My Way                                                                             11 April 2019

March off-plan sales topped 1.8k and were 7.7% higher than a month earlier. This welcome uptick in sales has seen developers, including Sobha – releasing 360 units in its second MBR twin tower project – and Emaar’s Creek Vista to bring forward their launch or new release dates. The realty sector is also getting a boost from China, with forty members of the country’s leading real estate portals, uooulu.com, investing US$ 6 million in fifteen units. More Chinese visits are expected and local agents are gearing up to meet more property investors.

Emaar have unveiled ELIE SAAB at Emaar Beachfront – a tower project comprising 1-3 B/R apartments and some 4 B/R penthouses overlooking the Arabian Sea and The Palm. The Lebanese fashion icon will be responsible for all the project’s design aspects that will focus on the 1930 Art Deco era.

One of Dubai’s leading travel consultancy agencies, Gulf Reps, headed by industry veteran Leo Fewtrell, has formed a partnership with Dubai Tourism in a bid to attract more Gulf holiday visitors; last year, the number of GCC overnight visitors contributed 18% of the total number of Dubai tourists. The arrangement will see Gulf Reps open a GCC representative office, with the main aim of developing relationships with the various parties in the region’s tourism market so as to promote Dubai as the preferred destination of choice.

There was bad news for South African expats living in Dubai with their government indicating it will introduce a tax regime, with the upper limit of 45%, for those earning over US$ 75k (1 million rand) per annum. As from March 2020, the new legislation will take effect for all South Africans who used to escape the taxman if they lived outside the country for more than 183 days.

According to figures released by the Department of Economic Development, over 9.6k jobs were created as it issued 2.5k new licences in March – 35.4% higher than the corresponding month last year.

Embattled Drake & Scull is planning to sell its stake in Abu Dhabi-listed development company, Wahat Al Zawya to Tabarak whose majority shareholder is also the leading shareholder in the Dubai developer. Drake & Scull has had a torrid time and its shares are suspended on the DFM. Despite a 2017 restructuring, that saw 75% of its capital expunged, it has posted several years of heavy losses so that by the end of Q3 last year, it recorded a US$ 134 million deficit and had accumulated losses of US$ 300 million, with liabilities of US$ 109 million.

This week, Bayut acquired its rival portal, Middle East Internet Group’s Lamudi, for an undisclosed sum; the deal will see Bayut taking ownership of all of Lamudi’s GCC assets. In 2012, Lamudi, which became the first real estate portal in Saudi Arabia and started operations in the UAE four years ago, will help boost Bayut’s presence in the kingdom. This deal comes just days after Dubai-based Property Finder announced it will acquire rival platform JRD Group and that it had also increased its stake in Zingat – Turkey’s second largest property portal – to almost 40%.

DXB Entertainments announced that Dubai Parks and Resorts attracted 760k Q1 visitors – a 10.7% drop in numbers compared to 2018. In Q3, it posted a reduced loss of US$ 74 million, as well as restructuring a US$ 1.1 billion bank facility and receiving new funding from its 52.3% shareholder, Meraas Holding. The park will open two new hotels – Rove and Legoland – over the next twelve months which will bring its total rooms to 1.3k.

Emirates NBD has confirmed the sale of 127.5 million ordinary shares from its stake in Network International for US$ 724 million through a secondary listing of its shares on the London Stock Exchange and to MasterCard. It will still retain a 25.5% stake in the company (rather than its previous 51%).

There are reports that the country’s biggest Islamic lender, Dubai Islamic Bank, (of which Investment Corp of Dubai has a 28% stake), could be in the market to buy out Noor Bank PJSC. If a deal did happen – and it is still some way off – the combined financial institution will manage over US$ 75 billion in assets, of which Noor would contribute 18.5% of that total.

Marka is planning to reduce its capital base by cancelling 450k of its 500k shares to make good losses that have occurred since its 2014 DFM debut. The Dubai-based retail and dining operator’s shares had a par value of US$ 0.272 at issue date but sank to just US$ 0.076 before being frozen; this equates to a market value of US$ 37 million.

