What We Ain’t Got!

sydney-opera-bridgeHH Sheikh Mohammed bin Rashid Al Maktoum launched the 22 million sq ft phase 2 expansion of Dubai Healthcare City which will cost up to US$ 1.36 billion. It will include the Nashami health project as well as retail and hospitality outlets. This will be a major boost for Dubai as it aims to become a major player in the global healthcare and medical tourism sector.

Union Properties expect work to commence on the five-tower The Vertex in Q1 2016. Located in Motor City, the US$ 300 million project will have 700 residential units and 66k sq ft of retail space, with the first tower ready by early 2018. A separate US$ 117 million, 4-tower development, also in Motor City, will have 200 apartments, with work starting in September.

Arabtec reported disappointing 2014 net profits, down 49.4% to US$ 66 million, largely because of a H1 blow out in general and administrative costs which soared 74.7% to US$ 204 million. The board indicated that it had intervened in June to curb unnecessary expenses – such as suspending some non-core operations including in Pakistan and Russia – at the time the then CEO Hasan Ismaik stepped down. Revenue was up 46.0% to US$ 2.26 billion, with gross profit showing a healthy 68.0% hike to US$ 250 million and the order book up at US$ 2.62 billion. However, Q4 results indicated a US$ 26 million loss which sent the developer’s shares sharply down. Subsequently, the Board has decided to streamline operations and started with plans to sell four of its five Saudi operations in which it has major shareholdings.

As the bottom was falling out of its share price early in the week, Arabtec announced a US$ 283 million Saudi order to build 380 villas in Dhahran for Aramco. The company is also set to soon conclude an Egyptian contract to build 1 million housing units, initially estimated at US$ 40 billion.

For the first time, the British Export Credit Agency has guaranteed a sukuk issue. Emirates has set the initial price for the US$ 913 million facility which will be in the region of 100 basis points over midswaps. The Dubai carrier will use the funds for the acquisitions of four new Airbus 380s.

MAF currently operates over US$ 10 billion worth of property, including 17 shopping malls, 11 hotels and 3 mixed-use communities in the MENA. The Dubai retailer has just appointed Bertrand Julien-Laferriere as its CEO.

Dubai Holding Commercial Operations Group, which manages several entities including Jumeirah Group, Tecom and Dubai Properties Group, saw its 2014 net profits up 42.0% to US$ 1.28 billion, as revenue rose 14.0% to US$ 3.60 billion.

Dubai Investments has gone into a 50:50 JV with the Saudi/Lebanese realty firm, RED House, to manage projects in the Kingdom, the first of which will be a Riyadh industrial park. The set-up, similar to that of Dubai Investments Park, will cover an expanse of 11 million sq mt.

The first tender for work on Nakheel’s Al Khail Avenue will be released later in the month. Located adjacent to the Al Khail Road, the 3.6 million sq ft dining, entertainment and retail hub, with over 350 outlets, will open in 2018.

Ahead of the final formalities in the Dubai World US$ 14.6 billion debt restructure, it seems that Lloyds and Natixis have sold their outstanding debts, whilst RBS has reduced its exposure.

DP World is liaising with the Maldives to further develop that country’s ports and logistics facilities. Negotiations have been going on for some time, as 2013 reports indicated that a JV was to be established with the local government to build an international port.

The Dubai-based port operator has also launched a new company, P&O Ports, to develop and operate marine and inland ports. The company has already signed agreements with clients in Albania, Madagascar and Somaliland to improve their port infrastructure.

According to recent statistics from the Permanent Committee for Labour Affairs, Dubai has 569k labourers working for 3,039 companies.

China – with a 29.0% increase in trade to US$ 47.7 billion – now tops India as Dubai’s leading trade partner. The emirate’s non-oil foreign trade of US$ 362.7 billion comprised imports (US$ 230.2 billion), reexports (US$ 101.4 billion) and exports (US$ 31.1 billion). Further analysis indicates that direct trade US$ 223.1 billion accounted for 61.5% of the total with free zones contributing US$ 133.2 billion (36.7%) and customs warehouses US$ 6.4 billion (1.8%).

In 2014, Dubai International recorded 15.1k flights of the Airbus 380 – 42.3% up on the previous year and well ahead of second placed Heathrow with 5.4k. Meanwhile the airport had an 11.0% rise in revenue, with help from a 15.0% jump in non-aeronautical revenue, accounting for 53.0% of total revenue. The balance came from aeronautical revenue, including aircraft parking fees, which had a 7.0% rise.

UK’s Leslie Jones Architecture has been appointed to carry out commercial design work on the US$ 32 billion expansion at Dubai World Central. Dubai’s second airport will eventually have the capacity for 200 million passengers. DWC, which started passenger flights 18 months ago, will be developed in two phases, with the initial phase, covering 56 sq km, due for completion before Expo 2020.

Unsecured creditors in the liquidation of ES Bankers (Dubai) Ltd discovered there was no money left for them, despite being owed US$ 14 million. Depositors were luckier receiving an 82.7% payment on the US$ 93.5 million owed. The fallen bank was the Dubai arm of the Portuguese Espirito Santo, recipient of a US$ 5.35 billion bailout payment in August 2014.

