Crocodile Rock                                                                        01 September 2023

No data was readily available for Dubai weekly property transactions.

According to Knight Frank, property prices grew across the board – 48.8%, 19.0% and 11.6% over the past twelve months, in H1, and in Q3 – and expansion will continue for the rest of 2023 and into 2024. The two drivers seem to be that some buyers are increasingly adopting a long-term perspective on Dubai, and see the financial benefit of buying, rather than renting, and others because of the attractive returns and capital appreciation. It looks likely that Dubai’s residential property will be the fastest-growing global market in 2024, and with business sentiment high, prices will continue to grow, albeit at a slower pace – but still touching double-digit increases.

Last February, a 3 B/R apartment at Bulgari Resorts and Residences was sold for just under US$ 11.7 million, equating to US$ 3,690 per sq ft, and the most expensive residence per sq ft. This week, a 3 B/R duplex apartment, at the Royal Atlantis, was sold for US$ 12.0 million, equating to US$ 3,375 per sq ft, that now becomes most expensive property to be sold per square foot on Palm Jumeirah and the second most expensive in Dubai. The buyer was a first-time Russian investor. Meanwhile, a 41.7k sq ft plot of land sold for US$ 57 million in Emirates Hill, equating to US$ 1.365k per sq ft.

Six years ago, the foundations for Dubai Creek Tower were laid but there has not been much progress made since then. At the time, it was planned to be a cable-tied tower and was due to be 100 mt taller than Burj Khalifa. The latest update from Emaar’s Mohammed Alabbar is that the tower is currently in the process of being redesigned “by an unnamed international company that was selected after a tender process”, and that “we are seeking during the next seven to eight months to develop a new idea about the project and we hope to start construction within a year from now.” Last August, Emaar paid Dubai Holdings US$ 2.14 billion to fully acquire Dubai Creek Harbour, (covering six sq km) in a cash/share deal which made the seller Emaar’s second largest shareholder. The community, that will house 200k people, features 78.5 million sq ft of residential space, and is connected to the mainland by three bridges. It is expected to house 200k people when complete.

H1 and Q2 saw Dubai’s office market sector boom at a time when other major cities are in crisis; for example, it is reported that vacancy levels in New York are at 25% and rising, with some being converted into apartments or hotels. Driven by banking, fintech, media, and telecommunications sectors along with new international firms setting up operations in the emirate, the office market experienced an unprecedented spike, with demand reaching a remarkable 580k sq ft – 23% higher compared to the same period in 2022. Savill’s noted in its latest report that Dubai attracted new companies, from the US, Europe and Asia, particularly India and China. In H1, the surge in leasing activity resulted in driving the transaction share to 72% in Q2, up from 55% in Q1. It is reported that there is robust demand for property in the CBD – an indicator that companies prefer high-quality offices in a prime location, whilst there is strong interest from multinational companies looking to expand their footprint in Dubai and the region.

The strong demand levels have led to an increase in rents across most markets. Rents across the DIFC have risen by 15%, y-o-y, while they have gone up by 27% y-o-y across One Central, close to 39% across Business Bay, and 23% on average across JLT, when compared to Q2 2022. The quarterly increase in rental values has positioned Dubai as the eighth most expensive market for prime offices globally, as per the latest Savills Prime Office Costs report.

HH Sheikh Mohammed bin Rashid reported that the UAE’s H1 non-oil foreign trade recorded impressive growth rates by exceeding US$ 337.6 billion, commenting “the UAE’s non-oil export continues to set unprecedented records as it rose 22% with the top ten global trading partners in 2023”. He noted that “the UAE will remain a major player in international trade, maintaining its position as a bridge linking the East with the West, and the North with the South.” In the period, non-oil exports grew 11.9% on the year to US$ 559 million – exceeding the exports recorded in the whole of 2017 and contributing 16.6% to the UAE’s total foreign trade. Re-exports and imports also recorded significant growth, with the former at US$ 929 million, (up 2.2% on the year) and imports by 2.6% to US$ 1.89 billion, as China continued to be the UAE’s leading global trading partner, followed by India, the US, Saudi Arabia and Türkiye; Iraq, Switzerland, Japan, Hong Kong, and Russia completed the top ten list. In relation to exports, the top five destinations were Switzerland, Türkiye, (which registered a 87.4% growth on the year), Saudi Arabia, India and North Macedonia. Gold, aluminium, oils, cigarettes, copper wires, jewellery, and aluminium topped the list of the UAE’s most prominent exports. Ahead of oil and cigarettes, gold exports registered the highest growth in H1 2023, up 40.7% to reach US$ 59.48 billion. The contribution of gold exports to the UAE’s non-oil foreign trade was 17.6%, compared to 14.3% in the corresponding period of 2022.

