Do You Wanna Know A Secret?

Edward-SnowdenYou cannot keep Arabtec out of the news! The Dubai-based builder, with strong Abu Dhabi-backing, is planning to establish five new subsidiaries, four of which will concentrate on new infrastructure and utility projects within the region and further afield whilst the fifth, Arabtec Capital, will provide financial services.

Meanwhile a subsidiary of Arabtec, Emirates Falcon Electomechanical Company, was part of a JV that has just been awarded a US$ 240 million contract for MEP work at the new Abu Dhabi airport.

Passavant-Roediger, a German division of Drake & Scull, won three European contracts worth US$ 45 million: the three locations are in Bosnia, Romania and Turkey.

Following their La Pointe announcement last week, Nakheel reported initial work on three new projects, totalling US$ 11 million, in their Warsan Village and Al Furjan master communities.

The third online property sale, via e-Mart, has seen five commercial and residential properties go under the virtual hammer, raising US$ 51.8 million. Expect to see more of the same in months to come as this portal becomes more popular with end-users.

Yet another indicator of foreign interest in realty is that RP Group from India is planning to spend US$ 1.1 billion on four new projects in Dubai. These will include two hotels, a serviced apartment project and a 3 million sq ft development on SZR.

Dubai-based property group, Orion Holdings,  will start work on five new projects, valued at US$ 136 million this year, as it continues with its strategy of acquiring luxury properties in the emirate.

Dubai Investments estimates that it has US$ 2.3 billion tied up in local real estate and plans further projects in Mirdiff, Meydan and Jumeirah Village, in line with further strong growth forecasts for this sector.

Drake & Scull announced a 61% rise in 2013 profit to US$ 50.4 million, on a 47% jump in revenue to US$ 1.48 billion. At the end of the year, the Dubai contractor had an order backlog in excess of US$ 3.3 billion.

The French/Italian manufacturer, ATR, secured a near US$ 1 billion order from Dubai Aerospace Enterprise for twenty 72-600 turboprop aircraft. This, with an option for another twenty planes, will maintain DAE’s position as the region’s largest leasing company.

dnata – part of the Emirates Group – has paid US$ 74 million to Thomas Cook for its Gold Medal Travel Group, including Netflights.com and Pure Luxury which deals in luxury travel packages.

JAFZA reported a 273% upturn in 2013 profit to US$ 188 million on revenue of US$ 417 million. Despite an outstanding loan balance of US$ 705 million and a US$ 650 million sukuk, due for repayment in 2019, its balance sheet is looking stronger with investment property valued at US$ 1.67 billion.

The RTA has approved its 2014 budget which has expenditure of US$ 1.91 billion, of which 55.4% (or US$ 1.06 billion) is for new capital expenditure and the balance for operating costs. Although revenue is expected to climb 17% to US$ 1.36 billion, there will be a cash deficit this year.

There is no respite for the Dubai-based Gulf Navigation as it announced a near-fivefold increase in 2013 losses from US$ 40 million to US$ 190 million on a 32% fall in operating income to US$ 37 million.  It was no surprise to see the company’s assets fall by over 30% to US$ 417 million. It is estimated that nearly 90% of the loss was attributable to non-recurring expenses, including a goodwill write off and added provisions.

2013 once again saw the country as the US’s number one trading partner from the MENA region, as bilateral trade jumped 8.5% to US$ 26.9 billion. Exports were static at US$ 2.3 billion whilst imports rose by 9.1% to a record high of US$ 24.6 billion; as expected, transportation equipment accounted for 38.2%, or US$ 9.4 billion, of this total.

Despite 2013 load factors declining slightly by 0.1% to 77.3%, along with increasing capacity of 12.8% being greater than increased traffic of 12.1% (down from 2012’s 15.4%), Middle East airlines led the aviation world in growth. On a global scale, IATA reported that load factors were up 0.4% to 79.5% whilst demand and capacity were both up 5.2% and 4.8% respectively. The US and Europe had the slowest growth rates at 2.3% and 3.8%.

Non-UAE nationals were responsible for purchasing shares totalling US$ 1.05 billion in the first week of this month – this represented 38.3% of all shares bought. Total foreign ownership during this period amounted to US$ 7.8 billion.

The Dubai General Market Index opened the week at 3931 points and, just as last week, surged a further 4.3% to 4099 points, at Thursday’s close; YTD it is 21.6% up on its 01 January opening of 3370.

