I Fought The Law And The Law Won!

I Fought The Law (And The Law Won)                                      14 January 2022

For the past week, ending 14 January 2022, Dubai Land Department recorded a total of 1,559 real estate and properties transactions, with a gross value of US$ 1.23 billion. It confirmed that 1,022 villas/apartments were sold for US$ 613 million, and 219 plots for US$ 305 million over the week. The top three transfers for apartments and villas were all apartments – one was sold for US$ 104 million in Marsa Dubai, a second sold for US$ 74 million in Business Bay, and the third sold for US$ 51 million in Burj Khalifa. The top land transaction was for a plot of land in Island 2, worth US$ 20 million. The most popular locations in terms of volume and value were Jebel Ali First, with 99 transactions, totalling US$ 62 million, followed by Al Hebiah Fifth, with 44 sales transactions, worth US$ 23 million, and Wadi Al Safa 5 with 8 sales transactions, worth US$ 910 million. Mortgaged properties for the week totalled US$ 447 million and 48 properties were granted between first-degree relatives worth US$ 60 million.

Just as in the case of real estate sales, experts indicate that the rental market has had a strong 2021, with more of the same this year, but at a slower rate. The two main factors attributable to 2021 figures were the successful vaccination programme and gradual opening of international borders. ValuStrat reported that “2021 was a year of recovery from pandemic challenges and a beginning of the new normal. Prices and rents mostly recovered to pre-pandemic levels, with record-breaking sales volumes and values.” `The ValuStrat Price Index closed the year on 67.3 – 6.7% and 18.9% higher on the quarter and the year. It also indicated that although the median rents, at the end of 2021, stood at US$ 16.0k and US$ 64.5k, for apartments and villas respectively, average rents are still 4.9% lower than pre-pandemic levels. There was no surprise that annual villa rentals outpaced those for apartments– 26.8% higher cf 14.3%; however, on a quarterly basis, apartment rents performed better – 6.9% v 6.3%. This year, average villa rents will increase by just over 10%, whilst apartments may squeeze 6%.

HH Sheikh Mohammed bin Rashid Al Maktoum issued a new law to regulate the procedures for expropriating property for public use in Dubai. The law covers all areas across Dubai, including special development zones and free zones. The legislation seeks to protect the rights of owners whose properties are expropriated (taken over by an authority from an owner for public use or for social benefit), that they receive a full and fair compensation, as per a decision issued by the chairman of the Ruler’s Court, which will also establish ‘The Expropriation Committee’ to oversee all matters related to the expropriation of properties. The chairman of the Court of the Ruler of Dubai will issue a decision on the formation of the committee, its members, decision-making processes and expropriation procedures.

HH Sheikh Mohammed has also approved six new laws to create a new legal framework for Dubai Chambers and their Boards of Directors. Its two main targets are to further strengthen the emirate’s position as a global economic hub and to support the business community in the emirate. Three of the decrees see the Dubai Chamber of Commerce & Industry being replaced by Dubai Chambers and that HE Juma Al Majid being appointed its Honorary Chairman, with HE Abdul Aziz Al Ghurair as its Chairman. Members of the Board include Faisal Juma Khalfan Belhoul, the Vice Chairman; HE Khalid Juma Al Majid Al Muhairi; HE Omar Sultan Al Olama; Omar Abdullah Al Futtaim; Sultan Ahmed bin Sulayem; HE Helal Saeed Al Marri; Buti Saeed Mohammed Al Ghandi; Dr. Raja Easa Al Gurg; Dr. Amina Abdul Wahed Al Rostamani; Tariq Hussain Khansaheb; Raji Patrick Chalhoub; and Ghassan Ahmed Yahya Al Kibsi. Three other devreees establish the Board of Directors for Dubai Chamber of Trade, the Board of Directors for Dubai Chamber of International Trade , with Sultan Ahmed bin Sulayem as Chairman, and the Board of Directors for Dubai Chamber of Digital Economy, with HE Omar Sultan Al Olama as Chairman.

Under the directives of Dubai’s Crown Prince, HH Sheikh Hamdan bin Mohammed, the ‘Talent Pass’ licence was launched for freelance work (self-employment)., available to people with special skills and expertise from around the world. It will target global talent and professionals in the fields of media, education, technology, art, marketing and consultancy, with two aims of doubling the contribution of the creative sector to Dubai’s GDP and increasing Dubai’s ability to attract creative individuals, investors, and entrepreneurs, as well as local, regional, and international investments.  The MoU, signed between the Dubai Airport Freezone, with Dubai Culture and the General Directorate of Residency and Foreigners Affairs, will create the framework for cooperation and coordination to process licenses, visas and other services that support innovators in establishing, operating and growing their business in Dubai. The ‘Talent Pass’ qualifies its holder to obtain a residence visa for three years, in addition to renting office space through a wide range of modern office solutions provided by DAFZ. ‘Talent Pass’ is part of a portfolio of six licences offered by DAFZ, which includes the Commerce Licence, for commercial activities such as import, export and re-export, and the General Commerce Licence.

The portfolio also includes:

  • the Industrial Licence for light manufacturing activities and packaging and assembly
  • the E-Commerce Licence for online trading of goods and services
  • the licence issued in partnership with the Department of Economic Development, which allows companies registered at the DAFZ to apply for the Department’s license, without the need for an office space for working outside the free zone
  • the Services Licence for a range of service-based companies

Following the Executive Council’s endorsement of the shared mobility plan and the e-scooter policy, new rules have been introduced by the RTA that will allow residents to ride e-scooters in ten districts across the emirate. They are Sheikh Mohammed bin Rashid Boulevard, JLT, DIC, Al Rigga, 2nd of December Street (specified track and zone), The Palm Jumeirah, and City Walk, as well as safe roads in Al Qusais, Al Mankhool, and Al Karama. Cycling tracks, except those in Seih Al Salam, Al Qudra, and Meydan, can also be utilised. The RTA also added that it “plans to expand the use and tracks of e-scooters to include specific residential areas, and 23 new districts later on.”

The December IHS Markit PMI, up 0.8 on the month, confirmed what many already knew – that Dubai’s business conditions, in the non-oil private sector, were at their best in thirty months; this was driven by a “robust increase in new order volumes”, and an improvement in the tourism sector, as the emirate continued to ease restrictions. In addition, there was the impetus from Expo 2020 and an improvement in local sales, amid growing consumer confidence in the economic recovery. Output was also strong, expanding at the second-fastest pace since mid-2019. Last month, new work at construction companies also grew at its fastest pace since February but lagged the pace of growth seen in the other two sectors; backlog volumes continued to rise as companies struggled to complete orders, whilst there was no change in the quantity of inputs purchased by businesses in the month. Dubai’s employment in the emirate’s non-oil economy showed a modest rise in December, indicating a renewed push to improve staffing. The rate of overall input price inflation rose to its highest level since March, driven by higher energy and raw material costs. There is some concern that the recent Omicron coronavirus variant surge may have a negative economic impact in upcoming months, but if it remains under control, then the 2022 outlook is promising for Dubai.

DMCC has announced the completion of a range of enhancements made to Jumeirah Lakes Towers throughout 2021 and further upgrades in 2022. Infrastructure work includes a new road network, that will facilitate travel between JLT and the Jumeirah Island area, as well as the renovation of the various lakes across JLT, including enhancing the lake’s walls and improving the water quality. DMCC has made significant progress in the palm replacement project, which will go on throughout the year. To better serve JLT’s 100k population, several new sports and recreational facilities will also be added in 2022.

With the DMCC welcoming nearly 2.5k new companies, representing 146 geographies, the world’s flagship Free Zone has seen its member companies nudging above the 20k level. Over the past four years, over 8.3k new companies joined the DMCC. The year has seen strong international demand, including from China, US, UK and Russia, with the launch of the DMCC Crypto Centre and the expansion of its commodities centres. The Dubai Diamond Exchange, the largest global diamond tender facility, held 68 diamond and precious stone tenders, whilst the DMCC Tea Centre posted a 14% hike in 2021, handling over 35.6k metric tonnes of tea.  Meanwhile, the DMCC Coffee Centre, doubling its numbers in 2021, stored and processed more than 9k MT of both green and roasted coffee from a broad range of producing markets across Central and Southern America, Asia and Africa. CEO, Ahmed bin Sulayem is bullish on the prospects for 2022, noting that, “given the incredible momentum that the DMCC team has collectively achieved this year, I am convinced that 2022 will feature major milestones, including the completion of Uptown Tower”; the tower is now more than 270 mt high and the 340 mt structure is scheduled for delivery in Q3 2022.

2021 proved to be a record year for the Dubai Gold and Commodities Exchange, trading 7.1 million contracts, with a total value amounting to US$ 149.7 billion. Its best performing product during the year was again the Indian Rupee Options Futures Contract, which traded up on the year by 1,233%. It also signed agreements with the S & Royal Group Mongolia, to explore future business and trade opportunities, the Victoria Falls Stock Exchange, aimed at supporting with the development of a clearing and settlement commodities exchange in Zimbabwe, as well as the Financial Markets Regulatory in Sudan, to strengthen the gold market across Africa. DGCX ended the year on a strong note, with December trade volumes of over 727.8 million contracts.

Shorages becomes the latest Dubai-based start-up to raise money in a seed funding round. The e-commerce fulfilment company, whose chief executive is Rayan Osserian, raised US$ 700k, with money to be used to build more warehouses in the UAE and to increase hiring. The financing was led by London-based Mayfair Holdings, along with a number of other angel investors. Earlier, it had attracted US$ 1.6 million in an oversubscribed seed roundlast October.

Zone, the first GameFi ecosystem on the Algorand blockchain, raised US$ 2.35 million in new funds before its initial dex offering tomorrow, 15 January. (The IDO coin/token is distributed through a decentralized liquidity exchange that uses liquidity pools to allow traders to swap tokens). Zone’s founder, Adi Mishra, commented that “we see Zone as proof that Algorand is the future of GameFi. The market now has a GameFi ecosystem that supports everything, all without very high fees that discourage user adoption. Institutional investors can see where the market is shifting, and this proves that.” GameFi – or gaming finance – combines gaming, decentralised finance and the opportunity to earn, whether in cryptocurrency or cash, with players trading for non-fungible tokens. NFTs, (with the global market valued at US$ 41 billion), are unique virtual assets and cannot be replaced.

The Central Bank announced that the November Money Supply aggregate M1 increased, month on month, by 2.1%, to US$ 186.9 billion, M2 by 1.3% to US$ 413.4 billion and M3 by 0.6% to US$ 498.6 billion. The November increases in all three groups were attributable to a US$ 3.8 billion in Monetary Deposits (M1), the increased M1 as well as a US$ 1.2 billion rise in Quasi-Monetary Deposits (M2) and the increases in M1 and M2 less the US$ 2.3 billion decline in Government Deposits. (M3). During the month, gross banks’ assets, including bankers’ acceptances, increased by 0.8% to US$ 898 billion, whilst gross credit climbed 1.4% to US$ 487.3 billion. Total Bank Deposits decreased marginally by 0.03%, to US$ 535.9 billion.

The DFM opened on Monday, 10 January, up 75 points (2.4%) on the previous fortnight, shed 18 points (0.6%) to close the week, on Friday 14 January, at 3,202. Emaar Properties, US$ 0.16 higher the previous fortnight, ended the week flat on US$ 1.35. Emirates NBD, DIB and DFM started the previous week on US$ 3.65, US$ 1.50 and US$ 0.72 and closed on US$ 3.58, US$ 1.50 and US$ 0.71. On 14 January, lacklustre trading saw 36 million shares changed hands, with a value of US$ 30 million, compared to 165 million shares, with a value of US$ 61 million, on 07 January 2022.

By Friday 14 January 2022, Brent, US$ 7.58 (10.2%) higher the previous three weeks, gained US$ 2.38 (2.9%), to close on US$ 84.28. Gold, down US$ 34 (1.9%) the previous week lost US$ 14 (0.8%), to close Friday 14 January on US$ 1,831. 

Gold may have a rocky six months ahead and could feel the pinch from the double whammy of inevitable higher interest rates and a strengthening greenback; a stronger dollar makes bullion more expensive for buyers who hold other currencies. However, as a hedge against inflation, it may be able to ride on the back of continuing market volatility from ongoing Covid variants, ongoing high inflation as well as increased demand from central banks and the global jewellery sector.

Brent ended the year at US$ 77.78, with an average US$ 71 price during the year which showed a yearly US$ 31 rise on the close of the annus horribilis. Last year ended with Brent prices over 50% higher for the twelve months.  Over the past three years, Brent has climbed 12.4% to US$ 66.67 in 2019, fell 22.3% to US$ 51.80 (2020) and rose again by 50.1% to US$ 77.78. It only has to increase by 10.0% to reach US$ 85.58 and there is every chance of that happening in Q1; today 14 January, it was trading at US$ 84.28, as inventory levels continue to head south, whilst global demand heads north, nearing a daily consumption of 100 million bpd. Further in the year, circumstances may change, more so if shale rears its ugly head again which could have a negative impact on Brent.

Tech giant Samsung Electronics expects a 52% hike in Q4 profits, at US$ 11.5 billion, which would be its fourth highest quarterly return posted over the last four years. Despite the global chip shortage, the world’s biggest memory chip maker noted that its revenue figures were boosted by strong demand for server memory chips and higher profit margins in its chip contract manufacturing business, as well as from currency fluctuations, with the Korean won declining during the period, making Korea’s exports more attractive on the global market. However, over the same period, it has seen costs rise, including on employees’ bonuses and marketing for its smartphone business. A potential problem for Samsung relates to its chip manufacturing factory in Xi’an, and with the city being in lockdown since 23 December. The South Koreanconglomerate commented that it would “temporarily adjust operations” at its sites in Xi’an but gave no indication on its short-term plans.

It is reported that Tim Cook’s 2021 salary remuneration was six times higher on the year at US$ 99 million, comprising a salary of US$ 3 million, US$ 1 million in other monetary benefits, US$ 12 million based on incentives and US$ 82 million in stock awards. However, his 2020 US$ 15 million package did not include any stock benefits. When he took over from Steve Jobs in 2011, he struck a deal that gave him a tranche of more than five million shares after he had completed a decade in the top job; this was paid out in August 2021. Four other senior executives picked up compensation packages of between US$ 26 million to over US$ 27 million, whilst the median pay for employees rose from US$ 58k to US$ 68k.

As it expects to raise its UK payroll numbers by over 56% to 10k, Google is to spend US$ 1.0 billion, backing a return to the office and to “reinvigorate” the work environment. According to its UK boss, Ronan Harris, the investment in London reflects the firm’s faith in the office as a place of work; its new King’s Cross development is currently under construction., whilst it is also planning a multi-million-pound refurbishment of its offices

For the second time in four months, Pret A Manger is to raise 6.9k of its 8.5k of its workers’ pay to more than US$ 13.70 per hour. This is in line with several other retailers, including supermarkets Sainsbury’s, Aldi and Morrison’s, who have boosted staff pay already as they struggle to hire and retain workers. Pano Christou, Pret’s Chief Executive of the sandwich chain, which has 550 shops around the world, commented that, “we’ve said all along that as our business recovered, we wanted to invest back into our people”.

After Ikea had made similar changes at the beginning of the month, Next and Ocado have become the latest retail chain to amend their health and safety policies. They have cut sick pay for unvaccinated staff who must self-isolate because of Covid exposure, but any staff testing positive will still receive full sick pay. Unvaccinated workers at the retailers, who test positive, are still being paid in full for the time they need off but if they are required toisolate, having been identified as a close contact of someone with Covid, could now receive as little as US$ 132 a week – the Statutory Sick Pay minimum.  Next, in line with many other companies, faced labour shortages in 2021 and some are now seeing mass absences due to the more infectious Omicron Covid strain.

The value of global Sukuk issuances skyrocketed 36.1% last year to reach a grand value of US$ 252.3 billion and are expected to continue this growth trend in 2022, A new report from Fitch Ratings indicates that much of the improvement can be attributed to robust Islamic investor appetite, a diversification in funding goals and Islamic-finance development agendas, all three of which will be in play again in 2022. It does carry five caveats that could have a negative impact including a downside risk stemming from higher oil prices could reduce a number of sovereigns’ funding needs, AAOIFI [Accounting and Auditing Organisation for Islamic Financial Institutions] compliance complexities, traditional risks such as interest-rate rise, lower global investor appetite for emerging-market debt and political risk. Interestingly, the GCC countries, Malaysia, Indonesia, Turkey and Pakistan accounted for US$ 230.2 billion of total deals, equating to 91.2% of the total value in 2021.

Despite all the supply chain problems, labour shortages and the onset of Omicron, most of the UK’s big retailers posted bumper Christmas sales. It was another great Yuletide for the sector, with consumers prepared to spend both on food and non-food, and willing to pay full price, pushing up retailers’ margins. Whether the good times are coming to an end remain to be seen but there will be an inevitable squeeze on spending, with inflation and supply issues pushing up prices, along with tax and national insurance increases in April.

Both M&S and Tesco have been performing better than expected, with the former posting a Q4 18.6% jump in sales to US$ 4.0 billion; this figure was also 8.9% up on the same quarter in 2019. Although in-store clothing and home demand fell10.8%, total revenue from its clothing and home division rose, driven by online sales. M&S also noted that its shops at retail parks continued to outperform stores in city centres. Chief executive, Steve Rowe, reiterated the problems facing not only his brand but the sector in general. These factors, pushing up prices, included supply chain pressure, combined with pandemic supply interruptions, rising labour costs, EU border challenges and tax increases.

After reporting an “exceptional” festive period for sales, Tesco now expects annual income to hit the top end of forecasts at US$ 3.6 billion. Tesco’s chief executive Ken Murphy said that “once again, Covid-19 led to a greater focus on celebrating at home”, as Tesco’s Christmas sales in the UK rose 0.3% compared to the previous year and were 9.2% higher than the pre-pandemic festive period in 2019.

According to Euromonitor, since the onset of Covid, global online shopping has expanded 43.5% to US$ 2.87 trillion, with 50% of that total emanating from Asia. The end result is that warehouse space is close to capacity, with vacancy rates at record low levels as businesses, including retailers, run out of space for items bought online. The CBRE estimates that the current vacancy rate in Asia is a historic record 3% low and that in a recent survey, more than 75% of companies, using warehouses in the Asia-Pacific region, indicated their keenness to expand in the next three years. It is obvious that this increased demand for more space, allied with the ongoing supply chain disruptions, means that the requirement for companies is to hold the highest safety stock levels. to meet online demand. With a lack of space to build traditional warehouses, it is inevitable that they will become taller as well as becoming increasingly more automated.

With its third base rate increase in six months, South Korea’s new rate of 1.25%, (the same level it was pre-pandemic), is an attempt by the Bank of Korea’s to contain rising inflation, (with consumer inflation for 2021 as a whole jumping to 2.5%), and soaring household debt. In August, it was the first major Asian country to raise rates since the onset of the pandemic.

Since the beginning of 2020, central banks, governments and international financial bodies have pumped trillions of dollars into the global economy to help cushion the impact of Covid restrictions. Now these institutions have started to phase out these stimulus measures and use monetary policy tools such as rate hikes. The Bank of England raised rates last month for the first time in three years, whilst the Fed has signalled that up to three rate hikes are possible in 2022; latest figures show that inflation in the UK and US was at 5.1% and 7.0%.

A report by Chainalysis claims that 2021 was one of most successful years on record for North Korean hackers as they stole almost US$ 400 million worth of digital assets in at least seven attacks on cryptocurrency platforms. The cyber criminals mainly targeted investment firms and centralised exchanges. It seems their modus operandi involves various techniques including phishing lures, code exploits and malware to siphon funds. Chainalysis considers that the so-called Lazarus Group, a hacking group sanctioned by the US, is largely responsible for these attacks; it is thought that the group is controlled by North Korea’s primary intelligence bureau, the Reconnaissance General Bureau. The North Korean government continues to deny its involvement in any of these incidents. In February 2021, three North Korean computer programmers were indicted for a hacking spree, aimed at stealing more than US$ 1.3 billion in money and cryptocurrency.

Last week’s blog pointed to the fact that China had become the biggest global lender and that Sri Lanka was one of more than forty low and middle-income countries, whose debt exposure to Chinese lenders was more than 10% of the size of their GDPs. Over the past ten years, the country had received at least US$ 5 billion from the Chinese government for projects including roads, an airport and ports, but now, it is claimed that some of these loans were used for unnecessary schemes, with low returns. The current classic example is that of the massive Sri Lankan port project in Hambantota, a one billion dollar project financed by Chinese money; it did not live up to its promise and soon became unviable leaving the country mired in debt; the only way out was to hand the state-owned China Merchants a controlling 70% stake in the port on a 99-year lease in return for further Chinese investment. This week, President Gotabaya Rajapaksa made a request to Chinese foreign minister Wang Yi to restructure its debt repayments, as part of efforts to help the South Asian country navigate its worsening financial situation.

Malaysia has confirmed that the trust account, set up to collect recovered 1MDB funds, has only received US$ 6.58 billion, (including US$ 111 million from audit firm KPMG paid to settle a lawsuit filed against it by 1MDB), and that it has repaid US$ 4.58 billion of 1MDB’s debt so far, with US$ 13.37 billion still outstanding. The government noted that it had recovered enough funds linked to the scandal-tainted state fund 1 Malaysia Development Berhad to pay off only the principal amount of the bonds for 2022. It is estimated that at least US$ 4.5 billion was milked from the fund in an elaborate globe-spanning criminal scheme. Between 2009 – 2013, 1MDB raised billions of dollars in bonds, ostensibly for investment projects and joint ventures. The government confirmed that it would pay off all the debts of 1MDB, once all the trust account funds are utilised, but still remained committed to recover all outstanding balances created by the scandal. At least six countries have launched investigations into 1MDB, co-founded by former Prime Minister Najib Razak, who has already been sentenced to twelve years in prison and millions in fines over corruption and money laundering linked to funds misappropriated from a 1MDB unit.

According to a YouGov study, the UAE is ranked fifth globally for gaming influencers, with 13% of those polled, behind China and Indonesia (both with 20%), India (17%) and Hong Kong (12%). Out of that percentage, 34% are aged between 25 and 34 years, indicating that influencers appeal strongly to Generation Z. The study noted that, “gaming influencers attract a very loyal and distinctive fan base. This high level of appeal is significant: the stronger the connection between influencer and audience, the more likely fans are to develop a favourable opinion of the influencer and the content they create.” The global gaming market has over three billion users and is expected to grow at a CAGR of 8.7% from 2019 to 2024 to US$ 218.8 billion.  Meanwhile, the market for influencers is projected to more than double to US$ 374 million by 2028. Gaming influencers have created a massive community around themselves with a common interest in video gaming, mainly using their marketing platforms in search and discovery of clients, campaign management, influencer relationship management, analytics and reporting.

US venture capital deal making topped a record high of nearly US$ 330 billion, and over 17k deals, on the back of excess liquidity and a monetary policy that encouraged such spending; leading sectors were technology, biotech, healthcare and fintech sectors. VC fundraising also had a record year at US$ 128.3 billion, with the two standout performers being crypto firm FTX Trading, valued at US$ 25 billion, and AI platform Databricks, with a valuation of US$ 38 billion, both raising US$ 1 billion. More of the same is on the horizon this year mainly because of liquidity in the market and returns outpacing all other assets classes.

This week, the World Bank came out with some gloomy news, indicating that the global economy faces a “grim outlook”, with 2022 global growth at 4.2% – down 1.4% on the year – with poorer countries suffering more from widening global inequality. It noted that two other drivers behind this decline were government aid unwinding and an initial bounce in demand fading. Although it estimates that the advanced economies will have recovered to pre-pandemic levels, those of the poorer nations will fall further behind and be still 4% lower than when the pandemic first struck. A major problem facing most of the world, but more so for the weaker economies, is inflation. The World Bank points the blame for the recent surge in inflation on the stimulus packages, introduced by the richer countries, which now will have to be rolled in and phased out. While officials in many countries, including the US, are now expected to raise interest rates, to try to rein in price increases, higher borrowing costs could hurt economic activity – especially in weaker economies – as loan rates increase and local currencies devalue.

US December inflation topped 7.0%, with prices climbing at their fastest rate since 1982, driven by strong demand and scarce supply for key items.  It is a certainty that the Fed will soon start raising interest rates, which will pump up borrowing costs so as to reduce demand. The current rate, which is well ahead of policymakers’ 2.0% target, was caused by the likes of energy, groceries and housing surging at annual rates of nearly 30%, 6.5% and 4.1%. The US is not alone with the 30 nation OECD bloc posting its highest inflation rate in twenty-five years and the UK rate at a ten-year high, and the World Bank noting that inflation is rising at its fastest pace since 2008. The fact that the pandemic is not going away, and that supply and production problems continue, means that the price increases have been more persistent than expected. What is known is that Fed Chair was hopelessly wrong thinking that inflation pressures would be transitory and admitted to Congress this week that “it’s proving more difficult than we had hoped to end the pandemic.”

In her first interview of 2022, the IMF’s Managing Director Kristalina Georgieva told Abu Dhabi’s ‘The National’ that the latest surge of Covid-19 infections will slow the pace of the global economic recovery. It will have to downsize its October global 4.9% growth forecast “because the two big engines of growth of the world economy, the US and China, were slowing down, and then we got hit by Omicron”. The IMF supremo commented that the world will have to adapt to a “shock-prone world”, in addition to ensuring greater global co-operation. Noting that that the recovery is quite uneven, with different countries in different positions, the IMF will “use a great deal of our capacity to protect people and our economy”. Two major issues facing the world body were that divergence is “deepening” due to “unequal access to vaccines and countries’ access to finance. Since the onset of Covid, the IMF has provided nearly US$ 170 billion of financing to ninety countries”. The IMF supremo has concerns about global debt which had been a major problem even before the onset of the pandemic and has worsened since then; in 2020, the world debt level was estimated at over US$ 226 trillion. The MD said that some low-income countries are now in debt distress, and for some emerging markets raising money is becoming increasingly difficult, and that the issue of debt is “at the top of our agenda”.

She was “cautiously optimistic” that supply chain disruptions will be resolved to ease inflation and that the inflationary pressures will recede “by the end of 2022, early 2023.” She did warn that other developments, like “climate shocks”, could have an impact on food prices. Her advice to some global central banks, with high levels of debt was to “already now work on a rational response, meaning if you can stretch maturities, push payments down the road, do it, improve the transparency, look at ways where currency mismatches can be addressed”. A further message to central banks was that “Our view is central banks are now in a place where they have to use their instruments to push inflation, and more importantly inflation expectations, down. As they do that, we know there will be a spillover impact on the recovery, growth and on emerging markets in developing markets with lower denominating debt”.

Some of the major economies will see 2022 growth slow, compared to a year earlier; China will be 2.9% lower at 5.1%, the US 1.9% down at 3.7% and the eurozone 1.0% at 4.2%. The negative growth trend will be most felt in the poorer nations, such as those in Latin America/Caribbean, 4.1% lower at 2.6%. India is expected to buck the trend rising 0.4% to 8.7%.

Australian politicians are very much like politicians from anywhere else in the world and most of them like to court opinion and to win elections – Scott Morrison is no exception. It seems to an outsider that he saw an opportunity, in the case of Serb tennis champion, Novak Djokovic, to ensure a boost in his flagging popularity just before the federal May elections. However, it seems that the first set went to the non-vaccinated 34-year old, as a judge ordered that he be released from a five-day immigration detention after quashing his visa cancellation by the authorities over his vaccination status.

Notwithstanding his anti-vax stance, there is no doubt that Novak Djokovic has never been the most popular sportsman in Australia, and he would have faced an icy reception at the Australian Open, even before the legislators took over. Initially, it seemed that Prime Minister, Scott Morrison did not want to get involved accepting that the matter was a decision of the Victorian government who wanted their main drawcard to play tennis in Melbourne. Within twenty-four hours, the Prime Minister, who must have received advice that he could make political capital out of this, did a U-turn. With a federal election due, and already under pressure from his mishandling of the pandemic, this was a golden opportunity to garner public support by appearing to act tough on the country’s stringent border policies. The player’s visa was cancelled shortly after he arrived in Melbourne late on Wednesday because officials decided he did not meet the criteria for an exemption. Djokovic argued he did not need proof of vaccination because he had evidence that he had been infected with the coronavirus last month. Djokovic’s legal team ended up successfully challenging the decision to deport him in court on Monday, five days after his arrival in Melbourne. Judge Anthony Kelly ordered Djokovic’s release after the government acknowledged in court that he was not given enough time to respond following the notification to cancel his visa. By Friday, Australia’s Immigration Minister, Alex Hawke swung his axe and exercised his power to re-cancel the visa and deport the unvaccinated player. A final appeal will be heard this Sunday, but it could be game, set and match to ScoMo, and Novak’s last day in Australia will be in the wrong court. I Fought The Law (And The Law Won).