HH Sheikh Mohammed bin Rashid reported that the UAE’s H1 non-oil foreign trade recorded impressive growth rates by exceeding US$ 337.6 billion, commenting “the UAE’s non-oil export continues to set unprecedented records as it rose 22% with the top ten global trading partners in 2023”. He noted that “the UAE will remain a major player in international trade, maintaining its position as a bridge linking the East with the West, and the North with the South.” In the period, non-oil exports grew 11.9% on the year to US$ 559 million – exceeding the exports recorded in the whole of 2017 and contributing 16.6% to the UAE’s total foreign trade. Re-exports and imports also recorded significant growth, with the former at US$ 929 million, (up 2.2% on the year) and imports by 2.6% to US$ 1.89 billion, as China continued to be the UAE’s leading global trading partner, followed by India, the US, Saudi Arabia and Türkiye; Iraq, Switzerland, Japan, Hong Kong, and Russia completed the top ten list. In relation to exports, the top five destinations were Switzerland, Türkiye, (which registered a 87.4% growth on the year), Saudi Arabia, Inia and North Macedonia. Gold, aluminium, oils, cigarettes, copper wires, jewellery, and aluminium topped the list of the UAE’s most prominent exports. Ahead of oil and cigarettes, gold exports registered the highest growth in H1 2023, up 40.7 percent to reach US$ 59.48 billion. The contribution of gold exports to the UAE’s non-oil foreign trade was 17.6%, compared to 14.3% in the corresponding period of 2022.

Minister of State for Foreign Trade, Thani Ahmed Al Zeyoudi, is confident that the country is “on course” to achieve its non-oil trade target of US$ 1 trillion by 2031, helped by government initiatives such as the signing of comprehensive economic partnership agreements which aims to deepen ties with selected strategic partner countries. The first bilateral trade agreement was with India last February and has been followed by ones with Israel, Türkiye Indonesia and Cambodia. UBS Global Wealth Management forecasts the UAE’s GDP will stand at 3.5% this year, (with 4.5% for the non-oil sector), rising 0.4% to 3.9% in 2024.

KPMG Lower Gulf Limited has been fined US$ 30k by the Abu Dhabi Global Market for ineffective systems and controls, leading to non-compliance with audit requirements. It was alleged that the firm demonstrated a systemic failure to ensure that only its ADGM Registered Audit Principals sign audit reports for entities registered with ADGM. The Registrar Authority had already engaged in ongoing communication with KPMG over a period of several months regarding concerns over non-ADGM Registered Audit Principals signing audit reports and were requested to prevent further occurrences by enhancing its systems and controls; it seems that non-compliance continued despite KPMG confirming to the RA that systems and controls had been strengthened.

Following this week’s concession agreement, first awarded in January 2023, DP World and the Deendayal Port Authority are to develop, operate and maintain a new 2.19 million TEU per annum mega-container terminal at Kandla. The JV between the Dubai port operator and National Investment and Infrastructure Fund will see the concession on a Build-Operate-Transfer basis for a period of thirty years, with the option to extend for another twenty years. The US$ 510 million investment, through a Public Private Partnership, will result in a state-of-the-art equipment and a 1.1 km berth capable of handling next-generation vessels carrying more than 18k TEUs; the terminal will connect to the hinterland through the network of roads, highways, railways and Dedicated Freight Corridors, supporting the growing demand for logistics solutions from across Northern, Western and Central India, and connecting businesses in the regions to global markets. With this latest addition, DP World will be responsible for six Indian container terminals – the new one with Kandla, along with two in Mumbai, Mundra, Cochin and Chennai.

Another week and another purchase reported by DP World – this time, the port operator has signed an agreement with Türkiye’s Evyap Group to establish a strategic equity partnership between DP World Yarimca Port and Evyap Port. When formalities are completed, the Dubai entity will own 58% of Evyap Port and the partner will have a 42% stake in the newly named DP World Evyap Port. The partnership aims at enhancing and growing trade infrastructure by focusing on improving container port facilities and enhancing efficiencies in the key Marmara gateway market. The parties are also looking at enhancing supply chain solutions in Türkiye, as well as improving productivity, reducing turnaround times, ensuring security, and broadening service offerings, that will ultimately enrich Turkish trade.

