Things Can Only Get Better!

blackpoolfcEmirates is reportedly looking at ordering a further 200 neo Airbus 380s but is still awaiting further information from the European plane maker on enhancement details. Last week, the airline confirmed the US$ 9.2 billion Rolls Royce order to supply engines for fifty of these aircraft (along with service and maintenance) – at the expense of the existing JV of GE and Pratt & Whitney. Emirates is still mulling over an order for between 50 – 70 A350s or 787s.

Reel Cinemas will open a 2-storey, 76k sq ft entertainment centre in Nakheel’s upcoming Al Khail Avenue development, located adjacent to Jumeirah Village Triangle. The facility will host 14 theatres with a combined total of 1.5k seats. The Nakheel development will include 1.25 million sq ft of retail space, 50% of which has already been taken up by tenants.

On Saturday, Emaar – in a JV with Meraas Holding – will launch the sale of 118 Maple townhouses, its first such community in Dubai Hills Estate, located in Mohammed Bin Rashid City.  Meanwhile its Egyptian arm, Emaar Misr, recorded a 562% jump in Q1 profits to US$ 23 million, as revenue rose 110% to US$ 99 million. The Cairo-listed company has an estimated portfolio of investments, totalling US$ 6.95 billion.

The InterContinental Group has signed a agreement with Sunflower to manage a 285-key Hotel Indigo in Business Bay. The boutique hotel, due to open in 2017, will be InterCon’s 19th Dubai property but the first for both the Indigo brand and Sunflower in the emirate.

Government-owned Meraas Holding has awarded a US$ 406 million contract to the UK’s Dutco Balfour Beatty for its Marsa Al Seef development on Dubai Creek. The mixed use project will cover 670 metres of the creek and will include several hotels, along with retail and dining outlets.

Al Mazaya is the latest developer that sees a booming market in the affordable housing sector. The company is launching a US$ 708 million development in Liwan, Dubailand, with studio apartments starting at US$ 95k. The so-called Q Line project will comprise 500 units, housed in four towers and will be completed by 2017.

Arabtec is seeking out finance options in relation to the US$ 36.7 billion development for 1 million housing units in Egypt. Phase 1 will involve the construction of 100k residences.

Dubai-based Habtoor Leighton Group has won a US$ 95 million contract to build the 112-key Saraya Bandar Jissah hotel in Oman, to be managed by Jumeirah Group. Completion is expected within two years.

Another week sees another two housing reports. Surprisingly, the expected fall in rentals did not materialise in Q1 with the largest quarter on quarter increase of 15.3% recorded for studios. Bayut reports that Dubai apartment prices rose by up to 5.8% (to an average US$ 58.6k) in Q1 but that with 25k new properties entering the market this year, there will be the inevitable downward pressure on rents.

Q1 reporting season has started in earnest with five of the heavyweights reporting impressive results. Dubai’s largest financial institution, Emirates NBD (55.6% owned by the Investment Corporation of Dubai), posted a 60.6% hike in quarterly profits to US$ 455 million. Etisalat recorded a 7.6% rise in net profit to US$ 594 million, as revenue grew by 30.3% to US$ 3.52 billion. Dubai’s third largest bank, Mashreq posted a 13.2% jump in Q1 profits to US$ 177 million. Aramex reported a 9% rise in Q1 revenue to US$ 253 million, as its net profit jumped 10.0% to US$ 24 million. Commercial Bank of Dubai returned a 3.6% hike in Q1 profit to US$ 80 million, as operating income rose 9.7% to US$ 158 million.

Despite Damac’s Q1 profit dropping 38.1% to US$ 216 million, revenue was well up to US$ 488 million. Last year the developer benefitted from a one-off credit gain and if this is taken out, its Q1 profit would have been 3% higher than the corresponding 2014 figure.

Although Dubai Aerospace Enterprise saw only a marginal increase in Q1 revenue to US$ 2.11 billion, its bottom line surged 42.9% to US$ 160 million. The government-owned aircraft maintenance and leasing company employs 3.5k and has a portfolio net value of US$ 3.65 billion, with an order for 40 new ATR-600 aircraft.

Last year, BMW recorded a 23% hike in ME luxury car sales and Q1 continues with a  positive 11% rise, as 8.3k vehicles were traded. The UAE remains its largest market with 58% of its total ME sales of which Abu Dhabi accounts for 3.4k units and Dubai 1.4k.

Dubai World Trade Centre is planning to increase its footprint by 14.5% to 122k sq mt. Construction on the three new halls and a 300 car park area will commence shortly and completion is expected within a year.

Sheikh Mohammed bin Rashid Al Maktoum has introduced a new law controlling charity collections and fund raising. In future, prior written approval has to be attained from the Islamic Affairs and Charitable Activities Department and violation penalties include a jail term of two months to one year and fines of between US$1.4k to US$ 27.2k.

