Peace Will Come According To Plan

With three projects – Binghatti Crystals, Binghatti Vista and Binghatti Jewels – due for completion this month and a further three (Binghatti East and West, Binghatti Sapphires and Binghatti Stars), ready by year end, the developer will have completed a credible US$ 300 million worth of projects. Before the end of 2020, Binghatti Developers hope to have handed over more than fifty other developments, with a value of US$ 1.6 billion.

An Arabtec subsidiary has been awarded a MEP works contract in Emaar’s Dubai Creek Harbour Development by the main contractor, AFC. Creek Horizon Plot 19, comprising 130k sq mt, will feature 550 contemporary apartments and should be ready for hand-over by Q1 2020.

The RSG Group has appointed Al Habbai Contracting for its 54-floor SZR building to be completed prior to Expo 2020. The US$ 136 million Sabah Rotana development will comprise a five-star hotel and hotel apartments.

Damac has awarded a US$ 20 million road and infrastructure contract to China State Construction Engineering Corporation, in relation to its massive Akoya Oxygen project which brings the total spend on this particular project to US$ 1.5 billion. Located adjacent to the Tiger Woods-designed Trump International Golf course, the development encompasses 55 million sq ft, with the first residents moving in by year-end.

Nakheel has received eleven proposals for the construction of its twin building residential complex at Dragon City, the lowest of which is US$ 177 million. Linked directly with Dragon Mart, the project will encompass 1,142 1-2 B/R apartments and is slated for a 2021 completion. The developer also announced an 80% completion of the construction of the third expansion at Dragon City – a US$ 46 million showroom and car park complex.

Wade Adams Contracting has been awarded a US$ 122 million Nakheel contract to build a 12-lane, 600 mt bridge connecting Deira Islands (the developer’s new15.3 sq km waterfront city) with the mainland. Work has already started and should be completed within two years.

There will soon be yet another tourist attraction for the emirate – the Dubai Wharf Green Wall, the region’s largest living green wall. The vertical garden, 210 mt long and six mt high, will feature 80k plants with a leaf canopy area equivalent to that of 200 trees. The Dubai Properties’ development, located in the heart of Culture Village, aims to promote sustainable living and will offset an estimated 4.4 tonnes of carbon dioxide annually.

DIFC is to build a state-of-art mosque in Gate Avenue, the heart of its new premium urban retail, leisure and cultural development. Covering 14.5k sq ft, the mosque will offer a modern, non-conformist facility that will host up to 500 worshippers.

Al-Futtaim Automotive International has announced that it has bought a plot of land in Faisalabad’s M-3 Industrial City to construct an assembly plant, capable of building 50k Renault vehicles annually.

A recent CarSwitch report (of 7k seller requests) confirms that Toyota and Nissan – each with an 11% market share – are the most popular car makers when it comes to resales; Ford (8%) and BMW (7%) come ahead of Mercedes. The most popular used car for sale continues to be the Mitsubishi Pajero, with a 3.6% share, but not surprisingly, Toyota models – Civic, Corolla, Camry, Prado and Yaris – take five of the top ten spots in the survey. A further breakdown sees sedans (47%) and SUVs (45%) dominate the used car market which at the end of the school year traditionally reaches its peak.

Last year, Dubai World Trade Centre’s events added US$ 3.4 billion to the emirate’s economy, equating to 3.3% of GDP; the location also captured 56.4% of the total return of major events held in Dubai which totalled US$ 6.0 billion – an 8.0% increase on the previous year. The growing importance of the MICE (Meetings, Incentives, Conferences and Exhibitions) sector to the Dubai economy can be seen from the fact that for every US$ 1 spent in this sector, US$ 4.31 is generated in overall non-trade business activity; furthermore, by supporting 84.2k jobs over the year, DWTC events also produces disposable household income of US$1.1 billion.

In its latest attempt to try and boost the economy, by reducing the cost of doing business in the emirate, the government is to cut Dubai Municipality fees on sales at local restaurants and hotels from 10% to 7%. Some properties in the sector, which adds 4.6% (US$ 40.9 billion) to the national economy, are indeed struggling as RevPAR (revenues per available room) dip for the fourth straight quarter. This follows recent decisions that have seen a 50% reduction in DM’s “market fees” and the freeze on private education fees.

