I Can’t Explain!                                                                               14 July 2023

The 3,626 real estate and properties transactions totalled US$ 3.73 billion, during the week, ending 14 July 2023. The sum of transactions was 618 plots, sold for US$ 1.69 billion, and 2,410 apartments and villas, selling for US$ 1.53 billion. The top three transactions were all for plots of land in Al Goze Second, sold for US$ 19 million, US$ 18 million and US$ 18 million. Al Goze Second recorded the most transactions, with 271 sales, worth US$ 1.21 billion, followed by 142 sales in Al Hebiah Fifth for US$ 105 million, and forty-five sales in Madinat Hind 4, valued at US$ 16 million. The top three transfers for apartments and villas were all for apartments – the first in Palm Jumeirah, valued at US$ 32 million, another in Madinat Dubai Al Melaheyah for US$ 20 million, and a third in Palm Jumeirah for US$ 19 million. The mortgaged properties for the week reached US$ 417 million, whilst ninety-six properties were granted between first-degree relatives worth US$ 116 million.

Latest figures from CBRE indicate that, in June, average property prices rose at the strongest pace since late 2014 – at 16.9% – compared to 15.9% a month earlier. Over that period, average apartment prices grew 17.2%, equating to US$ 353 per sq ft, but still 13.1% lower than record 2014 levels. Downtown Dubai registered the highest sales rate per sq ft in the apartment segment of the market at US$ 665.  Meanwhile, villa growth prices rose 15.1%, as average prices came in at US$ 416 per sq ft., with prices now 5.5% higher than 2014 levels. Palm Jumeirah registered the highest sales rate per sq ft in the villa segment of the market, reaching US$ 1,320. Last month, the volume of residential transactions totalled 9,876 – an 18.8% increase on June 2022, with off-plan transactions growing by 44.9%, as secondary market transactions dipped 0.5%. In H1, a total of 57,737 residential transactions were recorded – the highest H1 figure ever recorded.

A Betterhomes’ survey reckoned that Indians, British, (who were in the top position in Q1), and Russians were the top three investors in Dubai’s real estate market in Q2. The other seven countries that made the top ten were nationals from Egypt, UAE, Turkey, Pakistan, Italy, Lebanon and France. It also confirmed what many already knew indicating “Dubai’s real estate sector continues to see strong international demand from across the globe, as people seek a safe haven, tax efficiency and positive investment returns.”

Jannat, the final residential district of Deyaar’s flagship community project Midtown, was launched this week, with completion slated within three years. With a built-up area of 521.4k sq ft and located at the heart of Midtown in Dubai Production City, Jannat encompasses two towers, seamlessly connected by a bridge. The project sits at the head of Midtown’s landscaped piazza stretching a kilometre in length, which hosts idyllic community parks, open lawns for family/community gatherings, children’s play areas, and quaint nooks ideal for relaxing. The podium-like multi-utility retail boulevard is another integrated zone featuring fashion boutiques, bookshops, convenience stores, pharmacies, supermarkets, restaurants, and cafes – all at close quarters. The integrated Midtown community comprises six districts spanning twenty-four buildings.

A new luxurious development – The Project – is being constructed alongside Dubai Water Canal. PMR Property, a prestigious Dubai-based real estate developer, is collaborating with Foster + Partners, the renowned British design firm, to construct two buildings, each featuring six exclusive mansions. All twelve residences will span two or three entire floors, boasting expansive double-height living areas, ranging from an impressive 9k to 16k sq ft. The amenities will include private swimming pools, elevators, gyms, cinemas, expansive garden terraces, and floor-to-ceiling windows, offering 180-degree views of the Dubai Water Canal and the Burj Khalifa. The developer is planning to make this project a global benchmark for refined and exclusive luxury living.

It is reported that the Al Habtoor Group is in the market to acquire more commercial property, in Europe and locally, over the next five years, with a focus on Hungary, Slovakia, the Czech Republic and Romania, as it aims to grow its portfolio. The company, which currently owns an office complex and two hotels in the Hungarian capital, Budapest, as well as hotels in Austria, the UK, Lebanon and the US, expects to record revenue growth up to 20% higher in 2023. Vice chairman and chief executive, Mohammed Al Habtoor, did not disclose how much the company plans to spend in buying property but he said they were “looking for the right thing which has a good yield”; noting that times are  “good now … there is an opportunity”, he indicated that the company aims to fund the new deals through its own resources, and has no plans to borrow from banks or raise cash through bonds or Sukuk. The company intends to expand in the UAE and plans to unveil a new real estate project in Dubai by the end of the year following the launch of a US$ 1 billion residential tower in Al Habtoor City, in May. The company aims to double or triple its portfolio in the next five years; in Dubai, the hospitality and motoring divisions contribute 65% of the Group’s revenue, followed by real estate, education and insurance.

