Just Can’t Get Enough

donald-trump-akoyaDamac reported a healthy 39% boost in H1 profits to US$ 463 million as revenue jumped 59% to US$ 991 million, with Q2 returns of US$ 253 million and US$ 556 million respectively – both up on Q1’s US$ 210 million and US$ 435 million. Over the half year, the developer’s asset base expanded by 41% to US$ 4.29 billion whilst it has already booked sales of US$ 1.44 billion for its much vaunted Akoya project. (Last month, the company announced that it would soon list on the local bourse and, with a market cap of some US$ 3.5 billion, it will soon become a big player on the DFM).

Dubai Refreshments Company posted a healthy 14.1% rise in H1 profits to US$ 18.7 million. The Pepsi distributor in Dubai and Northern Emirates saw sales increase by 11.7% to US$ 130 million.

Drake & Scull reported disappointing Q2 earnings with a 41.0% drop in profit to US$ 7.1 million, compared to the same quarter in 2013, as revenue dipped by 17.9% to US$ 300 million. The main reason given was delays in some projects in Saudi Arabia.

Although there has been a marked slowdown in the realty sector, Dubai Land Department reported that Emiratis splurged out US$ 3.4 billion on local real estate in H1, with a further US$ 1.8 billion being spent by nationals from the rest of the GCC. Reports indicate that prime property price rises have fallen from 11.7% to 6.3%, year on year ending 30 June 2014.

Even though July is recognised as a flat month for the hospitality industry, latest figures still come as a major jolt with occupancy rates of 45.4%, which, according to STR Global, are at their lowest in eighteen years. The figures were made worse because the holy month of Ramadan fell mostly in July. The 11.8% fall in occupancy was the result of the double whammy of an 8.3% surge in supply, allied with a 4.5% drop in demand. Consequently RevPAR (revenue per available room) dropped 5% to US$ 79, whilst conversely average daily rate rose 5% to US$ 174.

Emaar Middle East has awarded the locally-based Arabian Construction Company a contract for three buildings in its Emaar Square development in Jeddah, with handover for the first offices by 2016. No financial details were available.

The Telecommunications Regulatory Authority confirmed that there are over 16 million active mobile subscribers in the country giving an impressive penetration rate of almost 193% – one of the highest in the world. This is in addition to the 2.1 million land lines in use. Pakistan was the leading country for outgoing calls, with a staggering 2.1 billion minutes recorded.

Emirates has signed a five-year maintenance agreement with BAE Systems to provide technical support for its Boeing fleet of aircraft. No costs were available but this a major contract for the UK company, as the airline operates the largest 777 fleet in the world.

The airline has also arranged loan facilities, totalling US$ 425 million, from three local banks to finance the purchase of two Airbus 380s which brings their total to fifty one.

Following China, the UAE is now considered the world’s second fastest growing air passenger traffic hub, with an 11.7% hike in numbers to 45.3 million last year.

The latest project for the ever-expanding Jumeirah Village Circle is Al Manara Tower. Tiger Properties has already started work on the 300 apartments with the US$ 55 million project slated for completion by 2016.

Only two years after going international, Dubai-founded Doner Kebab now has presence not only in the GCC but also Pakistan, India and a London base. It plans a US$ 5.5 million investment to open a further twelve outlets in Dubai and build a factory here. It employs more than 300 in its 20+ outlets.

Max Hypermarket, part of the Dubai-based Landmark Group, and the French retailer, Auchan, have pulled out of arrangements to operate hypermarkets in India. The initial 2012 arrangement was for the Indian partner to operate the French chain of outlets and have up to 80 stores open by 2015.

By the end of June 2015, Dubai Municipality hopes to have completed the naming of all streets in the emirate. In total, 7.5k streets and roads will bear names that take into account Dubai’s history, heritage and culture.

In line with the emirate’s recent economic growth, Dubai Customs has reported a 9.8% H1 expansion in transactions to 4.5 million. Among the various delivery channels in use, Dubai Trade portal and Business to Government (B2G) saw transactions up 37% and 11% respectively.

Emirates District Cooling – a JV between Dubai Investments and Union Properties – obtained a US$ 245 million, 12-year loan facility from Dubai Islamic Bank. Emicool will use the funds largely for refinancing purposes, as well as for expansion plans.

There are rumours that Meraas Holding, backed by the Dubai government, is considering an IPO that would help finance its ever-growing order book. Major projects include its massive JV with Emaar Properties for building Mohammed bin Rashid City, the US$ 1.6 billion Bluewaters Island off JBR, US$ 535 million Dubai Creek development and partnership with Six Flags to develop a theme park.

