Reasons To Be Cheerful

There was a 6.0% increase in the number of Dubai realty transactions to 69k last year, with the value 4.0% higher at US$ 77.8 billion, reflecting the continued growth in the sector. Of the total transactions, the biggest contributor was the sale of land, buildings and units accounting for 49k, valued at US$ 31.1 billion – with mortgages for the same three totalling 15.7k at US$ 37.7 billion. The top five investing nationalities remained unchanged- UAE – US$ 6.9 billion, India – US$ 4.2 billion, KSA – US$ 1.9 billion, UK – US$ 1.6 billion and Pakistan – US$ 1.4 billion. The leading three sales locations were Palm Jumeirah (731 transactions for US$ 3.3 billion), Business Bay (769 – US$ 4.9 billion) and Dubai Marina (1,127 – US$ 1.0 billion).

Dubai’s latest mega plan was unveiled this week – Knooz Al Sharq City in the heart of Dubai. The US$ 1.9 billion mixed use community development, extending over an area of 20 million sq ft, will combine various historic Islamic architectural styles. Surrounded by a giant wall, with seven main gates, it will have old-style housing, shops, markets and museums, as well as traditional hotels called caravansaries.

Azizi Developments announced that it would deliver seven of its Al Furjan projects in H1, including Roy Mediterranean and Montreal by next month. Five other developments – Plaza, Azizi Star hotel, Samia, Farishta, and Shaista – will be released in Q2. The Dubai-based property developer estimates the total value of these projects to be US$ 490 million.

Following an agreement between Nakheel and the AccorHotels, the 252-key, 16-floor hotel in Jumeirah Village Circle will be Ibis-branded when it opens in 2021. This property is just one of 17 projects in the Dubai developer’s ambitious hospitality expansion programme.

Later this quarter, the Gevora Hotel, on SZR, will become the tallest hotel in the world taking over the mantle from its neighbour JW Marriott Marquis. With 75 floors and 528 guest rooms, the dry hotel will be one metre higher at 356 mt.

The Dubai Land Department is trying to follow the success of the DSF (Dubai Shopping Festival) by organising the DPF – the Dubai Property Festival. The three-day event in April will include auctions, from both developers and investors, and perhaps special price discounts and the waiver of some bank fees. It will be open to any developer – as long as they are backed with an escrow account – and the general public.

DP World is expected to spend US$ 3 billion in capital expenditure over the next three years as it extends its global reach and looks for worthwhile international investments. The company expects to benefit from global trade moving upwards last year and will see its gross container volumes surge by 10%.

2017 was another record year for Emirates, with the airline flying over 59 million passengers on 191k flights and carrying 2.5 million tonnes of freight, travelling a total of a staggering 886 million km. It also served 63 million meals on flights out of Dubai and moved over 35 million pieces of luggage. Its current fleet of 269 aircraft now flies to 156 destinations; it also has a further 243 planes on order.

Dubai International Airport passenger traffic touched nearly 7 million in November – a 5.6% increase, year on year – to bring its YTD total to 80.4 million, 5.8% higher than in 2016.

After acquiring Dublin-based lessor AWAS last August, Dubai Aerospace Enterprise now has 383 aircraft in its US$ 14 billion portfolio, making it one of largest global aircraft lessors. Last June, the government-controlled company issued a US$ 2.3 billion benchmark bond in the US.

Following this week’s Cabinet Decision No. (59) of 2017 on Designated Zones, the following Dubai free zones have been added – JAFZA, Dubai Cars and Automotive Zone (DUCAMZ), Dubai Textile City, Al Quoz Free Zone area, Al Qusais Free Zone area, Dubai Aviation City and DAFZA.

Abraaj Capital is reportedly planning to offer stakes in its healthcare/hospital portfolio in either the New York or London stock exchange. Hermes has been appointed as the IPO’s book runner.

There are reports that Dubai Investments is targeting to acquire Union Properties’ 50% stake in Emirates District Cooling (Emicool), so as to take up full ownership of the district cooling entity. If that were to happen, it is highly likely that the company would be in line for an IPO. No financial details have been made available but it is expected that a sale could be agreed by early next week. Meanwhile the developer has bought a “strategic” 5.68% stake in Egypt’s Palm Hills Development for US$ 3.6 million.

Troubled Dubai contractor, Drake & Scull International, is hoping to finalise its US$ 272 million restructuring programme this year and will soon start discussions with its bondholders, holding US$ 119 million of debt. In Q4, it had already agreed with nine of its main lenders to refinance US$ 153 million of corporate debt over a longer repayment period. In Q3, the company posted an US$ 87 million loss.

December’s Emirates NBD’s PMI rose 0.7, month on month, to 57.7, recording its highest level in nearly three years – a welcome indicator to show that the country’s non-oil private sector is on the up. The data points to marked improvements in export growth, new orders and production. However, over the year both wage growth and employment have been sluggish.

A senior Ministry official estimates that the country’s economy will grow by 3.9% this year – slightly higher than the IMF’s figure of 3.4% October forecast – and up on 2016’s 3.0% rise. The improvement comes on the back of higher oil revenues, global growth and the UAE’s concerted efforts to diversify its revenue stream away from oil dependency.

Amlak Finance, via its Amlak Nasr City for Real Estate Investment unit, has signed an agreement with Marseilia Group for a mixed-use development in Nasr City District, Cairo. It will include not only the “usual” residential units, shopping mall and hotel but also dedicated areas for social activities. The Dubai-based real estate financier is also targeting 10k job opportunities for Egyptian youths.

As part of its ongoing expansion strategy, NMC Health has bought the remaining shares it does not own in Dubai (49% in Fakih IVF facility for US$ 205 million) and in Saudi Arabia (30% in As Salama hospital). Last month, the London-listed healthcare company indicated plans to spend US$ 800 million in the region.

Naeem Holding, listed on the Egyptian Exchange (EGX), now has a dual listing on the Dubai Financial Market up to a limit of 33.3% of its US$ 218.5 million capital.

The DFM opened on Sunday (07 January), at 3464 and nudged 31 points higher (0.9%) by Thursday, 11 January, to close at 3495. Emaar Properties was down US$ 0.06 at US$ 1.96, with Arabtec up US$ 0.08 at US$ 0.75.  Volumes were lower at 180 million shares traded on Thursday, valued at US$ 65 million (compared to 389 million shares worth US$ 161 million the previous Thursday – 04 January).

By Thursday, Brent Crude traded US$ 3.29 (1.7%) higher at US$ 69.26, with gold heading the same direction – up US$ 1 to US$ 1,322 by 11 January 2018.

It is reported that Aston Martin may go public, with estimates of a US$ 6.8 billion IPO. If that happened, the Kuwait-backed car company, which delivered 5k vehicles in 2017, whilst raking in nearly US$ 1.2 billion in revenue and expected profit of nearly US$ 250 million, could be valued at about the same as Italian rival, Ferrari, which has a stock market value of US$ 21.4 billion.

Even though Samsung Electronics – the jewel in the beleaguered South Korean’s company’s crown – posted record Q4 profits of US$ 14.1 billion, its share value has fallen over 10% since its November high. The 64% improvement in the bottom line figure disappointed analysts’ forecasts of US$ 14.8 billion. The world’s biggest chip maker was also hurt by a stronger won and hampered by the corruption scandal within the Samsung Group, expanding Chinese competition and a slowdown in the chip boom.

The Saudi “purge” continues unabated with eleven princes facing trial after being arrested for protesting the end of state subsidies for their utility bills and claiming compensation for a relative convicted and subsequently executed for murder. This is just part of a push by the “new” regime to diversify the Kingdom from its oil-dependent economy which has already seen the November arrest of over 200 high profile Saudis and the introduction of austerity measures, one of which was the 127% hike in fuel prices earlier in the month.

Despite an impressive 45% hike in 2017 global sukuk issues to US$ 97.9 billion, S&P forecast a possible 28% dip this year. The ratings agency cites factors such as increased geopolitical risks and tighter liquidity for the expected decline.

Having underestimated both the last two years’ global growth levels, the World Bank expects a stronger 2018 with growth levels of 3.1%. In an upbeat assessment, it reckons that the recovery is broad-based and more positive than its June assessment, particularly with regard to the eurozone.

UK supermarkets had better than expected sales over the Christmas period as consumer spend was nearly US$ 1.4 billion higher at US$ 39.3 billion. Tesco was the biggest winner with a 3.1% hike in sales, whilst the other three majors – Asda, Morrisons and Sainsbury’s – trailed but still posted 2% gains. These four were dwarfed by the two newcomers – Aldi and Lidl – that both posted revenue increases near to 17%. Non-food stores fared badly which saw them record their worst fall since the GFC.

The eurozone is still struggling with low inflation levels recording a 0.1% December fall to 1.4% – still some way off the ECB’s 2.0% target. Core inflation – excluding energy, food, alcohol and tobacco – remained unchanged at 0.9%. On an annual basis, there was a marked decline in energy prices (from 4.7% to 3.0%).

China reported a 1.8% Decmber CPI increase, marginally up on the 1.7% November reading. Over the month, inflation was 0.3% higher and year on year producer prices were 4.9% to the good. Chinese authorities confirmed that 2017 growth was better than most analysts’ expectations, coming in at 6.9%. Furthermore the Central Bank reported a month on month US$ 20.7 billion increase in its reserves to US$ 3.14 trillion, up US$ 129 billion (0.9%) for the year, not only helped by the growth spurt but also the government strengthening its grip on outflows. This includes a US$ 50k cap on how much foreign currency a Chinese citizen can convert each year. The yuan benefitted from the weak dollar last year, climbing 6.8% higher (a little lower than the overall 8.5% decline against a basket of major currencies).

It seems that US authorities are reluctant to see local tech companies dealing directly with overseas interests particularly from China. Last week, a proposed US$ 1.2 billion sale of Moneygram to the digital payments arm of Alibaba was blocked. Now Huawei, the world’s number three smartphone brand behind Apple and Samsung, is having problems obtaining a US carrier to sell its Mate 10 Pro smartphone, with AR&T, with security concerns the main issue. Five years ago, a US Congressional committee recommended that Huawei (and ZTE) should be barred from any future US mergers and acquisitions.

Once again some UK economic data continues to confound critics as latest figures see the monthly industrial output growth double to 0.4% – its eighth straight month of expansion – and manufacturing output posting a similar increase, up from 0.3% a month earlier. On an annual basis, growth is at 2.5% and 3.5% respectively. The FTSE 100 closed Thursday at a record high 7764, whilst sterling edged inexorably higher to close at 1.372 to the US$. Even those pundits who forecast that the UK economy, along with the pound, would fall off a cliff in 2017 should now have Reasons To Be Cheerful!