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Don’t Play With Me, ‘Cause You Are Playing With Fire

Don’t Play With Me, ‘Cause You’re Playing With Fire

2021 will go down as a stellar year for the Dubai real estate market, as the sector posted a mega jump in both the number of transactions, up 65% to 84.8k, and their value, 71% to the good at US$ 81.74 billion. 49.8k real estate units were registered in 2021 of which 41.0k units were sold, valued at US$ 18.66 billion, while 8.0 villas, worth over US$ 4.96 billion, were sold. The Dubai Land Department report noted that a total of 52.4k investors concluded 72.2k new investments, valued at US$ 40.32 billion, representing a 73.7% growth in the number of investments, a 65.6% rise in the number of investors, and a 100% increase in the value of investments compared to 2020. Of the 52.4k investors, 17.7k were women, with that number 72% higher than in 2020.; they totalled US$ 10.46 million of the US$ 40.32 annual investment. In the total, there were 6.1k Arab investors, 6.9k from the GCC and 38.3k foreign investors, with values of US$ 3.38 billion, US$ 4.60 billion and US$ 26.98 billion.

There is no doubt that the real estate sector represents a major catalyst for the growth of various other sectors and that the 2021 realty figures are an indicator that Dubai is fast becoming the preferred destination for many international investors and a leading candidate of being the world’s best city in which to live and work.  

The top ten locations for transaction numbers were Dubai Marina (8.0k transactions), Business Bay (5.7k), Al Thanyah Fifth (5.1k), Al Barsha South Fourth (4.8k), Hadaeq Sheikh Mohammed bin Rashid (4.4k), Burj Khalifa (4.3k), Wadi Al Safa 5 (3.5k), Al Hebiah Fourth (3.3k), Al Merkadh (3.2k), and Palm Jumeirah (2.8k). When it comes to locations with the highest value during 2021, Dubai Marina again headed the field with sales totalling US$ 7.79 billion, followed by Palm Jumeirah (US$ 7.25 billion), Hadaeq Sheikh Mohammed bin Rashid (US$ 4.31 billion), Burj Khalifa (US$ 3.87 billion), Business Bay (US$ 3.59 billion), Al Thanyah Fifth (US$ 2.23 billion). Wadi Al Safa 5 (US$ 2.18 billion), Al Yufrah 1 (US$ 1.99 billion), Al Thanyah Fourth (US$ 1.96 billion), and Al Hebiah Fourth (US$ 1.96 billion).

Dubai Marina was also the location with the highest number of real estate mortgages, (with 1,440), followed by Hadaeq Sheikh Mohammed bin Rashid (1,046), Al Thanyah Fifth (1,015), Burj Khalifa (922), Al Barsha South Fourth (875), Nad Al Sheba 3 (864), Al Yelayiss 2 (717), Al Thanyah Fourth (675), Me’aisem First (655), and Palm Jumeirah (618).

For such a relatively small market, there was a surprise to note that 3.2k new brokers had entered the sector in 2021, bringing the total number of registered real estate brokers to 8k, (33.9% of whom were women), operating from over 1.4k brokerage offices. Over the year, real estate brokers’ commissions in Dubai’s real estate market exceeded US$ 817 million through 12.1k transactions.

Data from the Dubai Land Department showed that the  emirate’s first ever working Friday included 173 sales transactions worth US$ 648 million— twelve of which were land plots, worth US$ 123 million, and 161 were apartments and villas for US$ 525 million. The top three areas that recorded the highest value of land sales transactions on Friday were Marsa Dubai, with land sales worth US$ 101 million; Al Thanya Fifth, where a plot of land was sold for US$ 8 million; and The Palm Jumeirah, where a plot of land went for US$ 5 million. Dubai’s Jebel Ali First area recorded the highest number of transactions, with three sales worth US$ 2 million. It was followed by Palm Jumeirah, with a US$ 5 million sales transaction, and Warsan First, with a US$ 1 million sale.

The three highest-valued sales transactions, featuring transfers of apartments and villas, included a US$ 136 million sales transaction in The Palm Jumeirah, followed by a US$ 135 million sales transaction in Marsa Dubai and a US$ 109 million sales deal, also in Marsa Dubai. Jebel Ali First recorded the most villa and apartment sales transactions on Friday, with 23 sales transactions worth US$ 5 million. Business Bay and Al Barsha South Fourth recorded 21 sales transactions (US$ 7 million) and 13 sales transactions (over US$ 4 million), respectively. The total value of mortgage transactions concluded on Friday was US$ 34 million, The biggest mortgage transaction was registered in Al Thanyah Fourth, featuring a value of US$ 10 million, followed by Nad Al Sheba Third (US$ 3 million). Five properties worth over US$ 5 million were granted to immediate family members. Among these, the highest value of Dh12m was registered in Al Merkadh.

According to the latest report by Knight Frank, Burj Khalifa apartment prices rose by a healthy 23% last year, to US$ 572 per sq ft, noting that the rest of Dubai saw an average 8% increase but that “2021 has been the exponential rebounding of Dubai’s luxury residential market.” All the usual drivers including:

  • the movement to larger homes with outdoor amenities
  • economic support measures
  • government initiatives (introduction of flexible residency visas – ten-year golden visas, retired and remote workers)
  • one of the best vaccine protocols in the world
  • historically low mortgage rates
  • attractive and flexible selling packages from developers
  • Expo 2020
  • a fast-growing non-oil economy
  • ease of doing business
  • security/safety
  • year-round sunshine (except for this week)
  • a cosmopolitan lifestyle

continue to enhance Dubai as one of the best places in the world in which to live and work.

HH Sheikh Mohammed bin Rashid Al Maktoum has approved the three-year 2022-2024 Dubai government general budget, with a US$ 50.7 billion spend, and also Law No. (28) for the General Budget for the fiscal Year 2022, with US$ 16.8 billion expenditure. Projected government revenues for 2022 are 10% higher, compared to 2021, at US$ 15.8 billion, as a result of the rapid economic recovery of Dubai and the effective measures taken to curb the pandemic, including not only cutting many government fees but also putting a freeze on fee increases until 2023. Non-tax revenues, tax revenues and government investment revenues, which come from fees, account for 57%, 31% and 6% of the total expected income – and do not include the 6% expected from oil revenue.

This year’s budget sees the emirate continuing to place a high emphasis on developing social services, and its healthcare, education and cultural sectors. It also includes US$ 272 million set aside for citizens’ housing sector, as well as allocating more than 4k plots and houses, with a total value of US$ 1.46 billion. As part of the government’s strategy to consolidate Dubai’s position as one of the best global cities in which to live and work, the budget also focuses on developing the Social Benefits Fund, by supporting families and people of determination. The budget reflects Dubai’s determination to accelerate post-pandemic economic recovery and achieve the Ruler’s wider aims to stimulate entrepreneurship, enhance society’s happiness and consolidate the emirate’s enviable position as a land of opportunities and innovation.

The two big ticket projected government expenditure items are salary and wages (34%), along with grant and social support (21%) to meet the requirements of human and community development and provide public services to the residents of the emirate. Other items include 9% of total spend on investments in infrastructure, 6% on public debt accounts, to follow a disciplined fiscal policy that ensures the budget fulfils all obligations, and 2% allocated to the private reserve to support emergency preparedness programmes. The budget allocates US$ 1.42 billion for post Expo construction projects.  Sector wise sees 30% being spent on the social development sector, in areas of health, education, housing and women and children’s care and a further 23% on security, justice and safety. A massive 42% of the spend will be invested in infrastructure and transportation and the remaining 5% on supporting the sectors of government excellence, creativity, innovation and scientific research.

Because of the double whammy of an exceptional year in the equity markets, helped by some shrewd financial advice, and a welcome recovery in the price of oil, the UAE sovereign wealth fund’s assets grew by over 18% to US$ 1.624 trillion; a barrel of oil more than quintupled from its April 2020 level of US$ 15.06 to US$ 82.00 in October 2021. Abu Dhabi manages around US$ 1.3 trillion through different SWFs, becoming the third-largest concentration of such funds after Beijing and Oslo. The UAE created this SWF to invest petrodollars in diverse sectors such as equities, bonds, commodities, real estate, automobiles, technology, pharmaceuticals and others to support local budgets. The largest SWF in the country is Abu Dhabi Investment Authority, with US$ 829 billion assets under management. Dubai-based entities include the Investment Corporation of Dubai (US$ 302 billion), Dubai Holding (US$ 35 billion) and Dubai World (US$ 15 billion).

Sheikh Ahmed bin Saeed Al Maktoum has appointed a new leadership team to manage the Dubai Integrated Economic Zones Authority free zones which include Dubai Airport Free Zone, Dubai Silicon Oasis, and Dubai CommerCity. Amna Lootah has been appointed director general of DAFZ and to head that free zone’s executive management team; Dr. Juma Al Matrooshi was appointed as director-general of Dubai Silicon Oasis. Muammar Al Kathiri was appointed as chief engineering & smart city officer in the authority to lead and direct engineering planning and make strategic planning, design, and construction decisions. At all central divisional functions. William Chapel will serve as Chief Financial Officer in DIEZ, where he will be responsible for financial management. Other appointments at DIEZ include Youssef Behzad as chief people & organizational development officer, Bader Buhannad as chief corporate support officer, (including managing and directing digital and IT activities), Saeed Al-Suwaidi as the new chief legal & regulatory affairs office and Abdul Rahman Basaeed, chief internal audit & enterprise risk management officer. The authority’s main aims are to boost economic growth, contribute to shaping the future economic map of Dubai, and create more diverse investment opportunities.

Worldometer estimates that over 5.4 million have died from Coronavirus since its onset, with the number of recorded cases exceeding 295 million. There is no doubt that the new Omicron variant, which has seen a massive increase in infections in many parts of the world, could put a dampener on expected demand growth in Q1 and slow the pace of the global economic recovery. Over recent days, UAE daily virus cases have moved from double digit numbers in early December to more than 2k. However, because of the high vaccination rates, and being the leading country in the world, (with the 91.3% of its people fully vaccinated and 7.7% partially vaccinated), with a relatively young population, there is every chance that it will escape the need for any further serious lockdowns.

According to a report issued by the Jet Airline Crash Data Evaluation Center, Emirates has retained its leading position as the world’s safest airline, ahead of KLM, JetBliue, Delta and easyJet. Due to its size, Etihad did not make the global list but topped the regional survey, whilst KLM, Finnair, Air Europa, Transavia and Norwegian were rated the safest airlines in Europe. IATA has projected that the global airline industry losses, due to the pandemic, will touch US$ 201 billion in the three years to 2022.

December’s adjusted PMI shedding 0.3 to 55.6, on the month, still showed a continued improvement in UAE business activity, driven by a sharp rise in new business and output, and a boost from Expo 2020 Dubai. The UAE’s non-oil private sector is a gauge designed to give a snapshot of operating conditions in the economy, with any figure above 50 indicating expansion. The improvement, especially noticeable in Q4, was also helped by an easing of restrictions in the country. Although the rate of growth dipped to a three-month low, new orders continued to rise, as new work volumes moved higher,  as business activity grew at its quickest rate since H2 2019. Despite the arrival of the Omicron variant, businesses are optimistic that the strong economic growth trend will continue into Q1, with sales growth driven by a substantial jump in travel due to Expo 2020 and strong demand from clients. The survey also noted that demand remained strong, as businesses reported a much sharper increase in input prices, driven by a rise in fuel and energy costs and higher raw material prices. There was a marginal increase in the workforce, indicating a slow recovery is taking place, but businesses still struggled to keep up with demand, leading to a sixth successive monthly increase in backlogs. With global inflation still moving higher, purchase costs rose at their fastest pace since March, resulting in businesses limiting their purchasing activity.

For what it is worth, the UAE’s oil GDP 2022 forecast growth is expected to come in at 5.0%, following a 2.0% contraction a year earlier, whilst in the non-oil sector, growth will remain flat at 4.2%, supported by rising oil prices. However, the UAE Central Bank added the caveat that, “economic projections are susceptible to uncertainties amidst Covid-19 repercussions”. Both the IMF and Emirates NBD are less bullish, with the former expecting the UAE economy to grow at just more than 3.0% this year and hover around the same levels into 2026 at least; Dubai’s biggest lender puts this year’s growth at 4.0 %, following 3.5% in 2021. Gulf countries, including the UAE, were dealt with a double whammy in 2020 as the spread of the coronavirus pandemic was accompanied by a drop in crude prices, the main source of income for the region. Last year, sentiment was better as travel restrictions eased and Dubai’s Expo 2020 was launched, attracting millions of visitors. 

In 2021, Dubai Duty Free posted a 40% increase, on the year, to US$ 976 million in sales, as annual passenger traffic, totalling 28.7 million, began to rebound from the coronavirus pandemic. It was estimated that there were over nine million sales transactions in 2021, equating to 25k a day, selling 26 million different items. DDF will also benefit from increased footfall going through DXB, as early estimates see an almost doubling of traffic to 57 million in 2022; Dubai World Central, the emirate’s second hub, will also reopen its passenger terminal in May.

The top five products sold in 2021 were perfumes, liquor, cigarettes/tobacco, gold, and electronics, worth US$ 190 million, US$ 168 million, US$ 95 million, US$ 79 million and US$ 76 million; they accounted for US$ 608 million worth of the sales, equating to 62.3% of the total revenue. Online sales, at US$ 48 million, represented 5% of the total, with sales in Departures and Arrivals making up 84%, (US$ 790 million), and 10% (US$ 102 million) of the annual sales. In November, Dubai Duty Free said it will rehire seven hundred staff who were laid off during the pandemic, as passenger numbers pick up.

On Tuesday, DP World and the Senegal government laid the first stone to mark the start of construction of the new Port of Ndayane, its biggest port investment in Africa; it will also boost Senegal’s position as a major trade hub and gateway to West Africa. The US$ 1 billion investment to develop the port will be carried out in two phases and follows a December 2020 concession agreement to build and operate a new port at Ndayane, about fifty kilometres from the existing Port of Dakar. The first phase of the port development will include a container terminal with 840 mt of quay and a new 5 km marine channel designed to handle two 336 mt vessels simultaneously, and capable of handling the largest container vessels in the world. Annual container capacity will increase by 1.2 million Twenty Foot Equivalent Units. The second phase will be the development of an additional 410 mt container quay, as well as an economic and industrial zone, adjacent to the port and near the Blaise Diagne International Airport, creating an integrated multi-modal transportation, logistics and industrial hub.

Dubai Internet City and Khazna Data Centres have teamed up to establish two data storage centres in Dubai. With the government strategy of turning the country into a smart nation, the demand for data storage across all industries, with a secure cloud infrastructure, is of major importance, bearing in mind the huge volume of digital data generated in the region. DIC is a leading supporter of widespread digital transformation which is required to increase Dubai’s  future economic competitiveness on the global stage. An Arizton Advisory and Intelligence report estimates that the data centre market in the Mena region will have an 8% CAGR (compound annual growth rate) to reach US$ 5 billion by the end of 2026.

This is not the only party in town. Last October, Etisalat and G42 agreed to merge their twelve data centre services to create the UAE’s largest data centre provider and operated under Khazna. Both Etisalat and du have data centres in Dubai, as have two global technology companies; Microsoft opened one in Dubai two years ago, whilst the world’s largest cloud storage service provider, Amazon Web Services, is set to open three centres in the country in H1. As Ammar Al Malik, DIC MD, commented, “building data centres and enhancing the overall technological infrastructure plays a key role in providing an investment-friendly environment;” and they will further support the UAE’s digital ecosystem.

Following an agreement signed between the governments of Dubai and Jammu and Kashmir, Emaar will develop a shopping mall in Srinagar. The 500k sq ft ‘Emaar Mall of Srinagar’ will be the first significant FDI investment in that northernmost region of northern India, since the Modi government revoked its special status given under Article 370 and brought the Union Territory under central administration. Emaar’s founder, Mohamed Alabbar commented that, “we wish to bring a world class mall experience to the residents of Jammu and Kashmir and the tourist inflows which are likely to increase exponentially” and that the Dubai developer “is also considering other investments into real estate, hospitality and mixed-use commercial and residential projects in the region”. It is expected that Dubai will deliver more than a billion-dollar worth of projects in Kashmir, including industrial parks, a medical college, a specialty hospital, logistic centres, IT towers and multi-purpose towers.

Dubai Aerospace Enterprise announced that at the end of 2021, it had a fleet of owned, managed, committed and mandated-to-manage aircraft of 425. During the year, it had divested thirty aircraft and acquired forty-one planes, as well as signing four new servicing agreements covering sevenaircraft. Its aircraft leasing division signed two hundred lease agreements, extensions and amendments in 2021. The average age of the fleet is 6.7 years and the ME’s biggest plane lessor served 112 customers in fifty-four countries. During the year, it issued US$ 2.5 billion in new unsecured notes and redeemed about US$ 2.2 billion in total unsecured notes.

The DFM opened on Monday, 03 January, up 51 points (1.6%) on the previous week, gained 24 points (0.7%) to close the week, on Friday 07 January, at 3,220. Emaar Properties, US$ 0.14 higher the previous week, gained US$ 0.02, at US$ 1.35. Emirates NBD, DIB and DFM started the previous week on US$ 3.69, US$ 1.47 and US$ 0.72 and closed on US$ 3.65, US$ 1.50 and US$ 0.72. On 07 January, 165 million shares changed hands, with a value of US$ 61 million, compared to 79 million shares, with a value of US$ 41 million, on 30 December.

By Friday 07 January 2022, Brent, US$ 3.43 (4.6%) higher the previous fortnight, gained US$ 4.15 (5.3%), to close on US$ 81.93. Gold, up US$ 53 (3.0%) the previous three weeks lost US$ 34 (1.9%), to close Friday 07 January on US$ 1,831. 

At an online meeting on Tuesday, the Opec+ group of oil producers agreed to bring an extra 400k bpd to the market, as from next month, despite demand concerns due to the increase in the Omicron variant. It is apparent that the oil bloc is confident that the market can take further increases in supply.  Although the news was widely expected, Brent jumped 1.62% to US$ 80.26 on the day, as demand for oil has continued to improve with the variant having only had a mild impact. It is expected that demand will average 99.13m bpd this quarter, up 1.11 million bpd from its November forecast, with global oil demand growth kept unchanged at an extra 4.2 million bpd for 2022 and total global consumption at 100.6 million bpd.

Bitcoin has slumped to its lowest level since its December flash crash, as growing expectations of rising borrowing rates weigh on some of the best performing assets over the past few years. The largest cryptocurrency by market value closed Friday trading at US$ 41.8k; its decline was followed by others such as Ether and Binance Coin along with. tokens of popular DeFi applications, including Uniswap and Aave. Bitcoin has surged by about 500% over the past two years, after stimulus measures were put in place during the Covid-19 pandemic. These recent declines run in tandem with what has been happening in the financial markets, at a time when inflation is running on its own speed and when global central banks have finally woken up to consider tightening monetary policy and lifting interest rates. There is no doubt that Bitcoin will bounce back but the market may have to wait until late Q2 to see that happen.

Following the latest US$ 300 million investment, it is estimated that the online marketplace OpenSea could be worth US$ 13.3 billion. The tech firm reports that trades’ in NFTs – unique pieces of digital code that can be associated with a digital asset such as a work of digital art.- on the platform have risen 600-fold in 2021. There are an increasing number of businesses, sports clubs and celebrities producing or purchasing NFTs including the rapper Eminem spending about US$ 450k on an image of a “Bored Ape” resembling him. According to the FT, the market in digital art and collectables is now approaching that of the global art trade and latest figures show that the total value of 2021 trade for NFTs was estimated to be worth US$ 40.9 billion.

This week, Blackberry advised that, as from Wednesday, 04 January, it will not operate correctly, stating that, “as of this date, devices running these legacy services and software through either carrier or Wi-Fi connections will no longer reliably function, including for data, phone calls, SMS and 9-1-1 (emergency) functionality.” This will see the end of BlackBerry 7.1 OS and earlier, BlackBerry 10 software, BlackBerry PlayBook OS 2.1 and earlier versions, whilst devices, using Google’s Android operating system, including the BlackBerry KEY2 released in 2018 would not be affected by the changes. Apple’s 2009 launch of its iPhone – and the introduction of smartphones – saw the beginning of the end for the once iconic Canadian tech company.

A lot has happened to the semiconductor industry after it had its worst ever recession in 2019, posting a 12% annual fall, followed by the onset of Covid-19 in the early part of 2020. Although global sales jumped 26% in 2021, to a record US$ 553 billion, the industry was beset by supply chain problems, but this year revenue is expected to be 9% higher, pushing industry revenue figures above the US$ 600 billion level. Covid saw a marked reduction in vehicle sales which would have been a major blow for the semiconductor sector but all the “lost” sales from the car industry were more than taken up by unusually strong demand for consumer electronics; personal computers, smartphones, and audio/video equipment accounted for 80% of semiconductor sales and were the three main factors driving the industry’s growth. 2021 saw prices on the up, as demand continued to outstrip supply. This unexpected demand growth led to a shortage in the industry, as has the US-China trade dispute which has seen both sides stopping their domestic tech companies from doing business with each other. The industry has a long lead time from drawing board to end user as the making of chips is a complex process that can take months.

The auto industry was one of the main users of semiconductors but when Covid first arrived, car production ground to a halt and all car makers cancelled forward orders for semiconductors. Even then, demand was greater than the supply, leading to long waiting times and increased prices and now Gartner expects that half of the major ten carmakers will be designing and producing their own chips by 2025 in order to reduce their reliance on traditional chip makers. Furthermore, the industry is modernising at break-neck speed to introduce electric and autonomous vehicles and need to have more control on what goes into their products. Because of shortages, manufacturers, such as Volkswagen, Ford, Fiat Chrysler, Toyota and Nissan, have had to delay production of some models in order to keep other factories running. Tesla got round the problem by using their own new chip designs and rewriting the software it uses on its vehicles.

In Monday’s premarket trading, Tesla shares jumped 7.0% to US$ 1,126 on the back of posting stronger-than-expected Q4 deliveries, easing any fears of supply chain problems that had beset the industry for most of last year. For the quarter, Models 3 and Y production rose 79%, whilst Models S and X fell 19%, largely due to a slowdown in production as new equipment was being installed. Analysts expect the world’s most valuable carmaker to report quarterly revenue of over US$ 2.3 billion, having seen the number of vehicles delivered being 17.3% higher than the market had expected – at 309k units. With new factories opening in Texas and Germany this year – and the fact that Tesla has managed to overcome much of the problems caused by the scarcity of semiconductors by reprogramming software to use less scarce chips – production is bound to be ramped up in 2022.

Ever since 1931, General Motors has held the mantle as America’s top car seller but it has lost that title as its domestic sales were down 13%, (impacted by the widespread shortage of semiconductors), with Toyota climbing to the number one position, with a 10% jump in sales to 2.3 million vehicles. It is estimated that car sales were 2% higher on the year in 2021 but remain depressed compared to pre-pandemic figures. Like all new car buyers around the world, US purchasers have had to make do with a reduced choice, because of the semiconductor shortage, supply chain problems and higher costs for new vehicles. GM’s profit would have been worse if it were not for the improved performance of its profitable pick-up trucks and SUVs. Toyota’s Camry has been the top-selling passenger car in the US fortwo decades, while its Rav4 has ranked as the best-selling SUV for five years.

One of the greatest hoaxers in history has been found guilty in a New York court of duping some very savvy investors into believing that her company had developed a revolutionary medical device that could detect a multitude of diseases and conditions from a few drops of blood. After a week of deliberation, the court found that 37-year old Elizabeth Holmes was guilty, on two counts of wire fraud and two counts of conspiracy to commit fraud, and now faces a maximum of twenty years in jail for each of the four offences; she was acquitted on four other counts involving patient fraud. Holmes had started Theranos in 2003 and went from an unknown to a Silicon Valley sensation, and an apparent visionary trailblazer, who amassed a US$ 4.5 billion on a tissue of lies. Her simple idea was to create a less painful, more convenient and cheaper way to scan for hundreds of diseases and other health problems by taking just a few drops of blood with a finger prick instead of inserting a needle in a vein. Her disruptive tactics were to upend an industry dominated by giant testing companies such as Quest Diagnostics and Labcorp and introduce “mini-labs” in Walgreens and Safeway stores across the US that would use a small device, called the Edison, to run faster, less intrusive blood tests. The likes of Rupert Murdoch, Larry Ellison as well as the Walton and DeVos families, were investors that helped her raise US$ 900 million in the early stages

Most people were unaware at the time that the Theranos’ blood-testing technology kept producing misleading results, and that blood tests were secretly being undertaken using conventional machines in a traditional laboratory setting and not by the simple Edison protocol. This façade could not go on forever and it was inevitable that she would be caught out even though she never stopped believing that Theranos was on the verge of refining its technology. It all ended in 2015 when the ruse was uncovered in a series of Wall Street Journal articles and a regulatory audit of the firm uncovered potentially dangerous flaws in its technology.

Asda has managed to anger UK farmers by backing out of its October commitment to stock exclusively British beef because of the rise in local beef prices. However, Asda has committed, (at least for the time being), that all fresh beef in its premium Extra Special tier will remain 100% British and all of their fresh beef will be sourced from farms in the UK and Republic of Ireland. Other UK supermarkets, including Lidl, Aldi, Morrisons and the Co-operative, also have commitments to source 100% British beef. The National Beef Association noted that farmers are struggling with feed, fertilizer and energy costs escalating at rates “never seen before”, whilst Republic of Ireland beef is currently around 20% less expensive than British.

Major UK retailers, Next and Greggs, have both indicated that they intend to raise prices this year to offset higher wage, supply and manufacturing costs at a time when inflation in the country could top 6% by the end of Q1. The fashion store intends to raise prices for its spring and summer clothing and homeware ranges by 3.7% and a 6% increase for autumn and winter goods. Shoppers at Greggs’ 2k stores will have to pay between US$ 0.07 to US$ 0.13 extra on items across its range of sausage rolls and cakes. There will be a lot more of the same from other major High Street stores as they get to grips with soaring inflation, higher costs and the Omicron variant.

It seems incongruous that bookmaker Ladbrokes could claim US$ 138 million from the furlough scheme, including US$ 60 million in 2021, despite rapid growth in online betting making up for all losses from the closure of stores. Its parent company, Entain, which actually saw revenues rise since the onset of the pandemic, said the matter is “under review” but that the money had protected 14k jobs. Although Entain was legally entitled to claim the money, others either returned the furlough money such William Hill, repaying US$ 33 million to the government, or did not claim it in the first place., such as Flutter, the owner of the Paddy Power betting shops. It is estimated that Ladbrokes was one of the twenty biggest furlough claims last year.

The latest Halifax House Price Index shows that the December average house price had risen 1.1%, on the month, 3.5% in Q4 and 9.8% for the year to US$ 374k – its largest annual gain since 2003. Despite the UK being under lockdown for some six months during 2021, the average house price reached record highs on eight occasions. Two main drivers behind these improved figures were the ongoing stamp duty holiday and a surge in demand for out of city locations, with gardens and more space. Wales registered the strongest growth of any part of the UK last year, at 14.5%, with London at the other end of the scale with tepid growth of just 2.1%. There is every chance that growth rates will slow, driven by factors such as rising inflation, higher cost of living, burgeoning interest rates, increased taxation and surging energy bills. With the end of the stamp duty holiday, the number of mortgage approvals continued to decline, with November numbers of mortgage approvals, at 67k, at their lowest level since June 2020. November also witnessed a decline in new listings, although new buyer enquiries rose by 13%.

With the cost of transport, food and other staples skyrocketing, Turkey’s annual inflation rate has soared to a 19-year high, at over 36% last month. In 2021, the currency tanked 44%, which made the country’s exports cheaper, and they became even cheaper this week when the lira lost a further 5% in value; since September, the central bank has cut rates from 19% to 14%, (instead of the other way round). However, the flipside of the coin sees imports become increasingly more expensive – bad news not only for the general population but also for manufacturers who have to pay more for energy, raw materials and other costs which in turn increase the cost of their exports. If there is no change in the economic attitude and change of monetary policy of Tayyip Erdogan, inflation could top 50% by April, with the lira in the monetary gutter; recently, the price of electricity and gas bills have jumped 50% and 25%.