In line with Dubai’s Higher Committee for Development and Citizens Affairs comprehensive citizen housing plans, Dubai Municipality has allocated 3.2k land plots to Emirati citizens in the emirate. This release supports the Dubai 2040 Urban Master Plan, which aims to achieve sustainable urban development in Dubai and boost the quality of life in the emirate, and its global competitiveness. All plots will be fully serviced and will comprise basic and entertainment facilities and parks, which will be implemented as per the highest global standards. During its first year, the committee approved the allocation of 11.5k land plots for citizens, as well as housing loans worth US$ 1.90 billion, benefitting around 7k Dubaians.

The Mohammed Bin Rashid Housing Foundation has unveiled its Innovative Investment Strategy that will focus on strengthening PPPs, (public and private partnerships) to develop the housing sector, with the main aim of boosting the quality of life for residents. The Dubai Media Office commented that the main strategic objectives included marketing the assets of the foundation, providing investment opportunities in residential complexes, diversifying investment fields and identifying new sources of income to achieve financial sustainability. The types of investment opportunities offered by the MBR Housing Foundation include leasing commercial and investment spaces, within residential projects, partnerships to enhance housing services and investment in its assets – to date it has entered into three such partnerships, with plans for five more before the end of next year.

DXB Live, the experiential agency of Dubai World Trade Centre, will host the eighth edition of the Middle East International Dermatology & Aesthetic Medicine Conference & Exhibition from 22 to 24 September 2023; it is the largest medical gathering of its kind in the Middle East and Africa. The conference will host over 3k professional and experts, from forty-seven countries, and there will be representatives from over forty international and governmental medical associations. MEIDAM 2023 will include forty-seven seminars and specialised workshops, on key topics in dermatology and cosmetic medicine, and there will be 207 peer-reviewed research papers, highlighting recent studies and urgent issues in the field. An exhibition running alongside the conference will feature 109 companies and global brands, highlighting cutting-edge scientific achievements in dermatology, cosmetics, and anti-aging.

An InterNations study has placed the UAE as the eleventh best global destination for expatriates to live and work, based on the high quality of life on offer and job opportunities. 12k people in fifty-three countries were polled and asked questions relating to five categories – quality of life, working abroad, (which covers career prospects, salary and job security), ease of settling in, personal finance and an expatriate essentials index; in the first two categories, UAE was placed fourth in the survey. The UAE was ranked second globally in theExpat Essentials Indexcategory, behind Bahrain, with 80% of respondents saying it is easy to obtain a visa when moving here, and to live here without having to learn Arabic. In the digital life subcategory, 84% of expatriates expressed satisfaction with the availability of government services online, while 87% said they found it easy to secure high-speed internet access at home. The top ten positions went to Mexico, Spain, Panama, Malaysia, Taiwan, Thailand, Costa Rica, the Philippines, Bahrain and Portugal. At the other end of the scale, some of the surprising names included Norway, South Korea, Germany, South Africa, Italy, Malta, New Zealand and Japan.

On Monday, Sheikh Hamdan bin Mohammed launched the Dubai Digital Cloud project, (aimed at creating a world-leading, efficient, agile and reliable digital infrastructure in Dubai), during a visit to the Digital Dubai headquarters. The project will be implemented by a partnership between Digital Dubai, Microsoft and Moro Hub – a subsidiary of Digital Dewa, the digital arm of the Dubai Electricity and Water Authority. Dubai’s Crown Prince confirmed that Dubai is steadfast in its commitment to fostering excellence and innovation in the use of advanced technologies to accelerate Dubai’s digital transformation in line with the vision of HH Sheikh Mohammed, to turn the city into the epicentre of the global digital economy. He also noted that the growing pace of Dubai’s digital transformation had significantly boosted the performance of government operations and reinforced its reputation as the world’s best city to live, work and visit. Meanwhile, Microsoft and Digital Dubai will collaborate to support the project by leveraging the Microsoft Azure cloud computing platform and providing platforms dedicated to government entities, in order to ensure the highest levels of security, governance and compliance with Digital Dubai’s policies and regulations.

