Everybody Wants To Rule The World!
Everybody Wants To Rule The World! 15 January 2021
As Dubai property starts to recover, after nearly six years of bear trading, the value of Q4 Dubai property transactions, at US$ 6.0 billion, was 21.0% higher than the previous quarter; the actual number of transactions was 25% up at 11.1k. As a sure indicator that the sector is in recovery mode – and bearing in mind that the emirate was in lockdown in Q2 and 2020 figures represent say eight months of trading – the value of trades, at US$ 19.7 billion, was only 9.5% lower than a year earlier; similarly, the number of 2020 trades of 35.4k was 11.7% lower on the year. Q4 figures echoed the improvement with the number of deals also climbing nearly 25% to 11.1k, according to listings portal, Property Finder. The figures also indicate transaction values and volumes have more than doubled since the Q2 lockdown, when there were 5.5k transactions worth US$ 2.9 billion. In December, secondary/ready transactions were 9.7% higher on the month, with 2.5k transactions, valued at US$ 1.7 billion; total transactions numbered 2.5k, worth US$ 2.0 billion. The last two months of 2020 witnessed seven-year highs in the volume of secondary/ready market transactions, whereas April and May were the lowest months historically for such sales.
There is no doubt of the negative impact of Covid-19 has had on the sector, but one interesting feature is that deals for completed homes now account for 72% of the total value, equating to US$ 52.2 billion and 20.7k units, of 2020 transactions; off plan properties accounted for 14.7k transactions, worth US$ 5.5 billion. There have been several reasons put forward why secondary/ready properties have seen a resurgence in demand., including an increased number of lower priced properties available, and with more time being spent at home, there is a positive move away from apartments to villas/townhouses, with bigger space and gardens, proactive government initiatives, and historically low mortgage rates; in 2020, most of the 13k Dubai mortgage transactions, worth US$ 23.8 billion, were for secondary/ready property. Other government measures, including visas for expat retirees, the golden visa scheme and amendments to commercial companies’ law, as well as many new projects having been put on hold (which cuts down the future supply pipeline), will see the supply/demand curve move to some form of equilibrium. The only canary in the coal mine is the pandemic and the possibility of future lockdowns.
Berkshire Hathaway HomeServices Gulf venture has launched its luxury collection division (covering sales of properties above the US$ 5 million level). The global real estate giant is confident that the emirate is witnessing renewed interest in the luxury market sector, as buying activity has increased in recent weeks. The new launch will target high profile locations, such as Emirates Hills, Palm Jumeriah, Bluewaters Island and Bulgari Residence, with positive signs that demand will remain buoyant.
To the surprise of no one, Dubai topped the league in 2020, building more skyscrapers (any building over 200 mt) than any other city in the world. Last year, the emirate saw the completion of a record twelve such buildings, three higher than a year earlier. It seems the reason behind the recent surge in building skyscrapers was down to the upturn in commitment in investment for this type of project around five years ago, aligned with the strong property market at the time – and those projects have finally come to completion. The tallest building completed in Dubai last year was the SLS Tower in Business Bay, which at 336 mt is now the 11th-tallest worldwide, followed by Amna Tower at Habtoor City (307 mt), Jumeirah Gate (303 mt) at JBR, ICD Brookfield Place (282 mt) at DIFC and Boulevard Point (280 mt) in Downtown Dubai. There was a 20% decline in the number of such buildings to 106 – the lowest number since 2014. For the first time in five years, the year’s tallest building was not to be found in China – this year, the honour went to the Park Tower in New York City (472 mt). China completed more than half the total buildings in the study (56), down from 57 in 2019 and 92 in 2018.
Four months after his September appointment as Emaar Mall’s chief executive, Rajiv Suri has resigned from his position, with immediate effect; he previously worked as chief executive of Shoppers Stop, a department store chain based in India. The retail arm of the emirate’s biggest listed developer, Emaar Properties, has issued a statement advising that Amit Jain will take over until further notice. Q3 profits were 60% down at US$ 66 million, as revenue fell 30% to US$ 321 million.
