was difficult but if it didn’t raise interest rates it would get “even worse”; this could have been done in May 2021 and not have to wait for August 2022. The UK is going into recession sooner than many people think and there are Storm Clouds On The Horizon!

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Brother, Can You Spare A Dime?

Brother, Can You Spare A Dime?                                                       29 July 2022

The 2,285 real estate and properties transactions totalled US$ 1.85 billion during the week ending 29 July 2022. The sum of transactions was 254 plots, sold for US$ 368 million, and 1,516 apartments and villas selling for US$ 913 million. The top two transactions were both for land in Hadaeq Sheikh Bin Rashid, one sold for US$ 27 million, and the other for US$ 25 million. Al Hebiah Fifth recorded the most transactions, with 134 sales transactions worth US$ 84 million, followed by Jabal Ali First, with 28 sales transactions worth US$ 27 million, and Al Yufrah 2, with 21 sales transactions worth US$ 8 million. The top three transfers for apartments and villas were all apartments – one sold for US$ 137 million in Marsa Dubai, another for US$ 94 million in Burj Khalifa, and a third for US$ 62 million in Business Bay. The sum of the amount of mortgaged properties for the week was US$ 411 million, with the highest being a building in Business Bay, mortgaged for US$ 84 million. 79 properties were granted between first-degree relatives worth US$ 139 million.

Mo’asher reported that June sales transactions had risen 34.0%, month on month, to 8.9k, valued at US$ 6.20 billion, 24.8% higher on the month. Of that total 60.05% of all sales transactions recorded were for secondary properties, (3.6k units valued at US$ 1.92 billion) and the balance for off-plan properties, (5.3k at US$ 4.28 billion). Q2 volume sales transactions were the highest quarterly returns in a decade, at 22.5k, valued at US$ 16.12 billion. Compared to Q2 2021, transactions and value were 45.9% and 61.6% higher. Of that total 59.68% of all sales transactions recorded were for secondary properties, (6.0k units valued at US$ 5.06 billion) and the balance for off-plan properties, (13.4k at US$ 11.06 billion). 

Property Monitor reports that Dubai June property prices declined, month on month, by 0.45, to 142.25, for the first time this year but were more than 10% higher on an annual basis.  Average property prices stood at US$ 278 per sq ft and these prices were at their highest level since August 2013. The report noted that this dip should “not be an immediate cause for concern at this stage, rather a welcome sign of a healthy market that can move forward at a sustainable pace whilst continuing to grow.”  There was massive growth seen in transaction volumes in the month – the second strongest June on record – at 8.9k, up 34.2% and 38.8% on a monthly and an annual basis; the value of sales was 55% higher at US$ 6.19 billion, with the total, at 01 July, equating to 70.8% of all 2021 sales. Property Monitor said it expects prices to be stable in H2. However, it must be remembered that Dubai is facing many of the same economic problems, as the rest of the world, including rising mortgage rates, the strength of the greenback and soaring inflation, and there may be some sort of minor correction by the end of the year. Property consultancy CBRE reported month-on-month apartment prices nudging up 0.1%, while villa prices gained more than 1.0%.

According to Betterhomes’ H1 2022 Dubai Real Estate Market Report, all segments of Dubai’s real estate market recorded growth “despite headwinds in the form of rising interest rates and a strengthening dollar”. The top five leading property buyers emanated from India, UK, Italy, Russia and France. During H1, 37.8k unts were sold, 60% higher on the year, whilst there was an 85% increase in the total value of sold properties on the year. The report noted that the Dubai market “is uniquely placed to weather any short-term storm and, as we have shown throughout the pandemic, could well be a net beneficiary of global uncertainty”, driven by the likes of surging inflation, rising mortgage rates and political unpredictability. Furthermore, high energy prices may act as an economic benefit, improving the country’s fiscal position. The report estimated that investors accounted for 68% of all transactions, with the balance from end users, and some 31% of transactions involved mortgages. Over the period, average rental prices for apartments, townhouses and villas climbed by 29%, 33% and 64%, while occupancy rates in freehold and leasehold areas increased to 90% and 86%.

For the rest of 2022, the report’s bullish outlook records “rising taxes, inflation and geopolitical instability in the West, and continuing Covid restrictions in the East, are likely to continue to push more expats to relocate to the UAE. Dubai will continue to reform employment and visa regulations to attract talent”. There has been an easing in earlier supply constraints, as some sellers have decided to “take the money”, thus releasing more stock in the market whilst developers have started to increase launches to enhance the off-plan market sector. With rates moving slowly northwards, it sees both rents and sales prices edging higher in H2 but noted that “historically, rates and prices still remain low, while yields and capital growth are strong, so for those taking a long-term view, Dubai real estate remains one of the best investment opportunities available.”

HH Sheikh Mohammed bin Rashid has made 2k plots of land available in the Umm Nahad Fourth district, located between Al Qudra and Al Ain roads. Emirati families will be able to receive US$ 272k, (AED 1 million), in interest-free loans to construct their residences. The plots were made available last Wednesday 27 July, when Emiratis, who had got approvals from the Mohammed bin Rashid Housing Establishment, through the Maskani app, can apply for a plot. The Executive Office noted that “it is part of His Highness’s keenness to enhance family stability and provide the highest standards of living for citizens.” Other benefits include exemption from mortgage fees and exempting citizens building homes for the first time from electricity connection fees. The project is part of the broader Dubai 2040 Urban Plan, which seeks to significantly expand the city and “make Dubai the best city for living in the world”.

The Dubai Ruler has made several amendments to rules governing the granting of titles to allotted industrial and commercial land in Dubai, aimed at promoting Dubai’s status as a preferred global real estate investment destination. The new decree defines “allotted land” as land plots allocated for industrial or commercial use whose “usufruct right is awarded to UAE nationals, (beneficiaries), including land subject to an order of disposition and allotted land transferred to third parties by way of succession, assignment, donation or in return for consideration”. The amended decree permits granting the allotted land to the beneficiary at their request on a freehold basis and without any restriction on its “use, exploitation or disposition, provided the allotted land includes the real estate project – either completed or under construction – in accordance with the rules and regulations of the Dubai Land Department”.

Boston Consulting Group has estimated that the country’s wealth will grow at 6.7% CAGR for the next five years to top US$ 1 trillion by 2026, from its current balance of US$ 700 billion, of which 41% was derived from UHNWIs, with this share expected to grow to 43% in 2026. Last year, global financial wealth rose by 10.6% to US$ 530 trillion, recording the fastest growth in more than a decade, whilst the UAE recorded growth in the region of 20%, driven by the influx of 2k millionaires in the year; it now accounts for 30% of the total financial wealth in the GCC, which totalled US$ 7 trillion after a 9% growth in 2021. The report noted that, “the growth in UAE and GCC wealth was equally distributed between financial wealth, such as equities, bonds, cash and deposits, and real assets.”

Premier Inn’s new listing places Dubai as the most popular global city break destination, as it won over travellers from twenty-one countries, claiming the “top searched-for city break destination” tag. Trailing behind Dubai were Paris (16), Boston (12), Madrid (8), Singapore (7) and London (6). The list was based on Google’s search data for city breaks from over 130 countries.

Dubai has formed a higher committee for future technology and digital economy, to be chaired by Sheikh Hamdan bin Mohammed, with the main aims of shaping the future of artificial intelligence and establishing Dubai as a global hub for the digital economy. The Crown Prince noted that this will require investing in the metaverse and establishing partnerships to boost the digital sector, in line with the Dubai Metaverse Strategy. The committee will design policies and analyse trends for the digital economy and future technologies, including the metaverse, and will work to identify the future skills needed for the digital sectors and will also plan to attract international companies and conferences.

Huobi Group has received a minimum viable product provisional approval from the Dubai Virtual Assets Regulatory Group. This will give the international crypto exchange time to undertake the process of applying for a licence and allow it to offer services within the parameters set by the regulatory authority’s specialised “test-adapt-scale” model. It plans to set up a regional headquarters in the emirate, noting that it was “optimistic about the city’s potential and the future opportunities it offers”.

Another company, which is based in Singapore, has also obtained a provisional licence from Dubai’s VARA which will allow it to participate in Dubai’s “fast-growing digital assets ecosystem by operating crypto native services under full regulatory supervision.” Financial services firm, Fintonia, commented that “Dubai is making significant strides towards establishing itself as a virtual assets hub and creating a conducive environment for the industry’s growth,” and that “the virtual asset licence marks an important milestone in our aspiration to have a presence in every region where there are innovative Web3 and crypto companies”. It will serve as the single custodial entity mandated to licence and govern the cryptocurrency sector in Dubai, including all mainland and free zones but excluding the DIFC.

The UAE is ranked 19th globally in Global Food Security Q2 2022, part of a report compiled by Deep Knowledge Analytics – and the first in the Arab World –  in  a list of the most food-secure nations in the world. The only other Arab countries in the top quartile were Saudi Arabia, and Qatar. The US topped the list with a score of 7.9 out of ten, while Sub-Saharan and MENA region countries dominated the bottom quartile of the Food Security Index, with Somalia scoring the lowest at 2.97 points out of ten. It noted that certain countries had not demonstrated the capacity to build food security through national policies and had been affected either by conflicts (northern Nigeria, Yemen, Burkina Faso and Niger), or by weather conditions such as consecutive seasons of drought (Kenya, South Sudan and Somalia) and by economic shocks. There is no doubt that the Russian invasion of Ukraine has destabilised the global food system and added to food insecurity this year.

This week DP World signed US$ 55 million agreements with agricultural commodity processors Adroit Canada and Al Amir Foods to develop two new agri-storage and processing units at Jebel Ali agri-terminal to boost the country’s food security; these units will have a “singular ecosystem” for bulk silo storage and agri-processing. Built over a quayside plot, it will cover an area of 100k sq mt and contribute to Dubai’s strategic plan of boosting foreign trade in the coming years. The Dubai-based port operator will also invest in the technologically advanced grain and pulses automated material-handling and ferrying systems as part of the project. A spokesman confirmed that “we look forward to amplifying trade for the UAE and the Middle East by enabling agri-trade and through our new developments in the Jebel Ali Port,” and that “our vision is always set on achieving the country’s national goals by supporting initiatives such as the National Food Security Strategy 2051,” Initially it will account for an estimated annual trade of US$ 245 million.

With global trade slowly improving, DP World, posted an almost 3% annual rise in gross container shipping volumes in Q2, handling 20.2 million twenty-foot equivalent units (TEU) driven by its terminals in Asia Pacific, the Americas and Australia. Group chairman, Sultan bin Sulayem noted that the results are “another solid set of throughput figures”, which are “once again ahead of industry growth”. In H1, the Dubai-based port operator recorded a 2.0% hike in TEUs transported, at 39.5 million, with strong growth of 4.5% to 5.7 million TEUs noted in the Americas and Australia.  The Asia Pacific and Indian subcontinent regions saw a 3.0% growth to 17.6 million TEUs, whilst EMEA nudged 1.0% higher to 16.1 million TEUs. In H1, its flagship base Jebel Ali port handled almost 7 million TEUs including more than 3.5 million TEUs in Q2, an increase of 1.2% and 3.5% on a yearly basis, respectively. Research and Markets estimate that the global shipping container market is projected to grow by more than 6% this year to more than US$ 10 billion and is expecting a 7.5% CAGR over the next four years to top US$ 13.5 billion by 2026.

By 30 June, DP World, had a global network of 295 business units in 78 countries, and over the previous six months had seen an expansion in its portfolio, including in the past month:

  • its South African unit, Imperial Logistics, increasing its stake in Botswana firm PST Sales & Distribution, receiving approval to buy a 100% stake in Mozambique-based logistics company J&J Group and acquiring a controlling stake in Nigeria’s Africa FMCG Distribution
  • signing an agreement with the Saudi Ports Authority to build a “port-centric” logistics park at the Jeddah Islamic Port with a total investment of more than US$ 133 million
  • signing an agreement, (including Dubai’s Ports, Customs and Free Zone Corporation), with Romania to develop infrastructure in the port city of Constanta and help it become one of the Black Sea’s “most important” cargo and vehicle ports
  • Canadian fund Caisse de Depot et Placement du Quebec announcing that it will invest US$ 5 billion in three of DP World’s UAE assets — Jebel Ali Port, Jebel Ali Free Zone and National Industries Park

In H1, the Federal Tax Authority more than doubled their inspections to almost 10k, compared to a year earlier, in a bid to combat tax evasion and protect consumers from non-compliant products. During the period, 5.5 million pieces of tobacco products, not bearing digital tax stamps, as well as other goods that failed to meet tax specifications were seized; the total value came to US$ 36 million and over 1.2k fines were also issued and 404 notices of non-registration were handed to violating entities.

For the first four months of the year, the gross value of interbank fund transfers through UAE Fund Transfer System (UAEFTS) topped US$ 1.08 trillion – a 26.2% increase over the same period last year. March was its busiest month with dirham-denominated transfers standing at US$ 297.8 billion. Over the same four months, cheques worth US$ 106.1 billion were handled by the Image based Cheque Clearing System – a year on year growth of 12%. The number of cheques processed by the ICCS rose 2.7% to 7.24 million.

Deyaar Development posted a 24.2% increase in unaudited H1 revenue at US$ 101 million and a 196% hike in profit to US$ 18 million. The property developer reported that revenues from development activities had increased, as it started recognising revenues from the sales of its Regalia project, (with it progressing according to schedule), and its hospitality portfolio performance continued to grow in line with the strong recovery of the tourism sector in the emirate. This is an indicator on how resilient the Dubai market is and how the market is expanding, despite adverse global economic conditions. The company also noted that “last month, the company successfully executed its capital reduction to write off the accumulated losses, which will increase the company’s attractiveness to investors and will reflect positively on Deyaar’s share price in the Dubai Financial Market.”

Dubai’s largest bank, Emirates NBD, reported its highest H1 profit in three years by recording an 11% increase in net profit to US$ 1.44 billion, with total operating income 45.1% higher at US$ 2.12 billion. Total H1 income came in 23% higher at US$ 3.87 billion attributable to record half-year retail lending, allied with improving margins. Net interest income jumped more than 24% year on the year to US$ 1.20 billion, whilst provisions for loan losses fell 28%, year on year, to US$ 518 million. Q2 figures saw earnings 42% higher at US$ 954 million, as provisions for bad loans dropped and revenue increased on a rise in net interest income. In H1, all three indicators grew – customer loans by 1%, to US$ 115.8 billion, deposits 2%, to US$ 127.5 billion, and total assets 3% to US$ 193.7 billion.

The Dubai-based Shariah-compliant lender Emirates Islamic saw H1 net profit climb 23% to US$ 191 million, driven by higher funded and non-funded income, as well as a marked reduction in the cost of risk; its impairment allowances declined 12%, year on year, reflecting improved business sentiment. The bank’s total assets grew strongly by 14% to US$ 20.2 billion in H1, with customer financing up 11% to US$ 12.8 billion and customer deposits 15% higher at US$ 14.7 billion, with CASA balances at 76% of deposits.

Commercial Bank of Dubai posted a 28.1% surge in H1 net profit to US$ 236 million, compared to a year earlier, driven by rising market interest rates and solid loan growth. It commented that “while the global macro-economic environment is challenging, on balance, the outlook for the UAE economy remains positive.” The bank’s operating income increased 10.3%, to US$ 472 million, driven by net interest income, fees and commissions, with operating profit to US$ 343 million, up by 8.3% comparable to H1 2021. Net impairment allowances were US$ 107 million, down 19.3%. Capital ratios remained strong with the capital adequacy ratio at 15.43%, Tier 1 ratio at 14.28% and Common Equity Tier 1 ratio at 11.88%.

Dubai Islamic Bank posted a Q2 33% hike in net income, to US$ 365 million, as revenue rose 8.0% to US$ 886 million and impairment charges for loan losses declined 29.0% to US$ 144 million. H1 profit rose 44.0% to US$ 725 million, as revenue rose 9.0% to US$ 1.36 billion and impairment charges were 37% lower, with a notable 6.0% jump in financing and Sukuk investments to US$ 66 million. The bank’s total assets rose 1.0% higher to US$ 76.9 billion. The bank’s capitalisation ratios remained strong, with capital adequacy at 17.9% and equity tier 1 ratio at 13.2%. The country’s biggest Sharia-compliant lender’s chairman, Mohammed Al Shaibani, noted that despite only moderate global growth “the GCC region and the UAE remain strong, building on the economic foundations and reforms.”

The Dubai Financial Market posted a 63.4% hike in H1 profit to US$ 17 million, with Q2 profit 134.6% higher at US$ 10 million, as H1 revenue rose by 19.9% to US$ 45 million; revenue was split into operating income of US$ 33 million and US$ 12 million of investment income & others. Q2 revenue came in at US$ 23 million, up 34.8% on the year. There were marginal increases in operating expenses in both H1 and Q2 to US$ 27 million and US$ 13 million. Total H1 trading volume on the bourse rose by 75.2% to US$ 13.46 billion, whilst the total market cap of listed securities was 28.2% higher at US$ 143.6 billion.