The bourse opened for trading on Sunday 07 April, at 2776, and having gained 202 points (7.8%) the previous fortnight, gained a further 14 points (0.8%) to close by Thursday, 04 April, on 2790. Emaar Properties, having jumped US$ 0.11 the previous week, closed US$ 0.15 higher at US$ 1.40. Arabtec, flat for the previous five weeks, was US$ 0.01 lower at US$ 0.58. Thursday 11 April saw  trades of 168 million shares, valued at US$ 60 million, compared to a week earlier of 124 million shares at US$ 64 million.

By Thursday, 11 April, Brent, having traded US$ 1.90 higher the previous week, continued its upward trend to close US$ 1.11 (1.6%) higher on US$ 70.83; gold continued its recent weeks of marginal ups and downs, shedding US$ 4 to US$ 1,293.

A strong message has been sent to global mining giants by 2k Zambian villagers who have taken UK-based Vedanta to court for alleged pollution. In a ruling by the UK Supreme Court, the case will be held in the UK because of “the problem of access to justice” in Zambia. The case revolves around allegations by villagers, living near the huge Nchanga Copper mine, that the miner had poisoned their water supply and destroyed farmland. It will not be the first time that mining companies have been involved in similar unethical and anti-social behaviour.

It has taken a long time but Boeing has finally said ‘sorry” for the lives lost in recent accidents in Ethiopia and Indonesia. The plane-maker continues to defend the safety features of its 737 Max model but has promised to undertake changes to eliminate future risk. In both accidents, preliminary findings showed the pilots had followed procedures, but the planes continued to nose-dive despite their attempts to wrestle with the anti-stall system, known as MCAS. The company has seen Q1 net orders fall 44.7% to 95, compared to last year, with none recorded last month, whilst quarterly deliveries dipped 32.6% to just 89, most of which were in January and only 11 in March. In a bid to reduce spending on the 737 and preserve cash, the US company is to cut output by 19% to 42 aircraft a month.

As a direct response to Airbus subsidies, that have stretched some fourteen years, the US is looking to hit the EU with tariffs totalling US$ 11 billion; this comes after the WTO (World Trade Organisation) found that such subsidies have had an adverse impact on the US. It seems that a myriad of goods – including aircraft, cheese, salmon, virgin olive oil and lemons – will be caught in the tariff net. Furthermore, there could be additional import duties levied on listed goods, which include helicopters, undercarriages and fuselages, from four specific countries – France, Germany, Spain and the UK. These charges are in addition to previous levies on the imports of steel and aluminium from the EU.

In a bid to report a lower average emission figure, Fiat Chrysler has teamed up with Tesla tohelp them avoid paying fines for violating new European Union emissions rules which impose an average emissions limit of 95g per km. Under the new regulation, car makers are allowed to pool their models within their own companies to come up with an average emissions figure, and also to form so-called open pools, with other carmakers. Since 2016, Tesla, which has made over US$1 billion selling emissions credits to other manufacturers in the United States, has yet to confirm the deal that could bring it a further US$ 1 billon.

Standard Chartered has been fined US$ 1.1 billion for violating US sanctions against Iran and over inadequate financial crime controls, in relation to various misdeeds dating back to before 2014; the bank had already set aside US$ 900 million to cover these costs. US$ 639 million related to breaching US sanctions on countries, including Cuba, Iran, Myanmar, Sudan and Syria, as well as US$ 132 million for “serious and sustained shortcomings” in its anti-money laundering controls in the UK.

Lei Jun, the founder of Xiaomi, has received a US$ 962 million “award” for his eight years of “devotion” to the company in the way of a stock transfer involving some 636.6 million shares; he has promised to donate the money to “charitable purposes” after tax deductions, The company, which only made US$ 980 million in 2018 profits, is the world’s fourth biggest smartphone maker; although the global handset market dipped 4.1% in 2018, the Beijing-based company saw shipments up 32.2%.

Debenhams has finally rolled over and is now in administration in the hands of its major lenders – Barclays and Bank of Ireland, as well as hedge funds Silver Point and GoldenTree. This comes the same week that Primark opens its biggest ever store, covering 161k sq ft and five floors, in Birmingham. Costing US$ 95 million, it is focussing on the younger market and if it can attract a new generation to ‘bricks and mortar stores’, it could be a lesson to the likes of Debenhams and other failing retail giants in the UK’s high street.

