What’s Going On? 18 February 2022
For the past week, ending 18 February 2022, Dubai Land Department recorded a total of 2,098 real estate and properties transactions, with a gross value of US$ 1.23 billion. A total of 219 plots were sold for US$ 305 million, with 1,022 apartments and villas selling for US$ 613 million. The top three transfers for apartments and villas were all apartments – one was sold for US$ 136 million in Marsa Dubai, a second sold for US$ 58 million in Al Merkadh, and the third sold for US$ 47 million in Burj Khalifa. The top two land transactions were for a plot of land in Palm Jumeirah, worth US$ 16 million, followed by a plot sold for US$ 11 million in Hadaeq Sheikh Mohammed Bin Rashid. The most popular locations in terms of volume and value were Al Hebiah Fifth, with 90 transactions, totalling US$ 55 million, followed by Jabal Ali First, with 57 sales transactions, worth US$ 38 million, and Al Hebiah Fourth, with 39 sales transactions, worth US$ 90 million. Mortgaged properties for the week totalled US$ 260 million, and 56 properties were granted between first-degree relatives worth US$ 15 million.
Dubai January property prices posted their best ever opening month of the year returns, which grew 33.4%, to an average US$ 429 per sq ft, over the past twelve months. The EFG Hermes report noted that price rises differed between three sectors – luxury, affordable and budget, with increases of 35.1%, 37.2% and 15.7% respectively. The luxury homes segment grew 31.7% to reach 4.1k deals in January, with the affordable and budget sectors dipping slightly to 5.3k and 3.7k deals respectively during the month. The high-end market was also up 10%, month-on-month, but transaction volumes came in 24% lower, “mainly due to an exceptionally high land activity in the comparable month”; off-plan sales surged more than fourfold, as the residential market activity dipped about 13%. The best performing areas in terms of prices were Jumeirah, Mohammed Bin Rashid City and Palm Jumeirah, as positive impactors, such as pent-up demand and improved investor sentiment, along with rising inflation, continued to move prices higher.
The Asteco report was very similar to that of EFG Hermes, but with slightly different numbers, recording a significant surge in Q4 prices for villas, (sales up 40% and rentals by 24%), and apartments, by 20% and 10%. Sales price growth is expected to ease in 2022, in line with increased supply and new project launches. “Villas will continue to be the predominant focus of buyer demand and the limited number of new handovers in quality communities should translate into higher sales prices,” according to the report.
In a survey of Dubai 4 B/R villa rentals, it studied twelve locations. The average annual rental in 2012 was US$ 60k, reaching its peak in 2014 at US$ 74k and then declining every year to 2020 to US$ 42k, before rising to US$ 53k by 31 December 2021. For a 5 B/R villa, the figures were US$ 71k, US$ 86k, US$ 53k and US$ 69k. For a Meadows 4 B/R, the figures were US$ 61k, US$ 75k, US$ 50k and US$ 64k. The report sees rents, across all major asset classes, increasing further for “good quality” properties, although at a lower rate.
Last month another report put the number of new units at 37k, but interestingly, the consultancy estimated that some 17k residential units (15k apartments and 2k villas) were handed over last year but expects that about double that amount – 30k apartments and 3.5k villas – will be handed over in 2022, but that “some of this is expected to be delayed and will eventually spill over into 2023”.
The former bank clerk, Majid Al Futtaim who, in his lifetime, created one of UAE’s biggest private conglomerates, (MAF), with global assets valued at US$ 16 billion, passed away last December. Since then, it appears that there has been speculation relating to the company and its operations. This week, the company clarified the situation by posting that it will continue to operate normally, as a special judicial committee looks into potential inheritance issues among the ten heirs, but also noting that “there is a special judicial committee whose role is to adjudicate potential legal disputes related to Mr Majid’s estate and inheritance issues, not to oversee the company or its business,” and that “as we work through this transition, our businesses are continuing their operations as normal.” However, following Sunday’s report in the FT, there was renewed interest about the future of the company but one observer put any misconceptions to bed by noting that, “unfortunately, the news took on a more [bigger] dimension than the reality because it was published in a foreign newspaper,” and that “so far there are no disputes between the heirs. Appointment of the Judicial Committee [is] due to the presence of inheritance (personal assets) that must be counted, evaluated and distributed to the heirs.” The group also commented that, “with a transparent governance structure and robust processes, we assure all our stakeholders that business at Majid Al Futtaim continues to operate normally and in line with our strategic plans”.