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Something Just Like This

VAT kicked off in the UAE – and Saudi Arabia – on Monday, with a standard 5% rate. The country’s coffers are expected to be boosted by US$ 3.3 billion in the first year of operations. Most goods and services will be affected although education, residential rents, medical treatment and public transport will be zero-rated. According to the UAE Finance Ministry, receipts from VAT will be used “for infrastructure development, upgrading public services and boosting the country’s economic competitiveness.” The other four GCC states are expected to introduce VAT by early 2019 at the latest.

With the introduction of VAT – and the estimated 2% additional hike in the inflation rate – many, including the Hay Group, expect real wages to fall as the 4.1% hike in remuneration will be lower than the forecast 4.6% inflation level. In the current environment, a 4.1% pay increase in 2018 looks highly improbable so consumer spending will have to be pulled in, to the detriment of the local economy.

At the start of the year, industry experts always seem to come out with dire warnings that the next twelve months will see an over-abundant realty supply chain. However, such high numbers never materialise and are often 50% lower than expectations by year end.

According to latest statistics, Dubai International City recorded the largest fall in rents last year – at 16% – to US$ 11.4k for a 1 B/R apartment. Over the year, the only type and location that posted an increase in rent were studio apartments in Mirdiff. However, as sale prices nudged lower, yields for both villas – 5% – and apartments – 7% – remained largely unchanged. Overall prices were down in 2017, although there were bright spots that posted marginal increases – 2 B/R in JLT, 1 B/R on the Palm and studios in Dubai Sports City and Silicon Oasis.

Omniyat has signed a US$ 136 million deal with Ajman Bank to help finance a luxury development – comprising a 5-star hotel, residences and retail outlets – located in the Marasi development on Dubai Canal and slated for a 2020 completion date. The Dubai developer is in a cooperative partnership with Jenina Real Estate and Saudi’s Rashed Al Rashed Group. Further details will be released this quarter and will involve a world famous hospitality brand. Omniyat also announced that The Langham Downtown Dubai will open in Q3 2020. The project, located on the banks of the Dubai Canal, will house 167 rooms and 239 residences.

Bin Ladin Contracting Group LLC Dubai has won a US$ 105 million JV contract (between Nakheel and Spain’s RIU Hotels & Resorts) to construct an 800-key hotel resort and water park on Deira Islands. Completion will be by 2020. This contract sees the total project spend on infrastructure and construction work nearing US$ 2.2 billion.

Amlak Finance has completed its US$ 38 million development of 54 3/4 B/R villas in Mirdiff.

DEWA is confident of completing its massive Jebel Ali M-Station electricity and water desalination expansion project by Q3 which will cost US$ 3.1 billion. On completion, its electricity capacity will increase by 32% to 2.9k MW, whilst the station will be able to produce 149 million imperial gallons of desalinated water per day. The whole DEWA capacity is currently 10.2k MW and 470 MIGD.

This week saw somewhat of a record with four cruise ships docking at Port Rashid on the same day – for the first time ever. On board were 25.3k souls of which 21.4k were tourists. It was a good start to the cruise season, which goes on until October, during which time Dubai hopes to attract over 700k visitors, following a 15% hike in numbers last year to 650k.

Following two years of falling turnover, Dubai Duty Free posted a 5.6% increase in 2017 revenue to US$ 1.92 billion, as December, with a new monthly sales record of US$ 218 million, aided by a three-day 25% discount during the company’s 34th anniversary celebrations. As in the past, perfumes (US$ 300 million), liquor (US$ 297 million) and tobacco (US$ 188 million) accounted for 40.8% of total sales.

Last Sunday, not only were the shops jammed to capacity because of the introduction of VAT, the following day, but the RTA posted record passenger numbers totalling 1.806 million. On New Year’s Eve, the three transport options Metro/Trams, taxis and buses had passenger numbers of 870k, 546k and 390k.

Although 525 deaths were recorded on the country’s roads last year, it was 25.6% down on the 2016 figure, whilst the number of fatalities per 100k people also fell to 4.4. It is noted that speeding continues to be the main culprit accounting for 43.8% of road deaths. However, the number of issued fines for speeding over 70 km and 60 km fell by 38.8% to 56.6k and 22.7% to 100.3k respectively. There is no doubt that any reductions in accidents would save money in many ways and boost the Dubai economy no end.

The assets of UAE banks in November totalled US$ 732 billion, with conventional banks accounting for US$ 585 billion (79.9%) of the total and Islamic financial institutions the balance; there was a US$ 12.9 billion month on month increase. There were also rises in both credit value and banks’ deposits to US$ 434.6 billion and US$ 392.9 billion respectively.

On 30 December, Al Futtaim finally completed purchase of the Marks & Spencer franchise and retail business (comprising 27 outlets) in Hong Kong and Macau. The Dubai-based retailer, which has been in partnership with the UK company since 1998, now has 72 M&S stores in Asia and the Middle East.

Gulf Islamic Investments has acquired two German grade A logistics centres for Amazon at a cost of US$ 144 million. The UAE-based firm has now spent over US$ 500 million on similar assets in the European market and plans further additions of high quality commercial realty, focusing on Germany and the UK.

It is reported that majority owner, the Varkey Group, has sold to Malaysia’s Khazanah Nasional Berhad a 3% stake in GEMS Education for an undisclosed fee. The global sovereign wealth fund, with a consortium including Bahrain’s SWF, already had an indirect interest in the education provider through Dubai-based private equity firm, Fajr Capital. GEMS’ latest financials (for the year ending 31 August) indicated an EBITDA of US$ 261 million on the back of a US$ 926 million revenue stream.

Gulf Navigation Holding, with year-end assets 12% higher at US$ 32 million, is to increase its capital base by US$ 122 million to reach US$ 272 million. The IPO is expected in Q1 with the money raised being used to support ambitious expansion plans, including the addition of twenty new vessels by 2020.

The DFM opened on Tuesday (02 January), at 3370 and started the year in bullish mood rising 94 points (2.8%) by Thursday, 04 January, to close at 3464. Emaar Properties was US$ 0.13 higher at US$ 2.02, with Arabtec up US$ 0.02 at US$ 0.67.  Volumes were lower at 389 million shares traded on Thursday, valued at US$ 161 million (compared to 572 million shares traded at US$ 206 million the previous Thursday – 28 December).

By Thursday, Brent Crude traded US$ 3.29 (5.1%) higher at US$ 68.07, with gold heading the same direction – up 4.0% from US$ 1,270 to US$ 1,321 by 04 January 2018. For the past year, black gold soared by US$ 9.80 (17.25%) from US$ 56.82 to US$ 66.62, whilst the yellow metal jumped US$ 154 (13.38%) from US$ 1,151 to US$ 1,305.

Following a class action suit in the US, Petrobas has been landed with a US$ 3.0 billion fine by authorities. The Brazilian state oil company suffered from a corruption scandal, with bribes being paid to officials and politicians by outside contractors to curry favour. Former chief executives, Maria das Gracas Foster and Jose Sergio Gabrielli, were caught up in the far-reaching scandal. The oil giant claimed to be a victim of a kickback scheme which had already cost Petrobas an estimated US$ 1.8 billion.

Despite the Trump tax cuts, BP expects to take a US$ 1.5 billion hit, as the petro giant will have to revalue some of its US deferred tax assets and liabilities. Several other companies will be caught under  the same net and will have to pay out more tax in the short-term, whilst international entities will be levied a 15.5% tax on repatriated overseas earnings.

Wixen Music Publishing Inc is the latest music publisher to sue Spotify (for US$ 1.6 billion) for alleged copyright violations, including works by Neil Young, Tom Petty and The Doors. Nevertheless, it seems that Spotify is planning an IPO on the New York Stock Exchange as early as March. The music streaming company, founded in Sweden and with more than 140 million users and a 30 million-song catalogue, sowed the seeds for the share issue in 2016 with a US$ 1 billion agreement with various private equity firms. (Interestingly, UK music fans streamed 68.1 billion songs last year, equating to over 1k per person and 36.4% up on 2016).

It is a surprise to see five English football clubs ranked in the top nine in the world, with the biggest economic growth potential. The Soccerex Football Finance 100 is based on different factors including potential owner investment, net debt, bank balance, value of players and ground/training facilities. The five EPL clubs are Manchester City (1), Arsenal (2), Tottenham Hotspur (5), Manchester United (7) and Chelsea (9).

BA’s owner, IAG, has paid US$ 24 million for the assets of the bankrupt Niki, founded by former motor racing world champion, Niki Lauda. It will buy 15 of the 20 Austrian airline’s planes and take over its slots at Munich, Vienna and Zurich, as well as reemploy 75% of the 1k personnel. The Anglo-Spanish group, which will incorporate Niki with its recently launched budget airline Vueling, also owns Aer Lingus and Iberia. Unlike a lot of airlines, it also expects a 20% surge in operating profits to US$ 3.6 billion this year.

After a truly miserable 2017, during which it issued three negative profit warnings, Carillion starts the year facing an investigation by the Financial Conduct Authority, concerning the “timeliness and content” of some past announcements it had made. The infrastructure company, which employs 40k staff, has been in so much trouble that its share value sank by more than 90% last year.

There were mixed results over the festive season for UK retailers, with the most disappointed having to be Debenhams. It has issued a profits warning, that saw its share value plummet by over 21%, after 17 weeks of like-for-like sales to 30 December were 2.6% lower, year on year. It now expects annual profits in the region of US$ 82 million against market expectations of US$ 113 million. However, it did report that Christmas on-line sales were up 15.1%.

On the other hand, Next, even surprised its own management, by posting a 1.5% rise in full-price sales (as opposed to an earlier forecast of negative 0.3%) over the festive season, helped by the colder than normal weather conditions; its shares rose 6.7% in Wednesday trading. Although store sales fell 6.1% in the eight-week period to 24 December, on-line trading jumped 13.6%, so it upped its annual profit estimate to almost US$ 1 billion.

The Co-op is to invest US$ 216 million to add 100 new food stores this year that will offer 1.8k new employment opportunities; 20% of the outlets will be opened in London. The retailer is planning to buy Nisa Retail, subject to Competition and Markets Authority approval, and has recently signed an agreement with the Costcutter Group to become its exclusive wholesale supplier for its 2.2k outlets.

