If You Can’t Beat Them, Join Them!

”If You Can’t Beat Them, Join Them”!                                             11 November 2021

Tuesday was another stellar day for the Dubai realty sector, as it recorded US$ 463 million worth of transactions, including 267 sales valued at US$ 199 million. Land sales amounted to US$ 59 million, while US$ 139 million apartment and villa sales deals were conducted. Dubai Marine was the best performing location on the day with 33 apartment and villas sales deals, valued at US$ 23 million, followed by Business Bay and Al Barsha. This is in addition to mortgage deals of US$ 263 million and 23 gift transactions amounting to US$ 11 million.

Chestertons’ latest research noted that the value of Dubai’s Q3 residential property transactions was 10% higher, quarter on quarter, exceeding US$ 9.3 billion, driven by Dubai’s pandemic response, overall quality of life and recent visa reforms. Over the period, average villa and apartment prices were up 6.4% and 2.0%. Completed property sales accounted for more than 60% (US$ 5.62 billion) of the total with notable growth in the luxury segment, posting sales of US$ 545 million in Q3 and US$ 1.25 billion YTD to September. It posted that the best performing locations were Palm Jumeirah, Arabian Ranches and Jumeirah Park, up 8.8%, 8.2% and 7.7%, while Downtown Dubai and Business Bay, at 5.1% and 5.0%, witnessed the biggest quarterly uptick in prices in the apartments sector. Villa rents were 5.2% higher on the quarter, and 12.6% over the twelve months; in Q3, apartment rents were 0.6% higher.

According to a senior manager at Dubai Holding Real Estate, the UAE property market is undergoing a “true rebound and there are very good fundamentals underlying it.” It is expected that the current market momentum is sustainable for up to the next eighteen months, as the ongoing government initiatives continue to drive the sector forward that will encourage more residents to buy homes. Over the past year, the federal government has introduced a number of such measures, including visas for retirees and professionals working remotely, as well as expanding the ten-year golden visa initiative; it has also overhauled the country’s commercial companies’ law and annulled the requirement for onshore companies to have an Emirati shareholder. Earlier this year, the Dubai Ruler announced his 2040 urban plan to overhaul the emirate’s urban landscape, increasing community, economic and recreational areas, as well as nature reserves, by 2040; this will expand recreational areas by 150% and its beaches by an impressive 400%, with 60%of Dubai’s total area being nature reserves and rural areas.

According to Valustrat, Dubai’s October capital values for villas and apartments either “stabilised or improved”. In a sample of 13 villa communities and 21 apartment areas, the Valustrat Price Index jumped 12.6% on an annual basis in October, growing 1.8% on the month. The study noted that prices in some Dubai villa communities increased 30% on a yearly basis and “most of the apartment submarket continues to improve, albeit at a slower pace”. The villa segment, accounting for 13% of the residential market, saw some impressive annual gains in locations such as Arabian Ranches, Jumeirah Islands, The Lakes and The Meadows of 31.0%, 30.9%, 27.9% and 26.7% respectively. Palm Jumeirah (14.6%) and JBR (12.1%) were the best performers in the apartment sector, with negative returns being seen in Jumeirah Village (-6.3%), Dubai Production City (-2.6%) and Dubai Sports City (-2.8%). In the month, nineteen property transactions were sold at a price of over US$ 8.2 million, (AED 30 million) in the obvious locations such as Dubai Hills Estate, Downtown Dubai, Business Bay, District One, Jumeirah Golf Estates, Emirates Hills and Palm Jumeirah communities. Sales wise in October, four developers – Emaar, Damac, Nakheel and Dubai Properties at 30.2%, 11.5%, 5.4% and 4.3% – accounted for 51.4% of the month’s total. The top locations for off-plan transactions in October were in The Valley, Business Bay, Dubai Harbour and Arabian Ranches phase 3; for ready homes, Dubai Marina, Business Bay, Jumeirah Village, Akoya Oxygen and Jumeirah Lakes Towers, led the field.

