Mind Your Own Business!                                                         02 February 2024

The real estate and properties transactions, totalling 3,677, were valued at US$ 3.13 billion in total during the week ending 02 February 2024. The sum of transactions was 192 plots, sold for US$ 711 million, and 2,699 apartments and villas, selling for US$ 1.57 billion. The top three transactions were all for plots of land, the first in Madinat Dubai Almelaheyah for US$ 167 million, the second in Al Merkadh for US$ 40 million and in Madinat Dubai Almelaheyah for US$ 39 million. Madinat Hind 4 recorded the most transactions, with fifty-one sales, worth US$ 32 million, followed by twenty-seven sales, in Al Hebiah Fifth, for US$ 21 million, and fourteen sales, in Jabal Ali First, valued at US$ 19 million. The top three transfers for apartments and villas were a villa in Al Mamzer for US$ 50 million, another in Al Wasl, for US$ 18 million, and an apartment in Um Suqaim Third for US$ 15 million. The mortgaged properties for the week reached US$ 610 million; one hundred and fifty-four properties were granted between first-degree relatives, worth US$ 232 million.

It is reported that Binghatti Properties is already talking to potential buyers for the sale of Dubai’s most expensive penthouse, priced at US$ 204 million (AED 750 million). Bugatti Residences by Binghatti’s Sky Mansion Penthouse went on sale for a record price in mid-2023. The forty-six-storey ultra-luxury development, Bugatti Residences by Binghatti, features Sky Mansion Penthouses spanning the top 11 floors. These penthouses allow owners to drive their super-luxury vehicles directly to their apartments, as each penthouse occupies an entire floor. To date, the most expensive penthouse, at US$ 136 million (AED 500 million) is the 21.9k sq ft five-bedroom Como Residences penthouse on Palm Jumeirah, whilst last month, the 77.7k sq ft Super Penthouse R1, comprising the top three levels and the rooftop of the Raffles The Palm Dubai Residences, went on the market for US$ 164 million (AED 600 million).

India’s Skyline Builders has announced the launch of Avant Garde Residences in Jumeirah Village Circle – its first foray into the Dubai market; the thirty-five-year-old real estate developer has a legacy of one hundred and fifty-eight projects, in India, with over sixteen million sq ft developed. The project, spanning 300k sq ft, features eighteen residential floors, five podia, and a ground floor, with one hundred and seventy-two apartments, including studios, one and two-bedroom units, as well as three retail shops; starting prices start at US$ 170k.

Even after four years of impressive growth, 2023 hit record levels to reach US$ 124.2 billion – and all indicators point to a better 2024, mainly because demand is expected to outstrip supply. Because of Covid, launches almost dried up and only returned to some form of normality last year, so that new property handover will only start later in the year. On top of that, after a pandemic-driven lull, Dubai’s population is beginning to move higher. Last year, it grew by 100k, and it will be no surprise to see 2024 welcome a further 150k to bring the emirate’s population to 3.805 million. It is a fact that at the beginning of the year, supply lagged demand and whether a 45k increase in residential units will be enough to satisfy the market is problematic, bearing in mind that up to 36k units will be taken by the newcomers.

Under the patronage of Dubai’s Crown Prince, Sheikh Hamdan bin Mohammed, a global first for Dubai sees the emirate launching the “Dubai Jet Suit” race, on 28 February 2024 – the first ever sporting contest featuring eight opponents going aerial, without the aid of an aircraft. Competitors will rely on suits equipped with jet engines to navigate a predetermined course. The country will be represented by Ahmed Al Shehhi, with the competition taking place between Dubai Harbour and SkyDive.

In a bid to enhance and support the sector, Sheikh Hamdan bin Rashid has launched the ‘Dubai International Growth Initiative for SMEs’; it also aims to accelerate their progress and global expansion. The US$ 136 million fund, developed through a partnership between the Dubai Government and Emirates NBD,  will be used to assist entrepreneurs, who the Crown Prince added “are key contributors to Dubai’s success, and your partnership is vital to achieving the goals of the Dubai Economic Agenda D33”; he also highlighted that entrepreneurs worldwide who have chosen Dubai as their launchpad, writing that they extend their steadfast support locally and internationally.