The DFM opened on Monday, 25 July, 199 points (6.5%) higher on the previous fortnight and closed up 81 points (2.5%) on Friday 29 July, on 3,338. Emaar Properties, up US$ 0.06 the previous fortnight, was US$ 0.04 higher to close on US$ 1.50. Dewa, Emirates NBD, DIB and DFM started the previous week on US$ 0.69, US$ 3.49, US$ 1.58 and US$ 0.47 and closed on US$ 0.69, US$ 3.76, US$ 1.60 and US$ 0.47. On 29 July, trading was at 87 million shares, with a value of US$ 73 million, compared to 62 million shares, with a value of US$ 55 million, on 22 July 2022.  

For the month of July, the bourse had opened on 3,223 and, having closed the month on 3,338 was 115 points (3.6%) higher. Emaar traded US$ 0.08 higher from its 01 July 2022 opening figure of US$ 1.42, to close the month at US$ 1.50. Four other bellwether stocks, Dewa, Emirates NBD, DIB and DFM started the month on US$ 0.69, US$ 3.60 US$ 1.57 and US$ 0.45 and closed on 29 July on US$ 0.69, US$ 3.76, US$ 1.60 and US$ 0.47 respectively. The bourse had opened the year on 3,196 and, having closed July on 3,338, was 142 points (4.4%) higher, YTD. Emaar traded US$ 0.17 higher from its 01 January 2022 opening figure of US$ 1.33, to close July at US$ 1.50. 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 July on US$ 0.69, US$ 3.76, US$ 1.60 and US$ 0.47 respectively.

By Friday 29 July 2022, Brent, US$ 2.69 (2.7%) higher the previous week, gained US$ 6.38 (6.2%) to close on US$ 110.01. Gold, US$ 18 (1.1%) higher the previous week, gained US$ 48 (2.8%), to close Friday 29 July, on US$ 1,773.

Brent started the year on US$ 77.68 and gained US$ 32.33 (41.6%), to close 29 July on US$ 110.01. Meanwhile, the yellow metal opened January trading at US$ 1,831 and has shed US$ 58 (3.2%) during 2022, to close on US$ 1,773. For the month, Brent opened at US$ 107.59 and closed on 29 July, US$ 110.01 (2.2%) higher. Meanwhile, gold opened July on US$ 1,793 and shed US$ 20 (1.1%) to close at US$ 1,773 on 29 July.

Russian state-owned energy company indicated that it was concerned about the potential impact of western sanctions “due to expiration of time before prescribed time for overhaul, Gazprom is shutting down one more gas turbine produced by Siemens at the Portovaya CS”. Last week, Vladimir Putin had warned that flows could drop to 20% if the turbine issues were not resolved. It has been estimated that if Nord Stream 1 flows remain at a minimum of 40% of capacity and imports through other routes remain at the levels reported since 17 June, before the maintenance began, Europe will be able to refill storage to more than 80% by November. If Putin decided to cut supplies to zero next month, Europe will be able to refill its storage to only 70% and this would see countries most dependent on Russian gas – the likes of Germany, Austria and Central and Eastern Europe – struggling.

Samsung Electronics posted a Q2 12.1% hike in profits to US$ 10.84 billion, with record revenue figures of US$ 59.24 billion, 21.5% higher on the year, driven by record high semiconductor sales as they jumped 25% to US$ 2.19 billion, and profit by 44% to US$ 7.67 billion. Samsung said that the important drivers behind the impressive figures “were disciplined sales strategy, to meet market demand, and the benefits of a strong dollar”. Q2 profit at Samsung’s mobile division – which includes its flagship Galaxy smartphones – slid 19%, year-on-year, to US$ 2.01 billion, attributable to overall market demand amid geopolitical issues and inflationary worries; the tech giant expects demand in the smartphone sector to “stay similar year-on-year or show single-digit growth” with prolonged geopolitical issues and economic uncertainties.

Amazon posted a Q2 net loss of US$ 2 billion because of forex losses and a pre-tax valuation loss of US$ 3.9 billion, included in non-operating expense from the company’s common stock investment in Rivian Automotives; this was their second consecutive quarterly loss in seven years after making a US$ 7.8 billion net profit a year earlier. Revenue was 7.0% higher at US$ 121.2 billion, beating market expectations. Its share value rose 12.2% to US$ 137.20 in after-hours trading on Thursday.

Although revenue was 14.7% lower, quarter on quarter, Apple posted an 1.8% rise in fiscal Q3 revenue to US$ 83.0 billion but net profit declined 10.6% to US$ 19.4 billion – 22.4% lower than the previous quarter’s profit of US$ 25 billion. In April, the tech company warned the market that parts shortages would hit its sales by between US$ 4 billion and US$ 8 billion in the quarter.

There are always two sides to an argument and in the case of LHR it is the owner blaming the operators, (and everybody else but themselves), and the airlines accusing the airport’s management. Its embattled CEO, John Holland-Kaye, confirming that its deep-seated problems could take another eighteen months to solve, and “this is not going to be a quick fix.” The man, who is at the helm in making Heathrow a national embarrassment, blamed passenger habits, operators’ failures. the government, inter alia, in a wide-ranging attack on deflecting responsibility away from the source. LHR noted that “all parts of the airport are now fully operational. We have hired 1.3k people in the past six months and will have a similar level of security resource by the end of July as pre-pandemic”. It confirmed that there was no prospect of lifting a cap on flights until airlines boost the number of ground personnel, saying carriers were too slow to combat staffing shortages that contributed to the travel chaos engulfing Europe this summer. The airport operator confirmed that the 100k cap on departing passengers, due to end on 12 September, “will remain in place until airlines increase their ground handler resource”. (In July 2019, Unite threatened strike action when the CEO was awarded a 103% pay rise to US$ 5.06 million, with staff being denied a 4.5% increase at the time). In line with his CEO, the chairman of LHR, Paul Deighton, continues to blame the travel chaos, including delays and caps on passenger numbers, squarely on the shoulders of the airlines for failing to recruit enough baggage handlers; he could be deluded.

At last, some good news for the UK travel sector, as hundreds of BA staff at LHR voted to call off strike action after the airline made a new improved pay offer which was accepted by members. This comes days after fuel workers also called off a three-day strike at the airport.

In yet another dispute over pay, the union Unite said 92% of its members at the Port of Felixstowe voted in favour of strike action and there was an 81% turnout; Unite had about 1.9k members at the port.  Although the employer had made a pay offer of 5% increase, the union has retorted that “this is an effective pay cut with the real rate of inflation currently standing at 11.9%.” Felixstowe is the UK’s biggest container port, handling 48% of the country’s container trade, and any strike action will have a damaging knock-on effect on the already troubled UK supply chain.

Following ground staff strike action on Wednesday, Deutsche Lufthansa had to cancel over 1k flights, further disrupting the peak summer travel season,  when they went on strike early Wednesday, prompting the cancellation of more than 1k flight. The union is asking for a 9.5% pay hike (US$ 355 a month) for its 20k members. The airline had offered a US$ 152 monthly pay rise for the rest of 2022, followed by an additional US$ 101 next year and a 2% increase from mid-2023 dependent on the company’s financial results.

With no new government formed, even after two months of parliamentary elections, and the resulting delay in the introduction of reforms, the IMF has delayed its expected US$ 3 billion rescue package to boost the country’s reserves. Securing IMF backing will also help in a further US$ 11 billion of assistance that was pledged at a Paris donor conference in 2018. Lebanon continues to be an economic basket-case, as June inflation topped 210% on the year – and its 24th consecutive triple-digit monthly increase – and 9.2% higher on the month. Water, electricity, gas and other fuels soared 594% in June, compared with the same month last year, followed by the health segment, which surged 492%, transport costs at 462% and food and non-alcoholic beverages rising 332%. Last year, Lebanon’s public debt ballooned to more than US$ 100 billion, equating to 212% of its GDP and it has the fourth-highest debt-to-GDP ratio in the world, surpassed only by Japan, Sudan and Greece. In the period, 2019 – 2021, the country’s economy contracted about 58%, with GDP falling from US$ 52.0 billion to US$ 21.8 billion in 2021 – the largest contraction on a list of 193 countries. Continuing failure by politicians to agree on the formation of a new government, and agreement on a new president by 31 October, when Michel Aoun’s six-year term expires, will further exacerbate the country’s economic crisis and delay the implementation of the IMF bailout programme.

According to NonFungible.com, the global NFT sector posted a Q2 25.2% drop in terms of buyers, volume of sales and volume of US dollars traded to US$ 8.0 billion. The report noted that “the market is experiencing a historical bearish period”, in line to what is occurring in the wider share and cryptocurrency markets and that for the first time ever, in the history of NFTs, trading-related activities are no longer profitable.” The average Q2 price of NFTs dropped 6.0%, quarter on quarter.

Surging costs, across the board, have seen McDonald’s push the UK price of a cheeseburger by 20.2% to US$ 1.45 (GBP 1.19) its first price increase since 2008. It will also increase prices for other items by between US$ 0.12 and US$ 0.24 (GBP 0.10 and GBP 0.20). A study by Meal Deal Experts has expensed all the ingredients required for a cheeseburger at a cost of US$ 0.83 (GBP 0.68). The chain’s UK & Ireland chief executive Alistair Macrow said the increases are needed to help the business cope “through incredibly challenging times”, as UK inflation continues to rise to over 9%. Reckitt and Unilever have seen their prices rise by 9.7% and 11.2% in Q2. Having raised prices by an average 3.1% late in Q4, Nestle has increased them again by 6.5% during H1, due to “unprecedented” increases in costs.

One of the by-products of inflation is that June interest payments on UK government debt hit a record high amount of US$ 23.4 billion, which pushed up government borrowing for the month to the second-highest June level since records began in 1993. The actual interest payment hike was down to the fact that interest paid on government bonds rises in line with the Retail Prices Index measure of inflation, which has soared to 11.8%. The month’s borrowing – the difference between spending and tax income – was US$ 27.7billion, up by almost US$ 5.0 billion from June 2021. The upcoming Truss government will have to choose between slashing inflation/cost of living or focus on cutting the rising budget deficit.

According to Eurostat’s latest preliminary flash estimate, there was Q2 growth of 0.7% and 0.6% in the GDPs of the EU and the euro area, following expansions of 0.5% and 0.6% in Q1. Compared with the same quarter of the previous year, seasonally adjusted Q2 GDP increased by 4.0% in both areas, after posting annual gains of 5.4% in the euro area and 5.5% in the EU in Q1.

With its economy contracting 0.9% for second consecutive quarter, having declined 1.6% in Q1, the US economy has shrunk into a “technical recession”, attributable to record-high inflation and aggressive interest rate hikes from the Federal Reserve, aimed to slow business and housing demand. However, the National Bureau of Economic Research is the official arbiter of recessions in the US and will decide whether the economy is in recession or not.

Although job growth averaged 457k per month in H1, which is generating strong wage gains, the risks of a downturn have increased, as homebuilding/house sales have weakened along with business/consumer sentiment softening in recent months. It is not in the political interests of the White House to see a recession ahead of the mid-term elections in November, which could result in the ruling Democratic Party losing control of the US Congress. At the same time, the report noted that consumer and business confidence were dipping because of soaring prices due to inflation, the Federal Reserve lifted interest rates by a further 75bp to mitigate the price increases.

There was no surprise to see the IMF lowering its global growth forecast for the second time this year, to 3.2% and 2.9% (in 2023), compared to a 6.1% growth last year. The announcement came with a caveat that if further risks materialise, and inflation continues to rise, expansion could slow to 2.6% and 2.0%. The main drivers behind this latest contraction forecast are the global spill over of Russia’s military offensive in Ukraine, which has exacerbated inflationary pressures, and the halving of growth forecasts for advanced economies and China. The world body noted that “the global economy … is facing an increasingly gloomy and uncertain outlook”.

A Q2 slowdown in China’s economy, growing at its slowest pace since pre-Covid, has added to global supply chain disruptions and has reduced global growth; last year, its economy expanded 8.1% and is expected to slow to 3.3% in 2022. Furthermore, four-decade high inflation figures have led to rising interest rates in most countries of the world. Advanced economies, which grew at 5.2% in 2021, are expected to expand 2.5% this year, compared with an earlier 3.3% estimate, with the US, seeing growth at 2.3%, down from the earlier estimate of 3.7% and last year’s 5.7%. Germany, the UK and France had seen 2021 expansion rates of 2.9%, 7.4% and 6.8% and are forecast to grow over this year and 2023 by 1.2%/0.8%, 3.2%/0.5% and 2.3%/1.0%. Japan, the world’s third largest economy, is expecting annual growth of 1.7% for 2022 and next year.

Emerging market and developing economies are now projected to grow 3.6% this year, down from 6.8% in 2021, whilst the ME and Central Asia, having expanded by 5.8% last year, will see growth of 4.8% in 2022, but Saudi growth this year is forecast to reach 7.6% after expanding by only 3.2% in 2021, helped by Brent prices jumping 67% last year and 37% YTD. IMF expect oil prices this year and next to average US$ 103.88 and US$ 91.07. As borrowing costs start to head north, central banks are beginning to tighten policies by literally printing money more than two years ago.

The IMF pointed to increasing risks for some countries, as borrowing costs rise amid rising inflation after governments and central banks across the world, which provided more than US$ 16 trillion of fiscal and US$ 9 trillionn of monetary support to help economies recover, tighten policy. It estimated that about 60% of low-income countries are in or at high risk of debt distress, compared with 20% a decade ago, and noted that a quadruple whammy of reduced available credit, a stronger greenback, higher borrowing costs and weaker global growth will cause even greater problems to the low-income countries. Brother, Can You Spare A Dime?

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Lost In France!

Lost In France!                                                                               22 July 2022

The real estate and properties transactions totalled US$ 1.50 billion during the week ending 22 July 2022. The sum of transactions was 186 plots, sold for US$ 162 million, and 1,004 apartments and villas selling for US$ 662 million. The top two transactions were for land in Ras Al Khor Industrial First, sold for US$ 9 million, and land sold for US$ 5 million in Al Merkadh. Al Hebiah Fifth recorded the most transactions, with 105 sales transactions worth US$ 72 million, followed by Jabal Ali First, with 35 sales transactions worth US$ 28 million, and Al Yufrah 2, with 12 sales transactions worth US$ 4 million. The top three transfers for apartments and villas were all apartments – one sold for US$ 86 million in Burj Khalifa, another for US$ 65 million in Al Wasl, and a third for US$ 52 million in Palm Jumeirah. The sum of the amount of mortgaged properties for the week was US$ 561 million, with the highest being a building in Burj Khalifa, mortgaged for US$ 150 million. Eighty properties were granted between first-degree relatives worth US$ 131 million.

In H1, Abu Dhabi’s real estate market recorded 7,474 property transactions amounting to over US$ 6.13 billion, with Sharjah posting Q1 21,615 real estate transactions worth $1.71 billion. By comparison, June was the highest month yet for Dubai sales, with a value of US$ 6.2 billion – 55% higher in overall value year on year, when compared with June 2021.

Growth was the word for Dubai Chamber’s members in H1, with exports and reexports 17.8% higher at US$ 35.26 billion and the number of certificates of origin issued up 8.9% year-on-year, to over 357k, all heading north. Hamad Buamim, President & CEO of Dubai Chambers noted the crucial role that the body plays in HH Sheikh Mohammed bin Rashid’s Dubai Foreign Trade Plan to boost the emirate’s foreign trade to US$ 560 billion, (AED2 trillion) by 2026. He added that this year is forecast to be a record for member companies’ trade performance, as the body continues to support Dubai’s business community and enhances its position as a leading global trade hub.

Over the next five years, DEWA is planning to invest US$ 11.20 billion, (AED 40 billion) in utility projects, including spend on boosting transmission and distribution networks, as well as expanding renewable and clean energy initiatives. Of the total capex budget, US$ 4.36 billion, (AED 16 billion) will be invested to strengthen and expand electricity and water transmission and distribution networks, and US$ 3.27 billion, (AED 12 billion), to complete the Independent Power Producer (IPP) projects in the Mohammed bin Rashid Al Maktoum Solar Park, the Hassyan Power Complex and the Independent Water Producer (IWP) projects at Hassyan. Empower, 70% owned by DEWA, will see an US$ 817 million investment on expanding district cooling capacity and network to meet growing demand.

Initial operations for the Dubai Waste Management Centre will start early next year, with two of the centre’s five treatment lines operating and generating 80 Mwh of renewable energy by processing 2k tons of solid waste in a day. The world’s largest waste-to-energy project, currently 75% complete, will be able to process 5.7k tons of solid waste per day via five lines, converting and producing 200 Mwh of clean energy into the local power grid.

There was a 25% hike in new business licenses in H1 to almost 45.7k – an indicator that the emirate’s strategy and policy changes, such as full company ownership to foreign investors, has paid off with a marked improvement in the rate of local and foreign investment, enabling economic growth and diversification. The split of new business licenses sees 55% being ‘professional’ and the balance ‘business’. In H1, there were 262k business registration and licensing transactions, up 33%, whilst renewal transactions, at 93k, were 22% higher. Interestingly, there were 14.7k Instant Licenses issued in H1; they can be issued within five minutes on invest.dubai.ae platform, with the option to issue an electronic MOA and a virtual site for the first year only.

