No Woman, No Cry                                                                                       12 February 2021

The latest weekly value of Dubai real estate transactions totalled more than US$ 900 million, including US$ 384 million relating to 802 real estate sales, (villas/apartments), US$ 439 million for registration of 856 pledges and 54 pledges of land for US$ 53 million. With regard to sales of apartments/villas, the three largest were a US$ 14 million pledge in the second Umm Hurair area, followed by a sale of US$ 12 million in the Palm Jumeirah area, and a pledge of US$ 8 million in the Al Thanyah Fourth area. Land sales saw the three high value transactions being in Al Thaniyah 4, Al Barsha South of the Fifth District and Sheikh Mohammed bin Rashid Gardens, fetching US$ 10 million, US$ 5 million and US$ 3 million respectively. Nad Al Sheba, the third region, was the leading location for the number sales, at 20 pledges, worth a total of US$ 13 million, followed by Al-Wafra 2 region, with 12 pledges, amounting to US$ 3 million, and Sheikh Mohammed bin Rashid Gardens, with sales of US$ 11 million.

It is reported that Abu Dhabi’s Aldar Estates has acquired the full-service real estate services company Asteco Property Management and all its branches across Abu Dhabi and Dubai. Through the acquisition, Aldar Estates will scale up its existing integrated estate management solutions to include building consultancy, valuation and advisory as well as franchising services. Asteco’s founder, Elaine Jones, commented that in the thirty-five years of its existence, the firm “has built a solid reputation for consistently delivering high quality, professional, value-added services in a transparent manner”. Because of this purchase, Aldar has managed to expand its portfolio by an additional 18.6k units under property management and more than 5k units under owner association management.

In Q4, DP World Limited handled 19.1 million TEUs (twenty-foot equivalent units) across its global portfolio of container terminals, with gross container volumes increasing by 7.6% year-on-year on a reported basis and up 6.5% on a like-for-like basis. Over the year, the figure was flat at 71.2 million TEUs, whilst there was an 0.2% increase on a like-for-like basis. Volume growth was driven by operations in India, Europe, MEA, and Americas with a strong performance from Mundra (India) London Gateway (UK), Rotterdam (Netherlands), Antwerp Gateway (Belgium) and Sokhna (Egypt). At a consolidated level, DP World terminals handled 11.2 million TEUs in Q4 – up 10.1% on a reported basis and 5.2% on a like-for-like basis; for 2020, the figures were 41.7 million TEUs, 4.6% higher on a reported basis but 1.8% lower on a like-for-like basis.

Dubai came in third overall in the ‘FDI Global Cities of the Future 2021/2022’ report’s overall global rankings and second in the ‘Major Cities’ category, according to the report published on Thursday by fDi Intelligence, part of the Financial Times. The emirates was also ranked third, behind Berlin and Hong Kong, in the FDI strategy sub-indicator among ‘Major Cities’ and eighth in the overall global rankings. Dubai also received a special commendation by the panel for its investment in green development.

Matrix International Financial Services has been appointed by the consortium bidding for Finablr whose companies include the UAE Exchange, Xpress Money, Bayan Pay, Remit2India and Unimoni brands. Its original owner, BR Shetty, has claimed he is a fraud victim perpetrated by former senior staff. The US firm has expertise in devising and implementing fraud prevention strategies, as well as fighting financial crime and money-laundering. The consortium, of Abu Dhabi’s Royal Strategic Partners and Prism Group’s Swiss subsidiary Global Fintech Investments, bought Finablr for US$ 1; the deal also included a further 25% of any funds recovered from “third parties in respect of possible historic wrongdoing” at the company, up to a maximum of US$ 190 million. Last May, Finablr reported undiscovered liabilities, resulting in its debts being US$ 1 billion higher than the US$ 334 million posted in its last filed accounts for the year to June 30, 2019.

With regard to BR Shetty’s other enterprise, Perella Weinberg Partners, with Resonance Capital, the NMC Health’s administrators have begun the sales process to try and find a suitable buyer for the firm’s core healthcare businesses in the UAE and Oman. At the same time, they are having discussions with regional and international lenders about corporate restructuring. Last year, the company reported that its 2020 gross revenue was 6.1% lower on the year at US$ 1.54 billion, with EBITDA only down by 1.7% at US$ 106 million. NMC Health was placed into administration in April last year following the discovery of more than US$ 4 billion worth of previously undeclared debts at the group, which also owes more than US$ 6.8 billion in loans and guarantees. There is no doubt that the company would be worth more as a whole unit rather than broken up.