On Monday, Sheikh Maktoum bin Rashid opened the forty-ninth edition of Arab Health, the region’s largest healthcare exhibition. The Minister of Finance for the UAE and First Deputy Ruler of Dubai commented that “by bringing together the world’s foremost healthcare expertise and institutions and fostering an environment for excellence and innovation in the sector, Dubai continues to consolidate its status as a premier healthcare destination.” The three-day event, held at the Dubai World Trade Centre, features over 3.4k exhibitors, more than forty international pavilions and over one hundred and eighty participating countries. Arab Health 2024 has nine product sectors, which include Medical Equipment & Devices, Disposables & Consumer Goods, Orthopaedics & Physiotherapy, Imaging & Diagnostics, Healthcare & General Services, IT Systems & Solutions, Healthcare Infrastructure & Assets, Wellness & Prevention and Healthcare Transformation.

After price falls over the previous three months, the UAE Fuel Price Committee has increased all retail fuel prices, (except for diesel) for February. Eight years ago, the federal government liberalised fuel prices so that they could be aligned with market rates until the onset of the pandemic saw prices frozen by the Fuel Price Committee. In March 2021, prices were amended to reflect the movement of the market once again, as January retail prices all headed south:

The breakdown in fuel price per litre for February is as follows:

• Super 98: US$ 0.768, to US$ 0.785 in January (up by 2.2%)

• Special 95: US$ 0.738, to US$ 0.777 in January (up by 5.2%),

• Diesel: US$ 0.815, from US$ 0.817 in January (down by 0.3%)

• E-plus 91: US$ 0.719, to US$ 0.733 in January (up by 1.9%)

In a bid to enhance its position as a leading player in the sector of global trade, transport and logistics, Emirates Post Group Company has unveiled its new brand identity – 7X. This branding represents the connectivity of the seven emirates to the seven continents and across the seven seas, marking a commitment to enabling a world in motion. This is in line with its five-year strategy shift which prioritises operational excellence, digital transformation, customer-centricity, cultivation of strategic partnerships, and promotion of sustainable growth. 7X is the parent of such entities as Emirates Post, FINTX, and Electronic Documents Centre.

Latest figures from the Ministry of Finance indicate that it expects 2023 non-oil growth to have reached 5.9%, and by 4.7% this year, as the benefits of diversification in the economy, and a marked effort to promote sustainable growth, start to gain traction. Younis Haji Al Khoori, Undersecretary of the Ministry of Finance, pointed out that the UAE’s non-oil foreign trade hit a record US$ 337.6 million in H1 – a 14.4% rise on the year; foreign direct investment inflows, up 14.4%, touched US$ 22.7 billion in 2022. He expected the country’s overall to grow to a creditable 5.7% this year, despite all the economic headwinds and a global slowdown.

The Central Bank of the UAE has imposed a US$ 327k fine on a local insurance company, following the result of the findings of a regular examination. This showed that the entity had deficiencies in its AML/CFT policies and procedures and was based on Article 14 of the Federal Decree Law No (20) of 2018 on Anti-Money Laundering and Combatting the Finance of Terrorism and Financing of Illegal Organisations. These laws have been introduced to safeguard the transparency and integrity of the insurance sector and the UAE financial system.

In line with the US Federal Reserve, the Central Bank of the UAE has maintained the Base Rate applicable to the Overnight Deposit Facility at 5.40 %. The CBUAE has also decided to maintain the interest rate applicable to borrowing short-term liquidity at fifty bp above the Base Rate for all standing credit facilities.

Greatly assisted by the rude health of the emirate’s economy, Mashreq posted a 107% surge in Q4 profit, to US$ 762 million, on the back of a marked improvement in interest income, 41% higher at US$ 545 million. Dubai’s third-largest lender by assets also registered a 116% surge in insurance, foreign exchange and other income surged 116% year-on-year to US$ 147million. Annual profit also more than doubled to US$ 2.34 billion, as net interest income and income from Islamic financing posted a 69% jump to US$ 2.10 billion. By the end of 2023, the bank’s assets had grown 22.0% to US$ 65.39 billion, with similar increases seen in loans/advances – up 25% to US$ 40.71 billion – and 28.5% in customer deposits to US$ 39.84 billion.

Commercial Bank of Dubai was the latest local bank to return record 2023 profits – 45.2% higher on the year to US$ 722 million – with major contributions from net interest and other operating income, backed by strong loan growth, along with higher market interest rates. Operating profit, with a 31.8% hike, stood at US$ 1.01 billion, with operating expenses at US$ 335 million, and net impairment loss 7.0% higher at US$ 289 million. There were increases in gross loans, total assets, net loans/advances and customer deposits – 11.6% at US$ 24.2 billion, 11.0% to US$ 35.1 billion, 11.5% to US$ 24.1 billion and 8.9% to US$ 22.1 billion. The bank proposed a cash dividend of US$ 0.12 per share.