Majed Al Joker, Chief Operating Officer of Dubai Airports, has forecast that a record 88 million passengers are expected to pass through Dubai International next year, which would surpass the pre-pandemic 2019 level of 86.4 million. This year will see the number at 85 million. DXB indicated that DXB’s current capacity is 100 million and that it could reach 120 million in the future.

After prices rose in July and August, the UAE Fuel Price Committee again increased all September retail petrol prices:

• Super 98: US$ 0.931 – up by 8.9% on the month and up 17.4% YTD from US$ 0.793  
• Special 95: US$ 0.902 – up by 9.6% on the month and up 24.1% YTD from US$ 0.727
• Diesel: US$ 0.926 – up 15.3% on the month and up 3.3% YTD from US$ 0.896
• E-plus 91: US$ 0.880 – up by 9.5% on the month and up 24.6% YTD from US$ 0.706

Hyderabad Pharma City has appointed Tabreed the preferred bidder for a long-term district cooling concession at the Hyderabad Pharma City master plan in India. The Dubai-based business, known as the National Central Cooling Company, will initially be responsible for 2.5 refrigeration tonnes of district cooling capacity at an estimated cost of US$ 10 million. The project is being developed as one of the largest global integrated clusters for the pharmaceutical industry, and will be expanded in phases, as cooling demand rises, and is expected to reach a total concession load of 125 RT. The company will provide chilled water services to the development in Hyderabad, and the project is part of its strategy to expand operations in India. Hyderabad Pharma City is one of world’s largest integrated clusters for pharmaceutical R&D and manufacturing and is expected to attract investments worth US$ 9.7 billion and create 560k jobs.

Emaar Properties’ founder, Mohamed Alabbar, has indicated that the property developer could raise dividends this year, in line with the company’s commitment to shareholder rights. It recently posted a 15% surge in its H1 profit, to US$ 1.34 billion, as Dubai’s property market continues to boom amid economic growth in the country. He also expects Emaar Properties to “continue to achieve favourable financial results in the upcoming quarters, supported by a strong sales track record, indicating sustained growth”, noting that its long-term plans, for the next 15 to 20 years, covered new projects, countries targeted for expansion, projected future risks, as well as investments in human capital.

Alabbar also founded the internet company Noon in 2016 and he, and regional private regional investors, own 50%, with Saudi’s Public Investment Fund owning the other 50%. He confirmed that there were no immediate plans for Noon to go public or list its shares on the financial markets but noted that the “Arab world is in need of a publicly listed e-commerce entity”. He stated that its current focus is on growth in its key markets, which include the UAE, Saudi Arabia and Egypt, and securing a strong foothold in its main markets. Last year, the company was the fifth largest e-commerce player in the UAE, with revenue of US$ 168 million, behind Amazon.aw, namshi.com, carrefouruae.ae and Apple.com with revenues of US$ 478 million, US$ 265 million, US$ 223 million and US$ 196 million.

In the first eight months of the year, four brokerage firms – EFG Hermes, BMH Capital Financial Services, Arqaam Securities and Emirates NBD dominated business on the DFM, accounting for 53.3% of the 2.57 million deals on eighty billion shares worth US$ 37.17 billion; the four dealt with 17.9%, 16.4%, 10.8% and 8.2% respectively. Twenty-nine brokerage firms operate on the bourse.

The DFM opened on Monday, 28 August 2023, 48 points (0.5%) higher the previous week, shed 9 points (0.2%) to close the week on 4,090, by 01 September2023. Emaar Properties, US$ 0.03 higher the previous week, gained US$ 0.05 to close on US$ 1.93 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.70, US$ 4.70, US$ 1.55, and US$ 0.44 and closed on US$ 0.70, US$ 4.55, US$ 1.54 and US$ 0.44. On 01 September, trading was at 88 million shares, with a value of US$ 52 million, compared to 122 million shares, with a value of US$ 102 million, on 25 August 2023.

The bourse had opened the year on 3,438 and, having closed on 31 August at 4,082, was 644 points (18.7%) higher. Emaar started the year with a 01 January 2023 opening figure of US$ 1.60, to close the first eight months at US$ 1.92. Four other bellwether stocks, DEWA, Emirates NBD, DIB and DFM started the year on US$ 0.59, US$ 3.54, US$ 1.55 and US$ 0.41 and closed YTD at US$ 0.69, US$ 4.46, US$ 1.54 and US$ 0.44.   On 31 August, trading was at 163 million shares, with a value of US$ 143 million, compared to 66 million shares, with a value of US$ 18 million, on 31 December 2022.