Covid-19 is the main reason why Aramex posted a 43% decline in 2020 net profit to US$ 78 million, as costs and provisions moved higher. Its revenue was up 9% at US$ 1.5 billion, whilst it booked US$ 6 million in estimated credit losses on the company’s bank deposits in Lebanon. Although its freight forwarding division dropped 5% in revenue, to US$ 272 million, both its international and domestic express businesses posted growths of 10% to US$ 700 million and 23% to US$ 371 million. Overall global trade contracted by 9.6% last year with the IMF forecasting growth for this year and 2022 at 8% and 6%. The ME’s biggest courier company is confident of a better 2021, as “demand-side fundamentals are encouraging as more and more businesses will depend on us to move and deliver shipments globally and domestically.”

Having disposed of one of its subsidiaries, embattled Drake & Scull managed to turn in a profit of US$ 59 million in 2020, compared to a loss of US$ 24 million a year earlier. However, the good news was tempered by the fact that profit, from continuing operations, sank 45% to US$ 35 million, with revenue 68% down at US$ 59 million – it made a US$ 96 million profit on the sale of one of its subsidiaries. The profit enabled the contractor to reduce its accumulated losses to US$ 1.33 billion, with shareholders’ equity improving slightly to negative US$ 1.02 billion. The company noted that its restructuring process had reached its “final and advanced stages”.

Emaar Properties’ unit, Emaar Malls, posted falls in both 2020 revenue and net profit by 25.1% to US$ 954 million and 69.3% to US$ 192 million respectively. One bright light was the performance of Nashmi which Emaar Malls acquired in 2019. The regional e-commerce platform recorded a 28% hike in sales to US$ 357 million, attributed to its continued growth in Saudi Arabia and addition of news brands on the platform. Despite the pandemic, occupancy rates at its locations – including The Dubai Mall, Dubai Marina Mall, Gold & Diamond Park, Souk Al Bahar and the Community Retail Centres – was at a respectable 91.5%. The company provided more than US$ 272 million in support to tenants as part of its flexible rental relief policy in the early stages of the global pandemic.

Amanat Holdings posted its preliminary unaudited Q4 results, with an 86.2% slump in profit to just US$ 2 million on revenue nudging 1.0% higher to US$ 39 million. By 31 December 2020, shareholders’ equity stood at US$ 681 million, total assets stood at US$ 736 million and cash at US$ 124 million at the holding level. However, in Q4, the GCC’s largest healthcare and education investment company did manage to post a 94.2% jump in income from investments to almost US$ 11 million, with education investments up 43.3%, while losses from healthcare investments narrowed by 51.7%.

A sign of the troubled times was seen with Mashreq posting a 2020 loss of US$ 348 million, (compared to a US$ 56 million 2019 profit), driven by a lower interest rate environment; revenue fell 14.1% to US$ 138 million. Dubai’s oldest bank also posted an increase in impairments to US$ 913 million, as liquidity problems – especially in the construction and hospitality sectors – came to the fore. The bank is “cautiously optimistic” that business will pick up in H2, after “a challenging first half in 2021”.

With the ongoing impact of Covid-19, it was no surprise to see that DXB Entertainments’ 2020 loss was 21.5% worse than that of the previous year – to negative US$ 740 million -not helped by US$ 460 million worth of impairment losses on property and equipment and a US$ 94 million non-cash depreciation charge. Its revenue sank 71% to just US$ 39 million, with theme parks being the biggest contributor with US$ 26 million; park visitors were 69% lower at 802k.  Operating costs were 49% lower at US$ 78 million, whilst the available cash balance stood at US$ 109 million.

The bourse opened on Sunday 07 February and having shed 64 points (2.3%) the previous fortnight, shed a further 36 points (1.3%) to close on 2,633 by Thursday 11 February. Emaar Properties, US$ 0.03 higher the previous week lost US$ 0.02 to close at US$ 1.03. Emirates NBD and Damac started the week on US$ 3.16 and US$ 0.37 and closed on Thursday at US$ 3.17 and US$ 0.34. Thursday 11 February saw the market trading at 187 million shares, worth US$ 45 million, (compared to 167 million shares, at a value of US$ 72 million, on 04 February).

