Handbags And Gladrags

Propertyfinder reports that Jumeirah Lake Towers is now Dubai’s top performing location for apartment rental values, as it was the only area to show an H1 price increase (1.0%). Other more salubrious sectors, such as Palm Jumeirah, Downtown, Jumeirah Beach Residence and Old Town, witnessed falls of 5.8%, 4.7%, 1.0% and 0.8% respectively. Downtown also recorded the highest decline in apartment prices of 6.7% but still remains the most expensive (at US$ 594 per sq ft), followed by Old Town (US$ 570), Palm Jumeirah (US$ 512) and DIFC (US$ 505).

According to Core Savills, there was a 6% increase in Q2 sales transactions, although the value remained flat, indicating an increasing penchant for more affordable housing. Q2 deliveries of 3.5k units brought the total for the year to 6.6k, with estimates that 2017 could see a maximum of 17.5k new residences. As with most other recent reports, there is a feeling that the market has now definitely bottomed out.

Belhasa Engineering and Contracting Company has been awarded a US$ 163 million contract by Deyaar Development to build 1.2k units in the Afnan and Dania districts in Dubai Production City. 70% of the properties have already been sold off plan and completion is slated for H2 2019.

Following the success of its first two projects, Ellington Properties has launched Belgravia III in Jumeirah Village Triangle. This latest release comprises 224 studio, 1 and 2 bedroom apartments.

Two of Al Ghurair’s hotels – the Rayhaan and Arjaan – are being rebranded under the Swissôtel & Swissôtel Living umbrella, managed by AccorHotels. Both properties – totalling 620 rooms – are located at the Al Ghurair Centre complex, which has just undergone a US$ 490 million expansion.

Tecom has been appointed to develop and operate the US$ 1.4 billion Emirates Towers Business Park, in collaboration with Dubai International Financial Centre, launched by HH Sheikh Mohammed bin Rashid Al Maktoum earlier in July.  Located adjacent to Emirates Tower, the development will include a wide range of high-end office space, three 5-star hotels, along with retail and F&B outlets.

BNC Network estimates that the number of active residential and commercial building projects in the country is 24.4% higher at 7.5k, with a total value of US$ 228 billion. Last month, it was estimated that the value of completed projects totalled US$ 3.0 billion, compared to only US$ 559 million in June 2016. 14.1% of the projects (1.1k) involve buildings of 15 storeys or more, with a value of US$ 100 million (44.0% of the total value).

One of the region’s iconic and oldest fashion retailers is shutting down, just four weeks after opening a flagship store in BurJuman. After thirty years, Sana is to close all 35 of its regional outlets, with the loss of 1k jobs.

A recent On The Go Tours study has noted that, with tourist numbers of 15.3 million compared to a residency of 2.7 million (today – 2.82 million), visitors outnumber the “locals” by 459%. Only two other destinations – Paris at 704% (with 18 million tourists and a local population of 2.2 million) and Kuala Lumpur’s 595% (12 million visitors and a population of 1.7 million) – bettered the emirate in this unusual survey.

Despite the holy month of Ramadan falling in June, Dubai International returned a 3.9% hike in passenger numbers to 6.1 million, bringing the YTD total increased by 6.3% to 43.0 million. The average number of passengers per flight grew 4.8% to 218.

Last month, Dubai-based Premier Composite Technologies was in the headlines for building the “largest ever freestanding carbon-fibre roof” on Apple’s Cupertino headquarters in California. It is also famous for the world’s largest clock – in Saudi Arabia – and now it has received further accolades for building the “largest sliding roof on a mosque in the world”, in Makkah; the 38 mt octagonal-shaped roof was built in Dubai and is now in the Holy City, ready for installation.

Local tech company, Eniverse Technologies, has tied up with San Francisco-based Skycart to bring drone home delivery to Dubai. Operations are expected to start next year and will allow packages of up to 5kg to be sent. Initial operations will start in selected locations, including The Meadows, Jumeirah and Umm Suqeim.

DP World reported a 10.7% increase in Q2 gross container volumes, as it has handled 34.0 million TEUs (twenty foot equivalent units) so far this year. Locally, Jebel Ali has operated 7.7 million TEUs (YTD) – this equates to a 4.3% year on year growth. The expansion figures reflect the improvement in global trade.