Dubai-listed developer Deyaar “did exceedingly well” in terms of sales this year and plans to launch several projects in different locations next year, as it takes advantage of a strong rebound in the emirate’s property market. Financing via a mix of equity, debt and proceeds from sales, the company will start new projects in JVC, Al Furjan and at its Midtown master development in Dubai Production City. The developer, majority-owned by Dubai Islamic Bank, launched its Business Bay US$ 272 million, seventy-storey Regalia Tower, which is “almost sold out” , to both local buyers and international investors; prices for 1 B/R, 2 B/R and 3 B/R apartments start at US$ 267k, US$ 463k and US$  654k.

Danube Properties has announced plans that, over the next five years, it will launch two to three projects every year, worth as much as US$ 272 million every year, as it tries to bridge supply gaps in the emirate’s cheaper housing segment. Last month, it launched its US$ 129 million Skyz residential project, (which is 40% sold), and expects a similar US$ 109 million launch early next year. The developer already has vacant plots available for future residential developments in Arjan, Furjan and Warsan areas in Dubai. The company, with a US$ 1.36 billion portfolio in the emirate, is also looking at plots in Abu Dhabi which it considers to be a bullish market. Its chairman, Rizwan Sajan, noted that “the market has recovered so well that we are now extra bullish,” and “I personally feel that the boom is now coming to the UAE market, especially if you look at the prices that have gone up in the last six months to one year.”

Next July, Sobha Realty plans to launch a US$ 4 billion, eleven million sq ft mixed-use project, Hartland Sanctuary, adjacent to its current project Sobha Hartland in the MBR City; it is estimated that the project will be finished by 2030. The new development will be three million sq ft bigger than Sobha Hartland which is scheduled to be completed by 2025, having first been announced in 2014. Financing of the new launch will be via a mix of debt and equity with the developer also considering the bond market. The company is expecting net sales to total US$ 1 billion by the end of the year andhas a target of more than US$ 1 billion in sales next year. Sobha is also keen to enter both the Saudi and UK markets and has plans in place to start a new residential project in the UK in 2024.

Meanwhile, Azizi Developments has plans to spend US$ 1.9 billion on up to fifty new projects next year, encouraged by a market rebound in the wake of a successful Covid-19 vaccine programme and the bounce from Expo 2020.The developer will launch projects in several locations including MBR City, Healthcare City, Al Furjan and Studio City, expecting to raise over US$ 4.0 billion in sales. This year, it has already launched three projects with two more expected before the end of December. The Fitch BB- rated company, with only US$ 272 million bank debt on its balance sheet, will finance projects through equity, off-plan sales and commercial loans; it is also in the throes of a planned US$ 300 million sukuk issuance which may be amended upwards.

DMCC has announced that the construction of its iconic 340 mt high Uptown Tower is currently standing at 260 mt, with 68 of the 81 floors completed. The building will feature 188 luxury hotel rooms and suites, exclusive restaurants, extensive conference facilities, Grade A offices and 229 uniquely designed branded residences. The tower will be at the heart of the Uptown Dubai District which will be a 24-hour neighbourhood brimming with world-class dining, unique high-end retail outlets, a central entertainment plaza and several five-star hotels. It will also serve as a hub for leading global businesses.

According to Savills’ ‘Spotlight on Branded Residences’ report, the UAE, (with 39 completed schemes), has emerged as the third largest country market for branded residences globally, behind the US, (with almost 200 branded homes) and Thailand’s 42. Dubai took the top place among world cities, ahead of Miami and New York, with all three cities having established luxury property markets. It noted that Dubai benefits from a healthy mix of projects from global brands, along with a sizeable number of projects from domestic players such as Emaar. Over the past decade, the global branded residences sector has expanded by 230%, with 580 schemes open and operating with almost 100k units between them; it is expected to see schemes grow to 900 and up to 200k units by 2025, led by the US, Mexico and the UAE. The branded residences space has diversified significantly over the past decade, shifting from a market dominated entirely by hotel brands to a combination of hotel and non-hotel or lifestyle brands. Marriott has been the leader in this sector since 2002, but there have been new entrants into the market, as well as expansion of established players both in terms of type of brand and the location of the parent brand. Non-US brands, such as Emaar and Banyan Tree, have risen to become global contenders.