Operating its Embraer Phenom 100 aircraft, Emirates airline launched an on-demand charter services for passengers who want to make short trips to the GCC, within and outside its network, from Al Maktoum International Airport. The Brazilian aircraft, seats up to four, with each passenger able to check in a medium-sized bag, weighing up to 15 kg, in addition to a carry-on handbag. Refreshments are available and special requests can be made to travel agents or booking representatives. Travellers from Dubai using Emirates’ charter services will be able to use chauffeur-driven vehicles to travel to Al Maktoum International, where waiting times and checking in formalities will be minimised.

As part of its expansion plans, Emirates is to add to its codeshare and interline partnerships forge new partnerships and deepen ties in Asia, Africa and Europe; it already has a network that comprises twenty-nine codeshare, one hundred and seventeen interline and eleven intermodal rail partners in more than eight hundred cities and one hundred countries. The carrier estimates that more than 50k travellers connect to their destination on codeshare or interline flights operated by Emirates’ partners. Last year, Emirates signed codeshare and interline agreements with eleven airlines – United, Air Canada, Airlink, Aegean Airlines, Air Tanzania, ITA Airways, Bamboo Airways, Batik Air, Philippine Airlines, Royal Air Maroc, and SKY Express. Although it has never joined any of the major global airline alliances such as Oneworld, Star Alliance and SkyTeam, it does have partnerships with more than one hundred and forty airlines, including five in Europe – Air Malta, Air Baltic, Aegean Airlines, TAP Portugal and Siberia Airlines – and nine in Asia, including Japan Airlines, Korean Air and Garuda, reaching more than one hundred and fifty cities. to ‘Simple Flying”, DXB is the best global airportfor layovers for various amenities and ultra-luxury shopping, lounging and dining experiences. Furthermore, it boasts a 24-hour fitness centre, a large pool, a locker room equipped with showers and open-air gardens to get fresh air for travellers. The report noted that “Dubai International also has various amenities that are beneficial to longer layovers”. For passengers staying longer, they can also enjoy Snoozecubes, soundproof pods with beds and touch-screen TVs to relax and enjoy. Amsterdam Schiphol, Munich, Hong Kong International and Hartsfield-Jackson International made up the top five.

Dubai’s Roads and Transport Authority has posted a 10% 2022 increase in their digital channel revenue, at US$ 954 million, with a 20.4% hike in digital transactions to 814 million, along with a 30% increase in the number of users to 1.3 million; the number of in-app transactions increased by 197% to 3.7 million. One of RTA’s main aims is to transform Dubai into a smart city – that uses cutting-edge technologies to deliver top-notch services – and to rank Dubai as the smartest global city in roads and transportation.

The Global Electric Mobility Readiness Index Demand for EVs has forecast that growth in the UAE will be at an annual 30% rate up to 2028, whilst ranking the country eighth globally in terms of electric mobility readiness. DEWA, as part of its plans to boost Dubai’s eco-friendly infrastructure and support green mobility, is planning to expand the number of its public charging stations by 270%, over the next three years, from 370 to 1k. Dewa’s EV green chargers have provided 13,264 MWh of electricity from 2015 to the end of 2022, powering a cumulative electric vehicle distance of over 66.3 million km. By the end of last year, the stations recorded more than 720k charging sessions, conducted by 9.7k registered electric vehicles. (2023 is forecast to be another record year for EV sales which will then account for 18% of the global car market – up from 4% in 2020 and 14% last year, when ten million units were sold).

The Cabinet, last week, approved the first preliminary national licence for self-driving cars, to Chinese company WeRide, who will now start testing all its models on the country’s roads. This is the first such licence given out in the ME, and probably in the world, as the country continues to transform its transport sector towards a future economy. Prior to its issue, the company had already completed public testing and operations since early 2022 on UAE roads.

Driven by a jump in demand growth, there was a marked increase in sales and new orders, as June business activity rose to a ten-month high of 56.9 – 1.6 higher on the month being the highest monthly rise since October 2021. All three sectors – construction, wholesale/retail and travel/tourism – posted faster increases, with the strong demand resulting in further job creation which has grown for the fourteenth straight month. Despite a slightly faster rate of input price inflation during the month, companies were also able to continue offering lower prices to customers. The twelve-month outlook for activity was the second strongest since October 2021 of the three key sectors monitored.

