HH President Sheikh Khalifa bin Zayed al Nahyan has issued the long-awaited decree on bankruptcy – federal law number 9 of 2016; there were no details of when the legislation would come into force. The law, covering company restructuring for the first time in the country, will benefit smaller companies that previously had little recourse when their entities faced financial problems that often resulted in owners going to jail or fleeing the country.
One company that could have benefitted from the new law is the embattled tech entity, Pacific Controls; it is looking to sell its 5-year old data centre (that cost a reported US$ 85 million) to Etisalat, as it attempts a major US$ 381 million debt restructuring programme. It is trying to finalise an agreement with creditors which is not being helped by legal action from Emirates NBD.
It is reported that Turkish contractor, Gunal, will secure a 6-year US$ 218 million loan that will be utilised for the construction of a hotel and apartment complex in Business Bay.
The company that introduced Miracle Garden and Butterfly Garden to Dubai, Cityland Group, is planning to build a shopping mall adjacent to the Global Village. The US$ 300 million nature-based Cityland Mall, with six thematic pavilions and encompassing 1.1 million sq ft, will utilise a massive 200k sq ft green reserve as the centre’s core.
In a bid to boost the sector, Dubai Tourism has approved 1.8k residential units as holiday lets. Homeowners have to follow certain guidelines – including quality, health, safety, insurance etc – and are subject to regular official checks to ensure that high standards are maintained.
It has been confirmed that the 2008 plan to build Universal Studios in Dubailand has finally been scrapped.
Following a memorandum of understanding between Dubai Future Foundation and Autodesk, US$ 100 million will be made available for regional companies involved in the 3D printing sector. The US software corporation will be responsible for strategy, whilst the Foundation will find suitable applicants for the Autodesk’s Spark investment fund.
The latest innovation coming out of d3 is a proposal by COM Group (a unit of Dubai Holding) and Dubai Creative Clusters Authority to establish the Dubai Institute of Design and Innovation. The US$ 74 million facility, encompassing 100k sq ft, will accommodate up to 550 students and will open within two years.
The US$ 6 million Rolls Royce Boutique has joined the likes of Bentley, Ferrari and Lamborghini in opening an ultra-modern and luxurious showroom that highlights more than just the car models
Following the initial agreement in February, Adeptio has finally acquired 66.8% in Kuwait Food Company for US$ 2.4 billion from Al Khair National for Stocks and Real Estate. The Dubai-based consortium, headed by Mohammed Alabbar, will now offer to buy the remaining shares, valued at US$ 8.74 each, as required by the Capital Market Authority.
The Emaar chief has also confirmed that he will soon launch a regional app to compete with WhatsApp; this will form part of the strategy of his launch company, that will be tailored to the needs of millenials, as he introduces a series of digital and e-commerce sites. He is also set to form a JV with a Chinese contractor that can build a 30-storey building within a month!
Emaar has given Serco a 3-year extension to operate and maintain the Downtown Dubai Trolley System until 2019.
Troubled Gulf Navigation Holding has signed an agreement with China’s Wuchang Group to build six new chemical tankers to meet the increasing demand of shipping chemicals from the GCC.
Although 8.2% down on August, Dubai International‘s September passenger numbers, at 7.1 million, were 10.3% higher than in the same month last year. YTD traffic, at 62.9 million, is 7.2% up on the 9-month period in 2015. September cargo figures, at 205 tonnes, were 1.0% lower than last year but the YTD return of 1.891 million tonnes came in 2.1% higher.
Despite the sluggish global economy and a marked downturn in trade, DP World still saw a 2.2% growth (on a reported basis) in gross container volumes to 47.5 million TEUs (20’ equivalent units). However, UAE traffic was down 6.7% to 11.1 million TEUs, as a result of a fall in lower margin transshipment traffic.
Official data shows that there was a 3.3% rise in the country’s H1 non-oil direct trade which totalled US$ 150.8 billion. Raw gold was the leading import at US$ 15.1 billion, followed by diamonds (US$ 6.5 billion) and motor vehicles (US$ 5.9 billion). Gold was also the leading export followed by raw aluminium and precious stones jewellery – at US$ 7.7 billion, US$ 3.1 billion and US$ 2.6 billion respectively.
Meanwhile UAE’s total foreign assets, as at 30 September, were up 12.9% to US$ 82.2 billion along with current account balances and deposits with overseas banks – up 7.4% to US$ 34.6 billion.
The UAE’s Barakah nuclear energy plant project, jointly owned by Emirates Nuclear Energy Corp and Korea Electric Power Corporation, has finalised financing of US$ 24.4 billion for its first plant.