Citigroup is planning to depart from a 2004 pact – along with Morgan Stanley and UBS Group – which allowed their financial advisers to change companies without the threat of being sued. The agreement signed by 1.7k firms is now set to unravel as, according to Morgan Stanley, the Protocol for Broker Recruiting had become full of “opportunities for gamesmanship and loopholes”.

Hyundai/Kia had a disappointing 2017, with sales of 7.25 million vehicles – one million down on company forecasts and the third year in a row that targets have been missed. Despite the shortfall, the South Korean company is still the fifth largest in the world although it is losing traction in the US market where sales dipped by 11%, whereas total sales elsewhere were only 7% off.

Not surprisingly, US authorities have stepped in to stop the US$ 1.2 billion sale of Moneygram to China’s Ant Financial – the digital payments firm for Jack Ma’s Alibaba.

China ended the year with positive news on the manufacturing and production fronts. The December Caixin PMI rose 0.7 to 51.5, indicating that the manufacturing sector is performing well, mainly because of robust output and new orders. To the outsider, it seems that the Chinese economy performed a lot better than many expected in 2017.

There is no doubt the importance that housing, the country’s largest asset valued at US$ 5.3 trillion, has to the Australian psyche, with home loans of US$ 1.3 trillion representing 60% of its banks’ total assets. However, after five years of solid growth – with Sydney and Melbourne increases of 75% and 59% – prices are starting to dip. How far they fall in 2018 remains to be seen but at least a 5% drop is on the cards.

The Institute for Supply Management December PMI jumped 1.5 to 59.7, reflecting the strength of its manufacturing sector as well as the improving US economy. Driven by marked improvements – in new orders (up 5.4 to 69.4) and production (1.9 higher at 65.8) – the index surprised analysts who had forecast a fall of 0.3 to 58.1. Early next week, the release of the non-manufacturing index is expected to see the service sector nudge higher as well. Other data shows that the pace of price growth is moving, with the December prices index surging 3.5 to 69.0, with employment expansion remaining firm.

Blog Oz                  
30 June 30 June     Unit %age 2017 31 Dec 17 31 Dec 16 31 Dec 15 31 Dec 14 31 Dec 13
1,325 1,365 Gold US$ oz 13.38% 1,305 1,151 1,060 1,186 1,236
66.50 79 Iron Ore US$ lb -4.96% 71.28 75 47 73 135
68.60 35.00 Oil – Brent US$ bar 17.25% 66.62 56.82 36.40 57.33 102.50
120 127 Coffee US$ lb -5.11% 126.2 133 124 161 260
87 85 Cotton US$ lb 13.77% 78.5 69 64 62 86
17.50 20.00 Silver US$ oz 6.19% 16.99 16.00 13.82 15.77 20.15
3.40 3.50 Copper US$ lb 33.06% 3.30 2.48 2.14 2.88 3.37
0.77 0.80 AUD US$   8.33% 0.78 0.72 0.73 0.81 0.89
1.37 1.40 GBP US$   8.87% 1.35 1.24 1.48 1.53 1.64
1.19 1.25 Euro US$   14.29% 1.20 1.05 1.09 1.21 1.38
0.018 0.020 Rouble US$   6.25% 0.017 0.016 0.014 0.017 0.030
7,500 8,000 FTSE 100     7.64% 7,688 7,142 6,242 6,548 6,730
3,850 4,100 CS1300     21.78% 4,031 3,310 3,731 3,532 2,291
2,750 2,850 S&P 500     19.48% 2,674 2,238 2,044 2,091 1,831
3,600 3,250 DFMI     -4.56% 3,370 3,531 3,151 3,774 3,370
6,050 6,355 ASX     8.93% 6,171 5,665 5,345 5,415 5,352
1,200 45 Bitcoin US$   1210.72% 13,081 998 427 302 817

From the table above, it can be seen that all but three of the sixteen listed indicators moved in positive territory in 2017. The three negative results were iron ore, 4.96% lower at US$ 71.28, coffee 5.11% off at US$ 126.2 and the Dubai Financial Market dropping 4.56% to 3,370. There are two forecasters willing to pit their wits against the market and their H1 forecasts are on the left of the table.

Both gold and Brent defied many analysts’ expectations by showing double digit growth figures of 13.38% and 17.25% respectively (a year earlier the increases were 8.6% and 56.1%). Gold is likely to lose a little of its sheen this year, as global central banks target higher interest rates which makes the bond and interest rate markets more attractive to the detriment of gold; however, the weak dollar may dilute that effect somewhat, resulting in little change in its value.

Last year saw gold grow at double the pace of silver but 2018 promises to see the underperforming metal bounce back as the yellow metal trades largely unchanged over the next six months. Silver will benefit from shrinking supply and an improved demand growth environment and should nudge 3% higher.

Take any forecast on future oil prices with a pinch of salt to put on the egg of faces of many analysts who, twelve months ago, forecast 2017 prices at under US$ 40. Much will depend on whether the agreed quota cuts, and output levels of non-OPEC producers including the ever increasing number of shale operators, continue at current levels. If global growth comes in at even IMF estimates, that will have a positive impact on prices that could top US$ 70 by June. Furthermore prices will get a boost from the upcoming Aramco IPO but this will probably not ibe felt until Q3.

Although most commodity prices are expected to show moderate growth, there could be a downturn of fortunes for iron ore, as China grapples with over-supply issues and on-going closures of its old, polluting steel mills. With the likes of Brazil and other low cost producers ramping up supply, prices are expected to dip in H1 by as much as 8%, especially since Chinese demand slows.

Coffee is expected to continue its recent dip in prices and could well be 5% off come 30 June – although do not expect the price in the coffee shop to follow suit, as other on-costs head in the other direction.

Cotton was the pick of the crop in 2017 and it looks more of the same in 2018. Major problems in two of the world’s biggest growers, India and Pakistan, have cut back on the supply chain, with the resultant slack being taken up by the likes of the US; latest data shows that there is a 29% increase in year on year commitments for US cotton exports.

With copper prices moving upwards towards the end of the year, there is every chance that this will continue into the New Year on the back of increased Chinese demand. Furthermore as there are no new significant supply lines on the horizon, allied with a global reluctance to boost production, prices could be 3% higher by mid-year.

Over the recent past, the Australian dollar has strengthened to 0.78 against the US$, coming off lows of 0.74. Although the probability of improving global growth – and its direct impact on commodity prices – would benefit the “lucky” country, it is likely that any uptick in its currency is by and large already priced in the market.

The surge in most currencies – including the much maligned sterling – points to a dollar weakness – a possible Trump ruse to make US exports cheaper. Two big ifs will push sterling higher in H1. If the current 3.1% inflation rate were to fall and the sluggish wage growth improves, then the currency will continue its upward trajectory, and will once again amaze some analysts who were predicting dollar parity this time last year.

To the surprise of many, the euro had an impressive 2017 that witnessed a 14.29% jump to the greenback and 3% up on sterling. Whether it remains so buoyant in H1 is open to conjecture as it will face headwinds on several fronts including on-going problems with Greek debt, Catalonia and the Italian March election just to mention three. These could be offset if the ECB slows down its massive US$ 1.2 trillion stimulus package and Brexit negotiations do not hit an impasse.

The Russian rouble – in line with its economy – has been hit by sanctions and softer industrial output. Following negative growth in both 2015 and 2016, last year saw the world’s sixth largest economy return to positivity. The 1.7% expected growth last year is expected to continue on similar lines in 2018. That being the case – and oil prices continue at current levels – the rouble is expected to trade around the same level.

There is only one thing to say about the global bourses – avoid them like the plague especially now they are at record highs. The three “western” indicators have all shown double digit growth over the past two years (S&P 500 – 30.8%, FTSE 100 – 23.2% and ASX 200 – 15.4%) but will surely run out of steam. The volatile CSI 300 goes up and down year by year and looks certain for a major correction, after climbing 21.8% in 2017 (but only 8.0% over the past two years). Strangely, it is the DFMI that could see an early year rally and even if it climbed 8% to 3,640 (pre-Ramadan), it would still be 33.6% lower than four years earlier in May 2014, when it was trading at 5,088.

April Fool’s Day has come early with reports in the FT that the UK is interested in joining the Trans-Pacific Partnership – and the likes of Commonwealth countries Australia, Brunei, Canada, Malaysia, New Zealand and Singapore, along with Chile, Japan, Mexico, Peru and Vietnam. This is the same body from which President Trump withdrew the US and he did so for a reason – that he thought it was a ridiculous trade deal; Theresa May should take note and stay well clear of Something Just Like This!

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Different Drum

Following a visit by HH Sheikh Mohammed bin Rashid Al Maktoum, it has been announced that the emirate’s latest tourist attraction – the Dubai Frame – will open on 31 December. Located in Zabeel Park, it has two 150 mt high structures, linked by a 93 mt wide bridge from which there are views of “old” Dubai (including Deira and Karama) and “new” Dubai (such as Burj Khalifa and Emirates Towers) from different vantage points.

The importance of the hospitality sector to Dubai’s economy cannot be underestimated, with STR reporting that the emirate accounts for 30.3% (29.2k keys) of all hotel rooms in development in the MENA region. With 95 hotels in the pipeline and the government’s policy to boost travel and tourism, the World Travel and Tourism Council’s forecast that the sector will top US$ 70 billion over the next decade looks a distinct possibility. Furthermore, the 12.4% contribution that the sector currently contributes to the country’s GDP is set to increase.

The Dubai Shopping Festival, running from 26 December to 27 January, started with a massive twelve-hour Super Sale on Tuesday that saw shopping centres packed and the resultant gridlock around many malls. There where discounts of between 25% – 90% offered on goods for sale at hundreds of shops in MoE, and five City Centres – Al Shindagha, Barsha, Deira, Me’aisem and Mirdiff.

Away from the retail side, Damac Properties is offering a new Tesla car to its buyers of selected property ranges from their portfolio during the 31-day extravaganza. Since its inception, the property developer has become synonymous with such promotional “giveaways” that in the past have included yachts, a jet and even a private Caribbean island.

Arabtec has been awarded a US$ 279 million Dubai Properties’ contract for construction work of villas and townhouses. The phases of La Quinta and Amaranta, located off Emirates Road, are expected to be completed by Q2 2020.

The region’s first Banyan Tree Residences is to be built at a cost of US$ 68 million in Dubai on a large island overlooking the Emirates and Montgomerie golf courses. The 110k sq ft, 32-storey project, housing 244 residences (ranging from 1- 4 B/R) and three full-floor penthouses, will be completed by Q3 2019. The developer, Sweid & Sweid, has appointed Civilco Civil Engineering & Contracting as lead contractor.