According to Mattar Mohammed Al Tayer, Chairman of the Roads and Transport Authority, Dubai’s transport agency, has invested US$ 40 billion, in enhancing the infrastructure of roads and transport, over the past fifteen years; this has saved about US$ 60 billion in time and fuel wasted through traffic congestions from 2006 to 2020. Speaking at the 18th IRF (International Road Federation) World Meeting and Exhibition, he noted how the RTA had achieved two of its mega projects – Dubai Metro project, in four years, and the Dubai Water Canal project in less than three years. Furthermore, over that period, its roadwork had doubled from 8.7k lane km to 18.3k, vehicle bridges/tunnels fivefold from 26 to 125, and cycling track network from nine km to 463 km. Interestingly, road accident fatalities have declined from 22 cases to 1.8 cases per 100k, and reduced pedestrian fatalities per 100k population from 9.5 to 0.5; carbon dioxide emissions have been reduced by 400k tons over the fifteen year period, with plans to zero-emissions public transport by 2050. Under the Dubai Urban Plan 2040, with the aim is to improve the wellbeing of people and make Dubai the best city for living in the world, 55% of the expected population will live within 800 mt of metro stations, with the plan to adopt a “20-minute city” concept to allow residents to access 80% of daily services, within twenty minutes by walking and cycling

An agreement with the European Tour group sees DP World becoming the new title sponsor of the group’s main tour from the start of the 2022 season. The Dubai port operator will target three key areas – elevating the Tour in every way, growing the game of golf globally, and driving positive community impact. Next year, the DP World Tour will have a record total prize money of over US$ 271 million, with a new minimum prize fund of US$ 2.71 million for all tournaments solely sanctioned by the DP World Tour. Over the year, the season will feature more than forty-seven tournaments in twenty-seven countries.

Although still in a loss position, H1 sees Emirates’ performance improving, posting a US$ 1.6 billion deficit, compared to US$ 3.4 billion loss in H1 2020. The airline’s revenue was 86% higher, at US$ 5.9 billion, with passenger numbers more than quadrupling to 6.1 million. With cargo 39% higher, to 1.1 million tonnes, it now stands at 90% of pre-pandemic levels. HH Sheikh Ahmed bin Saeed, the carrier’s chairman, noted that “while there is still some way to go before we restore our operations to pre-pandemic levels and return to profitability, we are well on the recovery path, with healthy revenue and a solid cash balance at the end of our first half of 2021-2022.”

The Emirates group narrowed its net loss to US$ 1.6 billion, compared with a US$ 3.8 billion loss in the same period last year, as revenue jumped 81% higher to US$ 6.7 billion and its cash position US$ 0.3 billion down at US$ 5.4 billion. It also received additional state support during the fiscal period, with a further injection of US$ 681 million by way of an equity investment. Dnata reported a US$ 23 million profit, (cf a US$ 396 million loss last year), whilst its revenue increased 55% to US$ 1 billion.

A Memorandum of Understanding, to set up a codeshare partnership, has been signed between Emirates and Garuda which covers seamless travel on both airlines’ routes, and frequent flyer programmes, across the Americas, Middle East, Africa and Europe; travel can be made on a single ticket. Subject to required regulatory approvals, the codeshare agreement is expected to come into effect in January. Emirates currently has codeshare cooperation agreements in place with twenty-one airline partners.

HH Sheikh Mohammed bin Rashid Al Maktoum has issued a decision to merge Dubai Economy and Dubai Tourism into one entity, under the name, ‘Dubai’s Department of Economy and Tourism’, with Helal Al Marri appointed as Director General. The Department is tasked with meeting seven targets to further strengthen Dubai’s leading position in tourism and economy and making it the world’s best city in which to live and work. These include increasing the added value of the industrial sector by 150% in the next five years, expanding export markets for local products by 50% and increasing the number of inbound tourists by 40% to 25 million, by 2025. Other responsibilities for the new set-up include ensuring that Dubai becomes one of the top five global cities, attracts 100k companies before the end of 2024, holds at least two hundred global economic events annually by 2025 and encourages private and family-owned businesses to get listed on the Dubai bourse. Furthermore, it will be in charge of other sectors, including attracting foreign investments and supporting SMEs.