Legal claims have been filed in the UK and Abu Dhabi against BR Shetty, Prasanth Manghat and the Bank of Baroda “with regards to the ongoing investigation into fraudulent activity at NMC Healthcare”, in a US$ 4.0 billion claim. Shetty founded the health-care company in 1975 and built it up to become the UAE’s biggest privately owned healthcare operator, employing thousands of people; Manghat was its former chief executive. The company was listed on the London Stock Exchange in 2012 and at its peak in 2018, its book value was over US$ 10.5 billion, but by December 2019, it was brought crashing down, following a report from short seller Muddy Waters, alleging that the value of its assets had been inflated. Whilst its debt was understated the company had inflated the value of its assets and understated its debt. An independent investigation concluded that more than US$ 4.4 billion of debt had not been reported and the company was placed into administration in April 2020. In 2022, the restructuring process was completed and allowed thirty-four NMC companies to exit administration and become subsidiaries of a new group.

A ten-year agreement will see QatarEnergy supplying Dubai’s Enoc Group with 120 million barrels of condensates, starting from July 2023. The two have had a successful relationship since 2008 and the terms of the latest agreement allows parties to further increase the condensate volumes under the contract, as additional condensate volume is expected to be exported from Qatar once the North Field East (NFE) and North Field South (NFS) expansion projects come online.

For the first time, Dubai-based real estate developer Sobha Realty is to raise funding via a sale of Islamic bonds. On Monday, it issued a five-year US$ 300 million Sukuk non-callable for three years launched at a yield of 8.75%, (the lower end of initial guidance earlier on Monday of 8.75-8.875%), after drawing final orders of more than US$ 525 million. Dubai Islamic Bank, Emirates NBD Capital, Mashreq and Standard Chartered are joint global coordinators, and Sharjah Islamic Bank joins them as joint lead manager. Sobha estimates that it had an 8% share of the booming Dubai property market in Q1, and last year posted a 249% surge in sales to US$ 2.94 billion; its net debt to operating EBITDA ratio was 0.9 in 2022 from 3.3 in 2021 and 13.5 in 2020.

By the end of the week, the DFM had crossed the 4k level, its highest since August 2015, and is up over 20% so far this year, beating MSCI World Index’s 12.6%. This is a definite indicator that there is growing confidence in the Dubai market and the momentum is expected to continue well into H2, whilst volatile global financial markets face continued economic uncertainty, as central banks tighten monetary policy further. Last year, the DFM defied the odds and gained 4.34%, whilst the likes of the MSCI All-Country World Index, the Nasdaq 100 and S&P 500 fell by more than 20%, 33% and over 19% – their worst returns since the 2008 GFC.

The DFM opened on Monday, 10 July 2023, 507 points (14.6%) higher the previous six weeks, gained a further 48 points (1.2%) to close the week on 4,010, by 14 July 2023. Emaar Properties, US$ 0.08 higher the previous week, gained US$ 0.04 to close on US$ 1.87 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.73, US$ 4.35, US$ 1.50, and US$ 0.43 and closed on US$ 0.74, US$ 4.44, US$ 1.54 and US$ 0.45. On 14 July, trading was at 347 million shares, with a value of US$ 88 million, compared to 298 million shares, with a value of US$ 116 million, on 07 July 2023.

By Friday, 14 July 2023, Brent, US$ 3.86 higher (5.2%) the previous week, gained US$ 1.58 (2.0%) to close on US$ 79.87.  Gold, US$ 3 (0.2%) lower the previous week, gained US$ 28 (1.5%) to US$ 1,959 on 14 July 2023.  

Its Annual Statistical Bulletin posted that Opec’s revenue, from petroleum exports, surged 54.2% last year to US$ 873.6 billion – its highest figure in nearly a decade. In 2022, Brent crude, accounting for almost 67% of global oil, went as high as US$ 140 a barrel, mainly attributable to the fallout from the war in Ukraine. Last year, global oil demand rose by 2.6% to 99.6 million bpd, whilst crude oil production jumped 5.0% to 72.8 million bpd; Opec’s production rose by 2.53 million bpd, with non-Opec production being 920k bpd. Opec’s exports rose nearly 9% to 21.4 million bpd last year, with more than 70% of the crude being exported to Asia.

This week, TotalEnergies and Iraq signed a massive energy agreement to develop oil and gas resources to improve the country’s electricity supply, in the biggest single foreign investment in the nation, that will help it build a large energy infrastructure and generate solar power. The three shareholders in the twenty-five-year Gas Growth Integrated Project will be the French energy giant (45%), state-run Basra Oil Company (30%) and QatarEnergy (25%). The project will start in Q3 and would see an “investment of US$ 10 billion” over the next four years. Although the deal was thrashed out in 2021, delays had been caused by the fact that Iraq wanted a 40% stake, whilst TotalEnergies insisted on having a majority shareholding. Oil revenue accounts for about 95% of Iraq’s income, with the country awash with 145 billion barrels of proven oil reserves and largely undeveloped natural gas totalling about 3,714 billion cu mt.