Majid Al Futtaim established his retailing and entertainment giant Majid Al Futtaim Holding (known as MAF) in 1992, and by the time of his death, MAF owned and operated thirteen hotels and twenty-nine malls, including Mall of the Emirates in Dubai and the Mall of Egypt in Cairo. The group also had the exclusive license agreement to operate hypermarkets for French company Carrefour across MENA and Central Asia. In the 2000s, the MAF portfolio expanded, with Vox Cinemas, the UAE’s first multiplex cinema, opening in 2000; it is now found in five of the GCC countries, Egypt and Lebanon. The company currently owns and operates 29 shopping malls, 13 hotels across the ME, 378 Carrefour hypermarkets and supermarkets, operated through franchise agreements, as well as entertainment and leisure assets.
The world’s largest food and beverage sourcing event was opened on Sunday by HH Sheikh Ahmed bin Saeed Al Maktoum. The five-day 27th edition of Gulfood has hosted 4k companies from 120 countries. Dubai was one of the first locations in the world able to safely hold such big events, post pandemic lockdowns, and Gulfood 2022 is no exception, being held under stringent safety and hygiene protocols, with the DWTC having already proved its capability to safely manage world-class events. Some of the more important topics to be discussed at Gulfood include sustainability, the rising role of e-commerce in F&B, disruptive technology and impactful innovation. Networking continues to be an important part of Gulfood as buyers, importers and distributors meet to extend their business opportunities at the world’s largest annual F&B sourcing meeting. Two new features this year were the introduction of Gulfood Zero Waste – a new movement to create a sustainable event and inspire people in the food business, to take action – and Gulfood YouthX, a brand-new platform set to empower young Emiratis and to enhance the food and beverage industry’s future.
A new analysis from Dubai Chamber of Commerce shows that UAE’s food and beverage trade topped US$ 25 billion in the first nine months of 2021, driven by growing demand and expanded efforts to enhance food security and diversify food. Of that total, imports; accounted for US$ 12.8 billion, exports – US$ 4.1 billion – and re-exports – US$ 8.3 billion. It is estimated that in the decade to 2020, the CAGR for imports, exports and re-exports were 0.6%, 7.5% and 6.0% respectively. The top six ‘F&B’ trading partners were India, US, Brazil, Australia, Canada and Saudi Arabia, accounting for 12%, 7%, 6%, 5%, 5% and 5% of total trade. The leading six ‘F&B’ imports were fruits & nuts (13%), meat (11%), dairy products (10%), oilseeds (7%), cereals (7%) and other edible food products (6%). Ten markets accounted for about 66% of the UAE’s total exports of food and beverages, with the leading four being Saudi Arabia, with a share of 17%, followed by Oman (9%), Kuwait (8%) and China (5%).
With the UAE and India signing a Comprehensive Economic Partnership Agreement, it is expected that bilateral non-oil trade will jump 66.7% over the next five years to top US$ 100 billion. HE Abdullah bin Touq, UAE Minister of Economy, estimates that the deal will add US$ 8.9 billion, or 1.7%, to the UAE’s GDP and boost exports by 1.5%, or US$ 7.6 billion, by 2030. The 881-page agreement lifts 80% of tariffs on UAE and Indian goods, while all tariffs will be removed within ten years. Currently, India accounts for 9% of the country’s total foreign trade, and 13% of non-oil exports, with bilateral trade having grown by more than 70%, to US$ 21 billion, in H1 2021. UAE’s aluminium, copper and petrochemicals industries will be major beneficiaries from the lifting of tariffs.
In 2021, DIFC reported its highest ever annual revenue – up 15.9% to US$ 244 million on the year, and 7.0% higher, compared to its 2019 pre-pandemic figure. Operating profit, at US$ 156 million, was 25.4% higher on the year, and up 12.4% on the 2019 return. For the first time, total assets topped the US$ 4.0 billion mark, reflecting the ever-growing financial strength of DIFC, and its position as a significant player in the global financial industry. There was a 24.8% rise in the number of active registered firms to 3.6k, including 1.1k financial and innovation related entities. During the year, DIFC saw company registrations 36.0% higher, at 1k, which is more than triple the average number over the past ten years, as employment grew by 11.0% to 29.7k. Amongst its 3,644 entities, DIFC is home to seventeen of the world’s top twenty banks, twenty-five of the world’s top thirty global systemically important banks, five of the top ten insurance companies, five of the top ten asset managers and many leading global law and consulting firms. During the year, an additional 350k sq. ft. of commercial space was leased across DIFC, up 73.4% on the year. The DIFC now boasts some of the emirate’s best eateries and continues its quest to become not only Dubai’s leading business hub but also its premier vibrant leisure community; last year, it added a further eighty retail and dining outlets, bringing its portfolio total to 367. Despite the pandemic, it also managed to meet its 2024 growth strategy three years ahead of schedule.