As part of its US$ 774 million portfolio, Danube Properties has awarded five separate construction contracts in 2017 totalling US$ 104 million, including its US$ 60 million, 599-unit Miraclz Tower at Arkan due for completion within two years. Another contract of US$ 61 million has been signed for the main construction of the Resortz project; slated for completion by Q2 2019, it will house 419 apartments and 25 retail outlets.

The 25-year old UAE-based Rotana is planning a further 14 hotels next year to add to its current portfolio of 38 properties, with a further 48 under various stages of development. Six of the hotels opening next year will be in the UAE with the remaining nine set for Iran, Iraq, Saudi Arabia (3), Tanzania and Turkey (2).

According to the OECD, the UAE is officially the world’s largest developmental aid donor relative to its national income, donating 1.21% of its GDP, equivalent to US$ 4.3 billion. Only two other countries recorded aid of over 1% of their GDP – Norway (1.12%) and Luxembourg (1.0%).

November consumer prices in the UAE rose 1.73%, year on year, driven by price hikes in food/beverages (1.9%), tobacco (70% – because of the October introduction of excise duty) and transportation – 3.5%.

UAE fuel prices will be higher in January with Special 95 up US$ 0.022 (3.9%) to US$ 0.600 per litre, as diesel prices jump 5.9% to US$ 0.635. Special 95 started the year at US$ 0.490, so has risen 16.9% in 2017 – almost in synch with Brent crude which is up 16.4% from its 01 January opening of US$ 56.82.

Launched last March, Emirates NBD REIT has bought a shopping centre in Silicon Oasis from Souq Extra in a US$ 57 million deal. Rental income from the 42 retail outlets, comprising 36k sq ft gross leasable area, is guaranteed for two years. It has already bought The Edge office building in DIC, South View School in Remraam Community and Uninest student accommodation in Dubailand.

Troubled developer, Union Properties, is planning a 100% IPO later next year involving its facilities management unit, ServeU. The money raised will be used to boost its investment portfolio  and operations, coming after a turbulent 2017 that has seen extensive board and senior management changes and losses of US$ 627 million (after a US$ 763 million write down in the value of assets) in Q2 and US$ 12 million in Q3.

Abraaj Group is reportedly in preliminary discussions to acquire a minority stake in Turkish drug maker, Sanovel Ilac Sanayi & Ticaret. The Dubai-based private equity firm, which manages a US$ 13.6 billion portfolio of assets, has a dedicated US$ 536 million fund specifically for Turkish investments; so far this year, it has made two outlays in the country – a 21% stake in logistics company Netlog Lojistik Hizmetleri and a minority share in online travel agent

The DFM opened on Sunday (24 December), at 3365 and was 5 points up by Thursday, 28 December, to close at 3370. Emaar Properties was US$ 0.05 lower at US$ 1.89, with Arabtec up US$ 0.01 at US$ 0.65.  Volumes nudged higher at 572 million shares traded on Thursday, valued at US$ 206 million (compared to 431 million shares traded at US$ 131 million the previous Thursday – 21 December). As the bourse will open next week on 02 January, Thursday was the last trading day of 2017. From its 01 January opening, and having gained 12.06% in the previous year, the DFM had a lacklustre year, shedding 4.56% in value reflected by a US$ 0.05 fall in Emaar shares; because of a mid-year capital restructuring programme, Arabtec’s value was US$ 0.29 higher from its January opening of US$ 0.36.

By Thursday, Brent Crude traded US$ 2.08 (3.3%) higher at US$ 64.78, with gold heading the same direction – up 1.0% to US$ 1,270 by 28 December 2017.

The booming equity markets have been the catalyst for a 23% surge, equating to US$ 1 trillion, in the Bloomberg Billionaires Index – a ranking of the world’s richest 500 people. The biggest winner appears to be Amazon’s Jeff Bezos, who saw his fortune jump over 52% to US$ 99.6 billion, replacing Bill Gates, with only US$ 91.3 billion.

The owner of the Volvo Car Group, Geely Holding, is set to spend US$ 3.3 billion to buy an 8.2% stake in the truck maker, AB Volvo. The Chinese company has no plans to combine the two Swedish companies, which were hived off some twenty years ago. It does hope to benefit because AB Volvo owns 45% of Dongfeng Commercial Vehicles, a major Chinese truck maker, and also has a significant construction equipment business in the country. Geely also owns the company that makes Lotus and London’s black cabs.

Despite well documented delivery delays on its car models – and a large number of back orders and only a relatively few deliveries – Tesla has announced plans for an electric pick-up model; this comes after founder Elon Musk indicated that the open-backed truck would be on the same lines as Model Y, a yet to be detailed car, but probably based on Tesla’s original Model 3. The company also has plans for a sports car range and a line in articulated lorries. However, despite all the hype, the fact is that the company has problems – it is still making losses and it may have to find extra funds in 2018 to finance operations.

Uber has agreed to sell a 20% stake in the company to a consortium led by Japan’s SoftBank for a reported US$ 9.6 billion. It has been a troubled year for the ride-hailing company beset by various scandals – and these have had a negative impact on its valuation that has seemingly fallen 30.5% to US$ 48 billion during the course of 2017. It is expected that this latest sale of shares will benefit the company, after numerous setbacks, and see the share value move north again.

In the run up to Christmas, there was some good news and bad news for Apple’s chief executive, Tim Cook, who has seen the company’s market value more than triple since he took over the reins from Steve Jobs in 2011; his 2017 remuneration has jumped 74% to US$ 102 million. However, the tech giant is facing at least eight class actions in the US, after admitting that it had developed software to slow down its old iPhones. Although it owned up to “downclocking” older models and apologised for any slowdown, it has refuted claims that it “intentionally degraded” the user experience”, with the aim of encouraging customers to upgrade to newer models.

Having filed for bankruptcy in September, Toys “R” Us Inc is set to close over one hundred  of its 879 US shops, with Christmas sales 15% lower than in 2016. Any decline in the retailer’s business has a knock-on effect on its major suppliers and subsequently Mattel Inc (the maker of Barbie and Fisher-Price) and Hasbro have been badly hit with their share values declining this week by 4.5% and 3.2% respectively. In the UK, 26 stores are expected to close, with the company focusing more on the smaller distribution units and on-line sales.

This year will not be a good year for many South Korean companies none moreso than Hyundai that is looking at a  67% slump in 2017 profit to US$ 44 million, driven by a raft of drivers including the lacklustre performance of Hyundai Heavy Metals. The world’s largest shipbuilder by sales announced plans to raise US$ 1.2 billion through a new share issue which in turn will dilute the value for existing shareholders. Consequently its share value fell by more than 25% which in turn saw the main stock market down 29%.  Slowing global demand and increased Chinese competition are two factors that have led to a global industry slump.

Foxy Bingo owner GVC is to acquire leading bookmaker, Ladbroke Coral, in a cash and share deal, valued at US$ 5.2 billion; GVC will own 53.5% of the new entity. This comes a year after Ladbrokes was involved in a US$ 3.0 billion merger with Gala Coral.

More of the same news from the UK – with Q3 average weekly wages up 2.3%, year on year but still not keeping up with the November inflation rate of 3.1%. Meanwhile consumer spending over the period – at 1% – was at its lowest rate in over five years. The fact that household expenditure has exceeded income over the past four quarters indicates that savings are being used to fund this expenditure. However, Q3’s 0.4% growth was better than the two previous quarters’ 0.3% and was a slap in the face for all the doomsayers who had forecast that the economy would fall off a cliff after Brexit and also that sterling would be on parity with the greenback.

Boxing Day sales in the UK have continued the same trend of recent times – shopping centres and High Streets witnessed shop visits down 4.5%, whilst internet sales were expected to grow by more than last year’s 6.2%. Two other reasons cited were the fact that Black Friday sales have become increasingly important, changing traditional shopping habits, and many retailers have started discounting around that time in late November rather than waiting for Boxing Day – as in the past.

In the first day of trading after the Christmas break, the FTSE 100 hit record highs during Wednesday trading to reach 7,633 before closing the day at 7,621 – 6.9% higher YTD from its 01 January opening of 7,142. The latest rally comes on the back of rising commodity prices, especially copper, that has seen gains for mining companies, and a general upturn in global trade.

With news that revenue from the recently introduced GST has slowed, the Indian government is looking to borrow US$ 7.8 billion to cover any shortfall and maintain spending at current rates. Asia’s third largest economy, at US$ 2.3 trillion, is targeting a budget deficit of 3.2% of GDP (its lowest level in a decade) by March year end but Prime Minister’s Narendra Modi has a problem. Normally he would just cut back on spending to meet the target but because of a slowing economy, not helped by last year’s withdrawal of high denominated bank notes, he is concerned not to slow expenditure any further, so as not to stymie growth.

Bitcoin, created anonymously in 2009, continues to confound those critics who proclaim its bubble has been well and truly deflated. The fact is that as of today, 28 December, its value stands at US$ 14.6k, compared to just US$ 1 k at the beginning of the year. In 2016, it was the world’s best performing currency for the second year in a row, having increased by 120%. It has always traded with volatility – in 2013 it increased tenfold to US$ 1.15k in just two months but the following year sank to under US$ 0.4k, following a major hack. Even then the same doomsayers were sure that bitcoin was dead and buried. Maybe they are the same people who, last January, predicted oil at US$ 20 and sterling trading at parity with the greenback! It’s about time they started beating to a Different Drum!

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Fairytale of New York

A new initiative by HH Sheikh Mohammed bin Rashid Al Maktoum sees the launch of the MBR Centre for Future Research. With the aim of carrying out new studies on space science and technology, the facility will initially finance a research centre of 3k scientists. It will also encourage enhanced communication, between the country’s young scientists and global experts, to build up the UAE’s knowledge bank.

Knight Frank has forecast that Dubai prime residential property is set to show a modest 1% increase next year, with the main drivers being Expo 2020 and higher government investment. In its 13-city study, the three locations with the strongest growth forecasts were Paris (9%), Singapore (5%) and Geneva (3%).

According to the latest study, Dubai residential sales and rents continued to fall in 2017. In the six month period to October, it is estimated that the four locations, with double-digit villa rental declines, were Al Furjan, Al Barsha, JVC and Dubai Sports City – at 13.9%, 12.0%, 11.8% and 10.7% respectively. In the apartment sector, falls were posted in all locations except for Dubai Investment Park, with rents up 3.5%, whereas Discovery Gardens at a 9.3% decline was at the other end of the spectrum.