Al Etihad Credit Bureau seems to have captured a lot of data since its January official opening. It is reported that the company already has information on 2.8 million individuals, representing 97% of the country’s population with a credit history. It estimates that 16.3% (or 65k) of all UAE-registered companies have credit facilities and the bureau is now in a position to give enquirers up to date and detailed information on companies’ financial standing.

Aster DM Healthcare will issue an IPO later in the year with the favoured locations being Mumbai, Dubai or London. It is estimated that 90% of the privately-held company’s revenue of US$ 600 million was from its GCC operations.

Damac Properties announced a 10% bonus share issue.

Borse Dubai, owned by Investment Corporation of Dubai, has sold its 17.4% share in the London Stock Exchange at a share price of US$ 33.6. In 1997, it had bought 28% of the LSE from Nasdaq at US$ 21.1 per share so this sale for US$ 2 billion has returned a tidy profit. There appears to be no hurry to divest itself of its interests in Nasdaq OMX and other stock exchanges, including an 80% holding in the Dubai Financial Market.

Amlak Finance, 48% owned by Emaar, is to have a 16 April shareholder meeting to approve a move for it to resume trading on the Dubai bourse. The company was delisted in November 2008 – at the height of the local real estate collapse and the GFC – as its shares sank to US$ 0.28, having fallen 79% over the preceding six months. Last November, it finally signed a creditors’ restructuring deal.

The DFMI started the week trading on Sunday at 3473 and dropped 1.9% to close at 3407 on Thursday, and 9.7% lower than its January opening of 3774. Bellwether stocks, Emaar Properties and Arabtec, were both well down – by US$ 0.17 and US$ 0.11 – to US$ 1.75 and US$ 0.60 respectively. Trading on the day was at 488 million shares, valued at US$ 179 million, being transacted. The market was not helped by the escalating problems in Yemen and had dropped 6% in early morning trade on Thursday before recovering. More of the same is on the cards for next week.

Brent crude closed on Thursday at US$ 59.12 – 8.6% up on last Thursday’s close of US$ 54.43. There are fears that the conflict could see Gulf oil supplies being disrupted as Yemen is an important location with European oil supplies passing through the Red Sea, between Aden and Djibouti.

Lloyds is selling its remaining 50% share in TSB to Sabadell, as the Spanish bank made a share offer of US$ 5.08 – 4% higher than the market close last week. TSB has agreed to the US$ 2.54 billion deal that still remains to be approved by the various regulatory authorities in the UK and Europe. Since Sabadell’s offer, the share price has risen 27% in the past two weeks.

A week after the US rebuked the UK for supporting the recently formed China-led Asian Infrastructure Investment Bank, Christine Lagarde has indicated that the IMF would be “delighted” to cooperate with the new banking facility. Now it seems that Germany and France are set to join, much to US chagrin who see the bank as a rival to their “baby”, the World Bank and a method for China to expand its global reach.

According to reports, close allies of the former Sri Lankan president, Mahinda Rajapaksa, have managed to park more than US$ 2 billion in Dubai accounts. This represents only 20% of monies allegedly stashed away overseas. Needless to say, claims have been rejected by Mr Rajapaksa’s cronies.

For the first time since records started in 1988, UK inflation rate dropped to 0% in February, with obvious signs that it may soon fall into negative territory. The rate will hover around the zero level for most of this year, with the worry being that if prices fall much further than the danger of stagflation becomes more probable. A drop in economic activity will occur as companies and individuals defer purchasing.

A mega deal will see Kraft and Heinz, owned by Warren Buffett’s Berkshire Hathaway Inc and the Brazilian private equity firm, 3G Capital, merging to form the 5th largest food and drinks company in the world.  Kraft Heinz will have combined revenue of US$ 28 billion and expects to save US$ 1.5 billion in annual costs.

In the complicated global telecoms world, it has been announced that Spain’s Telefonica will hive off UK’s O2 to Hutchinson Whampoa from Hong Kong for a reported US$ 15.4 billion. The deal, which will take over a year to finalise, is subject to regulatory approval as the buyer already controls the 3 Network in the UK. Last November, BT pulled out of talks to buy O2 and bought EE for US$ 18.6 billion, whilst five months earlier Vodafone paid US$ 8.0 billion for the Spanish cable firm Ono.

As Australian property prices, particularly in Sydney and Melbourne, hit record highs, it seems that a big correction will occur sooner rather than later. When a property bubble is inflating, speculators tend to push prices up in the hope of a quick capital gain and this is exactly what is happening. For the past two years, 50% of all new lending in NSW is by investors which have pushed prices up beyond what would be considered a true market price. Just like Dubai six years ago, there could be major fall-out when the inevitable correction occurs.

It is no surprise to see that Greece’s February state revenue was down 11% from its target, at US$ 8.43 billion – a shortfall of US$ 1.04 billion. As it is still in the throes of finalising term and payment details with its creditors, the outstanding bail-out funds from the troika remain unpaid until an agreement has been completed.

On Wednesday, eurozone authorities advised the Tsipras government that it would not be receiving an expected US$ 1.3 billion for its bank recapitalisation fund. In the absence of incoming funds that come 09 April, the date it needs to repay the IMF part of its bailout loan, there is the distinct possibility that, for Greeks, money is What We Ain’t Got!

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