This deal comprises four primary projects, with investments in associated gas from five oilfields in southern Iraq, (where currently billions of cubic feet of gas literally go up in smoke, burnt off on flare stacks), to boost production at Artawi oilfield to 210k bpd, to build the seawater treat plant, as well as a 1-gigawatt solar power plant to supply electricity to the Basra regional grid. As it stands now, the country buys 1.2k MW of electricity and enough natural gas to generate 2.8 MW from Iran, making up nearly 33% of its needs.

Following in the footsteps of traditional carmakers, Tesla has rolled out a new programme globally – “Refer and Earn” – allowing buyers to earn extra incentives through referrals from existing customers; this equates to about a US$ 500 cashback for buyers of Model 3 and Model Y, with the US incentive including three months of its Full Self-Driving feature. In China and the UK, the cash rebates come to US$ 385 (3.5k yuan) and US$ 1.28k (GBP 1k) respectively. Tesla, which has aggressively cut prices since late last year, starting in China, has slowed price cuts on its new orders but increased discounts on its already made cars.

Italian shipbuilder Finicantieri has lost its safety certification for fire resistant panels, which have tested faulty, that are used to equip its new 248 mt long Explora 1, whose launch has had to be delayed. The world’s newest luxury cruise liner was due to be delivered to Swiss cruise operator, MCS, but now it has been agreed by both parties to delay the delivery “by a few weeks to make further enhancements”. Explora 1 has fourteen decks, hundreds of luxurious suites, nineteen restaurants, swimming pools, and replacing all the panels – fitted to both walls and floors – will be a huge and time-consuming workload. According to the Cruise Lines Industry Association, there are fewer than three hundred cruise ships in operation, and it is reported that Paroc has identified forty of them with these faulty panels.

On Monday, EasyJet confirmed the cancellation of 1.7k flights, from Gatwick, over the next three months, blaming constrained airspace over Europe, (including the closure of Ukrainian airspace), and ongoing air traffic control difficulties both in the UK and Europe. It confirmed that 95% of affected passengers had been rebooked onto alternative flights. The budget carrier said its cancellations equated to just one day’s worth of flights, and that it would still be operating around 90k journeys over the three-month period; it noted that planned strikes by air traffic controllers in Europe could also have an impact. According to aviation analytics firm Cirium, July is scheduled to record the highest number of UK flight departures since pre-Covid October 2019, and that the number of flights departing the UK would be 11% higher than July 2022.

Despite fining financial companies, including Ant Group, more than US$ 1.0 billion, the Chinese government has announced the end of their crackdown on the industry, with the country’s central bank and securities regulator confirming they were moving on from their campaign to reform tech giants and shifting to more “normalised supervision”. Regulators cited violations of consumer protection laws and corporate governance. The fine for Ant, which had been one of the most high-profile targets as officials moved to tighten control of the sector, included the confiscation of more than US$ 59 million in “ill-gotten income”. Ant, which offers loans, credit, investments and insurance to hundreds of millions of customers and small businesses, said it would “comply with the terms of the penalty in all earnestness and sincerity”.

To the surprise of some, and more so to the Federal Trade Commission, who brought the case to court, Microsoft won its legal battle in the US to go ahead with purchasing videogame maker Activision Blizzard in a massive US$ 69 billion deal. The FTC had originally asked the judge to stop the proposed deal, arguing it would give Microsoft Corp, maker of the Xbox gaming console, exclusive access to Activision games, including the best-selling “Call of Duty.” The agency’s concern was that the deal would potentially preclude the availability of those videogames on other platforms. The antitrust regulator noted it was “disappointed in this outcome given the clear threat this merger poses to open competition in cloud gaming, subscription services, and consoles. In the coming days we’ll be announcing our next step to continue our fight to preserve competition and protect consumers.”  Shortly after the judge’s ruling, UK’s Competition and Markets Authority, which had objected to the deal in April, said that it was prepared to consider Microsoft’s proposals to resolve antitrust concerns in the UK.