Government-owned Dubai Aerospace confirmed that it had obtained financing of US$ 2.3 billion, partly to pay for its recent acquisition of the Irish aircraft leasing company, AWAS; the loan was split in three tranches – US$ 500 million – 4% – due in 2020, US$ 800 million – 4.5% – 2022 and US$ 1 billion – 5% – 2024. With the addition of 263 aircraft from the sale, DA’s fleet will grow to 394 units, valued at US$ 14 billion.

Dubai’s trade recovery can be gleaned from the fact that, notwithstanding challenging global economic conditions, Dubai Chamber of Commerce and Industry reported a 6.1% H1 increase in members’ exports and reexports to US$ 40.0 billion. Saudi Arabia was the emirate’s largest partner accounting for 35.4% of trade, equating to US$ 14.1 billion. It also reported that its membership now totals 210k, following a 10.9%, year on year, hike in numbers.

Although its revenue figures have not been disclosed, Nakheel reported a 21.6% fall in Q2 profit to US$ 316 million, year on year, and an H1 10.5% decline to US$ 719 million. The government developer handed over 870 units in the first six months of the year.

Etisalat posted satisfying UAE results with a 3.0% increase in H1 revenue to US$ 4.2 billion, resulting in a 7.0% hike in profit to US$ 1.1 billion. Group aggregate figures saw revenues at US$ 6.9 billion and profit (before Federal Royalty) of US$ 2.4 billion. In relation to its subscriber base, the UAE’s 12.4 million users account for just 8.9% of its aggregate total of 139 million.

Du posted a 0.3% increase in Q2 profit to US$ 122 million helped by a 1.5% rise in its customer base to 8.2 million users, with revenue 6.2% higher at US$ 837 million. The telco is planning to distribute US$ 161 million as an interim dividend, equal to US$ 0.0354 per share.

The DFM posted a 4.0% rise in H1 profit to US$ 40 million, compared to the same period in 2016, on revenue of US$ 65 million – 5.7% higher; however, Q2 profit dived 19.0%. Trading value for the first six months saw a 1.0% increase to US$ 19.1 billion.

The DFM opened Sunday at 3574 and continued its three-week positive trajectory moving 32 points (0.9%) to close the week on 3606. Volumes nosedived, closing on Thursday, trading 98 million shares, valued at just US$ 36 million, (cf 341 million shares for US$ 124 million, the previous Thursday). Emaar Properties was US$ 0.01 higher at US$ 2.22, with Arabtec failing to gain traction dropping US$ 0.03 to US$ 0.94.

By Thursday, Brent Crude was US$ 3.43 to the good (up 7.1%) at US$ 51.49, with gold climbing US$ 15 to US$ 1,260 by 27 July 2017. Brent should continue to trade in positive territory, helped by the political crisis in Venezuela, lower US stocks and a more stringent approach to maintain agreed quota cuts.

BMW has confirmed that production of its new electric version of the Mini will start in 2019 at their UK Cowley plant.

GM’s Q2 profits declined 14.3% to US$ 2.4 billion driven by lower sales (down 1.0% to US$ 37 billion) and extra restructuring expenses, including a US$ 100 million write-off relating to its Venezuelan facility which was taken over by the Maduro government in April. During the quarter, the car giant sold its European operations to the French PSA Group.

Although Q2 sales were 4.0% higher at US$ 245.5 billion, Nissan posted a 1.1% slip in profits to US$ 1.2 billion, resulting from slowing growth, an increase in raw material prices and forex fluctuations. The car maker expects an improvement in H2.

Despite adding a further US$ 1.3 billion provision (US$ 920 million for PPI claims and US$ 380 million to mortgage holders), Lloyds still posted a 4.0% increase in H1 profits to US$ 3.2 billion. This the 17th time that the bank, which received government bailout funds of US$ 26 million, has had to increase provisions for its previous nefarious activities. Of the big five banks, Lloyds has set aside 60% (US$ 23.4 billion) of their total provisions (US$ 39.0 billion) just for PPI claims. Meanwhile, Barclays returned a Q2 US$ 1.8 billion loss, not helped by that bank having to provide a further US$ 910 million in relation to PPI customer compensation.