Villas experienced a bigger fall in sale prices than apartments, with the four largest losses found in The Meadows (9.3%), Dubailand (8.2%), Al Furjan (8.1%) and Jumeirah Islands (7.1%). However, only two locations – JVC (4.0%) and Barsha (0.7%) – posted gains, with Emirates Hills and Jumeirah Park remaining flat. The biggest decline in apartment sale prices was found to be The Views (5.2%), with most others recording marginal falls.

Having recently confirmed two major contracts – US$ 3.3 billion Azizi Riviera and Azizi Victoria (at twice the size) – Azizi Developments announced that a further US$ 2.5 billion will be splashed out on new developments next year. The company is looking at a healthy future especially as the Expo factor starts to take effect.

Emaar Properties has extended the tender deadline, until the end of next April, for what would become the world’s largest shopping centre. Located in Dubai Creek, the project will cover 3 million sq mt, including 1.7 million sq mt for retail, 550k sq mt for residential and 150 million sq mt – commercial.

The Jumeirah Group will add five new properties to its portfolio in 2018. They include hotels in Abu Dhabi, Bahrain, China, Indonesia and Oman.

Local property developer, Seven Tides, launched its Anantara Residences Sky Collection, located on Palm Jumeirah. Prices range from US$ 327k for a studio to US$ 1.1 million for a 2 b/r luxury apartment. Forming part of the 5-star Anantara The Palm Dubai Resort, completion date is set for Q3 2018.

Knight Frank has forecast that Dubai prime residential property is set to show a modest 1% increase next year, with the main drivers being Expo 2020 and higher government investment. In its 13-city study, the three locations, with the strongest growth forecasts, were Paris (9%), Singapore (5%) and Geneva (3%).

MAF has completed phase 1 of the US$ 91 million upgrade of its Midriff City Centre that will double the number of parking places to 1k whilst adding new entry and exit points. The enhancement, including improved safety features, will be completed early in 2018. This is part of the company’s four year plan to add ten new City Centres, 40 Carrefour supermarkets, 28 cinemas and 740k sq mt of community centres in the country. The Dubai-based developer is also planning to increase its investment in the Egyptian market to US$ 1.3 billion by 2020, including a Vox Cinema complex in Alexandria. It is expected that these investments will provide up to 120k new direct and indirect jobs.

The six-year old Dubai-based Broccoli Pizza and Pasta company is planning to grow its current portfolio of 95 restaurants in four countries – UAE, UK, India and Saudi Arabia – to over 300 in twelve locations by the end of 2018.

Next week, Limitless aims to pay off US$ 112 million to outstanding creditors which will bring its total repayments to date to US$ 675 million, equating to almost half of its outstanding liability. The payment of US$ 81 million to banks will bring its total payments to US$ 599 million (49.4% of the total balance) and the US$ 31 million to trade creditors to US$ 76 million or 48.3% of the outstanding debt. Final repayments by the Dubai-based real estate developer are expected by December 2018 at the latest.

The London-listed NMC is expected to spend US$ 800 million in the region next year. The UAE hospital operator is expected to target hospitals and other medical facilities, as it continues its ambitious expansion plans. Last February, it bought the Al Zahra hospital in Sharjah for US$ 560 million.

flydubai has finalised its order for 175 Boeing planes – a mix of MAX 8, 9 and 10 – with a further 50-plane option. This deal sees the emirate’s budget airline more than triple its current fleet of 61 aircraft. The 737 MAX has proved a money winner for Boeing as it has won 640 orders this year and a total of 4.2k in its history.

Emirates NBD is expected to divest itself from the Bank of Beirut by selling its 7.56% stake in the bank of which it is the fourth largest shareholder. As one of the five largest financial institutions in Lebanon, the bank has assets of US$ 17.5 billion and posted Q3 profits of US$ 152 million.

DP World and Russia’s Caspian Venture Capital have each invested US$ 25 million in the beleaguered Virgin Hyperloop One. With Virgin also investing an unknown amount in the superfast rail startup, Richard Branson has been appointed Chairman that also sees Ahmed bin Sulaim on the board.

The Al Gurg Group has bought a 20-storey London building – 240 Blackfriars Road – for US$ 357 million, via its own Wolfe Asset Management, from Great Portland Estate and BP Pension Fund. The company also owns the adjoining property – Cubitt House.

Amanat Holdings has acquired a further 5.3% stake, valued at US$ 14 million, in education provider, Taleem to bring its total shareholding to 21.7%. Its initial 16.4% foray in April cost the Dubai firm, specialising in the healthcare and education sector, US$ 54 million. The Dubai-listed company expects to splash a further US$ 588 million next year in more acquisitions, both in the UAE and Saudi Arabia.

The DFM opened on Sunday (17 December), at 3355 and was 10 points up by Thursday, 21 December, to close at 3365. Emaar Properties was US$ 0.05 higher at US$ 1.94, with Arabtec down US$ 0.01at US$ 0.64.  Volumes nudged higher at 431 million shares traded on Thursday, valued at US$ 131 million.

By Thursday, Brent Crude traded US$ 2.08 (3.3%) higher at US$ 64.78, with gold heading the same direction – up 1.0% to US$ 1,270 by 21 December 2017.

It is reported that Prince Al Waleed bin Talal, probably the best known Saudi  caught up in last month’s detention of over 200 nationals, will have to pay over US$ 6 billion to gain his freedom. The 62-year old, estimated to be worth US$ 18 billion and listed by Bloomberg to be the 57th richest person in the world, is also founder of Kingdom Holding which could be used as a bargaining chip; the company, with stakes in global giants such as Apple, Citigroup and Twitter, has a US$ 9 billion market value. The Saudi crackdown continues unabated with more people being netted by authorities and more bank accounts being frozen.

It is looking increasingly likely that Boeing will reach a deal with the Brazilian plane maker, Embraer that would give the US company a footing in the lucrative small plane sector. If Boeing went for a total acquisition, it would be their biggest deal in over twenty years, since it bought McDonnell Douglas.

The US Justice Department is expected to shortly sentence a UAE-based UK executive of the Brazilian company who has pleaded guilty to bribing a Saudi state-owned oil company official relating to the sale of three aircraft. Last year, Embraer made a US$ 205 million settlement with both US and Brazilian authorities over corruption in several countries including Saudi Arabia. The Saudi official received the bulk of the US$ 1.5 million “payoff”, whilst Colin Steven is now facing a sentence that could be as draconian as 90 years.

Venezuela has had a turbulent year even though the government has not published formal economic data for the past two years. It is known that last year the country had inflation at 274%, economy contracting by 16.5% and unemployment over 7.5%. 2017 is unlikely to be any better.

Following Cyril Ramaphosa’s thin margin victory over Nkosazana Dlamini-Zuma in South Africa’s African National Congress election for a new leader, the Johannesburg Stock Exchange jumped nearly 5% and the rand rallied, trading at 12.74 to the US$. Indicators show that the ex-trade unionist turned billionaire businessman and who was a Lonmin board member in 2012 when 34 striking diamond miners were shot dead by police, is the front runner to take over the country’s presidency after Jacob Zuma’s second term ends in 2019. Having just emerged from a recession, the economy grew 0.8% in Q3 and its budget deficit this year is expected to increase from 3.1% of GDP last year to 4.3% in 2017. Recently ratings agencies – S&P Global and Fitch – cut the country’s debt to junk status. The outlook does not look good.

Growth in China continues northwards with the latest World Bank estimates for this year up to 6.8% from an earlier estimate of 6.5%. However, the world body considers that because of planned domestic policy tightening growth over the next two years, expansion will remain at the lower estimates of 6.4% and 6.3%. The country has seen a marked effort in rebalancing its economy, with household incomes and consumption growing relative to investment.

Driven by unexpected stronger domestic demand and rising export levels, Japan has lifted its 2017 growth forecast to 1.9% (and 1.8% next year) after earlier lower projections of 1.5% and 1.4%. Although still well below the 2.0% government target, inflation levels are beginning to move slowly north and are expected to reach 1.1% next year, with the jobless rate dropping one point to 2.7%.

The EU finally approved a deal that will result in Brexit talks progressing to the second stage. However, the UK government is still in disarray, despite the PM’s assertion that “we are well on our way to delivering a smooth and orderly Brexit.” To some, it seems that Theresa May, originally a firm Remainer, will settle for a very soft exit that will see the UK more aligned with the EU’s trade rules and following the bloc in economic ties – basically a non-Brexit – and paying US$ 60 billion for the privilege.

Latest data sees the US Q3 account deficit falling US$ 24.3 billion to US$ 100.1 billion, equating to 2.1% of GDP from 2.6%. December’s NAHB/Wells Fargo Housing Market Index jumped five points to 74 indicating a marked improvement in US home builder confidence; this was at its highest level since 1999 and is an indicator that the demand for housing is on the up. The stock markets have boomed this year with all three major US indices hitting new records and currently  all more than 20% higher YTD – Dow Jones at 24,800, Nasdaq 6,950 and S&P 500 at 2,680. So much for doom and gloom this time last year when the Queens, New Yorker had just been elected to the world’s highest political position.

Astounding his many worldwide critics, President Trump has managed to pass a huge tax reform bill that sees corporate tax rates slashed from 35% to 21%. Although it is expected to add US$ 1.46 trillion to the current national debt of over US$ 20 trillion, this will result in increased economic growth and boost job creation. The average tax payer will be up to US$ 2.4k better off as the top tax rate is cut from 39.6% to 37.0%. However, there is every chance that mega companies, such as Apple, DHL, Facebook, Google and Microsoft, that have apparently been parking their “profits” in lower tax overseas jurisdictions will be encouraged to now add them to the US tax funds.

There is no doubt that any American President is judged on the state of the economy and that being the case the incumbent is progressing well. There is no doubt that the economy is on a firmer footing than a year ago and has withstood major hurricanes in that time. GDP at 3.3% is at its highest level in three years, with departing Fed Chair Janet Yellen agreeing that the expansion is “increasingly broad based across sectors”. For Donald Trump the past year must seem a Fairytale of New York.

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It Don’t Come Easy!

HH Sheikh Mohammed bin Rashid al Maktoum approved a 19.5% rise in Dubai’s 2018 budget to a record US$ 15.4 billion; spending on infrastructure (for Expo 2020 and other projects) has seen a 46.5% hike, accounting for 21.0% of the total. Other increases saw general, administrative, grant and support spending 11.5% higher at US$ 6.5 billion and state salaries moving 10% higher to US$ 4.6 billion (as an additional 3.1k will be added to the public sector). This budget will show a US$ 1.7 billion deficit (equivalent to 1.56% of GDP) as revenues are expected to be 12% higher at US$ 13.7 billion. The three main contributors will be fees (US$ 9.8 billion), taxes (US$ 2.9 billion) and government investments (US$ 0.3 billion).