Despite many other countries thinking to the contrary, China claims that “not a single country has fallen into [a] so-called ‘debt trap’ as a result of borrowing from China.” The criticism is that the country lends to poorer countries which often leaves then struggling to repay debts and therefore vulnerable to pressure from Beijing. (This practice is reminiscent of similar US aid in the 1970s to countries mainly in South America and SE Asia which often left them beholden on the goodwill of Uncle Sam). China is one of the world’s largest single creditor nations, with its loans to lower and middle-income nations tripling since 2010 to top US$ 170 billion by the end of 2020. The main beneficiaries of their “largesse” are nations in SE Asia and Africa. However, some analysts believe that this represents only about half of China’s commitment, as the other half of China’s lending to developing countries is not reported in official debt statistics, as funds originate from state-owned companies and banks, joint ventures or private institutions, rather than directly from government to government.

According to AidData, there are now more than forty low and middle-income countries, whose debt exposure to Chinese lenders is more than 10% of the size of their GDP, as a result of this “hidden debt”, with Djibouti, Laos, Zambia and Kyrgyzstan having Chinese-related debts equivalent to at least 20% of their annual GDP. Much of the debt owed to China relates to large infrastructure projects like roads, railways and ports, and also to the mining and energy industry, under President Xi Jinping’s Belt & Road Initiative. The current classic example is that of the massive Sri Lankan port project in Hambantota, a one billon dollar project financed by Chinese money. But it did not live up to its promise and soon became unviable leaving the country mired in debt; the only way out was to hand the state-owned China Merchants a controlling 70% stake in the port on a 99-year lease in return for further Chinese investment.

According to the World Bank statistics, China is the leading global lender, at over US$ 350 billion, followed by the World Bank (US$ 300 million), the Paris Club governments (US$ 200 billion) and the IMF some way back at UDS$ 80 billion. At the turn of the century China had no public debt commitments. There are major differences in the terms and conditions of a typical Chinese loan compared to others. They include a higher interest rate of around 4%, compared to say 1% on a loan from the World Bank or an individual country such as France or Germany, a shorter loan term of around ten years, (compared to around 28 years) and the requirement of borrowers maintaining a minimum cash balance as some form of collateral, often not needed for loans from other institutions.

After a nine-month suspension from trading on the Hong Kong Stock Exchange, shares in scandal-hit China Huarong Asset Management resumed trading on Wednesday only to see its value tank 50% on the day. This followed a state-backed bailout of almost US$ 6.6 billion after the distressed debt manager posted a record US$ 16 billion loss in 2020. However, H1 figures for Huarong, whose main shareholder is China’s finance ministry, had shown improvement with a US$ 25 million profit. This follows the execution of its former chairman Lai Xiaomin, after being found guilty of corruption; he had been arrested in 2018 on charges of taking US$ 280 million in bribes over a ten-year period. The company, established in 1999 to take bad debts off the country’s largest state-owned banks, expanded beyond its original remit.

Evergrande, with debts of over US$ 300 billion, has suspended trade in its shares in Hong Kong at a time when the Chinese real estate giant is scrambling to raise cash by selling assets and shares to repay suppliers and creditors, as part of its restructuring plan. Over the weekend, it was reported that the troubled company was ordered to demolish its thirty-nine residential buildings on the island of Hainan, within ten days, as they were built illegally. Last week, it did not make any interest payments on any of its US$ 19 billion worth of international bonds, after missing a payment deadline earlier in December. It also indicated that each investor in its wealth management product could only expect to receive US$ 1.3k each month, as principal payment for three months, irrespective of when the investment matures; a month earlier, Evergrande had agreed to repay 10% of the investment by the end of the month when the product matures. The developer advised investors that the situation was not “ideal” and that it would “actively raise funds” and update the repayment plan in late March.

To make matters worse, it seems that the company will not receive any assistance from the Chinese government because it was the Communist Party that changed its rules to limit how much money the country’s property developers could borrow, knowing that the likes of Evergrande, and other heavily indebted real estate firms, would face mega cash problems. A government bailout is out of the question as it has succeeded in sending a message that it was unhappy with the reckless spending behaviour of the sector and that it had to stop. Although the signs are that the government will not let it fail, but will allow it time to restructure, this appears to be a final warning from President Xi – Don’t Play With Me, ‘Cause You’re Playing With Fire.

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Fill Y!our Boots

Fill Your Boots!                                                                      31 December 2021

Dubai’s Department of Economy and Tourism has set up the Timeshare Portal which allows would-be operators to submit applications for timeshare properties, receive permits as licensed operators, and renew them on an annual basis. This new website, which will let timeshare stakeholders apply for permits, will help encourage increased investment from both local and overseas parties. According to Helal Al Marri, DG of the DET, the portal will “help pave the way for a world-class vacation ownership market in Dubai, while also providing suitable alternatives to tourists encouraging them to spend multiple and extended holidays in the UAE.” The DET, in collaboration with DLD and DIFC, maintains a database of property brokers, developers, establishments and operators which allows the DET to supervise and inspect facilities to manage all contractual terms and disputes.

UAE’s fuel price committee announced that retail prices will dip in January by up to 7.58%. Super 98, Special 95 and diesel have declined by 4.3% to US$ 0.722, 4.5% to US$ 0.689, and 7.6% to US$ 0.697. Covid had seen prices frozen for a year and it was only in March this year that prices were duly amended, with Special 95 and diesel retailing at US$ 0.548 and US$ 0.586. Petrol prices in the UAE were liberalised in August 2015 to allow them to move in line with the market, at which time Special 95 and diesel prices were at US$ 0.58 and US$ 0.56.

There was no surprise to see Dubai International retaining its position as the busiest international airport in December, based on seat capacity that rose 15% on the month. DXB was around one million seats ahead of its main rival, London Heathrow, followed by Amsterdam, Paris Charles de Gaulle and Istanbul. Earlier in the month, the local; airport returned to 100% operational capacity, following the opening of the final phase of Terminal 3’s Concourse A. It is expected that two million passengers will pass through DXB between 29 December and 08 January, with average daily traffic exceeding 178k travellers; the peak day will be 02 January, with an estimated 198k passengers travelling.

Having previously listed a US$ 250 million and a US$ 500 million instrument on Nasdaq Dubai, Warba Bank, a leading Kuwaiti Islamic bank, celebrated its third on Tuesday – a US$ 250 million perpetual Tier-1 Sukuk. The latest issuance was priced at 4% and oversubscribed 4.4 times. This brought the Dubai bourse’s total value of Sukuk listing to US$ 79.4 billion, ensuring its position as one of the world’s leading capital markets, as well as further strengthening ties between the capital markets of Kuwait and the UAE.

After failing to achieve appropriate levels of compliance, with the law on preventing money laundering and financing of terrorism, an unnamed exchange house, operating in the UAE, has been fined US$ 96k for flouting anti-money laundering regulations. The Central Bank reported that it acted after the firm had failed to achieve appropriate levels of compliance with the law; in mid-2019, all the country’s exchange houses were instructed to ensure compliance by the end of that year and were put on notice that failure to do so would result in penalties. It also fined another unnamed exchange house US$ 163k for using a civilian vehicle to transport money instead of using Cash-in-Transit Agent. By doing so, they violated the CBUAE regulations and knowingly put the lives of their employees at risk.

This week saw the resignation of Bader Hareb from his role as CEO of Emaar Development, a post he had held for four years, after he had replaced Nakheel executive Chris O’Donnell, who had joined the company a year earlier.

The DFM opened on Sunday, 26 December, (its last ever Sunday opening), down 81 points (2.7%) on the previous week, gained 51 points (1.6%) to close the week, and the year, on Thursday 30 December, at 3,196. Emaar Properties, US$ 0.14 lower the previous week, regained that, up US$ 0.14, at US$ 1.33. Emirates NBD and Damac started the previous week on US$ 3.69 and US$ 0.40 and closed on US$ 3.69 and US$ 0.40. On Thursday, 30 December, 79 million shares changed hands, with a value of US$ 41 million, compared to 58 million shares, with a value of US$ 48 million, on 23 December. Next week, the bourse will open from Monday to Friday, in line with new government regulations.

For the month of December, the bourse had opened on 3,073 and, having closed the month on 3,196 was 123 points (4.0%) higher. Emaar traded up from its 01 December 2021 opening figure of US$ 1.28, to close December US$ 0.05 higher at US$ 1.33 Two other bellwether stocks, Emirates NBD and Damac, started the month on US$ 3.60 and US$ 0.38 and closed on 31 December on US$ 3.69 and US$ 0.40 respectively. YTD, the bourse had opened the year on 2,492 and gained 704 points (28.3%) to close the year on 3,196 NBD and Damac started the year on US$ 3.33 and US$ 0.35 and closed 31 December at US$ 3.69 and US$ 0.40.

By Thursday, 30 December, Brent, US$ 1.75 (2.3%) higher the previous week, gained US$ 3.10 (4.1%), to close on US$ 79.20. Gold, up US$ 25 (5.2%) the previous fortnight gained US$ 7 (1.4%), to close Thursday 30 December on US$ 1,810. Brent traded higher this week as concerns about the Omicron coronavirus variant spreading, and reducing demand, eased and was also helped by a decline in US inventories.

Brent started December on US$ 71.31 and gained US$ 6.37 (8.9%), to close 30 December on US$ 77.68. YTD, it started the year trading at US$ 51.80 and has gained US$ 25.98 (50.2%) to close on US$ 77.78 at 31 December 2021. Meanwhile, the yellow metal opened December trading at US$ 1,778 and gained US$ 53 (3.0%), during the month, to close on US$ 1,831. Over the year, it has lost US$ 64 (3.4%), from its opening year balance of US$ 1,895.

Saudi Arabia’s King Salman has reiterated that the latest Opec+ production agreement, to increase output by 400k bpd in January despite demand concerns due to the rising number of coronavirus infections globally, was “essential” for oil market stability. He also urged all twenty-three members of the bloc to comply with the pact and that those efforts to maintain spare capacity had proven important to safeguard energy supply security. The country’s Energy Minister Prince Abdulaziz bin Salman said Opec+ had brought stability to oil markets through its policies and had “delivered more sustainability, more stability, more predictability and more transparency to oil markets”. The oil cartel, led by Russia and Saudi Arabia, kept 2022’s world oil demand growth unchanged at 4.2 million bpd.

It was a happy Christmas day for 75k Santander customers, as the bank mistakenly deposited a total of US$ 175 million into their accounts, as payments from 2k business accounts were made twice. The embarrassed bank posted their apologies for the gaffe and confirmed graciously that “none of our clients were at any point left out of pocket as a result and we will be working hard with many banks across the UK to recover the duplicated transactions over the coming days.”

In October, the Indian government, with its first privatisation exercise in twenty years, accepted Tata Group’s US$ 2.7 billion cash bid, along with it taking over US$ 15.3 billion of Air India’s debt, for the loss-making national carrier; the sale included 100% equity shares of Air India and Air India Express, along with a 50% stake in ground-handling company AISATS government. The deal was expected to be finalised this month, but procedural delays will see this carried over into January.

For the first time in thirty years, UK vinyl record sales have topped the five million mark, with 2021 representing the fourteenth consecutive year of growth, with year on year sales, 8.0% higher. (It is estimated that ‘Rumours’ has sold over forty million copies to date). 23% of the albums bought were on vinyl., with Abba’s Voyage the biggest seller, followed by Adele (3D), Fleetwood Mac (Rumours), Ed Sheeran (Equals =) and Amy Winehouse (Back to Black). The 2021 vinyl improvement came despite serious delays in manufacturing, caused by a combination of Covid, supply-chain issues and labour shortages, as well as a scarcity of raw materials like PVC and paper products. It is estimated the demand for vinyl outstrips manufacturing capacity by a factor of 2:1 and Adele’s 500k order for vinyl only accounted for 0.3% of the LPs pressed in 2021.

YTD to 30 September, it was estimated that more than 1.04 billion smartphones were sold – a marked 17.4% improvement on the same period in 2020, and almost 88.6 million more than in the first nine months of 2020. The technology research and consulting company Gartner noted that there had been double-digit growth levels in Q1 and Q2 but that Q3 had seen an annual 6.8% decline. The main driver behind the Q3 results was that the supply chain disruption saw a shortage of key components, such as radio frequency and power management, which resulted in delayed smartphone production, rather than a fall in demand. The top seven best-selling smartphones were Apple’s iPhone 12, (retailing at its UAE launch in October 2020 at US$ 945), Samsung’s Galaxy A12, the iPhone 11, (launched in September 2019 and retailing at US$ 800), the US$ 1.28k, big screen iPhone 12, the iPhone 12 Pro, selling at US$ 1.14k, in the UAE, Xiaomi’s budget phone Redmi 9A, and Xiaomi Redmi Note.

In the last week of 2021, Apple is nearing to become the first company to have a share value of over US$ 3 trillion as its market value reached US$ 180.95 on Tuesday – and its market cap touched US$ 2.96 trillion; it needs a share price of US$ 182.86 to reach the mark. YTD, its share value has climbed 36% and over 200% since the onset of the pandemic. Four other tech giants lag well behind Apple, with Microsoft having a US$ 2 billion market value, followed by Apple and Microsoft, the only other one trillion-dollar companies in the world; Facebook owner Meta Platforms, the world’s biggest social media network, has a market cap of US$ 962 billion.

With a clampdown by Chinese regulators ordering online stores not to offer its app, ride-hailing giant Didi Global posted a nine-month US$ 6.3 billion loss, as revenue dipped 5%. The restrictions had a negative impact on its share value that has tanked by 65% since its US IPO six months ago. Earlier in the month and following the US Securities and Exchange Commission announcing that it would delist US-listed foreign companies if their auditors did not comply with requests for information from regulators, Didi decided to leave the New York bourse and set up shop in Hong Kong. To add to the firm’s woes, it now faces increased competition in China from ride-hailing services launched by car makers Geely and SAIC Motor.

Elon Musk’s problems continue with the latest being his Starlink Internet Services project and two official Chinese complaints to the UN Space Agency that its space station had two “close encounters” with Starlink satellites. It is alleged that the incidents occurred this year, on 01 July and 21 October, and involved Musk’s satellite internet network operated by SpaceX. China confirmed that “for safety reasons, the China Space Station implemented preventive collision avoidance control,” Following the complaint, the founder of Tesla, (with a growing presence in China), Starlink and the US were heavily criticised on China’s Twitter-like Weibo microblogging platform. As an aside, SpaceX raised US$ 337 million in equity financing on Wednesday, and had already hit US$ 100 billion in valuation, following a secondary share sale in October, having raised about US$ 1.16 billion in equity financing in April. Over the past quarter, SpaceX has already launched numerous cargo payloads and astronauts to the International Space Station for NASA.

Tesla is to recall more than 475k cars in the US, comprising 356k Model 3s, for potential rear-view camera issues, and a further 119k Model S vehicles because of potential problems with the front trunk, with the 21 December Safety Recall report noting that if the primary latch is inadvertently released, the front trunk “may open without warning and obstruct the driver’s visibility, increasing the risk of a crash”. This is a worrying time for the electric carmaker, as last year it delivered 500k vehicles that almost equates to the number recalled. Tesla has also had to agree to make changes to its Passenger Play feature, which allows games to be played on its touchscreen, while the car is in motion; this feature will now be locked and unusable while the car is moving. A day later, it was confirmed that 180k Model 3 and 20k Model S were being recalled in China for the same problem.

Probably representative of the luxury car market sector globally, HR Owen, a major UK car dealership for Aston Martins, Bentleys, Bugattis, Lamborghinis, Maseratis and Rolls Royce, has reported strong demand from the ultra-wealthy high value customers. They have helped drive its profits sevenfold higher, to over US$ 18 million, (with the number of vehicles 8.7% higher at 1.15k), on revenue of US$ 526 million. For a variety of reasons -including lockdowns, soaring material costs and major supply chain problems especially with the availability of semiconductors – car makers have struggled this year and have failed to meet demand A shortage of vehicles, in the luxury market sector, has seen not only dealers capitalise on the situation but also owners who have been able to sell on at prices more than they actually paid for in the first place; if this is happening in London, it will also be the case here in Dubai for those that cannot bear to be on a long waiting list for new cars.

‘Spider-Man: No Way Home’ became the first film to gross over US$ 1 billion since the onset of Covid-19 almost two years ago. It reached this figure within twelve days of release and became the third-fastest movie to reach the billion-dollar milestone; in 2019, ‘Avengers: Endgame’ and ‘Avengers: Infinity War’ did so in five days and eleven days respectively. The last film to hit the US$ 1 million revenue figure was 2019’s ‘Star Wars: The Rise of Skywalker’. The latest instalment of the Spider-Man franchise, a co-production between Sony and Disney, has yet to be released in China, the world’s biggest cinema market. Prior to this latest Marvel Cinematic Universe film, MGM’s latest James Bond movie ‘No Time to Die’, having taken US$ 774 million at the global box office, was the highest-grossing Hollywood film of both 2021 and the pandemic.

The studio that gave the world ‘League of Legends’ has paid out US$ 100 million to settle a 2018 class-action gender discrimination case. According to California’s Department of Fair Employment & Housing, Riot Games had engaged in “systemic sex discrimination and harassment”, and that the settlement will “remedy violations against approximately 1.1k women employees and 1.3k women contract workers”. As part of the settlement, Riot agreed to workplace reforms, independent expert analysis of its pay, hiring, and promotion practices, and to be monitored for instances of sexual harassment and “retaliation” at its California offices for three years. Another gaming company, Activision Blizzard, (known for its games, ‘World of Warcraft’, ‘Overwatch’ and ‘Call of Duty’), is also in similar trouble with the DFEH, as well as having recently reached a US$ 18 million settlement, with the US Equal Employment Opportunity Commission, over claims of sexual discrimination and harassment.

It has been estimated that the total value of flight credits, that Australian air passengers are currently holding, could well be worth billions of dollars. Covid has had a major impact on passengers’ rights relating to cancelled flights. Prior to its onset, it was relatively straightforward to obtain a refund, but it does seem that the situation has changed, with airlines amending their terms and conditions, and some requesting customers to take out insurance against Covid cancellations. The pandemic has made it harder for people to understand their legal rights, as terms and conditions have been” tightened”. In the earlier days of the pandemic, the Australian Competition and Consumer Commission issued a practice guideline to the travel sector and advised travel providers to prepare to extend the expiry period of any credits and to allow consumers a reasonable period to use their credits after travel restrictions were lifted.

A 2021 survey by consumer advocacy group CHOICE found 43% of travellers had received some form of travel credit or voucher, (some with a short expiry date, others that were non-transferrable, booking fees, and restrictions how and when credits could be used), many of which terms and conditions were in favour of the carrier, and not the passenger. Maybe it is time for the Morrison government to appoint an independent ombudsman for the travel industry and consider updating the underlying structural issues with the consumer law. However, Australia is not the only country in the world not really knowing how much is “owed” in flight credits by its airlines. On a global scale, the figure could be in trillions of dollars, with, for example, Heathrow Airport having endured a harrowing 12 months as the UK experienced a slump in international flights to just over 400k a year, almost a million down on 2019.

According to the Centre for Economics and Business Research, 2022 will see the global economy top US$ 100 trillion for the first time, two years earlier than initially forecast. There are concerns that if the rate of inflation continues unabated, the world may slip back into recession as early as late 2023, and the need to bring the non-transitory elements under control is greater than ever.

With favourable Labor Department data that US new weekly unemployment claims dipped 7k to 198k in the Christmas week, the blue-chip Dow hit a new high on Thursday, extending a record-setting run; nine of the eleven major S&P 500 sector indexes traded higher. It is estimated that the recovery will continue, albeit at a slower rate, more so because reports show that the Omicron coronavirus variant in the US is likely to peak by the end of January, and growing evidence surfaced that it causes less severe illness than the Delta strain. The major problems with the US economy in 2022 will revolve around rising inflation and the supply chain logjams and whether US interest rates can help solve these anomalies.

Since Brexit, the UK fishing industry has faced many challenges, and because of it, fish exports to the EU are now subject to new customs and veterinary checks which has caused disruption and delay. In addition, some businesses have struggled to find labour, without free access to European recruitment, whilst growing tensions between the UK and the EU, and more specifically France, have not helped. To give a boost to fishing and coastal communities, the government is introducing US$ 100 million of funding to modernise UK ports and processing facilities and create jobs. Projects across the UK will be asked to compete for a share of the funding, with priority going to those that reduce carbon emissions. The Communities Inshore Fisheries Alliance said investment was needed to “significantly upgrade many port facilities around the country” and that the most significant share must go to the fishing communities, with the poorest facilities, where there is the most scope for impact.

According to retail specialist Springboard, Monday 27 December’s footfall was 32% lower than the same day in 2019 but was better than the Boxing Day figures a day earlier. On Monday, shopper numbers on the High Street, shopping centres and retail parks were all lower compared to 2019 – down 40.1%, 38.8% and 7.2% respectively; the Boxing Day numbers indicated falls of 37.7%, 48.4% and 40.2%. Some of this decline was attributable to growing fears over Covid, as well as the fact the traditional start of post-Christmas sales fell on a Sunday this year and some big-name stores, including Next, John Lewis and M&S, opted to stay closed.

Some analysts see 2022 “the year of the squeeze” for UK households exacerbated by soaring energy prices, rising taxes and higher inflation, (that could near 7% by April), all of which will leave their mark on private household consumable income. Because of inflation, real wages will only nudge 0.1% higher, whilst energy prices could cost households a further US$ 2.0k and a 1.25% hike in National Insurance contributions will rip a further US$ 0.8k from the purse strings. For many, 2022 will be a year of prices surging and pay packets stagnating.

For the second year in a row, it is expected that the UK economy will outpace the other G7 countries in 2022, with a forecast 4.8% growth compared to the likes of 4.4%, for Italy and France, Germany’s 4.0% and 3.5% for the US. Some of this improvement is attributable to the UK’s rapid booster vaccination programme and that it had faced a more severe recession than other wealthy nations during the pandemic; the economy shrank by a historic 9.8% in 2020, the worst-hit economy in the G7. The IMF is even more bullish estimating the UK economy to grow 5.0% in 2022, with HSBC estimating 4.7%, with its estimates for the other G7 nations ranging from 2.2% for Japan to Italy’s 4.3%. (The CEBR also expects the UK to record significant growth in 2022, and said it is on track to be 16% larger than France in 2036, despite Brexit). However, there is no doubt that the size of the recovery will be dependent on the impact of the Omicron variant of coronavirus, with daily figures of over 130k new cases being reported and 8.5k people hospitalised as at 27 December. In 2019, India became the fifth largest global economy, superseding the UK, but lost that position last year. Next year, it will regain the fifth spot whilst the UK will return to sixth place – a position it is expected to hold on to until 2036.

31 Mar Forecast%age31 Dec30 Jun
2022UnitRise20212021202020192018
1,800GoldUS$oz-3.38%1,8311,7761,8951,5171,285
120.0Iron OreUS$lb-31.47%106.7214.55155.791.5371.3
85.00Oil -BrentUS$bl50.15%77.7875.551.866.6753.8
210.00CoffeeUS$lb76.80%226.75156.4128.25129.2101.9
115.00CottonUS$lb44.20%112.6585.8778.1268.9572.2
23.00SilverUS$oz-11.55%23.3626.2926.4117.8615.56
4.60CopperUS$lb26.70%4.464.253.522.82.64
0.71AUDUS$-5.71%0.7260.7460.770.7020.7
1.35GBPUS$-0.44%1.3531.381.3591.3261.27
1.14EuroUS$-6.65%1.1371.181.2181.121.14
0.013RoubleUS$-7.14%0.0130.0140.0140.0160.014
7,300FTSE 10014.23%7,4037,0386,4817,5426,721
4,800CSI300-5.22%4,9406,3725,2124,0973,142
4,800S&P 50026.89%4,7664,2983,7563,2312,507
3,250DFMI28.25%3,1962,8112,4922,7652,530
8,100ASX 20019.08%7,8447,2946,5876,8025,652
55,000BitcoinUS$65.31%4801135,01529,0437,2013,694

The above table covers certain economic indicators, with two sectors standing out. Compared to all the other currencies covered in the table, the US$ dollar reigned supreme in 2021, gaining between 5.71% – 7.14% on the Aussie dollar, the euro and the rouble, whilst sterling almost held its own to the greenback. Two others – gold and silver – disappointed, down 3.38% and 11.55%, and probably will not fare much better going into 2022. Notwithstanding iron ore, that had two prior stellar years, commodities performed well with copper, cotton, Brent and coffee all climbing high – by 26.70%, 44.20%, 50.15% and 76.80%. If the impact of Covid dissipates in 2022, expect another exceptional year for most commodities. Apart from the Shanghai bourse, most stock markets performed well and there is no reason not to see much of the same in 2022 as economies open up and supply chain issues are rectified.

Over the year, the greenback surprised many so-called experts by the US Dollar Index trading more than 7.0% higher, its biggest annual gain in six years, mainly attributable to strong domestic economic growth and even more lockdowns as Delta and Omicron variants took hold. It is a known fact that in times of crisis the US dollar is seen as a safe haven. There is no doubt that 2022 will be the year that interest rate hikes will return, and that can only be good news for the currency which could jump a further 4% in 2022. One caveat is that growth will be dependent on the US Senate approving Joe Biden’s US$ 2 trillion Build Back Better Framework.

Meanwhile, sterling, boosted by the Johnson government’s swift vaccine roll-out programme, ended 2021 6% higher compared to the Euro, but 0.4% lower on the US$. Towards the end of the year, the advantage afforded by its quick vaccine roll-out was nullified, as other countries caught up. Other factors in play, that could have a negative impact on the currency, include ongoing Brexit tensions, ballooning inflation and tax increases; but other countries are facing similar problems so their currencies will also be affected. However, the UK surprised the market by being one of the first global major economies to increase rates – by 0.15% to 0.25% – with more to come, and this could boost sterling.

With continuing inflationary pressure and almost non-existent wage growth, there will be no surprise to see the Euro struggling again in 2022, having registered 8% and 6% declines against the greenback and sterling this year. The fact that the ECB, contrary to the Fed and the BoE, seems steadfast in its stance not to lift rates in the coming year is another factor working against any improvement in the currency over the next twelve months. If the ECB do nothing in this regard, the Euro is certain to lose up to 4% in value, but if circumstances were to change – and rate hikes were introduced earlier and the course of  its monetary policy amended – the currency could keep its head above water.

Known as a “commodity currency”, the Australian dollar is mainly driven by exporting metals and minerals for income, and, in 2021, has been helped by the Bloomberg Spot Commodity Index rallying over 20% in the year. With the price of raw materials, soaring on the back of pent-up demand, mainly in China, the omens for the Australian economy and currency are bright. However, the world’s biggest commodity consumer – and Australis leading trade partner – will see its GDP growth hit a thirty-year low, at 4.9%, not helped by the Evergrande debt crisis and souring trade relations with the US. Demand for iron ore, one of Australia’s biggest exports, has diminished and with it, its price. Last May, prices jumped to a record US$ 237 a tonne but had crashed by 64% to US$ 85 by mid-November, (still a handy profit given cost of production is around US$ 20 per tonne). The best guestimate for the dollar sees it hovering around the US$ O.69 – US$ 0.71 level.

When it comes to cryptocurrency, anything can happen and volatility will remain the name of the game. But the “currency” continues to gain traction in the market as it is seeing increased demand for use as a payment option. Regulators and central banks are fearful of this not so new disrupter and will do everything to keep this financial system at bay, claiming that it is used to launder money and scam consumers. The hypocrisy behind this argument is that this is exactly what many traditional international banks have been doing in the past. 2021 saw another topsy turvy year, with Bitcoin opening 2021 on US$ 29.0k, peaking at US$ 67.6k and closing on 31 December at US$ 48.0k. Next year will be more of the same and the advice would be to buy in on a dip and exit once it goes up more than 10% – in other words, do not get greedy.

2021 proved to be a good year for most of the global stock markets, with the three US bourses all posting annual gains in excess of 19% and the likes of DAX and the MSCI World Index posting gains of nearly 16% and almost 21% respectively. Interestingly, one of the best performing markets was our own DFM – up 28.25%.  Apart from Australia’s ASX gaining more than 19% on the year, Asian markets either showed less impressive gains, (such as Japan’s Nikkei, 5.3% higher, and Shanghai Composite, 3.6%), or losses in the case of Hong Kong’s Hang Seng index, down 15%, and New Zealand’s NZX, 1.2% lower.

This year was one of the biggest years ever for retail investors to get involved, with share markets trading near record highs, as interest rates maintain levels of almost zero. The investment mantra for many was ‘TINA’ and this is likely to continue into the New Year, with investors still hoping Covid will become less restrictive and that the global economies continue their recoveries at a quicker pace, resulting in higher profits for the companies in which they have bought shares. The ‘There Is No Alternative’ segment works on the theory that, with historically low rates, it was – and will continue to be – a better option to invest in the stock market than earn little or nothing depositing money in banks. Furthermore, factory closures and lockdowns hit manufacturing production, reducing the amount of available goods for sale and increased the level of ‘enforced savings’. The canary in the coal mine is if inflation continues to surge and global central banks decide to hike interest rates and unwind their emergency Covid stimulus measures. (In 2021, most central banks were wrong when they assumed that the spike in consumer prices would be ‘transitory’, owing to supply disruptions and pent-up demand in lockdowns).