Along with 220 new factories, opening in the UAE last year, industrial exports posted a ‘historic rise’ to US$ 32.6 billion last year. According to the UN’s annual Competitive Industrial Performance Index, the UAE moved five places higher to be ranked 30th in the world – and the most competitive in the Arab world. Led by the Ministry for Industry and Advanced Technology, its National Strategy has achieved “several outstanding results within one year of its establishment”, by supporting “the growth of the UAE’s industrial sector by contributing to its capabilities, competitiveness and attractiveness”.
Its ‘Operation 300bn’ has a target of boosting the industrial sector’s contribution, to the national GDP, by 226%, to US$ 81.74 billion (AED 300 billion), over the next decade, as well as supporting 13.5k SMEs by 2031. The Ministry also launched a US$ 2.72 billion financing initiative for priority sectors, 50% of which is to help deploy advanced technology in the industrial sector.
It is estimated that the country’s ICV (In-Country Value) programme has already circulated some US$ 11.28 billion back into the local market and that, last year, 45 public entities and 13 major national institutions and companies joined the programme. The programme also saw 1k high-quality job opportunities for nationals, being created, as well as various training programmes to upskill Emiratis. The Fourth Industrial Revolution Programme (UAE Industry 4.0), an initiative to support manufacturers in the adoption of 4IR technologies, was also launched in 2021, along with the Emirates Research and Development Council being established to further support the industrial sector’s growth.
As part of its US$ 7.5 billion programme. DIB listed a five-year US$ 750 million Sukuk on Nasdaq Dubai this week, priced at an annual profit rate of 2.74% per annum – 95 bp over the five-year US Treasury; this issuance, 2.5 times oversubscribed, represents the lowest-ever credit spread on any of DIB’s previous fixed-rate senior Sukuk issuances. Following this listing, Dubai capital markets have a Sukuk listings’ total value of US$ 79.19 billion, ensuring its position as one of the leading such financial centres on the global stage.
It is reported that Dubai’s Trukker, now headquartered in Saudi Arabia, has raised US$ 96 million, via a Series B equity and a debt funding round, with a range of regional and global backing. The money raised will be spent on further expansion in the ME and Central Asia for adding new products and features to enhance the start up as a leading regional transport and logistics player. The digital freight network also noted that, as part of the financing round, the company also raised US$ 50 million in venture debt from Mars Growth and San Francisco-based Partners for Growth, backed by the Silicon Valley Bank. The company started in 2018 also managed to raise US$ 23 million in its Series A funding round a year later. As an online marketplace, that connects transporters with consumers and businesses to provide logistics services, it operates with a network of more than 40k trucks and 700+ enterprise customers across eight countries.
Dubai-based Micropolis has raised US$ 4 million in a new investment round, led by San Francisco-based venture capital firm Mindrock Capital, with the funding raised advancing its core technology and expanding its product range; it will also enhance its portfolio of projects designed to develop autonomous vehicles. Micropolis specialises in designing, developing and manufacturing autonomous utility robots. The robotics and autonomous technology start-up aims to be a major contributor to the UAE government’s technology-driven initiatives, specifically AI and robotics. Last November, the UAE cabinet approved a temporary licence to test self-driving vehicles on the country’s roads and has a 2030 target to make 25% of the country’s transport autonomous.
Soon to be launched Zand, the country’s first digital bank, for both retail and corporate clients, has unveiled new international and local shareholders including India’s Aditya Birla Group (Solfrid Investments), global investment manager Franklin Templeton, UAE’s Al Hail Holding, Dubai-based Al Sayyah and Sons Investments, Abu Dhabi holding company Global Development Group and Yussuf Ali, chairman of Lulu Group. Chairman Mohamed Alabbar, and chief executive, along with co-founder Olivier Crespin, are also investors. With the buoyancy of the local FinTech sector, and a young digitally aware population, Dubai seems a natural base for digital-only financial institutions. Zand is currently awaiting final regulatory approval from the UAE Central Bank and regulator and will be a “digital economic accelerator”, serving as a platform for wider digital services that focus on businesses and people.