At the same time, the RTA has announced a US$ 872 million investment in projects, including the Red Line metro extension from Nakheel Harbour and Towers Station to the Expo 2020 site.

Azizi Developments has completed and handed over two of its Al Furjan projects – the US$ 65 million, 316-unit Candace Acacia and the US$ 60 million, 227 unit Candace Aster.

Dar Al Arkan is to build a 38-storey residential building on the Dubai Water Canal which will be designed by Roberto Cavalli. The I Love Florence Tower will be the Saudi Arabian company’s first foray in the Dubai market.

Gemini Property Developers has started construction on the 29-storey Symphony Tower in Business Bay. It will house 455 varying-sized apartments and will be the developer’s second luxury tower after its September launch of Splendor in Sobha Hartland community.

AccorHotels is planning a 434-key hotel in the One Central development area that is slated to open in 2020. The 25hours Hotel for Dubai is the first of the 12-year brand in the region and follows six properties already operating in Germany and Austria, with three more – in Cologne, Düsseldorf and Paris – due to open in 2018.

With the likes of Quorvus Collection, Radisson and Country Inns & Suites By Carlson in its 1.4k property, 18k room-portfolio, Carlson Rezidor Hotel Group is planning a 25% hike in hotel numbers to 1.8k and rooms to over 20k. The group, acquired by China’s HNA Group last December, is planning a further four next year in the UAE and seven more in 2019.

Dubai’s newest attraction, the US$ 270 million Dubai Safari Park had its soft opening this week and is a welcome replacement for the 50 year old Dubai Zoo in Jumeirah. The park, covering 119 hectares, is located in Al Warqaa 5.

Ably assisted by major exhibitions, including the Dubai Airshow, and the onset of winter weather, STR reported that Dubai November hotel demand rose 2.7% to record highs; however, earnings remained disappointing as average room rates were lower at US$ 205 and occupancy levels dipped 2.7% to 87.0%, as supply outstripped demand with Q2 posting a 3.2% increase of 2.5k rooms to a 80.4k total. It is expected that over the next two years, supply will increase by 16.2% to 93.4k and, in 2019, by 21.4% to 113.4k.

Business in Dubai Investment Park continues to grow as it reports a 36% hike, over the past nine months, in sub-leasing contracts. Of this total, 68% related to existing sub-tenants and the balance to new contracts; furthermore, warehousing, at 46%, and staff accommodation (35%) accounted for 81% of the business.

Having opened its first regional data centre in Dubai last year, in a 50:50 tie up with Meraas Holding, China’s Alibaba will open a second facility in 2018. With digital transformation rapidly growing, the need for more centres is obvious.  On a global scale, it is thought that Alibaba ranks third behind Amazon and Microsoft in the public cloud services market.

Dubai’s Souq has launched Amazon Global Store that will allow customers access to over one million products, supplementing the local online marketplace’s range, including apparel and fashion. In March, Amazon bought the Dubai site for a reported US$ 650 million and, in time, there will be many more items available for Dubai customers.

It is reported that Emaar Properties, in collaboration with Dubai Properties is in discussions with banks regarding a US$ 1.1 billion loan package for several projects including a shopping mall and a tower. Also this week and, as expected, the Emaar board has approved a US$ 1.1 billion dividend as a result of the proceeds from the recent Emaar Development IPO. 75% will be paid out in January and the balance following the AGM ion April.

Abraaj Capital was involved in two deals this week. It has acquired a minority stake in Tunisie Telecom, that country’s largest operator, from Emirates International Telecommunications. No financial details or the share size have been made available but it will represent the largest ever private equity investment in Tunisia and brings the Dubai-based firm’s number of investments there to ten. It had earlier paid US$ 14 million for a minority share in Biletall, a Turkish online travel agency.

The DFM opened on Sunday (10 December), at 3393 and was 38 points (1.1%) off to close on Thursday, 14 December, at 3355. Emaar Properties was US$ 0.17 lower at US$ 1.89, with Arabtec flat at US$ 0.65.  Since 01 November, the bourse has lost 209 points (5.9%) from its then opening of 3564 with both Emaar Properties and Arabtec losing ground – US$ 0.38 and US$ 0.15 respectively.

By Thursday, Brent Crude closed lower at US$ 62.70, with gold heading the same direction to US$ 1,257 by 14 December 2017.

Abu Dhabi’s recently opened US$ 1 billion Louvre gallery is now home to a US$ 450 million painting – Da Vinci’s painting of Christ. The work of art was sold at a record price in New York and the emirate’s Department of Culture and Tourism has confirmed that it had acquired it, although earlier reports indicated that the buyer was a Saudi Prince.

There have been two major deals involving UK shopping centres. Last week, Hammerson, the owner of Birmingham’s Bullring made a US$ 4.6 billion offer to buy Intu which has Manchester’s Arndale Centre in its portfolio. Now the French property group Unibail-Rodamco is planning to spend US$ 24.7 billion to acquire the Australian Westfield Corporation which owns 35 shopping centres in the UK and US.

Just as John Leahy – the man responsible for the sale of more than 16k aircraft, valued at over US$ 1 billion – Airbus has been rocked by news that both their chief executive and COO will be leaving; Tom Enders will not seek reelection in 2019 and Fabrice Bregier will stand down in February. This seems to be the culmination of an internal power struggle taking place at the same as the European manufacturer is losing ground to arch rival Boeing.

Walt Disney has agreed to buy the bulk of 21st Century Fox’s business, including its film and television studios, regional sports network and 39% of the satellite broadcaster, Sky. Fox, run by 86-year old Rupert Murdoch, will form a news-focused company with its remaining assets but, along with other Fox shareholders, will also acquire 25% of the enlarged Disney group. The US$ 52.4 billion mega deal will also see Disney assume US$ 13.7 billion of Fox’s debt. The sale will finally give Disney access to millions of new customers and it can now complete with the likes of Amazon, Apple and Google on a level media business playing field.

It is reported that expat remittances out of the country continues to expand. One of the top four receiving countries, from the UAE, is Pakistan and interestingly it is that country’s second main source of income after exports. About half of its US$ 20 billion remittances are derived from the Gulf. On Monday, the rupee lost 5% in value after the Central Bank withdrew support of the currency and with this decline the value of remittances is expected to increase in the coming days.

Alibaba is again investing in the Indian e-commerce sector, funding 71.4% of a US$ 280 million start-up in the country’s largest online supermarket, Bigbasket. It had earlier been in investment discussions with Amazon but it now seems that the Chinese e-commerce giant is the Bangalore-based grocery’s favoured suiter. Alibaba has already invested in the Indian digital payment company, One97 Communications Ltd, whilst Amazon’s Jeff Bezos has vowed to invest US$ 5 billion in the country

November data sees China’s exports surprising the market by an impressive 12.3% year on year hike (compared to market expectations of 5.9%). On the other hand, imports were up 17.7%, with the market expecting 13.0%, resulting in a US$ 40.2 billion trade surplus.

As Japan’s Q3 GDP has been seasonally adjusted to 0.7%, compared to 0.6% in the previous quarter, GDP on an annual basis is now at 2.5% – well up on previous expectations of 1.5%. The once-flagging economy has now expanded in the past seven quarters. Meanwhile its current account surplus is 40.7% higher, year on year, at US$ 193 billion. Both exports and imports showed marked annual increases – by 14.3% to US$ 583 billion and 18.5% to US$ 545 billion

At its Wednesday meeting, the Federal Reserve chose to move its benchmark lending rate (for the third time in 2017) up 0.25% to 1.5%.  It has made indications that there could be three similar hikes next year, pointing to declining unemployment levels, allied with a moderate expansion in both household spending and business investment. Meanwhile, inflation is expected to remain the south side of 2% and, if Trump’s tax plan is passed by both houses next week, there could be a further boost for the economy.

At the same time of Janet Yellen’s last Fed meeting, Chinese authorities increased the rate that is charged in open-market operations by 5bp, as well as lifting the same in its standing lending facility to 3.25%.  This is a move to tighten the country’s monetary policy and to cut back on its worryingly high credit supply.

Now that the UK inflation rate has edged above the pivotal 3.0% level to 3.1%, the Bank of England Governor, Mark Carney, has to write a letter to the Chancellor of Exchequer explaining how he plans to reduce inflation to its 2.0% target. This level is at its highest level in nearly six years and comes at a time when wage growth lags behind at 2.2%. It was only in October 2016 that inflation was at 0.9%, with the fall in sterling being the main driver in inflation tripling in a little over a year. However, the 52 year old Canadian, who had worked for Goldman Sachs for 13 years, has not come to grips with the fact that inflation continues to outstrip wage growth. One thing is certain – if inflation remains at this level, or creeps higher, any future rate hike is left on the shelf.

Just like his two masters, Prime Minister May and Chancellor Hammond, Governor Carney appeared to have both feet in the Remain camp, stating (erroneously as it happened) that Brexit would force the UK into recession and be the biggest domestic risk to the economy. He is also on record for recently stating that the country would be booming if it were not for Brexit. Only last month, he hiked interest rates to 0.5% because the economy was growing “faster than its speed limit”, although current growth at 1.5% is somewhat lower than the 2.5% pre GFC figure.  Being the Governor of the Bank of England – It Don’t Come Easy!

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Happy Birthday!

Cluttons reckon that 80k residential units cloud be added to the Dubai property portfolio over the next three years and is one of the few consultancies that consider that this may not result in an oversupply situation. In line with what this blog has been expounding for some time, it expects the emirate’s population to increase by 441k over the same timeframe which pro rata equates to the requirement for an additional 105k units.

In Q3, the consultancy estimates that residential prices declined 1.9%, with villa prices down 2.8% and apartments lower at 1.3%. The sector recorded drops of 1.5% in Q2 and 5.6% over the past twelve months.

fäm Properties reports that there has been a US$ 8.2 billion (78%) increase in the value of Dubai land sales over the past five years, now at US$ 18.5 billion so far this year, compared to US$ 10.4 billion in 2012. Probably the best performing location has been Business Bay that has witnessed value growth from just US$ 131 million in 2012 to its current YTD level of US$ 900 million (and area-wise from 731k sq ft to 2.5 million sq ft).

