In Your Wildest Dreams!

In Your Wildest Dreams!                                                                  10 June 2021

For the past week ending 10 June, Dubai Land Department recorded a total of 2,069 real estate and properties transactions, with a gross value of US$ 2.92 billion. It confirmed that 1,418 villas/apartments were sold for US$ 765 million and 219 plots for US$ 398 million over the week. The three most expensive residential units sold were a Dubai Investment Park First villa for US$ 93 million, a Marsa Dubai apartment for US$ 77 million and an Al Merkadh apartment for US$ 77 million. The most popular locations were in Al Hebiah Fourth, with 101 sales transactions worth US$ 120 million, Hadaeq Sheikh Mohammed Bin Rashid with 18 sales, at US$ 58 million, and Al Hebiah Third with 15 sales for US$ 9 million. The amount of mortgaged properties for the week was US$ 6 billion, with the highest being for a plot of land in Al Warsan Second, mortgaged for US$ 1.28 billion. The top three land transactions were a plot in Palm Jumeirah sold for US$ 90 million, followed by land that was sold for US$ 19 million in Al Safouh Second, and thirdly land sold for US$ 14 million in the Burj Khalifa area. Mortgaged properties for the week totalled US$ 272 million, including a plot for US$ 25 million in Al Thanyah First. 51 properties were granted between first-degree relatives, worth US$ 210 million.

According to Property Finder, May recorded the highest monthly transaction value – at US$ 3.00 billion – in over four years, as the Dubai property market continues its escape from a six-year bear market that saw prices collapse. 62% of all May transactions were for secondary or ready properties, (2.8k properties at US$ 2.3 billion) and the balance for off-plan properties – 1.7K at US$ 70 million. The top areas of interest in terms of searches for villas/townhouses in the month were Dubai Hills Estate, Arabian Ranches, Palm Jumeirah, Damac Hills and Mohammed bin Rashid City. The top areas of interest for apartments were Dubai Marina, Downtown Dubai, Palm Jumeirah, Business Bay and Jumeirah Village Circle.

Over the past twelve months, it was estimated that the average transaction value for a single property had increased 16.77% for villa/townhouses and 17.18% for apartments. For the month of May, total property transactions jumped 205% to 4.4k, compared to a year earlier, with sales growing 324%. Interestingly, the portal noted that there had been a 36.5% rise in the total volume of sales transactions, along with an 83.8% hike in the total value of sales transactions when comparing the past two years from May 2019 to May 2021. According to the Dubai Media Office, real estate transactions over the past five months topped US$ 13.6 billion by the end of May – twice as high as the comparative 2020 figure.

A Palm Jumeirah signature villa sold this week for US$ 19 million but what was different to recent similar deals was that it included the Holger Albers’ private art collection. The 5 B/R villa, comprising 10k sq ft built up area and placed on a 14.5k sq ft plot of land, also included a separate study and media room, was sold to a mystery overseas buyer. The German seller estimated that the redesigned villa would rent for US$ 1 million a year and could prove to be a useful investment asset, with a 5%+ gross return and capital appreciation.

By the end of May, Emaar Properties saw Dubai sales rise over 250%, compared to the five months to 31 May 2020, with total property sales in excess of US$ 2.86 billion. So far this year, the developer has launched three new projects – Palace Beach Residents in Emaar Beachfront, Golf Place ~Terrace in Dubai Hills and Bliss in ~Arabian Ranches 3. The company expects even higher growth figures in June.

This week saw Damac’s founder, Hussain Sajwani, resign as its chairman to avoid any conflict of interest, as he now aims to take over the rest of the company that went public in 2015. He owns 72% of the developer and his personal investment company, Maple Leaf, has offered to buy the remaining 28% for US$ 600 million, valuing each share at US$ 0.354 – equating to a 45% decline on its IPO price. By 31 March, Damac had delivered 33.3k homes and has a development portfolio of 33k more units in the pipeline. The offer price is 31% lower than the average price for the shares over the past five years and with the recent upturn in the Dubai real estate sector could be seen to be on the low side.

ENBD Reit has announced a 17% decline in its net asset value to US$ 180 million for the year ending 31 March; this equates to US$ 0.72 a share, with a loan to value ratio of 52%.The Shariah-compliant real estate investment trust’s total assets fell 12% to US$ 360 million for the year, driven by a softening real estate market during the pandemic which also saw gross rental income dropping.

With Dubai expecting that 25% of mobility journeys in the emirate to be autonomous by 2030, the Roads and Transport Authority and China’s Zhong Tang Sky Railway Group. have signed a MoU to develop a futuristic suspended transport network. This is the latest agreement that the RTA has signed with various specialist companies to develop suspended transport systems, in line with the Dubai Self-Driving Transport Strategy. It hopes that Dubai will enhance its position as one of the best global locations for living and business, a destination for visitors, and the smartest and happiest city in the world.

Always ahead of the game, Dubai is taking further steps to ease the process and cost of doing business in the emirate, with the Crown Prince, Sheikh Hamdan, issuing directives this week to reduce government-related procedures by 30%. This move, which will be fully implemented by the end of Q3, is part of a strategy to speed up Dubai’s recovery and further enhance Dubai’s status as a business hub. At a meeting attended by his brother, the Deputy Ruler of Dubai, Sheikh Maktoum bin Mohammed, he also commented that, “promoting partnerships with the private sector is a key strategic objective for Dubai,” Since the onset of the pandemic fifteen months ago, the Dubai government has rolled out stimulus packages worth US$ 2 billion to help the private sector.

Luxembourg managed to pip the UAE at the post in Coursera’s Global Skills Report 2021, ranking second globally in overall business skills. The study involved more than 77 million learners on the platform to benchmark skills proficiency across business, technology, and data science from over one hundred countries. The UAE was placed within the top 97 percentile or higher in five business skills – Communication, Entrepreneurship, Leadership and Management, and Strategy and Operations. However, in technology and data science skills, the country was only ranked 72nd and 71st but this should rapidly improve given the government’s prioritisation of digital transformation as a driver of national development and economic advancement.  

May saw the Dubai non-oil private sector economy continuing to expand but at a slower rate – at 51.6, compared to April’s strong figure of 53.5 which had been a seventeen-month high. Of the five main sub-indices used, only suppliers’ delivery times moved higher, with output charges and new orders providing the biggest falls – both 3.8 lower on the month; output charges declined with firms seeking to boost their sales, whilst cost pressures remained weak. After three years of decreasing selling prices, April had seen the first rise since 2018, but May saw selling prices returning to its previous status quo. There was no surprise to witness travel and tourism posting a renewed decrease in activity, but construction was the only sector where activity moved up at a faster pace, whilst wholesale/retail had a slower expansion. Common sense dictates that a weak greenback, oil prices over US$ 70, rising property prices and no new pandemic waves will ensure a much-improved H2 for business/consumer confidence and the Dubai economy.

Emirates NBD’s listing of a US$ 750 million Tier 1 Capital bond brings the bank’s total bond issues on Nasdaq Dubai to US$ 5.1 billion and the bourse’s total US dollar denominated debt listings to US$ 93.1 billion – the highest value in the ME. The perpetual bond carrying a 4.25% coupon rate, which was 2.3 times oversubscribed, was the lowest pricing for a conventional Tier 1 bond from the UAE, and the second lowest from the ME.

In 2019, Emirates Development Bank had its first bond issue for US$ 750 million which was 4.7 times oversubscribed. This week, the bank has successfully closed another US$ 750 million five-year bond issue, priced at a fixed re-offer yield of 1.639% pa in the Regulation S markets. This was part of the financial institution’s US$ 3 billion Euro Medium Term Note programme to boost its accessibility to capital markets and strengthen its funding profile; its EMTN has received an ‘AA-’ issuer rating by Fitch. EDB is a major player in the country’s diversification plans, having allocated a portfolio of US$ 8.2 billion, (AED 30 billion), to support priority industrial sectors over the next five years. With the target of financing up to 13.5k SMEs, it hopes to create 25k new jobs in the UAE.

In an initial funding round, Trukkin raised US$ 7 million to expand its business further and invest in technology; the Series A funding was led by Saudi Arabia-based Emkan Capital. The UAE and Saudi Arabia-based logistics and supply chain start-up, launched in 2017, offers digital logistics solutions for long-haul trucking by operating on an asset-light model, which means it does not own the trucks it uses. Clients can utilise the app to arrange transport solutions by being able to select a chosen supplier from the bidders. The firm, which is active in twelve ME countries, and entered the Pakistani market last year, is also venturing into FinTech to provide solutions for payments, insurance and financial services.

In its IPO, a Norwegian-founded agri-tech start-up, Desert Control raised US$ 23 million on Euronext Growth Oslo, (a multilateral trading facility operated by the Oslo Stock Exchange) and is in the throes of introducing a commercial rollout of liquid natural clay. Four years ago, it had joined the alumni network of in5 an enabling platform for tech, media and design entrepreneurs in Dubai and is expanding its operations. LNC has the ability to turn deserts into fertile land and the company has plans to stop and reverse soil degradation – it is estimated that every year, twelve million hectares of fertile land, (an area more than twice the size of Denmark) is lost to desertification.

According to Magnitt, e-commerce start-ups, along with fintech companies, received the bulk of the funding for regional start-ups in 2020, with the data platform indicating that there was a 13.0% hike in the Mena region funding last year to US$ 1.03 billion, compared to 2019. Magnitt foresees a massive growth curve in the coming years, noting that “the size of the market is considerable at US$ 50 billion. Currently, local fragmented players dominate the market in the region, and we are working to be an enabler that brings this fragmented market together on an integrated platform”.

P&O Ferrymasters, whose parent company is DP World, has signed an agreement with Belgium-based Genk Green Logistics to build a 10k sq mt state-of-the-art warehouse near the Belgian Port of Genk. The new facility, which will further enhance the company’s position as a leading pan-European rail, road and warehousing network, will be located in Flanders’ main industrial area and near to the port.  P&O Ferrymasters operates integrated road and rail links to countries across Europe and facilitates the onward movement of goods from Asian countries via the Silk Road. The new warehouse will also be a hub for the import and export of goods requiring storage for international deep-sea routes and to the United Kingdom via both the English Channel and North Sea.

The country’s national banks reported a 5.2% increase in savings, (among Emiratis and residents), to US$ 54.2 billion, in the first four months of 2021; the local banks account for 88% of the total balance in all UAE-based banks. Covid-19 has been the main driver in moving saving balances higher, with much money waiting to be spent when global lockdowns ease further. Currently, some of the “pent up savings” has been spent in the housing sector – either by purchasing or upgrading property. Savings are expected to grow even further over the coming few months.

About 140 creditors, owed more than US$ 6.4 billion, have reached an agreement with NMC Health’s administrators Alvarez & Marsal, who confirmed that it had received enough firm commitments from creditors to embark on a restructuring. It is inevitable that creditors will have to take a “hair cut”, in return for equity instruments under a Deeds of Company Arrangement; the plan will bring the company’s debt down to US$ 2.25 billion, with a mechanism allowing them to benefit from an eventual exit that generates more than that amount. With the administrators announcing receipt of firm creditor commitments to ensure the troubled firm’s successful exit from Abu Dhabi Global Market administration, it appears that creditors have taken control. In a further bid to obtain more money for the creditors, the administrators are also claiming against the company’s former auditor, EY, and its former directors and shareholders. A formal voting process to complete the restructuring will now begin which will give creditors a better deal than what would have occurred if there had been a distressed sale or liquidation.

The bourse opened on Sunday 06 June, 199 points up (7.6%) the previous five weeks, gained a further 18 points, to close on 2,842 by Thursday 10 June. Emaar Properties, US$ 0.08 higher the previous five weeks, shed US$ 0.04 to close at US$ 1.06. Emirates NBD and Damac started the previous week on US$ 3.76 and US$ 0.38 and closed at US$ 3.73 and US$ 0.354. On Thursday, 171 million shares changed hands, with a value of US$ 67 million.

By Thursday, 10 June, Brent, US$ 5.90 (9.0%) higher the previous two weeks gained US$ 0.75 (1.1%) to close on US$ 71.97. Gold, up US$ 142 (8.1%) the previous four weeks, gained a further US$ 2, by Thursday 10 June, to close on US$ 1,896.  

Last April, India imposed a 2% levy, known as Digital Services Tax, on local earnings by overseas tech companies and e-commerce companies such as Amazon, Facebook and Google. Now, fifteen months later, the Biden administration has threatened to increase import duties, by 25%, on a 26-product range of Indian goods, including rice, pearl, copper foil, bamboo, window shutters and prawns; if implemented it is expected to net US$ 55 million – roughly the same amount being collected by the Indian taxman. This is in retaliation for the DST and will come into effect in December, unless India backs down and cancels the 2% duty. (At the same time, the Biden administration pointed out that five other countries – Austria, Spain, Italy, Turkey and the UK – are in the firing line over their use of DST on certain US goods).

ProPublica, a US news website, has managed to leak tax returns of some of the world’s richest people in what it called a “vast trove of Internal Revenue Service data”. It showed how little tax some billionaires are actually paying, including those paying no tax such as Jeff Bezos (in 2007 and 2011) and Elon Musk (2017). The website estimated that from 2014 – 2018, the wealth of the 25 richest Americans jumped by US$ 401 billion – but they only paid US$ 13.6 billion in income tax over those five years; this is equivalent of them paying an average of 15.8% less tax than most mainstream US workers.

At the beginning of the year, it was GameStop, last week, US cinema chain AMC Entertainment and this time it is Clover, as the “meme stock” effect, (the trend of small, underperforming and frequently shorted stocks being picked up by retail investors), continued on Wall Street. The latest rally involves the healthcare insurer whose share value has more than doubled, despite analysts indicating that Clover is at least 43.5% shortened. Recently, other stocks that have rallied include Bed Bath & Beyond, Workhorse Group and the original meme stock, GameStop.

As the economic world continues to open up, the first country to reap the benefits is China, where both its manufacturing base and exports have bounced back amid strong global demand. May exports were 28% higher on the year, whilst imports rocketed, at their fastest pace since March 2010, up 51.1%. China’s exports have benefitted from a resurgence in Covid-19 cases in India and South-East Asia which has led to production disruptions there which in turn has seen more orders being directed towards China. Manufacturers of communication and electronic equipment have led the country’s recovery, followed by electrical machinery, automobiles, chemicals and pharmaceutical companies. The International Monetary Fund expects the economy to expand 8.4% in 2021 this year – up from 2020’s 6.0% level.

The latest World Bank report this week painted a rosier picture on the state of the global economic health, forecasting a 5.6% growth level – its fastest rebound rate since 1973, and well up on its previous January forecast of 4.1%. It again warned that “this recovery is uneven and largely reflects sharp rebounds in some major economies”. The two main drivers behind this improvement have been vaccinations and massive government stimulus in rich countries; poorer countries have suffered because of a lack of vaccines and slow progress with inoculations. Measuring by income, the world body expects that 90% of advanced economies are expected to return to pre-pandemic levels by next year, whilst global output will be 2.0% below pre-pandemic projections, with 67% of emerging market economies having still not made up last year’s per-capita income losses. Other growth forecasts see the US, China, the EC, Japan and emerging markets growing at 6.8%, 8.5%, 4.2%, 2.9% and 4.4% respectively.

The OECD countries posted a marginal 0.1% rise in April unemployment levels to 6.6%, a 0.7 million rise to 43.8 million – the first monthly increase in a year when it reached 8.8% in April 2020; the OECD bloc includes the eurozone countries as well as the US, Australia, Japan and the UK, among others. However, there was a note of caution indicating that the level has been “artificially” boosted by the return to work of temporary laid-off workers in the US and Canada, where they are recorded as unemployed. The latest figure is still 1.3% higher than that recorded pre-pandemic in February 2020. A further breakdown of the figures sees the eurozone rate improving 0.1% to 8.0%, with the likes of Colombia and Canada posting figures of 15.0% and 8.1%, whilst the US unemployment mark dipped 0.1% to 6.1% in April.

As expected, the European Central Bank kept its stimulus package and interest rates unchanged, as it continues with speedier emergency bond-buying to maintain the bloc’s recovery from the impact of Covid. Its president, Christine Lagarde, maintained the stimulus package at US$ 2.25 trillion and confirmed the continuance of lower interest rates until the inflation outlook tops the bank’s 2% target. In the short-term, there is no sign of an early slowing in the ECB’s pandemic emergency purchase programme, initiated in March 2020, and Q3 may well see the pace of PePP accelerating, with a gradual tapering taking place towards the end of the year.

Ahead of the main G7 meeting this weekend, in Cornwall, the G7 finance ministers met in London, where its seven members and other countries have seemingly agreed to a minimum 15% tax on multinational businesses, such as Google, Apple and Amazon, as well as ensuring that they pay more tax in the markets where they sell goods and services. The deal, which was years in the making, also promises to end national digital services taxes levied by the UK, France and other European countries that the United States reckoned unfairly targeted US technology giants. It is one step forward that the seven leading countries buy into the agreement, it is another leap to get the same accord at next week’s G20 meeting in Venice. However, it appears a long way off to get all countries to back this bold plan – even in the EU, the likes of Ireland, Cyprus and Hungary will take a lot more convincing particularly as their tax rates are lower than this nominated threshold. Even though the UK Chancellor, Rishi Sunak, said the deal was a “huge prize” for taxpayers, he still does not know whether the UK would be better off. The agreement is also very vague stipulating that the businesses impacted will be only “the largest and most profitable multinational enterprises”. The tax proposals are in two parts – the first allows countries tax a share of the profits earned by companies that have no physical presence but have substantial sales, and the other is for countries to tax their home companies’ overseas profits at a rate of at least 15%.

It is obvious that many details still have to be negotiated among various blocs, such as the EU, G20 and the OECD, and the exact wordings need to be negotiated that will take several years to fruition. But the fact is that countries are becoming increasingly concerned that MNCs should pay taxes in the same places where they are earning their profits, which is patently not the case at the moment. Whether the tech giants will come to the party is another matter, and if anyone thinks they will be paying 15% tax in the future, it will never happen, even In Your Wildest Dreams!

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This Time, Next Year

This Time Next Year                                                                                03 June 2021

State news agency Wam indicated that four out of the seven emirates, (Dubai, Abu Dhabi, Sharjah and Ajman), recorded US$ 18.5 billion of real estate transactions in Q1 – a sure indicator that the UAE property market has started to bounce back, after more than six years trapped in a bear market. There had been signs in late 2019 that a recovery was on its way, but this was derailed by the onset of Covid-19. Unsurprisingly, Dubai and Abu Dhabi dominated the sector, accounting for 86% of the total, with sales of US$ 16.1 billion. Dubai recorded 5.8k transactions, valued at US$ 13.0 billion, with Abu Dhabi’s 3.8k deals, worth US$ 3.1 billion.

Latest May figures from Property Monitor detail the residential sales price per sq ft for various locations in Dubai. The leading five areas for villas were Palm Jumeirah, MBR City, Dubai Hills, Jumeirah Islands and Emirates Living with values of US$ 577, US$ 403, US$ 306, US$ 300 and US$ 272. For apartments, the leading five locations were City Walk, Dubai Creek Harbour, MBR City, Downtown Dubai and The Hills, with values of US$ 399, US$ 392, US$ 370, US$ 368 and US$ 354. For rentals, the top three areas for villas were Jumeirah Golf Estate (US$ 86k), Jumeirah Island (US$ 74k) and Emirates Living (US$ 63k); for apartments, the highest rentals were found in City Walk, Palm Jumeirah and The Hills with figures of US$ 40k, US$ 38k and US$ 34k. In May, the three areas, with the largest increase in prices, were Palm Jumeirah, Jumeirah Island and Jumeirah Golf Estates, with rises of 5.65%, 5.47% and 4.89%. Apartment prices rises were lower, with the three leading locations being JLT, Dubai Marina and JBR, with increases of 3.86%, 3.76% and 3.74%.

For the week ending 03 June, the DLD confirmed that the value of residential property transactions totalled US$ 1.216 billion, of which US$ 945 million were for existing properties and the balance for off-plan. Mortgaged properties for the week totalled US$ 1.262 billion, with properties granted between first-degree relatives totalling US$ 135 million.

Founded just eighteen months ago, Stake has raised US$ 4 million in an initial funding round to expand its operations by scaling and introducing new products and features, boosting marketing and expanding its current fifteen-man workforce. The Dubai-based real estate crowdfunding platform, based in DIFC’s Fintech Hive, allows users to browse through pre-vetted selections of properties and invest from as little as US$ 545. Its current property portfolio includes ready units in Downtown Dubai and Dubai Marina, with profits distributed from rental income every month. The firm is looking at expansions into Saudi Arabia and the UK. To date, the property crowd funding platform has attracted more than 4k registered users and achieved 30% increases in sales every month.

There is no doubt that Dubai Coin exists, having allegedly been launched by a UAE-based company called Arabianchain Technology but it is definitely not the official cryptocurrency of the emirate, as the government has come out to confirm that the website was, in fact, a phishing scam. Even the Dubai Silicon Oasis company has denied any association and that “this website, dub-pay.com/en/ is fake and [a] scam. Please be careful.”  It seems that a team of scamsters set up a website to phish data and money out of unsuspecting crypto investors who thought they were dealing with an official agency who had offered to exchange their “official” dirhams for DubaiCoins. It seems that recently its value had jumped almost sevenfold to US$ 1.13 and was touted to replace traditional cash and work for local online transactions.

Following instructions from Sheikh Hamdan bin Mohammed al Maktoum, Dubai Industries & Exports has been given the mandate to attract more domestic and foreign investment into the emirate’s industrial sector. The Crown Prince directed that the agency develop the emirate’s industrial sector and consolidate efforts to make it a centre for industries of the future. The newly named entity, formerly known as Dubai Exports, will oversee efforts to attract more domestic and foreign investment into Dubai’s industrial sector, in line with the goals of the Dubai Industrial Strategy 2030 and ‘Operation 300bn.’ Its reach has recently been extended to reflect the increasing emphasis on industrialisation in Dubai and the urgent requirement to synchronise the various stakeholders on policies, initiatives and services for industrial development and advancing manufacturing exports.

It seems hard to believe that Dubai International was the world’s busiest airport for international flights in May. According to aviation intelligence firm, the Official Airline Guide, it posted almost 1.9 million scheduled seats, well ahead of second place, Istanbul, with 1.3 million, followed by Doha, Amsterdam and Frankfurt. Two years earlier, in May 2019, London Heathrow claimed top position but has now slipped to seventh in the ranking. Dubai was also on the list for the top ten busiest international routes, with Dubai to Riyadh coming in at eighth and Cairo to Dubai at tenth. According to OAG, the busiest route for international travel in May was from Russia to Ukraine, Moscow to Simferopol Ukraine (285k passengers) and the return journey (197k travellers) filled the top two places, followed by Orlando to San Juan Puerto Rico and Cairo to Jeddah.

Petrol prices moved higher in June, as the UAE Fuel Price Follow-up Committee announced new monthly prices, effective from Tuesday 01 June. Special 95 will retail US$ 0.025 (4.1%) higher at US$ 0.619, whilst diesel will be US$ 0.036 (6.0%) dearer at US$ 0.627 per litre.  This is the fourth straight month that Special 95 has edged higher, as at 01 January, it was retailing at US$ 0.578.

The Central Bank of the UAE reported that foreign assets, at the end of Q1, had grown 1.1% to US$ 106.9 billion, attributed to a US$ 23.4 billion increase in foreign securities and a 25.7% rise in other foreign assets to US$ 2.5 billion; there was a US$ 24.7 billion, (26.1%), fall in current account balances and deposits with banks abroad. Money Supply M1, (Currency in Circulation outside Banks (Currency Issued – Cash at banks) plus Monetary Deposits) rose 7.1% and 18.4%, on a quarterly and an annual basis, to US$ 175.0 billion. Money Supply M2, (M1 plus Quasi Monetary Deposits (Resident Time and Savings Deposits in Dirham, plus Resident Deposits in Foreign Currencies)), rose 0.6% and 2.2%, on a quarterly and an annual basis, to US$ 405.3 billion. M2 is often seen to be the best sign pointing to the availability of liquidity in the economy.

The report also commented on the Q1 performance of the Dubai Financial Market. The Index grew by 9.2%, with a market cap of US$ 96.4 billion at 31 March. Quarterly Traded Value was 4.8% higher at US$ 4.2 billion but the DFM Index lost 14.1% on an annual basis.

The bourse opened on Sunday 30 May, 191 points up (7.3%) the previous four weeks, gained a further 8 points, to close on 2,824 by Thursday 03 June. Emaar Properties, US$ 0.08 higher the previous four weeks, remained flat to close at US$ 1.10. Emirates NBD and Damac started the previous week on US$ 3.68 and US$ 0.38 and closed at US$ 3.76 and US$ 0.38. For the month of May, the bourse had opened on 2,625 and, having closed the month on 2,798, was 173 points (6.6%) to the good. Emaar traded higher from its 01 May 2021 opening figure of US$ 1.02 – up US$ 0.06 – to close May on US$ 1.08. Two other bellwether stocks, Emirates NBD and Damac, started the month on US$ 3.27 and US$ 0.32 and both closed higher on 31 May on US$ 3.76 and US$ 0.37 respectively.

By Thursday, 03 June, Brent, US$ 4.32 (6.6%) higher the previous week gained US$ 1.58 (2.3%) to close on US$ 71.22. Gold, up US$ 124 (6.8%) the previous four weeks, gained a further US$ 18 (1.0%) by Thursday 03 June to close on US$ 1,894. Brent started the month on US$ 67.25 and gained US$ 2.14 (3.2%) during May to close on US$ 69.39. Meanwhile, the yellow metal had a stellar month, gaining US$ 136 (7.7%) in May, having started on US$ 1,769 to close on 31 May at US$ 1,905.

At a twenty-minute meeting on Tuesday, the shortest on record, Opec+ agreed to stick to the existing pace of gradually easing supply curbs through July. In April, it had decided to add 2.1 million bpd of supply to the market over the three months to July, ahead of an expected demand increase, as lockdowns were eased, offset somewhat by Iran’s supply moving higher; if the US lifts the sanctions on the country, it could add 1.2 million bpd to the global daily total. Benchmark Brent crude hit $71 a barrel, its highest in fifteen months, on Tuesday.

With certain shareholders, (along with outside pressure groups), becoming more vocal and powerful, and oil giants becoming more attuned to a future of green energy, Total has decided to be known as TotalEnergies, as it shifts some of its focus towards renewable energy sources.  Shareholders in the world’s fourth biggest privately owned oil and gas provider approved the firm’s environmental goals, with the 2050 target of being carbon neutral by then; this will see the French energy company investing in more solar and wind power projects. Other petro giants are also being hounded by different stakeholders, including Royal Dutch Shell and Exxon, with the former being ordered by a Dutch court to cut its emissions more quickly than it had planned.  Meanwhile, the US oil firm saw two board members being ousted by a vote from a small hedge fund investor, to alter the firm’s stance on climate change. Analysts see Total as one of the leading “green energy” companies, along with BP but behind Eni and above Shell. They are well ahead of their US counterparts, when it comes to some sort of compliance in line with the 2015 Paris Agreement.