Some shares will have sizeable returns, other not so, whilst some will fall in value. For example, in 2021, shares in the following four Australian sectors posted 20.0%+ returns – telecommunications, consumer discretionary, financial and real estate; five other sectors – industrial, healthcare, consumer staples, materials and utilities – recorded gains of between 5% – 12%. Only two sectors were in negative territory – energy and technology at -1% and – 2%. The two factors to look out for are how long will rates be kept at historically low levels and how will economies cope when official inflation rates top 6% but real inflation hits double digits? Whilst the going continues to look promising, at least in Q1, and the inevitable storm clouds some time away, there is still time for stock market investors  to Fill Your Boots!

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Ain’t Got No!

Ain’t Got No!                                                                                     23 December 2021

For the past week, ending 23 December, Dubai Land Department recorded a total of 1,685 real estate and properties transactions, with a gross value of US$ 2.02 billion. It confirmed that 1,137 villas/apartments were sold for US$ 763 million, and 177 plots for US$ 586 million over the week. The top three land transactions were for two plots of land in Al Hebiah Fifth, worth US$ 207 million and US$ 72 million, followed by one for US$ 40 million in Palm Jumeirah. The most popular locations in terms of volume and value were Jebel Ali First, with 40 transactions, totalling US$ 31 million, followed by Wadi Al Safa 5, with 37 sales transactions, worth US$ 49 million, and Hadaeq Sheikh Mohammed Bin Rashid, with 19 sales transactions worth US$ 90 million. Mortgaged properties for the week totalled US$ 447 million and 79 properties were granted between first-degree relatives worth US$ 49 million.

On Monday, 20 December, there had been 246 sales transactions, worth US$ 166 million, and mortgage deals of US 41 million, in addition to ten gift transactions amounting to US$ 5 million. Data released by Dubai Land Department also confirmed that the sales covered 223 villas and apartments, worth US$ 137 million, and 23 land plots at US$ 29 million. The mortgages included 38 villas and apartments, worth US$ 30 million, and 18 land plots valued at US$ 11 million, bringing Monday’s total realty transactions to US$ 212 million.

Dubai is expected to record property sales transactions worth over US$ 40.9 billion this year, more than double of the US$ 19.75 billion in 2020; by mid-December, the Dubai Land Department estimates there had been more than 57.5k transactions, worth US$ 38.8 billion. Transaction volumes are expected to remain high in H1 before stabilising for the rest of 2022. Some would say that 2020 was a year of decline and reflection, followed by a year of recovery and sustained growth, with 2022 a year of consolidation and mature expansion. There is no doubt that Dubai is probably considered one of – if not – the safest city in the world and this unique selling point is an important driver that will keep the emirate’s realty bubbling, as an increasing number of international buyers see the emirate as an investment haven.

According to FAM Properties, Dubai rents will continue to rise next year, with strong demand especially in the high-end and beachfront properties, included newly handed over projects in Bvlgari Resort & Residence and the Palm. Asteco estimated that, in Q3, apartment and villa rental rates continued their upward trend rising by 3% and 6% respectively, with annual increases of 19% and 3%. Coldwell Banker UAE “anticipate a moderate rise in the overall market in 2022, especially in prime apartment builds providing high-quality units, modern amenities and services”. Although the consultancy notes a steady rental rise in rents for villas and gated communities it considers that apartment buildings, not in communities, particularly the older properties situated in old Dubai may not do as well and may see rents drop in 2022.

Last Friday, Dubai Harbour welcomed the 252 mt AIDAbella and the 323 mt Costa Firenze – arriving on its maiden voyage to Dubai – inspired by the Italian Florentine Renaissance, with an interior intended to evoke classic Italian streets and town squares. The two cruise ships, with 2.5k passengers and 1.9k crew, berthed at Dubai Harbour’s twin cruise terminals. Capable of processing over 3.2k passengers an hour, it is also the largest standalone dedicated twin cruise terminal centre in the eastern hemisphere.The terminals are located on a pier stretch of over 910 mt and can accommodate a complete passenger turnaround of two cruise ships simultaneously.Al Shamal Holding, a one-person company with limited liability formed five years ago, is the owner and manager of Dubai Harbour, with plans to make it an exceptional seafront district. Dubai’s 2021-2022 season, which commenced in October, is expected to welcome 126 ship and over 500k cruise visitors – a huge bonus for the Dubai’s tourism sector.

The Dubai World Trade Centre has become the latest government asset to be remodelled as a new economic sector to be a comprehensive zone and regulator for virtual assets and crypto, including digital assets, products, operators and exchanges. It will hook up with private sector companies, and other Dubai stakeholders, to create a global hub, whilst enforcing rigorous standards for investor protection, Anti Money Laundering (AML), Combating the Financing of Terrorism (CFT) compliance and cross border deal flow tracing. The WTC will not only provide and oversee a new world-class regulatory framework of Virtual Asset legislative and enforcement policies, but also deliver and oversee an excellent regulatory framework of Virtual Asset legislative and enforcement policies. The Authority has also signed a cooperation agreement with Binance, the world’s leading blockchain and cryptocurrency infrastructure provider, to establish a new international Virtual Asset ecosystem.

This week, the RTA’s  108th Open Auction for Distinctive Vehicle Number Plates raised US$ 10 million. The top five numbers of the one hundred fancy plates on offer – Q22, Z31, V10000, W500 and O66666 – raised US$ 1.36 million, US$ 768k, US$ 251k, US$ 229k and US$ 229k respectively.

As a positive indicator that the airport’s and tourism industry’s numbers are rising quicker than expected is the fact that they will exceed pre-pandemic levels in the remaining few weeks of 2021. DXB’s Terminal 3 is expected to handle more than 1.6 million passengers in the final two weeks of the year, after exceeding one million in October and one million a week in November. Following the reopening of the final phase of Concourse A at Terminal 3 in DXB, the world’s busiest airport, by international traffic, is now operating at its full capacity. Meanwhile, Emirates, the main user of DXB, has restored 90% of its network and is on track to reach 70% of its pre-pandemic capacity by the end of the year. It is expected that 2021 annual passenger traffic will reach 28.7 million by 31 December and this figure will almost double to 57 million in 2022.

The DHL Global Connectedness Index ranked the UAE fourth most globalised country, (out of 169 nations) and the number one ME country, ahead of Qatar 31st Bahrain 39th, Saudi Arabia 42nd, Lebanon 54th, Kuwait 56th and Jordan 61st. The Netherlands, Singapore and Belgium were ranked the top three.  Along with Mexico, the Netherlands, Sierra Leone and Vietnam, the UAE was one of the five countries that have stood out for their strong or rising global connectedness over the past two decades.  The index measures globalisation, based on four main pillars – the flows of international trade, capital, information and people – as well as tracking both the size of countries’ international flows relative to their domestic activity and their geographic reach around the world. The country performed well in trade, (scoring 83 out of 100) and 73 out of 100 on both information flows and people flows. Overall, the report did note that the pandemic had caused a “modest” decline in global connectedness in 2020, followed by clear signs of recovery in 2021. International movement of people was hit the hardest, and they are on track to recover the slowest, whilst international travel remained more than 80% down in the first half of 2021.

To ensure the adoption of best practices in real estate financing and risk management, the UAE Central Bank has drawn up tighter regulations. The new enhancements require banks to review and improve their internal policies to enhance sound underwriting, valuation and general risk management; the main aim is to supervise local banks’ exposure in this field. Banks will be given a year to enhance their policies and procedures to be in line with the new amendments.

Dubai Islamic Bank has launched a “fun” digital offering, named Rabbit, targeting more technology-savvy millennials and helping the unbanked in the UAE, and other heavily populated markets, in which the UAE’s biggest Sharia-compliant lender operates, to get access to the formal financial system. Such countries include Indonesia, Pakistan and Kenya where DIB will work with regulators to introduce their new app, which is available in Apple and Android stores. It was initially launched with a current account, globally accepted debit card, and payments and money transfer transfers, with credit card being introduced later.

The DFM opened on Sunday, 19 December, up 153 points (5.9%) on the previous week, shed 81 points (2.7%) to close the week, on Thursday 23 December, at 3,145. Emaar Properties, US$ 0.05 higher the previous week, closed, US$ 0.14 lower, at US$ 1.19. Emirates NBD and Damac started the previous week on US$ 3.79 and US$ 0.38 and closed on US$ 3.69 and US$ 0.38. On Thursday, 23 December, 58 million shares changed hands, with a value of US$ 41 million, compared to 208 million shares, with a value of US$ 130 million, on 16 December.

By Thursday, 23 December, Brent, US$ 0.94 (1.2%) lower the previous week, gained US$ 1.75 (2.3%), to close on US$ 76.10. Gold, up US$ 18 (5.2%) the previous week gained US$ 7 (0.4%), to close Thursday 23 December on US$ 1,810. 

Boeing and Airbus have joined forces and have called on the US government to delay the rollout of new 5G phone services, warning that the technology could have “an enormous negative impact on the aviation industry.” With deployment of 5G services scheduled to start, within two weeks, there are concerns that C-Band spectrum 5G wireless could interfere with aircraft electronics and that “5G interference could adversely affect the ability of aircraft to safely operate.” Industry research found that if the Federal Aviation Administration’s 5G rules had been in effect in 2019, about 345k passenger flights and 5.4k cargo flights would have faced delays, diversions or cancellations. This month, the FAA issued airworthiness directives warning 5G interference could result in flight diversions; there are calls for a further delay in its implementation but, according to the US wireless communications industry pushing back deployment one year would reduce economic growth by US$ 50 billion.

With his company valued at US$ 1 billion plus, and himself being the world’s richest person, Elon Musk has declared that he “will pay more taxes than any American in history this year”; he confirmed earlier in the week that he would be paying more than US$ 11 billion in taxes this year. Days earlier, Democratic US Senator Elizabeth Warren said that the Tesla founder, and major shareholder, should pay taxes and stop “freeloading off everyone else” after Time magazine named him its “person of the year”. Since the beginning of November, Musk has sold nearly US$ 14 billion worth of Tesla shares.

According to PitchBook Data, it is estimated that venture capital funds have poured about US$ 30 billion into crypto, or more than in all previous years combined for the little more than a decade-old technology. Over the past three years, this has grown from US$ 8 billion, over which time period, Bitcoin has climbed by more than 1.3k%. The US$ 30 billion tally includes fundraising rounds raised by the likes of Robinhood Markets and Revolut, and US venture capital transactions investment, with some US$ 7.2 billion in deals, four times the previous record set in 2018.

It seems that investors are funding anything and everything, including former niche sectors such as NFTs (non-fungible tokens). Dapper Labs, the NFT platform behind CryptoKitties, raised US$ 350 million in March from investors that included basketball legend Michael Jordan, pushing its valuation to US$ 2.5 billion. Crypto derivatives exchange FTX closed a  US$ 1 billion Series B funding round in July that pushed its valuation to US$ 18 billion. Last month, crypto payments infrastructure provider MoonPay, closed a US$ 555 million round, increasing its valuation to US$ 3.4 billion, whilst Sky Mavis, the developer of Axie Infinity, raised more than US$ 150 million, at a US$ 3 billion valuation, in October for the crypto-based online game.

Staggering figures from the US Secret Service indicate that a minimum of US$ 100 billion has been stolen from relief programs, (estimated to be in the region of US$ 3.4 trillion), established to assist businesses and people who lost their jobs due to the pandemic. The agency reckons that it has more than nine hundred active criminal investigations into pandemic fraud and that the figure does not include those already prosecuted by the Justice Department. In addition, the US Labor Department reported about US$ 87 billion in unemployment benefits could have been paid improperly, with a significant portion attributable to fraud. The Secret Service said it has seized more than US$ 1.2 billion while investigating unemployment insurance and loan fraud and has returned more than US$ 2.3 billion of fraudulently obtained funds by working with financial partners and states to reverse transactions. In the initial stages, the Secret Service confirmed that its focus was on fraud related to personal protective equipment, (maybe they could have helped the UK government, with reports that some were “filling their boots”, at the expense of the taxpayer).

UK’s Financial Conduct Authority has fined HSBC US$ 85 million for failings in its anti-money laundering processes over an eight-year period up to 31 March 2018. The watchdog reported that the bank had made a string of failings, including inadequate monitoring of money laundering and terrorist financing scenarios until 2014, and poor risk assessment of “new scenarios” after 2016. HSBC was also found to have had inappropriate testing and did not check the accuracy and completeness of data in monitoring systems. Like it seems in similar cases, many banks get a “discount” if they do not dispute the findings; in this case, it resulted in its penalty being deducted from US$ 120 million.

Covering about half of fares – including season tickets on most commuter routes – regulated rail fares in England will rise by 3.8% from March. This will be the biggest annual increase in nine years, with fare rises normally based on the preceding July’s Retail Prices Index measure of inflation plus 1%, but this time the Department of Transport has capped the increase to 3.8%. This would see Brighton to London and Liverpool to Manchester fares rise by US$ 257 to US$ 7,025 and by US$ 139 to U$ 3,795 respectively. During the pandemic, government support to keep rail services running topped US$ 18.65 billion.

Like Evergrande, which has around US$ 300 billion of debt, another of China’s bigger property developers has unveiled plans to restructure its debts, after defaulting on billions of dollars of bonds, with an added problem that it may have been duped out of US$ 313 million by Wingskengo, a BVI investment management. China Fortune Land Development had appointed Wingskengo, to earn annual returns of between 7% to 10%, and in turn they advised the Chinese developer to transfer the money to China Create Capital. Now it has advised the Shanghai Stock Exchange, (on which its shares are traded), and the police, that it has “lost contact” with the wealth manager that has US$ 313 million of its money. To add further misery to its long-suffering shareholders, its share value has lost more than 70% of their value this year, having defaulted on billions of dollars of bond debt in 2021 alone. However, it is reported that earlier in the month it had agreed a debt restructuring scheme with a group of creditors. Like other debt-laden developers, they were badly impacted when Chinese authorities launched a sweeping crackdown on excessive borrowing in the sector last year. Another developer, Kaisa, with a US$ 12 billion offshore debt, missed a US$ 400 million repayment last week.

Having been kicked off the New York Stock Exchange, like a growing number of other US-listed Chinese firms, China Mobile aims to raise up to US$ 8.8 billion when it lists its shares on the Shanghai bourse. The world’s largest mobile phone company joins its smaller rivals – China Telecom and China Unicom – which have already made the move back to their home country; all three were delisted from the New York Stock Exchange after a Trump-era decision to restrict investment in Chinese technology companies. A week after its New York listing was pulled, when Americans were banned from investing in the firm, Chinese artificial intelligence start-up SenseTime relaunched its US$ 767 million Hong Kong share sale. Although denied by the company, US regulators have accused it of developing facial recognition software to determine people’s ethnicity, with a focus on identifying ethnic Uyghurs. Following the announcement after the US market watchdog had unveiled tough new rules for Chinese firms that list in America, Chinese ride hailing giant Didi Global said it planned to take its shares off the New York Stock Exchange and move its listing to Hong Kong.

According to Cloudflare, an IT security company, TikTok is the world’s most popular online destination taking over from Google. One of the main drivers behind the change was the Covid pandemic, as lockdowns meant people were stuck at home and looking for entertainment. By July this year, the Chinese app had been downloaded more than three billion times and has now more than one billion active users. Owned by Bytedance, the social network is called Douyin in its home country, and runs on a different network, to comply with China’s censorship regulations. As one of the only globally successful Chinese apps, many countries’ politicians and regulators have raised concerns about security and privacy, and last year TikTok was forced to deny it was controlled by the Chinese government.

The UK Supreme Court has overturned a Court of Appeal verdict that prevents Venezuelan President Nicolás Maduro from accessing US$ 1.95 billion  of gold stored with the Bank of England. The ruling means that only opposition leader Juan Guaidó, who the UK considers as the legitimate leader, can decide what happens to the gold. In a highly controversial 2018 poll, boycotted by the Opposition, Maduro was re-elected to a further six-year term. He has been blamed for mismanaging the country’s economy, highlighted by soaring unemployment, a much devalued bolívar, a failed public service and rising poverty. The country has been sanctioned by a group of nations, including the US, UK, EU, Canada, Switzerland, Panama and Mexico since 2014 over corruption, human rights violations and the suppression of democracy.

With output tanking by 28.7% to 75.8k units in November, UK car production hit its lowest level since 1984, as the effects of the pandemic continue to savage the industry. Calling the figures “worrying”, the Society of Motor Manufacturers and Traders blamed a continuing shortage of semiconductors, which will “likely to affect the sector throughout next year”, and also noted that the start of full Brexit customs, on 01 January, controls could also hit firms,

marking the fifth consecutive month of decline. Electric, plug-in hybrid and hybrid cars accounted for 32.7% of all cars made last month, with battery electric vehicle output expanding 52.9% to 10.4k units, hitting a new high of 13.7% of all production.

The Q3 UK economy grew at a slower pace than first estimated, with updated data showing a 0.2% to 1.1%, blaming weaker consumer spending, and the impact of energy companies going out of business. Latest figures still show the economy is 1.5% down on the pre-pandemic levels and some commentators note that things may become worse as this data precedes the onset of the Omicron variant. Furthermore, business investment also fell by 2.5% in Q3 and was nearly 12% below its pre-pandemic level. UK’s recovery to its pre-pandemic economy remained behind most G20 nations, including France, Germany and the US, in inflation-adjusted terms.

Rishi Sunak’s latest US$ 1.33 billion assistance package is aimed at those businesses impacted by the rise in Covid case. They include the leisure and hospitality sector, which has witnessed a slump in bookings and a marked reduction in footfall, to the tune of up to US$ 8k per premise which will cost the government an estimated US$ 909 million; theatres and museums get a miserly US$ 40 million. The Chancellor has also set money aside to assist firms, with less than 250 employees, with the cost of sick pay for Covid-related absences by reintroducing the Statutory Sick Pay Rebate Scheme. Businesses, other than hospitality and, can apply for some of the funding under the Additional Restrictions Grant, which has been topped up with US$ 136 million. Although he opined that the new measures announced were comparable to the grants that were on offer when businesses were fully closed earlier this year, many analysts consider that the assistance falls well short of actual requirements.

Banque du Liban Governor Riad Salameh has indicated that Lebanon will need to receive between US$ 12 billion – US$ 15 billion from its partners to kickstart its economic recovery and shore up fast-diminishing foreign currency reserves.  The World Bank describes the current unprecedented economic crisis in the country as one of the worst in modern times, as more than 80% of the population live in poverty and the Lebanese pound has lost more than 90% of its black-market value. Since 1997, the pound has been officially pegged at 1.5k to the greenback; at the beginning of the month, it traded for nearly 30k to the dollar on the black market earlier this month in a record low. The Governor said “our quota in the IMF is US$ 4 billion” and “if countries add to it, we could reach US$ 12 billion to US$ 15 billion, an amount that could help start Lebanon’s recovery and restore confidence.” Before the onset of the current crisis in 2019, the country’s mandatory reserves stood at US$ 32 billion; now it is at US$ 12.5 billion. Discussions with the IMF, that started last year, have been relaunched in recent weeks.

Despite mounting inflationary pressure, now at over 21%, and a currency that is going down the toilet, trading at below 15 lira to the greenback, Turkey – or seemingly Recep Tayyip Erdogan – has cut interest rates again for the fourth straight month. With the currency sinking a further 5.7% on the news, the President announced a 50% hike in the country’s minimum wage to US$ 275 to alleviate some of the economic pain that his policies are causing to a majority of Turks. Wishing for a high growth, low interest-rate environment, the President, in contrast to a raft of economic experts, believes that lower rates will stimulate the economy, create jobs and fuel investment in the country because it keeps borrowing costs low. The only problem is that the exact opposite is occurring, despite high economic growth in an emerging market. The measures are intended to mitigate retail investors’ demand for dollars and bring to an end three months of turmoil for the nation’s currency. The lira has lost more than half of its value against the US dollar since September, with declines gaining pace after Mr Erdogan last month unveiled an economic model that relies on lower borrowing costs and a cheaper currency.

This week, the president pulled the proverbial rabbit out of his hat, announcing that his government will make up for losses incurred by holders of lira deposits should the lira’s declines, against hard currencies, exceed interest rates promised by banks; he also introduced a new programme that will protect lira balances from future adverse exchange fluctuations, noting that “from now on, none of our citizens will need to switch their deposits from the Turkish lira to foreign currencies because of their concerns that the exchange rate fluctuations might wipe out gains from interest payments”. He also commented that “Turkey has neither the intention nor the need to take the slightest step back from the free-market economy and the foreign-exchange regime”. Some of the other steps include:

  • the authorities will offer non-deliverable forwards to help exporters mitigate foreign-exchange risks emanating from the elevated levels of volatility
  • withholding tax for investments in lira notes issued by the government will be reduced to 0% from 10%
  • the government will match 30% of all contributions made by private-sector workers to the optional pension system, up from the current level of 25%

Faced by two contrasting problems – the highest inflation rate in decade, at 5.1%, and the threat of the rapid spread of the new Omicron variant – the Bank of England raised base rates from 0.1% to 0.25%; this will inevitably lead to a slowing of consumer spending. The BoE, which for so long had reckoned that the higher inflation figures were “temporary” and would revert to its 2.0% target, have yet again got their forecasting horribly wrong and finally had to raise rates to tackle strong inflationary pressures building up in the economy; it now expects that inflation will top 6.0% early in 2022, with a rise in gas prices playing an important role in driving the figure higher. There are some analysts who consider that the bank’s move will do little to reducing inflation, as many of the rising costs are attributed to global factors, outside its control, with it noting that “consumer price inflation in advanced economies has risen by more than expected.”

In a bid to assist low-income countries still suffering from the impact of the pandemic, the IMF has approved the extension of US$ 115 million in debt relief to 25 eligible nations from 11 January to 13 April 2022. This was the fifth – and final – tranche of a two-year debt service relief from the Catastrophe Containment and Relief Trust and brings the total to US$ 964 million. It is estimated that the pandemic fall-out has caused more economic damage than that of the 2008 GFC, particularly in Africa and South Asia. There is no doubt that the subsequent ongoing global economic recovery has been highly uneven, with the emerging markets/low income countries suffering the worst and this will continue with the world economy forecast to  sustain as much as US$ 5.3 trillion in losses over the next five years. In 2020, global debt surged to US$ 226 trillion, 28% higher on the year, to 256% of GDP; it was the largest one-year debt surge since WWII. Both emerging markets and low-income countries are also facing elevated debt ratios driven by the large fall in nominal GDP in 2020. Not only do they have to face record-high public and private debt levels, low-income countries have limited resources to deal with new virus mutations, restricted access to funding, higher borrowing costs and rising inflation. The end result is that the poverty levels are rising at an alarming rate and as we approach 2021, a growing number of the world’s population Ain’t Got No!

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Glory Days!

Glory Days!                                                                                         16 December 2021

Latest data from the Dubai Land Department confirms that property sales transactions surged 88.4% annually in the first eleven months of the year, as the UAE’s economy has seen a strong post-pandemic recovery. The 55.6k transactions, valued at US$ 36.9 billion, have made this the best year since 2014, with the main drivers supporting the recovery including Expo 2020 Dubai, new measures by the government, including the expansion of the golden visa scheme and visas for retirees, and the roll out of mass inoculations. On a month-on-month base, Mo’asher, Dubai’s official monthly house price index rose 2.12%, and the general consensus is that prices will continue higher into the new year, albeit at a slower pace.Qantas Toyota

According to Valustrat, the UAE property market prices will continue their upward trend into next year, attributable to many factors, including supportive economic reforms and an accelerated vaccination programme. Furthermore, there will be an expected surge of international investors, looking to buy in the emirate, whilst developers will still be offering attractive packages, and mortgage rates, will continue at record lows, even though they may nudge marginally higher off their record lows in 2022. However, it did note that the price increase “is sustainable but it will only be toned down by the fact we have a lot of supply coming in, particularly in the apartment submarket”, citing that developers are expected to deliver up to 60k units in 2022. A Knight Frank study last month reported that Dubai residential property prices were 21.0% higher at US$ 336 per sq ft in the first ten months of the year.

Although Dubai’s November IHS market PMI remained flat, month on month, at 54.5, its non-oil economy continued its upward trend, with the joint-strongest improvement in operating conditions since October 2019. The positive data was attributable to a pick-up in new business, (on the back of higher tourism numbers and easing of restrictions), and a rebound in international travel, linked to Expo 2020 Dubai; by 05 December, more than 5.6 million visitors had visited the Expo site, (28% of the total emanating from overseas). All three monitored sectors – travel/tourism, wholesale and retail – showed improvements, whilst output expanded, as companies reduced their charges to attract more customers. Driven by higher demand, businesses also increased their input purchases.

For the first ten months of the year, Dubai welcomed 4.88 million visitors, including over one million in October; during that period, the hospitality sector sold 9.4 million room nights, compared to seven million room nights in the same period in 2019, also driven by a robust domestic tourism market and the knock-on effects of Expo 2020 Dubai. The latest tourism figures were released at the second bi-annual City Briefing of 2021, held by the Department of Economy and Tourism, attended by over 1.1k representatives from the sector, to provide stakeholders with key updates on the tourism sector’s growth and insights into current and future strategies and global marketing campaigns. In an October YTD study, occupancy was at almost 64%, while the length of stay showed a 12.2% increase from 4.1 nights to 4.6 nights. During this period, there were 24.74 million occupied rooms nights across the emirate at an average daily rate of US$ 105, with room inventory 6% higher than in 2019.

Today, Emirates received their 153th and the final and the 251st Airbus A380 ever to be built. Although several other carriers have already stopped using the Jumbo, which started commercial flights in 2007, the Dubai airline looks set to continue using it for many years to come. It is still the world’s largest passenger jet, with a standard configuration for 545 passengers; it has an 80 mt wingspan and a maximum take-off weight of 560 tonnes.

Based on financials, reputation, company’s age, value of projects completed and projects under construction, Forbes Middle East has unveiled its “Top 50 Real Estate Developers In MENA 2021” list. To nobody’s surprise, Emaar Properties, with total assets valued at US$ 34 billion, led the field, followed by Abu Dhabi-based Aldar Properties, with US$ 11.3 billion total assets as of September 2021. Seventeen of the fifty developers (and four in the top five) were based in the UAE, with Saudi Arabia, Egypt, Kuwait and Qatar – with numbers of eleven, seven, six and three making the top five.

The UAE nudged one place higher to 23rd in the IMD World Competitiveness Centre’s World Talent Report 2021; it maintained its top position in the Arab world and second in the Mena, behind Israel’s 22nd position. The survey focuses on three factors – investment and development, appeal and readiness. The country was ranked first in readiness of skilled labour, competent senior managers and student mobility inbound and appeal for zero personal income tax sub-indexes.

The latest Kearney’s Global Retail Development Index of thirty-five emerging markets has listed the UAE’s retail sector fourteenth. It bases its findings on a set of twenty-six factors and four key variables to determine markets that are growing, attractive, and relatively risk free. It noted that this was due to many factors, including its resilience during the pandemic, a raft of progressive government reforms and rapid digitalisation. With cash payments rapidly becoming a thing of the past, retailers have embraced technology adopting digital payment technologies such as mobile wallets and mobile payment apps. The consultancy also observed that the retail sector had benefitted from the general ease of doing business in the country, as well strong government support for start-ups and SMEs, which in turn encourage FDI. Another factor driving the sector forward is that the UAE is the regional leader when it comes to on-line spending at US$ 2.6k, compared to the global average of US$ 1.2k and the Mena average of US$ 629.

The Dubai Supreme Council of Energy confirms that the emirate has reduced its carbon emissions by 33% last year, more than double the 16% target of the Dubai Carbon Abatement Strategy 2021. These latest figures indicate that Dubai is well on its own way to becoming a carbon-neutral economy by 2050. This is part of the strategy of HH Sheikh Mohammed bin Rashid Al Maktoum to make Dubai a global hub for the green economy and sustainable development. Under the auspices of DSCE, there are other entities all working together to achieve the Ruler’s 2050 target. They include the Dubai Clean Energy Strategy 2050, the Dubai Net Zero Emissions Strategy 2050, (to provide 100% of energy from clean energy sources by 2050), and the Dubai Demand Side Management Strategy, which aims to reduce electricity and water demand by 30% by 2030.

