Stuck In A Moment You Can’t Get Out Of

Asteco’s latest report points to declines of 7.0%, on an annual basis, and 2.0%, in Q2, in apartment prices. Rentals nosedived in certain locations, most notably in Business Bay, Downtown, Deira and International City, where falls have ranged between 11%-14% over the past year. Declines in areas such as The Greens and JBR were not as severe, coming in at around 4%. Asteco expects that 17.7k units will be handed over this year – more than double the 2016 figure of 8.8k. (Official figures indicate that in Q1, only 2.6k units, valued at US$ 2.4 billion, were completed).

Chestertons has estimated that Q2 property transactions have declined by 23% and that rents for both villas and apartments have fallen by 2.0%, following a promising start to 2017 in Q1. The firm expects a pick-up in the latter part of the year, with both sales prices and rentals nudging higher.

Meanwhile, in line with most other reports, has concluded that over the past twelve months average property sales prices have declined by 7.0%, whilst there was a larger dip in rentals of 10.4%. However, there was some variance in declines over H1 such as a typical 3-bed villa falling by 7.6%, a 1-bed apartment by 6.1% and a studio by only 0.1%.

Having already awarded a US$ 204 million infrastructure project, Emaar Properties this week invited tenders for the construction of its Dubai Creek Harbour development.

To meet the expanding demands of a growing population, and to enhance the emirate’s position as a regional food hub, Dubai Holding has initiated the US$ 1.5 billion Dubai Food Park in Dubai Wholesale City. The park will act as a central wholesale market and will cover all aspects of the food sector, including infrastructure, logistical and ancillary services; it will also host employee accommodation and will see international and local food companies set up their headquarters. There are estimates that the local food industry, which makes up 11% of the country’s GDP, will grow by 70% to US$ 6.3 billion by 2030.

Monday saw the start of the DSS (Dubai Summer Surprises) 72-hour hour sale that will see up to 75% discounts from over 70 brands, including Calvin Klein, Tommy Hilfiger and Victoria’s Secret. The sale will be a weekly event, until its close on 12 August, and participating venues include Dubai Festival City, Dubai Mall, Mall of the Emirates, Mercato and Oasis Centre.

Following a feasibility study by the US-based Parsons Overseas Limited, it appears that Dubai Municipality’s massive US$ 8.2 billion deep drainage project will go ahead in two stages between 2019-2025. Tenders for the work on two tunnels – Bur Dubai, 62 km long and Deira, 16 km – will be released early next year and on completion, more than 100 pump stations, that currently transfers sewage to treatment plants, will become superfluous. The use of micro tunnel technology eliminates the need for digging up roads.

The RTA has advised that the US$ 110 million Airport Street upgrade, already 45% complete, should be opened by H1 next year. This will improve traffic flow around Dubai International where by 2029, it is expected that by 2020, over 92 million passengers will be using the facility.

A recent Campbell-Hill Aviation Group report has estimated that Emirates supports more than 104k jobs in the USA and contributes US$ 21.3 billion to its economy. On top of that, the much maligned airline (in the US) introduced 580k new travellers to the country in 2015 and generated US$ 3.2 billion of new trade-based revenue. Indirect spending by inbound Emirates passengers added US$ 4.6 billion of new revenues for local businesses and created some 30k jobs. Emirates has 135 flights a week (both passenger and cargo) to the US and serves 14 different locations, often utilising some of its 163 Boeing 777 aircraft (made in the USA).

In a bid to cut costs further, it is reported that Emirates has retrenched a number of senior staff including cabin crew, IT and administration. This follows a hiring freeze last summer but the airline continues to fill “critical roles”. Despite this, the Emirates Group reported an 11.0% hike in employee numbers to 105k in their March annual report.

Gulf Navigation is looking at ambitious expansion plans over the next four years, as it doubles its fleet to 20 vessels, and forecasting a 300% leap in revenue. CEO Khamis Bu Amin is also targeting growth opportunities by opening new facilities in Abu Dhabi and Fujairah, as well as fostering joint ventures. To help with financing, the company is set to issue a US$ 250 million sukuk in Q3.

June’s Emirates NBD Dubai Economy Tracker Index showed a marked 1.5 jump to 56.5 from a month earlier – an indicator that the Dubai economy has expanded at a faster rate in H1 than a year earlier. Although showing the slowest improvement, travel/tourism still posted a credible 54.0, whilst wholesale/retail (at 58.0) and construction (57.4) were the standout performers; however, employment in both sectors continues to disappoint, with the former flat at 50.5 and the latter down from 51.1 to 48.4.