Last month, the International Energy Agency surprised the energy market by suggesting fossil fuel production needed to slow down much more quickly than many had been espousing. The IEA noted that if the world wanted to reach net zero carbon emissions by 2050, there could be no new investment in fossil fuel projects after this year. The knock-on impact of this for major producers is immense, as it is inevitable that fossil fuel reserves will have to remain unexploited in the ground if these carbon emission targets are to be met.

On Wednesday, shares of US cinema chain AMC Entertainment jumped 95.2% to US$ 62.55, having started 2021 on just US$ 2.12; at one time, its YTD value had surged over 3,000%, with a market cap of US$ 33 billion, many times higher than its US$ 217 million book value at the end of last December. It closed today, 03 June, on US$ 51.34.  It is more complexing to note that the book value of the company, with debts of more than US$ 5 billion, sees each share valued at more than negative US$ 5. The company also managed to sell 11.55 million shares, and raise US$ 587 million, for “substantially strengthening and improving AMC’s balance sheet,” and “providing valuable flexibility to respond to potential challenges and capitalise on attractive opportunities in the future.”  This brings the total of new equity introduced in Q1 to US$ 1.246 billion. In March, it was estimated that more than 3.2 million individuals owned shares in AMC, now the latest so-called meme stock to rattle and confound the US markets and regulators.

There is every chance that the RBA will inject more stimulus – maybe US$ 75 billion in the next three years – to further boost economic recovery, at a time when rates are expected to hover around zero for at least the next two years. The Reserve Bank has hinted it may inject more stimulus into Australia’s economy to super-charge its recovery from Covid-19, while maintaining interest rates near zero. The bank’s main objective seems to be increasing the supply of money flowing in the country – by maintaining borrowing costs low and boosting economic activity. This despite Australia’s recovery being stronger than expected and an indicator that the bank does not want to undershoot and to do anything to ensure that this continues, and that the country meets its GDP growth forecasts of 4.75% and 3.5% over the next two years.

The RBA is also closely “monitoring trends in housing borrowing carefully and it is important that lending standards are maintained”. There is no doubt that low rates are pushing realty prices higher, but the bank’s current opinion is that rate hikes are unlikely to occur “until 2024 at the earliest”. The RBA will be praying that come that date, inflation levels would have risen from 1.1% to as high as 3.0% and that the unemployment rate had dipped below the 4% mark. There are some analysts who estimate that this will occur a year earlier by 2023 because of the better than expected economic recovery to date.

Meanwhile, Australia’s property boom continues unabated, with May average prices moving 2.2% higher on the month and more than 10% since the onset of the pandemic; capital city prices, at 2.3%, were marginally higher than regional sales at 2.0%. Hobart (3.2%) and Sydney (3.0%) had the strongest monthly price growth levels. Over the previous twelve months, Darwin, Hobart and Canberra recorded thebiggest growths at 20.3%, 16.5% and 15.6%, with regional areas posting higher price increases than the capitals last month at 15.2% to 9.4%. The main driver for this sudden jump in prices is that there is a lack of properties for sale relative to buyers. If you own investment property down under, the message would be to hold on to it for the rest of 2021but by early next year, the supply/demand balance will move to some form of equilibrium before there is more supply available to meet the falling demand. Prices will then flatten and start to move into negative territory and, at the same time, rates will move north, with the government getting involved with property-related tax amendments.

Thursday saw Australian shares climb to a record high for the second day in a row, with the ASX 200 closing on 7,260 points, driven by optimism over the nation’s economic recovery and expectations that stimulus and low interest rates will persist for the immediate future; oil and gas shares were the big winners after oil prices surged to a 15-month high. Since April  2020, retail sales have jumped by 25% and it is estimated that, last April, consumers spent over US$ 24.0  billion as revenue was 1.1% higher, month on month. More of the same is expected in future months because the economy has been buoyed by an improving labour market, high levels of confidence and a large pool of pent-up savings. Other good news included Australia’s trade surplus jumping to US$ 6.15 billion, 37.7% higher, month on month, as exports increased 3.0% to US$ 30.39 billion and imports declined by the same percentage to US$ 24.27 billion. The RBA’s commodity price index rose 5.8% in May, with prices for iron ore, (now at US$ 209 per tonne), gold, LNG and coking coal all heading north.

UK petrol prices have climbed US$0.32 a litre over the past twelve months to US$ 1.83 – its highest level in two years; last May, they had sunk to US$ 1.51, as strict travel restrictions were in place. May was the seventh consecutive month that prices have risen, and it seems inevitable that this trend will continue in to Q3. There seems to be a disconnect to what the actual pump price should be and it does appear that retailers are adding a little more (perhaps US$ 0.028 a litre) to compensate for Covid-related losses when car usage was curtailed. One impact that Covid has had on the dynamics of fuel retailing is that supermarkets have taken a greater market share, where fuel prices can be as much as US$ 0.056 per litre lower.

The ECB target inflation level of 2.0% was breached in May, driven by a recent, marked increase in energy prices, at the same time economic activity in the eurozone had a mini bounce with lockdown restrictions being eased in many member states. Ever since the GFC, the worry about inflation was that it was too low – now it seems that the future concern could be that it will become too high – and certainly will be above the 2% level for the rest of 2021.

Apart from the economic impact of rising energy prices, other factors are in play including a surge in travel and hospitality, pent up demand for consumer goods, supply chain disruptions, (seeing manufacturers having to pass on price increases to customers), and rising commodity prices. Finally, the massive stimulus implemented by the ECB could easily lead to substantially higher inflation. It is not so long ago that the oil prices and inflation were presenting different concerns – certain grades of oil were priced at minus US$ 40 per barrel just over a year ago and for five months until December 2020, EU inflation was below zero.

UK Inflation is also edging higher and, although rising from 0.7% in April to 1.5% in May, it is still below the Bank of England’s target. In the United States, the inflation measure used by the Federal Reserve was 3.6% last month, way above its 2.0% target. The same reasons  that see EU inflation beginning to rise apply elsewhere. One has to agree with Sandy Haldane, the BoE’s chief economist, who noted that there was a “tangible risk that inflation proves more difficult to tame” than the financial markets were expecting.

UK house prices jumped at an annual 10.9% in May – its highest level in seven years, – as the average value rose to US$ 344k. The “race for space”, brought on by the impact of Covid-19, continues as buyers look for larger homes and properties with gardens. In April last year, housing transactions totalled 42k, more than quadrupling to 183k in March 2021, also attributable to historically low mortgage rates and the continuing “stamp duty holiday” due to close at the end of next month.

The OECD’s latest estimate sees the UK’s economic recovery from the pandemic being stronger than previously forecast in March – now upgraded to a 7.2% growth from its 5.1% estimate three months ago; the latest figures see the UK outperforming most of the large rich countries, except for India and China. Even Chancellor Rishi Sunak warned that, there was a need to “ensure public finances remain on a sure footing”, as public debt nears 100% of GDP, as he noted the two main drivers for the strong forecast continued to be the success of the UK’s vaccine rollout and the government’s Plan for Jobs. It estimated that UK unemployment will peak by year end at 6.1%, compared to the 2019 and 2020 figures of 3.8% and 4.5%. The OECD changed its global forecast from 4.2% to 5.8%, with the now standard caveat that growth would not be shared evenly. The agency’s forecast for the US is upbeat with an estimate growth over the next two years at 6.9% and 2.6%. It also guesstimated when countries would return to pre-pandemic levels. The UK runs well behind India and China – and also US, Japan and Germany – with a mid-2022 return to “normalcy”, (the same as Italy and Canada), but ahead of France and Spain. However, with new and worryingly more infectious strains of Covid cropping up on a regular basis, there is a possibility that this will not happen This Time Next Year.

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Hooray! Hooray! It’s A Holi-Holiday!

Hooray! Hooray! It’s A Holi-Holiday!                                                           27 May 2021

Six months ago, many property consultancies were predicting a flat 2021 for Dubai realty, with prices edging lower, and how wrong they have been! According to Property Monitor, April Dubai property prices rose 2.5% – the largest single-month increase since March 2014 – to US$ 244 per sq ft; the report also noted that over the past six months, average prices have climbed by 9.5%, with the caveat that this strong performance is not uniform across all communities. It is expected that prices will stabilise in 2021 and that the strong double-digit increases recorded in some communities are likely to slow in momentum “as the recovery switches to a more sustainable pace across Dubai as a whole”. April saw 4.9k property deals – 167% higher on the year and 6.0% on the month. In all, ninety transactions were for above US$ 2.72 million (AED 10 million), growing by 6.7% month on month. YTD, Palm Jumeirah has witnessed 81 villa transactions in deals of more than US$ 2.72 million.

In the first four months of the year, DLD registered 25,455 real estate transactions, (up 51% year on year), valued at US$ 25.1 billion, 72% higher on the year. Over that four-month period, 8.7k new investors entered this market, representing 65% of the total number of real estate investors registered, with a growth of 54%, compared to the same period in 2020. It was also noted that the total value of real estate investments increased by US$ 9.8 billion. During that period, 188k Ejari contracts were recorded – 58% of which were new contracts and the balance renewed contracts. April villa sales saw the top five locations for villa sales being Hadaeq Sheikh Mohammed Bin Rashid, Palm Jumeirah, Wadi Al Safa 5, Wadi Al Safa 7, and Al Yelayiss 2, with apartment sales led Dubai Marina, Burj Khalifa, Palm Jumeirah, Business Bay, and Al Thanyah Fifth.

The latest Asteco report affirms that the Dubai property sector is moving higher, indicating that during Q1, average villa and apartment prices came in 6% and 3% higher on the quarter, with villa prices up 3% on an annual basis. Some locations, including Arabian Ranches, Meadows and Springs jumped 9% on average over the quarter, with Dubai Hills posting a massive 145% climb on year-to-year sales of secondary villas. Apartment sales in certain locations were slightly higher than the 3% average, including Jumeirah Village and Dubai Sports City, both up 5%. Although average rentals for both villas and apartments moved slightly north in Q1 – at 4% and 1% – year on year prices are still 2% and 10% lower. Furthermore, the absence of any large-scale villa development being handed over in Q1, and only 2k apartments, has led to a relative supply shortage.

Various factors come into play to support this recent upsurge including government economic support measures and initiatives, along with the expansion of the ten-year golden visa scheme and more attractive visa terms for both retirees and those working remotely. As in other global locations, there is a marked ‘race to space’ move to upgrade to larger units and mortgage rates are at historic lows; these two elements are also important drivers.

Nakheel also announced that it had sold one of the few remaining beachfront plots, at 17.9k sq mt, on Palm Jumeirah’s West Crescent to a JV between Select Group and Emirates Strategic Investments Company; the JV already owns a 47.5k sq mt plot, adjacent to its latest purchase. It is planning to develop branded luxury homes and a boutique hotel. Other projects built by Select Group include Jumeirah Living Marina Gate in Dubai Marina and 15 Northside in Business Bay.

Seagate Shipyard has launched the first unit of its floating sea resort Neptune, becoming the first environment-friendly floating house in the world; it was bought for US$ 5.45 million (AED 20 million) by Dubai-based businessman Balvinder Sahani. Spanning 900 sq mt, the two-storey building comes with 4 B/R and a glass swimming pool among other features; units use solar energy and smart technologies to treat wastewater. Utilising special hydraulic engines, the units can be safely moved between locations, with the first floating house being launched from Ras Al Khaimah before proceeding to its home base in Jumeirah. The UAE-based ship and vessel manufacturing firm confirmed that the US$ 237 million project, comprising a 156-room luxury hotel, and encircled by twelve residential floating boats, will be completed by Q1 2023.

Dubai Economy reported that there was an 18.8%, year on year, growth to 15.5k in new business licences in Q1, highlighting the emirate’s resilience during the pandemic and its ability to attract new firms. Most of the new permits were for professional activities, (59% at 8.9k) and for commercial (41% at 6.3k). The two most popular locations were Bur Dubai and Deira, with 8.2k and 7.2k licences. In Q1, there were 99.9k business registration and licensing transactions completed, an 8% growth.

‘Dubai Raffles’, an integrated digital platform, will be the vehicle for all future raffle draws and other promotional campaigns in Dubai. It will be welcomed by Dubai businesses, as this will actually manage the whole process without them having to develop their own systems or printing paper coupons; it can also supervise, manage and conduct digitally, with no paper coupons or contact required. In future, it seems that companies will be able to manage promotional raffles and Scratch & Win on ‘Dubai Raffles’, through a dashboard, whilst consumers will be able to track all the promotional draws in which they have entered. According to Sami Al Qamzi, Director General of Dubai Economy, “Dubai Raffles is a value-added service that will further enhance ease of business and support retailers in their business development”. This could be the start of something big for the Dubai economy.

The General Budget Committee met this week to discuss the draft federal budget for 2022-2026, whilst looking into the procedures taken by the Ministry of Finance to draft the federal budget of 2022, pursuant to the Federal Law No 26 of 2019 on general budget and relevant decisions. The MoF was directed to complete all measures needed for planning the draft five-year budget, as per the approved strategic objectives, in line with the UAE’s next 50-year vision.

According to the ‘E-Commerce Sector in the UAE 2020 insights’ report, the country’s e-commerce sector emerged as the fastest-growing economic segment in the ME. The report focused on several indicators in terms of value sales, supported by rising digital connectivity, infrastructure and substantial growth in consumer electronics, apparel and footwear. It also found that the UAE and Saudi Arabia accounted for 75% of ME e-commerce sales, attributable to their relatively high purchasing power, expanded usage of social media, and smartphone penetration rates compared to those of their neighbours. Some analysts see this as an ideal opportunity for the UAE to expand its operations, capture the untapped potential of cross-border e-commerce and enhance its hub status on the global-commerce stage. Latest forecasts point to UAE store-based retail growing by a 1% CAGR, over the 2019-2024 period, whilst e-commerce is forecast to grow by a 19% CAGR.

flydubai has requested all its employees, who had been sent on unpaid leave, to resume work from next Monday. It was reported that, at the beginning of the pandemic, some employees were given the option of being paid out, and take up the redundancy scheme, or go on unpaid leave; 97% took the second choice. The budget airline is confident that UAE’s massive vaccination drive will help their business, as an increasing number of countries open their borders, with flydubai opening up new destinations almost every week.

Although due for delivery by 2023, Emirates has confirmed that it is unsure that it will receive its first Boeing 777x jetliner before 2024. Its president, Tim Clark, commented that “we will not accept a plane unless it is performing 100% to contract, in the same way they expect us to pay 100% to contract at delivery,” and that he has yet to see any data on the aircraft’s engine performance capabilities, despite the plane undergoing test flights since last year and Boeing already having built eleven of them. Emirates is the biggest customer, (with a 126-plane order), for the revamped jet, which Boeing reckons will fly commercially for the first time in 2023, three years later than originally planned.

The launch of the DMCC Crypto Centre has been announced which it is hoped will be a local hub and comprehensive ecosystem for businesses operating in the cryptographic and blockchain sectors. The world’s biggest free zone on commodities trade and enterprise will appeal to the whole spectrum of crypto related businesses, from companies developing blockchain-enabled trading platforms to those trading in crypto assets. Any start-up or entrepreneur, in any way associated with cryptocurrency, will benefit by a presence in the Crypto Centre which will offer co-working spaces to crypto entrepreneurs and SMEs and a range of incubator and accelerator programmes; in addition, the centre will also house a leading crypto advisory practice led by CV Labs, the entity behind the Swiss government-backed Crypto Valley. The federal Securities and Commodities Authority will regulate activities conducted within the Free Zone that include the exchange of crypto assets.

The bourse opened on Sunday 23 May, having gained 126 points (4.8%) the previous three weeks, gained a further 65 points (2.4%), to close on 2,816 by Thursday 27 May. Emaar Properties, US$ 0.08 higher the previous three weeks, remained flat to close at US$ 1.10. Emirates NBD and Damac started the previous week on US$ 3.50 and US$ 0.37 and both closed higher at US$ 3.68 and US$ 0.38.

By Thursday, 27 May, Brent, US$ 3.24 (4.7%) lower the previous three weeks gained US$ 4.32 (6.6%) to close on US$ 69.64. Gold, up US$ 106 (6.0%) the previous three weeks, gained a further US$ 18 (1.0%) by Thursday 27 May to close on US$ 1,894.

The ECB President has commented that it is still too early to discuss winding down its US$ 2.25 trillion emergency bond purchase scheme – a sign to the markets that Christine Lagarde is unlikely to slow down the ECB’s Pandemic Emergency Purchase Programme at their next meeting on 10 June. She added that “we are committed to preserving favourable financing conditions, using the PEPP envelope, and to do so until at least March 2022,” and “it’s far too early and it’s actually unnecessary to debate longer-term issues”.

The US Q1 economy grew at 6.4%, compared to 4.3% in the previous quarter, attributable to the impressive Biden vaccine programme and trillions of dollars in government assistance; these have allowed thousands of businesses to reopen and millions of people to go back to work. All economic indicators headed north, at speed, including consumer spending, (11.3% to the good), business investment and residential construction (up 12.7%). However, US exports dipped at an annual 2.9% rate, with imports heading in the other direction. There are expectations that Q2 expansion could be in double-digit figures, as consumer spending, which accounts for 67% of the US economy, continues to gather momentum. There is every chance that the economy will recoup all of the output lost during the recession by the end of Q2.

As more businesses open and there is an increasing number of vaccinations, applications for US state unemployment insurance have fallen for a fourth consecutive week, with claims decreasing 38k to 406k in the week ending 22 May. With hopes that more Americans will socialise and travel, hiring numbers will inevitably continue to head north There is concern in some states that the continuation of federal unemployment benefit programmes is making it more difficult for employers to hire workers and so they have pulled out of federal unemployment benefit programmes.

After China’s National Development and Reform Commission issued a warning to commodity companies to maintain “normal market orders” and stop pushing up prices, they did decline; China, the world’s factory, and the biggest global user of raw materials, has seen monthly exports and imports 32% higher to US$ 264 billion and 43% higher respectively. In recent months, they had indeed skyrocketed, with global prices for many of the raw materials needed for industries – including copper, coal, steel and iron ore – moving higher, as lockdowns and other measures to curb the spread of Covid-19 had been eased. It was reported that the NDRC “collectively summoned” key Chinese companies, in steel, iron and aluminium, to discuss the continuous and drastic increase of a handful of commodities. Two other drivers in the sudden fall in commodities, have been attributed to The White House saying it had cut back its infrastructure bill from US$ 2.25 trillion to US$ 1.70 trillion and stalled factory production in India after its latest serious lockdown.

It has been estimated that iron ore has helped Australia shave off US$ 38.7 billion from the country’s budget deficit and earlier in the month it was trading at
US$ 240 a tonne, more than double the price it was twelve months earlier. Last time it had such a boom period was ten years ago when it was worth US$ 190 a tonne. The commodity is the country’s single largest export and Treasury predicts the value of that market will increase from US$ 79.6 billion last year to $105.1 billion this financial year; that being the case, both the federal and state governments will benefit by increased royalties and tax revenue, with miners increasing profits (particularly if their costs are as low as US$ 15 a tonne). Meanwhile, China’s steel production reached a record high in April – up 16% compared to a year earlier – as its economy continues to be driven by high-rise and infrastructure construction. However, as the Vale mine in Brazil – the biggest in the world -returns to some of normalcy, after two major dam disasters in 2015 and 2019, the Chinese authorities may continue to show their displeasure with Australian “diplomacy” by moving some orders from Australia to South America.

In a move that could see taxes on imports phased out completely, within fifteen years, the UK and Australia are in the last round of negotiations on a trade agreement. There had been a split reported earlier concerning UK beef and lamb farmers being undercut by larger Australian producers, but this was apparently resolved after Boris Johnson pushed for unity, even though the National Farmers’ Union has been concerned that freeing up the UK-Australian trade in meat will lead to hundreds of British cow and sheep breeders going out of business. Figures show that trade in meat last year was relatively small, with only 0.15% of Australian beef going to the UK and 14% of sheep meat imported into the UK originating from Australia. However, the UK is keen to get as many trade deals as possible under its belt and wants this approved prior to the next G7 meeting in Cornwall in June. Last year, bilateral trade totalled US$ 28.5 billion, with Australia’s main imports being cars, medicines and alcoholic drinks and their exports to the UK being gold, wine and lead.

Officials expect an agreement with New Zealand to quickly follow on similar terms. In addition, the UK government is also considering early trade deals with India and Canada, with talks in Ottawa beginning soon. Currently, it is drawing up an approach to the six member countries of the GCC, with International Trade Secretary, Liz Truss, commenting that “the Gulf is a definite target and we are working on the approach to [the] Gulf,” and “we are in discussions with the GCC and I hope that we’ll be able to say more about that soon.” British trade with GCC members was worth US$ 63.9 billion in 2019 and was the country’s fourth largest market after the EU, US and China.

With its economy slowly reopening as lockdown restrictions are eased, UK government borrowing in April fell by a third to US$ 44.9 billion, compared to the same month last year, but still the second highest April deficit on record. Borrowing – the difference between spending and tax income – for the fiscal year to March was at US$ 426.1 billion, the highest annual return since World War II; this has resulted in government debt growing to US$ 3.08 trillion, equating to 98.5% of GDP.

The VisitBritain agency estimates that 2021 UK tourism spending by holidaymakers this year will be 43.9% lower, at US$ 72.8 billion, than the level of 2019; of that total, spending by foreign tourists will be down 78.2% at only US$ 8.8 billion. The agency puts the economic cost of Covid on the tourism sector at US$ 82.2 billion, as last year, the domestic tourism industry shrank by about two-thirds, with coronavirus restrictions forcing the cancellation or postponement of millions of people’s travel plans. The Johnson government has poured in an estimated US$ 35.4 billion into the sector, including the furlough scheme, the VAT cut for hospitality businesses and the business rates holiday. This year, the UK tourism sector will be praying for fine weather so that the millions, who cannot go overseas for a holiday, will spend the money at UK resorts and travel destinations. Hooray! Hooray! It’s A Holi-Holiday!

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Tell Me What The Papers Say

Tell Me What The Papers Say!                                                                     20 May 2021

According to Valustrat, Dubai property prices rose 1.2%, month on month, but were still 6.5% lower, year on year. The consultancy noted that the property market has indeed bottomed out, as “capital values of residential homes commenced a growth trend” and that “clear improvements in capital values were observed in 96% of locations.” Monthly sales volumes were 16.9% higher, month on month, as off-plan house sales rose 30.1% and ready homes by 8.7%.

In what is traditionally a quiet period for the property sector, this year’s 29-day holy month of Ramadan saw property transactions totalling US$ 2.72 billion, with sales of 4.8k units; this beat the previous highest Ramadan period in 2015 when 3.9k units were transacted. The highest deal was found on Palm Jumeirah, where a villa went for US$ 29 million, whilst there were three other villas sold for more than US$ 19 million (AED 70 million) – two on the Palm and the other in Emirates Hills. As indicated in previous blogs, the secondary market demand for units has risen markedly, whilst there are some developers offering some ready to move in homes, with a ten-year payment plan and no interest.

Bloomberg has come around to forecasting that Dubai’s residential market is moving upwards and that the rally in property prices will continue, noting that “robust demand, peaking supply growth and long lead times for new projects could lead to a tighter than expected market over the next few years”.  As noted earlier, the emirate’s largest developer, Emaar, posted a 65% jump in Q1 villa sales, compared to the same period in 2020.

Nakheel’s latest launch is Murooj Al Furjan, a residential community of 418 villas, comprising 314 4 B/R and 104 5 B/R villas. Comprising two gated communities, the project, slated for completion in 2024, encompasses five million sq ft and will include several onsite sports and leisure facilities for residents. The Dubai-based developer has invested heavily in Al Furjan, spanning 560 hectares, where it already has built 1.7k villas and 2.8k apartments and a community with a population of 26k. The Dubai-based real estate announced that it sold out 217 villas worth US$ 218 million in just four hours today, as investors were “clamouring” to acquire homes at its new community.

Sobha Realty announced on Wednesday the launch of Waves – a 35-floor residential tower in The Waterfront District – and an integral part of the developer’s US$ 4.4 billion Sobha Hartland project – and scheduled for completion in Q3 2023. Located in Mohammed bin Rashid Al Maktoum City, the 592-apartment Waves is one of the 12 towers planned for its US$ 2.2 billion Waterfront District. Waves will comprise 1-2 B/R bedroom apartments and twelve retail units, with prices starting at US$ 272k. Sobha Hartland, launched in 2014, includes Greens, Creek Vistas, Creek Vistas Reservé, Gardenia Villas, Garden Houses, One Park Avenue and Forest Villas.

Rentals continued to decline in Dubai’s office market sector in Q1, attributable to continuing weak demand in the aftermath of lockdowns, restrictions and subdued consumer confidence. Consultancy Knight Frank noted an average 7.7% slide in Dubai rentals to US$ 281 per sq mt, with average prime office rents across Dubai falling slower at 4.2%, year-on-year, to US$ 586 per sq mt – its lowest level since Q3 2012. Vacancy rates also nudged higher to 24.3%, compared to 19.4% reported last summer. The report noted that there “are pockets of activity emerging, with the technology-media-telecoms sector being notably active, mirroring trends in other major global markets.” There is a glimmer of hope that the outlook could be brighter with the April UAE’s Purchasing Managers’ Index registering 52.7, its highest level since June 2019, indicating a welcome return of business confidence to the emirate.

Any hope of an early return to pre-pandemic tourist numbers have been dashed by numerous factors, including potential visitor numbers from their first and third source markets being severely curtailed because of the latest lockdown and travel restrictions in India and the UK, barring direct flights and requiring travellers from the UAE to hotel quarantine on their return. Despite these setbacks, there is still hope that the emirate will be able to attract 5.5 million visitors in 2021, well down on the 2019 figure of 16.7 million and in line with last year’s numbers. Some of the shortfall from traditional markets is expected to be filled by visitors from newer locations in Europe, Africa and the Commonwealth of Independent States (CIS).

This week saw the return of the Arabian Travel Market which attracted 1.3k exhibitors from sixty-two countries. It comes at a time when the local tourism sector is starting to return to some form of normalcy having been ravaged by the impact of Covid 19. Figures from the Dubai Media Office point to the fact that the number of visitors has increased tenfold in the nine months to March 2021, as hotel occupancy rates almost doubled to 64%, with the number of booked rooms 242% higher at 2.4 million. In Q1, the emirate recorded 1.26 million passengers and there have been recent moves to start removing Covid-19 restrictions; earlier in the week, Abu Dhabi lifted quarantine requirements for international visitors, whilst Dubai will allow vaccinated residents and visitors to attend concerts and community events.

At the event, Millennium Hotels outlined plans to double its regional property portfolio to 100 by 2025, with the UAE being the focus of its attention, with a further nine to be added by 2022. By that date, the company expects that it will have 20k keys, noting that “we see growth, we see potential and we see the curve is getting into [a] U-shape. It is picking up quite solidly … and we are fairly positive about the [UAE] market.” Latest data sees the UAE recording the world’s second highest hotel occupancy rate, at 54.7%, to China – last year, the country hosted 14.8 million guests.