A recent ISC report indicated that almost 47% (439) of all GCC international schools are based in the UAE, more than the combined total of the next three countries – Saudi Arabia (195), Qatar (130) and Kuwait (80). The total fees for all 982 schools were estimated at around a staggering US$ 6 billion.

There was no surprise news from Dubai Statistics Centre confirming a monthly increase in the emirate’s inflation rate from June’s 2.8% to 3.4%. This was the highest it has been since July 2009.

Better late than never, UNCTAD (United Nations Conference on Trade and Development) highlights that the UAE still maintains its second position in the Middle East, after Turkey, for foreign direct investment. The 2013 return of US$ 10.5 billion is a 9% increase on the previous year. FDI outflows last year were up 14.6% to US$ 2.9 billion.

The country’s official credit bureau – Al Etihad Credit Bureau – will start the first phase of its long-delayed operations next month by issuing consumer credit reports. Having processed six months of credit data from all the banks in the UAE, it will be able to give current information on all the banks’ clients who need to have their credit checked – a total of 5.2 million individual records are now on file.

All twenty eight of its financiers have approved Amlak Finance’s restructuring package, which is a forerunner for the institution to recommence trading on the Dubai Financial Market in early 2015 – almost six years after being delisted. The deal will see Amlak make an initial US$ 545 million payment to the financiers with the balance (a reported US$ 2.15 billion) being repaid over twelve years, including a US$ 380 million convertible bond; the outstanding debt due to the federal government will be repaid over six years. The deal has to be approved by the Sharia-compliant mortgage lender’s shareholders, of which Emaar Properties is a 45% stakeholder.

It is reported that DIFC Investments could issue a sukuk as early as next month and that proceeds therefrom could be used to refinance the US$ 1.2 billion syndicated loan taken out in May 2012.

Having dropped 2.0% the previous week, the Dubai bourse opened on Sunday at 4735 – and closed the week up 1.6%, on very thin trading, at 4813. Thursday saw total transactions at 301 million shares valued at US$ 108 million. Bellwether stocks, Emaar and Arabtec closed on US$ 2.74 and US$ 1.16 respectively.

Dubai Nasdaq is set to have a new listing as the Bahraini-based Gulf Finance House is planning a US$ 200 million sukuk. The money raised will be used to repay an existing Islamic bond of US$ 84 million and project development. Last month, the company signed a land sale agreement with Dubai Properties Group.

Poor economic news shows a 0.2% Q2 contraction in Germany and zero growth in France – a sure indicator that all is not well in the eurozone. Under the circumstances, France will not meet its 2014 deficit, as the country reels from lack of business investment and archaic labour laws. The 18-country bloc is being further hampered by worryingly low inflation and the on-going crisis in the Ukraine. It begs the question on who came up with the idea of sanctions against Putin’s Russia without realising that this is a double-edged sword and can work both ways.

As expected, Japan’s economy contracted by 6.8% in Q2 – its largest fall since the 2011 tsunami – mainly as the result of the government lifting the sales tax rate from 5% to 8% in April. On a quarterly basis, GDP fell by 1.7% following a 1.5% Q1 rise but this blip is only temporary as the economy will return to growth in Q3 as indicators, such as industrial production and retail sales, head north.

As a result of not achieving their budget deficit target, Fitch has cut Croatia’s rating one notch to BB. The recently admitted EU nation had earlier announced that it would cut its deficit from 4.9% to 3.8% but has failed to do so and has a public debt problem that may blow out – if action is not taken.

Another country not hitting their target is China with a July inflation rate of 2.3% – well down on the estimate. With July returns indicating a 14.5% hike in exports, compared to a year earlier, and a healthy trade surplus of US$ 47.3 billion, the Chinese economy is set to grow at a rate above 7.0% but slightly less than official estimates. The government has been proactive in moving the economy forward by such steps as reducing tax, making finance more available, cutting red tape and improving the country’s infrastructure.

Because of shady operations in its pre-GFC sale of mortgage-backed securities, it seems that the Bank of America will finally receive its full come-uppance. The disgraced financial institution is nearing a record US$ 17 billion settlement with the US Justice Department – 47% of which will be paid to the struggling home-owners who lost homes to foreclosures due to the banks’ rash actions.

This is the third major settlement arising from the same scandal with JP Morgan paying out US$ 13 billion last year and Citigroup US$ 7 billion last month. It was the junk status of these loans, packaged as commercial value by major banks, that was a precursor for the GFC.

It appears that Australian banks are following the example of their European and American brothers with legal proceedings being brought against the Big Five – ANZ, BankSA, Citibank, St George and Westpac. An Australian legal firm has instigated proceedings over late credit card fees that could run into hundreds of millions of dollars. More and more bankers Just Can’t Get Enough!

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