Another directive by HH Sheikh Mohammed sees Dubai Courts announce the formation of a law enforcement committee for the emirate’s financial markets and the establishment of two new courts, within its Commercial Court, to expedite the resolution of disputes related to securities, shares, bonds, and other such financial instruments.  The aims of the exercise are twofold – to reinforce mechanisms to ensure the speedy delivery of justice in the financial sector, and to assist the emirate’s judicial system further raise its stature in the global commercial judicial community. The new courts will feature a remote litigation system that supports Dubai Courts’ aim of transforming itself into a smart judicial system, along with an interactive technology-based system that can be easily used by all parties including judges, advocates, experts and litigants.

At Tuesday’s cabinet meeting, held at the Expo 2020 site, HH Sheikh Mohammed announced “today, we decided to approve the requirements needed to grant residency visas for retired expatriates. This will allow retired foreigners to continue their stay in the UAE. We welcome everyone in our country.” This comes after the government recently introduced ‘Green’ and ‘Freelance’ visas.

In directing them to establish Dubai as a leading global centre for alternative dispute resolution, as per the highest standards of efficiency and transparency, the Dubai Ruler has formed the Board of Directors of the Dubai International Arbitration Centre. Under the chairmanship of Dr Tarik Humaid Al Tayer, and six other members, it is expected that the Centre will become one of the world’s top five arbitration centres in the next three years. Only last month, Sheikh Mohammed issued a Decree dissolving the Emirates Maritime Arbitration Centre and the Dubai International Financial Centre Arbitration Institute and merged their operations and assets into DIAC.

National Bonds has increased its stake in Taaleem Holdings by 3.4% to become a 23.0% shareholder in a global education provider that educates approximately 9.8k students across nine different schools. The investment company, owned by The Investment Corporation of Dubai, is now the largest shareholder in Taaleem and, as 30 September 2021, had an investment portfolio, valued at US$ 2.72 billion.

Boosted by a strong rebound in new orders and the first month of Expo 2020, the seasonally adjusted IHS Markit PMI was 3.0 higher on the month in October to 54.5 – its highest level in two years, and third highest in a decade. The marked increase in client demand and tourist numbers, as flights resumed, contributed to a sharp expansion in activity, with 75% of respondents expecting the Expo factor to be the main driver to benefit business in Q4. Indeed, firms’ output expanded to its strongest levels since July, whilst client orders, both domestically and abroad, headed north. All the emirate’s sectors, including construction, travel, tourism and wholesale/retail, witnessed growth; the latter recorded the biggest of the rises, as construction continued to see the strongest overall speed of recovery; furthermore, the easing of travel restrictions was another factor  helping the hospitality sector, driving September average occupancy rate higher to 67.2% in the month – up 51%, compared to the same month in 2020., and 9.2% higher than the August return. However, once again employment disappointed which only nudged up slightly, as staff hiring was partly linked to a rise in backlogs of work.

Shuaa Capital saw nine-month net profit, to 30 September, jump 39% to US$ 25 million, as its Q3 profit was 19% higher at almost US$ 10 million; the quarterly EBITDA, (earnings before interest, taxes, depreciation and amortisation) grew 5% to US$ 23 million. The improvement was attributable to stable recurring revenues and strong performance in its public markets fund. The Dubai-based investment bank, which has assets of nearly US$ 14 billion under management, led the funding round for music-streaming service Anghami late last year. Shuaa Capital merged with the Abu Dhabi Financial Group two years ago to create a business, with an asset management and investment banking platform that offers diversified revenue streams across different countries.

Driven by a strong capital and liquidity position, Mashreq posted a US$ 50 million Q3 net profit, (compared to a loss of US$ 51 million in the same period last year), helped by a marked improvement in the local economy and a rise in business confidence. However, the nine-month profit to 30 September declined almost 25% to US$ 72 million, largely attributable to an almost 25% hike on impairment provisions to US$ 564 million. Its operating profit came in 44% higher at US$ 201 million (US$ 654 million for the nine months), generated mainly from a 26.2% increase in fee and commission income. Both the bank’s customer deposits and total assets grew – by 7.4% to US$ 26.0 billion and 7.0% to US$ 46.2 billion respectively.

