Robin Hood – Prince of Thieves!                                                    31 July 2021

According to Property Finder, July sales transactions in Dubai hit a 12-year high, registering 4,384 sales deals, worth US$ 3.05 billion, and this despite the fact that July is normally considered a “quiet” and slower month for the market. Last month, 59.4% of sales, (2.6k at US$ 2.11 billion) were in the secondary market – and the balance (1.8k at US$ 937 million) off-plan; the average transaction value for secondary or ready property increased by 4.62% to US$ 790k and off-plan units by 33% to US$ 518k. It reported that the top locations for villa/apartment sales were Dubai Hills Estate, Arabian Ranches, The Palm Jumeirah, Damac Hills and Mohammed bin Rashid City, with Dubai Marina, Downtown Dubai, The Palm, Business Bay and Jumeirah Village Circle for apartments. In the first seven months of the year, 31.8k sales transactions took place, valued at US$ 19.93 billion; the whole of 2020 saw 35.4k sales worth US$ 19.58 billion.

For the past week ending 05 August, Dubai Land Department recorded a total of 1,581 real estate and properties transactions, with a gross value of US$ 1.91 billion. It confirmed that 1,083 villas/apartments were sold for US$ 689 million, and 91 plots for US$ 195 million over the week. The top three transfers for apartments and villas were all apartments – one was sold for US$ 138 million in Marsa Dubai, a second sold for US$ 82 million in Burj Khalifa and thirdly, an apartment sold for US$ 45 million in Palm Jumeirah. The top two land transactions were for a plot in Me’Aisem First sold for US$ 17 million, and a plot that was sold for US$ 11 million in Madinat Dubai Almelaheyah. The most popular locations were in Hadaeq Sheikh Mohammed Bin Rashid, with 18 sales transactions worth US$ 75 million, Jumeirah First, with 15 sales at US$ 42 million, and Nad Al Shiba First with 11 sales transactions worth US$ 9 million. Mortgaged properties for the week totalled US$ 1.09 billion, including a plot for US$ 253 million in Palm Jumeirah. 35 properties were granted between first-degree relatives worth US$ 34 million.

Having resumed international travel three months earlier, in October 2020, Dubai became one of the first cities in the world to reopen for international meetings, conferences and conventions. Going into H2, it has built a healthy list of high-profile events, the most notable being the hosting of the delayed six-month long Expo 2020 Dubai, starting on 01 October. Some other major events include the Congress of the Société Internationale d’Urologie, Society of Petroleum Engineers Annual Technical Conference and Exhibition, International Astronautical Congress, World Chambers Congress, LPG Week, Gastech, (having been relocated from its originally planned host city of Singapore), and Africa Oil Week; the latter is usually held in South Africa but has been transferred to Dubai to coincide with Expo. Major incentive groups visiting the city will include AFC Life Science, Amway, Sunhope, Jeunesse and OMNILIFE. To build on this momentum, Dubai Business Events will continue to engage with meeting international planners, both here in Dubai and in their own overseas market, to highlight the city’s business events infrastructure and rapidly developing knowledge economy.

The Business Registration and Licensing (BRL) sector of Dubai Economy posted a 77.0% hike in business licences to 31k in H1 – a figure that surpassed pre-pandemic returns. Since the onset of Covid in March 2020, the Dubai economy has recovered a lot quicker than many had expected, mainly attributable to several rapid and effective government actions. H1 also saw the entry of 246 new investment firms and the establishment of twelve new holding companies, with the ‘Invest in Dubai’ platform attracting 10.6k foreign investors from 117 nationalities.

It is estimated that 51% of UAE’s wealth is in the hands of those individuals whose net worth is more than US$ 5 million, which in turn accounted for 26% of the GCC’s financial wealth last year. According to BCG, this wealth is expected to grow at an annual compound 4% rate to 2025, by which time the country’s wealth will have grown an extra US$ 700 billion, whilst the GCC total will have reached US$ 63 trillion. Saudi Arabia and the UAE account for 71% of the bloc’s total wealth.

