Ready For The Weekend!                                                     09 December 2021

Last month, Dubai registered an 80.4% jump in sales to 7.0k deals, worth US$ 4.89 billion, making it the best November, in terms of total sales, for eight years.; it was also 45% higher than the November 2019 return, occurring before the onset of the Covid-19 pandemic. Property Finder also commented that “the data clearly shows that investors and consumers are confident in Dubai’s future, which is reinforced by proactive government initiatives, attractive real estate projects and the vision of the city.” The split percentage of all property transactions was 54:46 between secondary or ready property, (3.2k properties, valued at US$ 1.86 billion), and off-plan property, (3.8k, worth US$ 3.03 billion). The consultancy also noted that Expo 2020 may have had a positive impact on sales and that “it is interesting to note that November 2021 had the highest number of sales transactions since Expo 2020 was announced in December 2013.” By the end of November, Dubai had recorded 55.7k sales transactions worth US$ 36.89 billion – up 88.4%, compared with the whole of 2020; even without December, this is already the highest yearly sales figure since 2014.

Dubai’s Crown Prince, Sheikh Hamdan bin Mohammed bin Rashid, issued a directive that sees tenants, who are rebuilding or renovating their properties in Al Quoz Creative Zone, being exempted from paying rents for up to two years. This is part of the strategy to transform the development project into a comprehensive creative hub with the aim of attracting global talent. It also runs in tandem with the emirate’s ambition to become an international cultural destination and the global capital of the creative economy by 2025. A dedicated platform, called the Creatives’ Journey, has been introduced to support the business operations of creatives and provide a single window to get licences for their projects within a few minutes. The plan also seeks to provide soft-mobility solutions for the people in the zone and to develop transport infrastructure between the free zone and Al Safa Metro Station. To date, Dubai Culture has awarded 4.5k certificates of accreditation to creatives and artists of different nationalities.

HH Sheikh Hamdan bin Mohammed has advised that the Executive Council, of which he is the Chairman, is seeking to enable greater corporate social responsibility in private sector companies. One such policy plans to align CSR projects and contributions with the priorities set by the government, as well as to promote partnerships between the private, public, and non-profit sectors that will eventually positively impact the community. Dubai’s Crown Prince noted that “strong partnerships with the private sector, which is a strategic partner in our development journey, is vital to accelerate our development plans.”. The new policy introduced social responsibility policy, with the aim of raising the role of companies and private establishments in social and economic development and inspire private companies to contribute to the community.

Under the directives of HH Sheikh Mohammed bin Rashid Al Maktoum, his son, Sheikh Maktoum announced the listing of TECOM on the Dubai Financial Market which is part of a strategy to increase the size of the DFM to US$ 817 million (AED 3 million). TECOM, with ten business communities in Dubai that offer state-of-the-art infrastructure, is a strategic business enabler that creates innovative business communities and thriving work environments. Its business communities include Dubai Internet City, Dubai Media City, Dubai Design District and Dubai Industrial Park.

After two months since its opening, Expo 2020 Dubai has recorded nearly 4.77 million visits, with virtual visits having reached 23.5 million.

This week, the UAE Railway Programme was launched in the presence of the country’s two leaders – HH Sheikh Mohammed bin Rashid Al Maktoum and HH Sheikh Mohamed bin Zayed Al Nahyan. The integrated programme comprises three key projects, viz., freight, (including the Etihad Rail freight services), passenger, (connecting eleven cities with travel between Abu Dhabi and Dubai taking forty minutes at speeds of 200 kph), and integration with a network of light rail facilitating transportation inside the seven emirates. By 2030, the number of passengers is expected to reach more than 36.5 million annually.

DP World and Emergent Cold Latin America, (Latin America’s newest temperature-controlled warehousing and logistics provider), will become partners to develop two temperature-controlled logistics facilities within DP World Caucedo (Dominican Republic), a world class logistics hub, and Duran Logistics Centre (Ecuador). These developments will provide both parties’ customers with a fully integrated supply chain solution and will see them both explore development activities in other DP World locations in Latin America.

Emirates Airline is expecting a busy week at the start of the holiday season and has advised its passengers to arrive early at the airport or opt for early check-in to avoid the peak holiday rush. The carrier estimates that this weekend it will carry 250k passengers and that passenger traffic at DXB’s Terminal 3 is forecast to be around 1.1 million over the next twelve days.