Siemens has won a 3-year, US$ 400 million DEWA contract to expand Jebel Ali’s M-Station power plant by 34% to 2.76k MW. The original power and desalination plant, the largest in the emirate, cost US$ 2.72 billion.

The UAE Energy Minister, HE Suhail bin Mohammed Faraj Faris Al Mazrouei, has confirmed that the country is planning to raise oil production to 3.5 million bpd over the next two years, along with a 55% increase in local refining capacity to 1.1 million bpd. Interestingly, the UAE holds 4% of the global oil reserves and 3.5% of global gas. The country’s future demand for energy is expected to increase by 9% per annum, in line with growth forecasts.

The latest World Trade Organisation’s Report confirms UAE’s ranking as the 16th top global exporter, as well as being the leading MENA merchandise exporter at US$ 359 billion, accounting for 1.9% of all world trade. In relation to import services, it ranks at 19th at US$ 72 billion, equivalent to 1.5% of all global imports of services.

Noor Bank, whose shareholders include Dubai Holding and the Investment Corporation of Dubai, has joined a growing list of Dubai entities tapping into the sukuk market. Its first foray into the sector sees a 5-year US$ 500 million issue, priced at a spread rate of 130bp.

Dubai-listed retailer, Marka has acquired a 60% share in Cheeky Monkeys Playland and Sweet Surprises for a reported US$ 8 million. Late last year, it had also spent US$ 60 million on the purchase of Retailcorp from the government-owned Istithmar.

Following three consecutive weeks of healthy gains of 6.1%, 4.0% and 8.7%, the DFMI still managed a marginal 8 point rise to close this week on 4088. However bellwether stocks, Emaar Properties and Arabtec, were down by 2.7% and 3.7% (US$ 0.06 and US$ 0.03) to close the week on US$ 2.16 and US$ 0.77 respectively.

One casualty of the low oil prices is the huge reduction in the ME mergers and acquisitions sector which fell over 71.8% to its lowest quarterly levels in three years. Qatar accounted for 83.3% in value, amounting to US$ 1.5 billion, of activity, all related to the recent Orascom Construction demerger. Qatar also dominated this sector, outside of the ME, with two deals valued at US$ 1.9 billion accounting for 46.4% of total investment.

UK high frequency trader, Navinder Singh Sarao, has been arrested in connection with his role in the now infamous 06 May 2010 “flash crash”, which saw US equities lose over 400 points – and almost US$ 1 trillion – for a matter of minutes. US authorities want him extradited for wire fraud, commodities fraud and market manipulation and his misuse of automated computer software to influence prices.

After five years, the EU has finally lodged a statement of objections against Google on the grounds of market manipulation over the use of its Android mobile platform. It seems that the Competition Commissioner, Margrethe Vestager, has no issue with Google’s dominance in the sector but the way its puts its own products, ahead of competitors, when its search engine is being used.

The UK’s biggest retailer, Tesco, has joined the likes of Cable & Wireless, Lloyds Banking Group, RBS and Vodafone as recording the fifth biggest loss in UK corporate history. The company, founded in 1919, recorded a massive deficit of US$ 9.5 billion largely because of a US$ 10.4 billion write down of the supermarket’s value. Its actual trading profit was down 57.6% to US$ 2.0 billion.

There are reports that the UK’s biggest – and until recently its most successful – payday lender, Wonga is heading for an annual loss of US$ 51 million as its revenue nosedives 31.7% to US$ 312 million. Last year, it had to pay US$ 3.7 million in compensation to 45k customers for sending out demand letters from non-existent law firms and it has made a US$ 29 million provision to cover future legal costs. The company – like the other estimated 400 payday lenders in the country – is facing difficult times, as new legislation has seen an official price cap on loan and repayment charges. Like the two football clubs it sponsors, Blackpool and Newcastle United, it could be on its way down.

Russia recorded its first quarterly contraction in six years as the economy shrank 2.0%, mainly as the result of the international sanctions. Prime Minister Dmitry Medvedev estimated that that they were responsible for the GDP falling 1.5% and a loss of US$ 26.7 billion in potential exports.

There was some good news out of Tokyo this week with Japan recording its first trade surplus – US$ 1.9 billion – in three years, as exports rose 8.5% and imports fell 14.5%. Despite this good news – largely as a result of a weak yen and cheap oil – the annual overall trade deficit came in at US$ 7.6 billion.

On Friday, Greece could default on its loans which could see the country edge closer to leaving the eurozone. Over the next three weeks, it needs to find money to cover interest payments of US$ 85 million (ECB), US$ 213 million (IMF – 01 May) and US$ 810 million (IMF – 12 May). If Friday’s negotiations are successful then Greece could receive an interim US$ 7.7 billion pay-out – if not then the country has finally run out of cash and time. There will be then a massive run on the banking system, an immediate devaluation, double digit inflation and the reintroduction of the drachma. Then watch out for the Russians and / or Chinese entering with so-called international aid (and possible contagion in other Mediterranean countries). Maybe then for Greece, Things Can Only Better!

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