Doesn’t Anybody Stay Together Anymore?

The pile foundations for the world’s tallest tower have been completed and soon the structures for the Tower at Dubai Creek Harbour will become visible. Completion date will occur before the start of Dubai Expo in October 2020.

After several false starts, it seems that the US$ 44 million Dubai Frame will eventually open later this year, after new bright-gold cladding, on its bridge, replaced the original planned exterior. Work on this project originally started in 2013.

Following months of disappointing data, local hotels reported a 6.0% year on year jump in February occupancy levels to 84.0% – its highest February level in nine years. Average daily rates also headed north 1.4%, up for the month to US$ 195, with revenue per available room 7.5% higher at US$ 163. This month, Dubai joined the ranks of Las Vegas (with 152k rooms), Orlando (150k), (Paris 140k) and Barcelona (120k) as its hotel room portfolio topped 100k.

Next week, Dubai will host 14k cosmetic agents – 13k from the US-based Forever Living and 1k from the China’s Nu-Skin (the same company that brought over 14.k staff here in 2014). The nine-day visit to the emirate is set to generate at least US$ 65 million for the local economy.

The Saudi Savola Group has decided to close its flagship HyperPanda hypermarket which was one of the first outlets to open in Dubai Festival City eleven years ago. This comes after one of the largest food and retail group in the Kingdom reported its first quarterly loss (US$ 257 million) in eight years and closed 51 smaller stores in the country. The Dubai store will have faced mounting problems resulting from several factors, including a slowing economy, reduced consumer disposable income, a strong US$ and the growth of e-commerce.

After three months of rises, petrol prices are set to fall in April with Special 95 retailing 4.2% lower at US$ 0.501 per litre.

Dubai International recorded an 8.8% hike in February passenger numbers to 6.95 million (YTD 9.3% higher at 15.0 million). Cargo traffic was down on the month – 1.9% lower at 193k tonnes but still 0.8% higher YTD at 401k tonnes.

February saw Dubai’s year on year inflation rate top 4.20% (and 0.40% month on month), driven by marked rises in miscellaneous goods, transportation and clothing/footwear of 16.9%, 11.1% and 8.0% respectively.

The federal government has spent US$ 8.1 billion in the first nine months of 2016, equivalent to 61.2% of the approved annual budget of US$ 13.2 billion. The three largest recipients, accounting for 68% of total spend, were general public service (US$ 2.8 billion), public order / safety affairs – US$ 1.7 billion – and education with US$ 1.0 billion.

The proposed US$ 8 billion merger between United Arab Shipping Company and the German Hapag-Lloyd has hit a problem, as some banks want assurances that Qatar Investment Authority will remain UASC’s leading shareholder and not try and divest some of its investment in the future. If that were to happen, there is every likelihood that rival shipping companies would acquire these shares.

Following last week’s news that Amazon had a US$ 580 million bid on the table to take over Dubai-based, Emaar Malls surprised the market with a US$ 800 million counter offer. However, this move was blocked since the American company had an “exclusivity” clause which would prevent any other dealings from interested parties whilst sales discussions were still in progress. It is reported that Tiger Global Management, already a major shareholder in the Dubai e-commerce leader, led the drive from Amazon’s side.

Nasdaq Dubai cemented its place as a leading global market with its total sukuk listing now at US$ 49.3 billion, following the Indonesian government listing a further two, totalling US$ 3 billion. The two main contributors to this impressive total are Indonesia (US$ 11.5 billion) and Saudi’s Islamic Development Bank’s US$ 8.5 billion.

Latest audited accounts from Drake & Scull indicate a US$ 200 million 2016loss and a negative US$ 90 million cash balance. The civil contracting company’s auditors, PwC have reported “a material uncertainty exists that may cast doubt on the group’s ability to continue as a going concern”.

Du has announced a US$ 262 million H2 2016 dividend, equating to US$ 0.057 per share, bringing the annual pay-out for the year to US$ 0.093. The telecom also reported a 12.0% surge in its mobile subscribers to 8.65 million.

The DFM opened Sunday at 3520 and shed a further 40 points to end the week 1.1% down by Thursday (30 March 2017) at 3480. Volumes were again disappointingly low, closing on Thursday at 147 million shares, valued at US$ 72 million, (cf 153 million shares for US$ 63 million, the previous Thursday). Emaar Properties gained US$ 0.01 to US$ 1.98, with Arabtec again flat at US$ 0.24.