In another bid to stimulate business growth and economic development in the emirate, the Department of Economic Development (DED) has launched a package to help businesses clear fines and renew licences in monthly instalments, rather than in one ‘hit’. This new initiative – which also includes giving businesses the ability to freeze their trade licence for a year, as well as seek amicable settlements with the DED for commercial violations – comes a month after companies were granted exemption from administrative fines for the rest of year. There is no argument that the local economy has gone through a troubled recent past, but recovery has already started with the UAE’s growth this year likely to be 2.7% (up from 1.5%) and 3.1% in 2019.

To reduce corporate costs further, the UAE cabinet has adopted a number of strategic decisions over foreign workers’ insurance in the private sector, as well as introducing measure in relation to the issue of visas. The mandatory US$ 817 deposit per employee will be replaced by a new US$ 16 new insurance policy that will allow businesses to recoup US$ 3.8 billion in previously tied-up cash with the bank.

There will be no charge for transit tourists staying for less than 48 hours, with a further two-day extension to cost US$ 13.62. Furthermore, anyone overstaying their visa will have the option of leaving the country voluntarily without a “no entry” passport stamp – and job seekers, who have overstayed their visa but wish to work in the UAE, will have access to a new six-month visa. There will also be the option of adjusting a person’s visa status, for a minimum fee, without the need for leaving the country. as was the case in the past.

Because of the recent government decision to freeze private education fees for a year, GEMS Education is reportedly planning to delay its London IPO. The Group, which includes Bahrain’s Mumtalakat Holding Co, Blackstone, Fajr Capital and founder Sunny Varkey, is studying the impact of the freeze on future earnings.

After three months of decline, Dubai’s inflation pushed above the 2% level in May (2.01%), driven by the introduction of VAT and year on year price increases of 73.4%, 10.8% and 10.1% in tobacco, restaurants/hotels and transportation respectively.

Emirates SkyCargo has signed a deal with Alibaba to deliver packages across its extensive network of 160 destinations, using Dubai as a hub – one of six that the Chinese e-commerce company plans to develop to expand its global reach. The world’s second biggest airline, after FedEx, is set to benefit from the growth in e-commerce, at a time when the global market appears to be dipping. (Meanwhile, neighbouring Etihad reported that it there had been a narrowing of its annual losses last year from US$ 2.0 billion to US$ 1.5 billion, as its cash flow and revenue streams improved on the back of its expansive turnaround plan, introduced by new management in 2017.

Noon, a US$ 1 billion JV e-commerce site between Mohamed Alabbar and Saudi Arabia’s sovereign wealth fund, is to tie up with eBay which will allow its customers greater access to access products internationally. As regional online shopping is beginning to expand, albeit from a small base, this agreement will see Noon capitalise on this growth trend as well as utilise the US company’s marketing and operational experience and expertise. (The Emaar Chairman has also acquired 51% in online fashion retailer Namshi last year, via Emaar Malls Group, but lost out to Amazon to buy Souq.com outright. He has a stake in Middle East Venture Partners, through one of his funds, whilst Noon also bought market platform JadoPado last year).

Last week, it was Kuwait’s Public Institution for Social Security (PIFSS), starting legal action against embattled Dubai-based Abraaj and now Auctus is the second creditor to seek the restructuring of the private equity firm’s liabilities. At the same time, Abraaj, with debts of US$ 1 billion, is reportedly filing for provisional liquidation in the Cayman Islands. The trouble started late last year when four major investors, including Bill & Melinda Gates Foundation, voiced concerns on how money in a US$ 1 billion global billion healthcare fund was being used. With the region’s largest private equity firm, denying any wrongdoing, a Deloitte report points to the firm “comingling” investor money with its own.

Last month, Dubai Islamic, the country’s largest sharia-compliant lender, increased its capital base, via a rights issue, by 19.5% to US$ 8.5 billion. Consequently, a bullish Moody’s report expects the bank’s credit growth to be up 15% this year, giving DIB strong capital and liquidity buffers until at least the end of 2019, with stable liquidity levels of above 20% of tangible banking assets.

The Investment Corporation of Dubai posted a 13.8% increase in 2017 revenue to US$ 54.7 billion which pushed profit 11.6% higher to US$ 6.7 billion. The main drivers behind the impressive returns included contributions from new acquisitions, as well as improved figures from banking/financial services and transport sectors. Over the year, ICD’s assets rose 9.4% to US$ 23.0 billion and liabilities 10.0% up at US$ 4.6 billion.