By Friday, 01 September 2023, Brent, US$ 0.38 lower (0.4%) the previous week, gained US$ 4.19 (4.9%) to close on US$ 84.72. Gold, US$ 60 (2.6%) lower the previous fortnight, gained US$ 24 (1.2%) to US$ 1,966 by 01 September 2023.  

Brent started the year on US$ 85.91 and gained US$ 1.10 (1.3%), to close 31 August on US$ 87.01. Meanwhile, the yellow metal opened 2023 trading at US$ 1,830 and gained US$ 136 (7.4%) to close YTD on US$ 1,966.

Despite turning in its biggest ever quarterly profit – at a massive US$ 29.3 billion – in Q2, UBS has indicated that it could be planning to make 3k redundant in a cost-cutting exercise; in Q2 2022, its profit was US$ 2.6 billion. The main driver behind the profit surge emanated from buying struggling rival Credit Suisse for US$ 3.25 billion, and acquiring its assets cheaply after fears it would collapse. The bank confirmed that it would not be selling off this acquisition and would absorb it in its own bank operations, with the integration taking place in 2024 and full migration of clients set to be completed a year later. UBS share price rose by more than 5% yesterday.

The soon to be outgoing head of Qantas, Alan Joyce, faced an explosive parliamentary hearing that lasted ninety minutes on the running of the national airline. The Irishman advised the committee that he had to leave early to catch a plane, with one of the committee saying “I’m sure it will be late”. Citing privacy policy, he refused to share details about Prime Minister Anthony Albanese’s son being granted access to the Chairman’s Lounge, confirmed that Qantas holds US$ 240 million (AUD 370 million) of flight credits, of which “less than AUD 100 million” relate to international passengers; he did report that Qantas is aiming to have zero outstanding flight credits left by 31 December. He said Qantas flights were returning to pre-pandemic capacity. He also confirmed that Qantas had sent a letter to the federal government in October 2022 about a proposal from Qatar and said granting it would distort the market. The airline currently flies twenty-eight times a week to Sydney, Melbourne and Brisbane and had requested a further twenty-one to satisfy passenger demand which was rejected by the government.

Yesterday, 31 August, the Australian Competition and Consumer Commission sued Qantas, accusing it of selling tickets to thousands of flights after they were cancelled. The watchdog claimed that the national airline broke consumer law when it sold tickets to more than 8k flights between May and July 2022, without disclosing they had been cancelled. It seems that Qantas continues to lose even more customer confidence and could be in for huge penalties – the maximum it could face is 10% of annual turnover which stood at US$ 12.8 billion last year ending 30 June 2022. ACCC claims that the carrier kept selling tickets for an average of sixteen days after it had cancelled flights for reasons often within its control, such as “network optimisation”; in one case, it kept selling tickets to one Sydney-to-San Francisco flight forty days after it had been cancelled.

In line with many other developed countries, Australia is facing an increasing problem with shoplifting. This comes at a time when major supermarkets, including Coles and Woolworths, are reporting record profits and margins, driven largely by higher prices whilst their customers are struggling with cost-of-living pressures of higher interest rates and soaring inflation – both at levels not seen since before the turn of the century. Estimates are that theft is costing the entire industry in Australia hundreds of millions of dollars annually, and the major supermarkets have reported big spikes over the past year. A Queensland researcher noted that “retailers across the globe are reporting high levels of consumers that aren’t paying for goods or not scanning goods appropriately.” Another indicated that “there’s a correlation between increasing costs of living families under financial pressure and increasing frequency of retail theft”. On top of that, it has become “popular” with organised criminal gangs to also get in on the act, who will often have a shopping list of wanted items. Coles CEO, Leah Weckert, says theft and product markdowns are hurting their bottom-line, noting that theft and product markdowns have increased “about 20% year on year — and that is driven by the organised crime”. Nevertheless, for the year ending 30 June 2023, Coles posted a 4.8% hike in profit to US$ 700k, (AUD 1.1 billion), with a 5% increase in margin to 26.4%. Wesfarmers has noticed a slight increase in stock loss but, at the same time, the operator of Kmart, Target, Officeworks and Bunnings posted an 18.2% jump in annual revenue to US$ 27.9 billion and a 4.8% rise in profits to US$ 1.6 billion. It seems that all major retailers are spending big on trolly locks, smart gates, that can tell if someone is leaving the store without paying, double gates and other initiatives to gain an advantage over shoplifters.