HH Sheikh Mohammed bin Rashid Al Maktoum toured Dubai International Airport yesterday and instructed senior officials to “continue working as a team” and to provide an “exceptional experience” for international travellers; he also instructed them to further enhance the capabilities of both airports, (DXB and DWC), in all areas including services, security and logistics so as to improve service benchmarks and passenger experience. He tweeted that“we had started preparing early for the return of international passenger traffic after the Covid-19 pandemic. Today, DXB maintains the first place in the world in international passenger traffic. We will continue to monitor the level and quality of services offered,” and that the “remarkable growth”, achieved by Dubai’s travel and tourism sector, is an example of the emirate’s “relentless efforts to ensure outstanding quality levels in diverse sectors”. Last year,DXB maintained its position as the world’s busiest international airport with 29.1 million passengers and recorded a traffic of more than 13.6 million passengers in Q1; the current forecast is that passenger traffic will top 58 million passengers by the end of the year.

This week, HH Sheikh Mohammed bin Rashid issued Decree No. (22) of 2022, introducing incentives for property investment funds. The new legislation will encompass all real estate investment funds licensed and regulated by government authorities, as well as private development zones and free zones; one of its main aims is to support real estate investment funds – both local and global. The DLD will be responsible for establishing a ‘Register of Property Investment Funds’, with any funds over US$ 49 million allowed, with the proviso that they are registered by the appropriate government authorities and have not been barred from trading in Dubai’s financial markets at the time of application. The value of properties that funds invest in should be US$ 14 million or above. A ‘Committee for Property Investment Funds’ will oversee applications to ensure that such funds are allowed to invest either through full ownership or lease for a period not exceeding ninety-nine years. The DLD will appoint a valuation expert to determine the value of properties owned by property investment funds. Funds are allowed to relinquish ownership of properties only after approval from the Committee.

With a US$ 40 million investment, Emirates has opened Bustanica, the world’s largest vertical farm, at 330k sq ft, and located near to Al Maktoum International Airport at Dubai World Central. Part of Emirates Crop One, a JV between Emirates Flight Catering (EKFC) and Crop One, Bustanica is capable of producing more than one million kg of high-quality leafy greens annually, while requiring 95% less water than conventional agriculture, and grown without pesticides, herbicides, or chemicals. Bustanica will have zero impact on the world’s threatened soil resources, an incredibly reduced reliance on water and year-round harvests, unhampered by weather conditions.

A new law, to come into effect in January 2023, will see the UAE fall in line with international standards in rules on sourcing gold into the country; it will apply to companies working in the field of gold refining and the recycling of gold products. Its main target is to prevent the misuse of gold for money laundering, terrorism financing and other financial crimes, while importing gold from conflict zones or high-risk areas; companies found to be violating the law will receive large fines. Its introduction will further enhance the country’s position as one of the leading global gold hubs. The guidelines will follow the directives of the Organisation for Economic Cooperation and Development and its annex related to gold.

UAE Central Bank has estimated that the UAE’s Q1 economy grew by 8.2% and that it expects real GDP to grow by 5.4% this year and 4.2% in 2023. There is every likelihood that these figures could be surpassed, driven by higher oil production and by the government’s commitment to double the size of the manufacturing sector by 2031. With global travel recovering well, as restrictions are being eased, this has helped the non-energy sector, expanding 6.1% year-on-year in Q1 2022; for the year, estimated growth is at 4.3%.

In Q2, EITC posted a 14.1% hike in overall service revenue to US$ 616 million – the third consecutive quarter of improvements and growth. DU’s mobile service revenue came in 8.6% to the good at US$ 381 million, with a bigger increase for fixed service revenue, up nearly 25% to US$ 233 million; handset sales generated US$ 53 million in revenue.  Operating free cash flow rose 48% to US$ 193 million, driven by improving Ebitda and lower capex which moderated to US$ 152 million.

The DFM opened on Monday, 18 July, 51 points (1.6%) higher on the previous week and closed up 148 points (4.8%) on Friday 22 July, on 3,257. Emaar Properties, up US$ 0.01 the previous week, was US$ 0.05 higher to close on US$ 1.46. Dewa, Emirates NBD, DIB and DFM started the previous week on US$ 0.69, US$ 3.38, US$ 1.52 and US$ 0.44 and closed on US$ 0.69, US$ 3.49, US$ 1.58 and US$ 0.47. On 22 July, trading was at 62 million shares, with a value of US$ 55 million, compared to 77 million shares, with a value of US$ 37 million, on 15 July 2022.   

By Friday 22 July 2022, Brent, US$ 10.51 (9.1%) lower the previous four weeks, gained US$ 2.69 (2.7%) to close on US$ 103.63. Gold, US$ 164 (8.8%) lower the previous four weeks, gained US$ 18 (1.1%), to close Friday 22 July, on US$ 1,725. 

There are reports that Starbucks, the world’s biggest coffee chain, is considering a potential sale of its UK business because of tough competition and changing customer habits emanating from the impact of the pandemic and the resultant lockdown measures. According to ‘The Times’, the firm will continue to “evaluate strategic options” for its company-owned international operations. Starbucks is feeling the pinch not only from the post-Covid impact but also from increased competition from rivals, such as Costa, Pret A Manger and Tim Hortons, surging product prices and customers’ changing habits. The first UK Starbucks opened in 1998 and there are now 1k outlets of which 30% are company-owned and the majority being franchises. Last year, it closed five company-operated stores, and opened fourteen new ones, targeted at drive-through locations.

In the last four months, Netflix has lost a further one million subscribers – a lot less than many analysts had forecast, with the firm expecting a growth recovery by the end of the year. Following its first subscriber decline since 2011, in April, the streaming company cut hundreds of jobs to compensate for the revenue downfall. It seems that when you are at the top of the ladder – in an era when competition is exploding – it is “inevitable” that Netflix would start to falter but if it continues to launch dramas, such as ‘Stranger Things’, it will make it more difficult for its rivals to take over the number one spot.

With the tech giant warning that it was facing “incredibly challenging” conditions, noting that advertising revenue had been slashed because of supply chain disruptions, labour shortages and rising costs, Snapchat’s share value slumped more than 25% in after-hours trading in New York; its Q2 revenue of US$ 1.11 billion was below market expectations. The current economic conditions, also impacting other tech giants, have also seen the market value of Alphabet, (Google’s parent company), Meta (owner of Facebook), Twitter and Pinterest fall.

The Cyberspace Administration of China has fined Didi US$ 1.7 billion for breaking cyber security laws, having found “conclusive evidence” against the ride-hailing giant. The regulator announced that it had started an investigation into Didi just days after the firm’s US IPO last year;  Didi’s shares stopped trading in New York last month. CAC also imposed fines of US$ 148k (one million yuan) each on Didi Global’s chairman and chief executive Cheng Wei and president Liu Qing. Apart from pressing ahead with the IPO, and not awaiting a cybersecurity review of its data practices, the regulator also fined the firm for violating three major laws concerning cybersecurity, data security and personal information protection. Chinese authorities have been pursuing a wide-ranging crackdown on similar companies, such as Alibaba with a record US$ 2.8 billion fine and ordering technology giant Tencent to suspend the roll out of new apps.

The Canadian plane manufacturer, Embraer, estimates that, over the next two decades, the demand for new aircraft of up to 150 seats will be almost 11k, with a value of US$ 650 billion. Of that total, 57% will be replacing retiring aircraft, with the balance increasing global airline fleets; 3.8%, or 330 units, will be delivered to the ME. The world’s third biggest plane maker noted that “the trend to smaller aircraft reflects overall lower demand growth, traffic patterns favouring short-haul versus long-haul, an increasing need for flexibility, connectivity, efficiency, and fleet and network transition to a decarbonised industry through new technology.” It expects annual growth figures of 4.3% for Asia Pacific, (including China), Latin America (4.0%), Africa (3.8%), ME (3.2%), Europe (2.3%) and North America (2.0%).

With many of the UK leading airports currently operating under chaotic conditions, the blame game continues unabated, with Heathrow’s chairman Lord Paul Deighton laying the responsibility for the travel disruptions on airlines failing to recruit enough baggage handlers. He seems immune from criticism from major players such as IATA and Emirates, with the former’s head, Willie Walsh, saying the management of Heathrow was “a bunch of idiots” for failing to foresee the recovery post-pandemic and the opening up of global business and tourism. “All you had to do was count up the tickets.” Meanwhile the Dubai airline’s Tim Clark said it had enough ground crew in place and should not have to cancel flights due to Heathrow’s inability to cope, and that anyone who behaved in that unacceptable fashion “would feel its wrath”. On Tuesday, Lord Deighton maintained the fault lay with airlines’ failure to recruit and defended the airport’s chief executive John Holland-Kaye, who has come under fire for his handling of the situation. Like the proverbial ostrich, the good lord seems to have his head buried in the sand as he denied the problem was down to a lack of planning or investment by the airport.

Earlier in the week, it seemed likely that a total of fifty workers from Aviation Fuel Services (AFS) would stage a three-day walkout from 05:00 BST on Thursday which would have had a negative impact on international airlines such as Emirates, Virgin, United, KLM and Air France. (AFS is a joint venture operation, which includes firms BP, Total Energies, Q8 Aviation and Valero Energy). This would have been another major blow to Heathrow’s sinking reputation in the aviation sector, with the Unite union noting that this industrial action would “cause delays to hundreds of flights”, claiming AFS workers were responsible for refuelling half of the non-British Airways traffic at the airport. Unite said its members had not received a pay rise for three years, adding AFS had made an offer of a 10% increase which was “rejected by members as it did not meet their expectations”.

Latest figures for the quarter ending May saw regular pay declining at the fastest rate since 2001, when taking into account rising prices, with pay excluding bonuses down 2.8% from a year earlier when adjusted for inflation. There was a marked difference between the private sector, with total pay growth of 7.2%, and the public sector’s 1.5%, both taking account of inflation. Pay, including bonuses, was down 0.9% when adjusted for inflation. With household budgets being bludgeoned by soaring inflation, at a record forty year high of 9.1% in May, and consumer spending dropping, the government is soon to unveil this year’s pay deal for 2.5 million public sector workers. There is no surprise to see unions calling for wages to reflect the cost of living, but if that did occur it would only mean inflation moving even higher, so that would inevitably see any pay rises not aligning with price increases.

This week, the IMF warned that if Putin were to completely close off Russian gas supplies, European countries would face a power crunch which could result in a slump of 6% in the some members’ GDP – including Hungary, Slovakia and the Czech Republic – as  their normal consumption would be slashed by 40%. Such a move would have a ‘significant’ impact on Austria, Germany and Italy but its extent would be dependent on policy responses, the remaining bottlenecks at the time of the shutdown and the market’s ability to adjust. Other countries would not suffer as much, with a GDP contraction of up to 1.5 %, in case of a severe winter, and no preventive measures to save energy have been taken, and under 1% in a normal winter. Earlier in the week, Russian state-owned energy company Gazprom declared force majeure on energy supplies to at least one major customer in Europe, and there is the ongoing possibility of Russia closing its main 1.224k km Nord Stream 1 pipeline permanently following its annual ten-day maintenance closure ending yesterday.

The ECB finally woke up and raised interest rates by more than expected yesterday – 50bp cf the forecast 25bp, justified by an “updated assessment of inflation risks”- with the prospect of further rises on the cards; this was the first rate hike for eleven years. It seems likely that a similar rise will occur in early September. With inflation now running at 8.6% – driven by soaring energy prices – and the central bank’s target having been 2% for some time, it does seem incongruous that Christine Lagarde, the ECB chief, has left this move far too late. Economics 101 teaches that raising rates is seen as the standard panacea for excessive inflation. This week saw the ECB end an eight-year experiment in negative interest rates, noting that “the front-loading today of the exit from negative interest rates allows the Governing Council to make a transition to a meeting-by-meeting approach to interest rate decisions.” This blog has espoused for some time that the ECB has been perpetuating the problem for too long, with the economic outlook worsening by the day, and that this week’s rate hike is too low, too slow and too late. The fact that energy is priced in US dollars only adds to ECB’s inflation fighting problems so that the current higher oil price has exacerbated the value of the euro which has hovered around parity for some weeks, as well as touching parity.

At the beginning of H1, UK interest rates stood at 1.25%, having risen by only 0.1% in H1, but many analysts consider that rate rises have still some distance to go before they will have any control over inflation which currently stands at 9.1% – a forty-year high. This observer has espoused that the Bank of England has left it too late so if, and when, it takes more positive action, and pushes rates higher, it, like the ECB, will be a case of too little too late. Economics 101 teaches that when rates move higher, it becomes more expensive for consumers and businesses to borrow, so that businesses and consumers start spending less, which in turn slows demand for goods and services and then the pace of price rises slows. The problem this time is the cost of soaring energy prices – and any rise in rates will have little impact on prices, and must be gauged against the backdrop that the economy earlier this year was in excess demand. In fact, the real economy is slowing when inflation erodes real income and real spending,

June prices nudged 0.3% higher on the month to 9.4%, driven by higher petrol, up by US$0.22 to US$ 2.20 a litre, and food costs, with milk, cheese and eggs recording the biggest rises in the month; a year earlier, fuel prices were at US$ 1.55. Food prices increasing at the fastest rate since March 2009. Kantar has predicted supermarket bills will jump by an average of US$ 544 this year, with energy prices moving an average US$ 836 higher from last April and set to rise even further this October. Prices charged in restaurants and for accommodation also increased in June climbing by 8.6% on the year. The rest of the world is in the same boat as the UK, but their inflation figures are lower, such as France and Germany posting annual rises of 6.5% and 8.2%. All three countries have been impacted by surging energy prices but to a large extent the EU has been immune from worker shortages due to fewer workers coming to the UK from overseas and a greater share of people of working age deciding they no longer want to or needed to work. It seems that the labour force has shrunk, making it harder to recruit and pushing up wages, so that the inflationary pressures on the economy are no longer just global, they are domestic too.

This week, 115k members of the Communication Workers Union voted for strike action in a pay dispute, that saw 97.6% of voting members. The Royal Mail workers have yet to decide strike date details in what would be the biggest ever action taken by its members. The CWU is the latest of several unions, including railway and airport workers, to ballot for strikes in recent weeks as the cost of living soars, with threats that they “will not budge” until they receive a “dignified, proper pay rise”. Royal Mail said it had offered workers a “deal worth up to 5.5% for CWU grade colleagues, the biggest increase we have offered for many years, which the CWU rejected”. It is reported that following the breakdown in talks, the Royal Mail offered a non-conditional 2% pay increase, backdated to 01 April, and a further 3.5% is available if agreements are subsequently reached.

Today, Friday 22 July, the Port of Dover declared a “critical incident” due to six-hour queues leading to the ferry terminal, with the blame being laid at the door of the French border controls, who “didn’t turn up for work”.  This weekend, the start of the UK schools’ summer holidays, will see an estimated 18.8 million leisure trips over the next three days according to the RAC. It is reported only six of the twelve passport booths, run by the French authorities, at Dover are currently open. Dover Port officials have requested more cooperation from the French, but it does seem that their officials have been Lost In France.

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There’s No Way Out Of Here!

There’s No Way Out Of Here!                                            15 July 2022

The real estate and properties transactions totalled US$ 1.50 billion during the week ending 15 July 2022. The sum of transactions was 186 plots, sold for US$ 162 million, and 1,004 apartments and villas selling for US$ 662 million. The top two transactions were for land in Ras Al Khor Industrial First, sold for US$ 9 million, and land sold for US$ 5 million in Al Merkadh. Al Hebiah Fifth recorded the most transactions, with 105 sales transactions worth US$ 72 million, followed by Jabal Ali First, with 35 sales transactions worth US$ 28 million, and Al Yufrah 2, with 12 sales transactions worth US$ 4 million. The top three transfers for apartments and villas were all apartments – one sold for US$ 86 million in Burj Khalifa, another for US$ 65 million in Al Wasl, and the third for US$ 52 million in Palm Jumeirah. The sum of the amount of mortgaged properties for the week was US$ 561 million, with the highest being a building in Burj Khalifa, mortgaged for US$ 150 million. Eighty properties were granted between first-degree relatives worth US$ 131 million.

June was the highest month yet for Dubai sales, with a value of US$ 6.2 billion – 55% higher in overall value year on year, when compared with June 2021, and by the end of H1, 71% of the total sales volume of 2021 had been reached. For June, month on month growth for volume and value were 33% and 24% higher, and up 9.5% and 7.0% quarter on quarter.

The latest CBRE report notes that June Dubai average residential property prices for the year rose 10.0%, with villas and apartments 19% and 9% higher – and 1.0% and 0.1% on the month. For the six-month period to June, total transactions, at 38.9k, hit historical highs, whilst mortgage transactions were steady despite rates edging higher. The report noted that the average transactional sq ft price continues to move higher, with the average transactional price per sq ft steadily  increasing with Palm Jumeirah, Emirates Hills, District One and Dubai Hills all posting month on month 4%+ rises – and the third consecutive month that Palm Jumeirah prices have risen by more than 5%, where per sq ft prices touched US$ 917. In the apartment segment, Jebel Ali and Dubai Silicon Oasis posted June rises of 4.0% and 3.6%.

According to the 2022 Xinhua-Baltic International Shipping Centre Development Index, Dubai ranks the fifth best maritime city in the world behind Singapore, London, Shanghai and Hong Kong, with Rotterdam, Hamburg, New York/New Jersey, Athens and Ningo-Zhoushan making the top ten. The report notes that Dubai has an advantage of offering a number of different locations in which to do business, including free zones, industrial areas and commercial buildings, as well as having some free zones that allow 100% foreign ownership of businesses; in addition, Dubai onshore business regulations allow full foreign ownership in 122 economic activities across, thirteen sectors, and offer 100% profit repatriation.