Dubai Customs reported that the emirate’s Q1 non-oil trade was up 2.7% to US$ 89.1 billion – and this despite the headwinds felt by the global economy and trade. The IMF’s latest forecast is for Dubai’s economy to expand 4.0% this year, following a 2.7% increase in 2016, aided by Expo 2020 infrastructure spending.

The delayed US$ 272 million Dubai Safari Park project will open in “the next few months”, according to Dubai Municipality. The project, located in Al Warqaa-5, covers an area of 119 hectares and will be home to 1k animal species, 35% of which are rare and endangered.

Etisalat has terminated its management and technical support agreements with Nigerian firm, EMTS, and will phase out the use of its branding in that country. Etisalat Nigeria, the fourth largest operator in Africa, is 40% owned by Etisalat with the other two shareholders being Abu Dhabi’s Mubadala (45%) and the Nigerian-owned MyaCynth (15%). With both UAE parties pulling out of the company’s board and management, the Nigerian government had to step in to save the telecom from collapse, after US$ 1.2 billion loan discussions had failed.

The next company to list on the Dubai bourse could be Kuwait’s Zima Holding after shareholders approved raising its equity from KWD 10 million to KWD 35 million, as well as listing its shares on foreign stock markets.

The first results of the H1 reporting season saw the Commercial Bank of Dubai report a 31.6% net profit decline to US$ 91 million, as it posted higher impairment provisions figure – up 84.1% to US$ 145 million. However, its operating income jumped 9.9% to US$ 357 million, driven by hikes in non-interest (16.3% to US$ 117 million) and net interest (7.1% to US$ 241 million), whilst operating expenses climbed 7.0% to US$ 122 million.

The DFM opened Sunday at 3401 and jumped 4.0% (136 points) to close the week on 3537. Volumes improved, closing on Thursday, trading 279 million shares, valued at US$ 69 million, (cf 88 million shares for US$ 33 million, the previous Thursday). Emaar Properties was US$ 0.04 higher to US$ 2.16, with Arabtec gaining a further US$ 0.08 to US$ 0.96.

By Thursday, Brent Crude was US$ 0.31 higher at US$ 48.42, with gold lower by US$ 6 to US$ 1,217 by 13 July 2017. Oil prices had plummeted almost 4% on Wednesday on the back of reports that OPEC’s exports had risen and this, after prices had risen over 10% in the previous eight sessions, from a ten-month closing low.

Libya and Nigeria were the only two members of OPEC that were exempted from the quota cuts introduced last November. In the light of the current downward trend in prices, they could well be requested to cap future output to help in the organisation’s attempt to rebalance the market. The two countries have been invited to join a St Petersburg meeting, later in the month, of OPEC and non-OPEC producers. Some argue that the 1.8 million bpd cutback has been offset by these two countries’ increased output, along with a marked rise in US shale production.

It seems that Adnoc (Abu Dhabi National Oil Co) is considering to list its 300 service stations and a network of convenience stores (valued at up to US$ 14 billion) in an IPO that could raise US$ 3 billion on the Abu Dhabi bourse. The conglomerate is looking at selling minority stakes in its service units, as well as seeking international entities to expand operations and boost revenue opportunities.

It is reported that Cosco is to acquire OOIL for US$ 6.3 billion which would then make the Chinese shipping conglomerate the third biggest in the world, with over 400 vessels. The Tung Chee-hwa family owns 69% and will benefit from the fact that the bid values the Hong Kong shipper at 38% higher than its last Friday’s market price.

As it moves away from its traditional way of doing business – selling office software licensing – to cloud computing, Microsoft is to slash its sales force by “thousands” from its current payroll of 121.5k. It is estimated that the tech firm’s annual revenue, from commercial cloud services, will top US$ 15 billion despite strong competition from rivals, Amazon and Google.

A French court has ruled that Google does not have to pay over US$ 1.4 billion in back taxes.  It  found that the internet search firm did not have to pay French tax on profits of its Irish subsidiary, even though 700 of its work force operate out of France. Last year, the company paid just US$ 10 million to the French exchequer.

RBS, still 72% owned by the UK taxpayer following a 2008 US$ 58 billion bailout, has agreed  to a US$ 4.8 billion settlement with the US Federal Housing Finance Authority, in connection with its dubious role in the risky mortgage products scandal. The troubled bank is expected to be hit with a similar penalty levied by the US Department of Justice and had already provided for some US$ 8.6 billion to cover these two cases.