After exceptional results during the pandemic, it was no surprise to see Lego H1 profits return to some form of normality, falling 17.7% to US$ 807 million, with revenue nudging 1.0% higher to US$ 807 million. Having opened fifty-eight new stores in H1 in China, the Danish toymaker was looking to that country to boost its top line but sales there have not been as strong as expected. However, the economy has not recovered as quickly as many analysts had forecast which reduced sales but Lego is confident that in the mid- to long-term, China will prove a lucrative market, especially with its growing middle-class. The company already has large flagship stores in Shanghai and Beijing. Two new factories are being built in Vietnam and the US due to open in 2024 and 2025, with expansion plans for those already in existence. The company, the world’s leading toymaker, has taken sustainability on board and has guaranteed to triple spending over three years as it looks to eliminate plastics that come from fossil fuels. After a torrid few years at the start of the century, Lego has recovered partly because of focusing on franchises and films in particular Lego Batman, Harry Potter and Ninjago, as well as introducing Lego Architecture for grown-up children. The success of the Lego movies and its global theme parks are also useful marketing tools.

Arnest, the company that made the aerosol cans for Heineken in Russia, is the beneficiary of an agreement that that will see it acquire the Dutch brewer’s seven breweries for just Eur 1; the agreement also sees the new owner take on 1.8k workers, with guarantees to employ them for the next three years. The company expects to take a US$ 324 million loss. Heineken beer was phased out last year, but its manufacture of the Amstel beer brand will take a further six months before being terminated. This week, Domino’s Pizza waved the white flag, commenting that it would no longer try to sell the operation because of an “increasingly challenging environment”; it plans to put the business into bankruptcy. With a number of sanctions by the West, many, such as McDonald’s and Coca-Cola, faced pressure to exit Russia and decided to close their operations. There has also been ongoing criticism for the ones that have continued business, including the likes of UK telecoms firm BT Group, and France’s Lacoste.

With a decision that “was incredibly difficult for us to make,” and was based on “unique complexities”, Kimberly-Clark, is to no longer selling Kleenex in Canada; however, its other product lines, such as Huggies and Cottonnelle, will remain on Canadian shelves. It does appear that the obvious reason was its tissues were trading at a loss and was losing market share to Scotties, the facial tissue produced by the Canadian company Kruger. However, some famous brands have already pulled the plug including iconic American snacks like Bugles, Bagel Bites and Little Debbie products. Maybe Canada is not all that friendly to foreign business. Indeed, according to the World Economic Forum’s competitiveness index, CEOs most frequently complain about Canada’s inefficient government bureaucracy and high taxes – at least compared to the US, whose population is ten times higher, where there is more readily available credit, less government regulation and more R&D investment. Another major reason is that there is an abundance of protectionism, with all three of the biggest industries – airlines, telecom and finance – being heavily protected by the federal government.

The latest news is that private equity firm M2 Capital has made a US$ 113 million (GBP 90 million) rescue bid for Wilko and has pledged to retain all employees’ jobs for two years; last month, it fell into administration, putting 12.5k jobs and four hundred stores at risk, after struggling with sharp losses and a cash shortage. It also faced strong competition from rival chains such as B&M, Poundland, The Range and Home Bargains, as the high cost of living has pushed shoppers to seek out bargains – and there was a possibility that some of them would also be interested in the firm. It was also reported that the owner of HMV, Canadian business man Doug Putman, was also interested iin buying some of Wilko’s stores.

On Monday, its first day back after its trading had been halted since 18 March 2022, Evergrande Group tanked 87% on the Hong Kong bourse. By the end of trading, the embattled Chinese developer saw its market value at US$ 586 million, well down from its 2017 peak of more than US$ 50 billion. Over the previous two years, the Group had posted losses of US$ 79 billion and had gone through a lengthy debt restructuring process; it had posted, last Sunday, that H1’s loss attributable to shareholders was US$ 4.5 billion. It had applied to resume trading after saying improved internal control systems and processes met its obligations under Hong Kong listing rules. Evergrande is one of many Chinese peers that have been impacted by the housing crisis after the government clamped down on the booming property industry to cut risk and make homes cheaper. A larger company, Country Garden Holdings, is expected to post a mega H1 loss.