Over the next six months, Emirates Group is planning to hire five hundred IT professionals, covering a myriad of roles including cyber security, technical product management, DevOps, hybrid cloud, modern architecture, software engineering, service management, digital workplace, agile delivery and innovation. In September, the carrier announced that it would be hiring 3k cabin crew and 500 airport services over the ensuing six months; a month later a further 6k staff were to be added prior to the end of Q1 2022. Emirates is hoping to reach 70% of its pre-pandemic capacity by the end of December, having already restored 90% of its network.

Majid Al Futtaim Properties and Abu Dhabi’s biggest developer, Aldar Properties, has teamed up to create an online real estate platform for their businesses, at a time when new legal reforms are being implemented. Such amendments include changes to electronic transactions and trust services that give digital signatures the same weight as a handwritten signature. The agreement will see both parties work together to “enhance innovation, customer experience, digital transformation and sustainable practices in the real estate sector”. Dubai-based MAF owns and operates twenty-nine shopping malls, thirteen hotels and four mixed-use communities, whilst Aldar has developed a number of projects in Abu Dhabi, including on Yas Island, Al Raha and Saadiyat Island.

The latest Global Power City Index 2021, published by the Institute for Urban Strategies at the Mori Memorial Foundation, has seen Dubai move up three places to fourteenth. The city was ranked fifth globally for “cultural interaction”; this category measures leadership, tourist and cultural attractions, communication and visitor amenities. London came top overall and also in the “cultural interaction” category. The survey ranks more than forty major cities on aspects such as the economy, research and development, cultural interaction, livability, environment and accessibility. The Crown Prince, Sheikh Hamdan noted that “Dubai continues to be a global model for a vibrant creative economy.”

According to a white paper released by Dubai Chamber, over the past five years, the UAE has accounted for 74% of GCC investments in ASEAN markets. The study, examining the business and investment environment in the ASEAN region, and assessing prospects for expanding bilateral economic co-operation. It is estimated that the total value of funding from the GCC into the region was over US$ 13.3 billion. The findings of the report were further studied and analysed by public and private sector stakeholders at Expo 2020 Dubai for the inaugural two-day GBF ASEAN which closed today, 09 December 2021.

Khalid Ali Al Bustani, Director-General of the Federal Tax Authority, has again confirmed that the well-publicised 70% discounted tax penalties do not apply to the actual tax but is a reduction in the penalties accrued over time. He also advised that those businesses who intend to avail the 70% discount on tax penalties must clear all their tax dues before that has accrued before June 28 and pay 30% of the penalty amount by the end of this month. VAT tax collection continues to rise on the back of new businesses and many enterprises previously below the taxable threshold, now being in the tax bracket.

BARQ EV, the first licensed drone delivery service provider in the UAE, broke two Guinness World Records, by executing the longest flight of a drone for the delivery service at 13.584 km, and the longest non-stop return flight for a drone at 18.065 km. The smart mobility solutions company, backed by Ahmad Al Mazrui, Abdullah Abu Sheikh and Mazen Al-Jubeir, will be launched in early 2022. They commented that the drone programme, introduced by the Crown Prince, Sheikh Hamdan, “seeks to improve people’s lives by reducing carbon emissions generated by traditional shipping and transportation methods and facilitating the movement of goods and materials. This way, it will contribute to positioning Dubai as one of the smartest cities in the world.” It is also an indicator that the emirate is fast becoming a centre of innovation and provides the ideal hub for start-ups specialising in innovation and technology

Last week, as the UAE celebrated its fiftieth anniversary, the United Nations Conference on Trade and Development released a report detailing the value of the country’s foreign trade since its 1971 inception. It noted that this has amounted to US$ 9.32 trillion and the country’s trade balance has recorded a surplus of nearly US$ 1.3 trillion over that period. Since 1971, the value of UAE’s foreign trade has increased 473 times from just US$ 1.15 billion to US$ 542.02 billion by the end of last year. During the fifty years, exports have increased 380 times, to US$ 319.3 billion, and imports 730 times to US$ 225.7 billion, whilst the cumulative balance of foreign direct investments jumped from US$ 7.8 million in 1971 to US$ 20.0 billion by the end of 2020.