Continuing its recent upward trend, Dubai’s business activity in its non-oil private sector economy improved at the quickest pace in three years, at 56.1, as new orders rose sharply despite inflationary pressures. The latest figures show that new business and activity continued to head north, (attributable to improving demand and increased promotional efforts), with a marked uptick in travel demand – the key driver of growth in the emirate -and a renewed increase in new work in the construction sector. Despite easing slightly from May, the output growth rate was still one of the fastest recorded since June 2019. Preliminary data indicates that Dubai’s economy grew 6.2% last year and by 5.9% in Q1. In Q1, the hospitality, and transport and storage had grown 47% and 40%, respectively.

HH Sheikh Mohammed bin Rashid has appointed Sheikh Ahmed bin Saeed – who is also chairman and chief executive of Emirates Group, Dubai Airports and Dubai Integrated Economic Zones Authority – as chairman of Expo City Dubai Authority (ECDA). At the same time, the Minister of State for International Co-operation, Reem Al Hashimy, was appointed director-general to oversee its development. The Expo 2020 site is being transformed and will soon welcome thousands of new residents and businesses, as well hosting international events including the upcoming Cop28 climate conference.

DP World has acquired a controlling share in Africa FMCG Distribution, another step in its quest to expand its growing presence in the continent; the deal, with no financial details given, involved DP World’s 100% owned Imperial which it acquired earlier in the year. AFMCG, part of the Nigeria’s Chanrai Group of Companies, represents multinational fast-moving consumer goods companies all over the continent. This acquisition also aligns with Dubai’s five-year foreign trade strategy to boost trade ties with promising global markets, and to enhance its status as an international business hub, focusing on high-growth markets in Africa, Latin America and Asia.

Faisal Belhoul’s latest foray sees his Dubai Digital Investment aiming to raise US$ 272 million in a Dubai listing by the end of the year. The vice chairman of Dubai Chamber of Commerce commented that “we’ve been granted permission by the local authorities to launch a greenfield investment company that focuses on the technology sector”. This latest venture will invest in regional and global technology opportunities alongside VC firms and founders, with the added benefit of enhancing Dubai’s ambitions to become a major technology hub. He also managed Dubai last similar IPO, involving Amanat Holdings which debuted on the DFM in 2014, as did the now defunct retail and dining company, Marka.

The DFM opened on Tuesday, 13 July, 393 points (12.2%) lower on the previous five weeks, and closed up 51 points (1.6%) on Friday 15 July, on 3,109. Emaar Properties, US$ 0.02 lower the previous week, nudged US$ 0.01 higher to close on US$ 1.41. Dewa, Emirates NBD, DIB and DFM started the previous week on US$ 0.69, US$ 3.23, US$ 1.48 and US$ 0.42 and closed on US$ 0.69, US$ 3.38, US$ 1.52 and US$ 0.44. On 05 July, trading was at 62 million shares, with a value of US$ 37 million, compared to 104 million shares, with a value of US$ 81 million, on 07 July 2022.

By Friday 15 July 2022, Brent, US$ 6.14 (5.7%) lower the previous three weeks, lost a further US$ 4.37 (4.0%) to close on US$ 100.94. Gold, US$ 130 (4.9%) lower the previous three weeks, shed US$ 34 (1.4%), to close Friday 15 July, on US$ 1,707. 

On Wednesday, US President Joe Biden started a four-day Middle East tour, that will end tomorrow, that includes stops in Israel, the occupied West Bank and Saudi Arabia. where he will hold meetings with regional leaders. It will be his first presidential visit to Saudi Arabia, where he will attend a GCC+3 summit, which includes Egypt, Iraq and Jordan. The US leader has stressed that the meeting revolves around relations with Israel and its greater integration in the broader region, and that the trip was not about mounting pressure on Saudi Arabia to boost oil production. However, Mr Biden and his European allies have repeatedly urged Opec+ oil producers to increase output in a bid to rein in high oil prices that are feeding into rising inflation, even though Gulf oil producers have precious little in spare capacity.

IATA reported that May global passenger traffic was 83.1% higher than a year earlier, attributable to a strong recovery in international traffic. However, it is still only at 68.7% of pre-crisis levels. International traffic rose 325.8% from May 2021, as the easing of travel restrictions in most parts of Asia accelerated the recovery of international travel; May 2022 international RPKs reached 64.1% of May 2019 levels. ME airlines’ traffic rose 317.2% compared to May 2021, with capacity 115.7% higher on the year. This was less than traffic recorded in Asia -Pacific and Europe where increases came in at 453.3% and 412.3%. but a lot higher than North America, Latin America and Africa with returns of 203.4%, 180.5% and 134.9% respectively.

At the behest of the UK government, Heathrow said it would cap the daily number of departing passengers at 100k this summer, (from 12 July to 11 September), to try to limit traveller disruptions as it struggles to cope with a rebound in demand. Airport authorities have noted that daily departing seats over the summer would average 104k, 4k above its cap, and have requested airlines partners to stop selling summer tickets to limit the impact on passengers.

John Holland-Kaye is facing the heat on two fronts, one as the temperature in London starts to rise even higher and is set to reach a record 42 degrees next Tuesday. The other sees the CEO of London’s Heathrow Airport, who earlier in the week received a strongly worded statement from Emirates, being issued an ultimatum to provide a “credible and resilient capacity recovery plan for the next six months”. Emirates had blamed Heathrow for choosing “not to act, not to plan, not to invest”, and that it is “now faced with an ‘airmageddon’ situation due to their incompetence and non-action, they are pushing the entire burden – of costs and the scramble to sort the mess – to airlines and travellers.”. The local airline rejected LHR’s demands to cut capacity and was upset that it had only been given “thirty-six hours to comply with the capacity cuts”, with it dictating the specific flights on which they should “throw out paying passengers” and the fact that it had “threatened legal action for non-compliance”. Interestingly, Emirates’ sister company dnata is “fully ready and capable of handling their flights”. The airline confirmed that they “plan to operate as scheduled to and from Heathrow” but has agreed not to sell additional tickets until mid-August.

After being sued by its shareholders, four former bosses of the failed Fukushima nuclear power plant have been ordered to pay US$ 95 billion (13 trillion yen) for not preventing a nuclear meltdown disaster. The bosses from the Tokyo Electric Power Company (Tepco) were sued by shareholders over the 2011 nuclear meltdown – caused by a tsunami., resulting from an earlier earthquake – with the judgment that it was preventable if they had exercised due care. This was considered to be the largest amount of compensation ever awarded in a civil lawsuit in Japan, but the four plaintiffs will only be able to pay as much as their assets allow.

As expected, Twitter started legal proceedings against Elon Musk for violating his US$ 44 billion deal to buy the social media platform at the agreed US$ 54.20 per Twitter share. Shares of the social media platform closed at $34.06 on Tuesday. The complaint noted that “Musk apparently believes that he is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away.” Musk had argued that he was terminating the deal because Twitter violated the agreement by failing to respond to requests for information regarding fake or spam accounts on the platform. Twitter also accused Musk of “secretly” accumulating shares in the company between January and March without properly disclosing his substantial purchases to regulators. Twitter called his decision to walk away had more to do with a decline in the stock market, particularly for tech stocks, and that Tesla’s stock had lost around 30% of its value since the deal was announced, closing on Tuesday at US$ 699.21.

The latest casualty in the US$ 2 trillion cryptocurrency crash that has already wiped out some big names, such as broker Voyager Digital, Terra and crypto hedge fund Three Arrows Capital, is Celsius Network. These liquidations have left thousands of individual investors facing life-changing losses. Celsius, with more than 100k creditors, took the drastic action to stabilise its business and work out a restructuring for all stakeholders. At its peak, the lender had over US$ 20 trillion in assets, but that balance has dropped considerably. Like many of its peers, Celsius has been savaged by recent hikes in interest rates, with investors fleeing for cover, many concerned with the sky-high yields on offer.

Vijay Mallya has had a colourful past that has seen him make his fortune from Kingfisher beer, before branching out into aviation and F1 racing. Now evidently ensconced in London, India’s top court has sentenced him to four months in jail for disobeying an earlier court judgement linked to the collapse of Kingfisher Airlines which had been India’s second largest domestic carrier before it collapsed a decade ago. The tycoon, known as the “king of good times” for his lavish lifestyle, was found guilty in 2017 of the same offence and the following year a UK court agreed to his extradition back to his home country. Although he lost his final appeal on that verdict in 2020, he is still believed to be living in London.

Blaming the rising cost of shipping, fashion firm Boohoo has become the latest retailer to charge shoppers who return items, by deducting US$ 2.37 (GBP 1.99) from their refund amount; the likes of Uniqlo, Next and Zara already charge for online returns, with other peers set to join the trend. It is known that online customers are more likely to return items than those bought in store, raising costs for retailers. Boohoo’s brands include BoohooMan, Karen Millen, Nasty Gal, PrettyLittleThing, Coast, Misspap, Oasis, Warehouse, Burton, Wallis, Dorothy Perkins and Debenhams. Its latest accounts showed a slump in annual profits blaming soaring returns, with customers returning products at a higher rate than they did pre-Covid.

Q1 saw EV global shipments 79% higher at 1.95 million, with Tesla still dominating the fledgling market and China taking 1.14 million of the vehicles, up 126% on the quarter.  Tesla claimed 16.7% of the Q1 market share, followed by China’s Wuling Hongguan, with 8.9%, and if you add the Chinese company to BMW and Volkswagen, their sales would equate to that of Tesla. The sector has managed to withstand the double whammy of the pandemic and the semiconductor shortage which has had such a negative impact on global supply chains. The global EV market continues to grow as more countries aim to phase out petrol-powered vehicles to adhere to environmental standards and achieve net-zero goals. 2021 sales doubled last year to 6.6 million units and are expected to top ten million this year and reach fifty-eight million by 2030.

Newspaper reports, based on some 124k leaked documents, have claimed that from 2013 – 2017, Uber Technologies attempted to lobby European politicians. The so-called “Uber Files” indicate that laws were flouted and that the tech giant received assistance in its efforts from politicians including French President Emmanuel Macron. At the time, its co-founder, Travis Kalanick, was still chief executive and it seemed that the company was keen to expand into European cities as fast as possible and apparently ’taking no prisoners’.  Uber’s aggressive tactics included using a remote system to prevent police from obtaining internal data during raids, and the company has since not denied any of the allegations in the ‘Uber Files’ but noted that many changes have been made since 2017 when Dara Khosrowshahi took over the reins from Kalanick; since then, the company has been transformed, making safety a top priority.

‘Le Monde’ reported on text messages between Mr Kalanick and Mr Macron while he was finance minister. There was a total of four meetings between the two and a secret “deal” was put in place between Uber executives and French politicians, led by the then finance minister Macron, who sought “to facilitate by untying certain administrative or regulatory locks.” Then Uber withdrew its person-to-person UberPop service in France in 2015 and a few months later, a law making it difficult to become a licensed Uber driver was modified in favour of the ride-hailing company, infuriating taxi drivers. During the following anti-Uber protests, the company sought to use the violent attacks against its drivers to win public sympathy, as its co-founder dismissed internal concerns about potential violence against Uber drivers.

On 03 June, an earlier blog noted: “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”.

This week, a French inquiry has found it was caused by a litany of administrative errors and failings rather than Liverpool fans and that dysfunctional mistakes were made at every level,

The French government initially blamed supporters and fake tickets for the crowd chaos that led to fans being tear-gassed and robbed in Paris. Two Senate committees have issued their report ‘Champions League Final: An Unavoidable Fiasco’, which investigated what went wrong on the night Paris police, UEFA and the French government were all taken to task by the inquiry: UEFA for failing to plan for potential ticketing fraud and the government for shifting the blame on to supporters. Interior Minister Gérald Darmanin still maintained that Liverpool fans were largely to blame but did admit things could have been better organised and apologised for the “disproportionate” use of tear gas. But the minister was rightly condemned in the report which stated, “It is unfair to have sought to blame supporters of the Liverpool team for the disturbances, as the interior minister has done, to deflect attention from the state’s inability to properly manage the crowd and suppress the action of several hundred violent and organised delinquents.” Darmanin, already the third most important member of the government, has since been given an extra ministerial portfolio and it seems there will be no apology forthcoming. Despite UEFA clarifying there had actually been 2.7k fake tickets on the night, this is the same person who had earlier complained that 30k – 40k Liverpool fans had arrived at the stadium either with no tickets at all or with forgeries. Hopefully, the French authorities will be better prepared for their next two events – the 2023 Rugby World Cup and the 2024 Olympic Games.

There has been a definite move for UK consumers to cut back on white good purchases, such as dishwashers and fridges, with many opting for cheaper brands, with June sales in shops and online declining for the third consecutive month. According to the British Retail Consortium, retail sales are falling at a rate “not seen since the depths of the pandemic”. At the same time, prices are currently rising at their fastest rate for forty years, as the May inflation reached 9.1%, with every chance of topping 10% by the end of Q3, as food inflation may well touch 15%. Total sales decreased by 1% in the five weeks ending 02 July 2022, to 9.0%, against an increase of 10.4% in June 2021, following declines in April and May.

Further bad news for UK consumers this week was that domestic energy bills will rise faster this winter than previously forecast by the energy regulator Ofgem; in May, it had forecast a

US$ 946 (GBP 800) increase from October – now it seems that this figure could rise by 50% to US$ 1,419 (GBP 1.2k). The typical bill stands at US$ 2,366 (GBP 2k) which had already risen by US$ 828 (GBP 700) in April. From October, the typical consumer will have to spend US$ 3,838 (GBP 3,244) rising in January to US$ 3,979. (GBP 3,363). The original figure was used by ministers when deciding how much to pay in direct assistance this winter, and so this may have to be amended upwards.

Beating economists’ expectations, (which is quite often), UK’s May economy rebounded in May, growing by 0.5%, after shrinking in the previous two months, with expansion seen in all sectors of the economy. However, consumer spending has been hit by a double whammy of shop prices rising, driven by higher running costs, and disposable income dipping because of higher energy costs among other factors. This time last year, UK inflation had just risen to 2.0%, the BoE’s target, and although the Ukraine crisis is probably the main inflationary driver, higher prices were beginning to ferment even before February with a 6.2% rate  then. It seems to this observer that the central bank was slow and a little negligent for not taking the problem as seriously as it would later become. Now its governor, Andrew Bailey, has belatedly vowed to bring inflation down to its target of 2%, “no ifs or buts”.

After last month’s major disruption on the country’s railways, both  eight train companies (employing Aslef members, the train drivers’ union), and hundreds of Transport Salaried Staffs Association (TSSA) members have voted “overwhelmingly” to go on strike in a dispute over pay. The June walkout involved members of the RMT union at thirteen train companies and Network Rail – a separate strike action by 40k rail workers, and the biggest such strike action seen in over thirty years. Aslef have claimed that many union members “have not had a pay rise since 2019”, and that “we want an increase in line with the cost of living – we want to be able to buy, in 2022, what we could buy in 2021”. The offer depended on workers accepting “modernising reforms”, but this was rejected, described by Network Rail as ‘paltry”. Probably, Transport Secretary Grant Shapps, is too busy launching his bid, (which did not last too long), to be the next Conservative party leader and prime minister, to worry about settling another dispute in his remit. Later in the week, Network Rail has made workers a fresh pay offer in an attempt to break the deadlock, saying the offer was worth more than 5%, but depended on workers accepting “modernising reforms”, whilst the RMT union said the offer was, in real terms, a pay cut and would mean cutting a third of front-line maintenance roles. In addition, there would be no compulsory redundancies for two years, which unions had been calling for, and employees and their immediate families would get 75% off rail travel. The rise in the cost of living has led to unions calling for pay rises to help workers cope. With several other industries having seen workers strike over pay, there is always concern that if employers hand out big salary increases, this could result in a 1970s-style “inflationary spiral”, where firms hike wages and then pass the cost on to customers via higher prices.

There is no doubt that the UK faces many problems over the next few months, Recently the IMF and the OECD have both warned that all is not well with its economy. The former predicted that the UK will be the slowest growing economy among the world’s largest economies next year, whilst the OECD indicated that the economy will grow more slowly than expected this year and will stagnate next year, as consumers rein in their spending and commodity prices remain high. However, with inflation set to continue to rise, ongoing political uncertainty following the Boris demise, longer term business confidence beginning to fall, ongoing Covid lockdowns in China and supply chain hassles, the economy is heading for a rocky few months.

At the beginning of the week, the euro had slid to a twenty-year low, edging closer to parity to the greenback as the prospect of European recession becomes increasingly likely. The ECB has been slovenly in trying to control surging inflation whilst theUS currency was boosted by expectations that the Fed will raise rates faster than the Europeans. Meanwhile, whilst the euro tumbled 1.3% in early Monday trading to US$ 1.0056, the dollar gained 1.0% against a basket of six major currencies, reaching 108.14, the strongest since October 2002. Another driver attempting to sink the euro is the fact that Nord Stream 1, the biggest single pipeline carrying Russian gas to Germany, stopped flowing for ten days on Monday for annual maintenance, and now the main concern is whether the shutdown might be extended because of the war in Ukraine. If this were to happen a recession is an almost given and There’s No Way Out Of Here!