Lootah Real Estate has broken ground on its The Gardens project in JVC. Covering an area of 244k sq ft, the twin residential buildings will house 217 units and should be completed by Q3 2019.

As part of its US$ 1.4 billion hospitality expansion plans, Nakheel has opened its tenth community club in Al Furjan. Located next to Al Furjan Pavilion, the facility will host a 150-seat restaurant, a swimming pool and fully equipped gym.

MMS Global has announced that The Art of Living Mall will open in September 2018. The specialised homeware mall, the first in the region, is being built on 162k sq mt of land in Um Suqeim Road and will host over 100 outlets. Apart from the “homeware” stores, it will also feature art exhibitions, restaurants, cafes and a gym.

Both parties have rejected claims, following rumours of a possible Spinneys takeover by Majid Al Futtaim. Spinneys did announce expansion plans which will see a 29.5% increase in its regional outlets to 79 and create 2k new jobs. The supermarket chain will also build a new US$ 48 million HQ in Dubai which will also feature a flagship store and an on-site cookery school.

A new fun golf concept is Dubai-bound for 2019 with the introduction of Topgolf. In partnership with Dubai Golf, the US company will open its venue at the Emirates Golf Club. The 60k sq ft, three-level building will see guests in hitting bays, using micro chipped balls that instantly score themselves, whilst indicating the accuracy and distance of shots. This is all carried out in a climate-controlled, family-friendly environment that utilises play, food and music.

Yet another leisure pursuit has arrived in Dubai with XDubai introducing its XLine in Dubai Marina. Not for the faint-hearted, the 1 km long zipline has a 16 degree incline and travels at 80kph.

There is every chance that Emirates may consider the introduction of a premium economy class on some of its flights. Some analysts consider that the airline has been missing out on an important revenue segment.

Damac confirmed plans that it hopes to work on Croatian projects – including Dalmatia, Dubrovnik and Istria – as it continues to expand its overseas business. The Dubai-based developer is searching for the right local partners.

Dubai Investments expect work to start early next year on its Riyadh Investments Park, whilst other projects in Angola and Kenya will be implemented later in 2018. The US$ 534 million Saudi project is in collaboration with two Saudi partners, one of which is providing the land whilst the remaining two stakeholders will contribute funding and management.

Dubai-based ASGC has won two Emaar Misr contracts in Cairo – phases 1 and 2 of the new Uptown Cairo project Levana, and the Crescent project in Mivida. The former involves construction of 121 villas and infrastructure work and the latter thirteen fully-finished apartment buildings with 5k residential units.

With revenue rising 17.3%, year on year, to US$ 926 million, GEMS Education posted an impressive 22.9% hike in its EBITDA (earnings before interest, taxes, depreciation and amortisation) to US$ 262 million. Revenue per student, among its 47 schools, jumped 6.6% to US$ 8.1k, whilst enrolments were 9.4% higher at 114k students, although capacity fell from 90% to 87%. Over the past four years, the company has invested over US$ 1 billion in capital expenditure, of which US$ 343 million was expended this year.

Dubai-based Audacia Capital has paid US$ 108 million for two headquarter office properties – the ASICS EMEA and Benelux HQ and the Danone Netherlands Global headquarters – under construction near to Schiphol Airport in the Netherlands.

In what could be construed as a highly controversial and political move, the UAE has been included on an EU blacklist of 17 global tax havens. It is thought and hoped that it will have a negligible impact on the local banking sector and that sense will prevail in Brussels.

November’s Emirates NBD’s quarterly purchase managers index indicates that there has been a marked increase in buying activity in Dubai’s non-oil private sector. The headline PMI was up at 57 and indicators point to strong growth in Q4 which will be further boosted with increased sales activity prior to the introduction of VAT on 01 January 2018. On the flip side, there are still a lot of discounts on offer, to stimulate demand, that may stifle new business growth.

It was no surprise to see Dubai finally makes it into the top 30 of JLL’s latest Global Cities Ranking, coming in at 27th. Encompassing 300 cities, the study covers the attractiveness of its commercial real estate offering.

Following its October launch in Dubai, the US$ 1 billion e-commerce company Noon has signed an agreement with the Saudi electronics giant, United Electronics Company (eXtra), as its exclusive partner for a range of consumer electronics and home appliance items. Noon has its head office in Riyadh.

Emirates REIT debut sukuk was 2.5 times oversubscribed; with a 5.125% profit rate and a five year tenure, the US$ 400 million raised, with a credit spread of 291 bp, will be used to refinance existing debt and replace amortising loans with bullet funding.

Acquiring an additional 66.7% stake in Brazil’s Empresa Brasileira de Terminais Portuários, DP World now owns 100% of Embraport The facility, to be known as DP World Santos, is Brazil’s largest multi-modal port terminal with an annual 1.2 million TEU capacity (20’ equivalent units). The Dubai operator already has a big presence in Latin America including operations in Argentina, Dominican Republic, Ecuador, Peru and Suriname.

Abraaj has made an initial investment in an 111MW Mexican natural gas-fired power plant in Chihuahua – the first phase of what will be a 500 MW platform that the Dubai investment firm is planning for the country. The Mexican government is targeting clean energy generation to reach 35% by 2024.

The DFM opened the shortened week on Monday (03 December), at 3420 and was 27 points off to close on Thursday, 07 December, at 3393. Volumes were lower this week, with trading of 302 million shares, valued at US$ 154 million, (cf 345 million shares for US$ 217 million, on Wednesday, 29 November). Emaar Properties was US$ 0.04 higher at US$ 2.06, with Arabtec bucking its recent downward trend, climbing US$ 0.04 to US$ 0.65.

By Thursday, Brent Crude was 0.7 % higher closing at US$ 63.40, with gold down 2.0% to US$ 1,278 by 07 December 2017.

HotStats’ October returns give mainly good news for the regional hospitality sector. GOPPAR (total gross operating profit), RevPAR (revenue per available room) and occupancy headed north – by 1.9%, 4.1% to US$ 208 and 4.8% to 68.5% – whilst average room rates cane in lower, down 3.1% to US$ 178.

Coincidentally, Australia’s major banks “voluntarily” agreed to a formal investigation into the financial services sector minutes before PM Malcolm Turnbull announced a US$ 57 million royal commission. It seems that the Big 4 – ANZ, CBA, NAB and Westpac – have finally realised that they had lost their customers’ trust and confidence by their sometimes shonky behaviour. The one year enquiry will look into how financial institutions have dealt with cases of misconduct, cultural and governance issues – and no doubt their findings will prove interesting reading.

The US healthcare sector will be reshaped if the US$ 69 billion bid by pharmacy chain CVS to acquire health insurer, Aetna, is approved by shareholders and regulators. However, it must be remembered that two years ago, Aetna’s US$ 34 billion bid for Humana fell foul of federal judges over antitrust concerns. This comes at a time when there are reports that Amazon may enter the pharmaceutical market.

The US Commerce Department has revised the country’s Q3 economic growth upwards from 3.0% to 3.3% – compared to Q2’s 3.1%. Positive economic data continues to exude from the US – this time, Q3 labour productivity was up 3.0%, with output 4.1% higher as hours worked only rose by 1.1%.

Moody’s maintained Japan’s credit rating at A1, with “stable” outlook. The agency forecasts that the country’s 2018 growth will be 0.4% weaker at 1.1% and even drop to just 1.0% thereafter. There could be an affordability problem in relation to its rather high debt level which, because of its 2016 stimulus package, continues to expand and could be at a worrying 220% of GDP by the end of the decade.

Despite all its apparent woes and tribulations, November’s IHS Markit/CIPS manufacturing PMI was 2.0 higher at 58.2 – its highest level in over four years – driven by a boost in the global economy and to a lesser extent soft sterling. Other positive indicators include a marked uptick in demand for investment goods, such as plant and machinery, and recruitment levels reaching 2014 levels. However, the UK economy continues to be stymied by a sluggish services sector and high inflation levels, outscoring insipid wage increases. Q3 growth was 0.4%, whilst the pound moved as high as US$ 1.35 during the week, and the FTSE 100, in line with many other global bourses, continued to defy gravity.

In line with recent data, UK construction activity in November continues to improve with the IHS Markit/CIPS Construction PMI posting a 2.3 points month on month hike to 53.1, driven by a boost in homebuilding activity; however, commercial work and civil engineering were lower.

Abu Dhabi Crown Prince Sheikh Mohamed bin Zayed has given the country’s motorists a welcome birthday present – a 50% discount on all traffic and impoundment fines outstanding as on the 46th National Day, 02 December. The country has come a long way since 1971 and has every reason to celebrate a Happy Birthday!

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Ticket To Ride!

fäm Properties expect that over the next five years to 2022, Dubai’s property portfolio will rise by 164 k, with 7.3k handed over before the end of the year. Other consultancies have estimated far more so there is a wide divergence of views on future supply. The past three years, handovers have been half of what most “experts” had expounded at the beginning of each year, viz 14.9k in 2015 and 11.9k last year with  say 26k for 2017. Assuming the current population is 2.9 million and the number of residential units is 500k, the average unit houses 5.8. If the population increases at the current 8.1% rate, the population by the end of 2019 will have reached 3.38 million which would indicate that an extra 82.8k units would be needed to house 5.8 people. Over the past three years, the total number of handovers has only been 52.8k or 17.6k per annum so where’s the problem?

It has been estimated that 2017 construction contracts of almost US$ 3 billion have been awarded in connection with Expo 2020, together with a further US$ 112 million relating to non-construction. With the event edging nearer vital deadlines, more procurement opportunities will arise in 2018.

The owner of Emirates and flydubai has posted flat H1 profits. The Investment Corporation of Dubai, that also has major stakes in Emirates Global Aluminium and Emirates NBD, reported a marginal 0.6% decline in profits to US$ 2.25 billion, dragged down by a 52.0% slump in its transportation segment to US$ 300 million. Revenue was 13.1% higher at US$ 25.4 billion.

DMCC is to build a Jebel Ali coffee centre, that can handle up to 20k tonnes of green coffee beans annually with a value of over US$ 100 million, to be developed by Chinese companies, Mega Capital Halal and Yunnan State Farms Group. The country is the hub of a region that consumes 8% (equivalent to US$ 6.5 billion) of the global coffee consumption and would benefit by the fact that global exports jumped 4.8% last year to116.9 million bags.

Petrol prices are set to rise from tomorrow (01 November). Special 95 will be 6.3% higher at US$ 0.556, with the higher grade Super 98 up 5.9% to US$ 0.620 per litre. Having risen 6.5% in 2016, Special 95 is 13.5% higher so far this year, starting on 01 January at US$ 0.490.