Samsung Electronics posted a 22.0% slump in Q2 revenue to US$ 46.0 billion – its worst quarterly decline since 2009 – indicating that the year-old slump in electronics and memo chip may have to still to run its course; operating profit tanked 96% to US$ 360 million. However, its main rivals, Micron technology and SK Hynix, have signalled that electronics companies are working through bloated stores of memory chips, after the post-pandemic collapse in demand for smartphones and computers. The global industry has been badly impacted by the slowdown in the US$ 160 billion global memory industry, (driven by a combination of inflation and recession fears), with Samsung seemingly the main casualty. The South Korean conglomersate cut production in April so as to ease the pressure on oversupply, the main reason for lower margins. Prices for dynamic random access memory Dram chips are expected to increase at a slower rate in Q3 – at 5%, compared to 15% in the previous three months – as global supply tightens. Semiconductor exports are also picking up, with a 28% fall in June compared to 41% in April, but inventory levels remain at historically high levels. However, AI may come to the rescue, as it will drive new demand for servers requiring next-generation Dram, with servers requiring at least four to six times more Dram capacity, compared with today’s servers.

Only a year after agreeing to set up a chip-making plant in Prime Minister Narendra Modi’s home state of Gujarat, Apple supplier Foxconn has pulled out of a US$ 19.5 billion deal with Indian mining giant Vedanta. Although a government minister says it will have no impact on the country’s chip making ambitions, many believe that it marks a setback to the nation’s technology industry goals. The Taiwan-based company noted that the decision was made in “mutual agreement” with Vedanta, and that “there was recognition from both sides that the project was not moving fast enough.” The Indian partner, who took over the whole venture, posted that it had “lined up other partners to set up India’s first [chip] foundry”.

A former Amazon operations manager has been sentenced to sixteen years’ gaol time, and obligated to pay US$ 9.5 million in restitution to Amazon, for masterminding a fraudulent scheme with “inside” help. The woman, who was an operations manager, recruited several individuals, including an Amazon loss prevention employee and a senior HR assistant, in a scheme that involved a friend’s assistance in stealing the cash; both went on a spending spree including a US$ 1 million house in Georgia and buying several high-end vehicles. The court concluded that “the defendant abused her position of trust at Amazon to steal nearly US$ 10 million from the company based on a brazen fraud scheme involving fake vendors and fictitious invoices.” It was revealed that US$ 2.7 million from her bank accounts, as well as the cars and the house had been forfeited.

Although it did not admit any wrongdoing, the US Consumer Financial Protection Bureau thought otherwise and took Bank of America to task for engaging in a series of illicit actions that eroded customer trust. The watchdog noted that “Bank of America wrongfully withheld credit card rewards, charged excessive fees and opened accounts without customer consent,” and “as a result of Bank of America’s actions, consumers incurred unjustified fees, experienced adverse effects on their credit profiles, and had to spend time rectifying errors.”  The bank has been found guilty of engaging in illicit practices such as charging repetitive fees for the same transaction, called double-dipping. In a deal, the bank has agreed to pay a total of US$ 150 million in fines and provide US$ 100 million in customer reimbursements.

In Australia, Steven Heaton is in jail after falsely telling investors that BHP was going to buy 1.8k of his energy-efficient air conditioners. (As it turned out, only two test units were delivered to a BHP site, but they were never plugged in). All it took the scammer, to dupe some investors, was an unsolicited LinkedIn message and some doctored emails that promised them a “ten times” return. The list of victims has some of the most eminent business figures in Australia, including:

• Mike Fitzpatrick, formerly the chair of the AFL and a director of Rio Tinto
• the former CEO of Merrill Lynch Australasia, Robert (John) Magowan, who was also an economist at the Reserve Bank of Australia
• Telstra’s former chief economist Geoff Frankish, also the former head of infrastructure at investment bank Goldman Sachs and who previously worked for Credit Suisse and the Victorian Department of Treasury and Finance.
• the former senior vice-president of global mining company Bechtel, Andrew (Andy) Greig
• the former treasurer of Victoria, Robert Jolly

The scam also took money from a Melbourne City Council sustainability fund.

Heaton started a company to try to produce an invention that could save a lot of energy and money by pre-cooling the air entering air conditioners. It was known as “IP Hybrid” or “ERK”, and he had reached a verbal agreement with BHP to give them some units to try for free, to get field data about any energy and efficiency savings. BHP also wanted the test data as part of the company’s due diligence in case it wanted to consider buying the system in the future. In April 2016, BHP actually received two of the units, but the power meters needed to install them were not received with the A/C units, and never arrived. However, Heaton was able to get his contact at the mining company to sign and place on BHP’s letterhead a letter that he had drafted, stating that BHP had installed the two units and they were achieving energy savings. But by April 2017, the units still had not been installed and Heaton’s contact at BHP had become aware that further emails and documents, purporting to be from BHP, had been “fabricated or ‘doctored'”. In that month, having been informed of the scam, Mr Jolly resigned as director and chairman of the companies. The final twist is that although the ‘new’ technology has yet to be fully researched, it might still work and could make Heaton a rich man if he still holds the patents.