Business activity in the UAE’s non-oil private sector continued to improve in July, posting its highest level in two years of 54.0, (52.2 in June), as demand rebounded from the pandemic-induced slowdown. Furthermore, employment rose at its fastest rate since January 2019, whilst both the output and new order indices also followed last month’s upward trajectory, driven by soaring domestic sales and strengthening market confidence, hitting their highest levels since July 2019. However, on the flip side, delays to shipments resulted in the worst lengthening of suppliers’ delivery times in over a year and contributed to a quicker rise in input costs. Business confidence indicated that the future economic outlook was bullish helped by the upcoming Expo 2020 and the easing of lockdown restrictions.

On Sunday, the UAE took over the mantle from the Seychelles to become the world’s most vaccinated country, having administered 18.8 million doses, equating to 78.3% of the country’s population.

In order to further promote Dubai as a regional and global hub for 3D printing technology, HH Sheikh Mohammed bin Rashid has issued a decree to regulate the use of 3D printing in the emirate’s construction industry which has already built two buildings; The Office of the Future at Emirates Towers was the world’s first 3D-printed office and Dubai Municipality’s Centre for Innovation the first 3D-printed two-storey building in the world. This decree is further support for the 2016 Dubai 3D Printing Strategy, aimed at ensuring that 25% of Dubai’s buildings will be constructed using the technology by 2030. The new law further aims to enhance efficiency in construction projects, boost the competitiveness of local industry, reduce waste and attract leading companies in 3D printing to Dubai.

The Dubai Ruler has also issued a further four decrees involving government-related entities including changes to board members. The first sees Sheikh Ahmed bin Saeed chairing the board of trustees of the British University in Dubai, while the head of the university will serve as vice chairman. Other members include Hussain Al Sayegh, Ahmad Al Muhairbi, Sheikha Hind Ali Rashid Al Mualla, as well as a representative each from Dubai Holding, the British Council in Dubai and the Northern Emirates, Emirates NBD, Rolls-Royce International, the British Business Group and Atkins.

The second decree appoints Reem Al Hashimy, Minister of State for International Co-operation, as chair of Dubai Cares, with Tariq Al Gurg as vice chairman. Other board members include Sami Al Qamzi, Abdulla Karam and Sultan Al Shamsi. Another appointed its MD, Mona Al Marri, as chairwoman of the board of the Dubai Women Establishment, with Hala Badri as her deputy. Other members of the board include Huda Al Hashimi, Huda Buhumaid, Khawla Al Mehairi, Mona Bu Samra, Fahima Al Bastaki, Aljoud Lootah and Moaza Al Marri, in addition to the chief executive of DWE. The fourth decree saw Tamim Al Muhairi appointed as chairman of Watani Al Emarat Foundation, with Saeed Al Aweem as vice chairman, and other members being Mohammed Al Theeb, Mohammed Al Hali, Dherar Belhoul, Abdulla Al Jatbi and Mohammed Al Tayer.

Dubai Airport Free Zone Authority, which supports more than 1.8k companies across more than twenty sectors, came up with some impressive H1 financial figure, posting an 8.3% hike in sales revenue, driven by an 88.4% annual increase in the number of registered companies and a 24% rise in leased areas. Over the period, the number of multinationals jumped 23.5% while the number of registered SMEs climbed 96.4%. To further support SMEs, (which make up 95% of all companies in the emirate and contributes 40% of Dubai’s GDP), Dafza also launched Scality, a start-up programme aimed at attracting local, regional and global tech start-ups to set up and grow in the emirate. H2 results will be bolstered by Dubai’s economy bouncing back quicker than expected and the opening of the six-month Expo in October. Following an agreement with the Securities and Commodities Authority earlier in the year, companies will be allowed to trade with crypto assets and cryptocurrencies within Dafza’s jurisdiction.

In Q1, trade rose 4.7% on an annual basis to more than US$ 39 billion and recorded a US$ 664 million, whilst accounting for accounted for 11% of Dubai’s trade. Goods including machinery, televisions, electrical equipment, pearls, semi-precious stones and metals accounted for 94% of the authority’s total trade. Trade with China surged 56.4%, year on year, and remained Dafza’s biggest partner, accounting for 31% of its total trade.