It is reported that Dubai’s Dragon Oil, a subsidiary of state-owned Emirates National Oil Company, has made its first oil discovery in Egypt’s Gulf of Suez, that could contain about 100 million barrels in reserves. In 2019, it committed to a five-year US$ 1 billion investment in upstream assets in Egypt, after acquiring BP’s stake in the Gulf of Suez. The upstream oil and gas exploration, development and production company, with concessions in Turkmenistan, Algeria, Egypt, Afghanistan, Tunisia and the Philippines, expects production rates will be in the region of 70k bpd this year, compared to 60k in 2021.
With net fee and commission income 21% higher, at US$ 72 million, Shuaa Capital posted an annual record 2021 net profit, before one-off impairments, of US$ 62 million, while net profit after impairments fell 69.0% from US$ 34 million in 2020 to US$ 11 million; EBITDA declined from US$ 413 million, in financial year 2020, to US$ 63 million in 2021, and stood at US$ 415 million adjusted for net one-off items The one-off charges included a net US$ 51 million mainly relating to valuation impairments following the decision to accelerate the restructuring of a legacy, illiquid investment portfolio; on a like-for-like basis, its net profit would have been US$ 62 million. During the year, the investment bank shored up its real estate investment and client coverage, that saw core headcount numbers 33% higher on the year.
Amanat Holdings quintupled 2021 total income to US$ 100 million and posted a massive twenty-eight fold jump in profit to US$ 77 million. On the back of this major improvement, the Board has recommended a dividend of US$ 41 million. It also made a US$ 55 million profit, and cash proceeds of US$ 213 million on the divestment of minority stakes in Taaleem Holdings and Saudi Arabia’s International Medical Center. It also posted a non-cash impairment charge of US$ 5 million against goodwill due to the Covid-driven delayed ramp-up of the Royal Hospital for Women and Children. Amanat has two profit-making units – health and education. The former – comprising its wholly owned Middlesex University in Dubai, Abu Dhabi University Holding Company and the real estate assets of NLCS Dubai – posted a 4.0% hike in income to US$ 7 million, driven by strong enrolments and increased market share. Meanwhile, healthcare turned a US$ 13 million 2020 deficit to an US$ 11 million profit last year. The Dubai-listed company recently acquired Cambridge Medical and Rehabilitation Center so that it ended 2021 with a strong portfolio of assets – an impressive base for its 2022 value creation strategy.
Driven by a higher revenue stream, the National Central Cooling Company posted a 12% rise in 2021 turnover to US$ 531 million, resulting in a US$ 159 million total profit attributable to equity holders. Tabreed’s board recommended a US$ 0.033 dividend. During the year, Tabreed formed a partnership with the World’s Bank IFC to boost operations in India – now Tabreed India will be transferred to a new, Singapore incorporated company, 75% owned by Tabreed and 25% by IFC. Over the next five years, it will invest US$ 400 million with the target being a 100k refrigeration tonnes figure across India. The company is looking for a 9%+ growth in 2022, driven by a combination of greenfield projects, mergers and acquisitions and international expansion; it also sees the recovering UAE property market being a source of increased funds, “especially in our concessions areas, be it in Saadiyat, Downtown Dubai, Al Maryah Island or Yas Island”.
Etisalat reported a 3.0% increase in revenue to US$ 14.52 billion, driven by growth in international operations, as well as steady improvement in domestic operations, with net profit attributable to equity holders, nudging 3.3% higher to US$ 2.62 billion; earnings per share rose 63.4% to US$ 0.29. Total assets of the company fell 4.0% to US$ 34.93 billion, with operating profit declining 1.7% to US$ 3.49 billion. Last month, the company bought elGrocer, an online, country-wide marketplace for groceries, in a deal that includes US$ 8.17 billion for the 100% share acquisition. This complements the telecom’s existing marketplace services under the Smiles brand, with 2.7 million members, that includes online food delivery, lifestyle offers and the ability to earn and redeem points at more than 7k outlets across the UAE. Last October, it boosted its AI portfolio, by merging its data centre services with that of Abu Dhabi’s G42, creating the UAE’s largest data centre provider. In August, it purchased a further 4.6% in Maroc Telecom group, bringing its effective ownership to 53.0%.