Earlier In 2015, Heaton had sent an unsolicited message to Jolly and told him that he wanted the former treasurer to chair the companies involved and later showed him a signed BHP purchase order – a promise to buy one hundred units. This was an obvious fraud because no one at BHP had signed the order or agreed to buy the air conditioners. Later in the year, Jolly met Geoff Frankish and told him about this new technology and he was able to find some more high-profile investors, including those listed above.

The latest OECD report points to the global economy starting to improve, but the recovery will be weak, following a 3.3% hike last year; 2023 and 2024 will see growth levels of 2.7% and 2.9%. The three main factors for this mini uptick are lower energy prices, business/consumer sentiment recovering, and the ‘stop-start’ re-opening of China. Over the three-year period, starting in 2022, headline inflation is expected to fall from 9.4% to 6.6% to 4.3% by the end of 2024, attributable to tighter monetary policy finally making an impact, lower energy/food prices and reduced supply bottlenecks. GDP growth levels for 2023 and 2024 are forecast to be 1.6%/1.0%, 0.9%/1.5% and 5.4%/5.1% in the US, euro area and China respectively. The US recovery is down to tight monetary and financial conditions, in the euro area, to headline inflation boosting real incomes and China due to the lifting of the government’s zero-COVID policy.

The Office for Budget Responsibility has noted that, over the next fifty years, the UK’s public debt could rise to more than 300% of the size of the economy from today’s 100% level – driven by an increasing number of aging population and a fall in tax receipts; other factors include climate change and geopolitical tensions. The OBR has called current government plans to reduce debt “relatively modest”, but Chancellor Jeremy Hunt said the government would take “difficult but responsible” decisions on the public finances and that he had set a target of getting underlying debt to fall in five years’ time. The report also noted that:

• government borrowing was now at its highest level since the mid-1940s
• the stock of government debt at its highest level since the early 1960s
• and the cost of servicing that debt the highest since the late 1980s

The recent decline in the greenback has continued with it closing the week around the US$ 1.31 level to sterling – its lowest level in twelve months. The US dollar index– a measure of the value of the dollar against a weighted basket of major currencies – is down nearly 3.2% YTD and 7.7% over the past twelve months. Although last month saw consumer prices slow, with headline annual consumer price inflation dipping to 3%, (6.1% lower on the year and 1% on the month), it is still possible that the Fed will go ahead with a further 0.25% hike in rates; over the past sixteen months, it has raised them a cumulative 5.0%. Latest data indicates that the decline in the value of the dollar will persist for the immediate future. Only last September, the dollar hit a twenty-year high because the Fed raised rates at a pace and international investors poured into the market to take advantage of higher dollar interest rates. Now with the US rates almost at the peak, the same investors are now leaving and looking for better returns, two of which are the pound sterling and Swedish krona.   .   . and perhaps even gold.

As an indicator that higher interest rates are beginning to decelerate the US economy, jobs growth slowed last month, with only 209k jobs added – the smallest gain in more than two years and fewer than what the market had forecast. The unemployment rate still fell – by 0.1% – to 3.6%, on the month, whilst hiring has remained strong, despite the Fed’s benchmark interest rate jumping to more than 5% over the previous twelve months; the average hourly pay has also risen in the twelve months but at a slower 4.4% rate. Although inflation has fallen sharply to 4%, it still remains higher than the Federal Reserve’s 2% target, and at its last meeting, most officials thought they would need to push interest rates higher to stabilise prices.

June’s consumer price index rose 3.0%, year on year, down from 4.0% in May, and is now at its lowest level since March 2021 – a possible indicator that the Federal Reserve may have started winning its battle against inflation. June core inflation – which excludes food and energy – increased by 0.2%, the lowest one-month gain since August 2021. Over the past fifteen months, the Fed has raised rates ten times and there is every likelihood that there could be just two more rate hikes this year which would see interest rates hovering around 5.5% by the end of 2023.

The BoE warned that mortgage payments will rise by at least US$ 645 (GBP 500) a month for nearly one million households, by the end of 2026, and noted that mortgage holders “may struggle with repayments” on loans. More than two million households will pay between US$ 260 (GBP 200) and US$ 648 (GBP 499) more per month over the next three and a half years. This is after interest rates have climbed from 0.1% in December 2021 to its current 5.0% level, with the average rate on a two-year fixed mortgage hitting a fresh 15 year high of 6.7%, as the central bank tries to get to grip with inflation. However, the BoE is confident that lenders are strong enough to withstand a rise in customers defaulting on repayments.

