On The Road Again

willienelson2The importance of the gold trade to the local economy was reinforced with news that almost 40% of the global market in the precious metal was carried out in Dubai. It is amazing to consider that only ten years ago, the local trade accounted for about US$ 6 billion – latest figures indicate that it is now worth US$ 75 billion! To ensure that the highest standards are applicable, the Dubai Multi Commodities Centre is planning to tighten policies and procedures to ensure that they are in line with international best practice.

Equally impressive is the growth in the local diamond market with business growing from an almost zero base at the beginning of the millennium to over US$ 40 billion. Dubai is now considered one of the global leaders in both the gold and diamond trade; with first class infrastructure and its unique location, things can only get better.

There was confirmation from Shaikh Holdings that it would be handing over 97 villas in its Sanctuary Falls development in the Jumeirah Golf Estates by the end of the year. It is reported that Bollywood celebrities and other high profile individuals have bought villas.

Majid Al Futtaim and Starwood Hotels & Resorts Worldwide have signed an agreement to launch two new hotels in Bahrain – the Westin and Le Méridien. The Dubai-based conglomerate currently has 11 regional hotels in its portfolio.

Ducab, jointly owned by the Investment Corporation of Dubai and Senaat from Abu Dhabi, recorded a 22% jump in 2013 revenue to US$ 1.36 billion. Cable sales accounted for 58% of the business with rods and wires making up the balance.

Q1 Nakheel profits showed an impressive 28.1% hike to US$ 171.4 million on revenue of US$ 373 million – a reflection of the buoyancy in the economy. Despite increased profits, and that it expects to hand over 1,200 residential units this year, the developer still has very high borrowings that will have to be eventually paid off.

Now managed by Nakheel, the troubled developer, Limitless has apparently requested a moratorium on the first instalment of a US$ 1.2 billion debt. Due for repayment this December, the developer has requested a further one year’s grace but has offered a payment of US$ 55 million towards the US$ 400 million due. The company currently has developments in Jebel Ali, Russia, Saudi Arabia and Vietnam.

With business confidence in the local market growing by the day, Emirates NBD is planning to reverse a US$ 123 million non-performing loan provision. This relates to a 5% charge made on a US$ 2.45 billion loan made to Dubai World and, if carried out, would probably add 50% to the bank’s quarterly bottom line.

While no figures have been revealed, Dnata, which did own 100% of Mercator, has divested some of its shares to make Warburg Pincus a majority shareholder. The New York private investment company has a current portfolio of around 130 companies managing more than US$ 37 billion in assets.

Already managing US$ 650 million in assets, Dubai-based Al Masah Capital expects a further 33% expansion in 2014. Its investments include 19 educational facilities, 18 healthcare studios and 9 food outlets.

Although still subject to Central Bank approval, it seems that Barclays has sold its retail banking division, with a 110k client base, to Abu Dhabi Islamic Bank for a reported US$ 177 million.

The banking authority has also introduced the Interim Marginal Lending Facility as from next week. This will allow financial institutions to engage in overnight borrowing and will be a boost to banks managing their liquidity.

Despite reports to the contrary, the DFM continues to deny that it is not in merger discussions with the Abu Dhabi Stock Exchange.

The DFM had another great week jumping 4.7% from its Sunday opening of 4618 points to close on Thursday at 4839. Bellwether stockThe market is already 55% up this year and 10% up in the first ten days of April and earlier had a Q1 gain of 32.08% from its 01 January opening of 3370 points to 4451.

Another indicator on the slowdown in the Chinese economy came with the release of March trade figures indicating year on year falls of 6.6% in exports (after a 11.3%) drop in February) and 11.3% in imports. Latest forecasts from the World Bank have seen a reduction in 2014 growth to 7.5% – slightly down on last year. There is no doubt that the weakening Chinese economy, together with the on-going crisis in the Ukraine and the possibility of eurozone deflation, are three major flashpoints that could derail future global growth.

According to the latest IMF forecast, Dubai’s 2014  growth is expected to be 4.4%, noting that the rapid expansion in the realty sector and the knock-on effect of Expo 2020 have boosted the local economy. More worrying is the predicted rise in inflation from 1.1% to 2.2% which, even at that figure, looks very much on the low side.

The CEO of Dubai Trade, Mahmoud Al Bastaki, has predicted that Dubai’s foreign trade, currently standing at US$ 379 billion, could reach the US$ 1.09 trillion mark by 2020. Already contributing almost 30% to the local economy, this will grow to nearer 35% over the next six years.

A Dubai delegation, led by the chief executive of Investment Corporation of Dubai, Mohammed Al Shaibani, is currently on a road show in London to drum up business and is impressing international financiers with what is on offer. Despite having a medium term debt overhang of some US$ 78 billion, the emirate is expanding with a GDP currently at US$ 97 billion, set to grow by 11.3% within the next two years to US$ 108 billion – almost three times the figure it was in 2005. There is no doubt that the emirate is a success story and it is edifying to see that Dubai Is On The Road Again!

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