Latest National Emergency Crisis and Disaster Management Authority guidelines confirm that a Hosn Green Pass and a negative PCR test, with 96-hour validity, will be mandatory for all those attending events this holiday season; it also has introduced an 80% capacity limit for all Christmas and New Year parties in the country, as well as 1.5 mt physical distancing guidelines being in place, except for members of one family  who are allowed to be be seated without adhering to social distancing protocols. 

DP World is again in the news, this time signing an agreement with the Government of the Democratic Republic of the Congo for the development of the country’s first deep-sea port at Banana. Earlier in the year, there was a signing of a term sheet, summarising the agreed amendments to the initial contract signed in 2018. The world’s leading provider of smart logistics plans to begin the port’s construction within twelve months, initially developing a 600 mt quay, with an 18 mt draft, capable of handling the largest vessels in operation. It will have a container handling capacity of about 450k TEUs (20-foot equivalent units) per year, and a 30-hectare yard to store containers.  Its development will be a boon for the local economy, attracting direct calls from larger vessels from Asia and Europe.

At the Central Bank’s fifth board meeting of the year, it was decided that local banks will be closely monitored in relation to internal policies regarding loans and management of real estate risk exposure. The aim of the exercise is to “improve identification, benchmarking and oversight of real estate exposure.” The meeting also discussed a proposal for conducting a study on a job nationalisation programme and Emiratisation of leading professions by qualified UAE citizens in the banking and insurance sectors. It also approved the Retail Payment System, the Large-Value Payment Systems (LVPS) and Card Schemes Regulation and approved amendments to the licensing and monitoring of exchange business. The meeting approved updates and amendments to the Targeted Economic Support Scheme (TESS) to contain the repercussion of COVID-19 and decided to extend capital buffer and stable funding relief for a further six months to 30 June 2022.

An unnamed bank has been fined over US$ 5 million by the Central Bank of the UAE for failing to comply with the anti-money laundering and combatting the financing of terrorism and illegal organisations (AML/CFT) regulations; the watchdog also took administrative measures against the bank for not adhering to the country’s banking norms. This follows on from the Central Bank tightening up regulations and imposing financial sanctions on six exchange houses operating and also fined them for violating AML and CFT laws.

Pursuant to Article 14 of the Federal Decree Law No. (20) of 2018 on Anti Money Laundering and Combatting the Financing of Terrorism and Financing of Illegal Organisations, the Central Bank imposed financial sanctions totalling almost US$ 100k on six Hawala providers operating in the country. The six companies were each fined almost US$ 14k each for failing to provide timely registrations on the GoAML reporting system.

Emirates Central Cooling Systems Corporation, the world’s largest District Cooling Services provider, becomes the fourth government and state-owned company that will be listed on the DFM. This is part of the strategy of Dubai’s Securities and Exchange Higher Committee to increase the size of the Dubai stock market in the emirate to US$ 817 billion. The company, established in 2003, is an enabler to the realtor sector and currently has a 79% market share in Dubai’s District Cooling market. Serving 140k corporate and individual consumers, it has 84 plant rooms and a network extending over 350 kilometres, with a cooling capacity of more than 1.64 million refrigeration tons.

The DFM opened on Sunday, 12 December, 287 points (8.5%) lower the previous fortnight, gained 153 points (5.9%) to close the week, on Thursday 09 December at 3,226. Emaar Properties, US$ 0.11 lower the previous fortnight, closed, up US$ 0.05, at US$ 1.33. Emirates NBD and Damac started the previous week on US$ 3.60 and US$ 0.38 and closed on US$ 3.79 and US$ 0.38. On Thursday, 16 December, 208 million shares changed hands, with a value of US$ 130 million, compared to 297 million shares, with a value of US$ 115 million, on 09 December.

By Thursday, 16 December, Brent, US$ 4.49 (1.8%) higher the previous week, shed US$ 0.94 (1.2%), to close on US$ 74.35. Gold, US$ 97 (5.2%) lower the previous fortnight gained US$ 18 (1.0%), to close Thursday 16 December on US$ 1,803. 

Over the next eight years, Toyota is planning to invest US$ 70 billion to electrify its automobiles by 2030, half of it to develop a battery electric vehicle (BEV) line-up. The carmaker estimates that BEV cars will only account for about a third of production, (equating to 3.5 million vehicles), come 2030. This is a lot lower than most other competitors such as VW which has predicted that 50% of its global vehicle sales will be battery-powered cars by that date. However, Toyota is still looking at a multi-pronged, carbon-reduction strategy that also includes hybrid cars and hydrogen-powered vehicles. Last month, the Japanese company did not sign a pledge, signed by six major carmakers, to phase out fossil fuel cars by 2040, arguing that some countries would not be ready to transition to green cars by that date.

In a major blow to Boeing, Qantas has announced that it will switch its domestic fleet of planes to Airbus from Boeing and had agreed to buy forty Airbus jets, with the option to purchase a further ninety-four aircraft. Deliveries of the new planes, which will lower carbon emissions, are due to start in mid-2023 and continue over the next decade to replace the airline’s ageing fleet of Boeing jets. This is yet another hit for Boeing, after yesterday’s announcement that Singapore Airlines had signed a provisional deal to buy seven A350 freighters. However, Boeing can glean some comfort from the demise of the Airbus A380 which has struggled since its 2007 launch to gain traction in the big jet market. Over the past fifteen years, Boeing was working on its long-range versions of its economical twin-engine 777 – and developing the 787 Dreamliner. In the end, it has become the most technically advanced commercial jet in history of aircraft and was much more efficient than previous models, using less fuel and cheaper to run.

The Australian carrier indicated that it would make a fiscal H1 (to 31 December) loss of US$ 790 million, having been savaged more than most airlines by months of coronavirus lockdowns”. Noting that this period had been the worst half year of the entire pandemic, Qantas had been operating at only 30% capacity, with most Australian states in lockdown. The airline has significantly reduced costs and added to its miscellaneous income figure by selling land near Sydney Airport for US$ 411 million.

Companies pay a lot of money to have their products appearing in films or on popular TV shows. One such company is Peloton Interactive, Inc, an American exercise equipment and media company, with one of its main products being internet-connected stationary bicycles and treadmills. It appears that the company had approved an appearance on a ‘Sex and the City’ reboot by a Peloton instructor Jess King, who plays Allegra, the trainer for Mr Big, one of the show’s favourite characters., The company was unaware of the plot before the show aired, with the main theme being Mr Big having a heart attack and dying (on screen) after working out on a Peloton exercise bike. The share price in Peloton nose-dived after the show was aired in the US. There is every possibility that because Peloton was unaware of the script beforehand, and because its stock prices took a substantial dive, there could be grounds for legal action against HBO.

The football world has been slow to enter the virtual world, with only twenty-four different clubs, in the five major European leagues, having launched or are considering fan tokens. A BBC study estimates that more than US$ 350 million has been spent on the virtual currencies and buying controversial crypto “fan tokens”. The eight EPL clubs mainly offer tokens similar to a club-specific crypto-currency – virtual coins can be bought and sold and their values rise and fall, depending on supply and demand. Some clubs, including Manchester City among others, also sell digital collectibles known as NFTs (non-fungible tokens). It seems that tech company Socios is involved with some of the clubs and is responsible for organising the initial sale, and subsequent trading, of the virtual coins. Buyers must first convert their money into the company’s own crypto-currency, Chiliz. and those hoping to cash in on the “cryptoboom” may be disappointed, as the value of many fan tokens has decreased since they were initially sold by the clubs. It is interesting to note although Manchester City and Lazio generated the most sales, they are the two that have fallen most in value – by 50% and 70% respectively, whilst the tokens of Inter Milan and Turkish outfit Trabzonspor have increased in value more than Bitcoin over the past twelve months. This market is not only volatile and unregulated, but also distorted as clubs hold on to most tokens, on average controlling 80% of the supply; the value of tokens held by the top thirteen clubs together exceeds US$ 1.36 billion – but individual buyers currently hold only US$ 270 million worth.

With coffee prices touching ten-year highs, some Brazilian coffee experts are looking at annual production levels of around 66 million bags which would see a three million bag surplus in global inventory levels; if this were the case, then prices may dip below the US$ 2 mark. There are others who are less optimistic and estimating arabica production in the region of 36 million bags and the total crop, (including the Robusta variety) to come in at 55 million bags. Brazil has had a bad year after a drought and later frosts ruined as much as 20% of the country’s coffee trees. Fortunately, following the bad weather, rains followed which produced flowering which indicates future cherries for picking; although the flowering was widespread, the conversion to fruit was below normal. Nobody really knows how many trees have been damaged and it will be the end of January before a realistic crop figure is known.

Claiming that Steve Easterbrook had hid and lied about sexual relationships with three staff members, McDonald’s has settled a lawsuit with its former CEO, who has returned equity awards and cash worth over US$ 105 million, which he had received in a severance package in 2019. (That is a lot of burgers). He had been terminated that year failing to uphold the firm’s values and fulfil his responsibilities, having admitted to having had a consensual relationship with one employee. At the time, McDonald’s said Mr Easterbrook had “violated company policy” and shown “poor judgement”. Investigators also found messages showing that he approved a grant of company shares worth hundreds of thousands of dollars to one of the employees “shortly after their first sexual encounter”.

In a belated bid to curb the power of big tech companies, such as Google and Facebook, the EU is taking steps to prevent them from abusing their market power by ensuring a higher degree of competition in the sector. One way to do this is to allow new players to enter the market more easily but MEPs also want to end anti-competitive practices within the sector. There is the feeling that the current law has been somewhat of a failure because it was “always running behind companies like Apple, Google or Facebook”, but the new law will change the burden of proof; it will stop companies from prohibiting or favouring a particular service, while also preventing interoperability between different rival platforms. Penalties of up to 10% of turnover could be levied for defaults or, in the case of systematic rule violations, could be enforced divesting part of the company’s assets. The providers argue that the new regulations would curb innovation.

On Tuesday, the Turkish lira slumped by nearly 7% to a new record low of just under 15 lira to the greenback amid fears that there will be further imminent rate cuts by the central bank. President Recep Tayyip Erdogan has pushed the central bank to keep cutting rates, despite surging inflation, and today’s 1.0% cut to 14% is the fourth 1.0% reduction since September. Although many economists disagree with his policy, the president continues to argue that lower interest rates will boost Turkish exports, investment and jobs. However, Turkey is now paying the price for this apparent misguided approach as the country’s November inflation rate topped 21.7%.

One of the few ‘benefits’ of the 20%+ inflation figures, and the record low lira rates, is the 59% November hike, to 178.8k, in Turkish house sales to foreigners to a record level, bringing in US$ 8.5 billion in foreign exchange, as a lira slump – down at under 15 lira to the greenback, made purchases significantly cheaper for those buying with hard currency. Many Turks see housing as a means of defence against inflation. 7.4k homes were sold to foreigners last month – the highest monthly level since the data series began in 2013; the highest number of foreign buyers were Iranian citizens, followed by Iraqis and Russians.

Official Japanese statistics have been called into doubt, with news that the government overstated construction orders data received from builders for years. The admission by Prime Minister Fumio Kishida, which will undoubtedly dent the credibility of official data widely used by investors and economists, came after the Japanese leader commented after it had been reported that the Ministry of Land, Infrastructure, Transport and Tourism had been “rewriting” data received from about 12k select companies since 2013 at a pace of about 10k entries per year. Kishida said “improvements” had been made to the figures since January 2020 and that there was no direct impact on GDP data for the fiscal years 2020 and 2021.

Lawmakers in Zhejiang are facing a new Covid 19 outbreak which has seen over twenty listed companies suspending operations in one of China’s biggest manufacturing hubs, halting production of goods from batteries to textile dyes and plastics. The Chinese province accounts for around US$ 1.02 trillion, (6%) of China’s GDP and is a manufacturing hub for exports. Tens of thousands of Zhejiang residents are in quarantine, with the outbreak in three cities – Ningbo, Shaoxing and Hangzhou – developing at a “relatively rapid” speed.

Data from the Australian Tax Office reports that 782 companies paid zero tax in the fiscal year ending 30 June 2020, with the agency noting evidence of profit shifting and continuing to battle large companies over unpaid taxes; the proportion of all entities with nil tax payable decreased from 36% in 2013-14 to 33%. For that tax year, the ATO issued US$ 2.25 billion in tax bills against large companies, of which US$1.79 billion is under dispute. It noted a significant increase in Australian public companies that paid nil tax, with service industries, transport and financial asset investing sectors badly impacted by pandemic lockdowns. There was increased concern about some companies who were seen to be mis-pricing loans and shifting income into low-tax jurisdictions such as Singapore, with funds being shifted offshore and not subject to Australian tax.

The ATO examined 2.4k tax-paying companies of which 1.4k were foreign-owned with an income of over US$ 72 million, 513 were Australian public entities with an income of US$ 72 million or more, and 479 Australian-owned resident private companies with an income of US$ 144 million or more. It found that 1.6k paid tax, 0.4k incurred an accounting loss, 0.2k used prior year losses and 0.8k did not pay any tax. Of the US$ 1.79 billion in disputed tax bills for 2021 have already been paid to the ATO under a 50:50 arrangement. Despite the progress being made, there are still disputes from previous years – 2020, US$ 1.07 billion from twenty-three different taxpayers, and 2019 US$ 720 million from thirteen.

For much of H2, the Australian dollar had been ‘range bound’ and has hovered around the US$ 0.72 and US$ 0.74 levels; over the past five weeks, the dollar has declined from US$ 0.75 to its current level of hovering around US$ 0.70; earlier in the year, it was trading at nearly US$ 0.80. The currency has always punched above its weight and although it is minute by global standards, it is one of the most traded in the international market. It is estimated that if the Australian currency declines 10%, then all things being equal, imported prices rise 10%, and they are about 20% of the CPI, so spread over a year, it would add 2% to prices; the lower the value of the dollar, the higher the price of imports and the higher the level of inflation. The question is not if the RBA is going to raise rates but more of when?

US November inflation figures hit a forty-year high, with latest figures showing prices up 6.8% on the year; on the month, they rose at the slower rate of 0.8%. compared to October’s 0.9%. Rising prices, including petrol, rent and the cost of second-hand cars, have impacted more on the lower income bracket. It is apparent that one of the main drivers behind the high inflation figure is President Biden’s previous spending programmes, designed to offer support amid the Covid pandemic. With many analysts arguing that further spending could make inflation worse, the US leader will have problems passing his new US$ 1.4 trillion social spending bill through both chambers. Another driver would be the lingering aftereffects of Covid and the fact that it has yet to be brought under full control, effecting the supply chain and the labour market. The US administration has pledged to tackle rising inflation and one factor that could greatly help is if the Federal Reserve moved a little quicker to reduce the monthly bond-buying support, allied with an interest rate hike.

At this week’s policy meeting, the US Federal Reserve surprised the market by declaring that it will quicken the pace at which it is pulling back its support for the post-pandemic US economy. The Fed will shrink its monthly bond purchases at twice the pace it previously announced, citing the original reasons for such purchases are no longer valid at a time when inflation is touching forty-year highs and unemployment declining. In other words, interest rates are set to move higher early next year, with two more rises before the end of 2022. Obviously, this will have an impact on rates here in Dubai.

Latest UK figures show there was a fall in unemployment among 16–24-year-olds, another group hit hard by the pandemic; the unemployment rate among that sector had now recovered to pre-pandemic levels at 11.3% – down from a high of 14.8% in the 2020 September quarter. After a marked slump during the pandemic, the number of people in part-time work jumped to 8.07 million, in the three months to October, (compared to 7.7 million in the May quarter). Data shows that the total of employees on payroll continued to grow strongly into November. Meanwhile job vacancies again moved higher– at 1.22 million, 54.9% higher than before the pandemic. – but the rate of growth slowing. However, the data was collected before the onset of the Omicron variant which some fear may lead to restrictions in some sectors. In November, UK employers added 257k staff to their payrolls, whilst unemployment nudged 0.3% higher to 4.3%.

In what is considered to be the first post-Brexit deal negotiated from scratch and not “rolled over” from trade terms that the country enjoyed while in the EU, the UK has signed a free trade deal with Australia which it says will benefit consumers and businesses. Not only will it unlock US$ 13.8 billion of additional trade. while ending tariffs on all UK exports, but a bigger boost will be the fact that it provides a gateway into the fast-growing Indo-Pacific region and would boost the UK’s bid to join the Trans-Pacific Partnership, one of the largest free trade areas in the world. The deal is due to come into force in 2022.

In a deal that sees his master recordings and publishing rights for his life’s work being sold to Sony, 20-time Grammy winner, Bruce Springsteen, has received US$ 500 million. Sony will have ownership of his twenty studio albums, including classics like ‘Born To Run’, The River and Born In The USA. Last year, it is estimated that his music generated about US$ 15 million in revenue. Last May, Sony reported that it had spent US$ 1.4 billion in acquisitions over the previous six months, including a multi-million-dollar deal to obtain the rights to Paul Simon’s back catalogue but it would appear that Springsteen’s deal would be the most expensive so far. For the 72-year old genuine rock star, famous for his four-hour live shows, there is no doubt that the future holds plenty more Glory Days!

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Ready For The Weekend!

Ready For The Weekend!                                                     09 December 2021

Last month, Dubai registered an 80.4% jump in sales to 7.0k deals, worth US$ 4.89 billion, making it the best November, in terms of total sales, for eight years.; it was also 45% higher than the November 2019 return, occurring before the onset of the Covid-19 pandemic. Property Finder also commented that “the data clearly shows that investors and consumers are confident in Dubai’s future, which is reinforced by proactive government initiatives, attractive real estate projects and the vision of the city.” The split percentage of all property transactions was 54:46 between secondary or ready property, (3.2k properties, valued at US$ 1.86 billion), and off-plan property, (3.8k, worth US$ 3.03 billion). The consultancy also noted that Expo 2020 may have had a positive impact on sales and that “it is interesting to note that November 2021 had the highest number of sales transactions since Expo 2020 was announced in December 2013.” By the end of November, Dubai had recorded 55.7k sales transactions worth US$ 36.89 billion – up 88.4%, compared with the whole of 2020; even without December, this is already the highest yearly sales figure since 2014.

Dubai’s Crown Prince, Sheikh Hamdan bin Mohammed bin Rashid, issued a directive that sees tenants, who are rebuilding or renovating their properties in Al Quoz Creative Zone, being exempted from paying rents for up to two years. This is part of the strategy to transform the development project into a comprehensive creative hub with the aim of attracting global talent. It also runs in tandem with the emirate’s ambition to become an international cultural destination and the global capital of the creative economy by 2025. A dedicated platform, called the Creatives’ Journey, has been introduced to support the business operations of creatives and provide a single window to get licences for their projects within a few minutes. The plan also seeks to provide soft-mobility solutions for the people in the zone and to develop transport infrastructure between the free zone and Al Safa Metro Station. To date, Dubai Culture has awarded 4.5k certificates of accreditation to creatives and artists of different nationalities.

HH Sheikh Hamdan bin Mohammed has advised that the Executive Council, of which he is the Chairman, is seeking to enable greater corporate social responsibility in private sector companies. One such policy plans to align CSR projects and contributions with the priorities set by the government, as well as to promote partnerships between the private, public, and non-profit sectors that will eventually positively impact the community. Dubai’s Crown Prince noted that “strong partnerships with the private sector, which is a strategic partner in our development journey, is vital to accelerate our development plans.”. The new policy introduced social responsibility policy, with the aim of raising the role of companies and private establishments in social and economic development and inspire private companies to contribute to the community.

Under the directives of HH Sheikh Mohammed bin Rashid Al Maktoum, his son, Sheikh Maktoum announced the listing of TECOM on the Dubai Financial Market which is part of a strategy to increase the size of the DFM to US$ 817 million (AED 3 million). TECOM, with ten business communities in Dubai that offer state-of-the-art infrastructure, is a strategic business enabler that creates innovative business communities and thriving work environments. Its business communities include Dubai Internet City, Dubai Media City, Dubai Design District and Dubai Industrial Park.

After two months since its opening, Expo 2020 Dubai has recorded nearly 4.77 million visits, with virtual visits having reached 23.5 million.

This week, the UAE Railway Programme was launched in the presence of the country’s two leaders – HH Sheikh Mohammed bin Rashid Al Maktoum and HH Sheikh Mohamed bin Zayed Al Nahyan. The integrated programme comprises three key projects, viz., freight, (including the Etihad Rail freight services), passenger, (connecting eleven cities with travel between Abu Dhabi and Dubai taking forty minutes at speeds of 200 kph), and integration with a network of light rail facilitating transportation inside the seven emirates. By 2030, the number of passengers is expected to reach more than 36.5 million annually.

DP World and Emergent Cold Latin America, (Latin America’s newest temperature-controlled warehousing and logistics provider), will become partners to develop two temperature-controlled logistics facilities within DP World Caucedo (Dominican Republic), a world class logistics hub, and Duran Logistics Centre (Ecuador). These developments will provide both parties’ customers with a fully integrated supply chain solution and will see them both explore development activities in other DP World locations in Latin America.

Emirates Airline is expecting a busy week at the start of the holiday season and has advised its passengers to arrive early at the airport or opt for early check-in to avoid the peak holiday rush. The carrier estimates that this weekend it will carry 250k passengers and that passenger traffic at DXB’s Terminal 3 is forecast to be around 1.1 million over the next twelve days.

Over the next six months, Emirates Group is planning to hire five hundred IT professionals, covering a myriad of roles including cyber security, technical product management, DevOps, hybrid cloud, modern architecture, software engineering, service management, digital workplace, agile delivery and innovation. In September, the carrier announced that it would be hiring 3k cabin crew and 500 airport services over the ensuing six months; a month later a further 6k staff were to be added prior to the end of Q1 2022. Emirates is hoping to reach 70% of its pre-pandemic capacity by the end of December, having already restored 90% of its network.

Majid Al Futtaim Properties and Abu Dhabi’s biggest developer, Aldar Properties, has teamed up to create an online real estate platform for their businesses, at a time when new legal reforms are being implemented. Such amendments include changes to electronic transactions and trust services that give digital signatures the same weight as a handwritten signature. The agreement will see both parties work together to “enhance innovation, customer experience, digital transformation and sustainable practices in the real estate sector”. Dubai-based MAF owns and operates twenty-nine shopping malls, thirteen hotels and four mixed-use communities, whilst Aldar has developed a number of projects in Abu Dhabi, including on Yas Island, Al Raha and Saadiyat Island.

The latest Global Power City Index 2021, published by the Institute for Urban Strategies at the Mori Memorial Foundation, has seen Dubai move up three places to fourteenth. The city was ranked fifth globally for “cultural interaction”; this category measures leadership, tourist and cultural attractions, communication and visitor amenities. London came top overall and also in the “cultural interaction” category. The survey ranks more than forty major cities on aspects such as the economy, research and development, cultural interaction, livability, environment and accessibility. The Crown Prince, Sheikh Hamdan noted that “Dubai continues to be a global model for a vibrant creative economy.”

According to a white paper released by Dubai Chamber, over the past five years, the UAE has accounted for 74% of GCC investments in ASEAN markets. The study, examining the business and investment environment in the ASEAN region, and assessing prospects for expanding bilateral economic co-operation. It is estimated that the total value of funding from the GCC into the region was over US$ 13.3 billion. The findings of the report were further studied and analysed by public and private sector stakeholders at Expo 2020 Dubai for the inaugural two-day GBF ASEAN which closed today, 09 December 2021.

Khalid Ali Al Bustani, Director-General of the Federal Tax Authority, has again confirmed that the well-publicised 70% discounted tax penalties do not apply to the actual tax but is a reduction in the penalties accrued over time. He also advised that those businesses who intend to avail the 70% discount on tax penalties must clear all their tax dues before that has accrued before June 28 and pay 30% of the penalty amount by the end of this month. VAT tax collection continues to rise on the back of new businesses and many enterprises previously below the taxable threshold, now being in the tax bracket.

BARQ EV, the first licensed drone delivery service provider in the UAE, broke two Guinness World Records, by executing the longest flight of a drone for the delivery service at 13.584 km, and the longest non-stop return flight for a drone at 18.065 km. The smart mobility solutions company, backed by Ahmad Al Mazrui, Abdullah Abu Sheikh and Mazen Al-Jubeir, will be launched in early 2022. They commented that the drone programme, introduced by the Crown Prince, Sheikh Hamdan, “seeks to improve people’s lives by reducing carbon emissions generated by traditional shipping and transportation methods and facilitating the movement of goods and materials. This way, it will contribute to positioning Dubai as one of the smartest cities in the world.” It is also an indicator that the emirate is fast becoming a centre of innovation and provides the ideal hub for start-ups specialising in innovation and technology

Last week, as the UAE celebrated its fiftieth anniversary, the United Nations Conference on Trade and Development released a report detailing the value of the country’s foreign trade since its 1971 inception. It noted that this has amounted to US$ 9.32 trillion and the country’s trade balance has recorded a surplus of nearly US$ 1.3 trillion over that period. Since 1971, the value of UAE’s foreign trade has increased 473 times from just US$ 1.15 billion to US$ 542.02 billion by the end of last year. During the fifty years, exports have increased 380 times, to US$ 319.3 billion, and imports 730 times to US$ 225.7 billion, whilst the cumulative balance of foreign direct investments jumped from US$ 7.8 million in 1971 to US$ 20.0 billion by the end of 2020.

Dubai stock exchanges will change their trading week to Monday-Friday, from 03 January, in line with the government’s new work system; trading hours will be between 10.00 to 15.00. This latest move will most probably benefit the DFM’s operations as it will bring it more in line with international financial markets, a factor that will enhance its competitiveness regionally and globally.

The DFM opened on Sunday, 05 December, 287 points (8.5%) lower the previous fortnight and gained 153 points (5.9%) to close the week, on Thursday 09 December at 3,226. Emaar Properties, US$ 0.11 lower the previous fortnight, closed, up US$ 0.05, at US$ 1.33. Emirates NBD and Damac started the previous week on US$ 3.60 and US$ 0.38 and closed on US$ 3.79 and US$ 0.38. On Thursday, 09 December, 297 million shares changed hands, with a value of US$ 115 million, compared to 365 million shares, with a value of US$ 271 million, on 02 December.

By Thursday, 09 December, Brent, US$ 11.87 (1.8%) lower the previous three weeks, rose  US$ 4.49 (6.3%), to close on US$ 75.29. Gold, US$ 97 (5.2%) lower the previous fortnight shed US$ 12 (0.7%), to close Thursday 09 December on US$ 1,785. 

One of the most expensive cases in legal history concluded this week, with the jury rejecting claims that the late Dave Kleiman was a former business partner of Craig Wright, a computer scientist, who has always asserted that he invented Bitcoin. Also known as Satoshi Nakamoto, he has won a court case allowing him to keep 1.1 million coins, worth over US$ 50 billion. The Kleiman heirs have always maintained that the claimant, a computer security expert who died in 2013, had worked with Mr Wright to create and mine the first Bitcoin in existence in 2008, and that he had stolen it. The Miami jury in the civil lawsuit cleared Mr Wright on nearly all issues brought by the Kleiman family but they will receive US$ 100 million for intellectual property infringement.

TikTok has become the second fastest-ever expanding social media with the one billion user number recently been reached. This has been done in 5.1 years, only surpassed by Facebook Messenger taking just 4.9 years to hit this target. Other apps have taken longer to top one billion users – WeChat, Facebook, Instagram and WhatsApp (7, 7.7, 8.5 and 8.7 years). TikTok, known then as Douyin, started life in China in September 2016.

Following heavy political pressure, Didi Global has decided to remove its shares off the New York Stock Exchange and move them to Hong Kong. The Chinese ride-hailing giant made its US debut in July, after raising US$ 4.4 billion in its IPO, but at almost the same time that Beijing announced a crackdown on technology companies listing overseas, with the internet regulator ordering online stores not to offer Didi’s app, saying it illegally collected users’ personal data. To make matters worse for the Chinese tech company, it has also come under pressure from regulators in the US and Europe, as US regulators unveiled tough new rules for Chinese firms that list in America.

For apparently violating EU Competition rules, Italy’s anti-trust authority kas fined Amazon US$ 1.3 billion accusing the company of exploiting its dominant position against independent sellers on its website. European governments appear to be taking early action against the tech giants if they step out of line. Italy’s AGCM authority has claimed that Amazon has required that third-party sellers use Fulfilment by Amazon, which gives it a double whammy of damaging competitors and strengthening its own position. It also prevents third-party sellers from gaining access to Amazon’s Prime loyalty program, “which makes it easier to sell to the more than seven million most-loyal and highest-spending consumers”.

Five years ago, Lego built its first Asian factory in China and has announced that its second one will be a US$ 1 billion investment in Vietnam to keep up with growing demand for its products in Asia, where it has witnessed double digit growth since 2019. Construction of the toymaker’s first carbon neutral factory, (with solar panels on its roof), will start next year, with production slated to commence in 2024; 4k jobs are expected to be created over the next fifteen years. Lego also notes that building production plants, close to key markets, “provides the flexibility to respond quickly to shifts in local consumer demand, shortens the supply chain, and reduces the environmental impact of shipping long distances.”