Tecom Group announced a record 2023 US$ 599 million in revenue, (a 10% increase), whilst net profit surged 49% to US$ 300 million. This improvement came about from new and existing customers operating across all six sectors the Group serves, and bullish consumer and business confidence. Ebitda increased by 23% to US$ 463 million, and the Ebitda margin expanded to 76%, compared to 68% a year earlier. Funds from operations stood at US$ 381 million, up 21% on the year, because of improved collections and increased performance of income-generating assets. The occupancy rate for the commercial and industrial portfolio was 89%, registering the third quarter of sequential growth. The lease of industrial lands witnessed a strong demand in 2023, as the occupancy rate rose to 94%. The Board recommended a dividend pay-out of US$ 109 million to the company’s shareholders for H2 2023.

Dubai Financial Market Company posted a 122.4% surge in its 2023 net profit at US$ 90 million, with a US$ 76 million dividend, (equating to 3.5% of the capital) proposed. Revenue was 54.0% higher, at US$ 148 million, with investment returns/other income contributing US$ 53 million and operating income, US$ 94.0 million, operating expenses, at US$ 58 million, were up 3.9%. In Q4, total revenue, at US$ 56 million, was 79.9% higher, whilst the profit came in up 146% at US$ 39 million. Two new entrants to the DFM – Dubai Taxi Company and Al Ansari Financial Services, the bourse’s first family-owned company – raised US$ 537 million last year – as investor demand led to an oversubscribed value of US$ 4.44 billion. Market capitalisation rose 18.2% on the year to US$ 18.75 billion and sector wise, financials, utilities, real estate, industrials and communication services accounted for 41%, 22%, 17%, 15% and 3.4% respectively. During the year, the DFM General Index grew 21.7%, closing on 31 December on 4,063 points.

The DFM opened the week, on Monday 29 January, 96 points (2.4%) higher the previous week, gained 66 points (1.6%) to close the trading week on 4,229 by Friday 02 February 2024. Emaar Properties, US$ 0.08 lower the previous fortnight, was flat, closing on US$ 2.04 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.68, US$ 4.93, US$ 1.70, and US$ 0.37 and closed on US$ 0.68, US$ 4.92, US$ 1.74 and US$ 0.36. On 02 February, trading was at 63 million shares, with a value of US$ 47 million, compared to 138 million shares, with a value of US$ 127 million, on 26 January 2024.

The bourse had opened the year on 4,063 and, having closed on 31 January at 4,169, was 106 points (2.6%) higher. Emaar started the year with a 01 January 2024 opening figure of US$ 2.16, to close the month at US$ 2.02. Four other bellwether stocks, DEWA, Emirates NBD, DIB and DFM started the year on US$ 0.67, US$ 4.70, US$ 1.56 and US$ 0.38 and closed YTD at US$ 0.68, US$ 4.82, US$ 1.72 and US$ 0.37.  On 31 January, trading was at 203 million shares, with a value of US$ 173 million, compared to 138 million shares, with a value of US$ 58 million, on 31 December 2023.

By Friday, 02 February 2024, Brent, US$ 3.93 higher (5.0%) the previous week, shed US$ 5.29 (6.4%) to close on US$ 77.20. Gold, US$ 38 (2.9%) lower the previous fortnight, gained US$ 39 (1.9%) to trade at US$ 2,055 on 02 February.

Brent started the year on US$ 77.23 and gained US$ 4.14 (5.3%), to close 31 January 2024 on US$ 81.37. Meanwhile, the yellow metal opened 2024 trading at US$ 2,074 and gained US$ 9 (0.4%) to close on US$ 2,083.  

On Tuesday, Japanese transport officials raided Toyota’s Hekinan plant to investigate cheating on engine testing, and, at the same time, the carmaker announced that it had retained its number one status – selling 11.22 million vehicles, up 7.0% on the year, and easily beating Volkswagen’s 9.2 million units. Toyota chairman Akio Toyoda vowed to steer the company out of scandal and to ensure the Japanese car maker “sticks to making good cars.” The latest scandal was revealed by a whistle-blower who claimed that Daihatsu Motors, 100% owned by Toyota, had been cheating on its testing for decades. Two years ago, another Toyota-owned company, lorry-maker Hino Motors said it had systematically falsified emissions data, dating back as far as 2003. No major accidents have been reported in connection with any of the cheating. but production has been halted on some of the models, including the ten models affected by the current cheating. The latest problem affects models including Land Cruiser and Hilux sport utility vehicles sold in Japan, Europe, the ME, Africa and Asia, but not in North America.