HH Sheikh Mohammed bin Rashid has issued a decree dissolving a special tribunal that was formed in 2009 to settle disputes related to mortgage lenders Amlak Finance and Tamweel that protected their creditors, following the GFC. Any complaint that has already been reviewed by the Special Tribunal, and has not received a final judgment, will be referred to the concerned Court of First Instance at Dubai Courts. Amlak, along with a number of others, specialising in home mortgages, suffered because of mortgage defaults, when prices tanked following the 2008 crisis. Last year, Amlak Finance, 55% publicly owned and 45% by Emaar, tried to get creditors’ approval for a restructuring plan but failed, despite having gained 95% approval, when just one creditor abstained from signing the deal.

According to the federal Ministry of Economy, starting next month, foreign investors and entrepreneurs can fully own onshore companies in the UAE. The aims of the change in legislation are to boost the country’s competitive edge, facilitate doing business in Dubai and augment UAE’s appeal as an attractive destination for both foreign investors, entrepreneurs and talents. A recent report by Expat Insider 2021 ranked the UAE 18th in the world’s leading countries to live and work in; the top five positions went to Taiwan, Mexico, Costa Rica, Malaysia and Portugal.

Dubai’s Crown Prince, Sheikh Hamdan bin Mohammed, launched ‘Dubai Next’ – a new digital crowdfunding platform for supporting entrepreneurs and start-ups, to boost positive competition, as well as encouraging new ideas that will stimulate local crowdfunding. He also wants to “empower a generation that is capable of innovating to succeed in a competitive commercial environment, thus reinforcing the fundamental role of SMEs in economic development so that the UAE can continue to stand as a model for youth empowerment.” There will be plenty of role models for the new SMEs to look up to, as Dubai is home to a number of global tech start-ups that have chosen to base their headquarters here due to its business-friendly legislation. They include messaging app Telegram, advertising technology company Media.net, Wrappup, the developer of an AI-based productivity app, acquired by US tech firm Voicera, and Emerging Markets Property Group – the parent company behind the Bayut and Dubizzle portals.

A UAE start-up, specialising in digital payment services, has managed to raise US$ 8 million in a new funding round, led by the local venture capital firm Global Ventures. Mamo, co-founded by ex-Google employees, Mohammad El Saadi, Asim Janjua and Imad Gharazeddine, will use the finance to expand its operations in the UAE and Saudi Arabia and also to support the transformation of the UAE and Mena countries into digital economies.

Alvarez & Marsal, administrators of NMC Health, has sent legal letters – before issuing claims – against the company’s former directors and pointedly to ex-auditor EY, noting that “these claims have the potential to generate significant recoveries for the estate,” and that “we consider that a meaningful estimate of dividend prospects for unsecured creditors cannot be made at this time”. The country’s biggest private healthcare company, founded in 1975 by BR Shetty, floated on the LSE in 2012 and was valued at US$ 12.1 billion in 2018. In late 2019, it was found that US$ 4.4 billion of previously undeclared debt had been concealed which was the beginning of the end for the Shetty empire.

Amlak Finance came out of the red in Q1 2021, posting a US$ 2 million profit after recording a net loss of US$ 38 million, over the same period in 2020, it had an annual 2020 deficit of US$ 119 million. Over the quarter, revenue dipped 12.7% to US$ 17 million, (excluding fair value losses on investment properties and gain on debt settlement). Operating expenses came in 16% lower at US$ 4.5 million and the finance company managed to repay US$ 19 million to financiers in the quarter. Amortisation for Q1, at US$ 9 million, was 45.4% higher compared to a year earlier, whilst in the first three months of the year, it managed to renegotiate an agreement with all the financiers that govern the new terms of its debt restructuring.

Damac Properties posted a Q1 loss of US$ 52 million, compared to a US$ 29 million deficit a year ago, as revenue almost halved to US$ 175 million down from US$ 335 million; the loss was the firm’s sixth straight quarterly loss, driven mainly by a supply overhang and ongoing price declines. Gross margins dipped because of lower revenue recognition – as projects are nearing completion – and higher selling and general administration expenses. However, the developer, founded by Hussein Sajwani, has reported a 52% hike in Q1 booked sales to US$ 302 million, as the Dubai real estate market gained further traction. The company has delivered over 33k units since its 2002 formation and has a similar number in the pipeline, 96% of which are in Dubai. Earlier in the week, Damac shares were trading at US$ 0.335, giving it a market cap of US$ 2.1 billion; the share value is 5.4% lower YTD and 72% lower than its 2017 peak but has almost doubled over the last twelve months.

Q1 saw Union Properties swing to a US$ 1.5 million profit, compared to a US$ 33 million loss a year earlier, attributable to lower finance costs, 42% lower at US$ 6 million, and the property market picking up. Direct costs fell 6% to US$ 211 million, with administrative and general expenses down 15% to US$ 7 million. The Dubai-based developer also gained US$ 2 million on the disposal of investment properties, (Q1 2020 a loss of US$ 5 million). Last year, it reached an agreement with Emirates NBD to restructure an outstanding debt of US$ 258 million and also divested a 40% stake in its subsidiary Dubai Autodrome for US$ 109 million.

Meanwhile, the emirate’s biggest listed property developer, Emaar Properties, posted an 8% hike in Q1 net profit to US$ 179 million, as it recorded a 12% revenue increase at US$ 3.3 billion. It booked Q1 sales of US$ 1.9 billion – 83% higher than a year earlier – with UAE sales accounting for 83% of the total. Having already built 74.5k units since its formation, it has 37k in the pipeline, of which 25.5k are in the UAE, and has a backlog totalling US$ 11.4 billion. Its two other companies posted healthy revenues, with Emaar Development and Emaar Malls up 26%. Profits at its Emaar Development arm grew 20% to US$ 211 million, whilst its Emaar Malls arm made a Q1 profit of US$ 84 million.

The bourse opened on Sunday 02 May for two days before the Eid Al Fitr holiday to reopen for a full week’s trading on 09 May; having gained 39 points (1.5%) the previous week, gained 87 points (3.3%), on the seven trading days to close on 2,751 by Thursday 20 May. Emaar Properties, US$ 0.04 higher the previous week, gained a further US$ 0.04 to close at US$ 1.10. Emirates NBD and Damac started the previous week on US$ 3.39 and US$ 0.34 and closed on US$ 3.50 and US$ 0.37. Thursday 20 May saw the first full week of a post-Ramadan market trading at a much improved 350 million shares, worth US$ 133 million, (compared to 76 million shares, at a value of US$ 28 million, on 06 May).

By Thursday, 20 May, Brent, US$ 0.29 (0.4%) lower the week ending 06 May, slipped a further US$ 2.95 (4.3%) to close on US$ 65.32. Gold, up US$ 44 (2.5%) the previous week, gained a further US$ 62 (3.4%) by Thursday 20 May to close on US$ 1,876.

Yesterday saw Bitcoin slump to below US$ 34k for the first time in three months, after China imposed fresh curbs on crypto-currencies, by banning banks from providing services related to crypto-currency transactions. This follows a 10% fall last week when Tesla said it would no longer accept the currency but It did recover by the end of the week, trading at US$ 40.6k. Bitcoin was not the only cryptocurrency to move lower with the likes of Ether and Dogecoin losing 22% and 24% respectively. Although crypto-currency trading has been illegal in China since 2019, people still trade but this week the National Internet Finance Association of China, the China Banking Association and the Payment and Clearing Association of China issued a warning that there would be no protection if they were to incur any losses from crypto-currency investment transactions. However, when the likes of the FT reporting “new doubts among institutional fund managers over the future of crypto-currencies as an asset class”, and Elon Musk noting that “we are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel”, there must be doubts not of its long-term future but its actual fair value. No major government is going to sit back and see its currency take a back seat to a virtual newcomer. The latest selloff in digital currencies has seen market capitalisation of all cryptocurrencies back under US$ 2 trillion, 20% lower from its recent US$ 2.5 trillion record, whilst gold proved a temporary winner, gaining 6% over the past fortnight.

It is reported that Amazon is prepared to spend US$ 9.0 billion to buy the historic MGM Studios which would give the tech giant’s Prime streaming service access to a vast back catalogue. This was the second major deal in a matter of hours, after telecoms giant AT&T agreed to combine its WarnerMedia unit with Discovery in a deal to create a new streaming giant. Although WarnerMedia-owned HBO and HBO Max now have around 64 million global subscribers, it still has a long way to go to catch up with the likes of Netflix, which has 208 million subscribers, Disney+, which has more than 100 million and Discovery, with more than 88 million US homes.

Despite the lifting of most restrictions, UK’s High Street is still facing daunting problems with the latest news being that people visiting shops was down by 3%, juxtaposed with the same time a week earlier and that compared to the same May period two years ago, footfall overall was 28.4% lower. A further analysis of the readings shows that retail parks saw the biggest declines, with visitor numbers falling 5.4% week-on-week, visits to shopping centres fell 3.4% and the number of shoppers on the High Street was 1.6% lower; compared to May 2019, the numbers were all lower by 3%, 30% and 32% respectively. The news is just as gloomy for bars and restaurants which this week could finally see patrons inside the building; however, it is estimated that across the country, there are now 9.7% fewer restaurants and 19.4% less “casual dining” venues than there were pre-pandemic. It seems that the traditional pub has fared a little better, with the number of pubs serving food declining by 4.2%, whilst those only serving drinks down by 5.2%.

With the highest monthly growth rate since August 2002, UK March average house prices jumped 10.2% on the year to a record US$ 363k, as the housing boom continued unabated; a month earlier, the growth was at 9.2%; it seems that London posted the country’s lowest regional growth, at 3.7%, for the fourth month in a row; this was put down to a lack of foreign investors due to the country’s tight travel restrictions. On a regional basis, Wales, Scotland, England and N Ireland prices rose 11% to US$ 262k, 10.6% to US$ 236k, 10.2% to US$ 389k and 6.0% to US$ 211k respectively.  The recent boom in house prices has been put down to the government’s stamp duty break – introduced last July, and still running – and the Covid lockdowns that have now resulted in a pent-up demand for homes. Just like Dubai, apartment price increases were a lot less than houses, with the former only rising 5% with detached houses 11`% higher.

The seasonally adjusted Q1 GDP in the EU and the euro area decreased by 0.4% and 0.6% respectively, according to a flash estimate published by Eurostat, the statistical office of the EU; the previous quarter, the falls were 0.7% and 0.5%, but in Q3 the bounce back saw expansions of 11.7% and 12.5% respectively. (The US posted GDP growth in both the last two quarters of 1.1% in Q4 and 1.6% in Q1). Over the past two quarters, the 
number of employed persons, in both blocs, decreased by 0.3% in Q1 and 0.4% the previous quarter.

The EC is to propose a more unified tax system of taxing companies in the EU and other measures to adjust the bloc’s business taxation to put the system more in line with the modern world, where cross-border business, normally via the internet, is increasing in popularity. Next month, the OECD is planning to introduce unified worldwide rules and regulations on where – and how much – to tax large MNCs such as Amazon, Apple, Facebook, Google and Microsoft. It may prove difficult for the bloc to introducesuch a radical unified taxation model by 2023, as the current modus operandi sees the 27 EU countries currently having 27 different tax protocols. This agreement will be a forerunner of a new set of corporate tax rules for the EU members – “Business in Europe: Framework for Income Taxation” – which will see common taxation for all 27 countries, as well as allocation of profits for taxation at national rates between EU countries, according to a set formula, dependent on various factors. That is the plan, but reality may see a different ending! 

With US pandemic restrictions being lifted, there were 444k jobless claims in the country to a new pandemic low – a positive indicator that the job market is steadily improving. By the end of the week ending 15 May, jobless claims had dipped 34k. Despite this, the levels of claims are still significantly higher than pre-pandemic levels but with more Americans getting vaccinations, and returning to work, the situation will steadily improve but at a slower rate than many had forecast.

There was no surprise to see that the Serious Fraud Office is investigating Liberty Steel, a company enmeshed in the Greensill debacle. It seems that the probe centres around suspected fraudulent trading and money laundering. Despite the sterling efforts of its special adviser, David Cameron, the Australian banking company went belly up in March; its reliance on Greensill meant that Sanjeev Gupta’s business empire would be in trouble if anything untoward happened. Following its reporting on the Wirecard scandal last year, yet again the FT proved that it is the best investigative newspaper in the UK and has claimed that one of Mr Gupta’s companies had sent Greensill invoices for business it had supposedly done with four European metal companies. But those European companies told the newspaper they had not dealt with GFG., and the group saying that the invoices were for products it expected to perhaps sell in the future and that the financial arrangement was common for many of its clients. Tell Me What The Papers Say!

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When The Going Gets Tough, The Tough Get Going!

When The Going Gets Tough, The Tough Get Going!                                06 May 2021

Being the last full week of the holy month of Ramadan, it was no surprise to see numbers drop for the Dubai real estate market, with a total of 1,557 real estate and properties registered transactions, valued at US$ 926 million, during the week ending Thursday, 06 May. The Dubai Land Department confirmed that 1,027 villas/apartments were sold for US$ 510 million and 111 plots for US$ 133 million. The three most expensive residential units sold were a Marsa Dubai villa for US$ 92 million, a Palm Jumeirah apartment for US$ 59 million and another Palm Jumeirah apartment for US$ 35 million. The most popular locations were in Al Hebiah Third, with 30 sales transactions worth US$ 18 million, Hadaeq Sheikh Mohammed Bin Rashid with 15 sales, at US$ 33 million, and Nad Al Shiba First with 15 sales for US$ 10 million. The top two land transactions were in Al Thanayah Fourth, selling for US$ 10 million, and a US$ 10 million sale in Palm Jumeirah. Mortgaged properties for the week totalled US$ 272 million, including a plot for US$ 25 million in Al Thanyah First. 63 properties were granted between first-degree relatives, worth US$ 30 million.

Property Finder posted that the value of Dubai’s April transactions hit a four year high of US$ 3.0 billion, bringing the YTD total of US$ 9.8 billion, involving 16.6k sales. In the off-plan market, 1.9k properties, worth US$ 842 million, with 2.9k properties, valued at US$ 2.15 billion, being sold in the secondary market. The consultancy also noted that there was a tripling in the number of ready villas and townhouses being sold in Q1, as residents upgraded to bigger homes amid the coronavirus pandemic. Interestingly, three of the first four months of the year recorded the highest number of monthly transactions since March 2010.

Last month, 70% of the total transactions were for less than US$ 545k (AED 2 million), 23% between US$ 545k to US$ 1.36 million, (AED 2 to 5 million), 4% between US$ 1.36 million to US$ 2.72 million (AED 5 to 10 million), and 3% between over US$ 2.72 million (over AED 10 million). For the month, 60% of all real estate transactions were for secondary/ready properties and the balance for off-plan properties. The most transactions in a single community were Mohammed bin Rashid City, followed by JVC, which accounted for 5.8% of all transactions, and Dubai Marina with 5.6%. The five leading communities, recording townhouse/villa transactions, were Mohammed bin Rashid City, Dubailand, Dubai Hills Estate, Rukan and Town Square accounting for 18.5%, 10.3%, 9.4%, 5.0% and 4.9% respectively. The five leading communities, recording apartment transactions, were Dubai Marina, JVC, JLT, Downtown Dubai and Business Bay, accounting for 8.5%, 8.4%, 7.6%, 7.3% and 5.4% respectively.

wasl properties has announced the release of ‘masaken wasl,’ a new leasing project in Al Qusais, offering 777 modern and spacious apartments, (from studio – 3 B/R apartments), with rentals from US$ 8k to US$ 20k. Located in Al Qusais, and close to the Metro and Al Mulla Plaza, the project comprises several modern facilities, including a gymnasium, a swimming pool, a kids’ play area, and parking lots for tenants.

A report by Juniper Research estimates that digital commerce spending is expected to jump 11.5% to US$ 16.1 trillion which includes money transfers and payments related to digital, as well as physical goods purchases, digital ticketing, banking, bills and NFC mobile retail. By the end of the year, mobile commerce will account for 73% of all digital trade transactions, increasing to 79% by 2025. Although much of the recent boom has been put down to the impact of Covid-19, it is expected that consumer behaviour will become increasingly digital, rather than reverting to pre-pandemic norms. January saw Mastercard recording a 30% increase in digital e-commerce spending and it seems likely that this will become a permanent feature, as the online share of retail spending in the Middle East and Africa region grows.

The annual ‘Dubai Summer Season’ opened last Saturday, 01 May. The Dubai Shopping Malls Group’s campaign, in association with Dubai Festivals and Retail Establishment, will last over four months to close on 04 September. During that period, it will run four mega promotions, including EID in Dubai, Dubai Summer Surprises (DSS), Back to School and Eid Al Adha. The first campaign will see forty lucky shoppers standing a chance to take home a total of US$ 54k, with draws being held on the 3 days of EID. EID in Dubai will run for six weeks until 14 August, with six prizes of brand-new Infiniti Q50s being won in the weekly draws. With every spend of US$ 54, at any of the participating malls, shoppers will also be eligible to enter the digital raffle draw and win major prizes.

The Federal Competitiveness and Statistics Centre confirmed that the UAE’s economy declined by 6.1% last year, attributable mainly to the negative effect of Covid-19 which saw foreign trade and investment slump, along with tourism, transportation and logistics. The non-oil sector was off 6.2%, with major falls of 23.6%, 13.1% and 10.4% seen in accommodation/food services, wholesale/retail trade and construction respectively.

The UAE retained its Moody’s Aa2 long-term issuer rating, with a stable outlook, mainly because of its exemplary record in its vaccine protocol and general control over the pandemic. The government’s policies have resulted in a “relatively muted impact of the pandemic on the federal government’s fiscal strength”. The ratings agency also noted that the country’s progress in vaccinating its population could allow for an easing of inbound international travel, supporting a “faster-than-expected recovery in the tourism sector, and providing a boost to the hospitality and retail sectors”. To date, the federal government has injected US$ 106 billion in economic support packages and has recently extended its Targeted Economic Support Scheme, a zero-cost loan initiative aimed at boosting liquidity in the banking system, until June 2022.

Dubai Aerospace Enterprise posted a 13% decline in Q1 revenue to US$ 308 million, with profit slumping to US$ 8 million from US$ 77 million in the same period in 2020, driven by falls in net lease revenue and maintenance revenue. However, it is confident that, with global vaccinations picking up and lockdown restrictions easing in many countries, air travel will expand. Over the period, DAE offered relief packages, valued at US$ 196 million, and in the form of either lease deferrals or amendments, to 38 airline customers. By 31 March, it had a total owned, managed and committed fleet of 377 aircraft, with an aggregate book value of its owned fleet, including finance lease and loan receivables, of US$ 11.6 billion and an estimated value of its managed fleet at US$ 1.4 billion. During Q1, its total available liquidity was US$ 3.3 billion, with cash and cash equivalents growing to US$ 717.4 million.

Flydubai posted a US$ 194 million 2020 loss, (for the year ended 31 March 2021), with revenue down by more than a half to US$ 763 million, as passenger numbers plummeted because of the various international lockdowns, attributable to the impact of Covid-19; a year earlier its profit was US$ 54 million. The main damage was seen in H1 when the deficit was at US$ 149 million. The budget carrier was also impacted by the almost two-year grounding of the Boeing 737-MAX.

April was a great month for DMCC, with 216 new businesses joining the free zone, following on Q1 numbers, recording their best quarterly returns since 2014. There are over 18k businesses operating in the free zone. This year, the Centre has introduced innovative bundled price packages, as well as new initiatives such as DMCC Cacao Centre and the upcoming DMCC Crypto Centre which have helped keep the company numbers high. Over the first four months of the year, it has seen strong interest from China, France, India, Israel and the UK.

Despite Covid-19 problems but assisted by providing several stimulus packages last year to support companies, Dubai Airport Free Zone reported that 2020 non-oil trade reached US$ 32.4 billion. DAFZ accounts for 10% of Dubai’s non-oil foreign trade, and 25% of the total commercial activity last year through Dubai’s free zones. Following the initial negative impact on business, because at the onset of Covid-19, both Q3 and Q4 witnessed “exceptional growth”, climbing 36.4% and 23.0%, year-on-year. H2 saw trade increasing by 7.1%, with imports, exports and reexports improving by 10.7%, 7.0% and 4.5% respectively, with H2 trade surplus coming in US$ 7.3 billion higher. Country-wise, China (with 27% of total trade) was the free zone’s biggest partner, accounting for 62.6% of all imports, followed by India and the US with 15.5% and 5.0%. Iraq was DAFZA’s largest export market with 17.5% of the total, followed by Switzerland (7.5%) and Saudi Arabia (6.2%).

During last Saturday’s “Most Noble Numbers” auction, Dubai car plate number AA9 went for over US$ 10 million, whilst mobile number 056 9999 999 went under the hammer for US$ 817k. Total money raised in this special Dubai car number and exclusive mobile numbers auction was US$ 13.2 million, with all proceeds going to UAE’s ‘100 Million Meals’ Ramadan campaign, recently launched by HH Sheikh Mohamed bin Rashid Al Maktoum. This week, the campaign provided 20.5 million meals for Palestinian refugee camps in Jordan and Bangladesh.

Now that the economy is picking up, many residents are receiving an increasing number of cold calls, with the three biggest culprits being financial advisers, real estate agents and banks. The authorities are enhancing their efforts to put an end to this malpractice. Now anyone receiving an unsolicited call can notify the Dubai Economic Department’s Commercial Compliance & Consumer Price Protection division – 600545555 – to lodge a complaint, follow a few steps and that caller will not be phoning again.

Following a Q4 loss of US$ 443 million, Mashreq returned to a profit of US$ 12 million in Q1 – but this was well down on the same period profit in 2020 of US$ 95 million; total operating income was down 7.9% at US$ 351 million but 12.0% higher than posted in Q4. Fees and commissions were up 29.0% to US$ 122 million, whilst customer deposits grew 2.2% to US$ 24.6 billion. The bank’s financial ratios remained stable, with a liquid asset ratio of 28.8%, capital adequacy ratio of 14.4% and Tier 1 ratio at 13.3%.

Meanwhile, CBD posted a Q1 net profit increase of 3.1% to US$ 89 million, compared to the same period in 2020, attributable to decreased credit losses and reduced operating expenses; operating income slipped 3.4% to US$ 199 million, driven by reduced market interest rates and a 6.4% decrease in other operating income because of lower fees and commissions. Operating expenses were 2.7% lower. Total assets, net loans/advances and customer deposits all headed north by 5.2% to US$ 27.9 billion, 6.6% to US$ 19.0 billion and 1.75% to US$ 19.0 billion. Its non-performing loan ratio dipped 0.15% to 6.62%, with quarterly impairment charges of US$ 57 million.

It is reported that the cumulative Q1 profit for the eleven UAE national banks grew 9.6% to US$ 2.11 billion, compared to the same quarter in 2020. The five listed Dubai banks posted a cumulative profit of US$ 1.02 billion, comprising US$ 632 million, US$ 231 million, US$ 89 million, US$ 57 million and US$ 12 million – Emirates NBD, DIB, CBD, EIB and Mashreq.

The bourse opened on Sunday 02 May and, having shed 28 points (0.3%) the previous fortnight, gained 39 points (1.5%), to close on 2,664 by Thursday 06 May. Emaar Properties, US$ 0.04 lower the previous fortnight, regained the US$ 0.04 to close at US$ 1.06. Emirates NBD and Damac started the week on US$ 3.39 and US$ 0.33 and closed on US$ 3.39 and US$ 0.34. Thursday 06 May saw typical Ramadan market trading at 76 million shares, worth US$ 28 million, (compared to 134 million shares, at a value of US$ 40 million, on 29 April). The market will only be open for two days next week and be closed from Tuesday to Thursday for Eid Al Fitr.

By Thursday, 06 May Brent, US$ 7.41 (12.1%) higher the previous fortnight, slipped by US$ 0.29 (0.4%) to close on US$ 68.27. Gold, down US$ 59 (3.2%) the previous five weeks, regained US$ 44 (2.5%) by Thursday 06 May to close on US$ 1,814. Brent started the month on US$ 64.42 and gained US$ 2.83 (4.4%) during April to close on US$ 7.25. Meanwhile, the yellow metal shed US$ 4 (0.2%) in April, having started the month on US$ 1,773 to close on 30 April at US$ 1,769.

The UN Conference on Trade and Development estimated online sales rose from 16% to 19% of all retail transactions in 2020, with the process “fast-tracked” somewhat by the advent of Covid-19. Countries reporting large growths included South Korea, China, UK and US, with increases of 5.1% to 25.9%, 4.2% to 24.9%, 7.5% to 23.3% and 3.0% to 14.0%. The top five countries, when it came to actual e-commerce sales, were the US, Japan, China, South Korea and the UK, with totals of US$ 9,580 billion, US$ 3,416 billion, US$ 2,604 billion, US$ 1,302 billion and US$ 885 billion. Ten of the top thirteen e-commerce businesses reside either in China or the US, with all of them experiencing sharp declines in gross merchandise volume and booking values. Chinese e-commerce company Alibaba retained the top position with a gross merchandise value of US$ 1.14 trillion last year, followed by Amazon at US$ 575 billion and Chinese site JD.com at US$ 379 billion.

As Barclays announced a doubling of Q1 profits to US$ 3.3 billion, its boss Jes Staley reckoned that the UK will see an economic boom and grow at its fastest rate since 1948. His reasoning is on the back of the success of the country’s vaccine roll-out and that his bank’s estimate there is an extra US$ 275 billion in customer and company bank accounts. He put the bank’s impressive profit figure down to growing customer confidence and that the bank’s impairment provision has fallen from more than US$ 2.75 billion to just US$ 75 million in a year. (Interestingly, Barclays – unlike other big banks in the UK and US – have decided not to adjust previous estimates of bad loan provisions but hinted that they will do so in future).

Bitcoin has been left in the blocks by the progress of ether which this week topped US$ 3.1k and is 325% higher YTD, compared to Bitcoin trading just 95% higher in 2021. Ether has benefitted by improvements to the ethereum blockchain and a marked move to decentralised finance, (DeFi), referring to transactions outside traditional banking for which the ethereum blockchain is a crucial platform. There are some analysts of the opinion that ether will be of even greater use in a decentralised future financial system, and it is reported that the European Investment Bank is planning to issue a digital bond over the Ethereum blockchain.

In another buying frenzy, Robinhood’s trading app crashed on Tuesday as crypto investors were in the market for so called altcoins, resulting in Dogecoin 50% higher as well as Dash and Ethereum Classic moving 14% and 30% to the good. The latest rally saw the value of all digital tokens surge past US$ 2.25 trillion and Dogecoin has already gained 14,180% YTD and was changing hands yesterday 05 May at US$ 0.67 – a year ago it was worth US$ 0.002. It is very difficult to see the logic behind such a surge for a “currency” that was created as a joke in 2013 and is now in the top ten of the most highly valued digital assets this year.  Even Jerome Powell Federal Reserve chairman, answered “some of the asset prices are high” when asked if things like GameStop’s and Dogecoin’s supercharged rallies created threats to financial stability.