Airbus has posted a 17.0% fall in H1 profits to US$ 1.8 billion, as it took an impairment provision against cost overruns on the troubled military A400M and ongoing engine issues with Pratt & Whitney for its A320neo. Q2 figures were even more disappointing as profits fell 27.2%, year on year, to US$ 1.0 billion. Despite all these problems, CEO Tom Enders, still expects to deliver 700 commercial aircraft in 2017 – as long as engine manufacturers meet their commitments. Part of this commitment is delivery of 200 A320neos – to date only 50 have left the factory gates.

It is also reported that it will cut the annual production number of its A380 superjumbo from 28 last year and 15 this year to just eight in 2019. At even current levels, it is highly improbable that the company can return a profit let alone recover some of its US$ 30 billion development costs.

Air France has become the latest international carrier to launch a lower cost airline to compete with the likes of easyJet, Norwegian and Ryan Air (and even Emirates). Joon will start flying medium-haul later in the year, with longer flights scheduled for H2 2018. The French carrier also has a low-cost subsidiary – Transavia. Initially the new company, which is targeting millenials, will use Air France deck crew (who will be on the same pay) but will outsource cabin crew and ground staff.

easyJet has announced that it is expanding its cabin crew by 17.4%, as it takes on a further 1.2k to bring its total to 8.1k; at the same time, it is recruiting a further 450 pilots. The airline has 270 aircraft operating 880 routes in 31 countries and has just applied for a new air operator’s certificate in Austria so it will have no hassles flying in the EU after Brexit is finalised.

Late last year, mining giant Rio Tinto contacted authorities over certain 2011 consultancy payments made in relation to their Simandou iron ore project in the Republic of Guinea. It had earlier sold the mine for about US$ 1.3 billion to Chinese firm Chinalco. This week, the UK’s Serious Fraud Squad has opened an investigation into the matter.

Samsung goes from strength, posting a record 72.7% jump in profits to US$ 12.7 billion, as its DRAM and NAND chip sales tripled to US$ 7.2 billion. The only blot on the landscape for Asia’s third largest company, by market cap, and the global leader in memory chips, TVs and smartphones, is the fact that its Vice Chairman, Jay Y Lee, is in detention on trial for a corruption scandal.

Facebook posted an impressive 71% hike in Q2 profit to US$ 3.9 billion, as revenue rose 45% to US$ 9.3 billion, mostly emanating from advertising; expenses were also up 33% to US$ 4.9 billion. Users topped 2 billion – up 17% year on year.

PayPal returned an 18.3% rise in Q2 revenue to US$ 3.1 billion, as it saw accounts up 80% (6.5 million) compared to a year earlier. As a result, its shares jumped 2.9% to US$ 60.50, with the company upping its annual forecast revenue to US$ 12.8 billion and adjusted earnings per share to top US$ 1.80.

The recent US$ 2.7 billion fine by the EC dented Alphabet’s Q2 profit which, at US$ 3.5 billion, was down by around 40% because of this indiscretion; revenue was 21% higher at US$ 26 billion. Over 87% of the revenue (US$ 22.7 billion) is generated from advertising – including its own sites Gmail and YouTube – and was up 18.0%, year on year.

Following concerns from interested parties to Amazon’s recent US$ 13.7 billion bid for Whole Foods, US regulators will take more time to consider their anti-trust concerns and whether consumer choice would be negatively impacted – or whether they could benefit from lower prices and better delivery.

After two years of haggling, the IMF has agreed to a new conditional bailout that will see heavily indebted Greece receive a further US$ 1.8 billion in bailout funds. The agency’s agreement to this disbursement is contingent on further debt relief from its main creditor – the eurozone – since it estimated that even if the Hellenic nation carried out all of its implementation conditions to the letter, it would be unable to restore debt sustainability; furthermore its debt by 2030 would still be in excess of 150% of GDP! For mainly political reasons, the eurozone countries, especially Germany, with an upcoming September election, has balked at a further “haircut” of Greece’s debt.