A snail could probably move quicker than the flagging UK economy, which contracted 0.1% in May, (mainly due to an extra holiday for CRIII’s coronation) – a month earlier saw a 0.2% expansion. May’s figures were driven by a fall in manufacturing, energy and construction sectors, along with sales at pubs and bars, in contrast to the health sector recovering while the IT industry had a “strong month”, and the impact of strikes lessened on the month. There is no doubt that the rising cost of living and higher interest rates have been squeezing households and businesses, with the added problem that inflation at 8.7% is not going away fast and should be an impacting factor for at least the next eighteen months. The Bank of England now have little wiggle room when it comes to interest rates – if they continue to push them higher, it could send the economy into recession, if they move in the other direction, inflation levels will remain at historic highs. The worrying thing for the UK public is that the May 2023 economy was only 0.2% bigger than it was at pre-Covid December 2019,

On Thursday, the Sunak government finally agreed to pay rises for those in public service, numbering more than one million, with awards ranging from 5% to 7%. The Prime Minister has warned trade unions the offer is “final” and there will be no more talks on pay, and that all rises will not be funded by borrowing or raising taxes, but departments will have to cover some costs from existing budgets. The sectors receiving the pay hikes include police/prison officers – 7.0%, teachers – 6.5%, doctors – 6.0% and civil servants – 5.5%. The Police Federation of England and Wales said that the rise did not fully address inflation and were concerned that cuts may be made to pay for the increase. The prison officers’ union gave its initial reaction on Twitter, saying in real terms it was another pay cut but that it will scrutinise the deal further. It seems that the teachers may be content, with the four teaching unions even issued a joint statement, with the government, saying the offer recognises how vital teachers are. However, the British Medical Association said the pay rise would not end doctors’ dispute with the government and that the 6% offered marks another real-terms pay cut and does not address years of below-inflation pay. The current five-day junior doctors strikes, and two days of consultant walkouts next week, will still go ahead. The FDA union called the 5.5% offer for senior civil servants “fair and reasonable”, whilst the Prospect union is unhappy, saying “the government has not allocated extra money to pay for it, and that it plans to cut recruitment at the Ministry of Defence to help pay for the pay rises”.

In the quarter to 31 May, although UK wages rose at the record annual pace of 7.3%, they still fell short of the 8.7% inflation level, fuelling fears that inflation will stay high for longer. The BoE has a long-term target to reduce inflation to just 2.0% and it is patently obvious that this cannot be reached until at least the end of 2024. The argument is that if wages continue to increase, then companies will have to push up their prices to compensate accordingly, which in turn will push inflation higher. In the world of Economics, the part-answer to tame inflation is to reduce consumer spending which will in turn start to bring it down; if wage increases are low and unemployment levels go higher, then there is less money spent in the economy which goes into downturn. Pushing rates higher will also help to slow the economy, as less money is being pumped into it; next month will surely see the BoE nudging rates up a further 0.25%.

Halifax has posted that June UK house prices have fallen 2.6%, (and Nationwide estimating 3.4%), over the past twelve months, with the average house price dipping US$ 9.6k to US$ 367.1k – the biggest fall since 2011; prices fell for the third month in a row, dipping 0.1%, it said, indicative of a cooling market, at a time when the average two-year fixed rate mortgage had climbed to 6.54%. It seems logical that with higher costs, and less household spend, that there will have to be a knock-on effect on demand. It does seem likely that higher rates will remain for longer than initially expected, and house prices will edge lower in the coming months. May saw 74.4k property transactions – some 25% lower than a year earlier.  However, bearing in mind that the labour market is still holding up and the continuing lack of residential property supply will ensure that prices do not tank.

An FT report indicates that the OECD pressured the Labour government to dilute a new law that would have seen the 2.5k multinational companies in Australia having to publicly report in which countries they pay tax. This is the same organisation that has an objective to ensure that the largest global companies pay their fair share of tax. In this case, it believes that if the bill went through unchanged it would have undermined its own efforts to make MNCs’ affairs less opaque. The bill should have been enacted on 01 July but the version that went through did not include a country-by-country reporting. It appears that the OECD stressed to the Australians that countries signing the 2015 OECD agreement did so on the premise that tax reports would not become public. It does seem strange that Australia cannot raise more tax revenue, and fight corporate tax abuse, because a Paris-based organisation thinks it knows better. It also begs the question where else in the world is this sort of ‘discrete’ pressure being exerted. It must be up to the Australian Prime Minister, Anthony Albanese to clarify why his country buckled under pressure and allowed to happen. I Can’t Explain!