Emaar Malls posted an 86% leap in Q3 net profit to US$ 122 million, driven by a 36% hike in revenue to US$ 311 million, as Dubai’s retail sector improved in line with the emirate’s economy returning to pre-pandemic levels; its nine-month profit was 83% higher at US$ 272 million. Occupancy levels across Emaar Malls’ establishments remained flat at 91%. The unit of Dubai’s biggest developer, Emaar Properties, also reported that its e-commerce platform Namshi recorded quarterly sales of US$ 87 million. Official estimates are that Dubai’s wholesale and retail trade sector is on track to achieve 4.7% growth in 2021, whilst the local economy will be 3.1% higher this year and up 3.4% in 2022.

The DFM opened on Sunday, 07 November, 332 points (12.0%) higher the previous three weeks, gained a further 33 points (1.1%) to close the week at 3,141. Emaar Properties, US$ 0.23 higher the previous fortnight, closed US$ 0.02 higher at US$ 1.32. Emirates NBD and Damac started the previous week on US$ 3.83 and US$ 0.38 and closed on US$ 3.88 and US$ 0.39. On Thursday, 11 November, 538 million shares changed hands, with a value of US$ 173 million, compared to 821 million shares, with a value of US$ 251 million, on 04 November.

By Thursday, 11 November, Brent, US$ 2.78 (3.4%) lower the previous fortnight, regained US$ 0.87 (1.1%), to close on US$ 82.67. Gold, US$ 16 (0.5%) lower the previous fortnight, had a stellar week, (as the greenback strengthened), gaining US$ 74 (4.1%), to close Thursday 11 November on US$ 1,866. 

A US court has ordered the current and former company directors of Boeing to pay a US$ 238 million settlement with shareholders, over the safety oversight of the 737 MAX; the payment amount will be paid by the plane maker’s insurers. Furthermore, the agreement sees the need for the appointment of an additional board director, with aviation safety oversight expertise, and the creation of an ombudsperson programme. Boeing has reached an agreement with the families of the 157 people who died in the Ethiopia 737 Max crash in 2019 and importantly accepts liability for the fatalities; this deal is subject to families of the victims not seeking punitive damages from the company. Lawyers for the victims’ families said Boeing would still be held “fully accountable”. Last month, a former chief technical pilot for Boeing was charged with deceiving federal regulators who were evaluating the company’s 737 Max plane, with a lawyer claiming that he did not act alone. He was accused of “scheming to defraud Boeing’s US‑based airline customers to obtain tens of millions of dollars” for the company. (Interestingly, its new 777X will make its international debut at the Dubai Air show later this month – both in the air, with a 777-9 flight test aircraft, and on a static display).

In what would be one of the country’s biggest ever buyouts, Sydney Airport has agreed to accept a US$ 17.5 billion takeover bid from Sydney Aviation Alliance, comprising Australian firms IFM Investors, QSuper and AustralianSuper, as well as US-based Global Infrastructure Partners. Before this becomes reality, there are several obstacles to clear, including an independent report on the takeover, 75% shareholder approval and the green light from Australian regulators.

Evergrande is back in the news again as it managed to pay a US$ 148 million interest payment just before a deadline for payment; it has managed so far avoided defaulting on its debts by making overdue payments just before thirty-day grace periods expired. Earlier in the year, the cash-strapped Chinese real estate giant managed to sell a 5.7% stake in HengTen Networks Group. Evergrande owned a majority stake in the media firm but has since made a number of share sales, as it tries to raise money to meet its financial commitments. (Tencent, which in July, acquired a 7% stake for US$ 266 million from Evergrande, is now HengTen major shareholder, with a 24% stake). Last week, it also sold its UK-based electric motor making business Protean, which it bought in 2019 for US$ 58 million. However, as it has struggled to sell some of its other assets, it will continue to have problems repaying interest charges, (let alone winding down its massive US$ 300 billion debt); last month, a US$ 2.6 billion deal fell through after seventeen days of negotiations.