In December, Dubai’s seasonally-adjusted IHS Markit PMI climbed 2.0 to 51.0 on the month – the first expansion in three months, as companies clawed back business, following the pandemic slowdown, driven by an increase in output and new orders. The monthly rate of expansion was the second quickest in 2020, behind July, but employment continued in decline, (recording job numbers falling for the tenth consecutive month), along with lower levels of inventory; the rate of job shedding has moved higher since November. The survey confirmed continuing weak cost pressures, as average selling prices fell again over the month, with companies continuing efforts to secure more business by offering discounts, but the rate of decline softened.
The local economy has benefitted by the lifting of most of the restrictions put in place last year to contain the spread of the virus. Dubai has begun to roll out a free mass inoculation campaign with the Pfizer-BioNTech Covid-19 vaccine; this is another measure that wlll help boost the economy and business confidence. There is no doubt that the reopening of borders with Qatar will prove a boon for Dubai’s economy, still recovering from the initial impact of Covid-19. Many sectors, such as cross border trade, re-exports, aviation, hospitality and tourism will benefit hugely, after three and half years of almost non-contact with each other’s country. However, this will not happen overnight, and it may be some time before Dubai sees the full effect.
It can only be Dubai that, in a middle of a pandemic, announces that at least twelve iconic restaurants will open their doors and kitchens in 2021. This month, Bla Bla, a massive 9k sq mt venue, opens, with twenty bars, three restaurants and a beach club, in a bid to cater for a wide range of patrons. The three licensed restaurants will also open in the first phase, and serve Italian and Japanese cuisines, and Texas-style barbecue. Another opening in Q1 will be the country’s largest food hall, as Dubai becomes Time Out Market’s seventh international location after Lisbon, Miami, New York, Boston, Montreal and Chicago. Located in Souk Al Bahar, it will feature thirteen restaurants, including Reif Japanese Kushiyaki; Little Earth by Nabz&G, The Mattar Farm Kitchen, Scoopi Café, Two Leaves by Project Chaiwala, Masti, BB Social, Folly by Nick & Scot, Vietnamese Foodies, Pickl, Pitfir, Brix, and Nightjar.
There are reports that one of Cannes’ hotspots, Baoli is coming to the ninth floor at Gate Village in DIFC. Serving a fusion of Mediterranean and Asian fare, with a focus on fresh seafood, it will comprise a restaurant, bar and outdoor terrace. Later in the year, Dubai, specifically the 51st floor of The Palm Tower, will welcome Sushi Samba. With branches already in New York, London, Miami, Las Vegas and Amsterdam, it will serve a blend of Japanese, Brazilian and Peruvian cuisine, culture, music and design.
With Atlantis, The Royal due to open in October, it will be home to a number of new restaurants, bringing with them some major global franchises and internationally acclaimed chefs.
Ling Ling will open its third resto-lounge, after Oslo and Marakesh, on levels 22 and 23, bringing the dining-to-dancing concept that draws inspiration from izakayas, the pairing of craft beverages with Cantonese food; it will overlook the hotel’s 90 mt sky pool. Little Venice Cake Company will introduce celebrity-favourite UK baker Mich Turner to the emirate as she opens her first cake atelier outside the UK. She has created cakes for royalty, including Queen Elizabeth, and famous personalities, and has been described by Gordon Ramsay as “the Bentley of cake makers”. New Andean cuisine will be represented by the Peruvian restaurant, La Mar, the brainchild of chef and restaurateur Gaston Acurio, famed for his Peking guinea or cuy, served with a rocoto pepper hoisin sauce and wrapped in a purple corn pancake. The cevicheria also has branches in Lima, Mexico, Brazil, Argentina and Miami.
Estiatorio Miloswill feature six mt high ceilings, Greek marble, floor-to-ceiling glass doors and an open-show kitchen, as well as rooftop seating. First opened in Montreal in 1979, Greek chef, Costaas Spiliadis, also has Mediterranean restaurants in New York, Athens, Las Vegas, Miami and London. Following the success of her cookery and travel series, ‘Ariana’s Persian Kitchen’, Iranian-American chef, Ariana Bundy, is set to open her first restaurant in the hotel which will be located on a garden terrace. Spanish chef, Jose Andres, is to bring his first international Jaleo restaurant to Dubai after opening his first in Washington in 1993, followed by branches in Maryland, Virginia, Las Vegas and Florida. It will serve traditional Spanish dishes, using authentic and local ingredients.