By Thursday, 11 February, Brent, US$ 0.33 (0.6%) lower the previous week, gained US$ 5.60 (10.2%) in this week’s trading to close on US$ 60.70. Gold, US$ 37 (2.0%) lower the previous fortnight, lost a further US$ 17 (1.0%), by Thursday 11 February, to close on US$ 1,821.

Driven by Saudi-Russian led production cuts, a feel-good Biden honeymoon for the US and a global rollout of Covid-19 vaccines, the price of Brent has breached the US$ 60-barrel price. On Monday, it rose to US$ 60.17. Prices are expected to edge higher especially because of Saudi Arabia’s pledge of extra supply cuts in February and March, with other members of Opec and Opec+ also reducing output which will go a long way to balance global markets. Like other commodities that trade in US dollars, oil will also benefit from a weaker greenback.

Opec+, the international coalition of producers, led by Saudi Arabia and Russia, will maintain its current level of curbs at 7.2 million bpd, equivalent to about 7% of global supplies, until the end of March, with Saudi also cutting a further 1 million bpd production in February and March to support oil markets. Latest estimates show global oil demand to increase 5.9 million bpd this year, with OECD demand up 2.6 million bpd and non-OECD by 3.3 million bpd. Inventories have continued to head south following a Q2 2020 peak, which has rebalanced the market somewhat, as demand indicators move higher. Oil demand from China, the world’s second-biggest economy, is also rising – and with factors such as these in play, there is every chance of Brent climbing 15% higher from its current US$ 60 level.

In a bid to cut costs to stem losses, caused by a drop in sales with fewer jets in the air requiring servicing, Rolls Royce is looking at a plan to close its jet engine plants for civil aircraft for two weeks; if their plan bears fruit, it will have no impact on its defence or energy divisions. The engine-maker agreed with unions last summer to enter into negotiations about delivering a 10% productivity and efficiency improvement across its civil aerospace operations in the UK. Last month, the company said it expects to get through more cash than expected this year; in 2021, having already slashed billions of pounds in costs, US$ 2.8 billion of cash is expected to leave the business, more than double earlier forecasts. As it is paid on the number of hours its engines are in use, its revenue stream will continue to be almost dry whist Covid and flight restrictions continue.

Meanwhile, the supermarket price war has stepped up a notch, following Tesco’s March 2020 move to launch its supermarket Aldi price-match scheme, with Sainsbury’s now saying: “It will help shoppers who are working hard to balance budgets”; initially, it will cut prices on 250 popular items, including meat, chicken, fresh fruit and vegetables and dairy. There is no doubt that the German interloper continues to ruffle feathers with the big players worried that Aldi (and to a lesser extent Lidl) are increasing their market share. The supermarkets are also suffering from the increase in online shopping because of making less profit caused by delivery and higher staffing costs.

Having dominated the supermarket sector for so long and having probably filled its boots over the 102 years it has been in existence, Tesco is facing competition on two fronts. The first is from the discounters such as the two German infiltrators, Lidl and Aldi, and the fact that Sainsbury’s and Asda are doing their best to improve their 14.9% and 14.5% market shares, compared to Tesco’s 28.1%. The second and probably the most dangerous to Tesco is the online pureplays and retailers. As Ocado overtook the supermarket giant last September to become the UK’s most valuable retailer, with a market value of US$ 30.0 billion, compared to Tesco’s US$ 29.1 billion. This came about even when Ocado sells just 1.7% of the UK’s groceries. In 2019 Tesco had a market share of 30.7% in online grocery in the UK, followed by second-placed Asda (17.6%), Ocado (15.3%), Sainsbury’s (14.4%), Morrisons (4.5%) and Waitrose (3.0%). Other players accounted for 14.5% of the sector. Now Tesco has joined some of its online rivals, such as Morrisons, Asda and Waterstones, to call for a 1% sales tax to be levied on online competitors, including Amazon. They will meet with the UK Chancellor, Rishi Sunak, to request a “level playing field” on tax, arguing that the current system puts retailers with large estates at a disadvantage to online firms.