Dubai stock exchanges will change their trading week to Monday-Friday, from 03 January, in line with the government’s new work system; trading hours will be between 10.00 to 15.00. This latest move will most probably benefit the DFM’s operations as it will bring it more in line with international financial markets, a factor that will enhance its competitiveness regionally and globally.

The DFM opened on Sunday, 05 December, 287 points (8.5%) lower the previous fortnight and gained 153 points (5.9%) to close the week, on Thursday 09 December at 3,226. Emaar Properties, US$ 0.11 lower the previous fortnight, closed, up US$ 0.05, at US$ 1.33. Emirates NBD and Damac started the previous week on US$ 3.60 and US$ 0.38 and closed on US$ 3.79 and US$ 0.38. On Thursday, 09 December, 297 million shares changed hands, with a value of US$ 115 million, compared to 365 million shares, with a value of US$ 271 million, on 02 December.

By Thursday, 09 December, Brent, US$ 11.87 (1.8%) lower the previous three weeks, rose  US$ 4.49 (6.3%), to close on US$ 75.29. Gold, US$ 97 (5.2%) lower the previous fortnight shed US$ 12 (0.7%), to close Thursday 09 December on US$ 1,785. 

One of the most expensive cases in legal history concluded this week, with the jury rejecting claims that the late Dave Kleiman was a former business partner of Craig Wright, a computer scientist, who has always asserted that he invented Bitcoin. Also known as Satoshi Nakamoto, he has won a court case allowing him to keep 1.1 million coins, worth over US$ 50 billion. The Kleiman heirs have always maintained that the claimant, a computer security expert who died in 2013, had worked with Mr Wright to create and mine the first Bitcoin in existence in 2008, and that he had stolen it. The Miami jury in the civil lawsuit cleared Mr Wright on nearly all issues brought by the Kleiman family but they will receive US$ 100 million for intellectual property infringement.

TikTok has become the second fastest-ever expanding social media with the one billion user number recently been reached. This has been done in 5.1 years, only surpassed by Facebook Messenger taking just 4.9 years to hit this target. Other apps have taken longer to top one billion users – WeChat, Facebook, Instagram and WhatsApp (7, 7.7, 8.5 and 8.7 years). TikTok, known then as Douyin, started life in China in September 2016.

Following heavy political pressure, Didi Global has decided to remove its shares off the New York Stock Exchange and move them to Hong Kong. The Chinese ride-hailing giant made its US debut in July, after raising US$ 4.4 billion in its IPO, but at almost the same time that Beijing announced a crackdown on technology companies listing overseas, with the internet regulator ordering online stores not to offer Didi’s app, saying it illegally collected users’ personal data. To make matters worse for the Chinese tech company, it has also come under pressure from regulators in the US and Europe, as US regulators unveiled tough new rules for Chinese firms that list in America.

For apparently violating EU Competition rules, Italy’s anti-trust authority kas fined Amazon US$ 1.3 billion accusing the company of exploiting its dominant position against independent sellers on its website. European governments appear to be taking early action against the tech giants if they step out of line. Italy’s AGCM authority has claimed that Amazon has required that third-party sellers use Fulfilment by Amazon, which gives it a double whammy of damaging competitors and strengthening its own position. It also prevents third-party sellers from gaining access to Amazon’s Prime loyalty program, “which makes it easier to sell to the more than seven million most-loyal and highest-spending consumers”.

Five years ago, Lego built its first Asian factory in China and has announced that its second one will be a US$ 1 billion investment in Vietnam to keep up with growing demand for its products in Asia, where it has witnessed double digit growth since 2019. Construction of the toymaker’s first carbon neutral factory, (with solar panels on its roof), will start next year, with production slated to commence in 2024; 4k jobs are expected to be created over the next fifteen years. Lego also notes that building production plants, close to key markets, “provides the flexibility to respond quickly to shifts in local consumer demand, shortens the supply chain, and reduces the environmental impact of shipping long distances.”