PayPal reported a record Q1 net profit climbing more than 12 times to US$ 1.1 billion, (compared to US$ 84 million a year earlier), with revenue 31% higher at US$ 6.0 billion, driven by strong payment volumes, boosted by the shift to online shopping and digital transactions during the pandemic. As at 31 March, the company’s cash, cash equivalents and investments totalled US$ 19.1 billion. The tech giant has 392 million active accounts, (with an additional 14.5 million new accounts in Q1), with payment volumes 50% higher at a quarterly record of US$ 285 billion.  It expects Q2 revenue to top US$ 6.3 billion and has revised upwards its annual forecast to US$ 25.8 billion.  In 2021, 26 million merchants had access to PayPal’s new service enabling them to buy, hold and sell cryptocurrency. Over the past twelve months, its share value has risen 90%. 

Not surprisingly, Amazon posted a tripling in Q1 profit from US$ 2.5 billion to US$ 8.1 billion, with revenue moving 44.7% higher to US$ 108.5 billion – it expects more of the same in the coming months. Just as with Apple, Facebook, Microsoft and Google’s parent firm Alphabet, in many ways Covid-19 has been a godsend for Amazon. Almost every aspect of the Covid-19 pandemic has served to boost its revenues, including video streaming, cloud-based web-services and grocery delivery, with the tech giant also branching out into automated grocery stores and online healthcare services. The ten-year old Prime Vision has over 175 million Prime members, with streaming hours up 70% during the year, as AWS has current annual revenues of US$ 54 billion. Recent innovations have seen the arrival of Amazon Pharmacy, which allows Amazon Prime members to save money on prescriptions, Prime Wardrobe which offers personal shopping services and Discover Rooms, which the company described as “an immersive shopping experience that helps customers browse and shop from thousands of home room designs”.

With the future of the App Store at stake, (and the amount it charges developers), Tim Cook and his Apple team started their court battle on Monday against Epic Games who have been claiming for years that Apple charges are exorbitant. It is estimated that Apple have already made hundreds of millions from charges it has made on their premier game, Fortnite. Last August, it implemented its own in-app payment – bypassing Apple’s 30% charges – following which Apple ejected Epic Games off its App Store. The response was immediate with a 65-page lawsuit claiming that Apple’s control over the App Store is anti-competitive, arguing that developers should be able to make apps for smartphones, without having to pay large sums to Apple; it concluded that if you want to make games for smartphones you have to be on either the App Store or Google Play. In a separate but related incident, the EU has announced that it was charging Apple for its behaviour on the App Store, whilst last month, the US Senate was unusually united in their attacks on Apple. In addition, Spotify, Match and Tile are just a few of the many companies that have also claimed Apple’s charges are unfair. It is going to be a long hot summer.

After failing to revive their dimming fortunes, Verizon has sold its media interests, including both Yahoo and AOL, to Apollo Global Management for just US$ 5.0 billion, with Verizon retaining a 10% stake in the division. It had previously invested US$ 9.0 billion when acquiring Yahoo in 2017 and AOL in 2015. Unfortunately, these two brands, that were once trailblazers, offering a wide range of free and informative web services to consumers, soon lost ground and could not keep up with the newcomers such as Google and Facebook. In the early part of this century, Yahoo and AOL predominated the online advertising market but lost out with the market becoming saturated, with new entrants including Google, Bing, Facebook, Twitter, ESPN, Fandango and Weather.com.

McDonald’s has posted a 40% hike in Q1 profits to US$ 1.54 billion, with quarterly sales returning to pre-pandemic levels, despite Covid restrictions remaining in place in many countries. The sales boost comes after Q4’s global net income slumped 12% to US$ 990 million and 2020 profits 22% down at US$ 4.73 billion. The main driver behind these impressive results is the return of US customers, aided by growth in the UK, Australia and Canada. The food chain noted that it would “double down” on marketing its staple items, such as Big Macs and Chicken McNuggets, and continue expanding drive-throughs, delivery and online offerings, which it sees as major growth areas. Last October, food delivery company Just Eat Takeaway said orders had expanded 40% on the back of adding 800 McDonald’s restaurants, (and 300 Greggs outlets), to its network.

In Q1, the Eurozone slipped into a double dip recession, with a 0.6% contraction following a 0.7% fall in Q4 2020, as pandemic lockdown measures were reintroduced. This is in direct contrast to the likes of the US and China, with Q1 growth levels of 1.6% and 0.6%. In the bloc, Germany returned a 1.7% Q1 decline and Spain down 0.5%, both driven by falling household consumption. Portugal fell 3.3%, whilst Italy dipped 0.4% attributable to lower services sector activity. The main exception turned out to be France, actually expanding by 0.4%, driven by a marked rise in household consumption and a construction rebound.

The ongoing spat between Australia and China sees the Beijing administration indefinitely suspending all activities under the China-Australia Strategic Economic Dialogue – as a direct response to the Morrison government tearing up two Belt and Road agreements. Some will argue that Australia should have known that its outspoken stand on requesting an inquiry into the origins of the Covid-19 pandemic, or its criticism of the government’s handling of the Uyghur Muslims and their dealing with the troubles in Hong Kong, would inevitably face a backlash – and that is what has happened! The National Development and Reform Commission has accused Australia of unfairly targeting China and accusing the country of disrupting “the normal exchanges and cooperation between China and Australia out of Cold War mindset and ideological discrimination.”

Despite ongoing trade tensions with the US and other countries, China’s April exports, at US$ 264 billion, were almost US$ 43 billion greater than its imports, a more than threefold increase. China’s exports in dollar terms surged by more than 32% from a year earlier to almost US$ 264 billion. In contrast, Australian exports for March declined 2.0%, on the month, to US$ 29.8 billion. A belated cursory warning for the Australian administration – When The Going Gets Tough, The Tough Get Going!

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Let The Good Times Roll!

Let The Good Times Roll!                                                                  29 April 2021

It was a mega week for Dubai realty, with a total of 1,791 real estate and properties registered transactions, valued at US$ 2.32 billion, during the week ending Thursday, 29 April. The Dubai Land Department confirmed that 1,121 villas/apartments were sold for US$ 599 million and 121 plots for US$ 143 million. The three most expensive residential units sold were a Marsa Dubai villa for US$ 88 million, a Palm Jumeirah villa for US$ 64 million and a Burj Khalifa apartment for US$ 54 million. The most popular locations were in Al Hebiah Third, with 25 sales transactions worth US$ 14 million, Nad Al Shiba Third with 18 sales, at US$ 13 million, and Nad Al Shiba First with 15 sales for US$ 10 million. The top two land transactions were in Palm Jumeirah, sold for US$ 19 million, and a US$ 3 million sale in Hadaeq Sheikh Mohammed Bin Rashid. Mortgaged properties for the week totalled US$ 1.63 billion, including a plot for US$ 1.09 billion in Palm Jumeirah. 171 properties were granted between first-degree relatives, worth US$ 73 million.

In Q1, the sales of ready villas and townhouses in Dubai jumped more than three-fold, from 673 to 2,273 units, as residents made a move to more spacious homes amid the coronavirus pandemic. Property Finder estimated that Dubai Hills recorded a 145% jump in villa sales to 203, compared to Q1 2020, Palm Jumeirah a fourfold rise to 65, Town Square nine times higher at 99 and Arabian Ranches saw sales rise to 100. Other areas including The Meadows, The Springs, Dubailand and Jumeirah Golf Estates all recorded higher sales. Ready apartment sales also increased by 40% during the period.

As indicated in a recent blog, Dubai’s property market saw its first annual price increase since 2015, as the average March property price nudged 1.3% higher to US$ 238 per sq ft; this time last year, the market recorded a 9.8% contraction. With the market growth picking up, March also witnessed transactions at a ten-year high, according to Property Monitor. However, not all locations are basking in the glory of rising prices for the fifth consecutive month but certain villa and townhouse communities have particularly emerged as hot spots, with prices heading north for at least the next eighteen months – notwithstanding another “covid attack”. Another sign of the times is that completed property sales now outweigh off plan sales by roughly 2:1 – not long ago, this ratio was the other way round.

Tellimer Research’s conclusion is in line with other consultancies’ recent findings that Dubai’s real estate sector has stabilised for the first time in five years, driven by a successful vaccination programme. Other factors, including the government’s economic support measures and initiatives, such as visas for expatriate retirees and the expansion of the ten-year golden visa scheme, have also pushed the sector forward. Tellimer noted that the rate of price decline has slowed markedly but are still 4% lower, year on year. However, the upcoming Expo will boost demand for properties, whilst the supply pipeline has indeed slowed over the past eighteen months after major developers pulled the plug on new projects.

Gulf Islamic Investments will invest up to US$ 400 million to acquire property in the Gulf, Europe and the US, and a further US$ 200 million in India and Saudi Arabia. The Dubai-based financial services company, which is regulated by the Securities and Commodities Authority, aims to increase its assets under management by 50% to reach US$ 3 billion by the end of 2021. Since 2014, GII has invested US$ 1.2 billion in the property sector, acquiring residential, commercial and industrial buildings in Dubai, the UK, France and the US. Apart from being the largest investor in Dubai’s e-commerce company Mumzworld, it owns logistics centres and staff accommodation in DIP. The firm is evaluating an IPO but will decide on it when the “time is correct”.

In October, Dubai will host the 72nd edition of the International Astronautical Congress – the world’s largest space conference, organised by the International Astronautical Federation, in collaboration with the Mohammed Bin Rashid Space Centre. The Congress, being held for the first time in an Arab country, will feature plenary events, keynote lectures, in-depth technical and special sessions and interactive workshops. It will be the first such event that high-level stakeholders, from space agencies and global institutions, will have gathered under one roof since the onset of Covid-19.

As tomorrow, 30 April, is the last day for registering, the federal Ministry of Economy has begun to implement inspection campaigns to ensure targeted firms’ compliance with the registration procedures, in line with the anti-money laundering regulations. The UAE passed an anti-money laundering and terrorism financing law in 2018 and in February, the Ministry of Foreign Affairs and International Cooperation announced the launch of the ‘Executive Office to Combat Money Laundering and Terrorist Financing’ to implement the law. The inspection campaign targets all categories of DNFBPs (“Designated Non-Financial Business and Professions), including brokers, real estate agents, auditors, dealers of precious metals and gemstones, and corporate service providers. The fines for violations start from US$ 13.6k and go up to US$ 1.36 million and could even lead to the revocation of the licence or the closure of the facility itself, with enforcing penalties commencing 01 May.

The UAE is planning to update and enlarge its companies’ law by adding ten new sectors which will allow for 100% ownership of onshore entities, in a bid to encourage more foreign direct investment into the country. They will include “chemical, petrochemical, pharmaceutical, defence and heavy industries; the national food and healthcare security industries; and industries of the future, including space and renewable energy among others.” Such industries will be prioritised with the aim of helping the industrial sector increase its contribution to the economy by US$ 45.5 billion to US$ 81.7 billion (AED 300 billion) over the next decade. The Ministry of Industry and Advanced Technology will be responsible for rolling out programmes and initiatives that will support 13.5k local industrial SMEs.

DP World has launched an e-commerce platform, initially in Rwanda, to increase trade with Africa and enhance the business interests of UAE and other global companies with the continent. The aim of the business-to-business online marketplace, known as Dubuy.com, is to create digital trading corridors to the physical corridors DP World has built across the African continent, with its investment in ports, terminals and logistics operations. At the beginning, it will assist Rwandan SMEs find regional and global businesses but then will spread to other physical corridors DP World has built across the African continent. Online marketplaces in Africa account for just 0.5% of global e-commerce and the introduction of Dubuy.com will undoubtedly help with growing this sector in the continent.

Despite the pandemic, Dubai Silicon Oasis Authority posted a 2.7% hike in 2020 revenue to US$ 148 million. The regulatory body for Dubai Silicon Oasis attracted 1.7k new companies last year, a 54% increase, raising the number of companies registered there to 4.9k. It also inaugurated its US$ 409 million Dubai Digital Park project, spanning an area of 150k sq mt, which now boasts a number of MNCs and has an 80% occupancy rate.. With a US$ 27 million investment, it also provides sixty smart city services, in line with the vision of making Dubai the smartest and happiest city in the world. Its Dubai Technology Entrepreneur Campus (Dtec) has more than 900 start-ups from 72 countries – 7% higher on the year – with several involved in blockchain and AI technologies. DSOA has 17 sq mt of retail units, 47k sq mt of office space, 235 apartments and 5k sq mt of ready-made. and plug and play offices.

Petrol prices will nudge a little higher in May, as the UAE Fuel Price Follow-up Committee announced new monthly prices, effective from 01 May. Special 95 will retail US$ 0.003 higher at US$ 0.594, whilst diesel will be US$ 0.013 cheaper at US$ 0.591 per litre.

The RTA estimates that its marine transport network will undergo a 188% expansion to span 158 km, with a 400% increase in the number of scheduled passenger lines under a master plan running up to 2030. The fleet will be 32% higher, at 258, whilst the number of stations would jump 65% to 79 by the end of the decade. Dubai’s marine transport ferried over 14 million passengers last year, with the sector expected to see a sustained growth as the Water Canal and other waterfront developments make their expected demand; during the year, the marine transport network increased 24 km to reach 79 km. In 2021, the RTA will open four water transport lines, extending 10 km.

Having acquired a 16.3% stake in 2016, and a year later a further 5.4%, Amanat has divested itself of its stake in UAE education provider Taaleem for US$ 95 million to an unnamed buyer. This deal made the Dubai-listed company a total cash return of US$ 61 million, including dividends – a very tidy return on its investment. The money made will be used “as an avenue to recycle the cash for other investment opportunities that are more strategically aligned as an influential shareholder.” It already has financial interests in Abu Dhabi University Holding and Middlesex University Dubai, as well as owning the property assets of the North London Collegiate School in Dubai. Earlier in the year, Amanat paid US$ 232 million for Cambridge Medical and Rehabilitation Centre.

There was some good news for Drake & Scull, announcing three new contracts, (totalling US$ 102 million), including two new wastewater treatment plants – for US$ 49 million in Tunisia and another one for US$ 9 million in India. The Dubai-based contractor also reported that it was bidding for projects worth US$ 477 million in Iraq and Kuwait. After several years of losses, Drake & Scull had already posted a 2020 profit of US$ 30 million. The contractor noted that its restructuring process was at an advanced stage, with discussions about a capital reorganisation, as its liabilities outweighed its assets by over US$ 1 billion at 31 December 2020.

Q1 Etisalat results saw the telecom giant increasing Q1 profit by 7.9% to US$ 627 million, with consolidated revenues at US$ 3.6 billion; there was a 0.7% hike in EBITDA to US$ 1.85 billion, with an increased 51% margin. Its aggregate subscriber base also climbed 4% to reach the 156 million mark, of which 12.4 million are in the UAE. The Abu Dhabi listed company’s shares were 0.14% lower, with a value of US$ 5.80.

Emirates Integrated Telecommunications Co posted a 27.6% decline in Q1 profit to US$ 70 million, as revenue dipped 3.7% to US$ 785 million. EITC, also known as du, noted that revenues grew for a third consecutive quarter-over-quarter, as economic activity continued to improve, but that on a year-on-year comparison, mobile revenues declined 12.7% due to the impact of Covid-19. Its mobile subscriber base  was 1.9% higher at 6.8 million, mobile revenues stabilised at US$ 257 million, whilst its fixed revenues reached an all-time high of US$ 181 million; capex was 83% higher at US$ 155 million, with much of the expenditure on the core network, 5G roll-out, as well as improving mobile coverage and capacity.

The bourse opened on Sunday 25 April and, having shed 8 points (0.3%) the previous week, lost 20 points (0.8%), to close on 2,625 by Thursday 29 April. Emaar Properties, US$ 0.01 lower the previous week, lost a further US$ 0.03 to close at US$ 1.02. Emirates NBD and Damac started the week on US$ 3.27 and US$ 0.32 and closed on US$ 3.39 and US$ 0.33. Thursday 29 April saw typical Ramadan market trading at 134 million shares, worth US$ 40 million, (compared to 92 million shares, at a value of US$ 47 million, on 22 April).

For the month of April, the bourse had opened on 2,550 and, having closed the month on 2,625, was 75 points to the good. Emaar traded higher from its 01 April 2021 opening figure of US$ 0.96 – up US$ 0.06 – to close April on US$ 1.02. Two other bellwether stocks, Emirates NBD and Damac, started April on US$ 3.13 and US$ 0.33 and closed on 30 April on US$ 3.27 and US$ 0.32 respectively.

By Thursday, 29 April, Brent, US$ 2.23 (3.4%) higher the previous week, was up US$ 5.18 (8.2%) to close on US$ 68.56. Gold, up US$ 51 (2.9%) the previous four weeks, was US$ 8 (0.4%) lower, by Thursday 29 April, to close on US$ 1,770. Although Opec recognised that a resurgence of Covid-19 cases “could hamper economic and oil demand recovery”, it has maintained production curbs at current levels, as it balanced “the continuing recovery in the global economy” with a sharp rise in cases in some countries. It expects that demand will pick up in H2 and it was noted that overall conformity among its members to existing supply restrictions reached 115% in March. There are some member countries that have not reached their production quotas and have been given until September to rectify this. It also raised its growth forecast by 400k bpd to six million bpd. Gold prices will move higher in the coming days, with news that Joe Biden has proposed raising CGT in the world’s largest economy, at a time when a weak greenback and subdued US yields keep the metal price high. However, if it does not breakthrough to US$ 1,800 by mid-May expect a decline to around US$ 1,720.

There is no doubt that commodities are in the middle of a rare supercycle, as many countries’ economies have started to show marked signs of improvement. The knock-on effect is that industry starts moving quicker to meet pent-up demand and one of their most important needs are base metals. Global demand, led initially by China and more latterly the US, has moved quicker than expected and that is why copper and iron ore have climbed to a decade high, with aluminium prices also moving higher. By mid-week, copper was trading at US$ 9.75k per ton and the bets are on that it will continue this upward movement and could top US$ 15k in the coming years. However, there is always the possibility of Covid returning which would then put a dampener on any further economic progress, with another possible drag factor being that Chinese demand has faltered. Another risk factor concerns reports that Chinese authorities have already implemented a swathe of production curbs across industries. In a bid to stabilise raw material prices. Last year Chile, the world’s largest copper producer, mined 5.7 million metric tons, equating to 25% of the global production. The other four leading producers are the US, Australia, the Democratic Republic of the Congo and Zambia, Some of these producers have a history of strikes and could also be subject to another Covid wave which would also cause supply problems – indeed, there are reports that Chile’s ports may go out on strike next Monday.

Covid almost brought the diamond industry to a standstill, with billions of dollars of uncut gems stashed away in safes, as production was cut and retail outlets in lockdown. There was concern that the huge stockpile would skew the market when business restarted – now it seems that, in a matter of months, they have suddenly found buyers, being the middlemen who cut, polish and trade stones. On top of that, leading miners, such as De Beers and Alrosa, managed to raise prices, as pent-up demand saw more money, that would normally have been expended on overseas holidays etc, being spent on luxury goods including diamonds. In Q1, De Beers sold 13.5 million carats of diamonds, almost double the amount it mined in the period, and it is reported that stockpiles have returned to normal levels. It has been hiking prices since the end of last year, with business back to pre-coronavirus levels, selling more than US$ 1.6 billion in rough gems – the most since 2018. Meanwhile, Russian miner Alrosa’s inventories tumbled about 60% to 12.8 million carats – its lowest level in almost three years.

It was a good Q1 for Porsche which reported a 36% hike in global numbers, to 72k, compared to the same period in 2020. In the first three months of 2021. The two leading models were the Macan and the Cayenne, with sales of 22.5k and 19.5k, as the iconic 911 and its first ever electric car, the Taycan, saw deliveries of over 9k. All global areas witnessed double digit growth, as China remains the carmaker’s largest market, with Q1 sales of 22k – 56% higher on the year, with US seeing numbers up by 56% to 17.4k and Europe to 6k by 16%. The outlook for the remainder of the year is bullish.

Tesla posted a major increase in Q1 net profit from US$ 16 million to US$ 438 million, with revenue 74% higher at US$ 10.3 billion, driven by record deliveries and strong environmental credit sales. The company’s 31 March cash and cash equivalents decreased by US$ 2.1 billion to US$ 17.1 billion in the first three months of the year. A company spokesman commented that “we have sufficient liquidity to fund our product roadmap, long-term capacity expansion plans and other expenses.“ Even as it transited its two new S and X models, the world’s biggest EV maker achieved its highest ever vehicle production and deliveries. The company delivered 184k vehicles in Q1 despite a shortage of chips that has hit the global automotive industry.; its latest forecast sees a 50% annual growth in vehicle deliveries, dependent on “equipment capacity, operational efficiency and capacity and stability of the supply chain”. Interestingly, in 2017, when Tesla began production of the Model 3, its average cost for each vehicle across the fleet was about US$ 84k – now down 55% to US$ 38k. Its shares have climbed 362% over the past twelve months.

Heathrow Airport failed in their bid to increase tariffs on passengers and airlines, so as to recoup losses incurred because of the pandemic. UK’s Civil Aviation Authority has rejected their request and allowed the UK’s biggest airport to raise just US$ 300 million (10% of their original request). From next year, the airport will be able to charge an additional US$ 0.42 (1.4%) per passenger for landing fees to its new figure of US$ 41.76. It also rightly concluded that risks to Heathrow’s financing should be a matter for shareholders, not consumers.

After spending US$ 677 million to carry on trading during the pandemic, there was no surprise to see UK’s second-largest grocery chain post a US$ 364 million loss last year. Sainsbury’s recorded bumper food and Argos sales during the pandemic, with like for like sales 8.1% higher, and is confident of profits returning to some form of normality this year: Argos sales were 11% to the good, as digital sales boomed and, not to be outdone, Sainsbury’s online grocery shopping more than doubled to 17% of revenue for the year. The retailer has already embarked on a restructuring, (and recently announced that 1.2k jobs were at risk) but is going ahead with plans to open 25 to 30 convenience stores per year until the end of 2023. It already has more than 800 convenience stores, where sales were up 13%.

HSBC surprised the market, (and probably themselves), when posting an 81.2% jump in Q1 profit to US$ 5.8 billion, with more than 65% of profits emanating from Asia and 17.2% from the UK; revenue slipped 5% to US$ 13 billion due to the impact of interest rate reductions. With “an improvement in the economic outlook, notably in the UK”, the bank was able to “release” US$ 400 million from its previous US$ 3 billion bad debts provision. Europe’s biggest bank by assets, with its restructuring plan, including cutting 35k jobs, on track, noted that solid growth in its mortgage business in the UK and Hong Kong also helped to boost profits. Although the bank expects better economic conditions this year, it warned of continued uncertainty, as countries recover from the pandemic at different rates and as governments pare back support measures. It will also have to face continuing low rates until at least the end of 2021 which will have a drag on revenue.

Microsoft posted a 47.3% hike in fiscal Q3 profit at US$ 15.5 billion, driven by strong cloud, gaming and personal computing businesses, as well as a net US$ 620 million income-tax benefit; revenue was up 19.0% to US$ 41.7 billion. The March quarter recorded its 15th straight double-digit revenue growth. Over the quarter, its operating income was 31% higher at US$ 17 billion, sales in its PC business were up 19% to US$ 13 billion and revenue in the company’s intelligent cloud business revenue rose 23% year-on-year to US$ 15.1 billion. Although no figures were available, LinkedIn annual revenue was almost 25% higher, its productivity and business processes division, which includes both its Microsoft Office business and revenue from LinkedIn, increased 15% to US$ 13.6 billion. Quarterly R&D investment was at US$ 5.2 billion. Over the year, its market cap has risen by more than 50% and is currently a tad under US$ 2.0 trillion.

Alphabet, the owner of Google, posted impressive Q1 figures, with net profits up 162% at US$ 17.9 billion, as revenue advertising came in 33% higher. With global economies slowly opening up, and restrictions being lifted, the commercial world has started spending more on online advertising, the main reason why Google’s search business jumped 30% to US$ 31.9 billion, with sales at YouTube climbing 49% to US$ 6 billion. Although business will still track its current upward mobility, US and European regulators continue to discuss tightening oversight of Google and other tech giants but have yet to agree on any legislation. When they do, this could prove to be a major problem for Alphabet and a hit on its margins.

One major beneficiary of the pandemic was the UK book market which rose 7% to US$ 2.92 billion last year, with the Publishers Association commenting that people had “rediscovered their love of reading” in lockdown. Whilst demand for fiction and non-fiction did improve, by 16% and 4% respectively, audio-book sales were the big winners – up 37% – whilst educational book sales slumped, down 20%, with schools being shut for months. According to the association, total UK publishing sales – including consumer, educational and academic titles – rose 2% in 2020 to US$ 8.9 billion.

Late last week, Turkish authorities confirmed that the country-based cryptocurrency exchange, and the Thodex website, had been closed, amidst reports that its founder had fled the country and flown either to Albania. They have now opened investigations into Thodex’s founder, 27-yeqr old Faruk Fatih Ozer, who has absconded with more than US$ 2 billion of the firm’s 391k investors’ assets. Prosecutors have launched an investigation into Ozer on charges of “aggravated fraud and founding a criminal organisation”. The country has little regulation into the running of the country’s crypto market, as the Turkish central bank having decided to ban the use of cryptocurrencies in payments for goods and services starting from 01 May. A second Turkish cryptocurrency platform Vebitcoin folded at the weekend after having abruptly announced it had ceased operations, citing financial strains. Subsequently, Turkish authorities launched an investigation, blocked the firm’s accounts and arrested four people, accused of fraud. Increasing numbers of Turks are opting to use cryptocurrencies in an attempt to protect their savings from a sharp decline in the value of the lira.

After abandoning discussions, about a takeover bid for Ares Management, Australia’s AMP has instead decided to split off AMP Capital’s private markets investment management business. This move would see the end of Boe Pahari as AMP Capital’s global head of infrastructure equity, who was only appointed last year; he was subsequently demoted, following the publication of sexual harassment revelations. The demerger will create two focused businesses, AMP Limited and Private Markets, the latter operating in growing, global markets. Michael Sammells, who is currently the non-executive director of AMP Limited and current chairman of AMP Capital, will be the interim chairman of the offshoot. Last week, the wealth management division reported US$ 1.2 billion in net cash outflows, while the AMP Capital division posted a US$ 2.2 billion funds outflow. Its future is not looking bright.

Cisco chief, Chuck Robbins, reckons it will take a further six months for the supply of computer chips to return to some form of normalcy. Many industries have experienced serious supply delays because of a lack of semiconductors, triggered by the Covid pandemic and exacerbated by other factors such as increased demand from the white goods and home appliances consumer sector, with major advances in technology including 5G, AI, IoT and cloud computing demanding enhanced computer chips. Some analysts estimate that current demand is at least 25% higher than what would have been expected twelve months ago. However, supply is being ramped up, with more capacity being built; for example, Intel is investing US$ 20 billion to significantly expand production, including two new plants in Arizona. Indeed shortages, have been made worse by companies overordering and not wanting to get caught short again. The US-based Semiconductor Industry Association reckons 75% of global manufacturing capacity is in East Asia; Taiwan’s TSMC, (which is planning a US$ 100 billion investment to expand capacity), and South Korea’s Samsung are the dominant players.