Utilising Japanese bullet train technology and European high-speed network expertise, HS2 has signed a US$ 2.6 billion contract with Hitachi and Alstom to build fifty-four of the fastest trains in the UK, creating some 2.5k. jobs. The controversial high-speed network, with links between London, the Midlands, and the North of England, will have trains that can travel at 225 mph, with production starting at Newton Aycliffe, County Durham, and be finished at Alstom’s Derby and Crewe sites. It could take five years before the first train rolls off the production line. Each train will be around 200 mt long, with the option to couple two units together to create a 400 mt long train with up to 1.1k seats.

There are reports that the Chinese property giant Evergrande Group could default on its latest debt repayment, with the markets not impressed as its share value tanked 20% on Monday. There are also contagion concerns of the knock-on impact on other shares, especially in property and banking sectors, which witnessed similar falls on Monday. With total liabilities, both in China and overseas, Evergrande commented that it could not guarantee “to perform its financial obligations”, following a US$ 260 million demand for payment. Even if the company were to soon fail, it will take years for the mess to be cleared. Matters did not improve on Monday, when smaller property developer Sunshine 100 China Holdings defaulted on a US$ 170 million debt payment “owing to liquidity issues arising from the adverse impact of a number of factors including the macroeconomic environment and the real estate industry”.

Today, 09 December, Fitch Ratings downgraded the Evergrande Group and its subsidiaries from C to RD (restricted default), confirming that they were defaulters, as the grace period to make two coupon payments, (US$ 645 million, 13% bonds and US$ 590 million, 13.75% bonds), had expired on Monday. Evergrande, China’s second-largest property company by sales, has more than $300 billion of debt and is considered the world’s most indebted developer. The Shenzhen-based conglomerate owns more than 1.3k projects in 280 or more cities in China, whilst its Hong Kong-listed property services arm has about 2.8k projects in more than 310 Chinese cities The company is also involved in electric vehicles, finance, healthcare and cultural tourism.

The luxury department store group Selfridges, which has twenty-five outlets in the UK, Ireland, Netherlands and Canada, has been sold to the Thai conglomerate, Central Group for US$ 5.3 billion. Founded in 1908, by retail magnate Harry Gordon Selfridge, the iconic brand had a flagship store in London’s Oxford Street that used to boast one hundred stores, including a library and shooting range. Selfridges, owned by Canada’s Weston family since 2003, was put up for sale in June, a few months after the death of Galen Weston. The new Thai owner has over 3.7k global shops, from supermarkets to electronics outlets, and department stores in Europe. Latest figures to February 2020 show that Selfridges had revenues of US$ 2.65 billion but this sales figure will have declined somewhat when the latest figures are released.

Last Saturday, Bitcoin plunged, to as low as US$ 42.3k, along with other cryptocurrencies – an obvious sign of the risk aversion sweeping across financial markets, as spiking inflation is ensuring that banks are finally beginning to tighten monetary policy and reduce liquidity. With Ether, the second largest token, tanking 17.4%, the end result saw the overall crypto sector shedding 20% to a cumulative US$ 2.2 trillion. It is estimated that on Saturday, 04 December, about US$ 2.4 billion of crypto exposure, both long and short, was liquidated. The Omicron variant has spooked the markets, as the danger of another lockdown looms and how the jittery global economies react.

The head of the Dutch central bank, and an ECB policymaker, Klaas Knot, commented that if inflation were to continue to be higher than the bank’s base case scenario next year, there could be increases in interest rates in 2023. However, it does seem that the consensus is that the current elevated inflation rate, which stood at a record high 4.9% in November, is still considered “to be largely a temporary phenomenon;” the ECB’s target is at a much lower 2.0%. At next week’s policy meeting, it is highly likely that the plug will be pulled on its US$ 2.09 trillion emergency stimulus scheme, and as per the bank’s policy any interest rate increase would only come “shortly after” quantitative easing ends. However, the decision to raise rates this month hangs in the balance, given the new variant, with some arguing that more details on its possible impact on the economy are needed before proceeding.

At last month’s BoE meeting, only two of the nine members of the Monetary Policy Committee voted for an immediate UK rate hike and there were strong indicators then that December would be the time to do so. However, the arrival of the Omicron coronavirus variant, which could slow the UK economy, may put any immediate rise, from the current 0.1%, on the back burner. One member of the committee noted that there “could be particular advantages in waiting to see more evidence on its possible effects on public health outcomes and hence on the economy.” However, there has to be risks from delaying an interest rate rise for too long: and the BoE could be guilty of underestimating the inflationary impact over the past year.

On her visit this week to the US, Anne-Marie Trevelyan, warned the US that the UK could step up retaliatory measures if punitive tariffs on UK steel exports were not lifted soon. The UK International Trade Secretary had been in Washington for talks with the Commerce Secretary Gina Raimondo and commented that “I am very keen that we solve this with what is our closest ally in the US through a positive removal”. It was Donald Trump who imposed tariffs of 25% on steel exports (and 10% on aluminium exports) when the UK was part of the EU. Subsequently, the EU had discussions earlier in the year that saw them lifted as from 01 January 2022 – but did not include the UK which had already exited the bloc. If the issue is not resolved quickly, the UK could increase existing retaliatory tariffs on products such as US whisky and cosmetics that could extend to other items such as lobsters, electric motors and orange juice.

The Australian Competition and Consumer Commission has given its approval for Sydney Airport to be taken over by a consortium of infrastructure investors for US$ 16.9 billion. In November, Sydney Airport agreed to be bought out by the Sydney Aviation Alliance (SAA), comprising IFM Investors, (which has stakes in nine other Australian airports, including Melbourne (25%) and Brisbane (20%)), QSuper, AustralianSuper and US-based Global Infrastructure Partners. It still needs the go-ahead from Australia’s Foreign Investment Review Board (FIRB) and the company’s shareholders.

BNPL is becoming something of a scourge for those Australians who max out and cannot repay their debts. If people are struggling, they are supposed to be able to access a hardship program so they can work out a new payment plan. Financial Counselling Australia has surveyed several buy now, pay later companies and reported that the industry’s practice falls well short of expected standards. Afterpay’s hardship program was ranked the best, but it still only scored 5.9 out of 10, whilst at the other end of the scale were the likes of Humm, LatitudePay and Zip posting scores of 4.7, 5.2 and 5.5. Similar surveys for the major banks saw average scores of 7 out of 10. It is patently obvious that consumers need better support by the regulators and are not covered by the National Credit Code because BNPL use service charges, and not interest; NCC covers credit cards, mortgages, personal loans, payday loans and consumer leases, whilst many of BNPL providers are signatories of a voluntary industry code of practice.

A report by the Commonwealth Bank sees their Household Spending Intentions Index rising to its highest level, (up 2.1% to 110.3 points) since December 2019 and a prediction that the population has retained US$ 170.2 billion in excess savings due to Covid-19 and the resulting lockdowns, lost incomes and travel restrictions. The end result is that it is expected that it will be a bumper Christmas, especially for retail, as Australians spend some of that “windfall”, with the national economy recovering strongly. It is estimated that shoppers spent US$ 5.75 billion in Black Friday and Cyber Monday sales, driven by resilient household incomes and high savings rates through the year, due to lockdown conditions, improvements in consumer confidence through November and a lack of opportunity for international – and, in many cases, domestic – travel.

The Australian Bureau of Agricultural and Resource Economics and Sciences has posted that the value and volume of their food and fibre has climbed to historic highs. Because of the price of grain rising, and historically high prices being paid at livestock sales all year, it is forecast that total farm production will top US$ 56 billion, and exports will hit a record US$ 43.8 billion this financial year. The global weather has been a major factor in the increased value of production, as poor seasonal weather in farming countries, like Argentina, Brazil, Canada, Russia, Ukraine and the US conditions, has had a negative impact on their agricultural production. Another positive for Australian ‘cockies’, is that La Niña is expected to set farmers up for another good year in 2022. For the fiscal year ending 30 June 2022, it is expected that farm cash income will hit a record US$ 22.0 billion, off the back of the larger volumes of food and fibre. However, farmers will face higher prices, with fuel, fertiliser and chemicals all heading north and there is no doubt that inflationary food prices may see some social unrest in H1 2022.

It is three years since Australia’s banking royal commission final report was published, referring thirteen cases to the Australian Securities and Investments Commission. Furthermore, thirty-two case studies were examined to see if banks should face prosecution. Even though ASIC confirmed it had thoroughly investigated all forty-five cases, twenty referred cases did not even reach court and were “concluded with no further action”. Now it is reported that the regulator has launched its final case, closing the door on any more court action for banks that ripped billions of dollars from customers. Thursday’s final case encapsulates the decades-long systemic issues exposed by the Hayne inquiry in 2018. Once again, it seems that the Australian banking system has escaped the true wrath of the law and its customers are the ones having to pay for the corrupt dealings of the banking hierarchy.

It appears that the banks – and more specifically senior management – have gotten off very lightly by admitting they broke the law ahead of proceedings. Of the thirteen referrals, six were dealt with in civil cases and only two became criminal cases; three are ongoing with five being completed, with total fines of US$ 56 million. In the thirty-two case studies, fifteen ended with no action taken and of the remainder, there were twelve civil and five criminal cases; total penalties to date total just US$ 22 million. One of the last cases before the courts involves ANZ, which is being sued for misleading, and ripping off, 580k customers since the mid-1990s; the bank has admitted that it breached its financial services and credit licence. ANZ said it would not be defending this case. The company admitted that it had made false or misleading representations to customers, about having systems and processes in place to ensure customers would receive their fee waivers and interest rate discounts. For far too long, it appears that many financial institutions have failed to honour agreements with customers and to ensure proper processes and systems are in place to prevent widespread compliance failures.

Last year, the big four Australian banks made US$ 19.2 billion in profit! A sad indictment of the system is that not one enforcement case has been brought against the management or board of the big financial service companies. There is no doubt that the culture and incentive rewards in place were the main drivers behind an industry driven by greed

Life is not getting any better for Turkish President Recep Tayyip Erdogan with the lira flirting with record lows, having already slumped 45% against the greenback YTD. Adopting a contrarian approach to Economics 101 and pressing ahead with his “economic war of independence”, backed up by low interest rates, he is of the opinion that keeping interest rates low is the panacea to boost Turkey’s economic growth and export potential. This contrasts with the commonly held belief that the President’s model will inevitably result in soaring inflation, higher unemployment, poverty, and a banana republic style currency – and the way to control surging price increases is by raising interest rates. According to the Turkish leader, such rates are “an evil that make the rich richer and the poor poorer”, at a time when the country’s inflation is above 21%; his response is to cut rates again, from 16% to 15%, for the third time this year. The question is whether the people will wait until 2023, for the next election, to oust the ruling Justice and Development Party (AKP), which has been in power since 2002.

Although up to 500k new jobs were expected, November job growth slowed to 210k, the smallest monthly increase seen in 2021, indicating that there is a major problem for employers to attract workers for the millions of vacancies. The US Labor Department figures pointed out that the unemployment rate fell to 4.2%, with the labour force participation rate nudging higher to 61.8%. The data was collected before the Omicron variant emerged in the US and there is the possibility that it could slow the economy if it were to discourage Americans from travelling, shopping and eating out in the coming months. Earlier figures forecast the Q4 economy growing 7.0%, compared to 2.1% in the previous quarter, but this may now have to be cut.

Initial claims for US state unemployment benefits, for the week ending 04 December, declined by 43k to a seasonally adjusted 184k – its lowest level in more than fifty-two years as labour market conditions continued to tighten amid an acute shortage of workers. Claims have declined from a record high of 6.149 million, in early April of 2020, to 1.992 million. There were eleven million unfilled jobs at the end of October, leaving employers reluctant to let workers go. Observers are taking more than a passing interest in the latest Omicron variant and the havoc it could wreak on the economy.

In a move that the federal government feels would “boost productivity and improve work-life balance”, the UAE is cutting its working week to four-and-half days and moving its weekend from Friday-Saturday to Saturday-Sunday. Initially applicable to the public sector, and starting from 01 January 2022, the new working week will be 7.30 am to 3.30 pm Monday to Thursday, and 7.30 am to 12 pm Friday; on that day, prayers at mosques will be held after 1.15pm all year round. The government said it would “ensure smooth financial, trade and economic transactions with countries that follow a Saturday-Sunday weekend, facilitating stronger international business links and opportunities for thousands of UAE-based and multinational companies”. Trials in other countries, such as Iceland, Ireland, Japan, New Zealand, Scotland, Spain and Sweden, have taken place and seem to indicate an improvement in both productivity and employee well-being. One can only congratulate the authorities on their forward thinking and foresight and if there is any place in the world that this strategy is going to work it must be the UAE. Come 2022, the whole of the country will be even more Ready For The Weekend!

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Ready For The Weekend!

Ready For The Weekend!                                                     09 December 2021

Last month, Dubai registered an 80.4% jump in sales to 7.0k deals, worth US$ 4.89 billion, making it the best November, in terms of total sales, for eight years.; it was also 45% higher than the November 2019 return, occurring before the onset of the Covid-19 pandemic. Property Finder also commented that “the data clearly shows that investors and consumers are confident in Dubai’s future, which is reinforced by proactive government initiatives, attractive real estate projects and the vision of the city.” The split percentage of all property transactions was 54:46 between secondary or ready property, (3.2k properties, valued at US$ 1.86 billion), and off-plan property, (3.8k, worth US$ 3.03 billion). The consultancy also noted that Expo 2020 may have had a positive impact on sales and that “it is interesting to note that November 2021 had the highest number of sales transactions since Expo 2020 was announced in December 2013.” By the end of November, Dubai had recorded 55.7k sales transactions worth US$ 36.89 billion – up 88.4%, compared with the whole of 2020; even without December, this is already the highest yearly sales figure since 2014.

Dubai’s Crown Prince, Sheikh Hamdan bin Mohammed bin Rashid, issued a directive that sees tenants, who are rebuilding or renovating their properties in Al Quoz Creative Zone, being exempted from paying rents for up to two years. This is part of the strategy to transform the development project into a comprehensive creative hub with the aim of attracting global talent. It also runs in tandem with the emirate’s ambition to become an international cultural destination and the global capital of the creative economy by 2025. A dedicated platform, called the Creatives’ Journey, has been introduced to support the business operations of creatives and provide a single window to get licences for their projects within a few minutes. The plan also seeks to provide soft-mobility solutions for the people in the zone and to develop transport infrastructure between the free zone and Al Safa Metro Station. To date, Dubai Culture has awarded 4.5k certificates of accreditation to creatives and artists of different nationalities.

HH Sheikh Hamdan bin Mohammed has advised that the Executive Council, of which he is the Chairman, is seeking to enable greater corporate social responsibility in private sector companies. One such policy plans to align CSR projects and contributions with the priorities set by the government, as well as to promote partnerships between the private, public, and non-profit sectors that will eventually positively impact the community. Dubai’s Crown Prince noted that “strong partnerships with the private sector, which is a strategic partner in our development journey, is vital to accelerate our development plans.”. The new policy introduced social responsibility policy, with the aim of raising the role of companies and private establishments in social and economic development and inspire private companies to contribute to the community.

Under the directives of HH Sheikh Mohammed bin Rashid Al Maktoum, his son, Sheikh Maktoum announced the listing of TECOM on the Dubai Financial Market which is part of a strategy to increase the size of the DFM to US$ 817 million (AED 3 million). TECOM, with ten business communities in Dubai that offer state-of-the-art infrastructure, is a strategic business enabler that creates innovative business communities and thriving work environments. Its business communities include Dubai Internet City, Dubai Media City, Dubai Design District and Dubai Industrial Park.

After two months since its opening, Expo 2020 Dubai has recorded nearly 4.77 million visits, with virtual visits having reached 23.5 million.

This week, the UAE Railway Programme was launched in the presence of the country’s two leaders – HH Sheikh Mohammed bin Rashid Al Maktoum and HH Sheikh Mohamed bin Zayed Al Nahyan. The integrated programme comprises three key projects, viz., freight, (including the Etihad Rail freight services), passenger, (connecting eleven cities with travel between Abu Dhabi and Dubai taking forty minutes at speeds of 200 kph), and integration with a network of light rail facilitating transportation inside the seven emirates. By 2030, the number of passengers is expected to reach more than 36.5 million annually.

DP World and Emergent Cold Latin America, (Latin America’s newest temperature-controlled warehousing and logistics provider), will become partners to develop two temperature-controlled logistics facilities within DP World Caucedo (Dominican Republic), a world class logistics hub, and Duran Logistics Centre (Ecuador). These developments will provide both parties’ customers with a fully integrated supply chain solution and will see them both explore development activities in other DP World locations in Latin America.

Emirates Airline is expecting a busy week at the start of the holiday season and has advised its passengers to arrive early at the airport or opt for early check-in to avoid the peak holiday rush. The carrier estimates that this weekend it will carry 250k passengers and that passenger traffic at DXB’s Terminal 3 is forecast to be around 1.1 million over the next twelve days.

Over the next six months, Emirates Group is planning to hire five hundred IT professionals, covering a myriad of roles including cyber security, technical product management, DevOps, hybrid cloud, modern architecture, software engineering, service management, digital workplace, agile delivery and innovation. In September, the carrier announced that it would be hiring 3k cabin crew and 500 airport services over the ensuing six months; a month later a further 6k staff were to be added prior to the end of Q1 2022. Emirates is hoping to reach 70% of its pre-pandemic capacity by the end of December, having already restored 90% of its network.

Majid Al Futtaim Properties and Abu Dhabi’s biggest developer, Aldar Properties, has teamed up to create an online real estate platform for their businesses, at a time when new legal reforms are being implemented. Such amendments include changes to electronic transactions and trust services that give digital signatures the same weight as a handwritten signature. The agreement will see both parties work together to “enhance innovation, customer experience, digital transformation and sustainable practices in the real estate sector”. Dubai-based MAF owns and operates twenty-nine shopping malls, thirteen hotels and four mixed-use communities, whilst Aldar has developed a number of projects in Abu Dhabi, including on Yas Island, Al Raha and Saadiyat Island.

The latest Global Power City Index 2021, published by the Institute for Urban Strategies at the Mori Memorial Foundation, has seen Dubai move up three places to fourteenth. The city was ranked fifth globally for “cultural interaction”; this category measures leadership, tourist and cultural attractions, communication and visitor amenities. London came top overall and also in the “cultural interaction” category. The survey ranks more than forty major cities on aspects such as the economy, research and development, cultural interaction, livability, environment and accessibility. The Crown Prince, Sheikh Hamdan noted that “Dubai continues to be a global model for a vibrant creative economy.”

According to a whitepaper released by Dubai Chamber, over the past five years, the UAE has accounted for 74% of GCC investments in ASEAN markets. The study, examining the business and investment environment in the ASEAN region, and assessing prospects for expanding bilateral economic co-operation. It is estimated that the total value of funding from the GCC into the region was over US$ 13.3 billion. The findings of the report were further studied and analysed by public and private sector stakeholders at Expo 2020 Dubai for the inaugural two-day GBF ASEAN which closed today, 09 December 2021.

Khalid Ali Al Bustani, Director-General of the Federal Tax Authority, has again confirmed that the well-publicised 70% discounted tax penalties do not apply to the actual tax but is a reduction in the penalties accrued over time. He also advised that those businesses who intend to avail the 70% discount on tax penalties must clear all their tax dues before that has accrued before June 28 and pay 30% of the penalty amount by the end of this month. VAT tax collection continues to rise on the back of new businesses and many enterprises previously below the taxable threshold, now being in the tax bracket.

BARQ EV, the first licensed drone delivery service provider in the UAE, broke two Guinness World Records, by executing the longest flight of a drone for the delivery service at 13.584 km, and the longest non-stop return flight for a drone at 18.065 km. The smart mobility solutions company, backed by Ahmad Al Mazrui, Abdullah Abu Sheikh and Mazen Al-Jubeir, will be launched in early 2022. They commented that the drone programme, introduced by the Crown Prince, Sheikh Hamdan, “seeks to improve people’s lives by reducing carbon emissions generated by traditional shipping and transportation methods and facilitating the movement of goods and materials. This way, it will contribute to positioning Dubai as one of the smartest cities in the world.” It is also an indicator that the emirate is fast becoming a centre of innovation and provides the ideal hub for start-ups specialising in innovation and technology

Last week, as the UAE celebrated its fiftieth anniversary, the United Nations Conference on Trade and Development released a report detailing the value of the country’s foreign trade since its 1971 inception. It noted that this has amounted to US$ 9.32 trillion and the country’s trade balance has recorded a surplus of nearly US$ 1.3 trillion over that period. Since 1971, the value of UAE’s foreign trade has increased 473 times from just US$ 1.15 billion to US$ 542.02 billion by the end of last year. During the fifty years, exports have increased 380 times, to US$ 319.3 billion, and imports 730 times to US$ 225.7 billion, whilst the cumulative balance of foreign direct investments jumped from US$ 7.8 million in 1971 to US$ 20.0 billion by the end of 2020.

Dubai stock exchanges will change their trading week to Monday-Friday, from 03 January, in line with the government’s new work system; trading hours will be between 10.00 to 15.00. This latest move will most probably benefit the DFM’s operations as it will bring it more in line with international financial markets, a factor that will enhance its competitiveness regionally and globally.

The DFM opened on Sunday, 05 December, 287 points (8.5%) lower the previous fortnight and gained 153 points (5.9%) to close the week, on Thursday 09 December at 3,226. Emaar Properties, US$ 0.11 lower the previous fortnight, closed, up US$ 0.05, at US$ 1.33. Emirates NBD and Damac started the previous week on US$ 3.60 and US$ 0.38 and closed on US$ 3.79 and US$ 0.38. On Thursday, 09 December, 297 million shares changed hands, with a value of US$ 115 million, compared to 365 million shares, with a value of US$ 271 million, on 02 December.

By Thursday, 09 December, Brent, US$ 11.87 (1.8%) lower the previous three weeks, tanked US$ 10.41 (12.8%), to close on US$ 70.80. Gold, US$ 97 (5.2%) lower the previous fortnight shed US$ 19 (1.1%), to close Thursday 09 December on US$ 1,773. 

One of the most expensive cases in legal history concluded this week, with the jury rejecting claims that the late Dave Kleiman was a former business partner of Craig Wright, a computer scientist, who has always asserted that he invented Bitcoin. Also known as Satoshi Nakamoto, he has won a court case allowing him to keep 1.1 million coins, worth over US$ 50 billion. The Kleiman heirs have always maintained that the claimant, a computer security expert who died in 2013, had worked with Mr Wright to create and mine the first Bitcoin in existence in 2008, and that he had stolen it. The Miami jury in the civil lawsuit cleared Mr Wright on nearly all issues brought by the Kleiman family but they will receive US$ 100 million for intellectual property infringement.

TikTok has become the second fastest-ever expanding social media with the one billion user number recently been reached. This has been done in 5.1 years, only surpassed by Facebook Messenger taking just 4.9 years to hit this target. Other apps have taken longer to top one billion users – WeChat, Facebook, Instagram and WhatsApp (7, 7.7, 8.5 and 8.7 years). TikTok, known then as Douyin, started life in China in September 2016.

Following heavy political pressure, Didi Global has decided to remove its shares off the New York Stock Exchange and move them to Hong Kong. The Chinese ride-hailing giant made its US debut in July, after raising US$ 4.4 billion in its IPO, but at almost the same time that Beijing announced a crackdown on technology companies listing overseas, with the internet regulator ordering online stores not to offer Didi’s app, saying it illegally collected users’ personal data. To make matters worse for the Chinese tech company, it has also come under pressure from regulators in the US and Europe, as US regulators unveiled tough new rules for Chinese firms that list in America.

For apparently violating EU Competition rules, Italy’s anti-trust authority kas fined Amazon US$ 1.3 billion accusing the company of exploiting its dominant position against independent sellers on its website. European governments appear to be taking early action against the tech giants if they step out of line. Italy’s AGCM authority has claimed that Amazon has required that third-party sellers use Fulfilment by Amazon, which gives it a double whammy of damaging competitors and strengthening its own position. It also prevents third-party sellers from gaining access to Amazon’s Prime loyalty program, “which makes it easier to sell to the more than seven million most-loyal and highest-spending consumers”.

Five years ago, Lego built its first Asian factory in China and has announced that its second one will be a US$ 1 billion investment in Vietnam to keep up with growing demand for its products in Asia, where it has witnessed double digit growth since 2019. Construction of the toymaker’s first carbon neutral factory, (with solar panels on its roof), will start next year, with production slated to commence in 2024; 4k jobs are expected to be created over the next fifteen years. Lego also notes that building production plants, close to key markets, “provides the flexibility to respond quickly to shifts in local consumer demand, shortens the supply chain, and reduces the environmental impact of shipping long distances.”

Utilising Japanese bullet train technology and European high-speed network expertise, HS2 has signed a US$ 2.6 billion contract with Hitachi and Alstom to build fifty-four of the fastest trains in the UK, creating some 2.5k. jobs. The controversial high-speed network, with links between London, the Midlands, and the North of England, will have trains that can travel at 225 mph, with production starting at Newton Aycliffe, County Durham, and be finished at Alstom’s Derby and Crewe sites. It could take five years before the first train rolls off the production line. Each train will be around 200 mt long, with the option to couple two units together to create a 400 mt long train with up to 1.1k seats.

There are reports that the Chinese property giant Evergrande Group could default on its latest debt repayment, with the markets not impressed as its share value tanked 20% on Monday. There are also contagion concerns of the knock-on impact on other shares, especially in property and banking sectors, which witnessed similar falls on Monday. With total liabilities, both in China and overseas, Evergrande commented that it could not guarantee “to perform its financial obligations”, following a US$ 260 million demand for payment. Even if the company were to soon fail, it will take years for the mess to be cleared. Matters did not improve on Monday, when smaller property developer Sunshine 100 China Holdings defaulted on a US$ 170 million debt payment “owing to liquidity issues arising from the adverse impact of a number of factors including the macroeconomic environment and the real estate industry”.

Today, 09 December, Fitch Ratings downgraded the Evergrande Group and its subsidiaries from C to RD (restricted default), confirming that they were defaulters, as the grace period to make two coupon payments, (US$ 645 million, 13% bonds and US$ 590 million, 13.75% bonds), had expired on Monday. Evergrande, China’s second-largest property company by sales, has more than $300 billion of debt and is considered the world’s most indebted developer. The Shenzhen-based conglomerate owns more than 1.3k projects in 280 or more cities in China, whilst its Hong Kong-listed property services arm has about 2.8k projects in more than 310 Chinese cities The company ais also involved in electric vehicles, finance, healthcare and cultural tourism.

The luxury department store group Selfridges, which has twenty-five outlets in the UK, Ireland, Netherlands and Canada, has been sold to the Thai conglomerate, Central Group for US$ 5.3 billion. Founded in 1908, by retail magnate Harry Gordon Selfridge, the iconic brand had a flagship store in London’s Oxford Street that used to boast one hundred stores, including a library and shooting range. Selfridges, owned by Canada’s Weston family since 2003, was put up for sale in June, a few months after the death of Galen Weston. The new Thai owner has over 3.7k global shops, from supermarkets to electronics outlets, and department stores in Europe. Latest figures to February 2020 show that Selfridges had revenues of US$ 2.65 billion but this sales figure will have declined somewhat when the latest figures are released.

Last Saturday, Bitcoin plunged, to as low as US$ 42.3k, along with other cryptocurrencies – an obvious sign of the risk aversion sweeping across financial markets, as spiking inflation is ensuring that banks are finally beginning to tighten monetary policy and reduce liquidity. With Ether, the second largest token, tanking 17.4%, the end result saw the overall crypto sector shedding 20% to a cumulative US$ 2.2 trillion. It is estimated that on Saturday, 04 December, about US$ 2.4 billion of crypto exposure, both long and short, was liquidated. The Omicron variant has spooked the markets, as the danger of another lockdown looms and how the jittery global economies react.

The head of the Dutch central bank, and an ECB policymaker, Klaas Knot, commented that if inflation were to continue to be higher than the bank’s base case scenario next year, there could be increases in interest rates in 2023. However, it does seem that the consensus is that the current elevated inflation rate, which stood at a record high 4.9% in November, is still considered “to be largely a temporary phenomenon;” the ECB’s target is at a much lower 2.0%. At next week’s policy meeting, it is highly likely that the plug will be pulled on its US$ 2.09 trillion emergency stimulus scheme, and as per the bank’s policy any interest rate increase would only come “shortly after” quantitative easing ends. However, the decision to raise rates this month hangs in the balance, given the new variant, with some arguing that more details on its possible impact on the economy are needed before proceeding.