Emaar Properties announced a trebling of property sales, on the year, to US$ 9.19 billion – its highest ever level since its 1997 incorporation. Over the year, both revenue and net profit moved significantly higher – by 57.0% to US$ 7.70 billion and 80.0% to US$ 1.04 billion. Dubai’s leading developer posted a sales backlog of US$ 12.54 billion, indicating that it has strong future revenue and profit streams. Since building its first housing units in 2002, it has 35.2k units under construction of which 24.5k are in the UAE and the balance in global markets.
Tuesday was the last day for Damac’s share trading on the DFM, after a notice period to take the company fully private ended a day earlier, following Maple Invest, owned by the developer’s founder Hussain Sajwani, having submitted a mandatory acquisition notice to the bourse last December. As from 20 February, all shares, not yet held by Maple, will be re-registered in the name of Maple in Damac’s share register. Meanwhile, the company is still trading in the red, announcing that it had narrowed its 2021 annual loss from US$ 176 million in 2020 to US$ 145 million, with revenue 36.2% lower at US$ 817 million. Booked sales more than trebled from US$ 627 million to US$ 2.12 billion, as Damac launched two development projects – Cavalli Tower, a 70-storey skyscraper overlooking Palm Jumeirah, and a new master community development, Damac Lagoons.
Yesterday, the UAE Cabinet approved a decision to let co-operative associations, which are primarily supermarkets and retail businesses, trade their shares on the local financial markets. This will allow such entities raise funds for expansion which in turn will benefit the national economy. This is another step by the government to double the size of the DFM to US$ 816.7 billion, (AED 3 trillion) and follows last year’s announcement that ten state-owned companies will be listed on the local bourse; maybe any of DEWA, Empower, Tecom or Salik could be first off the block? It is also reported that two funds, totalling US$ 817 million, will be launched to boost trading on the stock markets and encourage SMEs to list on its financial markets. Furthermore, to increase activities of market makers on DFM, last month, Dubai launched xCube to help the bourse attract more capital.
The DFM opened on Monday, 14 February, 86 points (2.7%) higher on the previous week, gained 69 points (2.1%) to close the week, on Friday 18 February, at 3,327. Emaar Properties, US$ 0.05 lower the previous week, gained US$ 0.15 to close on US$ 1.39. Emirates NBD, DIB and DFM started the previous week on US$ 3.69, US$ 1.55 and US$ 0.65 and closed on US$ 3.76, US$ 1.61 and US$ 0.65. On 18 February, trading was at 91 million shares, with a value of US$ 57 million, compared to 159 million shares, with a value of US$ 66 million, on 11 February 2022.
By Friday 18 February 2022, Brent, US$ 19.41 (25.7%) higher the previous eight weeks, shed US$ 1.22 (1.3%), to close on US$ 93.77. Gold, US$ 71 (4.0%) higher the previous fortnight, gained a further US$ 40 (2.1%), to close Friday 18 February on US$ 1,901.
With some UK expats complaining that Dubai petrol prices had risen to US$ 0.77 per litre this month, they should note that prices back home hit a record high of US$ 2.05 this week. It is inevitable that with Brent, currently at an eight-year high, and climbing quickly to the US$ 100 a barrel level, retailers will not be slow in passing on price hikes, sending UK prices even higher. Prices in energy-rich Australia were much lower. CommSec’s figures show that prices there were also skyrocketing to record highs, with Brisbane prices at a high of US$ 1.36 per litre, although the highest pump price noted was US$ 1.43 per litre in Sydney for standard unleaded.
When the cargo ship Felicity Ace caught fire in the Atlantic Ocean on Wednesday, it resulted in almost 4k luxury cars, including 1.1k Porsches and 189 Bentleys, as well as VWs, Audis and Lamborghinis, being abandoned. It is reported that the owner of the vessel is in contact with the logistic agent in order to draw up a plan for the towing of the ship back to Europe. The ship was sailing to a Volkswagen factory in Davisville, Rhode Island from Emden in Germany, before it caught ablaze off the coast of Portugal’s Azores islands. The insurance claim will be large if all 4k vehicles are write offs; assuming each was worth US$ 100k, the claim for loss of vehicles will be at least US$ 400 million. Faring better than its cargo, all 23 crew were rescued unharmed.