A lower-than-expected rise in Australian consumer prices in March sees quarterly and annual figures at 0.6% and 1.1% will make it easier for the Reserve Bank to maintain current stimulus measures longer. However, it seems that the public may not benefit, as commercial banks have already started to raise interest rates on longer-term fixed mortgages. On top of that, building costs are nudging higher with demand on the rise, driven by low rates and government subsidies, whilst material prices are higher along with labour charges caused by a shortage of skilled labour. For example, it was estimated that to lay a brick in Perth last year cost US$ 1.04, now US$ 2.30. In Q2, the impact of increases in housing rent – and rising building costs – will also impact the inflation figures. The RBA is highly unlikely to make any move to push rates higher until inflation moves into the 2% – 3% bracket and unemployment settles to under 5%.

Because of the pandemic, and the ensuing printing of money to support their various economies, the EU public deficit and debt have soared, over the past twelve months, with government debt, in the euro area and the EU, reaching 98.0% and 90.7% of GDP, compared to 83.9% and 77.5% a year earlier; the government debt to GDP jumped to 7.2% and 6.9% from the previous levels of 0.6% and 0.5%. On a country basis, the nations with the highest debt, compared to the size of its economy, were Greece (205.6%), Italy (155.8%), Portugal, (133.6%), Spain (120.0%), Cyprus (118.2%), France (115.7%) and Belgium (114.1%), All the EU countries, except for Denmark, had deficits higher than 3% of GDP, contrary to EU rules known as the Stability and Growth Pact, with Spain, Malta, Greece and Italy posting the highest deficits.  However, ECB President Christine Lagarde confirmed that its US$ 2.23 trillion emergency bond buying will not be curtailed in the near future, as indicators point to Q1 economic activity having contracted.

Trials have been running for over a year in cities across China for the new “Digital Currency Electronic Payment” (DC/EP) system – a digital yuan controlled by the central bank. Eighteen months ago, Mark Zuckerberg had warned the US House of Representatives Financial Services committee that “we can’t sit here and assume that because America is today the leader that it will always get to be the leader if we don’t innovate.” That enquiry had concerned Facebook’s proposed Libra new digital currency which deeply worried the committee that it might upend the bank-dominated financial system. Consequently, Libra has stalled, whilst China has the world’s most robust central bank digital currency (CBDC). The digital yuan is the complete opposite of Bitcoin, as it is more concerned with control and regulation and has become a new tool for the ruling Communist Party to monitor and hegemonize its people, as well as being used to try to loosen America’s grip on the global financial order. An all-seeing currency will also allow the government to track how citizens are spending their money in real time and give them more control over their citizens. The new currency will permit users to pay for goods and services, via a smartphone app, in much the same way as its competitors, WeChat and Alipay, and it appears that its speedy roll-out has been prompted by the current duopoly. If it were a success, the new digital currency could upset the US and become the future global financial leader.

Following a creditable 4.3% growth in Q4 2020, the US economy expanded 6.4% on an annual basis in Q1, driven by increased consumer spending that had been pent up since the onset of Covid. Personal consumption, the most important part of the US economy, leapt an annualised 10.7% – the second-fastest since the 1960s. In February 2020, the inflation-adjusted value of domestically produced goods and services was at an annualised $19.3 trillion, and with the latest figure of US$ 19.1 trillion, it  indicates that the economy has returned to almost normal levels quicker than many analysts had forecast. What is happening is that unprecedented demand has not be readily met by producers, experiencing material shortages and supply-chain challenges. This, at least in the short-term, will lead to higher prices and the possibility of inflation levels rising too quickly. To make matters worse, the Federal Reserve, and the Biden administration, are continuing to print money that will take inflation higher and result in the inevitability of raised interest rates.

To no surprise to anyone, President Joe Biden is reportedly looking at almost doubling the country’s capital gains tax from 20% to 39.6%, in a bid to recoup some of the massive social spending, exacerbated by pandemic; the capital gains increase would raise an estimated US$ 370 billion over a decade, The Democratic incumbent is also discussing hitting those, earning US$ 1 million or more, by raising the existing top tax rate from 39.6% to 43.4%. Accordingly, the markets’ rection surprised no analyst, as the S&P 500 dipped 0.9% on the news, with the ten-year treasury yields falling to 1.5% The Biden administration has already warned that there would be hikes in corporation tax, that would help fund the US$ 2.3 trillion infrastructure-focused ‘American Jobs Plan’, and that those earning more than US$ 400k can expect to be paying more tax in the future.

By the day, it seems that the former prime minister, David Cameron, sinks deeper into trouble for his cavalier approach, when representing the now disgraced and bankrupt Greensill as a special advisor, a role he took on in 2018. The Treasury has released more than forty pages of messages, relating to its contact with David Cameron and Greensill Capital, with the ex-PM communicating with all his old cronies, including Rishi Sunak, two other ministers, former Cabinet Secretary, Sir Marc Sedwell, and other top Treasury officials. Even the Bank of England said Mr Cameron had contacted it multiple times last year, as the finance firm sought access to a Covid loan scheme. The two questions that need answering is why Greensill Capital was given so much time and access to the Treasury, and why so much public money was put at risk. Other emails point to the desperation of the former PM, seeing a possible US$ 700 million commission payment slipping away. One, to the BoE’s deputy governor, Sir Jon Cunliffe, included reference to the fact that Greensill had “failed to get anywhere” with its proposals, despite “numerous conversations” and a later one to him bemoaning the fact that Greensill’s inability to access the scheme had proved “incredibly frustrating”.

Following bilateral discussions last Friday, led by UK International Trade Secretary Liz Truss and Australian Trade Minister Dan Tehan, it seems that the UK and Australia agreed “the vast majority” of a free trade deal, with an agreement set to be signed in June. If the outstanding details are ironed out, the deal could add US$ 700 million to the UK’s GDP over the long term; it will also be one of the first post-Brexit trade deals negotiated by the UK that is not a “rollover deal”, a replica of a trading arrangement earlier negotiated on the UK’s behalf by the EU.

All the doomsayers will be spilling their coffee, with news that the EY Item Club has amended its earlier 5.0% 2021 growth forecast for the UK to 6.8% which would be the highest ever rate since records began; it also expects that the country will return to pre-pandemic levels by Q2 next year. The three main drivers behind this have been the impressive vaccination programme, the relaxing of lockdown procedures and the high levels of “enforced” savings which are now ready to be spent. which in turn has lifted consumer confidence to high levels. It also expects unemployment figures to be better than expected as its new forecast is 5.8%, rather than its January 7.0% figure. Even Deloitte considers that the UK is on track for a faster economic recovery than previously thought and that “the UK is primed for a sharp snap back in consumer activity”. Furthermore, the IHS Markit/CIPS Purchasing Managers’ Index was 3.3 higher on the month to 60.0 in April, with any figure above 50 indicating expansion. With the April opening of non-essential shops, it was no surprise to see the service sector growing faster than manufacturing for the first time since the Covid crisis began last March. Let The Good Times Roll!

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It’s All In The Game

It’s All In The Game                                                                                       21 April 2021

According to latest figure from Valustrat, the average Dubai Q1 rent for residential units, apartments and villas stood at US$ 20.9k, US$ 15.0k and US$ 57.6k respectively; this translates into yields of 6.1%, 6.4% and 4.9%. The report, which estimated that residential occupancy was at 80%, noted that rentals for studio, 1 B/R, 2 B/R and 3 B/R averaged US$ 9.5k, US$ 14.2k, US$ 21.2k and US$ 31.0k; rents for 2 B/R, 3 B/R and 4 B/R villas averaged US$ 28.0k, US$ 40.1k and US$ 57.7k. These rents are expected to rise in H2 on the back of the upcoming Expo and an improvement in the economic environment. Valustrat expects a further 42.5k units to be handed over this year, with this figure slightly lower than the 42.9k apartments/villas of 2020. If these figures are taken, along with the assumption that the ratio between new apartments and villas is 6:1, then the emirate’s property portfolio at the end of year will stand at 125k villas and 610k apartments to house 3.411 million (being the population as of 31 December 2020). The ValuStrat Price Index posted this quarterly gain in Q1 for the first time in almost seven years. Not surprisingly, all established freehold villa locations, including the Meadows, the Lakes and Arabian Ranches, saw price increases from 1.8% to 5.4%, whilst only 50% of apartment locations improved in value, with some areas posting declines of up to 2.8%.

For the week ending 15 April, there was a total of 1,733 real estate and property transactions, valued at US$ 1.17 billion, of which there were 135 plots and 1,107 villas/apartments sold, valued at US$ 172 million and US$ 559 million respectively. The top three transfers were for  a Marsa Dubai apartment sold for US$ 79 million, a villa sold for US$ 65 million in Hadaeq Sheikh Mohammed Bin Rashid, and a Burj Khalifa apartment sold for US$ 40 million. The busiest locations were Al Hebiah Third, Hadaeq Sheikh Mohammed Bin Rashid and Nad Al Shiba Third with 22, 21 and 17 transactions, valued at US$ 15 million, US$ 51 million and US$ 12 million respectively. The total value of mortgaged properties was US$ 272 million, of which half of the value was for one plot of land in Al Mamzer. The two top land deals occurred in Hadaeq Sheikh Mohammed Bin Rashid sold for US$ 15 million, followed by a plot that was sold for US$ 14 million in Wadi Al Safa 3. Over the week, 73 properties were granted between first-degree relatives worth US$ 98 million.

The value of property transactions for the week ending today, 22 April, was US$ 1.04 billion of sales, according to the DLD. Of that total, there were 1,086 villa/apartment sales, worth US$ 480 million, and 93 plots worth US$ 140 million. The three most expensive transactions were for US$ 60 million, US$ 57 million and US$ 44 million for an apartment in Marsa Dubai, a villa in Hadaeq Sheikh Mohammed Bin Rashid and a Burj Khalifa apartment. Most transactions took place in Al Hebiah Third, (33 transaction values at US$ 25 million), Hadaeq Sheikh Mohammed Bin Rashid, (15 sales transactions worth US$ 45 million), and Nad Al Shiba Third – 15 sales transactions worth US$ 11 million. The week’s mortgaged properties totalled US$ 272 million, with the highest being for land in Nadd Hessa for US$ 51 million. 90 properties were granted between first-degree relatives, worth US$ 115 million.

March saw a total of 6.6k real estate transactions, valued at US$ 6.24 billion – a 43% growth in numbers and 40% in value, compared to March 2020; it was also the second highest number of monthly transactions, bettered only by returns in February 2017. Compared to Q1 2020, numbers and values were both higher at 27% and 47%. One interesting feature was that 5.7k new investors entered the market for the first time, equating to 64% of the total. The top five popular locations for villa sales in Q1 wereHadaeq Sheikh Mohammed Bin Rashid, followed by Wadi Al Safa 5, Wadi Al Safa 7, Nad Al Sheba 1, and Al Thanyah Fourth. Dubai Marina, Palm Jumeirah, Business Bay, Burj Khalifa, and Al Merkadh topped the list for apartment sales.

Azizi Developments has awarded Stromek Emirates Foundations with a multimillion deal for shoring, excavation, and dewatering in its latest development, Riviera’s Phase 3. The waterfront lifestyle community project, located in MBR City, will comprise more than 16k residences, spread across 71 mid-rise buildings and overlooking an extensive retail boulevard, a canal walk – with artisan eateries – and boutiques, and Les Jardins, a lush-green social space.

In 2020, Dubai’s external foodstuff trade reached US$ 14.2 billion, despite the impact of Covid-19; of that total, imports accounted for US$ 9.5 billion, exports US$ 2.7 billion and reexports US$ 2.0 billion. There is no doubt that food security was increasing in importance, even before the pandemic onset, and that UAE has performed remarkably well in securing food supply over the past twelve months. Dubai uses a united food platform, with cooperation between Dubai Customs, DP World and Dubai Municipality, to ease shipments, in both directions, throughout Dubai ports.

A new development in Australia could prove a winner for some keen Dubai investor if only part of the idea were taken up on the emirate’s shores. That part of the idea revolves around a wave pool, obviously located in the sea, creating five levels of waves ranging from beginner to professional. The machine bobs up and down in the water to produce waves that fan out and react with an artificial reef; the result is perfect waves twelve months a year. Just as cycling has moved from an almost zero base to now an established national past time, with thousands taking to the dedicated cycling tracks, which are some of the best anywhere in the world. The same would surely happen if there was guaranteed year-round surfing on offer in Dubai and would prove not only a USP for the emirate’s tourism sector but would also see school groups, disabled surfers and even aged care groups involved in learning to surf.

The impact hat Covid has had on Dubai tourism figures is reflected in two statistics – the first two months of 2021 see the emirate hosting 810k international visitors, (75.2% lower than in the comparative period last year), and the 2020 number of visitors at 5.51 million was down 67% on the previous year. With the usual caveat, that there will be no further lockdowns, there is no doubt that tourists will come flocking back to Dubai in their millions this year, a  once key source markets such as Saudi Arabia, UK and Germany open up again for travel. Issam Kazim, chief executive of Dubai Tourism, has indicated three focal points – to tap into the conferences business, boost leisure events and start a new global marketing campaign in May to showcase the emirate as a summer destination for families. Dubai has several drivers to push tourism numbers higher – a speedy and successful Covid-19 vaccination campaign, the hosting of the six-month Dubai Expo from October, the UAE’s 50-year celebrations, open borders, visa reforms and the new market of Israel.

Despite the pandemic, Dubai Customs completed five million transactions in Q1, 20% higher on the year, and double the number of transactions in the same period in pre-pandemic 2019. The figures reflect the emirate recovering quicker than expected from the pandemic, as well as witnessing outstanding growth, with Q1 customs declarations 24% higher at 4.47 million, compared to Q1 2020. The aim is to raise the value of trade to US$ 2 trillion in the next five years, by targeting new international markets and attracting more foreign investments in line with the objectives of the 2030 Dubai Strategic Plan. To enhance the emirate’s position as a global online, Dubai Customs has recently signed an agreement with JAFZA, Dubai South and DAFZA to enable them utilise all the services and benefits Dubai Customs provides through its cross border e-commerce platform.

Dubai CommerCity has launched the first stage of the region’s first dedicated e-commerce free zone, comprising 470k sq ft and located in Al Ramool. The US$ 871 million project, which will eventually span 2.1 million sq ft, will have a built-up area of over 320k  sq ft of office space in the Business Cluster, including 145k sq ft e-commerce logistics units and multi-client warehouses in the Logistics Cluster. The free zone has already leased more than 51% of the logistics warehouses to companies launching their operations in different sectors.

On a like for like basis, there was a 9.6% hike in DP World’s Q1 gross volumes, 9.6%  higher than the same quarter in 2020, on a like-for-like basis and 8.2% higher on a reported basis. It also reported that Jebel Ali port handled 3.5 million TEUs in Q1, a 2.6% increase, year on year, and this despite a “more benign trading environment”. The port operator noted that it remained focused on containing costs to grow profitability, managing growth capex and continuing to execute its strategy of delivering supply chain solutions to cargo owners. Any improvement for the remainder of the year could be jettisoned by factors such as trade wars, more lockdowns and geopolitical uncertainty.

HH Sheikh Mohammed bin Rashid Al Maktoum has announced a new rewards programme for positive behaviour, focussing on the three main pillars of homeland, society and family. The National Behavioural Rewards Programme is based on living a positive life, with residents winning “points” to pay for government services by demonstrating strong ethics, loyalty and patriotism. The programme is being run by the Ministry of Possibilities, set up two years ago as a virtual ministry, with no designated minister, and is led by a committee of existing government authorities. It was established to take a new approach to tackling issues of national importance so as to shake up current practices and help the country become a global power.

A strange case for Dubai Police this week was a man being fined for not following safety protocols. The police discovered that he was riding a bike in Naif to the bank, carrying US$ 272k (AED 1 million) in a plastic shopping bag. It seems that the police have stopped several potential victims of theft outside banks, as they were not following adequate safety measures and probably saved them from being a victim of a daylight robbery. It advises that companies must assign at least two employees to transport, (in a car and not a cycle), collections to the bank.

To further consolidate its strengthening position in the global gold and jewellery, the UAE is planning a federal platform for gold trading. At a recent meeting of the Emirates Gold Bullion Committee, there was a major review of technical plans for the platform and for establishing a comprehensive database of all its main players, as well as discussing the progress of the introduction of the UAE Good Delivery Standard. The Minister of State for Foreign Trade, Thani Al Zeyoudi, noted that the committee had made tangible progress in implementing policies, aimed at bolstering gold trading. Gold continued to top the list of commodities accounting for US$ 58 billion of the country’s total non-oil exports.

3iQ Corporation, the world’s first Bitcoin fund to trade on a major exchange (Toronto) is to list on Nasdaq Dubai next month, after gaining approval from the Dubai Financial Services Authority. This new listing will also help the firm, in terms of trading times, as Bitcoin is an all-day global trading asset. Currently, the company has net assets of US$ 1.45 billion, after starting trading last year on the TSE, with assets of US$ 15 million. With cryptocurrencies in the middle of a boom period, (Bitcoin, for example, has increased almost eightfold in a year), 3iQ is confident that its Dubai début will be successful, as it aims for initial subscriptions “north of US$ 200 million”, which can be increased in size.

Having bought 21.53% of National General Insurance Company shares, Dubai Investments now has a 29.99% stake in one of Dubai’s leading insurers. The deal will help the company, which is 11.54% owned by the Investment Corporation of Dubai, aims to expand within the UAE’s insurance sector and also to focus on strategic business investments, reinforcing the company’s foray into newer business sectors. ICD already owns Dubai Investments Park, venture capital company Masharie, Al Mal Capital, Globalpharma and the district cooling company Emicool. It has various other interests in sectors encompassing real estate, industrial, financial, healthcare and education.

Driven by lower impairment costs, (down 31% to US$ 479 million) and operating expenses (9% lower to US$ 506 million), Emirates NBD posted a 12% hike in Q1 net profit, attributable to equity holders, of US$ 632 million. Results were boosted by higher fees, foreign exchange income, and investment income as well as noting that the accelerated push of Covid-19 vaccinations was speeding up the economic recovery; it expects that the UAE’s non-oil economy will grow 3.5% this year. With total bank assets flat at US$ 189.2 billion, customer deposits rose by US$ 422 million to US$ 103.2 billion as total customer loans dipped by US$ 1.5 billion to US$ 118.7 billion. Dubai’s biggest lender by assets now has six branches in Saudi Arabia, having expanded with new branches in Madinah and Makkah.

A week after pulling out from an IPO on the DFM, Tristar Group posted strong Q1 results, although no figures were readily available. Consolidated revenue was said to have demonstrated resilience, whilst both EBITDA and net profit both moved northwards – up 9.9% and 9.3% respectively.

The bourse opened on Sunday 18 April and, having gained 75 points (1.0%) the previous fortnight, shed 8 points (0.3%) to close on 2,625 by Thursday 22 April. Emaar Properties, US$ 0.09 higher the previous fortnight, lost US$ 0.01 to close at US$ 1.05. Emirates NBD and Damac started the week on US$ 3.26 and US$ 0.34 and closed on US$ 3.27 and US$ 0.32. Thursday 22 April saw typical Ramadan market trading lower at 92 million shares, worth US$ 47 million, (compared to 184 million shares, at a value of US$ 89 million, on 15 April).

By Thursday, 22 April, Brent, US$ 6.25 (8.7%) lower the previous four weeks, was US$ 2.23 higher (3.38%) to close on US$ 63.38. Gold, up US$ 34 (1.6%) the previous three weeks, was US$ 17 (1.0%) higher, by Thursday 22 April, to close on US$ 1,778. On Tuesday, Brent crude climbed US$ 0.64, or about 1%, at $67.69, after hitting its highest level since 18 March  at $68.08, mainly attributable to Libya’s National Oil Corp declaring force majeure on Monday on exports from the port of Hariga, which is usually handles 180k bpd, as well continuing dollar decline. Meanwhile, gold eased off a seven-week high, not helped by a rebound in US Treasury yields.

With contracts slowing, and revenue slumping by 25.5% to US$ 4.1 billion, Petrofacc posted a US$ 180 million Q1 loss. The leading energy services firms has reported that a serious fraud investigation, by the SFO, is causing it “real and material” harm. Earlier in the year, former global head of sales, David Lufkin, pleaded guilty in a London court to three charges of bribery and corruption relating to US$ 30 million of payments made to agents to influence the awarding of US$ 3.3 billion-worth of contracts in a MENA country. The company was not helped by the collapse, early in 2020, of energy prices which forced an immediate US$ 200 million cost cut.

On a global scale, aviation lost a massive US$ 126 billion last year but with more government support, 2021 losses will be lower but still worryingly high. IATA estimates that last year, ME carriers lost US$ 7.1 billion because of a 72% slump in passenger demand, (66% globally) and a 63% decline in capacity, (57% globally). The average global loss per passenger is at a slightly lower US$ 66.04  – in the region, it was US$ 68.47. Job losses in aviation and related industries could be as high as 1.7 million in the ME. One bright note was that cargo only declined by 10% in 2020. The global body also called for regional coordination to ensure that restart plans can be efficiently implemented and urged governments to remain vigilant about the industry’s financial situation.

There was more good news for the UK High Street, after a hectic week of trading following the lifting of lockdown in the UK. One of the country’s biggest commercial landlords, Hammerson – owning Birmingham’s Bullring, London’s Brent Cross, the Oracle site in Reading and the Victoria Quarter in Leeds in its portfolio – has indicated that it could reduce rents by up to 30%. Over the past year, the firm had collected about 75% of rents owed by its tenants and agreed abatements with those shops who needed it. It also noted that last Monday’s footfall had been stronger than the week after the first lockdown in June, as consumers have more money to spend, (with the BoE estimating that UK households have accumulated over US$ 175 billion in pent-up savings) and are more confident with the success of the vaccine programme. This may see an unlikely resurgence in the High Street.

The billionaire Blackburn brothers who last year bought Asda for US$ 950 billion have now acquired more than seventy restaurants across the UK and Europe after buying the British fast food chain, Leon. Mohsin Issa and Zuber Issa, reportedly through their giant petrol forecourt business EG Group, have spent up to US$ 140 million acquiring 42 company-owned restaurants, as well as 29 franchise sites which are mainly found in airports and train stations across the UK and a handful of European countries; it is also committed to keeping on Leon’s management team and staff. It already operates more than 700 food outlets in the UK and Ireland, including branches and “drive-thrus” for KFC, Starbucks and Greggs,  and had a bid turned down by the administrators of Café Nero last November.

The Johnson government is expecting to pay US$ 168 million to the bondholders of London Capital and Finance which collapsed into administration in January 2019. At the time, the regulatory body, the Financial Conduct Authority, had failed to “effectively supervise and regulate” LCF, with the then head, (and now Bank of England governor), Andrew Bailey apologising to the thousands who lost their  life savings; it is estimated that 11.6k people invested a total of US$ 332 million with LCF before it collapsed. The government’s compensation is expected to be paid to about 8.8k people who have not qualified for other payouts, who will be given back 80% of the money that they lost when LCF went into administration, capped at US$ 95k.

Despite taking a US$ 911 million hit over charges relating to losses from its dealing with hedge fund, Archegos, Morgan Stanley still posted a 150%+ jump in Q1 profit from  US$ 1.59 billion to US$ 3.98 billion, driven by the boom in deal-making, with a marked increase in business mergers, acquisitions and companies’ IPOs. The US investment bank saw revenue come in at US$ 15.67 billion. By the end of last month, Archegos suffered when several of their investments turned sour and margin calls were made forcing the hedge fund to sell stock at a lower price than for what they had paid. Morgan Stanley was one of six banks that were exposed to the hedge fund’s liquidity problems so much so that they were owed US$ 644 million and lost a further US$ 267 million by selling out of shares linked to its trades with the hedge fund.

Scarred largely by self-inflicted injuries, Credit Suisse has turned to its shareholders for US$ 1.9 billion extra capital, as it reels from “unacceptable” losses. The bank took a US$ 4.8 billion dollar hit after disastrous foray with Archegos and is also a creditor of failed financial firm Greensill, which hit the headlines over its role funding the UK’s Liberty Steel and ‘dodgy’ lobbying by former Prime Minister David Cameron. Matters became worse for the bank when it was announced that Finma, the Swiss regulator, were widening probes into Credit Suisse’s activities. This week, Credit Suisse posted a Q1 US$ 827 million loss on what should have been its best trading quarter since the GFC. No wonder their shares lost 5% on the news this week and their YTD deficit comes in at 30%.

An indicator that the car industry is facing increasing supply problems relating to a  shortage of computer chips came earlier in the week with Jaguar Land Rover shutting its two main UK car factories temporarily. Covid is the main culprit for the industry’s difficulties; at the beginning of the pandemic, car sales tanked so manufacturers moved to other revenue sources and at the same time demand ramped up for semiconductor chips for use in electronics such as computers, as people worked from home, with suppliers unable to keep up with demand. The difficulties at Britain’s biggest carmaker echo similar problems at other manufacturers, including Ford, who have been hit by a global shortage of chips. The situation deteriorated as a fire at one of the world’s largest makers of semiconductors for the car industry cut supply even further. Many of the world’s leading carmakers, including Daimler, General Motors and Volkswagen have suspended production lines in recent weeks, with the problem being exacerbated by the fact that most of the industry relies on just-in-time delivery, where parts are brought in when needed, rather than being stockpiled.

IMF’s Kristalina Georgieva has indicated that advances made in digital money can help reshape cross-border payments and remittances, making them “easier, faster and cheaper”. The head of the world body noted that remittances have played a key role in improving the lives of people in developing economies and supporting economic activity. He noted that the biggest beneficiaries could well be the vulnerable people, sending small value amounts, making it more important to reduce the risk of the growing digital divide between rich and poor countries, so that all countries can benefit from the latest innovations in digital money and payments, particularly remittances. Many global central banks are in the throes of developing digital currencies not only to modernise financial systems but also to counter the threats from cryptocurrencies. She stressed the need for “shorter payment chains, faster transactions and more competition among remittance providers”.

The BoE becomes yet another central bank studying the possibility of a central bank digital currency. It will look at the risks and opportunities, involved in creating a new kind of digital money which could exist alongside cash and bank deposits, rather than replacing them. It has previously said it is interested in a central bank digital currency (CBDC) because “this is a period of significant change in money and payments” and considers having its own digital currency as a way of “avoiding the risks of new forms of private money creation”, including crypto-currencies such as Bitcoin. The use of cash has steadily declined, a process that Covid has actually speeded up, with the use of payments by debit cards, credit cards and direct debits increasing.

The nation of “battlers” has again seemingly taken on China with which it has had many problems in recent years. Australia has scrapped agreements tied to China’s Belt and Road initiative, a move that will ruffle the Beijing administration and deepen the existing  tensions between the two countries. The Morrison government has introduced new legislation that has allowed it to cancel two deals made between the state of Victoria and China on the grounds of protecting Australian interests. A Chinese spokesman commented that this action was “bound to bring further damage to bilateral relations and will only end up hurting itself.” Foreign Minister Marise Payne said that the agreements were “inconsistent with Australia’s foreign policy or adverse to our foreign relations”. If there is no change in the attitude of both sides, the two questions that have to be answered are how long China will be Australia’s largest trading partner and how long will it be the biggest source of overseas university students. Relations have worsened in recent years, leading to diplomatic and trade ructions.

