Don’t Play With Me

Despite all the doom and gloom around, a positive note was sounded by Bayut.com’s CEO Haider Ali Khan who noted that the start of the year has witnessed positive growth in a selection of key Dubai developments. Although agreeing that prices (for both rentals and sales) continue to head south, the rate of decline has slowed somewhat, with very few areas witnessing drastic decreases of over 10% – as had been the case in recent times. it was also noted that in some popular areas, including Downtown Dubai, Palm Jumeirah and Business Bay, there have even been marginal increases in some segments. has been appointed by Meraas to be the main contractor for the Address Harbour Point project in Dubai Creek Harbour. The project comprises two towers – 65 and 53 stories – and will feature 202 1-4 B/R luxury apartments.

In the wake of the property slowdown, it is reported that both Nakheel and MAF Properties cut staff numbers by 300 and 100 respectively. It seems that both developers are outsourcing more project management work – a cheaper option when the work load has been reduced. The questions are when will the market hit the bottom and will it start its inevitable upturn?

ASGC has been appointed by Meraas to be the main contractor for the Address Harbour Point project in Dubai Creek Harbour. The project comprises two towers – 65 and 53 stories – and will feature 202 1-4 B/R luxury apartments.

HH Sheikh Mohammed bin Rashid Al Maktoum announced the allocation of US$ 409 million to build the first tranche of a “new generation” of Emirati schools. He also approved a US$ 27 million fund to transform the Higher Colleges of Technology into economic zones in the hope that it would help support the career development of 65k students in the hospitality, retail, oil and gas and logistics sectors.

With the construction of the world’s largest single-site strategic solar park well under way, DEWA has requested tenders for developers to build and operate phase 5, with a 900 MW capacity, of the project. The Mohammed bin Rashid Al Maktoum Solar Park, at an estimated US$ 13.6 billion cost, will generate 5k MW by 2030 and will be a major contributor to the Dubai Clean Energy Strategy 2050 that aims to provide 75% of the emirate’s total power output from clean energy. Phase1, adding 13 MW, became operational in 2013, followed by phase 2, using photovoltaic solar panels and generating 200 MW, becoming active in 2017.The 800 MW photovoltaic third phase should come on line next year.

The week Kuwait raised the number of leave days of its private sector to 35 days, the UAE government announces that the country’s private sector will now have the same number of public holidays as the public sector.

According to Dubai Municipality, there was a 6% hike in Dubai’s urban construction sector last year, with 29k building permits approved and 6.0k buildings completed in 2018, encompassing 100 million sq ft. Surprisingly, there were 802 new contracting companies registered last year, bringing the total to 9.1k.

The February Emirates NBD UAE PMI figures indicate that the rate of employment in the country’s non-oil economy fell at its sharpest level in almost a decade to 47.5; any reading under 50 indicates contraction. Although still in growth territory, the overall index of 53.4 is the lowest since late 2016 and 2.9 lower than January’s return. There were major falls in both business confidence and seasonally-adjusted selling prices.

There was good news for many SMEs with the government’s announcement that it will expedite payments which should improve the current “awkward” liquidity problems facing many sectors within Dubai. It is expected that US$ 435 million of additional liquidity to companies will become available. As well as cutting current payment terms from 90 to 30 days, there will also be a reduction in insurance costs for SMEs which will not impact their eligibility for government tenders. The ripple effect of such a positive initiative will be felt throughout the local economy.

As it continues to expand its product offerings, the Dubai Gold & Commodities Exchange has launched two new products, aluminium and zinc futures; it already offers futures and options contracts, covering the precious metals, energy, equities and currency sectors, to more than 175 global members. Last month, the DGCX traded over 1.6 million contracts and in 2018 22.3 million contracts totalling US$ 475 billion.

Beehive has secured US$ 4 million in funding from Riyad Taqnia Fund (RTF) as part of a Series B funding round, with the money being used for expansion plans in the GCC and South East Asia. The five-year old peer to peer lending platform has facilitated funding of almost US$ 100 million to more than 450 businesses.