The slowdown in China’s economy is causing more than concern around the financial world, manifested by dipping imports of construction material into the world’s second largest economy; even Joe Biden has called the economic problems a “ticking time bomb”. It is reported that global investors have divested almost US$ 10 billion, mostly in blue chips, from China’s bourses. Many Asian economies have already been impacted, with Japan posting its first decline in exports, of cars and chips, in more than two years in July after China cut back on purchases. Other countries, including South Korea and Thailand, have downgraded their growth forecasts, citing China’s weak recovery. But it could prove to be a silver lining for the UK, still battling high inflation, as the slowdown will see global oil prices decline and prices of goods being shipped globally falling. Others will benefit as investors look for a new market to park their investments being moved out of China. However, a continuing slowdown will have a negative impact on the global economy, as a weak Chinese economy, allied with a Western recession, will be good for nobody; the IMF has indicated that when China’s growth rate rises by 1.0%, global expansion is boosted by about 0.3%.

There are several sectors that could bear the brunt of problems if the Chinese economy buckles, including many in Asian countries that has the country as its main export market, for everything such as electronic parts, food, metals and energy. It is noted that the value of Chinese imports has fallen for nine of the last ten months, (and the value of Asian and African imports down more than 14% in the first seven months of 2023), from pre-Covid record highs, whilst the value of shipments from Africa, Asia and North America were all lower in July than twelve months earlier. It is inevitable that the copper, coal and iron ore mining nations would also suffer if a downturn lasted longer.

Tourism is another industry that could be hurt by a Chinese slowdown – the country was only just beginning to recover from the effects of Covid and beginning to open up. Only recently did the administration allow group travel overseas, whilst increased flights were beginning to result in lower fares. SE Asian countries, including Thailand, were just benefitting from an improved influx of high-spending Chinese tourists. If the economy declines, there will be a fall in consumer spending, with the inevitable fall in overseas travel.

Already this year, the yuan has lost 5% in value to the greenback, despite the central bank having introduced measures, including daily currency fixings, to soften the impact. There is a correlation to a falling yuan and the effect that this has on other currencies such as the Singapore dollar, Thai baht, and Mexican peso. The impact is particularly felt by countries with metal-exposed currencies, with a good example being the Australian dollar which has lost more than 3% this quarter, the worst performer in the Group-of-10 basket.

Luxury goods will take a beating if the Chinese economy continues to slow. The likes of Louis Vuitton, LVMH, Gucci, Kering and Hermes are vulnerable to wobbles in Chinese demand, and top line figures will inevitably dip, as will margins, as prices will also be affected. Other companies from Nike to Caterpillar have reported a hit to their earnings from China’s slowdown.

The recent rate cuts by the central bank have led to less foreign interest in the bond market and some investors have moved their investments elsewhere. Bloomberg posted that overseas holdings of Chinese sovereign notes are at the lowest share of the total market since 2019. Global funds had turned more bullish on the local currency bonds of South Korea and Indonesia as central banks there near the end of their interest-rate hiking cycles.

There has been a damming report by the Organised Crime and Corruption Reporting Project (OCCRP), a global network of investigative journalists. The Guardian and Financial Times, has claimed that India’s Adani Group used “opaque” funds to bypass rules that prevent share price manipulation. It is alleged that the Group invested millions of dollars in publicly traded stocks of its own companies through offshore structures – using the services of two named individual investors. The two men, it says, have “close ties to the Adani family” and have been directors and shareholders in associated companies. Although the company rejects the “meritless” claims, it comes months after US short seller, Hindenburg Research, accused the Group of “brazen” stock manipulation and accounting fraud. This case is currently being investigated by India’s market regulator.

In a bid to calm local prices ahead of key state elections, the Indian government has imposed a US$ 1.2k per tonne minimum export price on basmati rice shipments; this comes after it had banned exports of non-basmati white rice in July and last Friday imposed 20% duty on the exports of parboiled rice. One of the reasons for this latest tariff is that, after the ban, some traders were classifying non-basmati white rice as basmati to overcome the export restriction. India ships out around 4 million metric tonnes of basmati rice to countries such as Iran, Iraq, Yemen, Saudi Arabia, the UAE and the US.

Following six consecutive quarters of deficit, the EU trade balance went into surplus, mainly attributable to declining energy prices. After a quarter of declines in exports, (down 2.0%), and imports by 3.5%, there was a US$ 1.09 billion, (Eur 1.0 billion) trade surplus at 30 June 2023 – a major improvement on the US$ 169.4 billion deficit in Q2 2022. The main factors for imports were a 15.6% drop in energy and a 10.9% decrease in raw materials, and for exports all sectors declined, notably energy (-22.5%) and raw materials (-9.3%); the only increase was for machinery & vehicles (2.5%). In Q2, trade surpluses were noted for food/drinks/tobacco, chemicals and machinery/vehicles reaching US$ 17.06 billion, US$ 57.32 billion and US$ 53.06 billion. Although the trade energy trade balance improved, it still remained well in negative territory at minus US$ 109.42 billion.