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Today Was A Fairy Tale!

Today Was A Fairy Tale!                                                            08 July 2022

There were no reports available for the past shortened week, ending 07 July 2022, from Dubai Land Department but it could be a record week noting that Monday saw real estate transactions top US$ 1 billion.

Zoom Properties, one of the few consultancies who seem to get their figures right, have projected 2022 delivery of around 38k residential units, with supply being seen highest in areas such as MBR City, (which is experiencing a boom in new stock, including 1.5k units in Q1), Dubailand, Downtown Dubai, Business Bay, Dubai Creek Harbour, Al Jadaf, and JVC. 6.7k units were delivered in Q1, with a further 31k expected on the market before the end of the year. Average prices are 11.0% higher, split between villas (19.8%) and apartments (9.5%). It is hard to disagree with the consultancy’s forecast that the property market would continue its upward trajectory, despite the threat of the upcoming global recession.

With Dubai property prices still heading north at an impressive rate, it was no surprise to see a new record set for the most expensive home in the emirate. In March, a ten-bedroom custom-built Palm Jumeirah villa, with seventy metres of private beachfront, was sold for over US$ 76 million, (AED 280 million), easily beating the previous 2015 record of US$ 50 million (AED 185 million) for a Palm Jumeirah villa. It seems a certainty that the first AED 300 million villa will be sold by the end of the year, and probably well before then. The reasons for the local property boom are manifold and have been listed several times in previous blogs but the fact remains that demand outstrips supply at the top end of the market. Last month, Alpago Properties announced a development of six villas on Frond G of Palm Jumeirah, with prices ranging from US$ 33 million to US$ 82 million.

Knight Frank has indicated that 40%, equating to ninety-three homes of all US$ 10 million plus sales ever recorded in the emirate were in 2021 and in Q1 the total had already reached 32. Latest data shows that June recorded the highest month ever for Dubai sales value at US$ 6.18 billion – 54.9% higher than in June 2021. By the end of H1, 70.8% of the total sales volume of 2021 had been reached.

Dubai South Properties announced this week that Dubai South Bay, at the heart of The Residential District, will have over eight hundred villas, and townhouses (between 3 B/R – 5 B/R, with built up areas ranging from 2.9k sq ft – 4.8k sq ft), as well as two hundred waterfront mansions; the mansions, ranging from 5 B/R to 7 B/R will have built up areas of up to 13k sq ft. The development will also feature a 1 km-long crystal lagoon, more than 3 km of a waterfront promenade and multiple beaches. Located on Expo Road, the development will also be home to several world class amenities including a community shopping mall, a fitness complex, kids’ clubs, swimming pools, a water sports club, waterfront cafés and several parks. The launch date is fixed for September.

In a bid to give tenants more flexibility with their rental repayments – as well as to facilitate administration work for landlords – Dubai Land Department has signed a deal with Emirates NBD for rent payments to be made by direct debit and digitised using the Central Bank’s UAE’s Direct Debit System (UAEDDS). In another boost for the Dubai realty sector, individual investors from overseas, looking to purchase property in Dubai, will also be able to easily open non-resident savings accounts with Emirates NBD. The move is also in line with Dubai government’s vision of paperless payment systems and the Dubai 10X initiative.

Following yesterday’s federal cabinet meeting, HH Sheikh Mohammed bin Rashid Al Maktoum announced that Emirati citizens working in the government sector will be offered a full year’s leave on half pay should they wish to run their own businesses. He added that the move was to “encourage our youth to take advantage of the huge commercial opportunities offered by our national economy.” The meeting also discussed the Sheikh Zayed Housing Programme and the Dubai Ruler tweeted that “we decided to approve housing loans for citizens at a value of 2.4 billion dirhams (US$ 654 million) during the next six months, with 500 beneficiaries per month. Our goal is to complete 13k homes from the Zayed Housing Program in the coming years.”

After adding an extra 600 MW from the natural gas-driven Hassyan Power Complex, and a further 100 MW from the fifth phase of the current production capacity of the Mohammed bin Rashid Al Maktoum Solar Park, Dewa announced that its total production capacity of energy has risen by 700 MW to top 14.1k MW.  The latter, the world’s largest single-site solar park using the Independent Power Producer (IPP) model, currently produces over 1.6k MW and will top 5k MW on completion in 2030. Currently, Dubai’s clean energy mix represents 11.5% of its total energy production, which is expected to reach 14.0% by year end, and is in line with the Dubai Net Zero Carbon Emissions Strategy 2050’s 100% target.

This year’s Forbes list of the Top 100 CEOs in the region comprises twenty-five different nationalities, with twenty-seven of the total in financial services followed by eight from the telecom sectors and seven from both energy and logistics companies. Topping the list is Saudi Aramco’s Amin H. Nasser, followed by ADNOC’s Sultan Ahmed Al Jaber and HH Sheikh Ahmed bin Saeed Al Maktoum of Emirates Group. All three maintained their rankings for the second consecutive year. The survey used various guidelines including the CEOs’ impact that they have had on the region, their country, and the markets that they serve. Other Dubai-related CEOs in the list included Sultan Ahmed Bin Sulayem of DP World, Hana Al Rostamani, Group CEO, First Abu Dhabi Bank (FAB), Saeed Mohammed Al Tayer, Managing Director and CEO, DEWA,  Adnan Chilwan, Group CEO, Dubai Islamic Bank, Saif Humaid Al Falasi, Group CEO, ENOC Group, Fahad Al Hassawi, CEO, Emirates Integrated Telecommunications Company (du) and Arif Amiri, CEO, Dubai International Financial Centre.

This week, Emirates SkyCargo took delivery of its latest plane to maintain its fleet capacity at eleven Boeing 777Fs. The Dubai carrier saw a marked 15% growth in cargo loads, with annual tonnage topping 2.1 million tonnes, with 260k tonnes of perishables being transported, whilst both pharma and valuable goods both posted 17.0% growth. With the air cargo business booming, the local airline has “been flat out since the pandemic began”. Most markets are experiencing a surge in demand, including China where Emirates will now have an additional four freighter flights every week, equating to 400 tonnes of cargo, with Shanghai, Beijing and Guangzhou being served by six, two and four direct flights. The airline is also looking at increasing frequencies to Hanoi, Sydney and Nairobi, with the fleet recording 950 charter flights in the year ending 31 March 2022. Plans are also already underway to convert ten passenger 777s into freighters, boosting the cargo fleet to 21 by the end of 2026.

Dubai Multi Commodities Centre has posted its best ever half-yearly performance figures with a 19% hike in registration numbers on the year to nearly 1.5k, including the 323 new members registering last month; DMCC is now home to over 21k companies. China and India accounted for over 20% of new companies, with 40% of new companies originating from Europe and South America in H1, spurred on by the free zone’s recent roadshows in the UK, Spain, Turkey, Poland, Brazil and Colombia. There was on-going interest in the DMCC Crypto Centre, and high volumes of trade for a range of commodities, predominantly diamonds, (with volume up 36% on the year to a value of US$ 11 billion), tea, and coffee.

FinTech start-up YAP has raised US$ 41 million in a bid to expand into new markets and enhance its technology offerings.  The local digital banking app, launched in 2021 in partnership with RAKBank, has more than 130k signed-up users. This latest fund round, led by Saudi Arabia-based investment company Aljazira Capital, saw interest from investment conglomerate Abu Dawood Group, Saudi Arabia’s Astra Group and Dubai-based private equity business Audacia Capital. YAP has also received regulatory approval in Pakistan and Ghana and plans to launch in Egypt and Saudi Arabia.

After “successfully through a challenging period” of five years, Michael Davis has resigned as CEO of NMC, the largest private healthcare provider in the UAE; he is expected to stay on until the end of the year to help the board with “a smooth leadership transition”. NMC Healthcare PLC entered administration in April 2020 and its thirty-four operating companies subsequently filed for voluntary administration in ADGM five months later. The company had been established by BR Shetty and had been subject of fraudulent activity by the then board and senior management. Joint administrators Alvarez & Marsal worked closely with creditors and the new management team at NMC led by Davis to design and implement a three-year business plan, which saw the group exit from administration last March, making its companies subsidiaries of a new company named NMC OpCo Ltd.

After its IPO was twenty-one times oversubscribed, the TECOM Group made its debut on the DFM this week, opening on its first day of trading at US$ 0.728 (AED 2.67). By the end of the shortened trading week, it had dipped (12.7%) to US$ 0.635 (AED 2.33).

Union Properties, which reported losses last year, (US$ 263 million) and in Q1, (US$ 55 million), has announced the completion of operational changes as part of its turnaround strategy which will benefit all stakeholders including homeowners, residents and shareholders. The developer has merged three of its business units – Edacom Owners Association Management, Uptown Mirdif and Al Etihad Cold Storage – under Edacom in a move that is expected to see cost savings of US$ 1.91 billion this year alone. The loss last year was attributable to amending the value of property which had been “inflated in prior years”, after the SCA had filed a complaint against its senior executives in October, accusing them of forgery, abuse of authority, fraud and damage to the interests of the company. The developer has also started the design and engineering work for major infrastructure upgrade projects within Motor City.

The DFM opened on Monday, 04 July, 300 points (8.6%) lower on the previous four weeks, closed 93 points (2.9%) down on Thursday 07 July, on 3,109. Emaar Properties, US$ 0.02 higher the previous week, shed US$ 0.02 to close on US$ 1.40. Dewa, Emirates NBD, DIB and DFM started the previous week on US$ 0.69, US$ 3.49, US$ 1.54 and US$ 0.45 and closed on US$ 0.69, US$ 3.23, US$ 1.48 and US$ 0.42. On 07 July, trading was at 104 million shares, with a value of US$ 81 million, compared to 38 million shares, with a value of US$ 41 million, on 01 July 2022. The bourse will open on Tuesday 12 July after the Eid Al Adha break.

By Friday 08 July 2022, Brent, US$ 12.62 (10.2%) lower the previous fortnight, lost US$ 4.37 (4.0%) to close on US$ 107.08. Gold, US$ 48 (2.6%) lower the previous fortnight, shed US$ 72 (4.0%), to close Friday 08 July, on US$ 1,741.  

JP Morgan analysts have managed to frighten some economists by warning that if Russia reduces its crude production by three million bpd, it could push prices to US$ 190 but that price could rise to US$ 380 if production was cut by five million barrels. If the G7, and other leading nations, continue to introduce measures such as a price cap that is disagreeable to Vladimir Putin, he would not be averse to retaliate by reducing exports. If this were to happen, these measures would probably harm the global economy more than the Russian one especially in the current climate of a very tight global oil market, when supply is limited.

It has been reported that more than five million barrels of oil, that were part of a historic US emergency reserves release to lower domestic fuel prices, were exported to Europe and Asia last month, even though US petrol and diesel prices hit record highs. Such moves will have a negative effect on US efforts to reduce domestic energy prices, as Joe Biden continues to call on gasoline companies to cut their prices. It is estimated that one million bpd are being released from the US Strategic Petroleum Reserve which has fallen to its lowest level since 1986. US crude inventories are the lowest since 2004 as refineries run at near peak levels.

By this morning, Bitcoin had had its best weekly gain since last October, as global markets returned to somewhat of a risk appetite. Trading at almost US$ 21.8k, Bitcoin is up 13% for the week, and with the likes of Ether, Avalanche and Solana also performing strongly, the overall cryptocurrency market value has returned to an overall market value in excess of US$ 1 trillion. Despite all the recent razmataz, Bitcoin is still down 50% this year, not helped by monetary tightening and a string of defaults in the digital asset sector. The latest news that bankrupt broker Voyager Digital is more than likely to default on payments to clients will do nothing to boost investor sentiment in the sector.

Ramesh “Sunny” Balwani, who with his then girlfriend, Elizabeth Holmes, has been found guilty of deceiving investors as part of a plot that claimed their company, Theranos, had a device that could detect hundreds of diseases, including cancer and diabetes. Holmes had founded the start-up when she was only nineteen wanting to create a cheaper, more efficient alternative to traditional blood testing and later claiming to have developed technology capable of testing for a range of conditions, by utilising just a few drops of blood. Along the way, the company managed to raise US$ 945 million from a range of high-profile investors, including Rupert Murdoch and Walmart’s Walton family. At one stage, the company was valued at US$ 9.0 billion but was brought down to earth when a Wall Street Journal investigation found holes in its testing methods and technological capabilities. Holmes was found guilty at a separate trial in January, and both will be sentenced by a judge later in the year. The two could get up to twenty years incarceration, whilst Balwani could end up paying millions of dollars in restitution payments to his victims.

It seems that Dave Calhoun, Boeing’s CEO, has indicated that it could cancel the 737 MAX 10 if regulators fail to certify the jet before new crew alerting system standards take effect this December. The Federal Aviation Administration has been taking longer to approve Boeing planes after criticism of the agency in the wake of two fatal crashes of earlier versions of the 737 MAX that left the plane grounded globally for more than a year. Eighteen months ago, Congress passed a law requiring the regulator to only certify planes equipped with a flight crew alerting system designed to help pilots prioritize warnings and advisories activated during flight. However, it appears that the alerting system in the 737 MAX 10 shares the traits in the earlier MAX planes and does not meet the new standards. This system requirement will take effect on 27 December 2022, effectively establishing a two-year exemption for jets already in the certification process. The requirement can be extended only by new US legislation, and Congress has been highly critical of Boeing in the past.

To try and ameliorate recent UK air travel disruption, BA has announced that it will cancel some eight hundred flights over the summer break, impacting some 105k holidaymakers. Both Heathrow, (‘losing’ 76k seats) and Gatwick (29k seats) will bear the brunt of the cancellations to more than seventy locations including Malaga, Ibiza, Palma, Faro and Athens. It hopes that this move will reduce last-minute cancellations while staffing shortages and long queues continue, “as the entire aviation industry continues to face the most challenging period in its history”.

Many of the budget and charter carriers have been highly critical of the state of UK airports with Jet2 coming out this week saying that it was directly affected by “inexcusable” wider disruption across the airline industry and its suppliers. It also noted that passengers have been hit by flight delays, cancellations, long queues, baggage handling problems, and a lack of onboard catering supplies. Furthermore, the budget carrier went even further calling customer service, long queues for security, and a lack of staff and congestion in baggage handling “atrocious”. The airline also noted that its flight schedule has been known for months and that “many suppliers have been woefully ill‐prepared and poorly resourced for the volume of customers they could reasonably expect”.

The ECB is going into battle with the banks that they had lent US$ 2.2 trillion at ultra-low rates to avert a credit meltdown as Covid-19 struck in Q1 2020. But now the environment has changed, and rates have started to head north so much so that banks could be in for a US$ 24 billion bonanza pay-out. All that they need to do is to place the loans back on deposit at the central bank. But the ECB is wary that whilst businesses and households are getting hammered by soaring inflation and higher rates, it will be “giving” taxpayers’ money to these financial institutions, with the bounty also extending to senior management, as bonuses, and investors, as dividends. There is every chance that most of the ECB’s initial funds to banks will remain as bank deposits rather than be utilised for loans.

Singapore-listed cryptocurrency hedge fund Three Arrows Capital is seeking US court- protection from creditors under Chapter 15 of the country’s Bankruptcy Code which is used by non-US companies to block creditors who want to file lawsuits or tie up assets in the US. 3AC is seeking liquidation attributable to the slump in the cryptocurrency which has badly impacted the sector and had left many related companies also struggling for survival. It is reported that the Singapore authorities have claimed that 3AC had exceeded its assets threshold and providing false information.

As expected, Elon Musk has finally announced that he is no longer interested in acquiring Twitter for which he agreed to pay US$ 44 billion in April; he alleges multiple breaches of the merger agreement, including not providing sufficient information on the number of spam and fake accounts. He had requested evidence backing the company’s assertion that spam and bot accounts comprised less than 5% of its total users. Twitter will take legal action to enforce the agreement, and even if it loses the Tesla chief will have to pay a US$ 1 billion break-up fee and possible lawsuit by opting out. Some other reasons why he may have pulled out from the deal include the fact that he paid a hefty premium on the market value, (and since then share values for large tech companies have declined markedly), as well as he wanted to cash in on selling some of his Tesla shares at a higher market price.

Q2 saw Tesla miss its delivery target of 261.2k vehicles, managing 254.7k, which ended its two-year streak of quarterly gains; the main driver behind the fall was production being impacted by a Covid-related shutdown at its factory in Shanghai. Although the figures were more than the 201.2k units delivered in Q2 2021, they were well down on the previous quarterly return of 310.0k. The immediate outlook sees more volatility with the EV maker facing “ongoing supply chain challenges and factory shutdowns beyond our control”, and Elon Musk warning staff of a “very tough quarter” . The enigmatic Tesla chief noted earlier in the year that he expected production in the third and fourth quarters to be “substantially higher” and that Tesla was on track to expand production to more than 1.5 million vehicles in 2022.