At the same time, eighteen company chief executives have written to the Chancellor warning that a return to Business Rates “will hamper the recovery of the retail sector post-pandemic, potentially putting thousands of jobs at risk”. The tax is calculated on a property’s rateable value and multiplying it by a tax rate set by the government which is amended every fiscal year so that a new rate will be introduced on 01 April. There is understandable concern about the future of “brick and mortar” shops, with latest official figures that 2020 retail sales at physical shops fell 10.3% to US$ 395.4 billion. Their chief protagonist, Amazon was criticised for paying less in business rates than British bricks-and-mortar retailers, as its 2020 revenue jumped 51% to US$ 26.5 billion, with its overall business rates bill estimated at just US$ 99 million – just 0.37% of its retail sales. Because of Covid, the bricks-and-mortar retailers were given a tax holiday for the year but if that had not occurred, their total bill would have been US$ 11.4 billion, equating to 2.9% of retail sales. The tech giant argues that it pays its tax and has not only created thousands of jobs in the UK, but also invested US$ 31.4 billion in jobs and infrastructure in the UK since 2010.

Boohoo has bought the Dorothy Perkins, Wallis and Burton brands from failed retail group Arcadia for US$ 35 million – and in line with similar deals in recent weeks does not include their physical presences. This particular sale sees the end of 214 shops and the 2.5k workers employed in them. With Asos acquiring Arcadia’s other leading brands – Topshop, Topman, Miss Selfridge and HIIT – it finally sees the end of Sir Philip Green’s and his Arcadia group which fell into administration last year. This business failure has seen most of the 13k Arcadia employees out of a job, with only about 260 jobs moving to the online fashion retailer, mainly at Boohoo’s head office. Boohoo has already bought a number of leading High Street names in the past two years, including the Karen Miller and Coast brands, in 2019, Oasis and Warehouse last year and more recently Debenhams. It seems only to be a matter of time before Boohoo becomes the UK’s largest retail marketplace, as well as the leading disruptor in fashion, reaching the top branches of the retail tree.

Following a year of “unprecedented disruption”, Heineken is to slash 8k – or almost 10% – of its payroll after a sharp drop in sales due to the coronavirus pandemic, with bars closing all over the world. The UK seems to have got off lightly with only 4.3% of its 2.3k workforce facing redundancy. The Dutch company – which also owns the Tiger and Sol brands – is the world’s second-largest brewer, with its Heineken brand the best-selling lager in Europe. The brewing giant called on the Johnson government for continued support for the pubs sector, including an extension of rates relief and a cut in VAT. To date, it had seen more sales out of the pub environment, but this has nowhere near made up of loss of revenue from its diminished pub trading. It hopes that the government will continue its support for the pubs sector including an extension of rates relief and a cut in VAT. Having made a US$ 1.4 billion profit in 2019, it posted a loss of US$ 132 million last year, as sales volumes fell in Europe, Mexico, South Africa and Indonesia. Over the next three years, Heineken hopes to slash costs by US$ 2.43 billion including US$ 425 million in personnel expenses.

To end what Jack Dorsey said had been”an extraordinary year” for the platform, Twitter noted that a 28% hike in Q4 saw a record US$ 1.3 billion in revenue, with “monetisable” daily active users growing by five million to 192 million, on the quarter. The company, that has 5.5k employees, has warned that total costs will be at least 25% higher in 2021, with payroll numbers 20% higher. The fact that the company took the unprecedented step of banning the then US President may have an impact on Q1 figures.

If you are an investor you cannot grumble about Bumble, as the dating app topped US$ 13 billion after listing its shares. Shares initially traded at US$ 43 (giving a market value of US$ 8 billion) but opened on Thursday 11 February at US$ 76. This despite the fact that it posted a nine-month loss to 30 September 2020 of US$ 116 million and saw its growth rate drop to just 15% (following a 2019 rate of 35% and a US$ 69 million profit). Whitney Wolfe Herd, who founded Bumble in 2014 to put women in charge of making contact with potential mates, became a self-made female billionaire overnight and also became one of twenty US firms to list publicly while led by a female founder. The thirty-one-year-old Texan also co-founded the dating app Tinder, whilst Bumble acquired Badoo in 2019.