What seemed to have been a plan made in heaven has become unravelled before football fans’ very eyes as the scheme to start a new European Super League has provoked strong opposition from every quarter. There is no doubt that, in the past, the major global sporting bodies have been run either inefficiently or fraudulently – just look at FIFA under the tutelage of Joao Havelange, (1974-1998), followed by his protégé Sepp Blatter, (1998-2013), that seemed to make more money for its administrators rather than working for the good of the game.  In July 2012, a Swiss prosecutor’s report revealed that, during his tenure, he and his son-in-law, Ricardo Teixeira, took more than US$ 41 million in bribes in connection with the award of World Cup marketing rights. So, for forty years, FIFA was headed by known crooks and one has to ask whether the world body has changed for the better. Even Blatter’s successor, Gianni Infantino, has been tarnished by the endemic problem of corruption within the game. He had been with EUFA since 2000 and had been Deputy General Secretary of UEFA in 2007, and Secretary General in October 2009. In 2007, Michel Platini was appointed President of EUFA until he was suspended in October 2015 and banned from football for six years, two months later. Surely this is a sign  – not only to the overseas billionaire owners who would have been involved, (and made money), in the now defunct super league, but also to the fat cat football administrators – that the game still belongs to the fans. It’s All In The Game.

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Let The Good Times Roll!

Let The Good Times Roll!                                                                  15 April 2021

As property prices start heading north in certain Dubai locations, a Colliers report indicates that investors are holding back the sale of their residential units to bargain for better prices. It has taken time for some observers to realise that the Dubai real estate sector is in recovery mode, (and probably has been since late last year), and that with the number of buyers now outnumbering the number of sellers, this is the start of a bull market after a seven-year hiatus. That being the case, it means that property prices will continue to increase but it must be noted that price rises will vary between villas and apartments, with location being an important contributor as to the level of price rises. Most of the economic indicators are positive, including the success of the vaccine programme, record low mortgage rates, attractive bank packages, Expo 2020 and the country’s golden jubilee celebrations at the end of the year. JLL said lower sales prices have yielded a 15% hike in Q1 sales volume for Dubai on the year and that there had been marginal 2% – 3% price increases on the quarter for some attractive villa and townhouse deals. It also noted that a further 10k units were handed over in Q1, with a further 46k expected before year end to add to the residential market stock of 607k units at the end of 2020.

According to the Dubai Statistics Centre, as at 31 December 2020, the number of apartments and villas in urban Dubai totalled 575.2k and 117.7k – an increase over the year of 37.8k apartments (7.0%) and 5.1k (4.5%) villas. With many of the big developers abandoning the release of new projects as long ago as two years, the number of new residential units will decline. This in turn will see the supply side drying up further, with the inevitable result of increased prices which will continue until either demand falls or the supply pipeline is turned on to pre 2019 levels,

Latest figures show that Dubai tourism performed noticeably better than any other country, except China, recording a 54.7% hotel occupancy rate last year, despite the impact of Covid-19 and the subsequent restrictions and lockdowns; the global rate dipped to 37% and ME hotels posted just 43% occupancy. Meanwhile, the slump in tourist activity was catastrophic, falling by 74% globally and 76% regionally. It is estimated that the UAE suffered the least globally in terms of tourist traffic with activity declining by just 45.2% – followed by Mexico, 52%, Italy (63%), Germany (69%), Turkey (73%), Saudi Arabia (76%), USA (77%), Spain (78%), the UK (82%), and Thailand (83%). In 2020, the UAE welcomed 14.8 million guests, who spent 54.2 million nights, in 1,089 different establishments that provided approximately 180k rooms; this resulted in an average 3.7-night stay per guest at US$ 87 per room. Domestic tourism added US$ 11.2 billion to the national economy.

According to Mastercard’s latest Recovery Insights report, the UAE witnessed a 2020 44% increase in the number of high-volume eCommerce trading partners. Before the start of 2020, e-commerce made up roughly US$ 1 out of every US$ 7 spent on retail, by the end of 2020; this was up to US$ 1 out of every US$ 5. Dubai Future Foundation has noted that the UAE’s digital economy, prior to Covid-19, contributed 4.3% to the UAE GDP,and that by the end of 2023 this is estimated to grow to US$ 62.8 billion. In 2021, it is forecast that the regional online shopping market will grow a massive 36.4% to US$ 30 billion. Three countries – Saudi Arabia, Egypt and the UAE – account for more than 80% of the overall e-commerce market. Interestingly, residents in Italy and Saudi Arabia are buying 33% more from online stores, followed by Russia, the UK and the UAE (21%).

It is reported that Cruise will launch its first international robotaxi service, outside the US, in Dubai in 2023. The tech company, backed by General Motors and Honda, has set 2030 as the year that “25% of the total transportation trips in Dubai to self-driving trips through various means of transportation.” Dubai’s Crown Prince, Sheikh Hamdan bin Mohammed Al Maktoum, discussed the future of mobility with Jeff Bleich, chief legal officer of General Motors-Cruise, and also attended a signing ceremony of the strategic partnership between Cruise and the RTA. The agreement sees the set-up of a new Dubai-based entity, responsible for the deployment, operation and maintenance of the fleet. To date, Cruise has spent US$ 2.2 billion refurbishing the former GM’s Detroit-Hamtramck plant, from its original combustion motor beginnings to its new use for making batteries and electric vehicles., which will start  production next year. Over the past three years, Cruise, valued at US$ 30 billion, and backed not only by GM and Honda but also the likes of SoftBank, T Rowe Price Group and Microsoft, has raised more than US$ 7.4 billion.

The Ministry of Energy and Infrastructure has outlined plans for developing the country’s energy, housing, infrastructure, and transportation sectors over the next fifty years. The Ministry aims to introduce energy efficient systems in industrial and mining facilities and enact legislation to produce clean energy.  Included in the report was a study on the need for housing across the country, based on the availability of land and supply of housing until 2040, with the aim of determining the demand and supply in each emirate, along with the financing requirements for housing projects. The plans will ensure that all housing needs are in line with government directives to provide citizens with decent living conditions. To further develop infrastructure, the Ministry is working to promote digital identity in infrastructure, demographic changes and urbanisation, interactive smart cities, and resilient infrastructure. The UAE is already one of the largest global logistics hubs and, to add to its impressive seaports and international airports, it is building an extensive 1k km rail network across the country to speed up transport of freight. In addition, it aims to design safe, integrated and sustainable transport networks that will use advanced technology.

The Telecommunications and Digital Government Regulatory Authority (TDRA) has rebranded, following a September 2020 decree, and board approval at the end of 2020. Its first director general, Hamad Obaid Al Mansoori, commented that “we are witnessing a full digital transformation … electronic government was started before 2000, mobile government was started in 2013 and today we are talking about a digital government supported by data and [the] Fourth Industrial Revolution.” The authority is remitted to regulate the UAE’s telecom sector and to provide frameworks to government entities in the field of smart transformation; it will also monitor the impact of its changes on users and collect feedback to improve services.

The Ministry of Human Resources and Emiratisation has introduced a new penalty for private sector companies that do not pay salaries through the government’s Wages Protection System and do not pay its employees on time. If companies do not follow these rules, they will be penalised by seeing the insurance policy of an employee more than doubling to US$ 68. When the government introduced a new insurance policy, ‘Taa-meen’, in 2018, employers had the option of submitting a US$ 817 bank guarantee for any new employee or use the new insurance policy, which costs US$ 33 for two years. The maximum insurance coverage was at US$ 54k to cover payroll items such as non-payment of wages, end of service benefits, unpaid wages, annual leave etc. The policy covers the financial entitlements of the employees of relevant companies for thirty months.

“Even as we continue reviewing details and consulting with Emirati officials”, President Biden is going ahead with more than US$ 23 billion in weapon sales to the UAE; they include fifty advanced F-35 Lighting II aircraft, eighteen armed drones and other equipment. These sales were approved by Donald Trump, days before leaving the White House, as part of the Abraham Accords, and it seems that the new incumbent passed the deals so that he could review them. A State Department spokesperson estimated that the delivery dates on the UAE sales, if implemented, were for after 2025 or later, and that it anticipated “a robust and sustained dialogue with the UAE” to ensure a stronger security partnership,

Boeing’s troubles just do not seem to be going away. This week, the platemaker has told 16 airlines to address a potential electrical issue in a specific group of 737 Max planes, prior to further operations. It advised airlines to check that “sufficient ground path exists for a component of the electrical power system” and to temporarily remove them from service to address a manufacturing issue. Flydubai has confirmed that none of its fourteen Max aircraft fleet is affected. The airline, one of Boeing’s biggest customers for the plane, only resumed flying the 737 Max on 07 April.

In Q1, DAE Capital acquired thirteen aircraft and signed 48 lease agreements and extensions, bringing its fleet size of owned, managed, committed and mandated to manage aircraft to 425, with a book value of more than US$ 16 billion.  During the quarter, it had sold seven aircraft, including the four it owned and three it managed. Last year, its revenue dipped 9.7% to US$ 1.3 billion, with profit 29.1% lower at US$ 250 million; it also reported new senior unsecured debt issuance of US$ 1.55 billion, with total bond repurchases and share repurchases of US$ 192 million and US$ 350 million.

Official data showed that, despite the negative impact of Covid-19, Dubai’s 2020 non-oil foreign trade performed remarkably well – at US$ 322.1 billion – only 13.7% lower on the year dominated by lockdowns and a marked global economic downturn.  The overall value of exports came in 8% higher at US$ 45.5 billion, with imports and reexports totalling US$ 186.9 billion and US$ 89.7 billion. The emirate hopes to hit its trade target of US$ 595 billion (AED 2 billion) by 2025. Dubai is planning to consolidate its position as a leading regional/global trade and investment hub, with a new international trade map showing an expansion in air and sea navigation routes, which will see its existing network expanding 50% to 600 cities. Air, sea and land trade accounted for US$ 152.3 billion, US$ 114.7 billion and US$ 55.3 billion in 2020. Direct trade touched US$ 193.7 billion, with free zones and warehouses at US$ 152.3 billion and US$ 1.9 billion respectively.

Dubai’s top five trading nations continue to be China, India, US, Saudi Arabia and Iraq with totals of US$ 39.0 billion, US$ 24.2 billion, US$ 16.6 billion, US$ 14.7 billion and US$ 11.2 billion. External trade figures improved in H2, with Q-on-Q growth in Q3 and Q4 being up 34% and 7% (US$ 8.9 billion), as well as H2 growth 6% higher than in the same period in 2019. The top five listed traded items were gold, telecoms, diamonds, petroleum oil and jewellery with respective values of US$ 58.0 billion, US$ 41.7 billion, US$ 17.4 billion, US$ 15.5 billion and US$ 12.8 billion. There will be at least five extra drivers to further boost Dubai’s trading figures this year – the delayed six-month Expo 2020 starting in October, golden anniversary celebrations for the country in `December, the launch of the Dubai 2040 Urban Master Plan, the expansion of trade with Israel and the resumption of trade with Qatar.

Continuing to build up its financial buffers, Dubai Islamic Bank has secured its second sukuk in five months, after a five-year US$ 1 billion additional tier-1 sukuk, with a 4.25% annual profit rate, last November. Now the biggest Sharia-compliant lender in the UAE has secured a US$ 500 million perpetual five and a half years non-call bond, with a 3.375% annual profit rate – the lowest-ever pricing achieved by a GCC bank on an additional Tier-1 sukuk instrument. The order book was 5.6 times oversubscribed, with the bond listed on both Euronext Dublin and Nasdaq Dubai.

It is reported that the administrators of NMC Health Administrators, Alvarez & Marsal, have so far received about US$ 6.4 billion of claims, (from 927 creditors), with a further 10% of that total being added by ten other “main financial creditors” that have yet to file before the 30 April deadline. They have outlined a Deed of Company Arrangement plan which would mean lenders agreeing to a reduction in their claims in return for exit instruments in a new holding company, with a view to achieving a “controlled” exit from the company within three years; this would lead to more than US$ 4 billion of its debts being wiped out, with the group debt reduced to a more manageable level. If agreement is reached by 15 June, it would see 35 out of the 36 businesses placed into administration being restored as going concerns.  If no agreement can be reached, and assuming that the group cannot be sold as one unit, then the companies would have to be sold off as separate entities which “is likely to yield a significantly lower recovery”.

Hotpack Global opened its 32nd GCC sales centre – its largest retail store for food packaging products, for both retail and wholesale customers, in the UAE – spanning 5.6k sq ft and located in Al Barsha. There is no doubt that the UAE food packaging industry is set for continual growth, with forecasts that it will expand 40% over the next five years to US$ 3.8 billion. It is also estimated that the regional market will grow at an annual faster rate of up to 7%, compared to the global forecast of up to 5%. The company, which manufactures and supplies over 3.5k disposable food packaging products, has a group turnover of US$ 259 million, with a footprint in 25 locations across the Middle East and UK, along with a network chain in other Gulf and African countries. The 25-year old company has also invested US$ 70 million in a state-of-the art manufacturing facility in Wrexham and has an ultra-modern PET extrusion plant in National Industries Park.

The latest Mergermarket report notes that Q1 M&A (Mergers and Acquisitions) activity, in the MEA region, was 52.1% higher, at US$ 32.7 billion, (and 41.7% for 85 deals). Inward foreign investment saw 52 transactions, totalling US$ 24.7 billion – the highest quarterly inbound value since Q4 2007 (US$ 26.2 billion). Tech deals still dominate the sector with their 31 transactions totalling US$ 14.7 billion, and the EMU (energy, mining and utility) sector accounting for 18 deals, valued at US$ 4.6 billion. There has been a noticeable increase in private equity deals, with 26 buyouts in Q1, totalling US$ 18.3 billion – the region’s highest quarterly buyout value and volume on record.

2020 foreign direct investment (FDI) into Dubai saw 455 projects valued at US$ 6.73 billion create an estimated 18.3k new jobs in the emirate. These figures, released by the Dubai Investment Development Agency, place the emirate among the top global FDI locations in 2020, ranking first in the MENA region and fourth globally in attracting greenfield FDI capital. Dubai also achieved a record global market share in greenfield FDI projects, attracting 2.1% of all such projects in 2020, exceeding the 2% mark for the first time.

Dubai SME, by utilising contracts from 61 local and federal government entities, was able to assist Dubai start-ups and SMEs to win government procurement contracts, worth US$ 244 million last year. The government agency, tasked to help such businesses to enhance their competitiveness and sustain growth, introduced the Government Procurement Programme that “reflects the continuity and firm commitment from the public and private sectors in the country to supporting SMEs”. Out of all contracts in 2020 won by Dubai SME members, 47% were from Dubai government entities, (with RTA the biggest provider), 22% came from semi-governmental entities, with Emirates providing US$ 21 million, 21% from the private sector, with the leading providers being Union Co-op worth US$ 37 million, Emaar and Etihad Airways, and 10% from federal government entities, led by the Ministry of Education.

Mohamed Alabbar, the founder, and former chairman, of Emaar Properties will head Zand, the UAE’s first digital bank, with a full UAE banking licence, that will cater to retail and corporate clients. It is hoped that it will prove successful in the UAE so that it can become a global player. It aims to service both retail and corporate customers by providing innovative, effective financial solutions that help simplify businesses and lives. Zand, a “digital economic accelerator”, to serve as a platform for wider digital services that focus on businesses and individuals, will launch imminently after final regulatory approval. Its chief executive will be Olivier Crespin, who most recently headed Eradah Capital in Dubai and previously worked for BNP Paribas, Citi, and DBS Bank. He noted that the bank was “backed by strong shareholders and working with the best bankers and technologists, we’ve built a bank that delivers on the promise of understanding and meeting customer needs”.  

On the back Zand’s entrée into the digital banking world, comes news that Al Maryah Community Bank has also secured a licence from the Central Bank of the UAE. The new bank indicated that it would focus on ‘supporting individuals and small businesses within the UAE economy”, offering smart banking services built on AI. Tarek Al Masoud has been appointed the chairman of the board of founders for the bank that will develop products to bridge gaps in personal and business banking. The Abu Dhabi government owned ADQ was reported last year to be interested in setting up a UAE digital bank using a legacy banking licence held by First Abu Dhabi Bank.

Emaar Properties PJSC approved a 10% dividend of the share capital at their recent AGM, at which a new board of nine directors was elected. Those elected were Mohamed Ali Rashid Alabbar, Jassim Mohammed AbdulRahim Al Ali, Ahmad Thani Rashed Al Matrooshi, Jamal Majed Khalfan Bin Theniyah, Buti Obaid Buti AlMulla, Eman Mahmood Ahmed Abdulrazzaq, Ahmed Jamal H Jawa, Helel Saeed Salem Saeed Almarri, and Sultan Saeed Mohammed Nasser AlMansoori. Eman Abdulrazzaq, chief human resource officer at Emirates NBD, becomes the first ever female board member. Last year, the developer posted property sales of US$ 3.0 billion, of which US$ 1.7 billion was made in the UAE and the balance overseas. Currently, it has 26k units under development in the UAE and 12k overseas.

Dubai Investments’ AGM approved all agenda resolutions, including its 2020 financial statements and approval of an 8% cash dividend to its shareholders. The 2020 profit came in at US$ 95 million, whilst its US$ 219 million growth in total assets brought the company’s total to US$ 5.93 billion.

Despite the negative niggles of the pandemic, Ducab Group posted a 36% profit across all three of its business units – Ducab Cable Business, Ducab Metals Business and Ducab High Voltage. No financial figures were readily available. Its largest business unit, DCB, posted a 13% hike in profit, driven by a sales volume of nearly 80k conductor tonnes. Its main revenue stream remains the local market, but it also exports to 25 other locations. DMB, comprising Ducab Aluminium Company and Ducab’s Copper Rod Factory, saw a 33% jump in 2020 profits, as it sold 190k tonnes of metal products to forty-five countries. The best performing unit, with margins 42% higher on the year, was DHV, as it sold nearly 6k tonnes of specialised high voltage cable to several regional utilities and global EPCs.

Amanat Holdings has decided to stay with the DFM and not transfer its share listing to Abu Dhabi’s stock market, almost a year after it received shareholders’ approval for the move. The Dubai-based healthcare and education company posted an 86% fall in 2020 net profit, although revenue nudged higher. In another announcement, it advised that Dr Shamsheer Vayalil will also step down as managing director, although he will continue to serve as the company’s vice chairman. Last May, Dr Mohamad Hamade was appointed as chief executive.  Last month, it was involved in one of the region’s biggest healthcare deals, when it invested US$ 232 million to acquire Cambridge Medical and Rehabilitation Centre from TVM Capital Healthcare, partly funded via a US$ 110 million bank loan; this was the company’s first local wholly owned healthcare investment., although it has healthcare investments in Saudi Arabia and Bahrain. Its education portfolio includes schools’ operator Taaleem, Abu Dhabi University Holding and Middlesex University Dubai, along with owning the property assets of the North London Collegiate School in Dubai.

Deyaar Development posted impressive Q1 results, with revenue coming in 51.0% higher at US$ 41 million, and profit almost six times higher at US$ 4 million on the year. The Dubai-listed developer, majority owned by DIB, “expects demand to grow even more with the economic recovery in the emirate and the effort that the government [is making] towards executing the Dubai Urban Master Plan 2040”. Earlier in the year, it announced the handover of its Bella Rose project, in Dubai Science Park, comprising 478 residential units and that construction had started on its residential project Midtown, adding eleven more buildings to the development.

Last week, it was all systems go for DFM’s first major IPO for over three years, with full page ads taken out in the local press amid much fanfare; it had announced plans to float 24% of its shares. Yesterday came the shock announcement that Dubai-based logistics company Tristar had dropped plans to float its company as “shareholders’ expectations were not met”, with the board having a last-minute change of mind believing that “that greater returns can be realised executing Tristar’s current growth strategy under the established shareholder structure.”

The bourse opened on Sunday 11 April and, having gained 25 points (1.0%) the previous week, was up a further 50 points (1.9%) to close on 2,633 by Thursday 15 April. Emaar Properties, US$ 0.03 higher the previous week, moved up another US$ 0.06 to close at US$ 1.06. Emirates NBD and Damac started the week on US$ 3.17 and US$ 0.33 and closed on US$ 3.26 and US$ 0.34. Thursday 08 April saw the market trading at 184 million shares, worth US$ 89 million, (compared to 172 million shares, at a value of US$ 45 million, on 08 April).

By Thursday, 15 April, Brent, US$ 6.21 (8.7%) lower the previous three weeks, dipped US$ 0.04 lower to close on US$ 63.38. Gold, up US$ 29 (1.6%) the previous fortnight, was US$ 5 higher, by Thursday 15 April, to close on US$ 1,761.

Opec revised oil demand growth upwards by 100k bpd for 2021, as the global economies begin to improve on the back of a stronger economic rebound, boosted by stimulus programmes, reduced lockdowns, and successful vaccine programmes in some countries in the world’s largest economies countries. It is forecast that global oil demand will increase by 6.6% this year to 96.5 million bpd. The producers will now bring back the 2 million bpd that was deferred three months ago due to uncertainty over any global economic recovery, and will start over the next two months – by 350k bpd and 450k bpd in May and June. Saudi Arabia, which had supported the group’s restrictions by volunteering to cut 1 million bpd until April, will phase out the curbs from May onwards.

Several commodities trading houses are currently investigating why their web domains have been imitated and registered to an email address of an employee of Liberty House – Sanjeev Gupta’s commodities trading and industrial group and part of his GFG Alliance conglomerate. Registrations include concordresources.net, (with the London-based trading house Concord Resources planning to send GFG a cease-and-desist letter), and szmhgroups.com (similar to the szmh-group.com site of the steel trading group, Salzgitter Mannesmann). An FT report notes that Greensill Capital’s administrators have been unable to verify some of the invoices used for Greensill to lend money to Gupta’s group. It seems that some of the companies listed on the documents denied that they have ever done business with GFG or is associated companies. Meanwhile, life sems to be getting more worrying for Greensill’s high profile special adviser, David Cameron, as his role and super connections with high government officials are the subject of more than one official government enquiry. The ex-prime minister was reportedly to receive 1% of Greensill’s value when it went public which could have been as high as US$ 800 million – now worth nothing.

The Japanese-owned ship that blocked the Suez Canal for almost a week last month is still stuck in the Suez Canal for different reasons. The Ever Green container ship is being held by officials pursuing a US$ 916 million compensation claim, including US$ 392 million, as a “salvage bonus”, and US$ 392 million for “loss of reputation”. The Suez Canal Authority’s chairman, Osama Rabie, commented that the Ever Given would not leave until the investigation was finished and compensation paid, adding that the canal had borne “great moral damage”, as well as shipping fee losses and salvage operation costs. Meanwhile, Maersk has warned customers that it does not expect a quick return to normal shipping in the Suez Canal and that global supply chains will be disrupted for weeks.

Toshiba’s chief executive, who had been masterminding a US$ 20 billion buyout bid from UK private equity firm, CVC Capital Partners, surprisingly resigned on Wednesday; a statement from Toshiba gave no reason for Nobuaki Kurumatani’s resignation. However, he had faced criticism from activist shareholders over the bid from CVC, his former employer, arguing that it was far below the company’s fair value. Toshiba’s chairman Osamu Nagayama said CVC’s bid was unsolicited and lacking in substance and requires cautious consideration. Its shares were up more than 6% in Asian morning trading on Wednesday, following media reports of potential rival bids for the company.

The fact that on its stock market debut, Cryptocurrency firm Coinbase, which runs a top exchange for Bitcoin and other digital currency trading, hit a market value of nearly US$ 100 billion is a sure indicator that cryptocurrencies are gaining wider acceptance among traditional investors. The firm has done well when compared to just three years ago when, following a private funding round, it was valued at just US$ 8 billion – now, as per its initial stock market valuation, it is worth more than BP and many key stock exchanges. Coinbase, whose main revenue stream derives from charging transaction fees, has more than 56 million users across more than 100 countries, holding some US$ 223 billion in users’ assets at the end of March. Its reported Q1 revenue of US$ 1.8 billion was more than its total for all of 2020 – driven by the boom in Bitcoin and other digital currencies.

The man who founded Bernard L Madoff Investment Securities in 1960 and went on to con thousands of investors, out of tens of billions of dollars, has died in prison, where he was sentenced in 2009, to 150 years, after admitting that he had defrauded investors through a Ponzi scheme; an estimated US$ 65 billion was tied up in the scam. Despite Bernie Madoff’s firm being investigated eight times by the US Securities and Exchange Commission because it made exceptional returns, it became one of the country’s largest market-makers and he also served as chairman of the Nasdaq stock exchange. The fraud exposed holes at the US Securities and Exchange Commission and was a wakeup call for the audit profession. The disgraced financier told the court he started the Ponzi scheme in the early 1990s, but many reckon he was scamming his clients much earlier than that. All he was doing was collecting money from investors (and there was no shortage of them) and used that to pay off existing investors. Investors were entranced by the steady, double-digit annual gains that Madoff seemed to generate, and which others found impossible to explain or duplicate. When the 2008 GFC happened, that was his final curtain, as investors tried to recoup US$ 7 billion, and the firm did not have any to pay out.

According to International Data Corporation, Q4 witnessed an 8.2% jump in the Gulf region’s mobile phone market to 5.38 million units, with smartphone shipments up 2.3% to 4.26 million users; feature phone shipments moved 38.3% higher to 1.12 million units. Value-wise, the smartphone market was up 39.5% to US$ 1.62 billion in Q4, growing faster than the feature phone market’s value with a 22.2% quarterly growth to US$ 19.2 billion. 5G shipments accounted for 16.5% of all smartphone shipments. The three best-selling brands were Samsung, Apple and Xiaomi, but all three suffered from supply shortages which will still cause problems in Q1, as sales will almost certainly decline by up to 1.0%.

Launched in 2012, Grab, the Malaysian ride-hailing and food delivery firm, is preparing to list US$ 4.0 billion worth of shares in the US which would value the company at around US$ 40.0 billion to become the largest US share offering to date by a South East Asian company. Shares will start trading in July, following a merger with US-listed Altimeter Growth Corp, set up, last year, as a Spac (special purpose acquisition vehicle), specifically for the purpose of finding a private firm to merge with and then take public on the stock market. (Known as “blank cheque companies”, they are seen as a faster route to taking a company public with less scrutiny). As is the case with many similar IPOs, Grab has yet to make a profit, with 2020 net revenue of US$ 1.6 billion.

Although Tesco has announced a 7.0% hike in sales to US$ 73.5 billion, it posted a 17.5% slump in full-year profits to US$ 1.17 billion, which included a US$ 1.24 billion abnormal spend to carry on trading through the Covid pandemic, including giving full pay to staff off work ill or shielding and US$ 736 million forgoing business rates relief. The sales growth was boosted by a 77% rise in online sales, whilst like-for-like sales rose by 6.3% for the group. The UK’s largest retailer expected that it would recover to a similar level in the previous financial year as well as a strong recovery in profitability as most of the costs incurred in the pandemic would not be repeated. Covid-19 hit Tesco Bank’s profits which moved into negative territory, with a loss of US$ 241 million, compared to a 2019 profit of US$ 266 million. The 2020 deficit was attributable to the pandemic resulting in less income from loans and credit cards and an increase in bad debts.