Utilising Japanese bullet train technology and European high-speed network expertise, HS2 has signed a US$ 2.6 billion contract with Hitachi and Alstom to build fifty-four of the fastest trains in the UK, creating some 2.5k. jobs. The controversial high-speed network, with links between London, the Midlands, and the North of England, will have trains that can travel at 225 mph, with production starting at Newton Aycliffe, County Durham, and be finished at Alstom’s Derby and Crewe sites. It could take five years before the first train rolls off the production line. Each train will be around 200 mt long, with the option to couple two units together to create a 400 mt long train with up to 1.1k seats.

There are reports that the Chinese property giant Evergrande Group could default on its latest debt repayment, with the markets not impressed as its share value tanked 20% on Monday. There are also contagion concerns of the knock-on impact on other shares, especially in property and banking sectors, which witnessed similar falls on Monday. With total liabilities, both in China and overseas, Evergrande commented that it could not guarantee “to perform its financial obligations”, following a US$ 260 million demand for payment. Even if the company were to soon fail, it will take years for the mess to be cleared. Matters did not improve on Monday, when smaller property developer Sunshine 100 China Holdings defaulted on a US$ 170 million debt payment “owing to liquidity issues arising from the adverse impact of a number of factors including the macroeconomic environment and the real estate industry”.

Today, 09 December, Fitch Ratings downgraded the Evergrande Group and its subsidiaries from C to RD (restricted default), confirming that they were defaulters, as the grace period to make two coupon payments, (US$ 645 million, 13% bonds and US$ 590 million, 13.75% bonds), had expired on Monday. Evergrande, China’s second-largest property company by sales, has more than $300 billion of debt and is considered the world’s most indebted developer. The Shenzhen-based conglomerate owns more than 1.3k projects in 280 or more cities in China, whilst its Hong Kong-listed property services arm has about 2.8k projects in more than 310 Chinese cities The company is also involved in electric vehicles, finance, healthcare and cultural tourism.

The luxury department store group Selfridges, which has twenty-five outlets in the UK, Ireland, Netherlands and Canada, has been sold to the Thai conglomerate, Central Group for US$ 5.3 billion. Founded in 1908, by retail magnate Harry Gordon Selfridge, the iconic brand had a flagship store in London’s Oxford Street that used to boast one hundred stores, including a library and shooting range. Selfridges, owned by Canada’s Weston family since 2003, was put up for sale in June, a few months after the death of Galen Weston. The new Thai owner has over 3.7k global shops, from supermarkets to electronics outlets, and department stores in Europe. Latest figures to February 2020 show that Selfridges had revenues of US$ 2.65 billion but this sales figure will have declined somewhat when the latest figures are released.

Last Saturday, Bitcoin plunged, to as low as US$ 42.3k, along with other cryptocurrencies – an obvious sign of the risk aversion sweeping across financial markets, as spiking inflation is ensuring that banks are finally beginning to tighten monetary policy and reduce liquidity. With Ether, the second largest token, tanking 17.4%, the end result saw the overall crypto sector shedding 20% to a cumulative US$ 2.2 trillion. It is estimated that on Saturday, 04 December, about US$ 2.4 billion of crypto exposure, both long and short, was liquidated. The Omicron variant has spooked the markets, as the danger of another lockdown looms and how the jittery global economies react.

The head of the Dutch central bank, and an ECB policymaker, Klaas Knot, commented that if inflation were to continue to be higher than the bank’s base case scenario next year, there could be increases in interest rates in 2023. However, it does seem that the consensus is that the current elevated inflation rate, which stood at a record high 4.9% in November, is still considered “to be largely a temporary phenomenon;” the ECB’s target is at a much lower 2.0%. At next week’s policy meeting, it is highly likely that the plug will be pulled on its US$ 2.09 trillion emergency stimulus scheme, and as per the bank’s policy any interest rate increase would only come “shortly after” quantitative easing ends. However, the decision to raise rates this month hangs in the balance, given the new variant, with some arguing that more details on its possible impact on the economy are needed before proceeding.

At last month’s BoE meeting, only two of the nine members of the Monetary Policy Committee voted for an immediate UK rate hike and there were strong indicators then that December would be the time to do so. However, the arrival of the Omicron coronavirus variant, which could slow the UK economy, may put any immediate rise, from the current 0.1%, on the back burner. One member of the committee noted that there “could be particular advantages in waiting to see more evidence on its possible effects on public health outcomes and hence on the economy.” However, there has to be risks from delaying an interest rate rise for too long: and the BoE could be guilty of underestimating the inflationary impact over the past year.