Dubai will be the third base for Dinner by the experimental UK chef Heston Blumenthal which will bring to the emirate his unique cuisine of adapting food traditions that date back to the 1300s. His London and Melbourne branches of Dinner, for example, feature roast fruit (c1500), marrowbone (c1720), spiced squab pigeon (c1780), goats’ milk cheesecake (c1390) and a chicken liver parfait dish that looks like an unpeeled mandarin.
Covid-19 has resulted in a 64.4% decline, to 17.9 million, travelling through Dubai airports in 2020; a year earlier, the number of passengers was at 86.4 million. Prior to the onset of the pandemic, Dubai International was the world’s busiest international travel hub. Three months after the UAE went into the lockdown in March 2020, Dubai opened its doors to international visitors on 07 July.
Last year, the Department of Economic Development (Dubai Economy) posted a 4% rise in new licences to 42.6k; the split was 64:35:1 for professional, commercial and others, (tourism and manufacturing activities), respectively. The fact there was an increase in numbers, despite the negative impact of Covid-19, is an indicator of the emirate’s unique resilience. Even in tough economic times, Dubai seems to maintain its growth and development momentum and continues its position as a leading global economic and business destination. During the year, over 346k business registration and licensing transactions were completed, up 3% on the year; licence renewals grew 15% to 162.8k.
2020 was a record year for Dubai South, with 650 new companies starting business, as well as utilising 945k sq mt of space, in its Business Park. Like other free zones, it has relied on a mix of stimulus packages, both to attract new businesses but also to retain 90% of existing tenants. To meet future demand, an additional floor in the Business Centre will be available by the end of Q1. The Business Park has a diverse client base from a variety of sectors such as IT, insurance, education and, online gaming.
Ducab has appointed Mohammed Abdul Rahman Al Mutawa, as its new chief executive, to replace the departing Andrew Shaw, who, after thirteen years of holding the reins, takes on the role of board adviser. The new headman, formerly the chief executive of Ducab’s cable business, becomes the first Emirati to hold the number one position. The UAE cable maker, a subsidiary of Abu Dhabi’s industrial holding company Senaa, has plans to increase its exports to more countries around the world; the Investment Corporation of Dubai also has a stake in the company. Over the past decade, the company has doubled its export markets to take in more than thirty countries, with ventures such as Ducab Aluminium Company and Ducab Metals both contributing to growth. The company has about 1.5k employees and, with 2019 revenue of US$ 1.3 billion, it currently operates six manufacturing facilities, across four sites in the UAE.
Network International estimates that its 2020 revenues will be US$ 284 million – ahead of earlier forecasts. The digital transactions platform noted an improvement in Q4 results and sees the new year starting with positive momentum across all of its business lines. Although Q4’s returns were 19% lower, year on year, they were higher than those of Q3, reflecting the continuing recovery in card and digital transactions across its markets. By the end of the year, its UAE direct acquiring total processed volume had fully recovered to pre-pandemic levels, driven by strong e-commerce spending.
Enoc Link has announced that sales volume for its digital mobile fuel delivery service has grown tenfold in 2020, with its fleet size expanding 46% in the year. Their range of fuels supplied includes EPLUS91, Special 95 as well as diesel, with the company recently launching a dedicated fleet line to offer biodiesel (B5 and B20) – this contributed 20% to Enoc Link’s overall sales volumes. It has also recently launched a fleet of mobile fuelling trucks, equipped with 11k litre tanks, powered with simultaneous multi-product fuelling capability. These trucks can serve large-scale customers who require different fuel products concurrently. The new trucks can contribute to significant savings for customers, by reducing time and expenses spent for fuelling at a traditional service station, and eliminates the need to send two Enoc Link trucks to the customer premises to provide different fuel grades to the same customer. Enoc Link operates a diverse fleet of trucks equipped with varying tank capacities; including 800 litres, 2.6k litres, 4.5k litres and 11k litres.