At last month’s BoE meeting, only two of the nine members of the Monetary Policy Committee voted for an immediate UK rate hike and there were strong indicators then that December would be the time to do so. However, the arrival of the Omicron coronavirus variant, which could slow the UK economy, may put any immediate rise, from the current 0.1%, on the back burner. One member of the committee noted that there “could be particular advantages in waiting to see more evidence on its possible effects on public health outcomes and hence on the economy.” However, there has to be risks from delaying an interest rate rise for too long: and the BoE could be guilty of underestimating the inflationary impact over the past year.

On her visit this week to the US, Anne-Marie Trevelyan, warned the US that the UK could step up retaliatory measures if punitive tariffs on UK steel exports were not lifted soon. The UK International Trade Secretary had been in Washington for talks with the Commerce Secretary Gina Raimondo and commented that “I am very keen that we solve this with what is our closest ally in the US through a positive removal”. It was Donald Trump who imposed tariffs of 25% on steel exports (and 10% on aluminium exports) when the UK was part of the EU. Subsequently, the EU had discussions earlier in the year that saw them lifted as from 01 January 2022 – but did not include the UK which had already exited the bloc. If the issue is not resolved quickly, the UK could increase existing retaliatory tariffs on products such as US whisky and cosmetics that could extend to other items such as lobsters, electric motors and orange juice.

The Australian Competition and Consumer Commission has given its approval for Sydney Airport to be taken over by a consortium of infrastructure investors for US$ 16.9 billion. In November, Sydney Airport agreed to be bought out by the Sydney Aviation Alliance (SAA), comprising IFM Investors, (which has stakes in nine other Australian airports, including Melbourne (25%) and Brisbane (20%)), QSuper, AustralianSuper and US-based Global Infrastructure Partners. It still needs the go-ahead from Australia’s Foreign Investment Review Board (FIRB) and the company’s shareholders.

BNPL is becoming something of a scourge for those Australians who max out and cannot repay their debts. If people are struggling, they are supposed to be able to access a hardship program so they can work out a new payment plan. Financial Counselling Australia has surveyed several buy now, pay later companies and reported that the industry’s practice falls well short of expected standards. Afterpay’s hardship program was ranked the best, but it still only scored 5.9 out of 10, whilst at the other end of the scale were the likes of Humm, LatitudePay and Zip posting scores of 4.7, 5.2 and 5.5. Similar surveys for the major banks saw average scores of 7 out of 10. It is patently obvious that consumers need better support by the regulators and are not covered by the National Credit Code because BNPL use service charges, and not interest; NCC covers credit cards, mortgages, personal loans, payday loans and consumer leases, whilst many of BNPL providers are signatories of a voluntary industry code of practice.

A report by the Commonwealth Bank sees their Household Spending Intentions Index rising to its highest level, (up 2.1% to 110.3 points) since December 2019 and a prediction that the population has retained US$ 170.2 billion in excess savings due to Covid-19 and the resulting lockdowns, lost incomes and travel restrictions. The end result is that it is expected that it will be a bumper Christmas, especially for retail, as Australians spend some of that “windfall”, with the national economy recovering strongly. It is estimated that shoppers spent US$ 5.75 billion in Black Friday and Cyber Monday sales, driven by resilient household incomes and high savings rates through the year, due to lockdown conditions, improvements in consumer confidence through November and a lack of opportunity for international – and, in many cases, domestic – travel.

The Australian Bureau of Agricultural and Resource Economics and Sciences has posted that the value and volume of their food and fibre has climbed to historic highs. Because of the price of grain rising, and historically high prices being paid at livestock sales all year, it is forecast that total farm production will top US$ 56 billion, and exports will hit a record US$ 43.8 billion this financial year. The global weather has been a major factor in the increased value of production, as poor seasonal weather in farming countries, like Argentina, Brazil, Canada, Russia, Ukraine and the US conditions, has had a negative impact on their agricultural production. Another positive for Australian ‘cockies’, is that La Niña is expected to set farmers up for another good year in 2022. For the fiscal year ending 30 June 2022, it is expected that farm cash income will hit a record US$ 22.0 billion, off the back of the larger volumes of food and fibre. However, farmers will face higher prices, with fuel, fertiliser and chemicals all heading north and there is no doubt that inflationary food prices may see some social unrest in H1 2022.

It is three years since Australia’s banking royal commission final report was published, referring thirteen cases to the Australian Securities and Investments Commission. Furthermore, thirty-two case studies were examined to see if banks should face prosecution. Even though ASIC confirmed it had thoroughly investigated all forty-five cases, twenty referred cases did not even reach court and were “concluded with no further action”. Now it is reported that the regulator has launched its final case, closing the door on any more court action for banks that ripped billions of dollars from customers. Thursday’s final case encapsulates the decades-long systemic issues exposed by the Hayne inquiry in 2018. Once again, it seems that the Australian banking system has escaped the true wrath of the law and its customers are the ones having to pay for the corrupt dealings of the banking hierarchy.

It appears that the banks – and more specifically senior management – have gotten off very lightly by admitting they broke the law ahead of proceedings. Of the thirteen referrals, six were dealt with in civil cases and only two became criminal cases; three are ongoing with five being completed, with total fines of US$ 56 million. In the thirty-two case studies, fifteen ended with no action taken and of the remainder, there were twelve civil and five criminal cases; total penalties to date total just US$ 22 million. One of the last cases before the courts involves ANZ, which is being sued for misleading, and ripping off, 580k customers since the mid-1990s; the bank has admitted that it breached its financial services and credit licence. ANZ said it would not be defending this case. The company admitted that it had made false or misleading representations to customers, about having systems and processes in place to ensure customers would receive their fee waivers and interest rate discounts. For far too long, it appears that many financial institutions have failed to honour agreements with customers and to ensure proper processes and systems are in place to prevent widespread compliance failures.

Last year, the big four Australian banks made US$ 19.2 billion in profit! A sad indictment of the system is that not one enforcement case has been brought against the management or board of the big financial service companies. There is no doubt that the culture and incentive rewards in place were the main drivers behind an industry driven by greed

Life is not getting any better for Turkish President Recep Tayyip Erdogan with the lira flirting with record lows, having already slumped 45% against the greenback YTD. Adopting a contrarian approach to Economics 101 and pressing ahead with his “economic war of independence”, backed up by low interest rates, he is of the opinion that keeping interest rates low is the panacea to boost Turkey’s economic growth and export potential. This contrasts with the commonly held belief that the President’s model will inevitably result in soaring inflation, higher unemployment, poverty, and a banana republic style currency – and the way to control surging price increases is by raising interest rates. According to the Turkish leader, such rates are “an evil that make the rich richer and the poor poorer”, at a time when the country’s inflation is above 21%; his response is to cut rates again, from 16% to 15%, for the third time this year. The question is whether the people will wait until 2023, for the next election, to oust the ruling Justice and Development Party (AKP), which has been in power since 2002.

Although up to 500k new jobs were expected, November job growth slowed to 210k, the smallest monthly increase seen in 2021, indicating that there is a major problem for employers to attract workers for the millions of vacancies. The US Labor Department figures pointed out that the unemployment rate fell to 4.2%, with the labour force participation rate nudging higher to 61.8%. The data was collected before the Omicron variant emerged in the US and there is the possibility that it could slow the economy if it were to discourage Americans from travelling, shopping and eating out in the coming months. Earlier figures forecast the Q4 economy growing 7.0%, compared to 2.1% in the previous quarter, but this may now have to be cut.

Initial claims for US state unemployment benefits, for the week ending 04 December, declined by 43k to a seasonally adjusted 184k – its lowest level in more than fifty-two years as labour market conditions continued to tighten amid an acute shortage of workers. Claims have declined from a record high of 6.149 million, in early April of 2020, to 1.992 million. There were eleven million unfilled jobs at the end of October, leaving employers reluctant to let workers go. Observers are taking more than a passing interest in the latest Omicron variant and the havoc it could wreak on the economy.

In a move that the federal government feels would “boost productivity and improve work-life balance”, the UAE is cutting its working week to four-and-half days and moving its weekend from Friday-Saturday to Saturday-Sunday. Initially applicable to the public sector, and starting from 01 January 2022, the new working week will be 7.30 am to 3.30 pm Monday to Thursday, and 7.30 am to 12 pm Friday; on that day, prayers at mosques will be held after 1.15pm all year round. The government said it would “ensure smooth financial, trade and economic transactions with countries that follow a Saturday-Sunday weekend, facilitating stronger international business links and opportunities for thousands of UAE-based and multinational companies”. Trials in other countries, such as Iceland, Ireland, Japan, New Zealand, Scotland, Spain and Sweden, have taken place and seem to indicate an improvement in both productivity and employee well-being. One can only congratulate the authorities on their forward thinking and foresight and if there is any place in the world that this strategy is going to work it must be the UAE. Come 2022, the whole of the country will be even more Ready For The Weekend!

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Lock ‘Em Up!

Lock ‘Em Up!                                                                                      02 December 2021               

For the past previous week, ending 25 November, Dubai Land Department recorded a total of 1,850 real estate and properties transactions, with a gross value of US$ 1.91 billion. It confirmed that 1,684 villas/apartments were sold for US$ 1.04 billion, and 166 plots for US$ 275 million over the week. The top three land transactions were for a plot of land in MBR Gardens, worth US$ 39 million, followed by one for US$ 22 million in Nad Al Shiba and another for US$ 21 million in Jebel Ali. The most popular locations in terms of volume were Business Bay, with 285 transactions, totalling US$ 170 million, and Dubai Marina, with 206 transactions worth US$ 157 million. Mortgaged properties for the week totalled US$ 537 million and 71 properties were granted between first-degree relatives, worth US$ 67 million.

Knight Frank’s latest report estimates that Dubai’s average October house price rose 21.0% to US$ 336 per sq ft in the first ten months of the year, driven by an accelerated vaccination programme and other government measures. Other factors impacting on the price increases include people upgrading to larger homes with outdoor amenities, (amid a surge in remote working and online learning), government stimulus packages and other initiatives, such as residency permits for those who have retired as well as for remote workers, and the expansion of the ten-year golden visa programme. The consultancy noted that there had been increased demand from “non-resident, ultra-high-net-worth individuals” which has resulted in the market for US$ 10 million properties witnessing the percentage of total transactions rising from its long-term average of just 2% to 7%. Surprisingly, residential values are still about 29% below 2014 peak levels which may point to further hikes in this current cycle.

Since the onset of the pandemic twenty-one months ago, Knight Frank indicated that villa prices had risen 14% and that apartments in the more expensive areas of Dubai – such as The Palm Jumeirah and Downtown Dubai – outperforming the average, as have villa prices in areas such as Mohammed Bin Rashid City, Dubai Hills and The Palm Jumeirah. October home sales, at US$ 3.05 billion, were 8.2% lower than in September which had been 100% higher than the previous September record of US$ 1.66 billion posted in 2009.

Meanwhile Asteco noted a broader recovery in the emirate’s Q3 residential sector, estimating that apartment and villa prices were 14.0% and 37.0% higher on the year. In line with the consensus, the consultancy expects prices to edge higher in December and that the growth trend will continue into 2022, albeit at a slower pace, as more developments come on stream. During the past twelve months, rents have also headed north – villas by an average 19.0% and apartments a disappointing 3.0%.

Dubai Maritime City is to spend US$ 4 million to complete the upgrade for its wastewater management network in the industrial precinct which will connect DMC, Mina Rashid and P&O Marinas to the existing Dubai Municipality main infrastructure. DP World’s purpose-built maritime centre, currently with 300 business partners and 82% occupancy, has a range of workshops, warehouses, showrooms, shops and office spaces, and is set for further expansion.The current project, with 98% of the design work and 36% of the engineering and placement of contracts completed, is scheduled to be finalised by the end of H1 2022. It is related to the upgrade project that commenced in October 2020 and is scheduled for completion in Q2 of 2022.

UAE’s fuel price committee announced that retail prices will dip by over 1% this month. Super 98, Special 95 and diesel have declined by 1.1% to US$ 0.755, 1.1% to US$ 0.725, and 1.4% to US$ 0.755. Covid had seen prices frozen for a year and it was only in March this year that prices were duly amended, with Special 95 and diesel retailing at US$ 0.548 and US$ 0.586. Petrol prices in the UAE were liberalised in August 2015 to allow them to move in line with the market, at which time Special 95 and diesel prices were at US$ 0.58 and US$ 0.56.

Dubai-based iOL Pay, a wholly owned subsidiary of enterprise system provider Illusions Online, hopes to become the first US$ 1 billion global hospitality FinTech unicorn, within twelve months; it has already launched in thirty-seven international markets. The company’s aim is to transform how the hotel industry manages payments, with its platform will enabling clients to initially manage US$ 500 million in total processing value; this figure is expected to expand sixfold within two years. The tech company reckons that “as digitisation has swept through the hospitality industry, consumer and B2B payment systems and processes haven’t advanced at the same pace.” It also notes that global hotel process payments topped US$ 1.45 trillion last year but that it would focus on the four and five-star hotel category, valued at US$ 450 billion.

Founded in 2014, Telr is a payment gateway provider that offers a set of APIs and tools, enabling businesses to accept and manage online payments via web, mobile and social media. This week Cashfree Payments became one of its largest shareholders when investing US$ 15 million in the Dubai’s e-payment solution firm, with the money being utilised to expand operations in the Mena – a fast growing online payment market. The move will benefit both parties, with a unified cross-border payments platform assisting Indian merchants accepting payments from customers in Mena and vice-versa. The region’s digital payments market is expected to grow at a 15.4% compound rate annual rate over the next five years. According to the Dubai Chamber of Commerce and Industry, UAE’s e-commerce market grew 53% to US$ 3.9 billion last year, with more of the same expected forthwith.

The DFM opened on Sunday, 28 November, 95 points (2.6%) lower the previous week and lost 192 points (5.9%) to close the shortened week, because of National Day holidays, on Tuesday 30 November at 3,073. Emaar Properties, US$ 0.05 lower the previous week, closed down US$ 0.06 at US$ 1.28. Emirates NBD and Damac started the previous week on US$ 3.58 and US$ 0.37 and closed on US$ 3.60 and US$ 0.38. On Tuesday, 30 November, 365 million shares changed hands, with a value of US$ 271 million, compared to 416 million shares, with a value of US$ 147 million, on 25 November.

For the month of November, the bourse had opened on 2,864 and, having closed the month on 3,073 was 209 points (7.3%) higher. Emaar traded up from its 01 November 2021 opening figure of US$ 1.11, to close November US$ 0.07 higher at US$ 1.28. Two other bellwether stocks, Emirates NBD and Damac, started the month on US$ 3.75 and US$ 0.38 and closed on 30 November on US$ 3.60 and US$ 0.38 respectively. YTD, the bourse had opened the year on 2,492 and gained 581 points (23.3%) to close the eleven months on 3,073. NBD and Damac started the year on US$ 3.33 and US$ 0.35 and closed 30 November at US$ 3.75 and US$ 0.38.

By Thursday, 02 December, Brent, US$ 1.46 (1.8%) lower the previous fortnight, tanked US$ 10.41 (12.8%), to close on US$ 70.80. Gold, US$ 78 (4.2%) lower the previous week shed US$ 19 (1.1%), to close Thursday 02 December on US$ 1,773.  Brent started November on US$ 83.64, and had a disastrous month losing US$ 12.33 (14.7%), to close on US$ 71.31. YTD, it started the year trading at US$ 51.80 and has gained US$ 19.51 (37.7%) to close on US$ 71.31 during the first eleven months of the year. Meanwhile, the yellow metal opened November trading at US$ 1,785 and shed US$ 7 (0.4%), during the month, to close on US$ 1,778. Over the year, it has lost US$ 117 (6.2%) from its opening year balance of US$ 1,895.

Although final figures will not be known until January, Black Friday, traditionally the busiest and most important day of the year for US retailers, saw thinner shopping traffic and lower than pre-pandemic levels; Thanksgiving Day sales were flat at US$ 5.1 billion. Although figures indicate that visits to stores and shopping centres climbed 48% on the year, they still lagged 28% behind 2019 traffic. Probably the most important driver behind these figures is the fact that retailers spread out traffic peaks by starting holiday deals much earlier; in the past, the holiday season traditionally started the week of Black Friday. With supply chain problems apparently continuing unabated, the trend of prioritising in-store shopping to beat any logjams has resulted in physical shop visits declining only 10% compared to pre-Covid levels, whilst Black Friday online spending, of US$ 8.9 billion, was at the low end of expectations – and slightly less than the US$ 9.0 billion recorded last year. In shops, toys and cooking items were the top sellers, whilst electronics and video games, such as FIFA 22from Electronic Arts and Ubisoft Entertainment’s Far Cry 6 dominated the list of top-selling products bought online. One worrying factor saw a marked 31% annual hike in the use of BNPL (Buy Now, Pay Later), accounting for 8% of all payments.

Utilising a Spac (special purpose acquisition company), Grab made its stock market debut on New York’s Nasdaq, valuing the Singapore ride haling app at US$ 40 billion. Initially, shares rose 21% but this was short-lived with them closing its first day down more than 20%. The tech app has yet to make a profit and does not expect to be trading profitably until 2023 but has indicated that its profit margins were “industry leading” and that it was focused on growing in a cost-disciplined way.

In the UK, the RAC is pointing the finger at retailers for pushing fuel prices higher on the back of wholesale oil prices. Last Friday, 19 November, oil prices dropped US$ 10 a barrel on the news of the spread of the Omicron variant but this has yet to be reflected at the pumps. Last month, retailers added US$ 0.041 to a litre of unleaded petrol. The RAC noted that, despite wholesale costs having fallen by US$ 0.093 from mid-November, retailers continued to put prices up, with the average cost of a litre of unleaded petrol ending the month at US$ 1.96, after peaking at a record US$ 2.01 on 21 November. The motoring organisation said this price hike was “completely unjustified”, with larger retailers – such as Asda, Sainsbury’s, Tesco and Morrisons – making a “shocking” profit.

November saw Australian housing prices climbing for the 14th-straight month, but the pace of growth last month, (1.3%) was the slowest since January, indicating the latest boom may be nearing its peak; in November, regional markets and capital cities showed rises of 2.2% and 1.1%, with the number of homes listed for sale in Sydney and Melbourne recently increasing – a sure sign that stock levels across those cities have pretty well returned to normalcy. Over the year, Hobart had the biggest capital city price increase, at 27.7%, and Perth the smallest rise at 14.5%. The market is waiting for the inevitable lifting of interest rates, as one of the main drivers of the recent boom has been the historically low mortgage rates; indeed, average fixed rates are rising for new borrowers. In November, Canberra median house prices almost touched the AUD 1 million (US$ 717k) level, ahead of Melbourne’s AUD 987k, but behind Sydney’s AUD 1 million mark.

Although Australia’s economy recorded its third-biggest fall on record, (Q3, a 1.9% contraction), attributable to lockdowns slashing economic activity., it was still 3.9% bigger than it was at the same point in 2020, after Q2 2020 had seen the worst quarterly fall on record of 6.8%. The latest data shows the current GDP is 0.2% lower than the Q4 2019 pre-pandemic level. There was a 4.8% slump on household spending, but household savings rose 19.8% due to the fall in spending plus stimulus payments that boosted disposable incomes. There was a 5.8% slump in services spending focused on hospitality, (tanking 21.2%), recreation, culture, and transport. Household spending in NSW, Victoria and the ACT fell 8.4%, compared with the other states, which rose 0.7%. Stimulus packages and other government support measures saw household gross disposable income rise 4.6% and SMEs recording a surprise 8.0% bounce in profits, also no doubt helped greatly by stimulus payments. That rise in incomes, combined with the slump in spending, saw the household savings ratio jump from 8% to 19.8%, nearing the record 23.6% high reached during the first lockdown in Q2 2020. However, there has been a marked improvement, with  the economy bouncing back, as restrictions were lifted and there is every chance that it will recover most or all of the lost ground in Q4, with a major caveat – the Omicron variant.

News of a new strain of Covid-19, that may be resistant to the current vaccine regime, and discovered in South Africa las Friday, sent the global markets in a spin, with major Australian companies, such as Flight Centre, Qantas and Corporate Travel Management, falling sharply down between 5% -7% on the day.  Although the general population will be more readied if a fourth wave were to arrive, the economy may not be. Twenty months ago, when Covid-19 struck, the economy was in a much better state than now, with an almost balanced budget and enough monetary wiggle room to introduce massive stimulus packages. Now the government is in US$ 615 billion worth of debt, and the RBA’s cash rate is just above the zero rate. Another extended lockdown would prove to be an economic disaster. A further problem would be inflation rates which have more than doubled this year which in turn will result in an uplift in interest rates – and therefore leading to heading higher borrowing costs. Whilst the possibility of a further lockdown remains, global markets will continue to be volatile, and investors will have to exercise caution during these troubled times.

With the current surge in inflation expected to continue into 2022, Federal Reserve Chairman Jerome Powell seems to indicate that, at the next mid-December policy meeting, there could be a winding down of its large-scale bond purchases. He was speaking after the emergence of the new coronavirus variant – which had rattled markets last Friday – saying it could not be compared to the spring of 2020 when the pandemic erupted. More interestingly, he suggested that he may have got it wrong when he considered rising inflation to be transitory and that policy makers may well be taking early action to reduce inflation; that would mean further tapering of its 2020 QE strategy sooner than many had predicted, having already cut it to a monthly US$ 120 billion last month.

Having lost ground on Wednesday, which saw a steep sell-off in the last hour of trade on worries about the Omicron variant, and the upcoming withdrawal of stimulus by the US central bank, Thursday witnessed a rally. Better performers on the day were economically sensitive smaller stocks and transport firms, along with travel and hospitality stocks also bouncing back. Boeing shares surged with news that the aircraft maker had been making progress with Chinese regulators on getting approval of its 737 MAX plane; the authority issued an airworthiness directive on the aircraft that will help pave the way for its return to service in China, thirty-two months after being grounded following two deadly crashes. The Dow was 1.8% (618 points) higher at 34,640, the S&P 500 up 1.4% to 4,577 and the Nasdaq Composite 0.8% higher to 15,381, driven by two factors – strong economic data, particularly with labour figures, and reduced concerns that Omicron infections may not be as severe as first thought. Latest data sees claims for unemployment benefits rising by 28k to 222k for the week ending 27 November, having dropped to 194k a week earlier – its lowest level since 1969. It is estimated that there were 10.4 million job openings at the end of September and that the total number of people receiving unemployment benefits was 2.31 million in mid-November.

Again, no surprise to see banks behaving badly again. This week, the EC has fined a raft of them – including Barclays, Credit Suisse, HSBC, RBS and UBS, – US$ 390 million for colluding in the trading of foreign currencies. It is alleged that traders, acting on behalf of the “Secret Five”, exchanged sensitive information and shared their plans and “occasionally coordinated their trading strategies” through an online chatroom called Sterling Lads. The regulator commented that their behaviour “undermined the integrity of the financial sector at the expense of the European economy and consumers”.

Another week, and yet another case besmirches the Australian banking sector. This time it involves Westpac, with the Australian Securities and Investments Commission launching six court cases, for alleged, widespread compliance failures that impacted thousands of deceased consumers. The outcome sees the bank agreeing to pay US$ 58 million to compensate the estates of its affected customers, with ASIC seeking a further US$ 81 million in fines to which Westpac has all but agreed. Some of the offences committed by the bank included charging fees to its dead customers, double-charging insurance policies, (affecting 7k paying twice for the same house insurance) and failing to adequately disclose its fees to financial advice customers. Only last year, Westpac agreed to pay the largest fine in Australian corporate history — a US$ 932 million civil penalty for more than 23 million breaches of anti-money laundering laws.

The main problem is that the people who should get punished for these misdemeanours escape any penalties. Senior managers – who are often the purveyors of wrongdoing – will receive their bonuses at the time the offences take place Years later, when action is taken, the bank will incur all the charges and penalties afforded by the regulator or the courts. Shareholders and customers will pick up the tab. The former will see their equity reduce because of reduced profits, leading to a lower share value and the latter by bearing  the brunt of extra costs incurred and reduced service levels The instigators will escape scot free and the only way to curb theses excesses is to hit the culprits hard, not financially, but introduce custodial sentences. Lock ‘Em Up!

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Lock ‘Em Up!

Lock ‘Em Up!                                                                                      02 December 2021               

For the past previous week, ending 25 November, Dubai Land Department recorded a total of 1,850 real estate and properties transactions, with a gross value of US$ 1.91 billion. It confirmed that 1,684 villas/apartments were sold for US$ 1.04 billion, and 166 plots for US$ 275 million over the week. The top three land transactions were for a plot of land in MBR Gardens, worth US$ 39 million, followed by one for US$ 22 million in Nad Al Shiba and another for US$ 21 million in Jebel Ali. The most popular locations in terms of volume were Business Bay, with 285 transactions, totalling US$ 170 million, and Dubai Marina, with 206 transactions worth US$ 157 million. Mortgaged properties for the week totalled US$ 537 million and 71 properties were granted between first-degree relatives, worth US$ 67 million.

Knight Frank’s latest report estimates that Dubai’s average October house price rose 21.0% to US$ 336 per sq ft in the first ten months of the year, driven by an accelerated vaccination programme and other government measures. Other factors impacting on the price increases include people upgrading to larger homes with outdoor amenities, (amid a surge in remote working and online learning), government stimulus packages and other initiatives, such as residency permits for those who have retired as well as for remote workers, and the expansion of the ten-year golden visa programme. The consultancy noted that there had been increased demand from “non-resident, ultra-high-net-worth individuals” which has resulted in the market for US$ 10 million properties witnessing the percentage of total transactions rising from its long-term average of just 2% to 7%. Surprisingly, residential values are still about 29% below 2014 peak levels which may point to further hikes in this current cycle.

Since the onset of the pandemic twenty-one months ago, Knight Frank indicated that villa prices had risen 14% and that apartments in the more expensive areas of Dubai – such as The Palm Jumeirah and Downtown Dubai – outperforming the average, as have villa prices in areas such as Mohammed Bin Rashid City, Dubai Hills and The Palm Jumeirah. October home sales, at US$ 3.05 billion, were 8.2% lower than in September which had been 100% higher than the previous September record of US$ 1.66 billion posted in 2009.

Meanwhile Asteco noted a broader recovery in the emirate’s Q3 residential sector, estimating that apartment and villa prices were 14.0% and 37.0% higher on the year. In line with the consensus, the consultancy expects prices to edge higher in December and that the growth trend will continue into 2022, albeit at a slower pace, as more developments come on stream. During the past twelve months, rents have also headed north – villas by an average 19.0% and apartments a disappointing 3.0%.

Dubai Maritime City is to spend US$ 4 million to complete the upgrade for its wastewater management network in the industrial precinct which will connect DMC, Mina Rashid and P&O Marinas to the existing Dubai Municipality main infrastructure. DP World’s purpose-built maritime centre, currently with 300 business partners and 82% occupancy, has a range of workshops, warehouses, showrooms, shops and office spaces, and is set for further expansion.The current project, with 98% of the design work and 36% of the engineering and placement of contracts completed, is scheduled to be finalised by the end of H1 2022. It is related to the upgrade project that commenced in October 2020 and is scheduled for completion in Q2 of 2022.

UAE’s fuel price committee announced that retail prices will dip by over 1% this month. Super 98, Special 95 and diesel have declined by 1.1% to US$ 0.755, 1.1% to US$ 0.725, and 1.4% to US$ 0.755. Covid had seen prices frozen for a year and it was only in March this year that prices were duly amended, with Special 95 and diesel retailing at US$ 0.548 and US$ 0.586. Petrol prices in the UAE were liberalised in August 2015 to allow them to move in line with the market, at which time Special 95 and diesel prices were at US$ 0.58 and US$ 0.56.

Dubai-based iOL Pay, a wholly owned subsidiary of enterprise system provider Illusions Online, hopes to become the first US$ 1 billion global hospitality FinTech unicorn, within twelve months; it has already launched in thirty-seven international markets. The company’s aim is to transform how the hotel industry manages payments, with its platform will enabling clients to initially manage US$ 500 million in total processing value; this figure is expected to expand sixfold within two years. The tech company reckons that “as digitisation has swept through the hospitality industry, consumer and B2B payment systems and processes haven’t advanced at the same pace.” It also notes that global hotel process payments topped US$ 1.45 trillion last year but that it would focus on the four and five-star hotel category, valued at US$ 450 billion.