On her visit this week to the US, Anne-Marie Trevelyan, warned the US that the UK could step up retaliatory measures if punitive tariffs on UK steel exports were not lifted soon. The UK International Trade Secretary had been in Washington for talks with the Commerce Secretary Gina Raimondo and commented that “I am very keen that we solve this with what is our closest ally in the US through a positive removal”. It was Donald Trump who imposed tariffs of 25% on steel exports (and 10% on aluminium exports) when the UK was part of the EU. Subsequently, the EU had discussions earlier in the year that saw them lifted as from 01 January 2022 – but did not include the UK which had already exited the bloc. If the issue is not resolved quickly, the UK could increase existing retaliatory tariffs on products such as US whisky and cosmetics that could extend to other items such as lobsters, electric motors and orange juice.

The Australian Competition and Consumer Commission has given its approval for Sydney Airport to be taken over by a consortium of infrastructure investors for US$ 16.9 billion. In November, Sydney Airport agreed to be bought out by the Sydney Aviation Alliance (SAA), comprising IFM Investors, (which has stakes in nine other Australian airports, including Melbourne (25%) and Brisbane (20%)), QSuper, AustralianSuper and US-based Global Infrastructure Partners. It still needs the go-ahead from Australia’s Foreign Investment Review Board (FIRB) and the company’s shareholders.

BNPL is becoming something of a scourge for those Australians who max out and cannot repay their debts. If people are struggling, they are supposed to be able to access a hardship program so they can work out a new payment plan. Financial Counselling Australia has surveyed several buy now, pay later companies and reported that the industry’s practice falls well short of expected standards. Afterpay’s hardship program was ranked the best, but it still only scored 5.9 out of 10, whilst at the other end of the scale were the likes of Humm, LatitudePay and Zip posting scores of 4.7, 5.2 and 5.5. Similar surveys for the major banks saw average scores of 7 out of 10. It is patently obvious that consumers need better support by the regulators and are not covered by the National Credit Code because BNPL use service charges, and not interest; NCC covers credit cards, mortgages, personal loans, payday loans and consumer leases, whilst many of BNPL providers are signatories of a voluntary industry code of practice.

A report by the Commonwealth Bank sees their Household Spending Intentions Index rising to its highest level, (up 2.1% to 110.3 points) since December 2019 and a prediction that the population has retained US$ 170.2 billion in excess savings due to Covid-19 and the resulting lockdowns, lost incomes and travel restrictions. The end result is that it is expected that it will be a bumper Christmas, especially for retail, as Australians spend some of that “windfall”, with the national economy recovering strongly. It is estimated that shoppers spent US$ 5.75 billion in Black Friday and Cyber Monday sales, driven by resilient household incomes and high savings rates through the year, due to lockdown conditions, improvements in consumer confidence through November and a lack of opportunity for international – and, in many cases, domestic – travel.

The Australian Bureau of Agricultural and Resource Economics and Sciences has posted that the value and volume of their food and fibre has climbed to historic highs. Because of the price of grain rising, and historically high prices being paid at livestock sales all year, it is forecast that total farm production will top US$ 56 billion, and exports will hit a record US$ 43.8 billion this financial year. The global weather has been a major factor in the increased value of production, as poor seasonal weather in farming countries, like Argentina, Brazil, Canada, Russia, Ukraine and the US conditions, has had a negative impact on their agricultural production. Another positive for Australian ‘cockies’, is that La Niña is expected to set farmers up for another good year in 2022. For the fiscal year ending 30 June 2022, it is expected that farm cash income will hit a record US$ 22.0 billion, off the back of the larger volumes of food and fibre. However, farmers will face higher prices, with fuel, fertiliser and chemicals all heading north and there is no doubt that inflationary food prices may see some social unrest in H1 2022.

It is three years since Australia’s banking royal commission final report was published, referring thirteen cases to the Australian Securities and Investments Commission. Furthermore, thirty-two case studies were examined to see if banks should face prosecution. Even though ASIC confirmed it had thoroughly investigated all forty-five cases, twenty referred cases did not even reach court and were “concluded with no further action”. Now it is reported that the regulator has launched its final case, closing the door on any more court action for banks that ripped billions of dollars from customers. Thursday’s final case encapsulates the decades-long systemic issues exposed by the Hayne inquiry in 2018. Once again, it seems that the Australian banking system has escaped the true wrath of the law and its customers are the ones having to pay for the corrupt dealings of the banking hierarchy.