Dubai Economy has already fined 148 firms US$ 4.1k (AED 15k) each for failing to register their ‘Beneficial Owner’ data by the 30 June deadline. This followed several reminders from its Commercial Compliance and Consumer Protection division about the deadline and the importance of registering their Ultimate Beneficial Owner data with the commercial registry.

There was no surprise to see a PwC UK report claiming that Dubai is the leader in the world when it comes to workers taking home 100% of the total income earned, placing it ahead of peers such as Hong Kong, Singapore and New York. It seems that this was a no brainer considering that the emirate ‘s residents do not pay tax or social security payments and because of this Dubai has long attracted high-income individuals and multinational corporations.

THE RTA reported that it had collected US$ 805 million, via digital channels (e-payment portal and smart kiosks), last year, with the number of digital transactions reaching 527.1 million, the number of registered users on digital platforms 2.2 million, and the number of smart apps downloads was 6.1 million. The introduction of digitalisation has seen numbers at customers happiness centres fall 64.5% in 2020 and that the rate of digitisation of RTA’s transactions exceeded 91%. It does appear that the RTA is doing its bit to contribute to transform Dubai into the smartest city in the world. The authority is currently updating and following-up the implementation of 111 projects as part of its digital strategy 2020-2024.

Dubai-based venture capital firm Vy Capital, along with Alphabet Inc’s Google Ventures, led the funding round that raised US$ 205 million for Elon Musk’s 2016 brain-chip startup, Neuralink. Funds raised in Round C will be used to take its first product, N1 Link, to the market, and for research and development. The company aims to implant wireless brain computer chips to help cure neurological conditions, including Alzheimer’s, dementia and spinal cord injuries and fuse humankind with artificial intelligence. According to Elon Musk “First @Neuralink product will enable someone with paralysis to use a smartphone with their mind faster than someone using thumbs.”

 A Dubai-based fintech start-up, baraka, has raise a further US$ 4 million in its latest seed round. It has officially launched its mobile investment app, whose aim is to educate, enable and empower retail investors in the ME. The money raised will help target a large and underserved segment of investors in the region, in an industry which focuses on the higher income segments. It has also received regulatory authorisation from the Dubai Financial Services Authority and its commission-free investment app allows its users access to over 5k US-listed securities, with no minimum investment requirement.

Dubai Investments reported a 47.3% hike in H1 net profits to US$ 82 million, mainly attributable to enhanced performance of the manufacturing and contracting and investment segments. Total income for the period came in 50.9% higher, at US$ 469 million, mainly driven by increased margins in their property sector. During the period, DI acquired an additional 15.19% stake in National General Insurance, bringing its total shareholding to 45.18%.

Although there were declines in both its H1 revenue – 6.8% lower at US$ 167million – and net profit to US$ 18 million, down 49.0%, Dubai Aerospace Enterprise still announced that it was looking for early redemption of an additional $1.25 billion this month, following its March’s redeeming of approximately US$ 456 million of high coupon debt. In H1, operating cash flow rose 15.2% to US$ 498.5 million. DAE had 99.1% fleet utilisation rate and confirmed that in the coming months it would sell 27 aircraft and purchase 26, including 15 new 737-8 MAXs from Boeing.

The DFM opened on Sunday 01 August, 52 points (1.9%) higher the previous fortnight, was up a further 54 points (1.9%) to close the week on 2,820. Emaar Properties, US$ 0.01 lower the previous week, was US$ 0.03 higher at US$ 1.11. Emirates NBD and Damac started the previous week on US$ 3.65 and US$ 0.34 and closed at US$ 3.65 and US$ 0.33. On Thursday, 05 August, 86 million shares changed hands, with a value of US$ 44 million, compared to 126 million shares, with a value of US$ 46 million, on 29 July.

