Isn’t It Ironic, Don’t You Think?

Sheikh-Mohammed-G-CarWith Jaguar Land Rover, Volkswagen and Rolls Royce announcing impressive regional 2013 growth of 46%, 30% and 17% respectively, there is no doubt that the Dubai motor trade is progressing well. Although final  figures for last year have yet to be collated, Business Monitor International forecast that year on year sales will be 16.7% up at 362k units, with further growth expected in 2014.

Dubai Taxi Corporation has just signed a contract with Al Futtaim Motors to supply 1,638 taxis or over 90% of DTC’s latest tender. With this order, over 85% of the company’s taxis will be Toyota Camry or Innova vehicles.

It may surprise some to note that the UAE-based Gulf Craft has been listed as one of the leading superyacht building yards in the world with fifteen craft currently being built. Less surprising is that the UAE makes the top ten global superyacht countries.

Following last year’s sale of 170 apartments in the Anantara The Palm Resort and Spa, Dubai-based developer, Seven Tides, is now gearing up to sell units in the adjacent Anantara The Palm Residence.

Damac has announced that Waitrose will open an anchor store in its upcoming Akoya project. Located in the 95k sq ft Damac Retail Centre, the store will be the UK company’s eighth shop in the UAE.

It seems that scarcely a week goes by without Arabtec announcing a new project. This time the Dubai builder has won a US$ 705 million construction tender on Reem Island which will include a hotel and residential tower in one of Abu Dhabi’s prime locations. Slated for completion by 2017, this development has extended the company’s backlog to US$ 9.0 billion.

From a 2012 loss of US$ 16.1 million, Shuaa Capital managed to eke out a US$ 763k profit last year in a major turnaround in their fortunes, with a 153% jump in Q4 revenue figures to US$ 17.2 million, giving rise to a quarterly US$ 1 million profit.

Deyaar Development has sold its 50% share in Alarko Gayrimenkul Gelistirme to its Turkish JV partner for an undisclosed amount. It appears that the Dubai-based company wants to focus more on local business interests in the future.

Drydocks World has announced it won a US$ 730 million contract to build the North Sea’s largest ever oil rig, known as CJ-80. The order from Drill One Capital may prove even more lucrative for the Dubai company with further potential work amounting to US$ 670 million in the pipeline. Its chairman, Khamis Juma Buamin is also bullish about the company’s operation in Iran if, and when, a political solution is reached.

Although bilateral trade with Iran has dipped by as much as 12.2% to US$ 2.94 billion, as at H1 2013, HH Sheikh Mohammed bin Rashid Al Maktoum sees a win win situation if sanctions are lifted. The UAE would see a major fillip in trade whilst Iran would be able to access US$ 4.2 billion in frozen assets, as well see almost normal trade resume.

Apart from an impressive BBC interview this week, Sheikh Mohammed also launched the country’s National Agenda programme for the next seven years. One of the aims was to grow the GDP by 65% over that period which would increase the figure from US$ 42k to just under US$ 70k.

In 2013, it is reported that Dubai’s financing costs were US$ 8.4 billion – equivalent to 8.9% of GDP. Over the next three years, certain loans will be maturing (including US$ 20 billion to Abu Dhabi) and some analysts expect Dubai to take advantage of favourable lending conditions and participate in a bond issue – maybe a long-term sukuk will be considered. Latest newspaper reports that Dubai Group may be finalising a long-standing US$ 10 billion restructuring deal with banks and its creditors.

The Dubai General Market Index opened the shortened week at 3505 points and rose 2.97% when closing on Thursday at 3609 and is already up 7.09% on its January opening of 3370. Bellwether stocks, Emaar and Arabtec, were trading at US$ 2.16 and US$ 0.93 respectively.

Recent figures from the UK indicate the speed of expansion in online trading with a 19.2% year on year growth in December – compared to a 0.4% rise in traditional retail shopping. In fact, 18.2% of all non-food sales were carried out away from a retail outlet, with furniture at 32.4%, and clothing (21.2%) being the internet favourites.

If you believe some experts, the unthinkable will happen – the UK, with growth levels in excess of 3%, will be the best performing economy of the G7 nations. Despite some speculation of late, base rates have remained at 0.5% – unchanged since March 2009. Unemployment levels have dropped to 7.4% as the growth gains traction and may fall below the 7.0% mark, earlier than estimated by the Bank of England, and this could trigger a rethink on rates. The trade gap between the exports and imports of goods has fallen to US$ 15.3 billion – another indicator that the UK economy is on the upturn.

The UK Chancellor took a justified swipe at the EU saying that its treaties were “not fit for purpose” and would have to be rewritten to keep up with other global economies. His simple message to the 28-country bloc was reform or decline – and it seems that some of the major players, including France and Spain, prefer the latter strategy. Over the past six years as European economies have stalled, those of China and India have seen growth levels of 70% and 33% respectively.

The European Central Bank president, Mario Draghi, is less bullish on the continuing eurozone crisis indicating that he considers any recovery “weak, fragile and modest”.  Latest quarterly figures show the bloc with a meagre 0.1% growth. The ECB has no option but to keep rates at 0.25% at least for most of 2014, but may be forced to take a more aggressive approach to bolster the weak growth levels. Another area of concern is the inflation rate dropping under 1% with the prospect of deflation rearing its ugly head.

Following several high profile legal cases and settlements, it was no surprise to see JP Morgan Chase announce a 16% dip in net profit to US$ 17.9 billion. The latest fine, totalling over US$ 2 billion, was for their alleged complicity with the disgraced Bernie Madoff and his Ponzi scheme. The bank has a US$ 23 billion provision to deal with future claims and legal costs.

It does seem rather strange that one of the country’s leading bankers is not blaming the financial institutions but their customers for over borrowing and racking up debt.  Former CEO of the National Bank of Abu Dhabi, Michael Tomalin, has reportedly indicated that customers – and not banks – have been reckless! Isn’t it Ironic, Don’t You Think?

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