Some consumers are accusing Qantas of price gouging especially in relation to its credit redemption scheme, which was amended as from 01 October 2021, describing it in terms such as “deceptive” and “dishonest”. There are records showing that the airline has jacked up prices for the same flight when a consumer has used a flight credit or voucher; there were price gaps ranging from 50% to 300%, depending on the credit value, compared to when people made fresh bookings, with the airline restricting all the cheaper options for seats and only making available tickets that were equal to or more than the credit amount available. A global problem faced by many, not only by Qantas customers, is that when information or a simple answer are required, there is usually the automated reply – “our operators are busy at the moment, please. . . . .” The changes made last year meant that the flight credit could only be used on an equivalent or more expensive seat; before that, there were fewer limitations and the credit could be used for multiple bookings. The airline has advised that it has started to wind back some of the rules since last September and is now offering “more flexibility with booking than pre-COVID, but we still have some rules in place.” Maybe it is time for Qantas, and other airlines, to start treating a travel credit just like cash – no extra fees, restrictions or limits – and not eke out more revenue from many unsuspecting customers.
Troubled Crown Resorts – savaged by a recent Royal commission – has agreed to a US$ 6.36 billion takeover by private equity firm Blackstone, valuing its shares at US$ 9.36 – some 11% higher than the price offered in its initial approach in 2021. Noting that it was a “compelling offer”, chief executive Steve McCann also commented that it highlighted “the strength of the Crown brand and confidence in our future, as we emerge from some challenging times”. The agreement has still to be ratified by the Foreign Investment Review Board and by the gaming regulatory authorities in the states where the casino operates in Australia. It is reported that James Murdoch, via Consolidated Press Holdings, holds about 37% of Crown.
Whilst posting a record Q4 profit of US$ 55 million, Airbnb noted that bookings over the period were on par with pre-pandemic levels, and that there were fewer cancellations during the wave of Omicron infections than during previous surges. Q4 revenue rose 75%, year-on-year, to US$ 1.5 billion, driven in part by higher rates, which jumped 20% compared to last year. Airbnb said it expected revenue of up to US$ 1.48 billion in Q1 2022 which is higher than analysts had forecast. Reservations for this summer at the end of January were up 25% compared to 2019. The online accommodation booking platform Airbnb estimated that US urban bookings have fully rebounded but indicated that during the pandemic, non-urban areas had proven more popular. Of the total nights registered, bookings in urban areas accounted for 49% of the total, but the lodging website noted that it was seeing signs of improvement in travel to top cities which have yet to recover to 2019 levels. An interesting fact was that 25% of nights booked in Q4 were for four weeks or longer, perhaps indicating the continuation of remote working and its importance to platforms such as Airbnb.
With a landmark ruling by the New South Wales Industrial Relations Commission confirming that it is possible for all workers to have access to enforceable rights and protections, regardless of employment status, it makes the state the first place where Amazon must pay wages to contractors that are set by law. The ruling seems to assert that it is possible for all workers to have access to enforceable rights and protections, regardless of their employment status. The Transport Workers’ Union noted that, “for too long the likes of Amazon have been able to exploit independent contractor loopholes to sidestep rights and rip workers off fair rates of pay.” Since Flex launched in Australia in 2020, drivers, who use their own vehicles to deliver by deadline packages picked up from Amazon distribution centres, have received varying amounts set by the company as they are not technically employees. This is now about to change in a major blow to the behemoth.
Last year, Amazon threated Visa that it would stop using its credit cards in the UK because of high fees but now both partners have reached an amicable agreement; Amazon customers in Australia and Singapore were also subject to Visa surcharges, which were removed yesterday, 17 February. The tech giant confirmed that, “we’ve recently reached a global agreement with Visa that allows all customers to continue using their Visa credit cards in our stores.” Following Brexit, an EU cap on fees charged by card issuers was no longer in place. Last October, Visa began to charge 1.5%, (up from 0.3%) of the value of a transaction for credit card payments made online between the UK and the EU.
Ericsson’s chief executive, Borje Ekholm, has said he could not rule out ISIS payments, made to gain access to transport routes in Iraq, following an internal investigation which found “serious breaches of compliance rules”. The probe had identified “unusual expenses dating back to 2018”, but the final beneficiary remains unknown. An internal investigation carried out by the Swedish firm, one of the world’s biggest makers of mobile network equipment, found “serious breaches of compliance rules”. Whilst insisting that the company did not tolerate “financial terrorism”, the company noted that it will continue to “invest significantly” into an investigation regarding compliance concerns in its Iraq-based operations. This is not the first such incident involving Ericsson – in 2019, it agreed to pay US$ 1 billion to resolve allegations of bribery, with the firm having “admitted to a years-long campaign of corruption in five countries to solidify its grip on telecommunications business”; they were Kuwait, Djibouti, China, Vietnam and Indonesia.