The latest Eurostat posts that the August euro area annual inflation is expected to come in on 5.3%. The main components – food, alcohol & tobacco, services, non-energy industrial goods and energy – will see August and July rates at 9.8/10.8%, 5.5%/5.6%, 4.8%/5.0% and -3.3%/-6.1%.

A game-changing ruling by a US appeals court overturned the Securities and Exchange Commission’s decision to block the first exchange-traded fund tied to Bitcoin’s spot price and sided with Grayscale Investments. This probably was the first legal ‘defeat’ by the SEC, as its main aim seems to have been to sanitise the cryptocurrency market and beat them into compliant submission. This was indeed a major victory for the industry, with Bitcoin soaring more than 7% on the news. The decision shows that the SEC’s approach to policing the grey legal areas of cryptocurrency, along with severe methods to enforce banking regulations, are far from fool proof and the watchdog has lost some teeth in its seemingly ongoing battle to harass the sector. It is highly likely that because of this court case, crypto is closer to more widespread acceptance in the traditional investment industry.

In yet another sign that the US labour market is cooling, the number of positions available fell 4.0% to 8.8 million in July, on the month, with the chance that the expected 0.25% rate hike this moth may now be paused. However, there are still 1.5 positions for every job seeker, whilst the quit rate and the number of layoffs remained flat at 2.3% and 1.6 million. The decline in total vacancies reflects dips in positions available in business services, health care and government services. Another Labour Department report noted a dip in August consumer confidence down 7.9 to 106.1, attributable to inflated prices, primarily energy and grocery, as well as less-optimistic views on the jobs market.

The WTO has forecast that Q3 global trade volumes will grow at a “moderate pace”, after rebounding in Q2, attributable to surging automotive exports following two quarters of decline. The WTO’s periodic goods barometer is used to indicate what is happening to world trade – values greater than 100 indicate above-trend trade volumes – and under 100 that goods trade has either fallen below trend or will do so in the near future. Latest figures show that in June, it climbed 3.5 to 99.1 on the month, but was down on the quarter by 0.3 and 1.0 on the year. The two main factors behind the downturn, that began in Q4 2022, were high food and energy prices linked to the war in Ukraine, and tighter monetary policies – higher interest rates – aimed at fighting inflation in advanced economies. Some of the barometer’s component indices include export orders, container shipping, air freight index, and raw materials at 97.6, 99.5, 97.5 and 99.2. Two notable outlier indices were automotive products, at 110.8, in contrast to electronic components’ 91.5. which has fallen below the trend.

At last week’s Jackson Hole symposium in Wyoming, Jerome Powell, the US Federal Reserve chairman, was fairly adamant that it will continue to raise interest rates “if appropriate” as inflation remains “too high” but noted that although the pace of price rises had fallen from a peak, it still remains too high – at July’s 3.9%, still above the Fed’s 2% target. He commented that interest rates could rise further and stay higher for longer, and that we “intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.” He also pointed to the states of the housing sector and the labour market that could have a bearing on future policy decisions. He said that activity in the housing market “had not cooled enough, and that after softening over the past eighteen months, it is showing signs of picking back up,” adding that “could warrant further tightening of monetary policy”. He also indicated that wage growth should soften – as higher wages tends to add to inflation – so if higher wages are needed to attract staff in a tight labour market, then that is a good enough reason to keep rates high. The Fed is not one for turning in uncertain times.

Nationwide indicated that UK house prices are 5.3%, (US$ 18.4k) lower on the year – the biggest annual decline since August 2009; a year ago, in August 2022, house prices peaked. The main reason for the fall is higher borrowing costs, with mortgage rates rising from almost zero at the start of 2022 to its current level of 5.25%, with mortgage approvals almost 20% lower than pre-pandemic levels. The average house today is valued at US$ 326k, compared to US$ 345k in August 2022 and US$ 313k in August 2021. The current two-year and five year fixed rates are at 6.7% and 6.19%, whereas the rate in December 2021 was a meagre 1.5%. According to property website Zoopla, people with mortgages currently make up 60% of all house sales, compared with 31.8% cash-buyers and buy-to-let making up the remaining 8.2%.