Shares in M&S skyrocketed yesterday, 10 November, by 18% – and its highest level since January 2020 – as it raised its profit forecast for the second time in less than three months; it now has upped its full year’s profit estimate to US$ 675 million, compared to its earlier expectation of US$ 472 million. For the six months to 02 October, it made a profit before tax and adjusting items of US$ 364 million, compared to a US$ 23 million loss over the same period in 2020. The main driver behind the improved results was a 10.4% increase in food sales, (and its deal with Ocado), offsetting a 1% decline in clothing caused by shop closures. The retailer had gone through a turbulent ten-year period but seems to have managed to turn around its ageing brand, with management focusing on transforming the company’s outdated culture, improving the quality and value of its clothing and food products, reshaping its stores and investing in technology and e-commerce. It also entered into an arrangement with online supermarket Ocado. It may have also benefitted from the fact that the UK has lost a staggering 83% of its rival department stores since 2016; it is estimated that 67% of closed shops remain unoccupied, with about 237 large shops yet to be taken over by a new business.

AB Foods, the parent company of Primark posted that the discount retail chain had lost one-third of its trading days in the 53 weeks to 18 September – which resulted in a 12% slump in sales, compared to pre-Covid, and lost sales totalling over US$ 2.7 billion – a massive blow for a retailer which has no online retail operations. AB Foods posted that its pre-tax profits dipped 1.0% to US$ 908 million for the year. Although Primark estimates that it could face disruption from global supply chain issues into 2023, it has assured customers that “we are getting the goods we need”. The retailer is bullish about its future, announcing a 33.2% increase in the number of shops to 530 over the next five years, with the number of US outlets rising more than fivefold to sixty. Although not ruling out introducing on-line sales, it still considers that it should focus on traditional shopping, but it does plan to overhaul its website to give more details of in-store ranges, so customers can “browse online, before they come into our stores”.

Google’s parent company Alphabet became the third tech giant to reach a market cap of over US$ 2 trillion, joining peers, Apple (US$ 2.47 billion) and Microsoft (US$ 2.53 billion); it only took the California-based company less than two years, after hitting US$ 1 trillion in January last year. The world’s largest provider of search and video advertisement posted a Q3 68.4% jump in net profit to US$ 18.9 billion, driven by the strong performance of Google Services business, which includes advertisements, Android, Chrome, hardware, Maps, Search, Google Play and YouTube. Since its 1998 formation, the company has diversified and has made some canny investments including paying US$ 50 million for the Android operating system, which is currently used by more than 2.5 billion people, and a year later, in 2006, US$ 1.65 billion for YouTube, whose revenue jumped 43% and added more than US$ 7.2 billion to Alphabet’s revenue.

Following a Twitter vote, arranged by the man himself, Elon Musk looks as if he is in the market to sell 10% of his Tesla stake as 58% of the 3.5 million Twitter users, who took part, were in favour of him trading US$ 21 billion worth of his stock. He has undertaken to keep to his promise, in response to a “billionaires’ tax” proposed by US Democrats, but should he go ahead with the sale, it could leave him with a huge tax bill. As he has apparently not taken any salary or bonuses from any of his companies, he has no earnings on which to pay income tax, but he has made billions of dollars through a compensation package, which gives him power to exercise large amounts of stock options when the company meets performance targets and its shares hit certain prices. His option, expiring next August, to buy 22.86 million Tesla shares at US$ 6.24 per share – on the day, 7.2% lower but still valued at US$ 1,222.00. Senate Democrats are proposing billionaires could be taxed on “unrealised gains” when the price of their shares goes up – even if they do not sell any of their stock. Yesterday, Elon Musk sold about US$ 5.1 billion in shares, with his trust selling nearly 3.6 million shares, worth around US$ 4 billion, while he also sold another 934,000 shares for US$ 1.1 billion after exercising options to acquire nearly 2.2 million shares; this equates to about 3% of his holdings in Tesla.