Although she ended her tenure as head of India’s largest bourse, the National Stock Exchange, in 2016, citing “personal reasons”, Chitra Ramkrishna, is back in the news. It is reported that the former chief executive made crucial decisions by consulting and sending confidential information to a yogi, sharing business plans, board meeting agendas and financial projections with the unnamed spiritual guru. The Securities and Exchange Board of India claimed that their evidence “clearly showed” that the yogi was running the NSE, and Ms Ramkrishna was “merely a puppet in his hands” until the end of her time in the role. The regulator added that “the sharing of financial and business plans of NSE… is a glaring, if not unimaginable, act that could shake the very foundations of the stock exchange”. She has been banned for three years, from working with any bourse or any firm registered with the regulator as an intermediary, and fined almost US$ 400k.
Green banking group, ShareAction, claims that big banks, including HSBC, Barclays, and Deutsche Bank, already signed up for net zero pledges, as part of the Net Zero Banking Alliance, are still continuing to pump in billions of dollars into new oil and gas production; last year, these three accounted for 55.9% of the US$ 33 billion that the twenty-four big banks had loaned. The campaign group alleges that the three listed banks above have funded, US$ 8.7 billion, US$ 4.6 billion and US$ 5.7 billion, into new oil and gas projects last year. According to a study by Profundo, Exxon Mobil, Shell, BP, and Saudi Aramco are among the energy giants receiving bank finance. However, it reckons that 2021 funding was well down, compared to a year earlier, because of banks focussing on providing pandemic-related loans to keep fossil fuel firms afloat during the pandemic. ShareAction urged big investors to demand that banks restrict finance for oil and gas expansion, indicating that “banks say that they want to help their clients to transition away from fossil fuels, but there is little evidence for this claim.”
US prosecutors have alleged that a former Goldman Sachs banker, Roger Ng – in cahoots with his former boss Timothy Leissner and Chinese-Malaysian financier Jho Low – embezzled millions of dollars of funds from 1MDB, Malaysia’s scandal-hit sovereign wealth fund; Goldman’s ex-head of investment banking in Malaysia is also accused of conspiring to launder money and violate anti-bribery law. Prosecutors allege that he used some of the stolen money to bribe Malaysian officials to get more business for Goldman Sachs and that he received US$ 35 million from Mr Leissner for his role in the alleged scheme. Goldman Sachs helped to raise US$ 6.5 billion for 1MDB, through bond sales to investors, between 2009 – 2014. Investigations have showed that the proceeds from the bonds had subsequently been largely stolen. After years of investigations in several countries, the Wall Street investment bank reached settlements of US$ 3.9 billion, with the Malaysian government for its role in the multi-billion-dollar corruption scheme, and a further US$ 3.0 billion with authorities in four countries – US, UK, Singapore and Hong Kong – to end an investigation into work it performed for 1MDB.
Last week, Unilever, the firm behind brands such as Marmite, Ben & Jerry’s, Hellemann’s mayonnaise and Dove Soap, posted that it would put up its prices again this year as its overheads continued to rise, noting that it was facing US$ 4.0 billion of extra costs in 2022 alone. This week, it was the turn of two other major conglomerates – Nestle and Reckitt Benckiser – posting that price increases were inevitable. The maker of KitKat, Cheerios, Smarties and Nescafe said price increases were down to growing cost of producing its goods and it had already lifted prices by 3.1% in Q4 to offset rising operating costs. It also commented that “it is a safe assumption that our input cost increases for 2022 will be higher than 2021, that is something that we have to reflect in our pricing.” Nestle posted a 3.3% rise in 2021 revenue to US$ 94.7 billion, with net profit 38.2% higher at US$ 18.3 billion.
Meanwhile, Reckitt Benckiser, the consumer goods company behind Dettol, Durex, Veet, Air Wick, Finish and Vanish also said prices would rise, but added it hoped to absorb most of the increases. Its costs jumped 11% last year but that would not mean their prices rising by that amount, as the company had ways to “mitigate and manage pricing”. Whilst the firm’s costs had increased “across the board”, ranging from crude oil and plastic, to shipping and wages, “we care about the competitiveness of our brands,” and that the company was “absorbing a significant part” of higher operating costs through “efficiency” and “better buying”.