There is another potential pension scandal brewing in the UK, with news that the Regulator has been investigating a potential shortfall in train company pensions. In a warning made to lawyers representing the rail industry trade body, the Rail Delivery Group, it appears that the deficit has increased 56.3% over the past three years to US$ 9.8 billion. Meanwhile, Virgin Trains has been barred from bidding for three franchises which may accelerate its demise. The operator is majority owned by Stagecoach which has blamed the barring on its refusal to shoulder responsibility for unquantified extra pension contributions.

The Australian housing bubble has continued to deflate with forecasts of capital city property prices falling – houses by 7.7% (1.8% in 2018) and apartments by 4.3% – at the same time that February home lending figures show an increase in both owner-occupier and investor borrowing. Melbourne will see the biggest falls as houses and apartments are expected to witness 11.4% and 5.0% declines in value; Sydney’s prices are expected to be in the region of 9.3% and 5.9% lower.

For almost five years, Japan has posted a current account surplus and February proved no exception with a positive US$ 24 billion balance – and a massive 25.5% increase, compared to a year earlier. The main driver behind this was primary income (mainly returns from foreign investments) accounting for US$ 18 billion. Furthermore, and helped by falling energy prices and improving export figures, Japan registered a goods trade surplus of US$ 438 billion. During the month, there were declines in both imports and exports of 6.6% and 1.9% to US$ 56.6 billion and US$ 52.2 billion respectively.

China, with the world’s largest forex reserves, saw a month on month hike in March to US$ 3.1 trillion, as hopes rose for a mutually beneficial trade settlement with the US. Having fallen 5.3% last year, the yuan is rebounding slowly and has gained almost 2% so far this year. The country saw its gold reserves 1.8% lower at US$ 78.5 billion.

Once again, Donald Trump has called for the Fed to cut interest rates and reiterated his confidence that an agreement can be reached with China; he indicated that a deal could be on the cards within a month, although there are still some issues to be cleared. If all goes well, there will be a summit with Chinese President Xi and that it would be “an epic deal” and “the Grand Daddy of them all”.

March saw U.S. consumer prices 0.4% higher – the most since January 2018, – driven by increases in the costs of food, gasoline and rents. However, slowing domestic and global economic growth meant that underlying inflation remained benign at 1.9%, the smallest rise in thirty months. Despite tightening employment conditions in the country, wage growth has been slower than expected.

All is not well in Germany were February manufacturing orders slumped 4.2%, month on month, when analysts were expecting a modest 0.3% increase. There was not one factor behind the decline but both domestic and overseas fell – by 1.6% and 6.0% respectively. There was also a 2.9% fall in demand from the euro area whilst there was a 7.9% slump in bookings from other countries. On an annualised basis, factory orders were off a worryingly high 8.4%, following a 3.6% drop a month earlier in January.

Despite the scaremongering tactics of many “experts”, the UK economy has performed relatively well since the June 2016 referendum. Surprisingly, the IMF expects the UK to perform better than Germany with a forecast 1.2% expansion, compared to just 0.8% for Europe’s leading economy. However, this will see the UK grow at its slowest rate in a decade, whilst wage growth heads in the other direction, rising at its highest pace in a decade. This could be a portent for a BoE rate hike later in the year.

Flummoxing many experts, UK’s economy unexpectedly grew by 0.2% in February, driven by stockpiling ahead of Brexit (whenever that may or may not be); month on month, manufacturing output was up 0.9%. Over the past quarter, whilst exports have dipped 0.4%, (not helped by a slowing global economy), imports have jumped 6.8%. Meanwhile there were 0.1% and 0.4% increases in the services and construction sectors.

Meanwhile, the Brexit farce continues with yet another extension granted by the benevolent EU to 31 October, with the previous deadline falling tomorrow 12 April. With her prime ministership hanging in the balance, May will be gone by May. After thirty months to arrange a formal departure, with abject failure, it seems highly unlikely that she can convince anyone that she can push any sort of deal through. After parliament has repeatedly rejected her withdrawal deal, negotiated with the EU, for Mrs May it is time for the highway not My Way.