As expected, EIB’s shareholders have agreed to double the size of the bank’s shareholding to US$ 2.72 billion.
Although revenue was up 1.3% to US$ 488 million, CBD reported a 23.4% slide in Q3 profits to US$ 191 million, as impairment charges started to bite. However, total assets rose 7.5% to US$ 16.9 billion.
Mashreq posted a 24.8% slump in Q3 profits to US$ 113 million (compared to the same period in 2015) – the fifth straight quarter of reducing profits. The bank’s position was further exacerbated by an 82.0% hike in impairment charges of US$ 128 million on bad loans.
Meanwhile Mashreq’s long-term outlook has changed from stable to positive, with its long and short term local and foreign currency deposit ratings being maintained at Baa2 by Moody’s Investors Service. This serves to show that the credit agency believes that the bank – and the wider economy – will remain broadly resilient in the coming months.
Despite all the doom and gloom enveloping the banking sector, DIB returned a 7.5% hike in Q3 profits to US$ 820 million, compared to the same 2015 period.
Emirates Investment Bank, an independent private investment institution, chaired by Omar Abdullah Al Futtaim, posted a stellar Q3 with profits up more than sevenfold to US$ 3.5 million, although YTD returns were 13.6% lower at US$ 7.7 million. Total assets were up 36.7% higher at US$ 3.6 billion.
Although its revenue rose 3.0% to US$ 3.6 billion, Etisalat disappointed markets with a Q3 profit fall of 2.6% to US$ 518 million. The results included the sale of the telecom’s sale of its 92.3% share in Sudan’s Canar to the Bank of Khartoum for US$ 95 million.
Deyaar Development posted an impressive 85.1% surge in 9-months’ revenue to US$ 71 million, as YTD profit came in at US$ 46 million. Of that, property revenue jumped 161.2% to US$ 48 million, with a US$ 31 million bottom line. Its latest development in Al Barsha will see 299 hotel rooms and 109 serviced apartments added to Dubai’s expanding hospitality portfolio.
This week, Kuwait bank, Ahli United, listed a US$ 200 million sukuk on Nasdaq Dubai – its third on the bourse which now sees its total sharia bond listing at US$ 45.8 billion.
Having lost over 4% in value over the past three weeks, the DFM opened Sunday at 3340 and shed 22 points to close on 3318 by Thursday (27 October 2016). Volumes, on the last day of trading, more than halved to 210 million shares, valued at US$ 76 million, (cf 437 million shares for US$ 171 million, the previous Thursday). Bellwether stocks, Emaar Properties gained US$ 0.06 to US$ 1.87,whilst Arabtec lost US$ 0.02 to US$ 0.35.
Brent crude proceeded to lose its previous week’s gain of US$ 0.94, down US$ 0.95 to close on US$ 50.47; gold nudged up US$ 2 to close on US$ 1,270 at Thursday’s (27 October 2016) close.
Cyrus P Mistry has paid the price for his lackluster performance at Tata Sons, being replaced, after four years, as chairman by the man he superseded, 78-year old Ratan Tata. The US$ 100 billion Indian conglomerate has seen sales of its motor vehicles continue to disappoint the market, whilst its steel division, especially in the UK, struggles to compete with cheap Chinese competition. Founded in 1868, the company has interests in a wide variety of industries, with its 100+ companies spanning the globe; its latest annual revenue dipped 4.3% to US$ 103 billion.
Philips posted a Q3 1.0% increase in sales to US$ 6.4 billion, resulting in an 18.0% hike in profits to US$ 417 million. The Dutch company used to be the largest global manufacturer of lighting but now medical equipment is their prime revenue driver.
Two global carmakers, GM and Hyundai, posted differing Q3 results. Despite sales falling almost 4% in its home country, the Detroit company posted a record quarterly revenue of US$ 42.8 billion, whilst returning a massive 103.7% surge in profits to US$ 2.8 billion. Meanwhile the world’s 5th biggest automaker, Hyundai / Kia reported a 9.4% fall in profit to US$ 935 million. The South Korean company was hit by sporadic strikes, that resulted in lost sales of 140k units, equivalent to US$ 2.6 billion, and weak local demand.
Having recalled 3.4 million vehicles in July for problems with passenger and driver-side airbags, Toyota has issued recall notices for a further 5.8 million cars for similar reasons.
Time Warner looks set to be taken over by AT&T, in a massive US$ 85.4 billion deal that will see the telecom giant better utilising its network, with content from the likes of HBO, CNN and Warner Bros, whilst expanding its customer base of online viewers. If the authorities approve the tie-up, it should be finalised by the end of 2017.