Blaming higher ingredient and energy costs, Heineken, which also sells Strongbow cider, and Amstel, is set to increase the price of its beers, driven by rising inflation levels. The world’s second largest brewer expects putting up prices could lead to “softer beer consumption”, as drinkers reined in their spending due to soaring living costs. Heineken said its input costs were now set to rise by a mid-teens percentage, due to the doubling in the price of barley over the year, along with aluminium surging around 50%, as transport and energy costs have also moved higher. However, the good news for the brewer was that 2021 net revenues were up 11.3% to US$ 24.9 billion and profits 80% higher.
The latest report from the UN Conference on Trade and Development reported global trade increasing an annual 2021 25% to a record US$ 28.5 trillion, after being battered by the Covid-19 pandemic; the figure was also 13% up on the 2019 pre-pandemic returns. During Q4, trade in goods reached a new quarterly record of about US$ 5.8 trillion, with trade in services touching US$ 1.6 trillion, slightly above pre-pandemic levels. The main reason for the impressive return was the result of an increase in “commodity prices, subsiding pandemic restrictions and a strong recovery in demand due to economic stimulus packages”. High fuel prices are also behind the strong increase in the value of trade of the energy sector. There are several warning flags that could upset global trade in 2022, including slower than expected economic growth, continued supply chain disruptions, rising concerns about debt sustainability, transition towards a greener global economy, trade agreements and trade regionalisation. In the past months, the Covid-19 crisis has exacerbated supply chain bottlenecks and highlighted significant challenges in the logistics sector, with many cargo customers struggling to find shipping containers and overcome labour disruptions.
There is life after being a high-profile politician and yet another, a la Tony Blair, and David Cameron, is lining up at the trough. This week saw the promotion of the former UK deputy prime minister, Sir Nicholas William Peter Clegg, being promoted by Meta Platforms chief executive, Mark Zuckerberg, from policy chief to a larger role in all policy matters. After losing his Sheffield Hallam seat in the 2017 election, he joined Facebook in 2018 to run its global policy organisation. The newly appointed President, Global Affairs “will now lead our company on all our policy matters, including how we interact with governments as they consider adopting new policies and regulations, as well as how we make the case publicly for our products and our work.” According to the Times, he was earning US$ 2.9 million per year as a salary with the tech giant before his latest promotion – a far cry from the reported US$ 183k as UK’s deputy PM.
Having dipped 2.5% a month earlier, January US retail sales surged a seasonally adjusted 3.8%, perhaps with a little help from rising inflation, and nearly double what most economists had expected. Consumer prices soared 7.5%, compared with January 2021, the steepest year-over-year increase since February 1982. US Commerce Department figures also showed that increases were across the board and that online sales came in 14.5% higher. However, possibly because of the presence of the Omicron variant, restaurant sales dipped 0.9% and petrol sales by 1.3%. It does appear that US households are purchasing larger volumes of goods and services, not just paying higher prices, and that there are no signs of consumer spending reducing in the short-term.
HM Revenue and Customs has become the first UK law enforcement to seize Non-Fungible Tokens, forming part of its probe into a VAT fraud. (NFTs are assets that can be traded in the digital universe, but have no tangible form of their own, and that have a unique digital signature of their own that can be bought and sold. A record of who owns what is kept on a shared ledger known as the blockchain). The UK tax authority has seized three NFTs as part of a probe into a suspected a US$ 2 million VAT fraud, carried out by three individuals, involving 250 alleged fake companies. “Sophisticated methods” were used by the three defendants to try and hide their identities, including false and stolen identities, false addresses, pre-paid unregistered mobile phones, Virtual Private Networks (VPNs) and false invoices.
Latest Q4 official data serves to confirm that UK wage growth continued to lag behind the rising cost of living, with real wages, taking into account rising inflation throughout 2021, declining 0.8%. Employees’ regular pay, excluding bonuses, grew by 3.7%, compared to Q4 2020, this was offset by UK’s 2021 inflation figure of 5.4%. As the unemployment rate fell to 4.1%, allied with job vacancies hitting a fresh record high of 1.3 million, there is every chance that this will lead to faster wage growth this year. Latest figures show that median monthly wages were 6.3% higher on the year and 10.3% higher than before the pandemic in February 2020 – an indicator that wages are rising faster and higher than before. It was also found that in certain industries, such as science, finance/insurance, information/communication, and hotels, January payrolled wage rises outpaced inflation, as employers had to pay more because of a shortage of workers. In some cases, there are examples of businesses that are struggling to hire, and pay is failing to keep up with inflation, whilst material costs continue to head north – a double whammy that is presenting many businesses no other option but to increase prices. What’s Going On?