One of the biggest local retail collapses came with news that the Toy Store owner, Gulf Greetings General Trading, abruptly ceased business at the beginning of the week, leaving suppliers being advised by email of the closure of the business, citing “unavoidable and unprecedented circumstances”. The company, with 400 employees, operated a total retail space of 125k sq mt, and had distribution centres in all six GCC countries. The company held exclusive representative rights for Hallmark Cards in the GCC and is the owner of The Toy Store – a chain of eight branded toy shops operating across sites such as MoE and Dubai Mall.
According to data platform Magnitt, MENA start-ups in 2020 secured record funding of more than US$ 1 billion – 13% higher on the year – despite 13% fewer deals of 496. Most of the funding occurred in H1 – US$ 725 million (29% higher than a year earlier) – with US$ 306 million raised in H2 from 198 deals. Covid has managed to wreak havoc on sectors such as air transport, tourism, supply chains, manufacturing and shipping. In contrast, businesses operating in key sectors, such as healthcare and technology, have seen an uptick in demand. E-commerce and FinTech accounted for about 25% of all deals in 2020, whilst healthcare start-ups more than tripled in value to US$ 72 million during the pandemic. The UAE, Egypt and Saudi Arabia accounted for 68% of total deals, with the former attracting the largest share of funds raised and ranked first in terms of the number of deals. Furthermore, the country’s start-ups received more than half of the total venture capital into the region and just over a quarter of the total Mena deals, with funding up 5% to US$ 579 million, and total deals dropping by 17%.TheUAE also attracted the two biggest funding rounds with EMPG raising US$ 150 million, in its April Series E round, and Kitopi with US$ 60 million.
Smart Solution Logistics FZE has signed an agreement with Israel-based Allalouf Logistics to explore new growth opportunities for the logistics and general freight forwarding business in both countries. DP World’s port-centric logistics arm, with its global network of ports and terminals, offers a wide range of containerised logistics solutions, whilst its new Israeli partner is one of that country’s largest and longest established shipping agencies. In the UAE, the freight and logistics market is of increasing importance to thenational economy and is expected to increase its contribution to the country’s GDP to 8% of its total this year.
A US$ 308 million buyout by Shuaa Capital has saved the future of troubled Stanford Marine Group which, if it had gone under, would have resulted in over 1.8k retrenchments. The consequences of the deal see Shuaa buying the debt, held by five local and two international lenders, at a discount and SMG strengthening its liquidity position, so that the company is now trading profitably. The company, one of the region’s major diversified offshore services companies, focuses on chartering, building and repairing offshore support vessels for the oil and gas industry. The deal will result in the company being able to continue to make vessels in its Grandweld shipyard’s facility and to carry out ship repairs, in Dubai Maritime City. Last year saw SMG post exports of more than US$ 27 million. The company was previously owned by private equity firm Abraaj Group, which was placed into liquidation two years ago. Shuaa Capital is hoping to close at least two more debt buyout transactions this year.
The bourse opened on Sunday 10 January and, having gained 134 points (5.4%) the previous week, gained a further 210 points (8.4%) to close on 2,702 by Thursday 14 January. Emaar Properties, US$ 0.11 higher the previous week, traded up again, by US$ 0.02, to close at US$ 1.09, whilst Arabtec is now in the throes of liquidation, with its last trading, late in September, at US$ 0.14. Thursday 14 January saw the market trading at 203 million shares, worth US$ 56 million, (compared to 421 million shares, at a value of US$ 110 million, on 07 January).
By Thursday, 14 January, Brent, US$ 13.44 (32.7%) higher the previous eight weeks, was up US$ 1.68 (3.1%) in this week’s trading to close on US$ 56.20. Gold, US$ 115 (6.4%) higher the previous four weeks, shed half of recent gains, down US$ 56 (2.9%) to close on US$ 1,853 by Thursday 14 January.