To tackle post-Brexit trading difficulties, retailer JD Sports has decided to solve part of the problem by opening a 65k sq ft warehouse in Dublin, after launchng a similar facility in Belgium; it is also considering a further warehouse in the EU from which it would process all the bloc’s online orders. Currently, the products it imports from East Asia attract tariffs when they are distributed onward to its stores across Europe. Its chairman, Peter Cowgill, noted that “there was no true free trade with the EU, because goods that JD Sports imports from East Asia incur tariffs when they go to its stores across Europe” and that “All the spin that was put on it about being free trade and free movement has not been the reality.”

It seems likely that that French lawmakers will ban short-haul flights of less than two and a half hours where rail alternatives exist. This is part of the Macron administration’s bid to reduce carbon emissions and will become law if passed by a further vote in the Senate. This could see the end of flights between the capital and cities such as Nantes, Lyon and Bordeaux. Noting that a plane will emit 77 times more CO2 per passenger than the train on these routes, the French consumer group UFC-Que Choisir called for all flights of less than four hours but this was cut following objections from some regions and the airline Air France-KLM. The vote to scrap certain flights came days after the French government more than doubled its stake in Air France, with the government previously offering US$ 8.3 billion in loans to help the airline battle the pandemic.

Microsoft Corp is set to spend almost US$ 20 billion to acquire Nuance Communications, a tech firm known for helping to develop Apple’s Siri speech recognition software. The tech giant’s second largest purchase, following its 2016 acquisition on LinkedIn, will reportedly bolster its software and AI expertise for healthcare companies at a time when so-called “telehealth” has boomed during the pandemic. Its chief executive, Satya Nadella, commented that “Nuance provides the AI layer at the healthcare point of delivery,” and “AI is technology’s most important priority, and healthcare is its most urgent application.” Nearly 80% of US hospitals are already Nuance customers and this purchase will dramatically expand Microsoft’s potential market in the health care industry.

It has not been a happy half year for Jack Ma that has seen the Chinese government suspend his Ant Group’s IPO last November, seemingly followed by a travel ban from leaving the country. Earlier, he had told a gathering of China’s leading regulators that they were stifling innovation. Now Alibaba has been fined by regulators a sum of US$ 2.78 billion, (4% of its 2019 revenue of US$ 69.5 billion) for “abusing its dominant position” for several years. Perhaps not surprisingly, the company said it accepted the ruling and would “ensure its compliance”. It was felt that Alibaba had restricted competition by stopping some sellers using other platforms. Other Chinese tech giants are being closely monitored by the regulators and last month, twelve of them, including Tencent, Baidu, Didi Chuxing and SoftBank, were fined.

Chinese authorities have begun to crackdown on the country’s fast-growing tech platforms, as regulators have ordered a sweeping restructure on the Ant Group, so the financial technology firm acts more like a bank. The People’s Bank of China will subject it to tougher regulatory oversight and minimum capital requirements.  This comes after Ant Group’s US$ 37 billion IPO was surprisingly canned days before its November launch and last week its affiliate company Alibaba was fined US$ 2.8 billion over monopoly concerns. Ant is China’s biggest payments provider, with more than 730 million monthly users on its digital payments service Alipay. The central bank has also introduced a “comprehensive and feasible restructuring plan,” for Ant that would cut the “improper” linkage between Alipay, and its credit card and consumer loan services.

Although March Chinese factory prices hit a more than two-year high, at 4.4%, compared to a year earlier, and pointing to a stronger economic recovery, there are concerns it could filter through to the global economy whose recovery is well behind that of China; the country was the only major economy to expand last year. Now with the worldwide vaccination making a positive impact in many countries, with restrictions and lockdowns being lifted, demand for Chinese goods is beginning to rise. Much of the increase in Chinese factory gate prices has been due to factors such as rising international commodity prices, including oil, iron ore and copper, along with a jump in local production. Because the country is the largest exporter of manufactured goods, any inflationary pressure in China will inevitably be passed to other economies, giving central banks another problem to deal with, in addition to trying to maintain ultra-loose monetary policies and low interest rates as inflation levels begin to move higher. Last week, the IMF raised its growth forecast for China to 8.4%.

In Q1,China’s economy grew a record 18.3% but this figure is skewed somewhat because last year’s figures came in the midst of the economy contracting because of Covid-19; in Q1 2020, the economy had contracted by 6.8%. Other comparative data will be similarly impacted because of the pandemic. Industrial output for March rose 14.1% over a year ago, while retail sales grew 34.2%. Many analysts consider that the economy’s rebound is largely down to exports, as factories work to fill overseas orders as the global economy starts to improve.

Wall Street stocks have climbed to fresh record highs fuelled by strong earnings and US economic data, with the Dow Jones up 0.9% on Thursday to a new record high of 34,036. Not to be outdone, the S&P 500 moved higher on the day by 1.1% to close at its record high of 4,170, driven by tech stocks such as Apple, Facebook and Microsoft. The Nasdaq Composite rose 1.3% to 14,039. The markets were helped by solid results from the likes of Bank of America, (with Q1 profits double that of a year earlier), as Citigroup and Blackrock posting double digit profit growth. There was also favourable economic data, including US retail sales up 9.8% in March, weekly first-time claims for unemployment benefits falling 193k to 576k, the lowest level since March last year, and March manufacturing production increasing by 2.7% in the month. 

Still trying to form a government and in the midst of its worst economic crisis, Lebanese inflation in February topped an annual 155.4%, 4.5% higher on the month and the eighth consecutive triple-digit CPI increase. Restaurant prices surged 618% in February and clothing/ footwear by 609%. The country will be the recipient of billions of dollars of aid from the IMF and donors, once a national government is in place. The jump in inflation is partly down to the inability of authorities to monitor and contain prices and also to the slump in the Lebanese pound which has been in free fall and lost as much as 90% of its value against the greenback on the black market. Before the onset of the latest crisis the pound was pegged at 1,507 to the US$, whilst on the black-market last month it was trading at 15,000 to the US$ before retreating to its current 12,000 level. In 2019, the economy contracted 6.7% and by 25.0% last year, with more of the same this year, more so if a government cannot be formed. By the end of January, the public debt had almost reached US$ 96 billion, equating to 194% of GDP.

Following January’s 42% slump in exports, between UK and EU trade, February saw a recovery, with growth figures of 46.6%; likewise, imports improved over the month, but at a weaker rate of 37.0%. Despite the much-improved figures, along with the UK economy growing 0.4% in the month, the fact is that the economy is still 7.8% smaller than a year ago; however, lockdowns and restrictions were still in place for the first two months of 2021. Although exports recovered well in February, imports have still not bounced back, as bureaucratic issues continue to hamper much progress. There is no doubt that consumer confidence is on the up and, notwithstanding a further lockdown, the UK economy will benefit from pent-up demand, which will result in increased spending in restaurants and pubs, with more people booking holidays.

March average UK house price hit a new record high of US$ 349k, as the market bounced back after Rishi Sunak extended the stamp duty holiday to 30 June which had been scheduled to expire on 30 March. Prices were 6.5% higher on the year, 0.3% on the quarter and 1.12% up, month on month. Apart from the stamp duty “present”, the sector has benefitted from the new mortgage guarantee scheme, (which encourages lenders to provide mortgages on deposits as low as 5%), continuing historically low mortgage rates and pent-up demand following the first lockdown. Prices have risen across the country, as demand continues to outstrip supply, with many buyers looking for larger properties and more outdoor areas. However, the canary in the coal mine remains that the UK economy has just gone through its worst year for centuries, with the economy contracting a record 9.9%, so when the stamp duty holiday is closed, taxes increase, rates edge higher and government rescue packages are tapered, it is inevitable that the longer-term UK housing outlook is not as rosy.

Following the end of its third lockdown, since the March 2020 onset of Covid-19, England’s hospitality sector received a US$ 430 million boost in the first week, after the reopening of the country’s restaurants, cafes and pubs. Following three months of closure, they finally opened their doors on Monday. With the vaccine campaign going so well in the country, consumer confidence continues to head north, up 3.0 to 106.4 in March. In 2019, hospitality was the country’s third biggest employer (3.2 million workers), generating US$ 180 billion in economic activity and contributing US$ 55 billion in tax. Pre-pandemic, it was estimated that individual households spent US$ 800 a week on dining which dropped to almost zero. After the first two lockdowns, diner numbers jumped 33% and 56% respectively, so it is no wonder that this week the numbers were even greater. To get the economic recovery moving faster, the short-term message to the country is to get out and spend money. Let The Good Times Roll!

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Another Day In Paradise?

Another Day In Paradise?                                                                 08 April 2021

How could all the property experts get it so wrong predicting further doom and gloom for the Dubai property sector in 2021?  March saw a marked uptick in sales transactions which totalled 4,643, valued at US$ 3.0 billion, and undoubtedly the 22% month on month growth in transactions, and 47% in value, will continue the same trend into Q2 and for the rest of 2021. 101 Economics teaches that prices will head north when there is lack of supply and high demand – this is exactly what is happening in areas like The Meadows and other established locations in the emirate for villas, and in Palm Jumeirah for prime apartments. Interestingly, last month had the highest number of secondary/ready properties transacted in a single month since June 2015.

The DLD weekly real estate report ending 01 April noted that the value of real estate and properties transactions was US$ 1.93 billion, including 1,116 apartments/villas selling for a total of US$ 559 million, along with 103 plots for US$ 197 million. The total amount of mortgaged properties came to US$ 1.09 billion, half of which was for land mortgaged in Marsa Dubai; there were 83 properties granted between first-degree relatives, valued at US$ 53 million. Three apartments were the top-priced for the week – US$ 55 million in Palm Jumeirah, US$ 52 million in Marsa Dubai, and U Madinat Dubai Almelaheyah, US$ 51 million, in Burj Khalifa. The highest land value sold this week was for US$ 58 million in Hadaeq Sheikh Mohammed Bin Rashid. Most transactions were carried out at Hadaeq Sheikh Mohammed bin Rashid, (28 sales valued at US$ 61 million), followed by Nad Al Shiba Third, with 22 sales transactions worth US$ 15 million, and Al Hebiah Third, with 8 sales transactions worth US$ 7 million.

Colliers’ latest report indicates that Dubai’s property market is running low on inventory, as buyers currently outnumber sellers in popular areas of the emirate, resulting in Dubai property fast becoming a sellers’ market. Since the advent of Covid, the trend is for many stakeholders moving to bigger spaces or better communities, or both. Covid was a catalyst for some property owners having to sell their property, (either through losing their job or having their pay cut). Now many sellers are in a position to wait and see, waiting for the right price to be offered.

Since the September 2019 launch of the Dubai Supreme Committee for Real Estate Planning, new project launches have slowed down substantially, so that, according to Asteco, only 34k residential units were handed over last year. Most of this number were already work-in progress, in September 2019, but with time the pipeline will become more manageable as actual new launches slow. There is no doubt that equilibrium is returning to the market and as supply slows, property prices will inevitably move higher, also driven by historically low mortgage rates, enticing buyers to pay more as the lack of good property available becomes apparent; maybe gazumping is returning to the local market.

Binghatti Developers launched a US$ 55 million project in JVC, comprising 160 apartments, covering 300k sq ft. The Binghatti Mirage – its third development in that location – is scheduled for completion within twelve months. One 722 sq ft B/R apartment will be priced at US$ 132k, after a 30% discount in advance, while a 2 B/R apartment, with an area of ​​856 sq ft, will cost US$ 188k. According to Cavendish Maxwell, JVC saw 2020 rental declines for both apartments (down 16.1%) and villas by 3.1%.

Dubai Economy has joined forces with Amazon in a new initiative to assist  local start-ups and SMEs, who are DED Trader licence holders and interested in expanding their online footprint. The Amazon Sale University will provide new e-learning courses and also host a dedicated store front on Amazon.ae to showcase products offered by local traders. One of DED’s main aims is to accelerate the “growth of e-commerce initiatives and promote technology integration” within the local business community.

Having met all safety requirements issued by the General Civil Aviation Authority (GCAA), flydubai will resume 737 Max passenger service with the first flight today to Pakistan’s Sialkot. The Dubai carrier has fourteen Max aircraft currently grounded, of which  four  Max 8s and one Max 9 have got the go-ahead to fly, following a comprehensive twenty-month review. The remaining nine Max aircraft are expected to return to passenger service over the next two months, following extensive work to reactivate planes that have been grounded for two years. The carrier noted that the Max aircraft “will operate to a number of flydubai’s destinations over the coming weeks” and that passengers will be notified in advance of travel if their itinerary now includes a flight that is scheduled to be operated by a Max plane. Twelve countries, within the carrier’s network, have yet to clear the narrow-body jet’s return, including Russia and India. The Dubai-based airline has over 750 pilots, of which over 30% have completed the required additional training on the 737 Max, with the remaining 520 expected to complete the additional training by the end of the year.

Dubai’s largest fuel retailer, Emirates National Oil Company, is planning to invest US$ 68 million of its capex budget on digital technology to optimise operations and identify synergies within its businesses. Enoc has more than 11k employees in sixty markets and it expects to grow the number of its service stations by 41.9% to 193 this year. In 2019, it had launched Enoc Link, an on-demand fuel service initially only for commercial customers, and now expects to add new revenue streams from the launch of on-demand fuel retail. In February, it introduced its first sustainable service station at the Expo 2020 site – and the first in the region equipped with a wind turbine for generating power. Enoc has launched its Masar project, as part of its digital transformation plans, with the aim of integrating all of its divisions and providing a more focused service to customers.

Earlier in the week, HH Sheikh Mohammed bin Rashid Al Maktoum launched the Dubai Creative Economy Strategy, with the aim of doubling the emirate’s creative industries’ contribution to GDP to 5.0%, company numbers to 15k and the number of creators to 140k by 2025. The Ruler noted that design, content, culture and arts will be major drivers for Dubai’s future, but the concept also covers a wide range including the likes of publishing, writing, cinema, video, cultural heritage and artistic industries. To speed up the process, the legal and investment environment will be upgraded to spur growth of creative industries in Dubai and to enhance its attractiveness to international creators, investors and entrepreneurs.

The Dubai Ruler also approved the Emirates Development Bank (EDB) Strategy to provide a sizeable US$ 8.2 billion financial support to businesses and start-ups in a major step to drive the national economy, as a support mechanism for the recently launched US$ 82 billion “Operation 300bn”. This was introduced last month as a ten-year comprehensive strategy to more than double the industrial sector’s contribution to the country’s GDP, and to finance more than 13.5k SMEs and to create 25k jobs. The Dubai Ruler also noted that “we must adopt a distinctive vision that meets global trends and sustains development to maximise the industrial sector’s revenue and boost the broader economy”, as well as “The Emirates Development Bank Strategy presents a giant leap that will leverage the bank’s role as a key driver of the national economy. Providing effective financial solutions will support the role of SMEs as main players in shaping our national economy.”

This week saw the appointment of Khaled Mohamed Balama Al Tameemi as governor of the Central Bank of the UAE who takes over the role from Abdulhamid Saeed Alahmadi. At the same time, the central bank also decided to extend the Targeted Economic Support Scheme (Tess), the US$ 13.61 billion zero-cost funding programme, set up a year ago to help lenders maintain funding flows through the economy, following the onset of Covid-19, until year end.

Moving up four places, the UAE is now ranked 15th in the world (and the leader in the Arab region) in Kearney’s 2021 Foreign Direct Investment (FDI) Confidence Index. Not surprisingly, the report indicated a marked decline in overall optimism about the global economy over the year but noted that the UAE business environment demonstrated continued strengths, including government incentives for investors. It also pointed to the fact that investors are more cautious regarding FDI as they gear up for a long-haul economic recovery Only 57% of investors were optimistic about the three-year global economic outlook – compared to 72% in last year’s survey. China, the UAE and Brazil are the only three emerging markets on this year’s Index, with China remaining the highest-ranked emerging market, as has been the case all this century.

The International Monetary Fund revised upward the UAE economic growth forecast for 2021, thanks to massive vaccination efforts which will strengthen recovery in H2. The UAE is now the second most vaccinated country in the world after Israel. The world body more than doubled its previous forecast of 1.3% to 3.1%, with growth softening to 2.6% in 2022. (However, the IMF often seem to get their forecast so wrong and no doubt the UAE economy will grow at an even faster rate next year). For the MENA region, the Fund revised its 2021 growth outlook from 3.2% to 4.0%.

The Ministry of Economy announced a price reduction on 30k food items during Ramadan. Discounts on items such as rice, flour, sugar, meat, fish and juices will range from 25% – 75%, across 900 national outlets. The ministry will also clamp down on unfair price increases during the holy month and will carry out 420 inspections to ensure grocery stores and businesses follow the rule. Government officials have met with representatives of fruit and vegetable markets in Abu Dhabi and Dubai to ensure enough food will be available during the Holy Month. It is estimated that on a daily basis, Dubai imports around 17k tonnes of fruit and vegetables, whilst the Abu Dhabi total is nearly 5k tonnes.

Dubai Internet City will be the regional headquarters for a company rated as the most valuable start-up in the US. Stripe, the online payments company, will help all its internet-based customers accept payments, make pay-outs and manage the money-side of the business. The UAE digital payment transactions have doubled over the past two years to US$ 18.5 billion, with a further 54% increase to US$ 28.5 billion expected by the end of 2022.

Two DFM entities were in the news this week. With Meraas now owning over 90% of the shares in the theme park operator, DXB Entertainments, the company will buy out the remaining equity holders by paying them US$ 0.022 per share, so that the government-owned entity can assume 100% ownership. Meanwhile, Deyaar has decided not to pursue a capital reduction to cancel US$ 417 million of accumulated losses; no reason has been given for this change. The DFM also announced a plan to launch new equity futures contracts on individual stocks of three leading listed companies – Aramex, Air Arabia and Emirates Integrated Telecommunications Company (DU) – in line with its strategy to diversify investment opportunities. It is like the inaugural equity futures contracts launched last October on stocks of five listed companies – Emaar Properties, Dubai Islamic Bank, Emirates NBD, Emaar Development and Emaar Malls.

Later in the month, the DFM will see its first IPO for some time, as Tristar will be offering shares at between US$ 0.60 to US$ 0.74 which would value the Dubai-based fuel distributor at up to US$ 880 million. It is expected that 20% of the shares will be offered to the public, through the sale of new shares, while the current shareholders could divest a further 4% onto the market, through a secondary offering. The business currently has three shareholders – Kuwait-based logistics group Agility, (65%), Gulf Investment Corporation (20%) and an investment vehicle owned by chief executive, Eugene Mayne (15%). Last year, Trisatr, with a fleet of more than 2k lorries and 35 maritime vehicles, posted a US$ 103 million EBITDA on revenue of US$ 453 million.

The bourse opened on Sunday 04 April and, having gained 62 points (2.5%) the previous week, was up 25 points (1.0%) to close on 2,583 by Thursday 08 April. Emaar Properties, US$ 0.03 higher the previous week, moved up another US$ 0.03 to close at US$ 1.00. Emirates NBD and Damac started the week on US$ 3.12 and US$ 0.32 and closed on US$ 3.17 and US$ 0.33. Thursday 08 April saw the market trading at 172 million shares, worth US$ 45 million, (compared to 69 million shares, at a value of US$ 36 million, on 01 April).

By Thursday, 08 April, Brent, US$ 6.83 (8.6%) lower the previous fortnight, lost a little more ground, shedding US$ 1.23 (1.9%) in this week’s trading, to close on US$ 63.42. Gold, up US$ 3 (0.1%) the previous week, was US$ 26 (1.5%) higher, by Thursday 08 April, to close on US$ 1,756.

IATA estimates that ME passenger demand has fallen back to levels last seen in 1998, noting that last year was the worst in the industry’s history. The global body indicated that, in 2020, passenger demand slumped by 72%, allied with a 63% fall in capacity, with cargo only declining 10%. It once again warned that some carriers may face bankruptcy and that to date losses registered total more than US$ 7 billion and that there must be more collaboration between the industry and various governments to best facilitate global economic recovery.

Despite a shortage of chips, Tesla delivered a record 184.8k electric vehicles in Q1, beating analysts’ expectations of 168k; this is well on its way to meet Elon Musk’s target of 750k for the year. Tesla announced that it would be progressing to full capacity at its Chinese plant. Despite this positive news, Tesla’s shares, which have skyrocketed by more than  540% over the past twelve months, were 1% lower on the day. Q1 sales were dominated by its cheaper models ‘3’ (from US$ 33.7k) and ‘Y’ (from US$ 45.7k), with its two more expensive models, ‘S’ and ‘Y’, (from US$ 75k), accounting for just 1% of Q1 turnover. The company confirmed it was still in the “early stages” of ramping up production of updated versions of both the more expensive models. Tesla was the biggest electric car manufacturer in 2020, accounting for 15.6% of the global production of 3.2 million. However, Monday was another day and, after digesting the news of record quarterly production, investors pushed Tesla shares 8% higher in pre-market trading on Monday.

LG Electronics is to close its loss-making smartphone business following six years of continual losses, totalling US$ 4.5 billion. Only eight years ago, it was the world’s third largest smartphone maker but has trailed the leading two players, Samsung and Apple, not helped by its own hardware and software issues; last year it shipped 28 million phones, compared with Samsung’s 256 million; it is estimated that it has a 2% global market share. Noting that the mobile phone market had become “incredibly competitive”, the South Korean conglomerate has said that its “strategic decision to exit the incredibly competitive mobile phone sector will enable the company to focus resources in growth areas such as electric vehicle components”. The smartphone business is the smallest of LG’s five divisions, accounting for just 7.4% of revenue.

The UK High Street cannot wait for next Monday – the day when lockdown restrictions are finally lifted and, driven by pent up demand, analysts are expecting that there will be a massive 48% hike in “bricks and mortar” sales. A study by Springboard noted that between the first and last weeks of March, the decline in shopping centre footfall moved up from -69% to -62.5%, compared with March 2020, whilst a -29.8% annual drop in footfall at retail parks shrank to -14.8% just before the Easter weekend. Over that four-day holiday period, footfall in. the country’s major cities was three times greater than for the same period a year earlier, and for UK retail destinations, footfall has increased from week to week for ten of the past eleven weeks, despite all but non-essential stores being closed. A more telling statistic from the latest data from the PwC’s Consumer Sentiment Index is that consumer confidence is now at its highest level since the tracking of the data began in 2008, with figures showing there are consumers with more disposable income and “a pent up demand to spend after a year of lockdown restrictions”.

It is estimated that Penguin Random House has claimed US$ 1.4 million under the UK government’s furlough scheme and now it has commented that it will not be repaying any of this back to the government despite strong sales in lockdown; revenues rose by 4.6% to US$ 5.3 million last year but UK’s biggest publisher, owned by German firm Bertelsmann, does not publish its UK profits separately, but they are thought to have soared. A spokesperson said: “We have used the government’s furlough scheme for its intended purpose: to protect jobs during this extraordinary time.” To date, the furlough scheme has cost the UK taxpayer US$ 78 billion.

The collapsed fashion chain Peacocks, previously owned by Edinburgh Woollen Mills, has been bought out of administration, by an international consortium, led by Peacocks’ former chief operating officer, Steve Simpson. It is being supported by EWM, a private investment group controlled by the Day family, which is owed money by Peacocks. If they receive the support of stakeholders, including partners, suppliers and landlords, the Peacocks’ management team is hoping to reopen 200 of its 400 shops, and retain all 1.85k store staff, along with more than 150 in head office and support. Last year, a similar deal was agreed with EWM and Bonmarche brands; as well as EWM also selling its Jaeger brand to M&S which will be run as an online-only business.

CVC Capital Partners, a UK private equity fund, has placed a buyout offer for troubled embattled Japanese conglomerate Toshiba, in a deal that could be as high as US$ 20 billion. Shares jumped almost 20% on Toshiba’s US-listed shares. The company has been involved in several scandals in recent years, including false accounting, (by overstating its profits for six years to 2015), and huge losses linked to its US nuclear unit, which resulted in an enforced sale of its profit-making chip sector to cover the deficit. Last year, it sold its final stake in the personal computer maker Dynabook, but if the deal goes through – it still needs the green light from regulators, including the Japanese government – it will allow the company to focus on renewable energy and other core businesses.

It took Credit Suisse little time to dismiss two key executives, chief risk officer, Lara Warner and its investment banking chief, Brian Chin, and to decide to cut bonuses in the fallout from two major business relationships. The first involved Greensill Capital, which filed for insolvency last week, and was a key financial backer of Liberty Steel owner, GFG Alliance. The other casualty was hedge fund Archegos which also imploded with major losses. Credit Suisse said it expects to make a Q1 US$ 960 million loss.  The Swiss bank also warned of a US$ 4.7 billion Archegos’ loss but noted that it had yet to calculate the cost of its involvement with Greensill Capital, but that could easily run into billions as well. It had acted as one of several lenders as prime broker for Archegos which collapsed after “bets” made on stocks unravelled including entertainment giant Viacom. The bank was one of the last to exit when these shares crashed from US$ 100, (earlier in March), to just over US$ 40. Credit Suisse confirmed it had launched investigations into both matters, with chief executive, Thomas Gottstein noting that “serious lessons will be learned.”

The recent rally in digital assets appears to have no ending and is no longer the domain of just Bitcoin. Ethereum, the world’s second largest cryptocurrency and rising 6.2% last Friday is now worth US$ 2.144k, having already tripled in the first three months of 2021. Ethereum was trading at US$ 150 in April 2020. The market has been boosted by major institutional investment, as well as increased adoption by retailers and payment platforms, including Visa which recently started using its network to settle cryptocurrency transactions.

The Australian Securities and Investments Commission is suing Westpac over its sale of consumer credit insurance in 2015 to almost 400 customers. ASIC alleges that the bank mis-sold CCI with credit cards and other credit lines to almost 400 customers “who had not agreed to buy the policies” for several months back in 2015. This insurance is usually optional and provides cover for consumers if they are unable to meet their minimum loan repayments due to unemployment, sickness or injury. A 2019 report by ASIC, covering eleven banks, found CCI was giving consumers “extremely poor value for money” and that they were only receiving 11 cents for every dollar they spent on CCI premiums linked with their credit cards – and only 19 cents for every dollar on all CCI products.

The Consumer Action Law Centre noted that the practice of selling people insurance, that they did not need, had been “widespread” and targeted consumers at the vulnerable “pressure dynamic” point of sale. It concluded that “the salesperson effectively adds on junk,” and “the problems with junk insurance were industry wide. It was a rort and everyone was in on it”. To date, ASIC has “recovered” US$ 191 million for 580k consumers from eleven banks, equating to an average of US$ 185 for each consumer. If any company had been found stealing so much money, there would be executives serving time but it seems that the law does not apply to the Australian banking sector.