ITP Media Group has launched a new division – ITP Gaming – as it enters the ever-expanding US$ 138 billion global gaming market, with a myriad of games being played by 2.3 billion worldwide players. The leading sector is mobile gaming, growing at a phenomenal 25% annual rate and accounting for 51% of the total revenue. The new entrant will focus on managing large-scale gaming events, representing gaming publishers and creating new games.

It is reported that Uber Technologies Inc is in advanced discussions to acquire Careem in a possible US$ 3 billion cash and share deal. It was less than three years ago that the Dubai-based ride-hailing entity, with more than one million drivers and operations in more than 100 ME cities, was valued at a much lower US$ 1 billion in a 2016 funding round.

The UAE’s inflation rate decreased by 2.39% year-on-year and 0.12% month-on-month in January, according to a recent report by the Federal Competitiveness and Statistics Authority. The UAE Consumer Price Index (CPI) recorded 109.61 points in January, driven by price declines of 5.08% in the housing/utilities segment and food/beverage of 1.09%.

DIFC posted an impressive 11.0% hike in 2018 profit to US$ 88 million, as consolidated revenue moved 5.0% higher at US$ 199 million. At the end of the year, assets under management stood at US$ 99 billion. Over the year, the number of new companies, new arrivals and leased space all headed upwards – by 25.7% to 2.1k, 5.5% to 23.6k and 8.9% to 4.2 million sq ft. Earlier in the year, HH Sheikh Mohammed bin Rashid Al Maktoum approved a plan to triple the size of DIFC that will see 50k employees and US$ 250 billion under management by 2024.

Troubled Union Properties has received official approval to raise its foreign ownership ceiling to 49%; its share value dipped over 1% to US$ 0.104 on the news. In February, the developer posted a US$ 17 million 2018 profit – a major move forward compared to the US$ 740 million loss the previous year.

The bourse opened for trading on Sunday 03 Mar, on 2636, and having risen by 3.7% the previous fortnight ended the week 41 points (1.6%) lower by Thursday, 07 March, on 2595. Emaar Properties, having jumped $ 0.23 the previous fortnight, shed US$ 0.05 to US$ 1.29, with Arabtec down US$ 0.01 at US$ 0.58. Thursday 28 February saw trades of 103 million shares, valued at US$ 15 million, compared to a week earlier of 201 million shares at US$ 77 million.

By Thursday, 07 March, Brent, having jumped US$ 5.31 (8.6%) the previous fortnight had a lacklustre trading week, dipping US$ 0.27 (0.4%) to close on US$ 66.03; gold’s recent good run came to an abrupt halt slumping US$ 29 (2.2%) to end the week on US$ 1,286.

Mining giant Rio Tinto has posted full year underlying earnings of US$ 8.8 billion, (2017 – US$ 8.6 billion). The company also posted a final dividend of US$ 1.80 per share, plus a special dividend of US$ 2.43 per share.

To mark its 110th anniversary, Bugatti has launched a one-off celebration vehicle – La Voiture Noire. At over US$ 12 million, it will become the most expensive sports car ever made and is built along the lines of the Bugatti Type 57 SC Atlantic – with only four vehicles made between 1936 and 1938. It will also have a unique 1.5k horse power 16-cylinder engine.

After three months of incarceration, former Nissan boss, Carlos Ghosn has been released on US$ 9 million bail. Numerous charges against him include financial misconduct and aggravated breach of trust and if found guilty he could face up to ten years in prison. As a French citizen, it will be interesting to see how far the government of that country gets involved in the case.

Despite Elon Musk promising to deliver a US$ 35k Model 3, Tesla woes continue as it posts a Q1 loss that saw its shares sink 4.1% to US$ 307 on the news. He has now promised to go in the black in Q2 by “significantly reducing” its spending on sales and marketing, as it focuses on direct-to-consumer sales and reducing the number of outlets to 130; it is estimated that concentring on on-line sales could save 6% in costs. Furthermore, any car delivered before 01 July will be eligible for a US$ 3.75k government incentive. Although he promised, it is unlikely that car sales will top 500k this year.

Debenhams has issued a profits warning saying its turnaround plan is likely to prove “disruptive” as trading conditions remain tough. In H1, to 02 March, the retailer announced that its like-for-like sales in its core UK market were 6% lower but noted that the rate of decline had moderated. The news did little for the company’s market value which dipped below US$ 53 million, as it fell 8% in early morning trading. Watch out for the much-maligned Mike Ashley who already owns almost 30% of the battered retailer. Having acquired House of Fraser last year, he could be in the market for a bigger share and considering a merger of the two famous retail brands.