After initially issuing a statement saying it was in the “early stage” of talks with Apple, about a possible electric car partnership, Hyundai quickly backtracked with a retraction indicating it was talking with a number of potential partners, without actually naming the iPhone maker. Following the initial statement, Hyundai’s shares jumped 20%. Apple is known for its secretiveness when it comes to new products and partnerships and only last month did it become known that the US tech company was hoping for a 2024 launch date for a self-driving car. Last month, the South Korean car giant took a controlling stake in the mobile robot firm Boston Dynamics, that is valued at US$ 1.1 billion, as it continues to push into new technologies such as electric, driverless and flying cars. Currently, it is in negotiations with Aptiv to establish a US$ 4 billion autonomous-driving JV, with the Irish auto spare parts company contributing 700 engineers and transferring patents and intellectual property to the venture.
UK Foreign Secretary, Dominic Raab, has warned businesses they face penalties if they cannot show that their products are not linked to forced labour in China’s Xinjiang region, where there are more than one million Uighurs, and other minorities, being held in forced labour camps. They have been advised that the government will be monitoring the situation where there is mounting evidence of modern slavery. Only last week, Marks & Spencer, that uses about 40k tonnes of lint cotton each year from various sources, signed onto a call to action on human rights abuses in China’s Xinjiang region. In a related story, it seems that Huawei has introduced a patent for a system that identifies people who appear to be of Uighur origin among images of pedestrians. Having previously denied their technology was being used to identify ethnic groups, the tech giant now plans to alter the patent.
Although there was modest growth in food sales, (like for like sales were up 2.6%), and trading was “robust” over Christmas, Marks & Spencer saw overall performance fall sharply for the thirteen weeks to 26 December, with revenue 8.2%, lower at US$ 3.42 billion; international revenues took a big hit at 10.4% lower, whilst clothing and homes division tanked 24.1%. The retailer blamed “on-off restrictions and distortions in demand patterns” due to the coronavirus crisis. (M&S must know that this is the same for other retailers). The retailer is concerned that potential post-Brexit tariffs may impact on its business in Eire and the Czech Republic, along with its French franchise interest.
M&S has finally announced that it has bought the Jaeger brand, (but not any of its 63 stores and concessions), which fell into administration last November. Last May, it announced that it planned to stock other complementary brands to boost sales, and although this is its first real acquisition, M&S has started to sell products online from the Early Learning Centre, as well as from two designers, Nobody’s Child and Ghost London. The retailer’s MD Clothing & Home, Richard Price, announced “we have set out our plans to sell complementary third-party brands as part of our Never the Same Again programme to accelerate our transformation and turbocharge online growth”.
Meanwhile, Sainsbury’s had a bumper Christmas, as sales came in 9.3% higher during the festive trading period, following a bad November period, when clothing/home sales slumped 40.5% and food sales down 4.5%. Morrison’s posted a 9.3% hike in sales for the three weeks to 03 January and noted a 64% jump in champagne sales and 40% for whole salmon. For the nine-week period, like for like sales were 8.5% to the good. Overall, Research Kantor estimated that December was the busiest month ever for the supermarket sector, with a spend of US$ 15.9 billion; however, US$ 5.4 billion of that total was down to what would normally have been spent on food and drink outside the home over the Christmas season.
A consortium of international investors, led by the existing management team, has injected fresh funds into Edinburgh Woollen Mill, to save the business from closing, after going into administration last year. Although 2k staff will retain their jobs, 85 Edinburgh Woollen Mill stores and 34 Ponden Home stores have been closed permanently, with the loss of 485 jobs. It is expected that 246 EWM and Ponden stores will remain operational, whilst Wakefield-based Bonmarché will retain 72 of its stores. EWM is part of a stable, including Ponden Home and Bonmarché chains, owned by Dubai-based billionaire businessman, Philip Day, who it is thought will effectively lend the group the money to buy the businesses which will be paid back over a number of years.