The situation in Sri Lanka just gets worse with energy minister, Kanchana Wijesekera noting that the nation only had enough petrol left for less than a day under regular demand, and that

its next petrol shipment was not due for more than two weeks. The estimate is that the island nation had only 12.8k tonnes of diesel and 4.1k tonnes of petrol left in its reserves, and that although a shipment of diesel was expected to arrive at the weekend, the country did not have enough money to pay for planned fuel and crude oil imports. Although US$ 587 million is needed to pay for its scheduled shipments, the central bank could only supply US$ 125 million for fuel purchases; it still owes US$ 800 million to seven suppliers for purchases it made earlier this year. To make matters worse, inflation is at record highs and there are acute shortages of fuel, food and medicines. There may be some good news on the horizon as last week, the IMF concluded a fresh round of talks with Sri Lanka over a US$ 3 billion bailout deal.

Turkstat confirmed that Turkey’s June inflation rate hit a two year high of 78.6% and was nearly 5% higher month on month, driven by a depreciating currency and soaring prices, particularly in the energy and commodity sectors. Since last December, Turkey’s inflation has risen more than 42%. Of the June figures, producer prices rose about 138% annually while food prices surged 93.9%, on an annual basis, transport rates, furnishing/household, clothing/footwear, education, health and communications saw increases of 123%, 81.0%, 27%, 28% 39% and 24%. More of the same is forecast for the coming months, whilst interest rates will probably not rise, in line with President Recip Tayyip’s contrary economic policy, and stay at 14%. Such policies are the main reason why the lire has lost 20% in value to the greenback and become the worst performing currency in emerging markets this year.

It now seems likely that the Australian economy will be in recession territory next year, driven by higher interest rates and slower economic growth; (a recession is defined by two consecutive quarters of negative economic growth).  The Australian stock market is down over 10% from its recent all-time high, whilst latest data indicates the sharpest slowdown in the property market in thirty years. The good news is that the downturn will be a short-lived aberration and should be followed by a robust recovery but only after inflation starts its decline from a probable 7.0% high.

In June, the US economy created 372k jobs, with employment growing by far more than forecast, as unemployment rates remained flat at record lows of 3.6%. This is just one factor that points to an interest rate hike, probably as early as next week, and further tightening by the Fed. Even with the US inflation rate moving steadily to double digit levels, the economy contracting 1.6% in Q1, the equity markets slowing and the Fed hiking rates by 75 bp last month, the US job market remains tight, suggesting still-intense wage pressures. It appears that these impressive job figures contrast with many other economic indicators and that a recession could be on the horizon.

According to the Food and Drink Federation, there will be “relentless” increases in the UK price of food which may not hit their peak until next year, and that it usually takes 7-12 months for producers’ costs to reach shop shelves. The body’s head commented that prices would “absolutely” get worse before they get better, and that “the peak could well be into next year and that prices could well rise some way above 10%”; in May, food and drink price inflation rose to 8.7%. In a similar vein, the Institute of Grocery Distribution, which provides analysis to major grocers, has predicted price hikes topping 15%, as household staples such as bread, meat, dairy, fruit and vegetables become more expensive. Prior to the Ukraine crisis, food and drink manufacturers had already seen costs rise during the pandemic due to supply and labour shortages – but the war has exacerbated the situation.

The real estate consultancy Altus Group estimated that over the past decade the number of pubs in England and Wales has fallen by 15.0% to 40.0k – its lowest level on record. In 2021, four hundred pubs closed for the last time, with a further two hundred calling time in H1. It seems that in 2019, the number of pubs rose but Covid put an end to that, with lockdowns forcing pubs to shut or implement strict social distancing rules. Now it is not Covid that is causing concern for the publicans but a triple whammy of soaring prices, increased taxation and higher energy costs. On top of that there are other factors in play including younger people drinking less, supermarkets selling cheaper alcohol and the industry being too heavily taxed. According to the British Institute of Innkeeping and UK Hospitality, only 37% of hospitality business is making any profit.

A fairly recent addition to the economic lexicon is a SPAC, (special purpose acquisition company), a company without commercial operations and formed primarily to raise capital through an IPO or the purpose of acquiring or merging with an existing company. Now it is reported that UK companies, that have gone public via a Spac listed since 2020, have lost on average 62% of their value, with the biggest loss being EV company Arrival that has tanked 93% of its value since its March 2021 Spac deal, followed closely by used car dealer Cazoo whose shares have lost 92% since its debut last August. Most of the UK companies that decided to list in the US have lost on average 72% in value. There is no doubt that Spacs have quickly lost their gloss, with many projecting initial forecasts too good to believe.

The political mess in the UK saw sterling drop even further against the US dollar, and on Tuesday it was trading at 1.1899 – its lowest level in over two years, having dropped up to 1.8% on the day following news that Home Secretary Sajid Javid and Chancellor Rishi Sunak had “jumped ship”, joined by up to forty more junior resignations. UK stocks and sterling rallied yesterday, after Boris Johnson confirmed he would step down, ending months of political uncertainty in the world’s fifth-largest economy. ‘Borexit’ was an accident waiting to happen after months of political scandals and uncertainty that eroded public confidence in the Johnson government. There was little he could do with surging food prices and massive energy hikes as this was a global problem with most advanced economies failing to get to grips with the problem. In May, inflation in the UK hit an annual rate of 9.1% – a new forty-year high. On Wednesday, the BoE reassured the markets that it would quash inflation before it becomes rampant in the system – perhaps it should have addressed the issue more seriously at least twelve months earlier.

Within three days of stabbing his mentor in the back, Rishi Sunak has come out as a candidate for the number one job with a very slick video, as he promises to restore trust in the government. One has to ask what he has been doing since he accepted the Chancellor’s job in February 2020 taking over from another opportunistic jumper, Sajid Javid; he lost that position after only seven months when he refused No 10’s. orders to replace his advisers with those chosen by the Prime Minister. He had been appointed following Johnson’s election victory despite being a prominent supporter of the unsuccessful ‘Britain Stronger in Europe’ campaign for the UK to remain in the EU; he finished in fourth place to Johnson in the 2019 leadership contest. Then there is Nadhim Zahawi, previously a Johnson supporter, who was appointed to replace Rishi Sunak as Chancellor on 05 July, only to call for the Prime Minister’s resignation two days later on 07 July. This week has seen Whitehall and these   three and many more ministers acting like rats fleeing a sinking ship.

Many would have been surprised by former FIFA president Sepp Blatter and vice-president Michel Platini both being found not guilty, following their fraud trial in Switzerland, relating to a US$ 2 million payment made by Blatter to the ex-French footballer. They claimed that the 2011 money transfer was a belated payment for Platini’s advisory work for FIFA some ten years earlier. In his testimony, Blatter said he asked Platini to be his adviser when he was first appointed president of football’s world governing body in 1998. He said Platini wanted US$ 1 million per annum but told him FIFA could not afford that fee, so they settled on US$ 300k, with the outstanding total to be paid at a later date. Platini had stopped working for FIFA in 2002 but did not pursue the payment until 2010, telling the court he had not needed the money at the time of his departure, when – according to Blatter – the world body was in any case “broke”. It seems that Platini heard that two former employees had received substantial payments and approached FIFA, who he said told him to send an invoice. He did so in January 2011, with the money paid ten days later after approval by Blatter. It does seem a very odd arrangement and a surprise to many that these two vagabonds got away such a story. Today Was A Fairy Tale!

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The Keepers and the Poachers

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The Keepers and the Poachers                                             01 July 2022

For the past week, ending 01 July 2022, Dubai Land Department recorded a total of 2,369 real estate and properties transactions, with a gross value of US$ 2.70 billion. A total of 379 plots were sold for US$ 444 million, with 1,990 apartments/villas selling for US$ 1.16 billion. The top two transaction sales were for plots of land – one in Palm Jumeirah for US$ 20 million and another sold for US$ 16 million in Seih Shuaib. The sum of mortgaged properties for the week was US$ 744 million. 144 properties were granted between first-degree relatives worth US$ 368 million.

Many analysts consider that the emirate’s luxury property market will continue to rise in H2, driven by limited stock of prime and ultra-prime residential units being not enough to meet the demand from high-net-worth individuals. This growing sector of the population has resulted in growing demand from both end-users and foreign buyers outstripping ready supply. A recent report noted that over 4k HNWIs are expected to relocate to the UAE this year for a variety of reasons, including the country’s ability in managing the Covid-19 pandemic, its successful hosting Expo 2020 Dubai, excellent connectivity, 100% foreign ownership of companies and its recent visa reforms. Real estate consultancy, Core commented that there had been a “marked increase in demand for prime residential properties since fourth quarter of 2020. In fact, 2021 saw the highest secondary market transactions above AED 10 million in the last decade, with Palm Jumeirah accounting for nearly 35% of these transactions.” In Q1, the number of deals involving property over US$ 2.72 million (AED 10 million) was 140.2% higher in the year at 483 – 305 villas and 178 apartments, (Q1 2021 – 150 villas and 51 apartments). This equates to only 3.3% of all the secondary market transactions and 1.4% of all the off-plan market transactions This year, the sector is expected to double its share due to an influx of investors showing interest in the segment.

The second phase of Imkan’s 370-hecatre, US$ 4.1 billion AlJurf masterplan project on the coast between Abu Dhabi and Dubai has been launched. Following the first phase, comprising 293 small ranch-like villas, due for completion within twelve months, this phase comprises 98 villas, with a choice of two styles, Joud and Budoor.  The overall aim of the project, stretching along 1.6 km of coastline, is to create a coastal “retreat” for UAE city dwellers, whilst conserving the existing resources – 100k trees, sea turtles and other wildlife at the Ghantoot reserve. AlJurf Gardens will include a private marina, a private beach and a large central park, as well as a private school, retail shops, restaurants, boutique hotels, parks, heritage sites and a canal adding 8 km of prime waterfront real estate.

On Monday, Al-Futtaim Group Real Estate launched a new residential development in Dubai Festival City. Al Badia Terraces comprises a complex of residential mid-rise towers that will house 132 1 B/R units, 193 2 B/R units and 26 3 B/R units, with floor sizes of at 749 sq ft, 1,183 sq ft and 1,942 sq ft. Completion is slated by mid-2024. Another developer has launched a US$ 136 million development to be completed next June. Binghatti Canal, comprising of 84 studios, 124 1 B/R and 85 2 B/R, is located in Business Bay, with views of the Dubai Water Canal. It will be the developer’s fiftieth project and will be unique in terms of creativity and luxury.

Pivot has been awarded a US$ 168 million, 976-townhouse contract by Damac Properties for construction works on its Costa Brava housing cluster at Damac Lagoons, which comprises seven other clusters named Venice, Morocco, Santorini, Nice, Malta, Andalucia and Portofino.  Earlier in the year, Shapoorji Pallonji was awarded a US$ 136 million contract for the main works at the Santorini cluster, with the last two clusters – Venice and Malta – only announced in May. The overall Lagoons development, only launched late last year, is expected to open in 2024.

Damac has completed its first ever European project, Damac Towers Nine Elm London building, with handover of units having already started. The 450-unit, fifty-storey project, in a tie up with Italian firm Versace, comprises studio, 1 B/R, 2 B/R and 3 B/R apartments. The developer has also collaborated with various other global brands such as Cavalli, de Grisogono, Paramount, Rotana, Radisson and The Trump Organisation. April saw average UK house prices jump 12.4% to US$ 345k, whilst Damac’s prices range from US$ 1.1 million to over US$ 17.0 million. The development has 8.0k sq ft of communal gardens, as well as four levels of office space in its South Tower.

Latest figures show that Dubai is ranked tenth among global cities with the most Airbnb residences, with 15.9k properties on offer, fast catching up on the top five locations – London (34.1 active properties), Paris (24.9k), New York (22.6k), Istanbul (21.6k) and Shanghai (20.7k).  It is estimated that Airbnb’s portfolio numbers over seven million rentals, but since 2019 – and the onset of the pandemic, and the resulting travel bans – the number of active rentals has fallen for the top ten destinations by 30.0% to 209.7k.

Mercer’s latest ‘Cost of Living’ survey sees Dubai move nine places higher to become the 31st most expensive city for expatriates, with Abu Dhabi dropping five places to 61st. Hong Kong again topped the list, followed by four Swiss cites – Zurich, Geneva, Basel and Bern. Tel Aviv was judged to be the sixth most expensive global city, followed by New York and three Asian locations – Singapore, Tokyo and Beijing. The survey is based around the price of two hundred goods and products, including housing, transport, utilities, food, domestic supplies and entertainment, in over four hundred cities. The cheapest places for expatriates to live include Ankara, Bishkek in Kyrgyzstan and Dushanbe in Tajikistan, with Karachi and Islamabad also ranking among the cheapest cities.

Another initiative to strengthen Dubai’s growing global presence has been launched by Sheikh Hamdan bin Mohammed. ‘Dubai Global’ will see fifty integrated representative offices being open in leading locations. Its twin aims are to increase public awareness of Dubai’s position as one of the best commercial hubs on the planet and to assist Dubai-based companies with ‘local’ logistical support in more than thirty promising markets. The Crown Prince added that, “our goal is to globalise our national companies, attract global investments, and add new markets to our global business lines”, and “we will double our economy over the next few years, establish the best business environment in the world, and be No. 1 in quality of life.” The fifty commercial representative offices will operate as part of Dubai Chambers and in partnership with several government and semi-government entities in Dubai.

A decision by Sheikh Hamdan bin Mohammed has seen the fee, imposed pursuant to regulations issued on March 12, 1985, and Resolution No. (4) of 1998, being cancelled. It applies to Dubai-based airline agents, offices and branches.

It has been announced that the Arafat Day and Eid Al Adha holidays will start next Friday, 08 July, for four days ending on Monday, 11 July 2022, with official working hours resuming on Tuesday.

 July petrol prices have once again shown double-digit monthly increases:

  • Super 98: US$ 1.261 – up by 11.5% on the month and 74.7% YTD from US$ 0.722
  • Special 95: US$ 1.232 – up by 12.1% on the month and 78.8% YTD from US$ 0.689
  • Diesel: US$ 1.297 – up by 9.0% on the month and 78.8% YTD from US$ 0.697
  • E-plus 91: US$ 1.210 -up by 12.1% on the month

Dual-tranche US$ 3 billion sovereign bonds, issued by the UAE, were five times oversubscribed, with the Ministry of Finance doubling its initial target of US$ 1.5 billion.  The bonds – a ten-year tranche and thirty-year Formosa bonds – will be listed on both the LSE and Nasdaq Dubai. The former tranche of US$ 1.75 billion was priced at a spread of 100 bps over US Treasuries, with a final coupon rate of 4.05%, whilst the latter tranche of US$ 1.25 billion was priced at a spread of 175 bps over US Treasuries, with a final coupon rate of 4.951 – this tranche will also be listed on the Taipei Exchange.

Wednesday saw the opening of the 200k sq mt Yiwu Market, thefirst smart free zone market in the Middle East, and the first phase of the Dubai Traders Market in Jebel Ali Free Zone. It is expected that this new concept, comprising 1.4k mainland showrooms and 324 warehouses, will revolutionise the trading experience for sellers and consumers. The showrooms will be split into various sectors including electronics/appliances, furniture/lighting, beauty/ accessories, tools/hardware (including auto spare parts), kitchen/bath, bedding, curtains, and clothing. The new marketplace will enable goods to be stored, sold, imported, and exported all in one place, without additional charges, and with the greatest possible ease.  Another benefit of the new facility is its close proximity to both Jebel Ali Port and Al Maktoum International Airport, allowing customers to easily transport goods to and from their warehouses. In tandem with ‘Yiwu Market’, ‘Yiwu Connect’, (a dedicated area that allows cross-border networking and information exchange between traders in Dubai and factories in China), has been launched.

Dubai International Financial Centre has launched the region’s first Open Finance Lab, a six-month programme that commenced on Wednesday. Four banks – CBD, FAB, Mashreq and National Bank of Ras Al Khaimah – along with FinTech company Zand will participate in the scheme that will use current cases that will conclude the participants giving a detailed summary of the impact achieved to government officials and bank executives. It is hoped that initiatives like this one will help unlock strategic opportunities for the UAE and reinforce DIFC’s leading position as a global financial services hub. Over the trial period, the lab will run regulatory forums on important issues, as it collaborates with banks, FinTech, regulators and the industry.

Following on the success of the DEWA IPO in April, the government’s latest foray into the DFM saw its TECOM Group raise US$ 463 million; the IPO was 21 times oversubscribed, with the UAE Retail Offer almost 40 times oversubscribed. The final offer price of US$ 0.728 per share valued the business at US$ 3.65 billion. The IPO comprised 12.5% of TECOM Group’s issued share capital, equating to 625 million ordinary shares; Dubai Holding Asset Management (DHAM) will continue to own a majority 86.5% stake.

The Union Coop today announced its intention to list on the DFM on 18 July 2022 and becomes the first national retail cooperative to do so. It suspended trading of its shares as of today, 01 July, and will now exercise a share split that will see Union Coop member receive ten shares against each currently owned share. The share price will be determined on the first day of trading on the DFM. Union Coop posted a 2.6% rise in profit., compared to a year earlier, and last year recorded a US$ 113 million profit.