It appears that the banks – and more specifically senior management – have gotten off very lightly by admitting they broke the law ahead of proceedings. Of the thirteen referrals, six were dealt with in civil cases and only two became criminal cases; three are ongoing with five being completed, with total fines of US$ 56 million. In the thirty-two case studies, fifteen ended with no action taken and of the remainder, there were twelve civil and five criminal cases; total penalties to date total just US$ 22 million. One of the last cases before the courts involves ANZ, which is being sued for misleading, and ripping off, 580k customers since the mid-1990s; the bank has admitted that it breached its financial services and credit licence. ANZ said it would not be defending this case. The company admitted that it had made false or misleading representations to customers, about having systems and processes in place to ensure customers would receive their fee waivers and interest rate discounts. For far too long, it appears that many financial institutions have failed to honour agreements with customers and to ensure proper processes and systems are in place to prevent widespread compliance failures.

Last year, the big four Australian banks made US$ 19.2 billion in profit! A sad indictment of the system is that not one enforcement case has been brought against the management or board of the big financial service companies. There is no doubt that the culture and incentive rewards in place were the main drivers behind an industry driven by greed

Life is not getting any better for Turkish President Recep Tayyip Erdogan with the lira flirting with record lows, having already slumped 45% against the greenback YTD. Adopting a contrarian approach to Economics 101 and pressing ahead with his “economic war of independence”, backed up by low interest rates, he is of the opinion that keeping interest rates low is the panacea to boost Turkey’s economic growth and export potential. This contrasts with the commonly held belief that the President’s model will inevitably result in soaring inflation, higher unemployment, poverty, and a banana republic style currency – and the way to control surging price increases is by raising interest rates. According to the Turkish leader, such rates are “an evil that make the rich richer and the poor poorer”, at a time when the country’s inflation is above 21%; his response is to cut rates again, from 16% to 15%, for the third time this year. The question is whether the people will wait until 2023, for the next election, to oust the ruling Justice and Development Party (AKP), which has been in power since 2002.

Although up to 500k new jobs were expected, November job growth slowed to 210k, the smallest monthly increase seen in 2021, indicating that there is a major problem for employers to attract workers for the millions of vacancies. The US Labor Department figures pointed out that the unemployment rate fell to 4.2%, with the labour force participation rate nudging higher to 61.8%. The data was collected before the Omicron variant emerged in the US and there is the possibility that it could slow the economy if it were to discourage Americans from travelling, shopping and eating out in the coming months. Earlier figures forecast the Q4 economy growing 7.0%, compared to 2.1% in the previous quarter, but this may now have to be cut.

Initial claims for US state unemployment benefits, for the week ending 04 December, declined by 43k to a seasonally adjusted 184k – its lowest level in more than fifty-two years as labour market conditions continued to tighten amid an acute shortage of workers. Claims have declined from a record high of 6.149 million, in early April of 2020, to 1.992 million. There were eleven million unfilled jobs at the end of October, leaving employers reluctant to let workers go. Observers are taking more than a passing interest in the latest Omicron variant and the havoc it could wreak on the economy.

In a move that the federal government feels would “boost productivity and improve work-life balance”, the UAE is cutting its working week to four-and-half days and moving its weekend from Friday-Saturday to Saturday-Sunday. Initially applicable to the public sector, and starting from 01 January 2022, the new working week will be 7.30 am to 3.30 pm Monday to Thursday, and 7.30 am to 12 pm Friday; on that day, prayers at mosques will be held after 1.15pm all year round. The government said it would “ensure smooth financial, trade and economic transactions with countries that follow a Saturday-Sunday weekend, facilitating stronger international business links and opportunities for thousands of UAE-based and multinational companies”. Trials in other countries, such as Iceland, Ireland, Japan, New Zealand, Scotland, Spain and Sweden, have taken place and seem to indicate an improvement in both productivity and employee well-being. One can only congratulate the authorities on their forward thinking and foresight and if there is any place in the world that this strategy is going to work it must be the UAE. Come 2022, the whole of the country will be even more Ready For The Weekend!