Following a surprise 9.1% January jump, Chinese exports will probably show a 4.8% decline, year on year, in February, whilst imports fell for the third straight month as the impact of US trade tariffs begin to take their toll. The need for an amicable settlement between the world’s two superpowers is imperative for world trade to get back on track. For that to happen, Beijing will have to agree to certain structural economic changes and see that its bilateral trade surplus continues to head south. In the week when its overall trade surplus fell by a third to US$ 26.4 billion, China announced that it expects the economy to grow at between 6.0%-6.5% – its slowest pace in almost thirty years.

Australia is not happy with China’s apparent decision to ban its coal exports to five ports due to additional environment checks. Some in Australia thinks this could be a retaliatory move for Australia ‘picking on’ their high-tech company Huawei. However, the IMF is happy with the ‘robust and resilient.’ Australian economy, whilst extolling the virtues of its infrastructure and labour market; the organisation did voice some concern about the downturn in the housing sector and stagnant wage growth.

Worrying news for secret bankers, with the Italian government demanding that Swiss lenders disclose the names of bankers working in Italy, along with details of how their clients’ assets are managed. The letter, sent in January, came three weeks before UBS was hit by a French court fine of US$ 5 billion for helping French clients to launder their assets. On the surface, it seems that the Italians want to ensure that Swiss banks pay Italian taxes, but it is not inconceivable that this information could be used in future prosecutions.

The UK government has agreed to pay US$ 43 million to Eurotunnel in an agreement to settle a lawsuit over extra ferry services, in the event of a no-deal Brexit. It is claimed that the May administration handed out three contracts in a “secretive” way and that one of the firms awarded a ferry contract, Seaborne Freight in a US$ 18 million deal, despite the company having never run a ferry service and having had its deal already cancelled. Eurotunnel wrote to the error-ridden Transport Secretary Chris Grayling pointing out this anomaly and that it should have been considered. The fact that he is still in a job speaks volumes of the way the government moves from one self-made crisis to another.

On an annualised basis, the Indian unemployment rate climbed 1.3% to 7.2% in February – its highest level in almost three years – whilst the number of employed persons dropped 6 million to 400 million. This was probably not what Prime Minister Narendra Modi wanted to hear two months before an early May general election that could easily lead to a change in government for the world’s largest democracy.

Another blow for the Indian Prime Minister came with news that Donald Trump will end India’s preferential trade treatment under a program that allows US$ 5.6 billion worth of Indian exports to enter the United States duty free. The US President is concerned that it “has not been assured the United States has been provided equitable and reasonable access to the markets of India,” Even his most ardent critic must agree that he has a point, as the goods and trade deficit with India stands at US$ 27.3 billion.

Following a massive 9.1% jump in November new home sales to 599k, December witnessed another climb – this time by 3.7% to 621k. This was even more impressive as the general consensus pointed to an 8.7% decline. A 15.3% slump in Midwest sales was more than offset by a 44.8% spike in the Northeast. Median sales were 5.0% higher, month on month, to US$ 318.6k but 7.3% lower than the December 2017 price of US$ 343.5k.

Meanwhile the ISM non-manufacturing index for February rebounded to 59.7 after falling to 56.7 a month earlier and this despite concerns about the uncertainty of tariffs, capacity constraints and employment resources. The main driver was the pace of new orders growth, climbing 7.5 to 65.2, month on month.

There will be one unhappy US President hearing the news that, last year, his country’s trade gap ballooned to US$ 621 billion – a decade long high. The deficit is bound to continue to head north if trade continues as is – last year’s export totals slumped 1.9% to US$ 205.1 billion, whilst imports headed in the other direction, up 2.1% to US$ 264.9 billion. Of that total, the situation worsened in locales such as China, up US$ 43.6 billion to US$ 419.2 billion, and the EU which saw a US$ 17.9 billion widening to US$ 169.3 billion (as EU exports rose to US$ 487.9 billion). Certain governments will soon be heeding Donald Trump’s warning – Don’t Play With Me.

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