The DFM opened on Monday, 27 June, 300 points (8.6%) lower on the previous three weeks, closed flat on Friday 01 July, on 3,202. Emaar Properties, US$ 0.18 lower the previous three weeks, gained US$ 0.02 to close on US$ 1.42. Dewa, Emirates NBD, DIB and DFM started the previous week on US$ 0.69, US$ 3.54, US$ 1.60 and US$ 0.50 and closed on US$ 0.69, US$ 3.49, US$ 1.54 and US$ 0.45. On 01 July, trading was at 38 million shares, with a value of US$ 41 million, compared to 35 million shares, with a value of US$ 26 million, on 24 June 2022.

For the month of June, the bourse had opened on 3,347 and, having closed the month on 3,223 was 124 points (3.7%) lower. Emaar traded US$ 0.14 lower from its 01 June 2022 opening figure of US$ 1.56, to close the month at US$ 1.42. Four other bellwether stocks, Dewa, Emirates NBD, DIB and DFM started the month on US$ 0.69, US$ 3.58, US$ 1.62 and US$ 0.59 and closed on 30 June on US$ 0.69, US$ 3.60, US$ 1.57 and US$ 0.45 respectively. The bourse had opened the year on 3,196 and, having closed June on 3,223, was 27 points (0.1%) higher, YTD. Emaar traded US$ 0.09 higher from its 01 January 2022 opening figure of US$ 1.33, to close June at US$ 1.42. 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 30 June on US$ 0.69, US$ 3.60, US$ 1.,57 and US$ 0.45 respectively.

By Friday 24 June 2022, Brent, US$ 11.55 (10.5%) lower the previous week, lost US$ 1.17 (1.0%) to close on US$ 111.45. Gold, US$ 33 (1.8%) lower the previous week, shed US$ 15 (0.8%), to close Friday 24 June, on US$ 1,813.  

Brent started the year on US$ 77.68 and gained US$ 32.94 (42.4%), to close 30 June on US$ 110.62. Meanwhile, the yellow metal opened January trading at US$ 1,831 and has shed US$ 38 (2.1%) during 2022, to close on US$ 1,793. For the month, Brent opened at US$ 107.59 and closed on 30 June, US$ 110.62 (2.8%) higher. Meanwhile, gold opened June on US$ 1,837 and shed US$ 44 (2.4%) to close at US$ 1,793 on 30 June.

The Minister of Energy and Infrastructure, Suhail bin Mohammed Al Mazrouei, confirmed that the UAE was close to OPEC+’s production baseline of 3.168 million bpd, which the country is committed to until the end of the agreement. Following the statement on Tuesday, made “in light of recent media reports,” oil prices jumped about 1% in early trading. It was reported that French President Emmanuel Macron told U.S. President Joe Biden, at the G7 summit, that President His Highness Sheikh Mohammed bin Zayed al-Nahyan had “told me two things. I’m at a maximum, maximum (production capacity). This is what he claims,” and that “the Saudis can increase by 150k bpd – maybe a little bit more, but they don’t have huge capacities before six months’ time.” Saudi Arabia and the UAE are the only two OPEC countries with spare capacity available to make up for lost Russian supply and weak output from other member nations.

The slight rise in gold earlier in the week was the result of it being looked on as a safe haven in a time of renewed fears of a recession and countered pressure from a firmer dollar, while investors waited for the Fed to introduce much awaited firmer monetary policy changes. This comes when rising interest rates, non-stop surging inflation, (9.1% in the UK last month), and stock markets declining.

Do Kwon, co-founder of Terraform Labs, acknowledged that he has lost almost all his net worth after the US$ 40 billion cryptocurrency ecosystem collapsed in May; prior to then, the Luna token that Terraform Labs backed was hovering around the US$ 100 mark – now it is almost worthless. Not only did it wipe out Do Kwon’s wealth, it also cleaned out the savings of thousands of investors; as well signalling the start of the collapse in cryptocurrencies and this is why investigators in both South Korea and the US are now delving further into the modus operandi of its stablecoin, TerraUSD. In May, the South Korean ex-billionaire introduced a new Luna coin, Lina 2.0, made available free to existing holders of the original token. It did reach a high of US$ 18.87 before slumping to recent values of around US$ 2.00.

This week, German Ruja Ignatova, also known as “Cryptoqueen,” has been added to the FBI’s list of its ten most-wanted fugitives long after being charged in 2019 with eight counts including wire fraud and securities fraud for running the Bulgaria-based OneCoin Ltd as a pyramid scheme. It is thought that she could have defrauded investors out of US$ 4 billion by offering commissions for members to entice others to buy a worthless cryptocurrency. She disappeared in late 2017 after bugging an apartment belonging to her American boyfriend and learning he was cooperating with an FBI probe into OneCoin, following which she boarded a flight from Bulgaria to Greece and has not been seen since. The FBI is offering a US$ 100k reward for information leading to Ignatova’s capture.

As it prepares to receive one of the largest aircraft orders in commercial aviation history, Air India, now taken over by Tata Sons from the government, is considering hiring retired pilots. The airline has to increase its manpower following reports that it would be ordering three hundred new jets – either Airbus SE A320neo and/or Boeing’s 737 Max models. Tata Sons has ordered a complete revamp of the former state-run airline, bringing in the former head of Singapore Airline’s budget unit, Campbell Wilson, and assigning a US$ 1.9 billion budget to the project. It will include the airline’s fleet, ground handling, network planning, IT systems, maintenance and training.

After introducing a temporary ban on parties in August 2020, in response to the pandemic, Airbnb has permanently banned them and events at homes on its platform, noting that the rule has become “much more than a public health measure.” Since the temporary ban, the number of complaints about parties had dropped by 44%. The San Francisco-based company has also removed a sixteen-person limit on how many people can stay at homes. It started putting restrictions on parties in 2019, when it banned “open-invite” parties and so-called “chronic party houses” that were a nuisance to neighbours.

Shareholder pressure is mounting on Sainsbury’s to ensure all its workers, including sub-contractors, are paid the real living wage. The supermarket chain already pays its direct staff over the rate set by the Living Wage Foundation, of US$ 12.14, (GBP 9.90,) which is higher than the government-set minimum wage of US$ 11.65 an hour (GBP 9.50) for workers over the age of 23. Management argues that the “vast majority” of its subcontracted staff were already being paid at the real living wage level, but the difficulty came with making a longer-term commitment to pay the rates set by the foundation. Investors pushing for a wage hike include Legal & General Investment Management, the National Employment Savings Trust (Nest), the Coal Pensions Board and wealth management firm Coutts and Co. Other large shareholders in the company have said they will support the firm and vote against the resolution at this week’s AGM on 07 July.

Gaffe-ridden Transport Secretary Grant Shapps continues to display his ministerial ineptitude, as he tries to keep out of trouble and continues in shifting any responsibility to other parties. He indicated that last week’s rail strikes dispute could “easily be settled because there are so many modernisations from antiquated work practices, for example noting that “two vans often have to be sent to a maintenance job when only one van is required.” Earlier it was pointed out that sending several vans “is both a safety and engineering standards issue”, and that “it would be pointless sending staff to a location without their gear, equipment and tools which is why the vehicles and associated equipment are sent to site” in more than one van. Although Minister Shapps has said that rail strikes could be “easily settled” by modernising “antiquated” working practices, he is adamant that “he didn’t, and shouldn’t, interfere with the detail of negotiations between the RMT and the industry”, noting employers were “the only people who could settle this strike”. He has acknowledged that he and the Treasury had set an overall mandate, which dictated how much money was available, and that he had final sign-off on what was agreed. Is this the same man who got so involved in the P&O dispute earlier in the year?

Yesterday saw another day of “total chaos” and “zero customer service” at London Heathrow with passengers again complaining of long queues; this came after the airport asked airlines to remove thirty flights from Thursday’s schedule, for safety reasons, as it was expecting more passenger numbers than it could cope with. Belatedly, and not unexpectedly, embattled Grant Shapps commented that “it’s now on airports and airlines to commit to running the flights they’ve promised or cancel them with plenty of time to spare so we can avoid the kind of scenes we saw at Easter and half term.” Yesterday, the government introduced twenty-two

measures to give airlines a short window to hand back plane parking slots for the rest of the summer season, with the aim to help manage capacity at the busiest airports. There has been disruption and flight cancellations all year at UK international airports caused by several factors, but staff shortages have left the aviation industry struggling to cope with resurgent demand.

The next sector lining up for industrial action appears to be Communications, with 40k BT workers voting to go on strike in a dispute over pay; this would be BT’s first national strike since it was privatised in the 1980s. Over 90% of workers called for strike action, with BT commenting that it was disappointed and would “work to keep our customers and the country connected.” It is all but certain that the UK –and other countries – will witness a summer of discontent, with widespread strikes, industrial action and civil unrest.

The G7 leaders have relaunched a US$ 600 billion Partnership for Global Infrastructure and Investment as a counter to China’s multi-trillion-dollar infrastructure initiative Belt and Road plan which has been criticised for hitting nations with too much debt. The G7 plan calls on leaders to raise the funds over the next five years to finance the launch of infrastructure projects in middle and low-income countries, with the focus on tackling climate change, improving global health, achieving gender equity and building digital infrastructure. Some of the highlighted initiatives include a solar-powered project in Angola, a vaccine manufacturing facility in Senegal, and a 1.6k km submarine telecommunications cable connecting Singapore to France via Egypt and the Horn of Africa. The EC President Ursula von der Leyen said that PGII’s target was to present a “positive powerful investment impulse to the world to show our partners in the developing world that they have a choice”.

(The Chinese have learnt well from the US escapades, in both South America and Indonesia, in the 1970s, and now countries such as Djibouti, Kyrgyzstan, Laos and Zambia have debts to China equivalent to at least 20% of their annual GDP. Then there are the loans from the Exim Bank of China to build the Hambantota International Port and the Mattala Rajapaksa International Airport that have left Sri Lanka bankrupt).

In another effort to hit the Russian economy, the G7 has announced a ban on imports of Russian gold as their summit in the Bavarian Alps. It is hoped that such a move will further tighten the sanctions squeeze on Moscow and the many Russian oligarchs. Boris Johnson commented that “we need to starve the Putin regime of its funding. The UK and our allies are doing just that.” (Whether that is the case for all members is debatable). It is estimated that their 2021 gold exports were worth US$ 15.45 billion last year and since the onset of the crisis, wealthy Russians have been buying bullion to reduce the financial impact of Western sanctions.

Although it has the money to and is willing to pay, Russia saw its first debt default since 1998 when it missed the deadline to repay a US$ 100 million debt interest. Because of sanctions, it was not in a position to get the payments to international creditors. It seems that the US$ 100 million interest payment was due on 27 May, and was sent to Euroclear, but that payment has been stuck there. Russia’s access to the global banking networks which would process payments from Russia to investors around the world, has all been cut. About US$ 40 billion of Russia’s debts are denominated in dollars or euros, with around half held outside the country.

With concerns about its economy growing by the day, US stocks have had their worst half year returns since 1970, with the benchmark S&P 500 tanking 20.6% as the others also showed marked declines; the Nasdaq Composite shed almost 30% and the Dow Joes a somewhat lower 15% in the first six months of the year. The same has happened on an almost global scale and despite unwarranted optimism from some central banks, it is almost inevitable that many economies will go into recession, some as early as by the end of this year, as interest rates move higher.  The FTSE 250 has dropped by more than 20%, while Europe’s Stoxx 600 index has lost almost 17% and the MSCI index of Asia-Pacific markets has moved 18% lower over the period. There is no doubt that volatility in the markets will continue, driven by the triple whammy of investor confidence, continuing soaring inflation and the ongoing war in Ukraine. The problem facing most central banks is the temptation to move too far with rates because the last thing anybody would like to see is a ‘hard landing’ that would lead to an even bigger downturn in economic activity. It is time for people to realise that the days of low inflation and low rates are fast disappearing and will not be seen again until the next economic cycle comes around.

According to the IMF, the US economy is likely to slow in 2022 and 2023 but will “narrowly avoid a recession” but warned that “the policy priority now must be to expeditiously slow wage and price growth without precipitating a recession.” Jerome Powell, the Fed Chairman seems to be pointing to a rate up to say 4% in a matter of months, including a probable 0.75% hike this month, which in theory should tighten financial conditions just enough to bring inflation down to its 2% target. To this observer, this seems a foreloin hope, bearing in mind a number of factors, including global supply constraints, domestic labour shortages and the ongoing war in Ukraine among many potential pitfalls. Like other central banks, including the BoE and the ECB, their moves may have come too late, after printing too much money, with a lackadaisical approach, for too long a period. Even Jerome Powell, facing the Senate Banking Committee, said when asked if a recession was possible “it’s not our intended outcome, but it’s certainly a possibility.” His best hope in his belated quest to quench soaring inflation is to achieve a “soft landing” — a reduction in inflation and a slowdown in growth without triggering a recession and high unemployment. Concerns are growing that the Fed will end up tightening credit so much as to cause a recession. This week, Goldman Sachs estimated the likelihood of a recession at 30% over the next year and at 48% over the next two years.

Unfortunately, many a UK government eventually falls to sleaze, described as ‘immoral, sordid and corrupt behaviour or activities’. In recent decades, it has seen the end of John Major, Tony Blair, David Cameron and very soon Boris Johnson. It happens in all walks of life with institutions like the NHS, the Vatican, other Church bodies, the judiciary, FIFA, the gun lobby, the mining industry and innumerable others have all been tarnished by sleazy behaviour by people who should have known better. The professions are not immune from their fair share of sleaze and in the US, the land of the lawsuits, the auditing profession are up there among the best. At the turn of the century, Enron managed to lose US$ 74 billion in a controversial accounting scandal, with its share value tanking from US$ 94 to less than US$ 1 within a year; WorldCom had US$ 3.8 billion in fake invoicing, resulting in a loss of 30k jobs and US$ 180 billion in investor losses. Since then, the cases have kept mounting, with the likes of Lehman Brothers, Freddie Mac. AIG and Bernie Madoff ensuring billions of dollars of losses for duped investors.

Now the Big Four are in the news again and this time for claims that employees have cheated on their ethics exams and have subsequently misled investigators. This week the SEC has fined EY a record US$ 100 million for exam cheating and illegal tip-offs. It is alleged that between 2017-2019, forty-nine EY staff shared answers to the ethics portion of their CPA exam, with hundreds more cheating on tests required to maintain their certification. In 2019, KPMG were fined US$ 50 million for similar offences but at the time EY, even though they knew to the contrary, denied any issues with its employees’ illegal behaviour. It is a worry that such firms are entrusted with auditing many of the US government and major US listed companies. If the gatekeepers are responsible for such important audits, who is watching the gatekeepers? It is becoming more difficult to separate The Keepers and the Poachers.

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Who Got The Juice Now?

Who Got The Juice Now?                                                                      24 June 2022

For the past week, ending 24 June 2022, Dubai Land Department recorded a total of 2,624 real estate and properties transactions, with a gross value of US$ 2.18 billion. A total of 274 plots were sold for US$ 313 million, with 1,757 apartments/villas selling for US$ 1.09 billion. The top three transaction sales were for plots of land – one in Palm Jumeirah for US$ 34 million, another sold for US$ 14 million in Al Thanayah Fourth., and a third in Umm Suqeim Third for US$ 7 million The three leading locations for sales transactions were Al Hebiah Fifth, with 154 sales worth US$ 91 million, followed by Jabal Ali First, with 29 sales transactions worth US$ 24 million, and Al Merkadh, with 17 sales transactions, worth US$ 35 million. Burj Khalifa came in first in terms of number of transfers for apartments and villas recording 223 transactions worth US$ 172 million, followed Marsa Dubai, with 173 transactions worth US$ 144 million, and Al Jaddaf, with 151 transactions worth US$ 55 million. The sum of mortgaged properties for the week was US$ 744 million. 77properties were granted between first-degree relatives worth US$ 41 million.

According to a CBRE report, Dubai off-plan sales increased by 55.4% and secondary market sales by 18.0%, with May monthly transactions totalling 5.54k – the highest monthly total recorded since 2009 – and 33.0% higher YTD at 30.9k; average prices were 10.9% higher. Rentals for villas and apartments averaged out at US$ 68.0k, up 19.8% on the year – equating to US$ 356k per sq ft – and US$ 22.7k, (9.6%) higher for villas, and US$ 300 per sq ft for apartments; the study found that, compared to the peaks of 2014, the rates were 9.5% and 25.9% lower. The highest rents were located at Al Barari (US$ 238.2k) and Palm Jumeirah (US$ 58.2k).

Officials have announced that 80% of Expo-built infrastructure is to be retained and repurposed including 123 LEED-certified buildings that will have many features including being the first WELL-certified community in the region; it will host ten km of cycling tracks, five km of running tracks and 45k  sq mt of parks and gardens. Expo City will be pedestrianised, without cars, and will be a human-centric smart location, driven by sustainability innovation, education and entertainment. Many of the cultural attractions of Dubai Expo will be maintained including its two focal points – Al Wasl Plaza and Terra -as well as many country pavilions, including those of the UAE, Saudi Arabia, Morocco, India, Pakistan, Egypt and Luxembourg.