Speaking at the same gathering, the BoE’s Deputy Governor Ben Broadbent noted that interest rates will have to remain high for longer because inflation will not fade as quickly as it blew up, despite recent drops in gas and producer prices and adding that the main problem is to forecast how quickly declining import costs will feed through to domestic price-setting behaviour – he opined that it would potentially take up to two years to get it embedded. Even before this high-level get-together, the general opinion was favouring at least two more 0.25% rate hikes before any impact is felt. After fourteen consecutive rises, the current rate is 5.25% – its highest level since 2007 – and consumer price growth has fallen from 11.1% to 6.8%.

In the UK, there was extensive flight disruption last Monday which left thousands of passengers stranded, with the National Air Traffic Services confirming a flight plan that its systems could not process was the reason for the failure. It took just three hours to sort out the problem but by then the damage was done. Michael O’Leary, boss of Ryanair, said that about 40k of his passengers were affected and two hundred and fifty flights cancelled, with a further seventy-five on Tuesday. Overall, on that day, two hundred and eighty-one flights were cancelled. IATA supremo, Willie Walsh, called the failure “unacceptable” and said he felt for passengers who continue to suffer “huge inconvenience” and airline staff put under “considerable additional stress”. He also added that airlines would “bear significant sums in care and assistance charges, on top of the costs of disruption to crew and aircraft schedules. But it will cost Nats, (National Air Traffic Services), nothing.” Some reports indicate that the failure caused disruption to over 300k people and could cost the government over US$ 100 million Maybe some of the money may be paid by certain UK politicians and ministers who reportedly ran a “chumocracy” at the start of the pandemic in 2020, and that some multi-million-pound contracts were awarded during the coronavirus crisis to companies with links to ministers, lawmakers and officials.

The National Audit Office posted that the government did not properly document key decisions nor was it open enough about billions of pounds of contracts handed out during the pandemic There had been a lack of transparency and a failure to explain why certain suppliers were chosen, or how any conflict of interest was dealt with,  as over US$ 22.8 billion (GBP 18 billion) in procurement deals made between March and the end of July, often with no competition. Of these contracts, US$ 13.3 billion (GBP 10.5 billion) was awarded without any competition.

This month, inflation in Zimbabwe peaked at 280%, one of the highest rates globally. The Zimbabwean dollar also weakened, trading at 930 to the US dollar on the parallel market – a steep decline after two months of relative stability at 700 to $1. Recently, the IMF predicted a further GDP fall of 3.5% next year, attributable to “renewed domestic and external shocks (inflation surge, erratic rainfall, electricity shortages, and Russia’s war in Ukraine) … adversely affecting economic and social conditions.” Many are of the opinion is that the hyperinflation and falling currency – not helped by years of economic mismanagement, (and the possibility of corruption), by the past president, Robert Mugabe, and the current incumbent, Emmerson Mnangagwa – will continue to worsen until major reforms are carried out. Some analysts see no improvement following the inevitable Mnangagwa presidential election victory last week. A crystal ball is not needed to forecast inflation at over 400%, the currency trading at 1.5k to the US$, no let-up in power cuts, increased civil unrest and the central bank continuing to print money.

Zimbabwean President Emmerson Mnangagwa is known as ‘The Crocodile’ for his ruthlessness; he is a member of the ruling ZANU-PF party which has ruled the country for the past forty-three years. The octogenarian took over the presidential reins when his predecessor, Robert Mugabe, left the position following a well-organised 2017 coup d’état – he was 93 years old. Despite the new president, the corruption and mismanagement of the country’s finances continues, whilst any election followed the set pattern of rigging, voter suppression, failure to meet regional and international standards, as well as other irregularities. Last month’s election was no exception, with the head of the EU’s observer mission saying the vote took place in a “climate of fear”, including issues such as voting delays, problems with the voter roll, bans on opposition rallies and biased state media coverage. Early last month, Human Rights Watch posted a damming report – ’Crush Them Like Lice’; Repression of Civil and Political Rights Ahead of Zimbabwe’s 2023 Election – which found that the seriously flawed electoral process threatened the fundamental rights of Zimbabweans to freely choose their representatives. The electoral process has been undermined by the authorities’ adoption and use of repressive laws, the Zimbabwe Electoral Commission’s lack of impartiality, the Zimbabwe Republic Police’s partisan conduct, and use of intimidation,  as well as violence against the opposition, the opposition’s lack of access to voter rolls, and impunity for individuals responsible for election-related abuses. Last week, voting was forced into an unprecedented second day because of delays in the printing of ballot papers in some key districts including the capital Harare, an opposition stronghold. Guess who won last week’s election and didn’t the Crocodile Rock?