By Thursday, 05 August, Brent, US$ 1.87 (1.6%) higher the previous week, shed US$ 3.50 (4.7%), to close on US$ 71.42. Gold was US$ 23 (1.3%) higher last week but lost US$ 26 (1.4%) to close Thursday 05 August on US$ 1,802 Brent started July on US$ 73.31 and gained US$ 1.88 (2.6%) during the month, to close on US$ 75.19. Meanwhile, the yellow metal opened July trading at US$ 1,776 and gained US$ 41 (2.3%), during the month, to close on US$ 1,817.

Driven by an uptick in the global economy and higher energy prices, BP posted a Q2 profit, US$ 2.8 billion, after posting a massive US$ 16.8 billion loss a year earlier. It announced that it would raise dividends payment by 4.0% and it also will start with a US$ 1.4 billion share buyback programme. Its H1 profit at US$ 7.7 billion compares with a US$ 21.2 billion loss in 2020. BP joins other mega energy companies, such as Chevron, Royal Dutch Shell and Total Energies, to start share repurchases amid a favourable environment for crude commodity prices, currently hovering around the US$ 70 level. – more than 50% higher YTD.

Although revenue dipped 7.0% to US$ 25.7 billion, HSBC posted a 112% leap in H1 profit to US$ 11.9 billion, attributable mainly to the effect of the 2020 interest rate cuts. Of those figures, Q2 accounted for US$ 12.0 billion of revenue, (down 10.0% year on year), and US$ 5.6 billion of profit, (up 124%).  The three main drivers behind this drastic improvement for Europe’s biggest bank by assets were the return of growth in its main markets, an increase in lending and a drop in bad loan charges; its bad loan provision dropped from US$ 7.2 billion last year to US$ 719 million. The bank noted that all its regions had traded profitably in H1, with Asia driving the strongest growth in profitability. The bank declared an interim US$ 0.07 cash dividend but advised that “reflecting the current improved economic outlook and operating environment in many of our markets, we now expect to move to within our target dividend pay-out ratio range of 40 per cent to 55 per cent of reported earnings per ordinary share in 2021.”

Standard Chartered posted a higher-than-expected 57.0% jump in H1 profit to US$ 1.24 billion, as its Middle East and Africa (MEA) region’s operating income more than quadrupled to a five-year high of US$ 476 million, mainly attributable to a “significant” drop in provisions for loan losses, down on the year to US$ 40 million from US$ 370 million. The bank’s strongest returns were seen in its Asian region where profits were 75.0% higher at US$ 1.0 billion, driven by “fantastic results in Hong Kong and in China.” However, results in Europe were not as good, with a 5.0% decline in profit to US$ 337 million.

The Johnson government confirmed that it would be “closely monitoring” the planned US$ 8.8 billion takeover of Meggitt by US company, Parker-Hannifin. It added that “under the Enterprise Act 2002, the Business Secretary has powers to intervene in mergers and takeovers which raise national security concerns”. The Coventry-based defence and aerospace firm employs 9k globally, of which 2.3k are in the UK. Meggitt’s shares climbed 55% in Monday’s trading when the takeover bid was announced but still traded some 10% lower than the takeover bid. On the same basis, the government is also monitoring the proposed US$ 3.6 billion takeover of UK firm Ultra Electronics by US private equity-owned company, Cobham.

Despite having to pay a large anti-trust fine, Alibaba Group posted a Q1 (to 30 June) net profit of US$ 7.0 billion, slightly down on the comparative 2020 figure of US$ 7.4 billion; revenue was 34.0% higher at US$ 31.8 billion, driven by growth in the company’s China commerce retail business and its international retail and Cainiao logistics businesses. Alibaba has 1.18 billion annual active consumers of which 265 million are from overseas and the balance from within China; the total number increased by 45 million in the quarter.