Permira Holdings, the owner of Dr Martens, is planning an LPO on the London Stock Exchange, as it looks to sell a stake in the iconic British bootmaker; the parent company paid US$ 462 million for the brand in 2014. The company, that invented its first boot in 1960, now has 130 global stores and had a US$ 907 million revenue stream last year, ending 30 March 2020, after adopting a direct-to-retail strategy, through physical stores and online. It sold more than eleven million pairs of footwear in the year. During the pandemic, Dr Martens was forced to close some of its shops but still managed to increase its six-month EBITDA by 30.0% to US$ 116 million on an 18.0% hike in revenue to US$ 429 million; during the period, and despite the onset of Covid-19, it sold 700k more boots than the same six months a year earlier, as revenue jumped an impressive 74%.
The wheels have come off UnbeatableHire Limited, a company that borrowed money from lenders, to buy motorhomes, promising to return all the money plus, with returns of up to 10%; the company then hired out the motorhomes to holidaymakers in the UK. People were invited to lend the company US$ 55k, with each loan secured against an individual motorhome that would be bought with their money. The scheme appeared to go well for at least a decade but now investors are facing big losses, as the firm has collapsed not only owing US$ 10 million but that 123 vehicles have gone “missing”. The administrators, who were appointed over a year ago, estimate that the company still has 350 vehicles and found that some motorhomes were found to have more than one chattel mortgage listed against them; in some cases, some were shown as “stolen” in company records, but the administrators said they had never been reported stolen to the police, whilst others had been destroyed in two separate fires at two of the company’s depots. There is no smoke without fire and it seems that the company’s MD, Andrew Hughes, has a lot of explaining to do.
This week saw the value of Postmark reach US$ 7.1 billion in its first day of trading, as it raised about US$ 277 million in the Nasdaq listing; in spring, the second-hand shopping site posted its first ever quarterly profit. There is no doubt that such sites will become even more popular, whilst the pandemic encourages the need for online shopping and as shoppers grow more budget and environmentally conscious. Its shares were listed at US$ 42 at the beginning of Monday’s trading and had risen to US$ 97.60 by the end of the day.
Benefitting from the pandemic, Crocs is on track to report its best annual sales ever, with 2020 revenue expected to top a record US$ 1.4 billion, and at 12%, much higher than the company’s initial 7% estimate. There is no doubt that the company is on a winning streak, with its shares 50% higher last year and 12% up on this Monday’s trading. Crocs expects another record year in 2021, with revenue up to 25% higher, as their product line seems highly suitable for indoor wear during lengthy periods of self-quarantine; the company has also expanded its range to include sleeker designs.
Alimentation Couche-Tard, that owns the Circle K chain, has started “exploratory discussions” on a friendly deal with Carrefour, representing a major strategy shift for the Canadian firm. Shares in Carrefour are already 10% higher in January and, by Tuesday, the supermarket chain had a market cap of US$ 15.4 billion, whilst the friendly suiter is valued a lot higher at US$ 36.0 billion, even though it shed 2.2% in market cap, on the news breaking earlier in the week. The 40-year old Canadian conglomerate has not focused on supermarkets but on convenience stores and petrol stations for its growth, expanding into the US and Europe in 2001 and 2012; of late, it has concentrated its efforts on the Pacific regions and probably would have acquired Caltex Australia if it were not for the onset of Covid-19. Last year, it was one of the unsuccessful bidders for US gas station operator Speedway, which was eventually sold to Seven & I Holdings for US$ 21.0 billion. It currently has a network of more than 9k convenience stores in North America, most of which also offer fuel retail, and It also has about 2.7k locations in Europe. Carrefour has 2.8k supermarkets and 703 larger-format hypermarkets, as well as a presence in Argentina and Brazil, but has lost ground to the likes of Germany’s Aldi and Lidl, as well as to Leclerc. Its international forays have seen mixed results in Latin American and China, where it sold an 80% stake in its Chinese operations to local retailer Suning two years ago.
Although Airbus delivered 34% fewer aircraft in 2020, 566, (compared to a record 863 a year earlier), it still retained its number one spot, as the world’s biggest plane maker. The Toulouse-based Airbus recorded 268 net orders last year, after adjusting for 115 cancellations, a 65% decline from 768 orders in 2019; by the end of 2020, it had a backlog totalling 7.2k.