Philip Morris failed in its bid to sue the Australian government over its introduction of the world-first plain-packaging laws, introduced in 2012. The tobacco giant was also ordered to pay the government’s legal fees and could be left with a US$ 40 million bill.

With the sale of its two Hartlepool steel pipe mills to Liberty House Group, Tata Steel Ltd has completed an overhaul of its UK operations that will see the Indian conglomerate concentrate on its Port Talbot strip products supply chain; it has also invested US$ 1.3 million in its 20-inch pipe mill there. The company had already divested itself of  mills in Teeside, a Scunthorpe steelworks, some Scottish operations and part of its specialty steel business.

Having failed to find new investors, UK fashion chain, Store Twenty One, has been forced into liquidation, with the closure of 122 stores and the loss of over 900 jobs. The closure of the chain, owned by the Indian manufacturing group Alok, is the latest of several over the past three years, the most notable being BHS.  Competition from the likes of H&M, Primark, e-commerce and supermarket chains has made trading more difficult and eroded margins to the point of no return.

In order to repay some US$ 3 billion of fines and penalties, Alpargatas is selling its world-famous Havaianas brand for a reported US$ 1.1 billion. The company, which makes 200 million pairs of flip-flops every year, is owned by J&F which has been involved in a series of corruption scandals that seems to be bedevilling Brazil.

Former Brazilian president from 2003-2011, Luiz Inacio Lula da Silva, has been sentenced to nine years following corruption charges. He was found guilty of receiving an apartment for assisting in winning contracts with Petrobras, the state oil company.

With an estimated 1 in 30 of the old £1 coin a fake, it is no wonder that in March, the Bank of England  introduced a new 12-sided coin that will make it harder for counterfeiters to copy. The old round currency will cease to be legal tender on 15 October 2017. To date, the Royal Mint in Wales has issued over one billion coins since the £1 note was withdrawn in 1988.

It is a pity that UK wage growth does not keep up with inflation, with the result that although the country’s unemployment level at 4.5% (1.49 million) is at its lowest level since 1975 and its employment rate of 74.9% (32.0 million) its lowest in 46 years, real terms falls in total earnings continue to disappoint. Inflation at 2.9% has hit 4-year highs, whilst wage growth lags somewhat behind at 1.8%, resulting in adjusted for inflation total pay falling 0.7%. Consequently, it is unlikely to see the Bank of England raising interest rates in the short term.

Following a US$ 17.1 billion current account surplus the previous month, Japan posted a weaker US$ 14.5 billion figure in May, whilst its trade balance fell from a US$ 4.8 billion surplus to a US$ 1.0 billion deficit. May imports were 15.8% higher, year on year, at US$ 510 trillion with exports up by 12.9% at US$ 500 trillion; the country’s adjusted trade balance fell 9.8% to US$ 12.3 trillion. However, export prices were 5.6% lower on the year, but less than half of the 11.9% decline in import prices. The Bank of Japan reported that overall bank lending, at US$ 4.5 trillion, was 3.3% up on the previous year.

German exports reached US$ 123.1 billion dollars in May – up 1.4% year on year and hitting a new record high; the country’s biggest export market was the EU, with trade 11.8% higher. Over the same period, imports increased by 1.2% to US$ 100.0 billion.

The Federal Reserve reported “slight to moderate” June growth in the US economy, as any noticeable increase in inflation, currently at 1.4%, is some way off despite record employment figures. Over the recent past, wage growth has been sluggish with June data showing an increase of less than 0.2% in average hourly earnings. It is expected that the third increase in Fed rates this year may occur but not before September.

Carillion is one of UK’s top two contractors to the Highways Agency and Network Rail and employs 40% of its total 50k workforce in the UK. To say it is facing tough times is an understatement; the news, that 2017 financials would be “below management’s previous expectations”, spooked the markets on Monday with its shares tanking 38%, followed by a further 30% on Tuesday. By Thursday, its share value had fallen 72% in just four days, having opened the week on US$ 2.48 and closing on US$ 0.71. The company has a pension deficit of US$ 1.8 billion and has set aside US$ 1.1 billion in provisions of which 55.6% relates to overseas markets, mainly in Canada and the Middle East; it has also suspended its dividend payout. The company, with a 48k workforce, has already intimated that it will be leaving Egypt, Qatar and Saudi Arabia and it is inevitable that parts of the group will be sold or closed. It seems that Carillion is Stuck In A Moment You Can’t Get Out Of!

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