It appears that the Chinese authorities are continuing with their recent policy of tightening their control over technology and private education companies and this is having a negative impact on the share value of Chinese online gaming firms. This week, a state media outlet labelled them as “electronic drugs”, following which the shares of Tencent and NetEase declined more than 10% in early Hong Kong trading. Investors are becoming increasingly concerned about the Beijing crack down, with the state-run Economic Information Daily reporting that “no industry, no sport, can be allowed to develop in a way that will destroy a generation,” and likening online games to “spiritual opium”. The latest government move is seen to be an attempt to tackle Tencent’s dominance of online music streaming where it controls more than 80% of China’s exclusive music streaming rights. Last week, the US$ 120 billion private tutoring sector was stripped of the ability to make a profit from teaching core subjects in China, with the new guidelines also restricting foreign investment in the industry.

The growing influence of players in the “buy now, pay later” market was brought home by the announcement that digital payments platform, Square, is to acquire Australia’s Afterpay for US$ 29.0 billion in an all-share offer. It valued Afterpay’s shares at US$ 92.91 each, a 34.1% premium on the market price last Friday but this is still well down on its February high of US$ 198.97. In Monday’s trading Afterpay shares were trading 29% higher at US$ 91.82. The US company has realised that there has been a shift, particularly in the younger age market, away from traditional credit and it now plans to integrate Afterpay into its consumer Cash App and its Seller product for small businesses. The sale will also see Square’s customer base increase from 70 million to 86 million.

Despite the impact of Covid-19, the UAE managed to boost its financial wealth by 3.0% to over US$ 600 billion. The report by the Boston Consulting Group noted that investable wealth accounted for about 69% of the total. On a global scale, financial wealth climbed 8.3% last year to US$ 250 trillion, whilst following the 2008 GFC it had actually declined 8.0%. 2020 witnessed both equities & investments funds, (driven by a strong stock market performance fuelled by supportive central bank policies, as well as cash and cash deposits both growing by 11.5% and 10.6%, the latter due to pent up savings). Over the period, governments pumped in over US$ 16 trillion in fiscal stimulus measures and global central banks a further US$ 9 trillion to bolster worldwide economies.

According to figures from CoreLogic, Australian house prices are going through the roof and, with July prices 1.6% higher, climbing at their fastest rate since February 2004. Although the monthly growth rate has begun to trend lower over the past four months, when the national index rose 2.8%, a continuance of the current trend of higher prices is pushing an increasing number of Australians out of the house-buying market. The current regime of low interest rates and generous tax breaks for housing will ensure that prices will continue to skyrocket. Darwin recorded the highest annual increase in house prices at 23.4% with Sydney, (still the country’s most expensive city), Brisbane and Melbourne posting increases of 18.2%, 15.9% and 10.4%. Houses continued to record much stronger growth in values relative to units – 18.4% against 8.7% – in every city except Hobart where the trend was 21.7% against 23.0%. With 42% of borrowers now having a loan-to-value ratio of 80%, the highest on record, when the market does implode, there will be a lot of mess to clear up.

The eurozone’s economy escaped the shackles of recession by a 2.0% Q2 GDP growth, following a double-dip recession, but it still remains 3.0% lower than its pre-pandemic level.

All countries in the 19-nation bloc recorded growth with some – such as Portugal, (growing at 4.9%) and Austria – performing better than others.  Whilst the likes of Italy and Spain saw growth hovering around the 3.0% average, the two powerhouses reported only moderate expansion – Germany (1.5%) and France (0.9%). One of the main growth drivers was household spending, especially noticeable in France, (which reported a 29% jump in its hotel and restaurant trade), Germany and Spain. Similar figures in Q3 are expected which would bring the eurozone economy almost to par compared to its pre-pandemic level.

Last Friday’s IPO, Robinhood shares dived to end its first day of trading at US$ 36, as some bigger investors shunned the trading platform for being too risky, along with fears it could face a future regulatory crackdown. Since then, its shares have surged and by yesterday 04 August, were trading as high as US$ 86, as speculation mounted that it could be heading in the same direction as Gamestop which earlier in the year saw its shares skyrocket as users of the social media platform Reddit bought them up to drive up the price. The same ‘meme stock’ phenomenon could well happen again with Robinhood. Interestingly, retail investors held a third of its shares at the IPO and on Tuesday it was estimated that retail trading in Robinhood shares was up tenfold, according to Vanda Research. Robin Hood – Prince of Thieves!