In comparison, its main rival, Boeing, was way behind with only 157 aircraft, (59% down from 2019 and well down from the 806 in 2018), driven by the Chicago-based plane maker struggling with the grounding of its best-selling 737 Max narrow body jet and its 787 Dreamliner; however, it did hand over 27 737 Max in December but did not deliver any 787 widebodies in the last two months of 2020, with the jets undergoing inspections after production flaws were found. The disappointing results from both Airbus and Boeing were a direct result of the onset of Covid-19, which wiped out air travel demand, forcing airlines to ground aircraft and to delay, defer or even cancel jet deliveries to preserve cash.
The Institute of International Finance is concerned about the massive increase brought on by Covid-19, as governments’ debt to GDP in 2020 jumped 15% to 105%; global debt levels rose more than US$ 17 trillion to US$ 275 trillion, driven by a marked rise in sovereign debt issuance. The knock-on effect is that this may have a negative impact on economic prospects this year, with a sharp rise in financial and budgetary imbalances. In 2020, there was a US$ 7 trillion increase in negative-yielding bonds issued to US$ 18 trillion and, with the added impact of abundant liquidity from global central banks, investors have had to move to the new territory of emerging markets to access better returns. The IIF warned that one drawback is that foreign currency debt may exacerbate debt-related vulnerabilities for emerging market borrowers, as “greater reliance on foreign capital could leave emerging market borrowers more exposed to sudden shifts in global risk sentiment”.
According to the Federation of Small Businesses, a record number of small UK firms could close in the next 12 months; it estimates that, without further government aid, more than 250k businesses, (equivalent to 5% of the total number of SMEs – 5.9 million) and effecting 700k – 1.1 million, may go under. It has written to the government with a suggested proposed support scheme, aimed to help many self-employed workers currently excluded from aid. The federation noted those not receiving public support included “company directors, the newly self-employed, those in supply chains and those without commercial premises.” It suggests that grants of around US$ 10k be paid to cover three months of lost trading profits and limited to those who earn less than US$ 70k.
As 2020 sales in physical shops dipped – food by 20%, and non-food by 25% – UK’s retail sales recorded their worst ever year, whilst overall food sales rose 5.4% in the year, non-food sales dropped about 5%. Matters were made worse with the third lockdown clashing with the festive period, usually the best season for the High Street. With the lockdown continuing into January, closures will cost the industry billions of dollars and will result in many retailers having to close their doors. Over the five-week period to early January, thanks to online shoppers, non-food sales rose 44.8%, with online retail overall jumping 33% to account for 46.1%of all sales. Last year, 180k retail jobs were lost – almost 25% up on the 2019 figure, with this year presenting the triple whammy of a new national lockdown, economic downturn and a new relationship with the EU.
Even when the coronavirus dies out, whenever that may be, online shopping will continue to gain popularity, whilst there will be more people working from home, with the inevitability of an increasing number of ‘bricks and mortar’ shops closing, and the possibility of a further 400k redundancies, along with the loss in the High Street of up to 40% of their retail offerings. In the study, which covered 109 UK towns and cities, the report noted that “the reduction in commuter footfall (and) the accelerated shift to online shopping is exacerbating the vacuum in city and town centres, with less people calling in to shop.” Working from home carries many advantages, two of which are that the individual will not only have more time to enjoy life – because of cutting out commuter travel – but also more money to spend because of reducing their commuting expenses.
South Korea’s post pandemic rebound continues with Samsung Electronics reporting a Q4 26% jump in profit, to US$ 8.2 billion, on a 1.9% rise in revenue to US$ 56 billion, still driven by continued remote working and TV-watching which in turn fuelled sales of chips and display panels; full earnings will be available by the end of the month. On Thursday, the company launched a new line-up of its Galaxy S series smartphones – S21, S21 Plus and S21 Ultra – and a slew of other products at a virtual event. Samsung is fighting hard to retain its leading position in the market, with increasing competition from its current main rivals, Apple and Huawei.