By Thursday, Brent Crude had regained some of its recent losses, being up US$ 2.40 (4.7%) to close on US$ 52.96, with gold flat, down 0.2% (US$ 2) to US$ 1,245 by 30 March 2017.

At their Sunday meeting in Kuwait, a joint committee of ministers from OPEC and non-OPEC oil producers recommended a further 6-month extension of the 1.8 million bpd output cut agreed last December.

Canadian interests have been involved in two recent major energy sales. Earlier in the month, Royal Dutch Shell sold its Alberta fields and processing centres to Canadian Natural Resources Ltd for US$ 9.5 billion. This week, Cenovus Energy Inc paid ConocoPhillips US$ 13.3 billion for its Canadian holdings, thus doubling its reserves and production.

It is reported that Westinghouse Electric Co, the US-based nuclear developer owned by Toshiba, is filing for protection under Chapter 11 of the US Bankruptcy Code. The company’s two plants in Georgia and South Carolina have been beset by massive cost overruns that have sent the company spiraling into huge losses; any move into administration will help the South Korean conglomerate from hemorrhaging further money. With total 2016 losses expected to top US$ 9 billion, no wonder an investor told this week’s shareholders’ meeting that “Toshiba is now a laughing stock around the world”.

Chinese Tencent has acquired 5% of Tesla shares for a reported US$ 1.8 billion which makes the Chinese internet giant the electric car maker’s fifth largest shareholder. The company also raised a further U$ 1.4 billion earlier in the month, as it finances the introduction of the long-awaited Model 3. The Chinese suiter is keen to develop AI for use in future driverless vehicles.

Wells Fargo, already suffering from the fallout from last year’s fake accounts scandal, became the third US bank to post diminishing Q3 profits which came in 2.8% lower at US$ 5.5 billion. Earlier, JP Morgan posted a 7.6% slump to US$ 6.3 billion whilst Citigroup fared even worse, down 10.5% to US$ 3.8 billion.

The money spent in the Australian tourism sector rose by 5.6% to top AUD 100 billion (US$ 76.6 billion) for the first time, with 39% of the total derived from overseas visitors and the balance from home-based tourists. The oversea market, which climbed 7.1%, is dominated by visitors from China, UK, USA, New Zealand and Japan; the hospitality sector reported that there was an 11% jump in foreign holiday makers to 28.8 million.

Retail sales in Japan have been disappointing with growth of a miserly 0.1% being recorded, although February monthly sales were 0.2% higher. However, sales for larger retailers were even worse – sinking 2.7%.

The March flash survey data from HIS Markit saw the composite output index up seven notches to 56.7 – the eurozone’s highest private investment level in almost six years. There were also welcome (and unexpected) PMI increases in both services to 56.5 and manufacturing at 56.2. Such figures would indicate the bloc’s Q1 growth at 0.6%. There were also February falls in both growth rates for total credit to euro area residents from January’s 4.6% to 4.3% and to general government from 10.5% to 9.8%, month on month.

Despite political hiccoughs, Trump’s administration is churning out favourable economic data. US manufactured durable goods surged a further 1.7% in February, following January’s revised 2.3%, driven by an increase in transportation equipment of 4.3% whilst orders for non-defence aircraft and parts surged by 47.6%. Furthermore new home sales jumped 6.1%, equating to an annual rate of 592k – their highest level in nearly eight years.  March consumer confidence jumped 9.5% to 125.6 – well above analysts’ expectations of 113.8; this was at its highest level since December 2000.

Having already invested over US$ 50 billion in the UK, Qatar seem to have no qualms about Brexit and will invest a further US$ 6.3 billion mainly in the transport, property and digital technology sectors. Among its current portfolio are Harrods, London’s Olympic Village and The Shard (95%), along with stakes in the Milford Haven LNG terminal and Canary Wharf. Qatar has also a 20% stake in London’s Heathrow, whose shareholders recently approved a further US$ 810 million investment in the aging airport.

As expected, EU regulators have blocked the proposed US$ 31 billion merger between the London Stock Exchange and Deutsche Boerse on “competition grounds”. It was no coincidence that the announcement came just hours before the UK Brexit letter was delivered. In another Brexit-related story, Lloyd’s of London has decided to open a new subsidiary in Brussels to ensure that it holds onto its European business which accounts for 11% of turnover.

This week, Theresa May forwarded the Article 50 notification, a six-page letter, to the EU, giving notice that the UK is intending to withdraw from the bloc. The Brussels mandarins will start realising (and worrying) that the Brits may not be the only one leaving. Doesn’t Anybody Stay Together Anymore?

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