January saw Amsterdam – with share trades totalling US$ 11.2 billion – replace London as Europe’s largest financial trading centre, with a monthly trade of US$ 10.4 billion, as Brexit-related changes to finance rules came into force on 01 January. New directives see EU-based banks wanting to buy European shares being unable to trade via London, meaning a loss of fees for City firms. The BoE chief, Andrew Bailey, indicated that there were signs that the EU had plans to cut the UK off from its financial markets, but talks are afoot that would see both parties harmonise rules over financial regulations – so-called equivalence. It has to be remembered that financial services make up about 7% of the UK’s income in total, and about 40% of banking and investment’s business abroad is with the EU. The BoE governor noted that EU demands had so far been unreasonable, and that he would not accept being “dictated” to by Brussels – something that the bureaucrats there are not used to.

Uber‘s chief executive, Dara Khosrowshahi confirmed that the tech company would  start accepting Bitcoin and other cryptocurrencies, as a form of payment, if it benefits the business and if there is a need for it. But he did comment that Uber would not buy the digital currency with its own cash, noting that the company was not in the speculation business. This week, the global ride-hailing firm posted a 2020 loss of US$ 6.8 billion (20% lower on the year), with its delivery service ticking over but ride-sharing nose-dived; revenue slumped 14% to US$ 11.1 billion. In 2020, it acquired new businesses like Cornershop in Mexico for groceries and Postmates courier service but rid itself of ATG and Jump to save on costs.

By the end of last week, the UK economy was receiving all the plaudits, with upbeat news and the vaccination programme going quicker than planned, The Bank of England forecasted a stronger than expected recovery later in the year, as the Covid-19 crisis begins to normalise. However, UK’s recent return of a stricter lockdown protocol will result in a disappointing Q1 4% contraction. With a steady hand on the tiller, the BoE maintained both the policy rate unchanged at 0.1% and the size of its bond buying programme steady at US$ 1.24 trillion. One note of interest was the bank’s guidance on negative interest rates indicating that any change would be highly unlikely over the next six months, if at all. The latest BoE projections expect GDP to return to pre-Covid levels as early as Q1 next year but has downgraded its 2021 forecast by 2.25% to 5% but raised 2022 to 7.25%. Their 2021 estimate looks a little too conservative and it will not be the first time that the BoE has erred on the side of caution.

After only two years in production, luxury goods group LVMH and singer Rihanna have agreed to shut down her Fenty fashion label; the only good news for the singer was that it be “put on hold”, pending better conditions. However, the Fenty brands in cosmetics – Beauty and Skin, along with the Savage X Fenty lingerie line will continue. Although the singer, whose real name is Robyn Rihanna Fenty, has a huge fanbase, the Fenty label’s prices were too steep for most of them. However, both parties pledged to concentrate on the long-term development of the “Fenty ecosystem”. Maybe the singer can now return to her singing career which seems to have been on hold since 2016 – the year of her last album.

Women are taking over the financial world – and some may say this is not before time. The latest two sees KPMG appointing its first female leaders in its 150-year old history, after current incumbent Bill Michael was fired for alleged offensive remarks, he made advising consultants to “stop moaning” about the pandemic’s impact. Bina Mehta has been asked to step in as acting chairman in his place and Mary O’Connor will take over Mr Michael’s day-to-day executive responsibilities, as acting senior partner. Then there is Ngozi Okonjo-Iweala, Nigeria’s ex-finance minister, who was vying for the position of head of the World Trade Organisation with another woman, Yoo Myung-hee, who has withdrawn her candidacy; the South Korean was favoured by the Trump administration last October who said it wanted another woman, South Korea’s Yoo Myung-hee. At the time, the ex-US President, who seemed to be the only one of the 164 WTO members who objected to the Nigerian’s appointment, described the WTO as “horrible” and biased towards China; perhaps with a smidgeon of truth. The Nigerian, who also becomes the first African to hold the position, joins the likes of Ursula von der Leyen, President of the EC, Kristalina Georgieva, Managing Director of the IMF, Janet Yellen the newly appointed US Secretary of the Treasury and Christine Lagarde, President of the European Central Bank. No Woman, No Cry.