Dubai Investments has acquired the two-year old Kent College Dubai campus in a long-term sale and leaseback deal which will see the operators working on a triple net basis to manage the school. With a student population of 2.2k, the UK school operates in Nad Al Sheba and is a subsidiary of Mir Hashem Khoory. The Dubai-listed company appears to be focusing on education-related ventures, as it expands its reach into income-generating real estate assets.

The UAE ambassador in Washington, HE Yousef Al Otaiba, stated that he thought that “US companies remain the preferred supplier for the country’s commercial and military’s aviation needs”. In the past decade alone, it is estimated that UAE customers – Emirates, flydubai, Etihad and Air Arabia plus the military – have purchased units valued at over US$ 150 billion from Boeing alone that represents a large share of the US$ 19 billion trade surplus the country has with the UAE.

The latest BMI report highlights the country’s transportation infrastructure as a leading driver in the construction sector with a total of 71 projects, valued at US$ 54.6 billion, under construction or in the planning stage. The fifteen railway projects account for US$ 13.9 billion of the total spend, with the largest being the 1.2 km Etihad Rail development. Both Dubai and Abu Dhabi are spending significant amounts on their airport expansions whilst half of the total projects are road-related but they only account for 8% or US$ 6.7 billion.

The latest BNC report estimates that there is currently 11.8k active construction projects in the country, valued at an impressive US$ 818 billion. The UAE’s number of projects accounts for 52% of the total and 33.6% of the total value of all the MENA projects.

Emaar Properties has agreed to start construction on Al Rasheed Residential City in Iraq; work on the US$ 10 billion project will begin early next year.

Long-standing creditors of Drydocks have agreed to DP World taking over the UAE shipbuilder in return for a US$ 225 million capital injection; this money will be used to pay out the junior creditors around 23% of their initial US$ 1.4 billion outstanding balance.  The remaining senior debt of US$ 649 million will be paid in two tranches – one of three years at 200 basis points over Libor and the other a five year repayment at 250 bp. The original US$ 2.2 billion debt (a three year loan of US$ 1.7 billion and the balance over five years) occurred in 2000 when Drydocks was planning to expand operations into Singapore.

A Chinese company, EHang Inc, has developed a one-passenger flying car that it hopes to roll out in Dubai next year prior to regulatory approval. The taxi drone, powered by four battery propellers, will have a100 km cruising speed and can remain airborne for 25 minutes.

The world’s busiest international airport continues to grow and looks set to welcome a record of over 89 million passengers by year end. Dubai International posted a 6.9% hike in October passenger numbers to 6.9 million, although flight movements were lower offset by an 11.6% increase in passengers per flight to 213.

The cruising season has restarted in Dubai after the summer break, with the emirate confident of beating last year’s total of 625k cruise visitors – a 15% hike on numbers from a year earlier. This year will see a rise in cruise calls to 155 with over twenty different cruise lines making use of the world class facilities, one of which will be Crystal Cruises which has chosen the city for the maiden voyage of its recently refurbished Crystal Symphony.

On Monday, the federal cabinet issued decree number 52 in relation to the introduction of Value Added Tax as from 01 January 2018. The executive regulations detail the supply of goods and services and initially will only apply to the UAE and Saudi Arabia, with other GCC states joining later. Any entity, with revenue over US$ 100k, is required to register although some companies will be considered exempt. The tax rate is currently fixed at 5% with some specified goods and services being zero-rated. To those hoping for an implementation extension, there is bad news – the Director General of the General Tax Authority has reiterated that there would be no delay. It is also reported that failure to submit a registration application by 01 January 2018 could lead to a possible US$ 5.4k fine.

Following the announcement that Shuaa Capital had abandoned plans to buy into Global Investment House of Kuwait, its shares fell 1.7%; in June, the Dubai-based investment back pulled out of merger talks with Bahrain’s Gulf Finance House. Once the region’s largest investment bank, its fortunes declined on the back of the GFC and, having returned to profitability over the past two years, it was planning to expand its balance sheet partly through acquisitions.

The DFM opened Sunday (26 November), at 3461 and by the end of the shortened week (because of the National Day holidays) was 41 points off to close on Wednesday, 29 November, at 3420. Volumes were higher this week, with trading of 345 million shares, valued at US$ 217 million, (cf 356 million shares for US$ 172 million, on Thursday, 23 November). Emaar Properties was US$ 0.08 lower at US$ 2.06, with Arabtec continuing its recent downward trend, nose-diving by US$ 0.08 to US$ 0.61.  For the month, the bourse was 5.9% lower from its opening of 3461 (YTD 3.1% down), with Emaar and Arabtec both heading south dropping US$ 0.21 and US$ 0.14 from their respective November openings of US$ 2.27 and US$ 0.80.

By Thursday, Brent Crude was 2.6% higher closing at US$ 62.94, with gold flat at US$ 1,278 by 30 November 2017. The month opened with the yellow metal trading at US$ 1,276 and Brent at US$ 60.79.

There was some sort of consensus in Vienna with OPEC deciding in principle to cap production for another nine months. This comes after a year of output cuts of 1.8 million bpd involving all stakeholders including non-cartel members which led to oil prices stabilising upwards. It is estimated that compliance to this output reduction was over 90%.

The Abu Dhabi National Oil Company is planning to spend US$ 110 billion over the next five years, as it continues expansion by further exploration, development and production of its energy assets. It is also expected that ADNOC will look closely to worldwide downstream investments to become a global player in that sector. The oil giant recently announced a partial IPO (of between 10-20%) of its fuel distribution unit, with shares valued at between US$ 0.64 and US$ 0.71.

Keeping to his promise to the South Australian government – and at the same time winning a US$ 50 million bet – Tesla chief executive Elon Musk has delivered the world’s biggest lithium-ion battery within 100 days. The state had suffered a series of “load-shedding” blackouts earlier in the year that had left 1.7 million residents without power. In September he stated that the 100 Mw battery, enough to provide emergency power to 30k homes, would be up and running within 100 days or it would be given free.

A surprise development saw Xavier Rolet step down, at the board’s request, as chief executive of the London Stock Exchange with immediate effect. This follows a bitter boardroom battle with some members not happy with him. Mr Rolet will leave with payments that could be as high as US$ 17 million – US$ 1.1 million annual salary, US$ 2.3 million bonus and the balance from a number of long-term incentives.

The UK’s biggest tobacco supplier, Palmer & Harvey has entered administration, leaving 2.5k people jobless. The main driver was finance-related as a potential buyout by private equity firm Carlyle did not materialise.

Another week and another Japanese corporate scandal. Following in the wake of fake data from the likes of Kobe Steel, Mitsubishi and Nissan, Toray becomes the latest to be embroiled in falsifying product data. The synthetic fibre-maker has admitted rewriting quality tests before shipping products to several companies, including those that make car parts and tyres.

Black Friday saw footfall in the UK high street shops down 4.2%, and 3.6% in shopping locations, against market expectations of only 0.6%. The usual suspects, the continuing squeeze on household income and the recent rate hike, came into play but many stores already had prior sales bargains in place.

The Consumer Financial Protection Bureau has had two directors this week following the resignation of its previous incumbent who nominated Leandra English as his replacement. However, President Trump had other ideas and installed his budget chief Mick Mulvaney to the position – a man who has called the consumer financial watchdog “a sick, sad joke” that should be scrapped. The agency has tried to curb the power and influence in Wall Street following the GFC whilst others consider it stifling economic growth with too much red tape and overbearing regulations.

Société Generale is to provide US$ 678 million in Q4 in relation to tax changes and redundancy payments with plans to cut a further 900 jobs on top of the 2.6k already announced. The bank is focusing on enhancing its tech investments and mobile banking to boost both revenue and profitability.

Troubled Uber Technology will reportedly post a Q3 loss of US$ 1.5 billion as it faces several legal battles, intense competition and regulatory problems in several jurisdictions. Two of its early backers want out and they have received a bid from Japan’s SoftBank to acquire a large shareholding but at a 30% discount on its last US$ 69 billion valuation. Other possible suitors for a stake in the ride-hailing company include Dragoneer Investment, Sequoia Capital and Tencent as General Atlantic and DST Global have dropped out of discussions.

In 2014, Time Warner divested itself of the iconic magazine publisher which has struggled, like many other in the printing world, from falling advertising revenues; it posted a 9.5% fall in Q3 revenue to US$ 679 million. In its home country Time publishes Entertainment Weekly, Fortune, People and Sports Illustrated.

The OECD is yet another global institution bullish about the global economy and has upped its 2017 forecast to 3.6% followed by 3.7% and 3.6% over the next two years. Over the three year period, US and euro area growth will be 2.2%, 2.5% and 2.1%, with the latter at 2.4%, 2.1% and 1.9%. There is no surprise to see the UK economy with figures of 1.5%, 1.2% and 1.1%. However, it is highly likely that these forecasts will not ring true and will probably come in higher as they do appear to be on the low side.

Zimbabwe is not the only country in an economic downturn. S&P have downgraded South Africa’s local currency debt score to junk status of BB+. It highlights the fact that the country’s economy has stagnated and, with its external competitiveness softening, a worsening of its economy and public finances is all but certain. The end result would be a widening of its budget deficit with borrowing costs increasing.

It appears that Prince Miteb bin Abdullah is one of the first detainees in the recent Saudi corruption crackdown to be released after reportedly settling to repay US$ 1 billion as “compensation”. Earlier in the month, Crown Prince Mohammed bin Salman hinted that most of the 200 or so Saudis detained in the Riyadh Ritz Carlton would be freed if they agreed to repay some of the money they had acquired via illicit means. The Public Prosecutor has the final say whether to take any of the suspects, that include Prince Alwaleed bin Talal and billionaire Mohammed Al Amoudi, to court instead; to date, at least five will face prosecution whilst several have already settled with cash payments.

Having started the year trading at US$ 1k, virtual currency Bitcoin was trading at just over US$ 8k last Friday (24 November) and by Wednesday had risen by a further 25% to top US$ 10.0k for the first time. Most bank chiefs have trash talked the virtual currency, likening it to a Ponzi scheme, mainly because it is encroaching on their traditional business. International authorities are also concerned especially with the lack of regulation and not being backed by any government, or central bank, no entity is responsible for backing their value. Like similar crypto currencies, Bitcoin makes use of blockchain – an online ledger of transactions – backed up by a network of unknown computer operators on the internet. There is no doubt that anyone who purchases crypto currency will have bought a roller-coaster Ticket To Ride!

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