Toyota became the latest – and last – vehicle producer to pull the pin in Australia, resulting in a loss of 4k production jobs in Victoria. This comes after similar moves by Ford and GM and despite protestations by Prime Minister, Tony Abbott. Because of the recent high dollar and a regulated  labour market, costs escalated by so much that it was cheaper for production to take place in Indonesia, Thailand and even Japan. This could act as a wakeup call for the Lucky Country that was cushioned from much of the blow out from the 2008 GFC.

Most people associate quantitative easing with the US but it was Japan which first introduced this unconventional monetary policy back in 2001. The aim is to stimulate a country’s economy by purchasing banks’ financial assets which by increasing its monetary base will lower their yield return. But what is basically a money-printing exercise has seen Japan’s per capita QE spending at twice the US QE3 rate of that introduced by Ben Bernanke. Now the country is in the throes of economic turmoil. Hopefully the US economy, which has spent US$ 1.3 trillion on QE3 alone, since its September 2012 introduction, will not slide down the same slippery slope.

Just when banks thought 2014 could not be worse than last year, consider the following:

· The taxpayer-payer bank Lloyds is trying to push through increased incentive payments in the region of US$ 650 million or 11% higher than the previous year.

· Barclays, with 2013 profits down 33% to US$ 8.5 million and planning to cut staff numbers by 12,000, want a 10% increase in bonus payments to US$ 3.9 billion.

· JP Morgan Chase had their November US$ 13 billion fraud settlement (for selling bonds backed by dubious mortgages) blocked pending further judicial review and could find that they will have to shell out even more money. The bank is also involved in paying out over US$ 1.6 billion relating to their shady dealings with the Bernie Madoff Ponzi scheme.

· The probe by Danish prosecutors into bond price manipulation may expand beyond the lender and six of its employees.

Scarcely a week goes by without some high profile corruption news and this week is no exception with Mathew Martome, a former manager of SAC Capital, being found guilty of a securities fraud that made the company US$ 275 million. The company had already paid US$ 1.8 billion in fines last year but to date its founder, Steven Cohen, has not been charged in what has been described by New York prosecutors as the most lucrative trading scheme in history.

Political figures continue to have their nose in the trough. The former Italian Prime Minister, Silvio Berlusconi, is again in court – this time for allegedly paying US$ 4.1 million to a senator to help destabilise the then government. Ray Nagin, ex-mayor of New Orleans, has been found guilty of corruption by accepting bribes for his favoured treatment to contractors following Hurricane Katrina. Tommy Suharto, son of the former Indonesian president, has been implicated in a scandal involving Rolls Royce; he allegedly received US$ 20 million and a blue Rolls Royce for favouring RR Trent 700 engines for the national airline, Garuda. (This could be part of the reason why shares in the UK engine maker lost 13.6%, or US$ 6.4 billion, on Wednesday).

Some sources indicate that corruption is widespread in Spanish business and public anger has boiled over with a case involving the husband of the younger daughter of King Juan Carlos, Princess Cristina. Inaki Urdangarin has been accused of using his royal connections and of embezzling US$ 8.2 million of public money.

A recent EU report has again highlighted the scale of corruption among the 28-country bloc and has put a figure of at least US$ 164 billion. What the Brussels technocrats are going to do about it remains to be seen but it is hoped that they put their own house in order first.

India is awash with corruption. Over recent years, high profile cases include:

· SP Tyagi, former head of the Indian Air Force and his shady role in the purchase of Italian helicopters

· the 2010 New Delhi Commonwealth Games mired by corruption and inefficiency

· Ashok Chavan and his part in selling war veterans’ Mumbai apartments to cronies

· bribery claims relating to a recent US / Indian nuclear pact

· the telecommunication licences sold  to favoured companies at below market rates and estimated to have cost the government coffers US$ 37 billion

· the granting of lucrative coal deals, without any bidding, could have lost government revenue of an estimated US$ 35 billion

This week, it is reported from Oslo that whistleblower, Edward Snowden, could be a potential winner of the Nobel Peace prize. It is said that less than 1% of his files have been released and that some of the information therein is explosive. It can only be hoped that the true links between the trinity of governments, big business and banks can be exposed and that corruption is brought to centre stage. And in these circumstances, Do You Wanna Know A Secret? Yes.

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