There was a marginal 0.3% hike in eurozone government debt to GDP in Q1 to 89.5%, whilst the larger EU28 bloc saw a 0.5% rise to 84.1%. Not surprisingly, Greece topped the table with the highest ratio of debt at 176.2% followed by Italy’s 134.7%, Spain’s 99.4%, France’s 96.0% and Germany’s 68.3%.  (The UK’s debt of US$ 2.280 trillion is equivalent to 87.4%).

The UK’s June budget deficit showed a US$ 2.6 billion year on year jump to US$ 9.0 billion driven by debt increase of repaying index-linked bonds, as interest payments expanded by 32.9% to US$ 6.4 billion, driven by higher inflation. YTD, public sector net borrowing jumped 9.1% to US$ 29.6 billion of which 75% of the total related to the cost of the “day-to-day” activities and the US$ 7.4 billion balance being expended on infrastructure. With government spending increasing by 8.3% but its revenue lagging at 4.6%, it is doubtful that Philip Hammond will meet his annual borrowing target of US$ 75.4 billion.

Apart from Brexit negotiations, the Chancellor has also other problems to face, as the country becomes more belligerent after seven years of austerity.  During that time, the deficit has fallen from 10% of GDP to 2.4% but the casualties have been the public sector workers (apart from MPs themselves), the National Health and the education system. All need much wanted money pumping in and it took this year’s disastrous election result to drive the point home. The problem is that if money is spent on these, there is no chance of a future balancing of books and the distinct possibility of public debt climbing from 87% to triple digits.

The country’s Q2 growth was up by 0.3% (compared to 0.2% the previous quarter) underpinned by output falls in both the construction and manufacturing sectors. One area that fared well, motion picture activities, recorded an 8% increase, thanks to the success of films such as the latest Pirates of the Caribbean and Wonder Woman. Slower growth is expected in the coming quarters, driven by real wages not keeping up with inflation and the Brexit factor. Little wonder then why the IMF cut its 2017 growth forecast from 2.0% to 1.7%, blaming “weaker-than-expected activity”, but maintained next year’s figure of 1.5%.

Although the world body also pegged back US growth forecasts from 2.3% to 2.1%, it maintained a brighter picture of the global economy which saw 2017 and 2018 forecasts unchanged at 3.5% and 3.6%.

To the surprise of nobody, the Fed kept US interest rates on hold, noting that it would be “monitoring inflation developments closely” but would soon be reducing its massive bond holdings. Like many other nations, the world’s biggest economy is worrying economists with a conundrum – the US has seen uninterrupted employment growth since the GFC and a historically low 4.4% unemployment rate but, unlike what is studied in Economics 101, wage growth and inflation have remained stubbornly flat. That being the case, it is difficult to see any rate hike this side of Thanksgiving Day. However, expect an early reduction in its portfolio of investment holdings.

Whether this is the straw that will break the camel’s back remains to be seen but there is no doubt that the country’s stock markets are ready for a major correction. Over the past twelve months, all three major bourses have shown massive appreciation – the Nasdaq by 23.8% to 6382, the Dow Jones 18.3% to 18432 and the S&P 500 by 14.4% to 2482. Investors have already filled their boots and those that stay in at these record levels will surely live to regret their greed (and ignorance).

Famous handbag and shoe maker, Jimmy Choo Plc, has been bought by Michael Kirsten Holdings for US$ 1.2 billion. It is the New York high-end fashion company’s first acquisition since it went public in 2011. Recently it has had its trials and tribulations as it lost its exclusive gloss by expanding its market to outlet malls and discount stores. Now with Jimmy Choo on board and a move away from department stores, the firm may regain some of its former brand image.

The world’s largest luxury goods company saw its H1 profits grow at the fastest rate in seven years. LVMH posted a 23.0% increase in H1 profits (from recurring operations) to US$ 4.23 billion, with revenue above market expectations (Q1 13% to the good and Q2 12% higher). The company is confident that the recovery in the luxury goods sector has been global-wide, having recorded double digit turnover growth in key markets such as China, Europe and Japan. This year, it has seen its share value increase by over 20% to become France’s most valuable company, surpassing Total. A sure sign that it is a good time to invest in Handbags And Gladrags!

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