Founded in 2014, Telr is a payment gateway provider that offers a set of APIs and tools, enabling businesses to accept and manage online payments via web, mobile and social media. This week Cashfree Payments became one of its largest shareholders when investing US$ 15 million in the Dubai’s e-payment solution firm, with the money being utilised to expand operations in the Mena – a fast growing online payment market. The move will benefit both parties, with a unified cross-border payments platform assisting Indian merchants accepting payments from customers in Mena and vice-versa. The region’s digital payments market is expected to grow at a 15.4% compound rate annual rate over the next five years. According to the Dubai Chamber of Commerce and Industry, UAE’s e-commerce market grew 53% to US$ 3.9 billion last year, with more of the same expected forthwith.

The DFM opened on Sunday, 28 November, 95 points (2.6%) lower the previous week and lost 192 points (5.9%) to close the shortened week, because of National Day holidays, on Tuesday 30 November at 3,073. Emaar Properties, US$ 0.05 lower the previous week, closed down US$ 0.06 at US$ 1.28. Emirates NBD and Damac started the previous week on US$ 3.58 and US$ 0.37 and closed on US$ 3.60 and US$ 0.38. On Tuesday, 30 November, 365 million shares changed hands, with a value of US$ 271 million, compared to 416 million shares, with a value of US$ 147 million, on 25 November.

For the month of November, the bourse had opened on 2,864 and, having closed the month on 3,073 was 209 points (7.3%) higher. Emaar traded up from its 01 November 2021 opening figure of US$ 1.11, to close November US$ 0.07 higher at US$ 1.28. Two other bellwether stocks, Emirates NBD and Damac, started the month on US$ 3.75 and US$ 0.38 and closed on 30 November on US$ 3.60 and US$ 0.38 respectively. YTD, the bourse had opened the year on 2,492 and gained 581 points (23.3%) to close the eleven months on 3,073. NBD and Damac started the year on US$ 3.33 and US$ 0.35 and closed 30 November at US$ 3.75 and US$ 0.38.

By Thursday, 02 December, Brent, US$ 1.46 (1.8%) lower the previous fortnight, tanked US$ 10.41 (12.8%), to close on US$ 70.80. Gold, US$ 78 (4.2%) lower the previous week shed US$ 19 (1.1%), to close Thursday 02 December on US$ 1,773.  Brent started November on US$ 83.64, and had a disastrous month losing US$ 12.33 (14.7%), to close on US$ 71.31. YTD, it started the year trading at US$ 51.80 and has gained US$ 19.51 (37.7%) to close on US$ 71.31 during the first eleven months of the year. Meanwhile, the yellow metal opened November trading at US$ 1,785 and shed US$ 7 (0.4%), during the month, to close on US$ 1,778. Over the year, it has lost US$ 117 (6.2%) from its opening year balance of US$ 1,895.

Although final figures will not be known until January, Black Friday, traditionally the busiest and most important day of the year for US retailers, saw thinner shopping traffic and lower than pre-pandemic levels; Thanksgiving Day sales were flat at US$ 5.1 billion. Although figures indicate that visits to stores and shopping centres climbed 48% on the year, they still lagged 28% behind 2019 traffic. Probably the most important driver behind these figures is the fact that retailers spread out traffic peaks by starting holiday deals much earlier; in the past, the holiday season traditionally started the week of Black Friday. With supply chain problems apparently continuing unabated, the trend of prioritising in-store shopping to beat any logjams has resulted in physical shop visits declining only 10% compared to pre-Covid levels, whilst Black Friday online spending, of US$ 8.9 billion, was at the low end of expectations – and slightly less than the US$ 9.0 billion recorded last year. In shops, toys and cooking items were the top sellers, whilst electronics and video games, such as FIFA 22from Electronic Arts and Ubisoft Entertainment’s Far Cry 6 dominated the list of top-selling products bought online. One worrying factor saw a marked 31% annual hike in the use of BNPL (Buy Now, Pay Later), accounting for 8% of all payments.

Utilising a Spac (special purpose acquisition company), Grab made its stock market debut on New York’s Nasdaq, valuing the Singapore ride haling app at US$ 40 billion. Initially, shares rose 21% but this was short-lived with them closing its first day down more than 20%. The tech app has yet to make a profit and does not expect to be trading profitably until 2023 but has indicated that its profit margins were “industry leading” and that it was focused on growing in a cost-disciplined way.

In the UK, the RAC is pointing the finger at retailers for pushing fuel prices higher on the back of wholesale oil prices. Last Friday, 19 November, oil prices dropped US$ 10 a barrel on the news of the spread of the Omicron variant but this has yet to be reflected at the pumps. Last month, retailers added US$ 0.041 to a litre of unleaded petrol. The RAC noted that, despite wholesale costs having fallen by US$ 0.093 from mid-November, retailers continued to put prices up, with the average cost of a litre of unleaded petrol ending the month at US$ 1.96, after peaking at a record US$ 2.01 on 21 November. The motoring organisation said this price hike was “completely unjustified”, with larger retailers – such as Asda, Sainsbury’s, Tesco and Morrisons – making a “shocking” profit.

November saw Australian housing prices climbing for the 14th-straight month, but the pace of growth last month, (1.3%) was the slowest since January, indicating the latest boom may be nearing its peak; in November, regional markets and capital cities showed rises of 2.2% and 1.1%, with the number of homes listed for sale in Sydney and Melbourne recently increasing – a sure sign that stock levels across those cities have pretty well returned to normalcy. Over the year, Hobart had the biggest capital city price increase, at 27.7%, and Perth the smallest rise at 14.5%. The market is waiting for the inevitable lifting of interest rates, as one of the main drivers of the recent boom has been the historically low mortgage rates; indeed, average fixed rates are rising for new borrowers. In November, Canberra median house prices almost touched the AUD 1 million (US$ 717k) level, ahead of Melbourne’s AUD 987k, but behind Sydney’s AUD 1 million mark.

Although Australia’s economy recorded its third-biggest fall on record, (Q3, a 1.9% contraction), attributable to lockdowns slashing economic activity., it was still 3.9% bigger than it was at the same point in 2020, after Q2 2020 had seen the worst quarterly fall on record of 6.8%. The latest data shows the current GDP is 0.2% lower than the Q4 2019 pre-pandemic level. There was a 4.8% slump on household spending, but household savings rose 19.8% due to the fall in spending plus stimulus payments that boosted disposable incomes. There was a 5.8% slump in services spending focused on hospitality, (tanking 21.2%), recreation, culture, and transport. Household spending in NSW, Victoria and the ACT fell 8.4%, compared with the other states, which rose 0.7%. Stimulus packages and other government support measures saw household gross disposable income rise 4.6% and SMEs recording a surprise 8.0% bounce in profits, also no doubt helped greatly by stimulus payments. That rise in incomes, combined with the slump in spending, saw the household savings ratio jump from 8% to 19.8%, nearing the record 23.6% high reached during the first lockdown in Q2 2020. However, there has been a marked improvement, with  the economy bouncing back, as restrictions were lifted and there is every chance that it will recover most or all of the lost ground in Q4, with a major caveat – the Omicron variant.

News of a new strain of Covid-19, that may be resistant to the current vaccine regime, and discovered in South Africa las Friday, sent the global markets in a spin, with major Australian companies, such as Flight Centre, Qantas and Corporate Travel Management, falling sharply down between 5% -7% on the day.  Although the general population will be more readied if a fourth wave were to arrive, the economy may not be. Twenty months ago, when Covid-19 struck, the economy was in a much better state than now, with an almost balanced budget and enough monetary wiggle room to introduce massive stimulus packages. Now the government is in US$ 615 billion worth of debt, and the RBA’s cash rate is just above the zero rate. Another extended lockdown would prove to be an economic disaster. A further problem would be inflation rates which have more than doubled this year which in turn will result in an uplift in interest rates – and therefore leading to heading higher borrowing costs. Whilst the possibility of a further lockdown remains, global markets will continue to be volatile, and investors will have to exercise caution during these troubled times.

With the current surge in inflation expected to continue into 2022, Federal Reserve Chairman Jerome Powell seems to indicate that, at the next mid-December policy meeting, there could be a winding down of its large-scale bond purchases. He was speaking after the emergence of the new coronavirus variant – which had rattled markets last Friday – saying it could not be compared to the spring of 2020 when the pandemic erupted. More interestingly, he suggested that he may have got it wrong when he considered rising inflation to be transitory and that policy makers may well be taking early action to reduce inflation; that would mean further tapering of its 2020 QE strategy sooner than many had predicted, having already cut it to a monthly US$ 120 billion last month.

Having lost ground on Wednesday, which saw a steep sell-off in the last hour of trade on worries about the Omicron variant, and the upcoming withdrawal of stimulus by the US central bank, Thursday witnessed a rally. Better performers on the day were economically sensitive smaller stocks and transport firms, along with travel and hospitality stocks also bouncing back. Boeing shares surged with news that the aircraft maker had been making progress with Chinese regulators on getting approval of its 737 MAX plane; the authority issued an airworthiness directive on the aircraft that will help pave the way for its return to service in China, thirty-two months after being grounded following two deadly crashes. The Dow was 1.8% (618 points) higher at 34,640, the S&P 500 up 1.4% to 4,577 and the Nasdaq Composite 0.8% higher to 15,381, driven by two factors – strong economic data, particularly with labour figures, and reduced concerns that Omicron infections may not be as severe as first thought. Latest data sees claims for unemployment benefits rising by 28k to 222k for the week ending 27 November, having dropped to 194k a week earlier – its lowest level since 1969. It is estimated that there were 10.4 million job openings at the end of September and that the total number of people receiving unemployment benefits was 2.31 million in mid-November.

Again, no surprise to see banks behaving badly again. This week, the EC has fined a raft of them – including Barclays, Credit Suisse, HSBC, RBS and UBS, – US$ 390 million for colluding in the trading of foreign currencies. It is alleged that traders, acting on behalf of the “Secret Five”, exchanged sensitive information and shared their plans and “occasionally coordinated their trading strategies” through an online chatroom called Sterling Lads. The regulator commented that their behaviour “undermined the integrity of the financial sector at the expense of the European economy and consumers”.

Another week, and yet another case besmirches the Australian banking sector. This time it involves Westpac, with the Australian Securities and Investments Commission launching six court cases, for alleged, widespread compliance failures that impacted thousands of deceased consumers. The outcome sees the bank agreeing to pay US$ 58 million to compensate the estates of its affected customers, with ASIC seeking a further US$ 81 million in fines to which Westpac has all but agreed. Some of the offences committed by the bank included charging fees to its dead customers, double-charging insurance policies, (affecting 7k paying twice for the same house insurance) and failing to adequately disclose its fees to financial advice customers. Only last year, Westpac agreed to pay the largest fine in Australian corporate history — a US$ 932 million civil penalty for more than 23 million breaches of anti-money laundering laws.

The main problem is that the people who should get punished for these misdemeanours escape any penalties. Senior managers – who are often the purveyors of wrongdoing – will receive their bonuses at the time the offences take place Years later, when action is taken, the bank will incur all the charges and penalties afforded by the regulator or the courts. Shareholders and customers will pick up the tab. The former will see their equity reduce because of reduced profits, leading to a lower share value and the latter by bearing  the brunt of extra costs incurred and reduced service levels The instigators will escape scot free and the only way to curb theses excesses is to hit the culprits hard, not financially, but introduce custodial sentences. Lock ‘Em Up

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I Did It My Way!

I Did It My Way!                                                                                 25 November 2021

Into Q4, and towards the end of 2021, the Dubai real estate market continues to post further growth sales transactions records. Latest figures from the 20th edition of Mo’asher, indicates 5,352 sales transactions, worth US$ 3.57 billion, making it the best October since 2013. YTD, there have been 48,651 sales transactions, worth US$ 48.34 billion – 63.4% higher, year on year. Even with two months to go until the end of the year, it has already surpassed the highest yearly sales figure since 2015. With the index base rate of 1 in 2012, October’s overall monthly index was at 1.132, (with an index price of US$ 296k); apartments’ monthly Index posted 1.16, and an index price of US$ 266k, with villas/townhouses monthly Index at 1.13 and an index price of US$ 535k.

In October 2021, 60% of all transactions were for secondary/ready properties and 40% for off-plan properties, which witnessed 2,133 transactions, valued at US$ 1.20 billion. The prime markets saw figures of 3,219 sales transactions, worth US$ 2.38 billion. The total transaction value of US$ 3.57 billion on 5,352 deals can be split between the developers’ 3,395 transactions, worth US$ 2.20 billion, which included off-plan and prime, ready properties while individual sales accounted for 1,957 transactions, worth US$ 1.37 billion.

Property Finder estimates that Damac Hills 2, Nad Al Sheba, The Springs, Dubai Hills Estate and Arabian Ranches were the best locations for sales of villas/townhouses, with Dubai Marina, Business Bay, Jumeirah Village Circle, Downtown Dubai and JLT sectors the leaders for apartments.For off-plan properties, the best locations for villas/townhouses were Dubai Marina, Business Bay, JVC, Downtown Dubai and JLT. For off-plan properties, and for apartments, Dubai Harbour, Mohammed bin Rashid City, Dubai Creek Harbour, Business Bay and Downtown Dubai were the leading locations.

A plot of land, located next to Burj Daman, and opposite ICD Brookfield, has been sold in a cash deal for US$ 79 million to a private family developer, represented by Luxhabitat Sotheby’s International Realty. Initially acquired by Al Rihab Real Estate in 2010, it became the first-ever repossession order, granted by the DIFC courts in favour of Emirates NBD after a lengthy legal case. With an estimated total built-up area of 2.2 million sq ft, the luxury development is expected to include exclusive hospitality, residential, commercial and retail space.

For the first ten months of the year, Dubai’s Department of Economy and Tourism issued 55.2k new business licences – up 69.2%, year on year; they were split 59:41 between professional and commercial. Location wise, Bur Dubai accounted for 37.6k and Deira 17.6k of the total. Three types of legal entities – Sole Establishment, LLC and Civil Company – accounted for 38%, 28% and 24% of the total. Over the period, business registration and licensing transactions being completed were 17.0% higher at 233.9k, with the total number of renewal transactions touching 120.1k, a growth of 2.7%.

At this week’s 12th World Chambers Congress in Dubai, Hamad Buamim commented that Expo 2020 Dubai had already proven to be a catalyst for growth for the emirate’s economy. The president and chief executive of Dubai Chamber also noted that the emirate is set to expand at the faster pace of 4.0% next year, by taking steps to develop its digital economy and boosting the start-up ecosystem. The local economy has recovered quicker than expected from the pandemic’s impact, driven by speedy government measures to support businesses and the digital transformation during the crisis. Mr Buamin also commented that “we think the recovery we are seeing in the fourth quarter will fuel the [economic activity] in 2022,” and “hopefully, it will bring the recovery way beyond the single-digit level that we have seen projected for the UAE and Dubai.” Mr Buamim expects business confidence in Dubai’s growth potential to remain high, as the economic transformation, driven by the Expo, will last beyond the six months of the world’s fair. He also noted that trade and the digital economy were at a better stage than they were in 2019 and that it is only a matter of time before tourism and retail perform likewise.

Under the directive of Dubai’s Crown Prince, HH Sheikh Hamdan bin Mohammed, the Dubai Executive Council has introduced a programme that explores the use of the tech in several sectors, including health, security, shipping and food. Dubai’s Crown Prince noted that “the Dubai Programme to Enable Drone Transportation will create an advanced infrastructure that enables innovators and relevant entities to test prototypes of unmanned aerial vehicles in designated areas and develop legislation that optimises their implementation”. This programme will not only enhance the emirate’s competitiveness but also attract talent and local and foreign investments to the drone applications sector. Dubai Future Foundation will oversee the implementation of the outputs of the Dubai Program to Enable Drone Transportation through Dubai Future Labs. As far back as 2014, Dubai had attracted thousands of innovators in this field, from 165 countries, to participate in the UAE Drones for Good Award, seen to be “beginning of our journey with this emerging technology”.

Emirates Central Cooling Systems Corporation posted a 49%, nine-month, year on year, expansion in the number of new registered individuals and companies in Dubai. The company, better known as Empower, is the first district cooling services provider in the country, and the region, to launch electronic registration. This strategy is in line with the ‘Dubai Paperless Strategy’ which saves time and money for all stakeholders, as all transactions are now online, without the need of visiting customer service centres. The company noted that the recent improvement in the UAE economy would inevitably open up many more deals and new expansion projects.

Shuaa has confirmed that it is in the “very early stages” – and that it may list “one or more” of its subsidiaries – and is in talks with different, yet to be named, stock exchanges to list through initial public offerings. According to Bloomberg, the investment bank is in discussions with the DFM to launch IPOs for two of its subsidiaries – Stanford Marine Group and NCM Investment which have a combined US$ 545 million valuation; this could happen before the end of Q1 2022. This comes at a time when the Dubai government is to list ten state-owned companies, starting with DEWA and Salik, as part of its wider strategy to double the size of the local financial market to US$ 815 billion; it also planning to set up a US$ 545 million market-maker fund to encourage listings from private and family owned businesses from the energy, logistics and retail sectors, as well as  a US$ 272 million fund to attract more technology companies to list.

The DFM opened on Sunday, 21 November, 489 points (17.6%) higher the previous five weeks but shed 95 points (2.9%) to close the week at 3,265. Emaar Properties, US$ 0.32 higher the previous four weeks, closed US$ 0.05 lower at US$ 1.34. Emirates NBD and Damac started the previous week on US$ 3.87 and US$ 0.38 and closed on US$ 3.58 and US$ 0.37. On Thursday, 25 November, 416 million shares changed hands, with a value of US$ 147 million, compared to 582 million shares, with a value of US$ 225 million, on 18 November.

By Thursday, 25 November, Brent, US$ 0.62 (0.7%) lower the previous week, shed US$ 0.84 (1.0%), to close on US$ 81.21. Gold, US$ 78 (4.2%) higher the previous fortnight, lost all that gain, shedding US$ 78 (4.2%), to close Thursday 25 November on US$ 1,792. 

The UK government has set aside nearly US$ 2.3 billion to help the failed firm Bulb, which was put into special administration on Wednesday, continue supplying energy to its 1.7 million customers. Teneo, the appointed administrator, estimates it will cost around US$ 2.8 billion to keep Bulb trading until the end of next April. Due to its size, Bulb – which is triple the size any other energy supplier that has failed in recent years – will be run as normal for the time being, rather than its customers being immediately transferred to other suppliers, as has happened in the past. Since the beginning of September, twenty-two energy suppliers have failed, following a spike in gas prices.

In its biggest ever single investment in the US, Samsung will spend US$ 17.0 billion building a computer chip plant, in the Texan city of Taylor, that will be completed by H2 2024 and provide employment for2k; this will bring Samsung’s total US investment to US$ 47.0 billion. In line with its global rivals Samsung is racing to expand chip making in the US to tackle supply chain issues that currently appear not to be going away, The Biden administration, which has been pushing tech giants to increase their chip production in the US, noted that the new facility would help “protect our supply chains, revitalise our manufacturing base and create good jobs”. Earlier in the year, Taiwanese chipmaker TSMC announced a US$ 100 billion investment in Arizona, while US contract semiconductor manufacturer Global Foundries announced that it will increase its investment in upstate New York.

“We are well on our way to becoming an indispensable platform for enterprises, individuals and developers to connect, collaborate and build in the flexible hybrid world of work,” were the words of Eric Yuan, Zoom’s founder. The company had just announced a massive 71.5% hike in Q3 net profit, to US$ 340 million, on the back of a 35.2% improvement in revenue to US$ 1.05 billion and driven by an increase in the number of paid customers for the video-conferencing platform. Despite these results, the market was not happy, with the share value dipping 3.5% to US$ 242, a third down YTD. By the end of last month, Zoom had 512k paid customers, with more than ten employees – 18% higher than the same period in 2020 – and total cash and marketable securities stood of US$ 5.4 billion. It also recently called off plans to acquire Five9, for a reported US$ 14.7 billion, citing that the cloud call-centre software provider had not obtained the requisite stockholder support for the merger agreement.

New guidelines involving special purpose acquisition companies – also known as blank-cheque companies – have been issued by the Dubai Financial Services Authority, With the aim of mitigating some of the risks associated with Spacs, DIFC’s market regulator will ensure that they adequately ring-fence proceeds raised from investors and that applicants will also be required to appoint a sponsor company for the initial listing and subsequent acquisition of a target company. A Spac is a vehicle with no commercial operations that is formed with the intention of raising funds through an IPO and then acquiring an existing company. Since these entities do not have the onerous disclosure requirements of an IPO listing, they have grown in popularity to meet the need to take fast-growing companies public quickly. On a global scale, Q3 saw 88 Spacs announcing mergers with existing companies, with a US$ 16 billion value. PwC estimated that “there is nearly US$ 120 billion in cash on the sidelines in Spacs that have yet to announce a merger.”  

Although many had thought that the Modi government would do a U-turn on its cryptocurrency stance, it now seems likely that it will go ahead to ban most cryptocurrencies under a long-awaited bill. On the news, cryptocurrency prices dropped on Indian exchanges, as the new law aims “to create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India”. Bitcoin declined 13%, as Shiba Inu and Dogecoin both dropped more than 15%. It seems that India is following on the coattails of China’s recent decision to make cryptocurrency illegal. There is no doubt that the RBI has very conservative views on cryptocurrency, with the 2020 verdict by the country’s supreme court overturning a digital currency trading ban imposed by RBI for two years. Only last week, the bank noted that it had “serious concerns from the point of view of macro-economic and financial stability”, and that blockchain technology can thrive without cryptocurrencies.

Unlike most other advanced economies, Japan will buck the trend by introducing a record US$ 490 billion spending package to further cushion the economic blow from the pandemic impact, at a time when many other countries are phasing out stimulus measures. Indeed, Prime Minister Fumio Kishida, in his earlier life, would have favoured fiscal restraint to focus on reflating the economy, and redistributing wealth to households, rather than spending to get the economy out of trouble. He is now following in the footsteps of his predecessor, Shinzo Abe, and appears to be using the scatter-gun approach shooting money at any target, whether the spending is to be effective or not, resulting in a lot of wasteful and unnecessary public spending. Kishida is also planning a US$ 280 billion year-end budget to fund the measures. including measures to counter higher oil prices, by subsidising oil refiners in the hope of capping wholesale gasoline and fuel prices to assist households and firms from rising oil costs.

Driven by concerns over higher prices and rising household debt, South Korea’s central bank has raised interest rates for the second time, (following its August move), in 2021, to 1.0%; it becomes the latest central bank to focus on monetary policy, which includes raising rates, as opposed to fiscal policy which involves spending money to spur economic growth in a bid to help with the post-pandemic recovery and rising inflation. The bank also raised its inflation outlook to 2.3% for this year and marginally lower to 2.0% for 2022 – an indicator that further rate rises are more than probable. The bank has to act on surging house prices and household debt to control financial risks, so the immediate need is to put a cap on rising prices, as well as to contain growing financial imbalances.

This week, the Reserve Bank of New Zealand lifted its official cash rate, by 25 bp to 0.75%, for the second consecutive meeting, in a bid to counter rising inflation, whilst its Australian counterpart reiterated that it is unlikely to hike rates before 2024. The RBNZ also withdrew pandemic stimulus – which had been one of the main factors that had driven consumer price inflation to its highest point since 2010; the CPI inflation rate is expected to top 5%, probably before the end of the year, but there are hopes that it will dip to its original 2% target by the end of 2023. New Zealand’s unemployment level has fallen but inflation and property prices have headed in the other direction.

Despite the apparent inaction by the RBA, there are many that believe it will have to make moves to raise rates earlier, driven by forecasts that wages will rise faster, than the central bank is expecting, and house prices may fall by 2023. (Some see Aussie house prices rising slower in 2022 by 7%, followed by a 10% decline a year later). The central bank is hoping that some of the factors driving near-term inflation – including higher oil prices, rising transport costs and the impact of supply shortfalls – are transient. The RBA’s forecast sees “normal” inflation will reach 3% by Q3 2023, at which time there will be full employment.  – that, being the case, it rules out any chance of a rate hike in 2022, with the RBA board being “prepared to be patient”.

Following a request from the US administration, that is pushing other nations, including China, for lower oil prices, by utilising their reserves, Japan is considering releasing oil from its stockpile. However, it appears that this would be against Japanese law as it states that reserves can be released only at a time of supply constraints or natural disasters, but not to lower prices. The world’s third biggest economy has used its reserves over the past thirty years on two occasions – following the fallout of the Gulf War in the early 1990s and the deadly earthquake and tsunami in 2011. Currently, the resource-poor country’s strategy seems to be coordinating with major consumer nations and international organisations such as IEA, at a time when surging oil prices and a weakening yen are driving up the cost of imports.

As bilateral tensions continue to worsen over the status of Taiwan and other issues. the US government has added twelve more Chinese companies to its restricted trade list. The Biden administration, also citing national security and foreign policy concerns, noted that eight of the firms were helping develop the Chinese military’s quantum computing programme, and have been added to the so-called “Entity List”; they were also accused of acquiring or attempting “to acquire US origin-items in support of military applications”. Sixteen individuals and entities, operating in China and Pakistan, were also added to the list due to their involvement in “Pakistan’s unsafeguarded nuclear activities or ballistic missile program.”

Jerome Powell, Donald Trump’s appointee in 2018, has seen Joe Biden nominate him for a second term as chair of the US Federal Reserve. His closest rival for the position was Lael Brainard, favoured by progressives on the left of the Democratic Party, was nominated for vice chair. Powell has been criticised for weakening regulation of financial institutions, as well as not doing enough to tackle climate change and poverty. The two appointments still have to be ratified by the Senate, where there will be opposition from those liberal members who want the Fed to be more aggressive in addressing income inequality and banking power. Biden’s view of continuing stability in the Fed is at odds with those who advocate more urgent action to better manage risks to the current financial system as well tackle climate change issues.

In another bid to counter China’s ever-growing global influence, especially in developing countries, the UK has overhauled its British International Investment institution which offers capital backing for schemes that promote growth in developing countries. It is hoped that the BII would be a “reliable and honest” source of funding for infrastructure and technology projects in countries across Asia, Africa and the Caribbean. This is part of the government’s policy to invest US$ 10.7 billion in international projects every year until 2025. African and developing world nations, some of which are recipients of high-interest Chinese loans, may see this as a welcome option to taking on “strings-attached debt”. BII will prioritise sustainable infrastructure investment to provide honest financing and avoid unsustainable debt, at a time when “too many countries are loading their balance sheets with unsustainable debt. Reliable and honest sources of finance are needed”.  It is estimated that since 2003, China has granted or lent US$ 843 billion to infrastructure projects in 165 countries.

Following zero growth the previous month, UK sales rose by 0.8% in October, driven by early Christmas shopping, as clothes sales jumped to just 0.5% lower than pre-pandemic levels. It was noted that shoppers were buying, or pre-ordering other items, such as toys, shoes and accessories earlier than usual for Christmas this year. However, there were declines in food and online sales, with fuel prices tanking, as consumers returned to normal levels after the September fuel supply crisis. Like for like sales in second-hand shops and other non-food stores headed north, with the charity shop sector posting sales 3% to 5% higher than pre-pandemic sales figures. Retailers continue to face supply chain problems, whilst labour shortages throughout the supply chains – from farms to distribution – are pushing up costs. As 5% inflation and climbing energy prices, will undoubtedly push up end prices, there is the chance that demand may slow as consumer confidence and spending start to dip next month.

On Tuesday, the Biden administration made the expected announcement that the United States will utilise its emergency stockpile by releasing fifty million barrels of the 605 million barrels in the reserve, in a bid to lower energy prices which have been skyrocketing in recent months; it had been discussing this strategy with major Asian energy consumers, including China, India, Japan and South Korea. This had arisen as OPEC+ appeared to reject US advances to tame soaring prices and put a cap on them; the oil cartel had already added 400k bpd to meet the increasing demand and have argued that the rebound in demand could be fragile if more supply was added.   So, the idea seems to be by pumping up supply, prices will fall to match rising demand. It is estimated that up to 140 million barrels, with the likes of India and South Korea contributing just small token amounts, will be released from the stockpiles and if that is the amount of the ‘release, this could be “very negative for pricing”.

After eleven straight days of declines, the Turkish currency tanked 15% on Tuesday to trade at just over thirteen lira to the greenback – down 45% YTD to make it the world’s worst performing currency. President Tayyip Erdogan has pushed Turkey’s central bank to make three rate cuts since September, in a move that he thinks will boost the flagging economy, but his action is the main driver for inflation levels rising above 20%; he still thinks that raising interest rates causes inflation, and that the way to combat rising prices is to make money cheaper. The president is determined that it’s his way or the highway. The fact is that the Turkish president is adamant that cutting rates is the best policy for Turkey and he will be telling the electorate next year, when the lira hits rock bottom and inflation skyrockets, that I Did It My Way!

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