One positive sign for the Australian economy is that job vacancies are rising, indicating there is a growing demand for labour and positions are not being filled. February job vacancies surgied, with 289k vacancies – 13% higher than three months earlier and 90% of the total in the private sector. With such figures, some analysts are looking at a 5% unemployment rate by July, particularly since the government is scaling back on JobSeeker unemployment payments so that it may encourage those at the lower end pf the payment schedule to seek full-time paid work, as opposed to living on a relatively comfortable JobSeeker pay-out.  There is no doubt that there are clear labour shortages in some industries, and with job vacancies rising, there is an obvious growing demand for labour for positions that are not being filled. The construction sector is an obvious example – in February 2020, there were 16.6k job vacancies but that number halved to 8.3k in May 2020 when the lockdowns were put in place. One obstacle to the favourable employment prospects is vaccine and the disappointing figures – at the beginning of the year, Prime Minister Scott Morrison hoped to have four million doses of the vaccine administered by the end of March; his woeful forecast was well out, with only 670k doses administered by the end of last month. Other potential drag factors include ongoing trade tensions with China, further possible disruptions to global trade and the booming Australian property market that could see regulators stepping in to curb bank lending.

With the biggest gains seen since August, March witnessed a surge in US hiring, with 900k jobs being added in the month, as the vaccination program gained traction and restrictions easing led to the mass opening of restaurants, bars, construction sites and schools. Accordingly, although the unemployment rate eased 0.2% to 6.0%, it is only a year ago that the country lost more than twenty million jobs, at the onset of the pandemic; full employment will return within eighteen months The current estimate sees a 6.0% growth rate, driven by a strong rebound later this year, as families emerge from lockdowns with pent-up demand and in many cases, savings put away during the pandemic. Despite the number of Americans claiming unemployment benefits unexpectedly rising by 16k to a seasonally adjusted 744k for the week ending 03 April, there is no doubt that labour market conditions are rapidly improving, as the country’s economy reopens, vaccination programs increase, and the various stimulus packages take effect.  However, there is still some way to go as the US employment figures are still 8.4 million shy of the February 2020 peak.

As restrictions eased, Chancellor Rishi Sunak has announced a government-backed loan scheme to help companies, as the economy reopens. The loans, ranging from US$ 35k to US$ 13.9 million, (GBP 10 million), will be 80% guaranteed by the government and will aim to help companies restart trading. Administered by the British Business Bank, it will run until the end of the year and interest rates will be capped at what seems to a rather high 14.99%. To date, it is estimated that its emergency loans had supported about US$ 105 billion of financing.

US Treasury Secretary Janet Yellen confirmed that the US is working with G20 countries to agree on a global corporate minimum tax rate to end a “30-year race to the bottom on corporate tax rates”. In the absence of a global minimum, the US will always be struggling against other economies with lower rates so that is probably why the Biden administration is leading the negotiations to level ‘the tax playing field.’ It appears that the US would use its own tax legislation to prevent companies from shifting profits or residency to tax-haven countries and would encourage other major economies to do the same. Ms Yellen’s take on the problem is not shared by the World Bank supremo, David Malpass who was against such a high tax rate of 21% for companies and indicated that such high rates would hinder poor countries’ ability to attract investment. Whilst the EC supported the idea, it did not comment on the rate, whilst some countries, including Ireland, expressed reservations about the US proposal. Recently, the OECD held discussions that focused on a minimum corporate tax rate of 12.5%, whilst the average corporate tax rate globally is about 24%, with Europe having the lowest regional rate at around 20%.

Every three months, the IMF seems always to amend previous quarters and this month is no exception. This time it is forecasting a stronger economic recovery this year and next and has marginally upped the UK’s growth to 5.3% and 5.1% in 2022, after a 9.9% contraction last year. Despite this, the UK remains ahead of just one of the G7 countries, Italy, and will only return to pre-pandemic levels only by the end of 2022. On a global scale, two year forecasts are at 6.0% (up from October’s 5.2%) and 4.4%, with the caveat that recoveries are diverging dangerously within and between countries. The global body notes that countries likely to perform less than the global average are those with slower vaccine rollouts, more limited support from economic policy, and those more reliant on tourism. Many emerging and developing economies are forecast not to return to pre 2020 economic levels, although China has already returned to pre-pandemic levels of economic activity. Over the period 2020 – 2022, cumulative losses in income per person are forecast at 11% for the developed world and 20% for other countries. The report notes that people counted as extremely poor are likely to have increased by 95 million in 2020, with a rise of 80 million in the number who are undernourished. Another Day In Paradise?

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Another Day In Paradise

Another Day In Paradise?                                                                 08 April 2021

How could all the property experts get it so wrong predicting further doom and gloom for the Dubai property sector in 2021?  March saw a marked uptick in sales transactions which totalled 4,643, valued at US$ 3.0 billion, and undoubtedly the 22% month on month growth in transactions, and 47% in value, will continue the same trend into Q2 and for the rest of 2021. 101 Economics teaches that prices will head north when there is lack of supply and high demand – this is exactly what is happening in areas like The Meadows and other established locations in the emirate for villas, and in Palm Jumeirah for prime apartments. Interestingly, last month had the highest number of secondary/ready properties transacted in a single month since June 2015.

The DLD weekly real estate report ending 01 April noted that the value of real estate and properties transactions was US$ 1.93 billion, including 1,116 apartments/villas selling for a total of US$ 559 million, along with 103 plots for US$ 197 million. The total amount of mortgaged properties came to US$ 1.09 billion, half of which was for land mortgaged in Marsa Dubai; there were 83 properties granted between first-degree relatives, valued at US$ 53 million. Three apartments were the top-priced for the week – US$ 55 million in Palm Jumeirah, US$ 52 million in Marsa Dubai, and U Madinat Dubai Almelaheyah, US$ 51 million, in Burj Khalifa. The highest land value sold this week was for US$ 58 million in Hadaeq Sheikh Mohammed Bin Rashid. Most transactions were carried out at Hadaeq Sheikh Mohammed bin Rashid, (28 sales valued at US$ 61 million), followed by Nad Al Shiba Third, with 22 sales transactions worth US$ 15 million, and Al Hebiah Third, with 8 sales transactions worth US$ 7 million.

Colliers’ latest report indicates that Dubai’s property market is running low on inventory, as buyers currently outnumber sellers in popular areas of the emirate, resulting in Dubai property fast becoming a sellers’ market. Since the advent of Covid, the trend is for many stakeholders moving to bigger spaces or better communities, or both. Covid was a catalyst for some property owners having to sell their property, (either through losing their job or having their pay cut). Now many sellers are in a position to wait and see, waiting for the right price to be offered.

Since the September 2019 launch of the Dubai Supreme Committee for Real Estate Planning, new project launches have slowed down substantially, so that, according to Asteco, only 34k residential units were handed over last year. Most of this number were already work-in progress, in September 2019, but with time the pipeline will become more manageable as actual new launches slow. There is no doubt that equilibrium is returning to the market and as supply slows, property prices will inevitably move higher, also driven by historically low mortgage rates, enticing buyers to pay more as the lack of good property available becomes apparent; maybe gazumping is returning to the local market.

Binghatti Developers launched a US$ 55 million project in JVC, comprising 160 apartments, covering 300k sq ft. The Binghatti Mirage – its third development in that location – is scheduled for completion within twelve months. One 722 sq ft B/R apartment will be priced at US$ 132k, after a 30% discount in advance, while a 2 B/R apartment, with an area of ​​856 sq ft, will cost US$ 188k. According to Cavendish Maxwell, JVC saw 2020 rental declines for both apartments (down 16.1%) and villas by 3.1%.

Dubai Economy has joined forces with Amazon in a new initiative to assist  local start-ups and SMEs, who are DED Trader licence holders and interested in expanding their online footprint. The Amazon Sale University will provide new e-learning courses and also host a dedicated store front on Amazon.ae to showcase products offered by local traders. One of DED’s main aims is to accelerate the “growth of e-commerce initiatives and promote technology integration” within the local business community.

Having met all safety requirements issued by the General Civil Aviation Authority (GCAA), flydubai will resume 737 Max passenger service with the first flight today to Pakistan’s Sialkot. The Dubai carrier has fourteen Max aircraft currently grounded, of which  four  Max 8s and one Max 9 have got the go-ahead to fly, following a comprehensive twenty-month review. The remaining nine Max aircraft are expected to return to passenger service over the next two months, following extensive work to reactivate planes that have been grounded for two years. The carrier noted that the Max aircraft “will operate to a number of flydubai’s destinations over the coming weeks” and that passengers will be notified in advance of travel if their itinerary now includes a flight that is scheduled to be operated by a Max plane. Twelve countries, within the carrier’s network, have yet to clear the narrow-body jet’s return, including Russia and India. The Dubai-based airline has over 750 pilots, of which over 30% have completed the required additional training on the 737 Max, with the remaining 520 expected to complete the additional training by the end of the year.

Dubai’s largest fuel retailer, Emirates National Oil Company, is planning to invest US$ 68 million of its capex budget on digital technology to optimise operations and identify synergies within its businesses. Enoc has more than 11k employees in sixty markets and it expects to grow the number of its service stations by 41.9% to 193 this year. In 2019, it had launched Enoc Link, an on-demand fuel service initially only for commercial customers, and now expects to add new revenue streams from the launch of on-demand fuel retail. In February, it introduced its first sustainable service station at the Expo 2020 site – and the first in the region equipped with a wind turbine for generating power. Enoc has launched its Masar project, as part of its digital transformation plans, with the aim of integrating all of its divisions and providing a more focused service to customers.

Earlier in the week, HH Sheikh Mohammed bin Rashid Al Maktoum launched the Dubai Creative Economy Strategy, with the aim of doubling the emirate’s creative industries’ contribution to GDP to 5.0%, company numbers to 15k and the number of creators to 140k by 2025. The Ruler noted that design, content, culture and arts will be major drivers for Dubai’s future, but the concept also covers a wide range including the likes of publishing, writing, cinema, video, cultural heritage and artistic industries. To speed up the process, the legal and investment environment will be upgraded to spur growth of creative industries in Dubai and to enhance its attractiveness to international creators, investors and entrepreneurs.

The Dubai Ruler also approved the Emirates Development Bank (EDB) Strategy to provide a sizeable US$ 8.2 billion financial support to businesses and start-ups in a major step to drive the national economy, as a support mechanism for the recently launched US$ 82 billion “Operation 300bn”. This was introduced last month as a ten-year comprehensive strategy to more than double the industrial sector’s contribution to the country’s GDP, and to finance more than 13.5k SMEs and to create 25k jobs. The Dubai Ruler also noted that “we must adopt a distinctive vision that meets global trends and sustains development to maximise the industrial sector’s revenue and boost the broader economy”, as well as “The Emirates Development Bank Strategy presents a giant leap that will leverage the bank’s role as a key driver of the national economy. Providing effective financial solutions will support the role of SMEs as main players in shaping our national economy.”

This week saw the appointment of Khaled Mohamed Balama Al Tameemi as governor of the Central Bank of the UAE who takes over the role from Abdulhamid Saeed Alahmadi. At the same time, the central bank also decided to extend the Targeted Economic Support Scheme (Tess), the US$ 13.61 billion zero-cost funding programme, set up a year ago to help lenders maintain funding flows through the economy, following the onset of Covid-19, until year end.

Moving up four places, the UAE is now ranked 15th in the world (and the leader in the Arab region) in Kearney’s 2021 Foreign Direct Investment (FDI) Confidence Index. Not surprisingly, the report indicated a marked decline in overall optimism about the global economy over the year but noted that the UAE business environment demonstrated continued strengths, including government incentives for investors. It also pointed to the fact that investors are more cautious regarding FDI as they gear up for a long-haul economic recovery Only 57% of investors were optimistic about the three-year global economic outlook – compared to 72% in last year’s survey. China, the UAE and Brazil are the only three emerging markets on this year’s Index, with China remaining the highest-ranked emerging market, as has been the case all this century.

The International Monetary Fund revised upward the UAE economic growth forecast for 2021, thanks to massive vaccination efforts which will strengthen recovery in H2. The UAE is now the second most vaccinated country in the world after Israel. The world body more than doubled its previous forecast of 1.3% to 3.1%, with growth softening to 2.6% in 2022. (However, the IMF often seem to get their forecast so wrong and no doubt the UAE economy will grow at an even faster rate next year). For the MENA region, the Fund revised its 2021 growth outlook from 3.2% to 4.0%.

The Ministry of Economy announced a price reduction on 30k food items during Ramadan. Discounts on items such as rice, flour, sugar, meat, fish and juices will range from 25% – 75%, across 900 national outlets. The ministry will also clamp down on unfair price increases during the holy month and will carry out 420 inspections to ensure grocery stores and businesses follow the rule. Government officials have met with representatives of fruit and vegetable markets in Abu Dhabi and Dubai to ensure enough food will be available during the Holy Month. It is estimated that on a daily basis, Dubai imports around 17k tonnes of fruit and vegetables, whilst the Abu Dhabi total is nearly 5k tonnes.

Dubai Internet City will be the regional headquarters for a company rated as the most valuable start-up in the US. Stripe, the online payments company, will help all its internet-based customers accept payments, make pay-outs and manage the money-side of the business. The UAE digital payment transactions have doubled over the past two years to US$ 18.5 billion, with a further 54% increase to US$ 28.5 billion expected by the end of 2022.

Two DFM entities were in the news this week. With Meraas now owning over 90% of the shares in the theme park operator, DXB Entertainments, the company will buy out the remaining equity holders by paying them US$ 0.022 per share, so that the government-owned entity can assume 100% ownership. Meanwhile, Deyaar has decided not to pursue a capital reduction to cancel US$ 417 million of accumulated losses; no reason has been given for this change. The DFM also announced a plan to launch new equity futures contracts on individual stocks of three leading listed companies – Aramex, Air Arabia and Emirates Integrated Telecommunications Company (DU) – in line with its strategy to diversify investment opportunities. It is like the inaugural equity futures contracts launched last October on stocks of five listed companies – Emaar Properties, Dubai Islamic Bank, Emirates NBD, Emaar Development and Emaar Malls.

Later in the month, the DFM will see its first IPO for some time, as Tristar will be offering shares at between US$ 0.60 to US$ 0.74 which would value the Dubai-based fuel distributor at up to US$ 880 million. It is expected that 20% of the shares will be offered to the public, through the sale of new shares, while the current shareholders could divest a further 4% onto the market, through a secondary offering. The business currently has three shareholders – Kuwait-based logistics group Agility, (65%), Gulf Investment Corporation (20%) and an investment vehicle owned by chief executive, Eugene Mayne (15%). Last year, Trisatr, with a fleet of more than 2k lorries and 35 maritime vehicles, posted a US$ 103 million EBITDA on revenue of US$ 453 million.

The bourse opened on Sunday 04 April and, having gained 62 points (2.5%) the previous week, was up 25 points (1.0%) to close on 2,583 by Thursday 08 April. Emaar Properties, US$ 0.03 higher the previous week, moved up another US$ 0.03 to close at US$ 1.00. Emirates NBD and Damac started the week on US$ 3.12 and US$ 0.32 and closed on US$ 3.17 and US$ 0.33. Thursday 08 April saw the market trading at 172 million shares, worth US$ 45 million, (compared to 69 million shares, at a value of US$ 36 million, on 01 April).

By Thursday, 08 April, Brent, US$ 6.83 (8.6%) lower the previous fortnight, lost a little more ground, shedding US$ 1.23 (1.9%) in this week’s trading, to close on US$ 63.42. Gold, up US$ 3 (0.1%) the previous week, was US$ 26 (1.5%) higher, by Thursday 08 April, to close on US$ 1,756.

IATA estimates that ME passenger demand has fallen back to levels last seen in 1998, noting that last year was the worst in the industry’s history. The global body indicated that, in 2020, passenger demand slumped by 72%, allied with a 63% fall in capacity, with cargo only declining 10%. It once again warned that some carriers may face bankruptcy and that to date losses registered total more than US$ 7 billion and that there must be more collaboration between the industry and various governments to best facilitate global economic recovery.

Despite a shortage of chips, Tesla delivered a record 184.8k electric vehicles in Q1, beating analysts’ expectations of 168k; this is well on its way to meet Elon Musk’s target of 750k for the year. Tesla announced that it would be progressing to full capacity at its Chinese plant. Despite this positive news, Tesla’s shares, which have skyrocketed by more than  540% over the past twelve months, were 1% lower on the day. Q1 sales were dominated by its cheaper models ‘3’ (from US$ 33.7k) and ‘Y’ (from US$ 45.7k), with its two more expensive models, ‘S’ and ‘Y’, (from US$ 75k), accounting for just 1% of Q1 turnover. The company confirmed it was still in the “early stages” of ramping up production of updated versions of both the more expensive models. Tesla was the biggest electric car manufacturer in 2020, accounting for 15.6% of the global production of 3.2 million. However, Monday was another day and, after digesting the news of record quarterly production, investors pushed Tesla shares 8% higher in pre-market trading on Monday.

LG Electronics is to close its loss-making smartphone business following six years of continual losses, totalling US$ 4.5 billion. Only eight years ago, it was the world’s third largest smartphone maker but has trailed the leading two players, Samsung and Apple, not helped by its own hardware and software issues; last year it shipped 28 million phones, compared with Samsung’s 256 million; it is estimated that it has a 2% global market share. Noting that the mobile phone market had become “incredibly competitive”, the South Korean conglomerate has said that its “strategic decision to exit the incredibly competitive mobile phone sector will enable the company to focus resources in growth areas such as electric vehicle components”. The smartphone business is the smallest of LG’s five divisions, accounting for just 7.4% of revenue.

The UK High Street cannot wait for next Monday – the day when lockdown restrictions are finally lifted and, driven by pent up demand, analysts are expecting that there will be a massive 48% hike in “bricks and mortar” sales. A study by Springboard noted that between the first and last weeks of March, the decline in shopping centre footfall moved up from -69% to -62.5%, compared with March 2020, whilst a -29.8% annual drop in footfall at retail parks shrank to -14.8% just before the Easter weekend. Over that four-day holiday period, footfall in. the country’s major cities was three times greater than for the same period a year earlier, and for UK retail destinations, footfall has increased from week to week for ten of the past eleven weeks, despite all but non-essential stores being closed. A more telling statistic from the latest data from the PwC’s Consumer Sentiment Index is that consumer confidence is now at its highest level since the tracking of the data began in 2008, with figures showing there are consumers with more disposable income and “a pent up demand to spend after a year of lockdown restrictions”.

It is estimated that Penguin Random House has claimed US$ 1.4 million under the UK government’s furlough scheme and now it has commented that it will not be repaying any of this back to the government despite strong sales in lockdown; revenues rose by 4.6% to US$ 5.3 million last year but UK’s biggest publisher, owned by German firm Bertelsmann, does not publish its UK profits separately, but they are thought to have soared. A spokesperson said: “We have used the government’s furlough scheme for its intended purpose: to protect jobs during this extraordinary time.” To date, the furlough scheme has cost the UK taxpayer US$ 78 billion.

The collapsed fashion chain Peacocks, previously owned by Edinburgh Woollen Mills, has been bought out of administration, by an international consortium, led by Peacocks’ former chief operating officer, Steve Simpson. It is being supported by EWM, a private investment group controlled by the Day family, which is owed money by Peacocks. If they receive the support of stakeholders, including partners, suppliers and landlords, the Peacocks’ management team is hoping to reopen 200 of its 400 shops, and retain all 1.85k store staff, along with more than 150 in head office and support. Last year, a similar deal was agreed with EWM and Bonmarche brands; as well as EWM also selling its Jaeger brand to M&S which will be run as an online-only business.

CVC Capital Partners, a UK private equity fund, has placed a buyout offer for troubled embattled Japanese conglomerate Toshiba, in a deal that could be as high as US$ 20 billion. Shares jumped almost 20% on Toshiba’s US-listed shares. The company has been involved in several scandals in recent years, including false accounting, (by overstating its profits for six years to 2015), and huge losses linked to its US nuclear unit, which resulted in an enforced sale of its profit-making chip sector to cover the deficit. Last year, it sold its final stake in the personal computer maker Dynabook, but if the deal goes through – it still needs the green light from regulators, including the Japanese government – it will allow the company to focus on renewable energy and other core businesses.

It took Credit Suisse little time to dismiss two key executives, chief risk officer, Lara Warner and its investment banking chief, Brian Chin, and to decide to cut bonuses in the fallout from two major business relationships. The first involved Greensill Capital, which filed for insolvency last week, and was a key financial backer of Liberty Steel owner, GFG Alliance. The other casualty was hedge fund Archegos which also imploded with major losses. Credit Suisse said it expects to make a Q1 US$ 960 million loss.  The Swiss bank also warned of a US$ 4.7 billion Archegos’ loss but noted that it had yet to calculate the cost of its involvement with Greensill Capital, but that could easily run into billions as well. It had acted as one of several lenders as prime broker for Archegos which collapsed after “bets” made on stocks unravelled including entertainment giant Viacom. The bank was one of the last to exit when these shares crashed from US$ 100, (earlier in March), to just over US$ 40. Credit Suisse confirmed it had launched investigations into both matters, with chief executive, Thomas Gottstein noting that “serious lessons will be learned.”

The recent rally in digital assets appears to have no ending and is no longer the domain of just Bitcoin. Ethereum, the world’s second largest cryptocurrency and rising 6.2% last Friday is now worth US$ 2.144k, having already tripled in the first three months of 2021. Ethereum was trading at US$ 150 in April 2020. The market has been boosted by major institutional investment, as well as increased adoption by retailers and payment platforms, including Visa which recently started using its network to settle cryptocurrency transactions.

The Australian Securities and Investments Commission is suing Westpac over its sale of consumer credit insurance in 2015 to almost 400 customers. ASIC alleges that the bank mis-sold CCI with credit cards and other credit lines to almost 400 customers “who had not agreed to buy the policies” for several months back in 2015. This insurance is usually optional and provides cover for consumers if they are unable to meet their minimum loan repayments due to unemployment, sickness or injury. A 2019 report by ASIC, covering eleven banks, found CCI was giving consumers “extremely poor value for money” and that they were only receiving 11 cents for every dollar they spent on CCI premiums linked with their credit cards – and only 19 cents for every dollar on all CCI products.

The Consumer Action Law Centre noted that the practice of selling people insurance, that they did not need, had been “widespread” and targeted consumers at the vulnerable “pressure dynamic” point of sale. It concluded that “the salesperson effectively adds on junk,” and “the problems with junk insurance were industry wide. It was a rort and everyone was in on it”. To date, ASIC has “recovered” US$ 191 million for 580k consumers from eleven banks, equating to an average of US$ 185 for each consumer. If any company had been found stealing so much money, there would be executives serving time but it seems that the law does not apply to the Australian banking sector.

One positive sign for the Australian economy is that job vacancies are rising, indicating there is a growing demand for labour and positions are not being filled. February job vacancies surgied, with 289k vacancies – 13% higher than three months earlier and 90% of the total in the private sector. With such figures, some analysts are looking at a 5% unemployment rate by July, particularly since the government is scaling back on JobSeeker unemployment payments so that it may encourage those at the lower end pf the payment schedule to seek full-time paid work, as opposed to living on a relatively comfortable JobSeeker pay-out.  There is no doubt that there are clear labour shortages in some industries, and with job vacancies rising, there is an obvious growing demand for labour for positions that are not being filled. The construction sector is an obvious example – in February 2020, there were 16.6k job vacancies but that number halved to 8.3k in May 2020 when the lockdowns were put in place. One obstacle to the favourable employment prospects is vaccine and the disappointing figures – at the beginning of the year, Prime Minister Scott Morrison hoped to have four million doses of the vaccine administered by the end of March; his woeful forecast was well out, with only 670k doses administered by the end of last month. Other potential drag factors include ongoing trade tensions with China, further possible disruptions to global trade and the booming Australian property market that could see regulators stepping in to curb bank lending.

With the biggest gains seen since August, March witnessed a surge in US hiring, with 900k jobs being added in the month, as the vaccination program gained traction and restrictions easing led to the mass opening of restaurants, bars, construction sites and schools. Accordingly, although the unemployment rate eased 0.2% to 6.0%, it is only a year ago that the country lost more than twenty million jobs, at the onset of the pandemic; full employment will return within eighteen months The current estimate sees a 6.0% growth rate, driven by a strong rebound later this year, as families emerge from lockdowns with pent-up demand and in many cases, savings put away during the pandemic. Despite the number of Americans claiming unemployment benefits unexpectedly rising by 16k to a seasonally adjusted 744k for the week ending 03 April, there is no doubt that labour market conditions are rapidly improving, as the country’s economy reopens, vaccination programs increase, and the various stimulus packages take effect.  However, there is still some way to go as the US employment figures are still 8.4 million shy of the February 2020 peak.

As restrictions eased, Chancellor Rishi Sunak has announced a government-backed loan scheme to help companies, as the economy reopens. The loans, ranging from US$ 35k to US$ 13.9 million, (GBP 10 million), will be 80% guaranteed by the government and will aim to help companies restart trading. Administered by the British Business Bank, it will run until the end of the year and interest rates will be capped at what seems to a rather high 14.99%. To date, it is estimated that its emergency loans had supported about US$ 105 billion of financing.

US Treasury Secretary Janet Yellen confirmed that the US is working with G20 countries to agree on a global corporate minimum tax rate to end a “30-year race to the bottom on corporate tax rates”. In the absence of a global minimum, the US will always be struggling against other economies with lower rates so that is probably why the Biden administration is leading the negotiations to level ‘the tax playing field.’ It appears that the US would use its own tax legislation to prevent companies from shifting profits or residency to tax-haven countries and would encourage other major economies to do the same. Ms Yellen’s take on the problem is not shared by the World Bank supremo, David Malpass who was against such a high tax rate of 21% for companies and indicated that such high rates would hinder poor countries’ ability to attract investment. Whilst the EC supported the idea, it did not comment on the rate, whilst some countries, including Ireland, expressed reservations about the US proposal. Recently, the OECD held discussions that focused on a minimum corporate tax rate of 12.5%, whilst the average corporate tax rate globally is about 24%, with Europe having the lowest regional rate at around 20%.

Every three months, the IMF seems always to amend previous quarters and this month is no exception. This time it is forecasting a stronger economic recovery this year and next and has marginally upped the UK’s growth to 5.3% and 5.1% in 2022, after a 9.9% contraction last year. Despite this, the UK remains ahead of just one of the G7 countries, Italy, and will only return to pre-pandemic levels only by the end of 2022. On a global scale, two year forecasts are at 6.0% (up from October’s 5.2%) and 4.4%, with the caveat that recoveries are diverging dangerously within and between countries. The global body notes that countries likely to perform less than the global average are those with slower vaccine rollouts, more limited support from economic policy, and those more reliant on tourism. Many emerging and developing economies are forecast not to return to pre 2020 economic levels, although China has already returned to pre-pandemic levels of economic activity. Over the period 2020 – 2022, cumulative losses in income per person are forecast at 11% for the developed world and 20% for other countries. The report notes that people counted as extremely poor are likely to have increased by 95 million in 2020, with a rise of 80 million in the number who are undernourished. Another Day In Paradise?

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