In a case relating to Monaco-based consultancy Unaoil, Australian police have arrested a second former Leighton executive over an international bribery investigation. Former COO, David Savage, following that of a previous MD of Leighton Offshore, Russell Waugh, was charged with have knowingly provided misleading information to authorities, contrary to Australian law. Investigators have identified a US$ 77 million suspicious payment, made through third party contractors, and allege that the Leighton subsidiary was used to funnel these bribes through Unaoil and an unnamed ME contractor to “grease palms”. It appears that this refers to Iraqi oil ministry officials and government officials within the South Oil Company of Iraq. As a side note, it is reported that Leighton won contracts, in 2010-2011, valued at US$ 1.5 billion, that needed official approval from the two entities above. In 2019, the two brothers, who ran Unaoil, pleaded guilty to being part of a 17-year scheme to pay millions of dollars in bribes in nine different countries; they later decided to cooperate with authorities which may have had some bearing on the two Australians being arrested. Last year, two Unaoil officials were found guilty by a UK court for paying bribes to secure contracts of more than US$ 1.0 billion.
Last August, the US administration listed China State Construction Engineering Corporation as a Chinese military company and this week it appears that the Morrison administration has blocked the same company’s US$ 230 million bid for the Australian construction firm Probuild, and being accused by the Chinese government of further undermining trust between the two countries. Treasurer, Josh Frydenberg, used the national security “card” to stop the bid going any further. China has accused the Australian government of discriminating against Chinese companies noting that “the Australian government has been politicising trade and investment issues, violating market principles and the spirit of the China-Australia free trade agreement, and imposing discriminatory measures on Chinese companies.” The Australian government introduced tough new foreign investment rules, as from the beginning of 2021, giving regulators enhanced powers to review and scrutinise investments that could have national security implications. Last year, bilateral trade sank to new lows with China targeting multiple Australian products, including wine, timber, barley and coal, with severe trade sanctions, whilst investment into Australia has tanked
With the labour market still struggling, applications for US state unemployment benefits surged last week, by 181k to 965k, the most since late March – a sure indicator thatthe impact from the pandemic points to the need for a further massive federal stimulus package and the national vaccination programme to be ramped up.. The increase in numbers surprised analysts, who were predicting littleor no changefrom the previous week, with a median forecast of 789k.Continuing claims in state programs – an approximation of the number of people receiving ongoing benefits – climbed by 199k to 5.27 million in the week ended 02 January. There is no doubt that incoming President, Joe Biden, in true Democratic style, will be considering a massive additional relief package that could further extend unemployment benefits; this could come in as high as a mouth-watering US$ 2 trillion. Furthermore, Federal Reserve Chair, Jerome Powell, confirmed there will be no raising of interest rates anytime soon, whilst also rejecting suggestions the Fed might start reducing its bond purchases in the near term.
The Australian government has urged Google to focus on paying for Australian content instead of blocking it, as Australian news websites were apparently not showing up in searches, Google later confirmed it was blocking the sites for a small number of users, as it was conducting experiments to determine the value of its service to Australian news outlets. With the likes of Amazon, Apple and Google ejecting it from their platforms, Parler is now virtually homeless on the internet. Amazon decided to remove the alternative social media platform, favoured by conservatives, after mounting pressure from the public and Amazon employees, which resulted in the Parler website becoming inaccessible by early Monday. Some will see this as an action to completely remove free speech off the internet – on the apparent whim of their own employees!
The chief executive of Twitter, Jack Dorsey, is right saying that banning President Donald Trump from its social media platform, after last week’s violence in Washington, sets a dangerous precedent but wrong and arrogant to say it was the “right decision”. Twitter is among several social media platforms and messaging services to ban Donald Trump, with Snapchat also permanently banning the president. Whatever you think of the outgoing US President, the actions of Twitter to permanently ban him for life seems a step in the wrong direction and one has to applaud German Chancellor Angela Merkel for attacking the platform for the ban and calling it a “problematic” beach of the “fundamental right to free speech”. She appears to be taking the correct and logical approach that the US should follow laws that restrict online incitement, rather than leaving it up to the likes of Twitter and Facebook to make up the rules themselves. It is only a small step away for the tech giants, who are fond of flexing their muscles – but no paying their fair share of international taxes – to dictate to the rest of the world what they can and cannot say. Everybody Wants To Rule The World!