At Wednesday’s IPO on the New York bourse, shares in electric vehicle firm Rivian, having raised more than US$ 11.9 billion from investors, started above the company’s target range of US$ 78 each. Although the flotation is among the top ten US IPOs of all time, the company has made losses of over US$ 2 billion over the past two years and only started delivering its first electric trucks in September. It will roll out its SUVs next month and delivery vans in 2023. Despite this, it has been backed by Amazon and Ford (with a 13% stake), as well as hitting the market for small trucks, pick-ups and SUVs before its rivals such as GM. Not only is Amazon a 20% shareholder, it will also buy 100k electric delivery vans once they start production. Obviously, some investors are hoping that Rivian will emulate Tesla which went public in 2009, with a share value of US$ 17 – now they are trading at over US$ 1k. It was the world’s biggest initial public offering (IPO) this year and made Rivian the second most valuable car manufacturer behind Tesla (US$ 1 trillion), and ahead of GM (US$ 86 billion) and Ford (US$ 66 billion).   

Rolls-Royce Small Modular Reactor (SMR) business, backed by a consortium of private investors and the UK government, has been created to develop small nuclear reactors to generate cleaner energy. A US$ 285 million UK government grant and a US$ 265 million investor cash injection will fund the development of Rolls-Royce’s SMR design and take it through regulatory processes to assess whether it is suitable to be deployed in the UK. If successful, it could create 40k jobs by 2050 and result in this nuclear power contributing more than its current level of 16% to UKs electricity generation. At an expected cost of US$ 2.7 billion each, SMRs would cost less than the US$ 27 billion each for the larger plant under construction at Hinkley Point and a further possible plant at Sizewell in Suffolk. RR estimates a plant would have the capacity to generate 470MW of power, equating to the same amount of power produced by more than 150 onshore wind turbines.

At the Glasgow COP26 summit, the UAE indicated its intention to become a global leader in low carbon hydrogen, unveiling the Hydrogen Leadership Roadmap, a comprehensive national blueprint to support domestic, low-carbon industries. Its two aims are to contribute to the UAE’s net-zero ambition and establish the country as a competitive exporter of hydrogen. The country’s Minister of Energy and Infrastructure, Suhail bin Mohammed Al Mazrouei, told the summit that seven projects are currently underway, and the UAE is on-track to capture 25% market share in key export markets, including Japan, South Korea, Germany, and India initially along with additional high-potential markets in Europe and East Asia.

The FAO Food Price Index rose for the third month in a row, with October increasing on the month by 3.9% – its highest level since July 2011. The UN barometer for global food prices, which tracks the international prices of a basket of food commodities, saw marked rises in cereal, wheat, dairy and vegetable oil, of 3.2%, 5.0%, 2.6% and 9.6% respectively; with cheese prices remaining stable, the meat index declined, as did sugar prices dipping 1.8%. It is estimated that the production, distribution and consumption of all this food uses about a third of the world’s total energy, and that feeding the world is responsible for about a third of global greenhouse gas emissions.

Despite theGerman and French antitrust watchdogs, and their counterparts in the other twenty-five EU countries, having lobbied for a bigger role in enforcing the upcoming Digital Markets Act, representatives from EU countries have agreed that the EC will be the sole enforcer of new tech rules. Notwithstanding, there will be a more limited role for the national regulators, who may have more practical expertise in digital cases. An EU documents cites that “the Commission is the sole authority empowered to enforce this regulation.,” but noted that “member states may empower competent authorities enforcing competition rules to conduct investigative measures into possible infringements of obligations for gatekeepers,”

Labour Department data posts the October consumer price index at 6.2% on the year, and 0.9% on the month, driven by higher prices for energy, shelter, food and vehicles. Year on year, prices paid by US consumers rose by the most since 1990, reflecting broad-based increases and pushing up prices, as more often than not the consumer ends up paying for the inflationary increase. With the US returning to almost pre-pandemic normalcy, there is pent up demand for services and consumer goods, with certain sectors facing the double whammy of supply chain bottlenecks and a shortage of qualified workers which have been driving up costs. It seems that maybe the Fed, along with the BoE and many other global central banks, have underestimated the inflation impact on two counts – the percentage is higher than many had forecast and there was a feeling that the rise would be more transient than it has turned out.