It seems that the Dubai property market is again seeing properties being snapped up within hours of their launch, with long queues of property buyers waiting for the various openings. Last Saturday, Nshama’s 200-plus units of Shams Townhouses, located in Town Square, were sold out, to a mix of investors and end users, within three hours. It was reported that by 4am, on Saturday morning, there was a queue of over one hundred waiting in line. Prices for a 3 B/R townhouse, (with a 2.1k sq ft built up area) were US$ 441k and US$ 572k for a 4 B/R with a built-up area of 2.4k sq ft.  Buying terms were 10% down payment, 40% during construction and 50% upon handover in 2024. Earlier this month, Danube Properties saw long queues ahead of its Gemz project which was also sold out on the same day. Last September, Nakheel also saw a strong response with long queues of investors on the day of the sale of its 360 units of phase two of Murooj Al Furjan West

During the first five months of 2022, Dubai’s tourism sector posted a 197%, year on year, jump in international overnight visitors, reaching a total of 6.17 million. The figures were released at the first ‘City Briefing’ for 2022, organised by Dubai’s Department of Economy and Tourism, and attended by 1.2k key executives from across the tourism ecosystem. The bi-annual meeting discussed future strategies to further reinforce the city’s position as a global hub for business, investment, talent and tourism. Over the period, the emirate’s hotels maintained an average occupancy level of 76%, up 14% compared to a year earlier, and a figure that places Dubai the leading location in the world. STR figures show that the likes of New York, London and Paris lag far behind with occupancy levels of 61%, 60% and 57%.

At this week’s meeting of the Executive Council, chaired by Sheikh Hamdan bin Mohammed, confirmed that Dubai’s GDP grew by 6.2% last year and 5.9% in Q1, equating to US$ 27.8 billion. The Crown Prince noted that the figures reaffirmed the emirate’s ability to adapt and grow, and that the government’s attractive fiscal measures directly helped to stimulate economic growth; he also indicated that the successful Expo 2020 Dubai contributed to a post-pandemic tourism boom, leading to increased air and sea traffic and record foreign trade. The Deputy Ruler of Dubai, Sheikh Maktoum bin Mohammed, also attended the meeting, which was held at the newly opened Mohammed Bin Rashid Library.

This week, DP World and the Saudi Ports Authority (Mawani) signed a thirty-year agreement to build a state-of-the-art, port-centric Logistics Park at the Jeddah Islamic Port. The US$ 133 million investment includes the construction of a 415k sq mt logistics park, with an in-land container depot capacity of 250k TEUs (Twenty-foot Equivalent Units) and 100k sq mt of warehousing storage space. The project will expand the Dubai port operator’s regional footprint and will boost the Jeddah’s export activities as well as reducing the time and cost of logistics for importers and exporters. In April 2020, DP World signed a new thirty-year US$ 800 million concession agreement with Mawani to continue operating and managing the South Container Terminal at the Jeddah Islamic Port.

This week saw another announcement that the UAE would build a new Red Sea port in Sudan, as part of a US$ 6 billion investment package involving the DAL Group and the Abu Dhabi Ports Group. However, the latter has yet to sign any such agreement but noted there were “preliminary” talks taking place in Sudan and that it is “always exploring new opportunities and projects.”

Although it is expecting to receive two A350s a month from the summer of 2024, Emirates is in discussions with Airbus to increase the flow of planes because of continuing delays with Boeing’s 777X programme. The aircraft, of which the 777-8 and 777-9 are variants, has been in development since 2013 and was expected to be released for commercial use in June 2020. Even now the GE engines are yet to be subject to scrutiny by Emirates, and there has been no flight test programme to date. The airline is hoping to get its fifty-plane order, worth US$ 16 billion and signed at the 2019 Dubai Air Show, over a shorter time period to “pick up this big capacity”. Delivery had been planned to start in May 2023 and run until 2028. The airline is set to meet Boeing officials next week in Dubai to seek more clarity on the delivery timeline and programme and have warned that if negotiations are unsuccessful “it’ll have serious repercussions.” (This week, Emirates made its first flight to Israel as EK 931, with 335 passengers taking off to Tel Aviv).

flydubai is hoping that the recent surge in passenger demand continues into the summer to ensure a record-breaking holiday period for the Dubai carrier. It is planning to carry three million passengers in the coming three months on its 8.5k monthly flights to 102 destinations. Its CEO Ghaith Al Ghaith said that, “while the global aviation sector has been slowly recovering from the repercussions of the pandemic, we have seen Dubai steadfast in its approach to enable the return to free flows of trade and tourism. The decisions made early on in the pandemic have enabled us to ramp up our operations to cater to the pent-up demand in record time.”

Fujairah’s Sakamkam area, was the location for the signing of a US$ 327 million deal between Etihad Rail and Spain’s CAF for designing, manufacturing, supplying, and maintaining passenger trains for the UAE’s new rail network; it will also be the site of the country’s first passenger train station. Each train will have a seating capacity of more than 400 and will reach speeds of up to 200 kph. With the train line between Abu Dhabi and Dubai completed in March, the 1.2k km rail link will eventually connect eleven cities and regions within the UAE; a launch date has yet to be released. It is estimated that the travel time between Dubai and Abu Dhabi, and Dubai and Fujairah will both be fifty minutes Recently, the operator has signed three MoUs with Spain’s national railway operator Renfe, and UK companies, High Speed 1 and GB Railfreight. A launch date for the passenger service has not yet been announced.

The Securities and Commodities Authority’s Annual Report 2021 noted that the country’s listed public joint stock companies approved cumulative dividends of US$ 9.37 billion last year, of which 97.3% were paid out in cash and the balance in stock. A further breakdown sees banks being the largest distributors of profits, US$ 4.30 billion, followed by the telecommunications – US$ 3.19 billion – and the realty sectors, US$ 516 million.

The second auction of federal treasury bonds (T-Bonds) was held last Monday, with an auction size of US$ 408 million, (AED 1.5 billion), comprising two equal tranches of US$ 204 million – one for two years and the other for three years. It was over-subscribed 6.5 times. The first auction in April, also for US$ 408 million, was well received and carried a uniform coupon rate fixed at 3.01% (for its two-year tranche), and 3.24%, (for the three year one) respectively. The Ministry of Finance confirmed that there would be further issues of local bonds during the rest of this year, with the aim of improving liquidity in the secondary market.

As part of its strategy to utilise the debt market, the Ministry of Finance confirmed that it will issue dual-tranche, US dollar-denominated sovereign bonds, including a ten-year tranche and a thirty-year Formosa tranche; the latter refers to debt issued in Taiwan by foreign borrowers in currencies other than the Taiwanese dollar. Each tranche will be valued at a minimum US$ 500 million, with the ten-year note being listed on the London Stock Exchange and Nasdaq Dubai, as will the thirty-year tranche plus the Taipei Exchange. 2021 was the first time that the federal government issued such bonds at a federal level, and raised US$ 4 billion through the issuance of multi-tranche sovereign bonds. Typical tenures will range from ten to twenty years, with forty years for the Formosa funds. The UAE federal government is rated “AA-” by Fitch, and “Aa2” by Moody’s Investors Service, with a stable outlook for the national economy.

According to the Arab Investment Export Credit Guarantee Corporation, the UAE has received 41% of foreign direct investment projects, directed to Arab countries, over the past nineteen years. During that period, the countries have attracted 14.4k foreign projects, with a total capex of US$ 1.3 trillion; it is estimated that these projects have created approximately two million job opportunities. Last year, Western Europe was the region’s main investor, with Saudi Arabia being the top investment destination in view of the capex (US$ 9.3 billion), while the UAE came first in terms of the number of projects (455).  It is reported that, in Q1, the number of foreign projects into the region rose by 15%, on the year, while their capex jumped 86% to US$21 billion.

The RTA announced that, last year, its digital platforms generated US$ 954 million of revenue, up 32.0% on the year, with the number of smart app transactions topping 1.2 million – 44.0% higher on the year. It estimates that over one million people are active users of its digital service platforms, with more than two million users in 2021, and that there was a 28.3% increase in the number of digital transactions at 676 million.

In a major local marketing coup, adidas has come up with a limited edition of the ‘adidas x Ravi Restaurant trainers’ and yesterday they went on sale at its Dubai Mall’s flagship store, with the first person queuing at 4am. The store was decked out just like Ravi Restaurant including the iconic green and white. The trainers were sold at US$ 150 and although no numbers are available, it is thought that the white and green trainers, with a snippet of Ravi’s menu on the tongue of the shoes, will be sold out very quickly. The concept had taken eighteen months to fruition.

As it continues to expand its food offerings, local ride-hailing firm Careem has acquired UAE subscription-based food delivery company Munch:On, but no financial details were available. It will stop daily operations and its services will be incorporated into Careem’s multi-service platform. In 2019, Careem became the region’s first unicorn – a start-up with a valuation of more than $1 billion – when US-based Uber paid US$ 3.1 billion for it. The firm, with its co-founder Mudassir Sheikha still chief executive, offers more than a dozen services including ride-hailing, food and grocery delivery, micro-mobility and payments; it continues to increase its services and geographic footprint to grab a larger share in FinTech services.

The DFM opened on Monday, 20 June, 125 points (3.6%) lower on the previous fortnight, and shed 175 points (5.2%), to close on Friday 24 June, on 3,202. Emaar Properties, US$ 0.13 lower the previous fortnight, shed US$ 0.05 to close on US$ 1.40. Dewa, Emirates NBD, DIB and DFM started the previous week on US$ 0.71, US$ 3.68, US$ 1.60 and US$ 0.50 and closed on US$ 0.69, US$ 3.54, US$ 1.56 and US$ 0.46. On 24 June, trading was at 35 million shares, with a value of US$ 26 million, compared to 225 million shares, with a value of US$139 million, on 17 June 2022.

By Friday 24 June 2022, Brent, US$ 11.55 (10.5%) lower the previous week, gained US$ 2.46 (2.2%) to close on US$ 112.62. Gold, US$ 33 (1.8%) lower the previous week, shed US$ 14 (0.8%), to close Friday 24 June, on US$ 1,828.  

By selling at a discount, there is no surprise to see that Russia has become China’s biggest supplier of oil, as imports to the country increase by 55%, and surpasses Saudi Arabia. This comes at a time when China has seen an economic slowdown because of recently introduced Covid-related lockdowns, and Russia has seen exports to Europe slow markedly because of EU sanctions. Last month, the Chinese General Administration of Customs confirmed the import of 8.42 million tonnes, with Saudi’s balance being 7.82 million tonnes. A recent report noted that in the first hundred days of the country’s invasion of Ukraine, Russia continued to earn fossil revenue, topping US$ 100 billion, of which the EU ‘contributed’ US$ 59 billion; it is estimated that Russia’s daily spend on the war is around US$ 876 million.

Rattled by surging energy prices and ongoing staff issues, Qantas has decided to reduce the number of domestic flights until March 2023. Last month, it cut flights by 10% and will apply a further 5% for flights in August; the 15% flight reduction will last for two months before returning to 10% flight cuts as from October. The Australian carrier is still confident of posting a profit in the next financial year ending 30 June 2023 and noted that it had already reduced its debt to below pre-pandemic levels. Surprisingly, the airline was able to charge higher fares on its international routes, to recover the higher cost of fuel, but was unable to do so within its domestic flights. The airline is expecting capacity levels to reach 99% of pre-pandemic levels in Q1 (ending 30 September 2022) and 106% by Q2. It also plans to give 19k staff a US$ 3.5k, (AUD 5k), bonus after signing fresh union contracts, following a two-year wage freeze during the pandemic, and also to negotiate a new enterprise agreement for a 2.0% pay increase each year — well below the current 5.1% headline rate of inflation. This seems to be a recipe for staff action later in the year.

A US$ 200 million five-year agreement between Qantas and Airbus will help the Australian carrier meet its commitment to use 10% SAF, (sustainable aviation fuels), in its overall fuel mix by 2030; it currently uses 1% SAF in its network and has a 60% target by 2050. Qantas currently sources SAF from overseas, including 15% of its fuel use out of London. (Engine maker Pratt & Whitney, selected to provide the engines for the new narrowbodies, will inject some of the funding). Both parties are already involved in sustainability initiatives as part of the airline’s May’s multi-billion-dollar orders for A350-1000 widebodies and A220 and A321XLR narrowbodies. The partnership will invest in locally developed and produce SAF and feedstock initiatives, on condition that projects are commercially viable and meet strict environmental sustainability criteria.

Revlon, the multinational iconic beauty company, with household names such as Almay, Elizabeth Arden and Revlon in its brand portfolio, has been in slow decline for the past twenty-five years. The ninety-year-old business was slow in the 1990s to adapt to women’s shift away from bright colour cosmetics to more muted tones and has also faced increasing competition not only from the likes of Procter & Gamble, but most recently from celebrity lines like Kylie Jenner-backed Kylie, which benefitted from their high-profile social media network and consequently had a much lower marketing budget. Covid did not help matters with 2020 sales slumping 21.0% to US$ 1.9 billion but recovered slightly last year with an 9.2% growth. However, the company, like many others, has been saddled with higher costs, labour shortages and supply chain challenges. A sign of the times and a sign of its problems see the company, that for most of the last century was the world’s second largest cosmetics company behind Avon, now lying 22nd in the global rankings. None of Revlon’s international operating subsidiaries are included in the proceedings, except for Canada and the UK.

Anyone with paper £20 or £50 notes should be aware that by the end of September, they should be spent or deposited in a bank. It is estimated that 163 million paper £50 banknotes and about 314 million £20 paper notes are still in circulation. From October, people with a UK bank account should still be able to deposit the paper notes into their account or at the Post Office but spending them will be impossible. The ‘old’ paper notes have been replaced by more durable polymer notes that will last longer and be harder to counterfeit.

UK households are cutting back on food shopping as the rising cost of living bites into budgets, a trend confirmed by supermarket giants, Tesco and Asda. Tesco said that it had seen early signs that shoppers were changing their habits due to high inflation such as buying less food and visiting more frequently. Asda has noted many customers are asking cashiers to stop scanning items when the total reaches US$ 36.81, (GBP 30.00) and are changing to budget ranges. The Office for National Statistics found that supermarket sales dipped 1.5% in May, with a 2.2% fall in specialist shops such as butchers and bakers. Retail sales overall fell by 0.5% in May, the ONS said, and it also revised down its sales growth figure for April to 0.4% from its previous estimate of 1.4%.

May inflation figures hit forty-year highs last month, touching 9.1%, with every chance that it will hit double digits by the end of Q3; it was noted that the increases were across a wide range of sectors, including everything from fuel and electricity to food and beverages. Prices, rising 0.7% in the month, witnessed a marked fall compared to the 2.5% pace recorded in April. It was the highest inflation rate across the G7, driven mainly by food – and the figure would have been higher but for lower clothing/footwear prices, as well as recreation/culture prices.

Elon Musk is not too happy with the progress of his two new Tesla factories in Austin Texas and Berlin, as they are “losing billions of dollars” due to battery shortages and supply disruptions in China. Furthermore, Tesla’s huge production facility in Shanghai has faced closures this year, as the Chinese government ordered the city to lockdown as Covid returned. He bemoaned the fact that his gigafactories were “losing billions of dollars right now. There’s a ton of expense and hardly any output,” and Tesla has plans to shed 3.5% of its global workforce. He commented that Tesla’s new factories have been struggling to increase production since their opening because battery components are “stuck at a Chinese port, with no one to actually move it”, Last week, the company raised the price of its whole range of cars in the US by almost 5%, as the cost of raw materials including aluminium and lithium rose.

Latest April figures from the Office for National Statistics indicate that UK average house prices rose 12.4%, year on year to April, well up on the 9.7% increase a month earlier; the average house price was US$ 345k – US$ 37k higher than in April 2021. There are signs that the housing market is softening, with comparative figures skewed by the fact there had been falls in 2021 from changes in the previous stamp duty holiday. Also, there are other problems including future increases in borrowing, as rates move north, and ongoing inflation with the latest May figure of 9.1%, with every chance that it will hit double digits by the end of Q3.  However, this could be offset by a shortage of quality property options and strong employment prospects. Across the UK, prices in England, Scotland and Wales have risen by 11.9% to US$ 366k, 16.2% to US$ 230k and 10.4% to US$ 202k.

Prime Minister Ranil Wickremesinghe has told the Sri Lankan parliament that the country’s debt-laden economy has “collapsed” after months of shortages of food, fuel and electricity, with the island nation unable to even purchase imported oil. He confirmed that the Ceylon Petroleum Corporation was US$ 700 million in debt and that “no country or organisation in the world is willing to provide fuel for us.” There is no doubt that a succession of corrupt or inept governments has not helped the cause, with the problem further exacerbated by lost tourism revenue, surging commodity costs and other effects of the Covid-induced slowdown. US$ 4 billion worth of credit lines from India has helped the country muddle through in recent weeks but India cannot keep the country from sinking further for too much longer. It has already reneged on the repayment of US$ 7 billion in foreign debt due for repayment this year, pending further negotiations with the IMF. It sees highly unlikely that it will be in a position to repay US$ 5 billion a year, until 2025, due to international creditors.

Robinsons and The All England Lawn Tennis Club have “mutually agreed” to end their eighty-six year partnership that will see the end of Robinsons Lemon Barley Water being seen on Wimbledon courts, as the soft drink company will no longer sponsor the two-week tennis championship. A spokesman for Britvic, which owns several drinks brands including Robinsons, said it was “tremendously proud to have been such a prominent partner to this historic tournament for so many years and the wider role we have played in boosting engagement with the game of tennis in the UK”. Last month, the company signed a three-year sponsorship with The Hundred, cricket’s 100-ball competition. Who Got The Juice Now?

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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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