The DFM opened on Sunday (10 June), at 3042, and, having gained gaining 180 points the previous four weeks, gained a further 41 points (1.3%), closing the week, on 14 June 2018, at 3083. Emaar Properties was up US$ 0.03 at US$ 1.54 whilst Arabtec jumped US$ 0.12 to US$ 0.63. Volumes were flat, trading 131 million shares, valued at US$ 82 million, (compared to 132 million shares, worth US$ 51 million, the previous Thursday – 07 June).

By Thursday 14 June, Brent Crude, having declined US$ 1.74 (2.2%) the previous fortnight shed a further US$ 1.60 (2.1%) to close on US$ 75.96, with gold US$ 2 lower at US$ 1,303.

Offering a 33% premium, CK Infrastructure Holdings has made an audacious US$ 9.8 billion bid for APA Group, Australia’s biggest gas pipeline company. If successful, it would make the Hong Kong company the leading player in the country’s s east coast gas pipeline network but any deal may have problems clearing Australia’s competition and national security regulators.

In a move to cut costs (and improve the bottom line), as well as restructure the company, Tesla is to retrench about 10% – or 3k – of its labour force. Most of the lay-offs will be salaried employees, rather than factory workers.

A US federal court judge has approved the US$ 85 billion merger between AT&T and Time Warner that will have a major impact on the sector, as well as being a blow to the government who had claimed that the tie-up would harm competition. The administration had argued that the pay-TV market would be less competitive if the merger between the largest US pay TV operator and the media entertainment giant went through.

The AT&T court victory was seen as a green light for Comcast to submit its expected bid which almost immediately renewed its interest in 21st Century Fox’s entertainment businesses, with a US$ 65 billion cash bid – much higher than rival Disney’s US$ 52 billion stock offer. The US cable giant was unsuccessful in a previous offer last year. In the UK, Disney and Comcast are currently battling to take over Sky plc, the owner of Sky News, with authorities there clearing Comcast’s US$ 30.7 billion offer for the 61% of Sky that Rupert Murdoch does not own.

A major South Korean hack has led to a US$ 46 billion sell-off in Bitcoin this week, just when the cryptocurrency was showing signs of relative market stability; over last weekend, it lost over 11% in value to be trading at US$ 6.8k on Monday morning. Estimates put the current value of all cryptocurrencies at US$ 249 billion, well down its January 2018 peak of US$ 830 billion. Now its many critics are claiming, on social media, that the currency is becoming increasingly prone to money laundering, manipulation and outright theft.

In a bid to entice Saudi’s Aramco US$ 2.0 trillion 5% float of its shares on the London Stock Exchange next year, regulators are looking to exempt state-owned entities from rules that apply to privately-held companies; this will give investors the same protections offered by a premium listing. It removes a major obstacle for state-owned companies wanting to list on the LSE and means that Saudi Aramco no longer needs to operate at arm’s length from its biggest investor; this gives the London bourse more than a fighting chance to beat off New York and Hong Kong for this lucrative deal.

A PwC partner, responsible for leading the audit of BHS before its sale by Sir Philip Green, has been hit with a US$ 675k fine, by the UK’s Financial Reporting Council, and a 15-year ban that removes him from the register of statutory auditors. This follows a two-year probe into the audit of the retailer which subsequently collapsed into liquidation in 2016.

Trouble in the UK high street continues unabated with the latest being New Look, reporting an 11.7% fall in UK revenue and its net loss jumping from US$ 23 million to US$ 316 million. The retailer is confident that its turnaround strategy, that will see a change of focus from edgy fashion to basic cheaper clothes, along with the closure of 60 outlets, will result in “significant progress”. Interestingly, it also reported a 19.2% fall in on-line sales at a time when online retailer Boohoo, with brands such as Pretty Little Thing and Nasty Gal, posted a 49% Q2 increase in online UK sales.

Although it will add billions to FIFA’s coffers, this year’s World Cup is unlikely to break any profit records. Furthermore, Russia’s US$ 11.6 billion investment in the tournament is less than the US$ 15 billion expended on the last World Cup in Brazil and a lot less than the US$ 51 billion spent on the Sochi Winter Olympics by the Putin government. Overall income for the four-year commercial cycle tied to the event will be marginally higher than Brazil’s US$ 5.7 billion overall income. However, the footballing body is still recovering from the toxic, corrupt and scandal-ridden Blatter era which has had such a negative impact on mainline sponsorship. With several US, European and Japanese companies pulling out, FIFA have only 12 deals (out of 14) in place for their Partner and Sponsor categories. It was also looking at a further 20 backers in its third-tier category (four each from the five global regions) but have only seven in place (four from Russia and three from China). This time round, FIFA has struck lucky because of the boom in the broadcast rights market. Sponsorship returns are unlikely to improve for the Qatar World Cup in 2022.