After a depressed summer, caused by the spread of the Delta variant and sluggish economic growth, US October employment numbers rose by 531k, with the unemployment rate dipping to 4.6%. With an apparent reluctance from parts of the workforce to return to work, many employers seem to have problems acquiring staff to meet the growing demand and have had to increase remuneration levels to attract and retain staff. Although average private sector wages only grew by US$ 0.11 to US$ 30.96, it does follow six months of strong wage increases; over the past twelve months, average earnings are 4.9% higher but this figure is still short of the 5.4% annual inflation over the same period. Despite the positive news, it must be remembered that the country has more than four million fewer jobs than it did before the pandemic and that the participation rate, which shows what proportion of potential workers are in jobs or looking for one, remained worryingly flat at 61.6%.

Today, 11 November, the US dollar rose to 16-month highs against the euro and other currencies, as the yen sank towards four-year lows of US$ 114.5, after the latest US inflation readings saw the rate climb to a generation high and the growing possibility of a hike in interest rates. With seeming inactivity by the ECB, the euro took a battering, sinking to US$ 1.1459, its lowest level since July 2020. Better than expected economic data from the UK saw the BoE doing little to support sterling which dipped to an eleven-month low at US$ 1.3388. Another factor driving behind the dollar’s surge was the sharp rise in US government bond yields, including the 30-year Treasury passing 1.5%. To some observers, it is inevitable that the Fed will end near zero-rate interest rates and to speed up the pace of tapering its QE program before the end of 2021.

President Joe Biden has welcomed the House of Representatives finally passing his US$ 1 trillion infrastructure spending package, which includes a US$ 550 billion investment in infrastructure, over the next eight years, to upgrade highways, roads and bridges, and to modernise city transit systems and passenger rail networks. The balance will be spent on funding clean drinking water, high speed internet, and a nationwide network of electric vehicle charging points. This largest federal investment in the country’s infrastructure for decades, and seen by many to be a major domestic win for the US president, did not please all legislators, with some complaining that key liberal policies had been dropped in exchange for the bipartisan House victory. Members of the Congressional Progressive Caucus pledged they would not support the infrastructure bill until they had voted on a separate social welfare bill that allocates a massive US$ 1.75 trillion for healthcare, education and climate change initiatives.

China’s annual Singles Day is the world’s biggest shopping festival but this year, it has been a low-profile event, as the tech giants are wary of upsetting the Chinese administration which, over the past twelve months, has been cracking down on platforms such as Alibaba. Normally more money is spent on this extravaganza than the combined totals of Black Friday and Cyber Monday. It seems that the regulators have two problems with the tech giants – an alleged abuse of user data by online giants, and wider concerns that big tech had become too powerful and unregulated. Singles’ Day — so called for its 11.11 date — began more than a decade ago and was a 24-hour event for some time before Alibaba and its rivals began milking its success and then extended the promotion from 01 November to 11 November. Last year, the combined sales of Alibaba and JD.com came in at a mouth-watering US$ 158 billion. In prior years, most platforms had a running total of sales, but this has changed with the likes of Alibaba not releasing figures until after the event closes.

The UK economy seems to be faltering, as latest Q3 figures show only a 1.3% expansion, with one of the main drivers for this disappointing figure being the supply chain problems; this is well down on Q2’s 5.5% which rebounded because of coronavirus restrictions being lifted. During the quarter, the service sector grew 1.6%, with accommodation and food services expanding 30% and the arts and entertainment by 19.6%, but production and construction output fell. Despite the latest figure, and the fact that the economy is still 2.1% smaller than it was in Q4 2019, it is expected that the UK’s economy will have the fastest growth in the G7 this year. Things may not get better in the coming months, as household spending could be slowed, by higher taxes and rising utility prices, and the ongoing supply problem could see shortages continue; this could result in a phenomenon known as stagflation when the economy has slowing growth mixing with rising inflation.

It is reported that the Bank of England and the Treasury are to evaluate the possibility of a UK central bank digital currency. The consultation next year will form part of a “research and exploration” phase and will help the Bank and government develop the plans over the following few years. If the process were to be taken further, the new currency would not replace cash and bank but would be used in tandem – at least for the short-term because there is no doubt that cash is on its way out for good. Some central banks have warned that widespread use of CBDCs could deprive banks of a cheap and stable source of funding from consumer deposits. The success of Bitcoin, and some other cryptocurrencies, has caused great concern among most global central banks and there is a feeling that If You Can’t Beat Them, Join Them!

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