Another merger will see a US$ 47 billion deal between British American Tobacco and Reynolds, with the former buying up the remaining 57.8% shares it does not already own; payment will be US$ 20 billion cash and the balance in shares, valuing the US company at US$ 56.50 per share.
Chinese conglomerate, HNA has paid Blackstone US$ 6.5 billion for part of its stake in Hilton, leaving the US private equity giant with a 21% shareholding. The 23-year old Chinese tourism company, with 2k hotels and 1.25k aircraft, employs 200k and has annual revenues in excess of US$ 30 billion. Earlier in the year, it acquired the Carlson Hotels, which owns the Radisson and Park Plaza brands.
Apple posted a 19.0% Q3 fall in profit to US$ 9.0 billion, mainly as a result of a disappointing 5.0% drop in iPhone sales (to 45.5 million units), with revenue down 8.9% to US$ 46.9 billion. Annual figures, to year-end 24 September, for the world’s largest company by value, saw decreases in revenue to US$ 215.6 billion and profit to US$ 45.7 billion.
Finnish telecom Nokia posted a quarterly loss of US$ 137 million on revenue of US$ 6.5 billion, compared to a profit of US$ 166 million on a US$ 3.3 billion turnover over the same period last year.
So far this year, the world’s largest oil rig builder has already cut its workforce by 26% to 23k. Singapore-based Keppel Corp has been badly hit by low energy prices, resulting in a major global slowdown in oil and gas exploration, and has seen its latest quarterly profit down 38% to US$ 161 million.
Despite revenue falling 7.5% to US$ 23.9 billion, Boeing’s Q3 profit jumped 34.1% to US$ 2.28 billion. The company expects to deliver 750 planes by year-end that would see its 2016 revenue hit US$ 95 billion. (This week, UPS placed a US$ 5.3 billion order for 14 747s, with an option for further 14).
As expected, Airbus posted disappointing Q3 numbers, as EBIT fell 20.6% to US$ 796 million because of production / delivery delays, scaling back on the A380 and a fall in helicopter sales. It is no surprise to note that its share value has fallen over 14% this year, with a current market value of around US$ 45 billion.
Earlier in the year, Bombardier retrenched 7k staff and now the Canadian plane and train maker is planning to cut a further 7.5k. The company will take a US$ 250 million restructuring charge on these job reductions, of which 67% will be in its rail division and the balance in aerospace.
Although providing a further US$ 1 billion towards its possible illegal role in PPI misselling, Lloyds still managed to post a Q3 profit of US$ 2.3 billion (compared to US$ 2.4 billion a year earlier) on income of US$ 5.2 billion. Shares in the bank, that was saved in a US$ 25.0 billion government bailout following the GFC, have fallen by almost 25% since the Brexit vote.
According to the British Bankers’ Association, smaller financial institutions are planning to exit the country this quarter, with larger banks making similar moves in early 2017. They all fear that if the UK were to lose its preferential access to the single market, then the London-based operations will be disallowed from carrying out business in the European mainland. However, there is every chance that the UK would consider cutting corporation tax to 10% if the 28-country bloc refused continental access to UK-based banks.
Having carried out the reforms, as required by eurozone officials, Greece will shortly receive a further US$ 3.0 billion, as part of its third bailout by the troika. 40% of the funds will be used for debt servicing and the balance for clearing long-standing arrears. Further to its latest US$ 92 billion bailout, agreed last year, the Prime Minister Alexis Tsipras’ government had already received two earlier payouts totalling US$ 258 billion.
A welcome boost for the UK economy was Nissan’s decision to build its two new models in Sunderland, thus securing 7k direct and 28k indirect jobs in the supply chain. Whether a sweetheart deal has been done with the May government remains to be seen.
The UK government has approved Heathrow’s plan to build a third 3.5km runway at a cost of US$ 21.5 billion. Thanks to a mix of bureaucracy and politicking, it has taken 50 years since the Roskill Commission was established to look at expanding the airport. Even now, it will take five years before construction could commence and then a further five years before it comes into use. Some people could learn from studying what happens in Dubai!
A Royal Caribbean study by Dr David Holmes has concluded that Dubai has the world’s best shoreline, beating Blackpool to second place followed by Gulf of Mexico, Inchydoney, (Ireland), Twelve Apostles – Australia and Cape Town. Now that Dubai has a bigger tower, a better tramway, newer theme parks and more visitors than its English counterpart, the only thing that Blackpool has that cannot be found here is an amusement pier – they have three! Oh I Do Like To Be By The Seaside!