Despite its troubles, Turkey’s economy continues to outpace most of the world, with Q1 annual growth of 7.4%, as its GDP topped US$ 207 billion, driven by a 10.0% rise in the value-added services sector, as well as 8.8% and 6.9% increases in its industrial and construction sectors respectively.

It seems likely that embattled Argentina will receive a US$ 50 billion loan to support its battered economy, as the peso hit an all-time low last week. Part of the deal will entail a cut in public spending, slashing the fiscal deficit to zero by 2020 and a new strategy to tackle its double-digit inflation; only last month, interest rates were hiked three times in one week from 27.2% to 40.0%. President Mauricio Macri’s decision to request a loan brings back unhappy memories for some who remember the international body pulling the plug on the country in 2001 which led to an economic collapse.

Despite recent monthly declines, the UK inflation level in May remained at 2.4% with the downward trend abruptly halted by a 3.8% hike in fuel prices – its biggest monthly increase since 2011 – to US$ 1.692 per Litre (UAE – US$ 0.717 – Super 98). The reading was not helped by the strengthening greenback but the good news was that wage growth remains ahead of the inflation level. However, the country’s quarterly industrial production growth, ending April, eased, declining 0.5%, whilst month on month there was an 0.8% fall in total production – the largest decrease since October 2012.

Despite the Trump administration removing a trading ban on China’s tech giant, ZTE, it had a harrowing day on the Hong Kong bourse on its return, after its 17 April 2018 suspension – it shed 39% of its market value. The initial ban saw it being prevented sourcing US parts and supplies after it had been found violating trade bans by dealing with companies in Iran and North Korea.

With public spending outpacing revenues, the US government posted an 8-month deficit in May of US$ 532 billion – 23% higher than the same period in 2017 – and a 66% month on month shortfall of US$ 147 billion. The main driver behind the figures is attributable to the Trump tax cuts late last year. May saw the country’s inflation rate move higher, at its fastest pace in six years – up 0.2% month on month and at an annual 2.8% – whilst wage gains remained flat, despite an 18-year low in unemployment figures; average hourly wages, adjusted for inflation remain static year on year as annual nominal pay was at 2.7%.

As expected, the Federal Reserve lifted its benchmark overnight lending rate 0.25% to a 1.75%-2.0% range and signalled the possibility of a further two rate hikes this year. It also indicated a change in policy that sees it no longer keeping rates low enough to stimulate the economy “for some time” and that it will allow inflation to remain above the 2.0% level until 2020. It noted that “the labor market has continued to strengthen … economic activity has been rising at a solid rate,” and that “household spending has picked up while business fixed investment has continued to grow strongly.”

The US President turned the table on his six colleagues as he attended the first part of Friday’s G7 summit. In a surprising change of face, which would have startled the other six leaders, he suggested the elimination of all barriers to international trade, a complete turnaround on the accusers who have been reproaching the US of wielding protectionist policies. In a later press conference, he once again emphasised “no tariffs, no barriers, that’s the way it should be, and no subsidies.”

Veni, Vidi, Vici – Donald Trump’s truncated visit to the Q7 meeting was not the main event of the week as he was off to Singapore for his historic ‘one-time shot’ meeting with North Korean leader Kim Jong-un. Unlike previous presidents, who have all shied away from addressing the main issue, the denuclearisation of the Korean peninsula, he has gone into talks saying “I think I’m very well prepared, I don’t think I have to prepare very much. It’s about attitude.”

Prior to the meeting, Mr Trump promised that if North Korea gave up its nuclear programme, he would provide “protections” for Mr Kim and his government and that the likes of South Korea, China and Japan would be prepared to invest in the North to boost its besieged economy. Once again, the US President has gone to script and has done what he promised to do in the months prior to his 2016 election. There are not too many world politicians who can claim to have kept to their campaign promises. Hopefully, the outcome from the historic meeting of probably the world’s two most despised leaders is that Peace Will Come (According To Plan).

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