Toyota Motor issued “Do Not Drive” advisory covers to urge the owners of 50k old 2003-2004 model year Corollas, 2003-2004 Corolla Matrix, and 2004-2005 RAV4s, with Takata air bag inflators, to get immediate recall repairs because an air bag inflator could explode and potentially kill motorists. More than thirty deaths worldwide, including twenty-six in the US, and hundreds of injuries in various automakers’ vehicles since 2009 are linked to Takata air bag inflators that can explode, unleashing metal shrapnel inside cars and trucks. Furthermore, over the last decade, over sixty-seven million Takata air bag inflators have been recalled in the US by more than twenty automakers, and more than one hundred million inflators worldwide, in the biggest auto safety recall in history. Last July, Stellantis warned 29k 2003 Dodge Ram pick-up drivers to immediately stop driving pending repairs after one person was killed when a Takata air-bag inflator exploded. Earlier, in November 2022, Stellantis urged owners of 276k other older US vehicles to immediately stop driving after three other crash deaths, tied to faulty Takata air bag inflators. Honda has reported seventeen US deaths, and more than two hundred injuries, related to Takata inflator ruptures.

With drone attacks in the Red Sea continuing, it appears that global air freight charges have risen for the first time since 11 December; the latest weekly Baltic Exchange Air Freight Index increased 6.4% in the week ending 29 January to US$ 1,972, with air cargo rates outbound from Shanghai, Hong Kong and Singapore, moving by 8.8%, 5.9% and 4.1% higher. DHL has indicated that “some companies are already shifting to other modes of transportation, with air freight being the first choice. If the situation in the Red Sea continues to escalate, more companies may choose to go via air.” Another factor for the spike in air cargo rates is the upcoming Chinese New Year. Meanwhile, other shipping companies have decided to use the Cape of Good Hope and the subsequent higher shipping costs and increased fuel burn. IATA points out that air cargo accounts for more than 35% of global trade by value, but less than 1% of world trade by volume. Dubai maybe a beneficiary of this crisis, with some goods possibly going by air to Dubai and then by sea to Europe.

Microsoft posted a 33% surge in its fiscal Q2 2024, ending 31 December, to US$ 21.9 billion, driven by Azure cloud business and robust strong productivity; over the quarter, revenue was 18.0% higher, at US$ 62.0 billion, with its operating income jumping to US$ 27 billion. The company’s last-quarter diluted earnings increased 33% to US$ 2.93 a share. During the quarter, Microsoft also returned US$ 8.4 billion to shareholders in the form of share repurchases and dividends. Xbox content and services revenue surged 61%, mainly attributable to the US$ 69 billion acquisition of Activision the gaming company behind Call of Duty, Overwatch and World of Warcraft. The company spent more than US$ 6.8 billion on R&D – about 13% of its total quarterly sales. Its total cash/cash equivalents/short-term investments were 27.2% lower over the fiscal H1 standing at more than US$ 81 billion. There was a 20.0% revenue increase in Microsoft’s intelligent cloud division, which includes Azure public cloud, to US$ 25.9 billion, Last month, the technology company announced the addition of a new Copilot key on the Windows keyboard, in a move aimed at supporting the adoption of AI in its hardware products; it will be available in laptops and personal computers manufactured by Microsoft and its partners.

Declining energy prices in 2023 were the main cause behind Shell’s profit declining 29.3% to US$ 28.2 billion, compared to its biggest ever profit of US$ 39.9 billion in 2022, for which it paid a windfall tax of US$ 225 million. Last year, the energy giant paid US$ 1.39 billion in overall tax in the UK of which US$ 303 million was taxed under the Energy Profits Levy. It also returned US$ 29.05 billion to its shareholders in 2023 and was now increasing its dividend by 4% and beginning a US$ 4.42 billion share buyback programme over the next three months.

In after-day trading yesterday, Amazon’s shares jumped almost 8%, after it had posted higher than expected Q4 net profit to US$ 10.6 billion, as revenue climbed 14.0% to US$ 170 billion – the thirteenth consecutive quarter with more than US$ 100 billion in sales. The company noted that “the fourth quarter was a record-breaking holiday shopping season and closed out a robust 2023 for Amazon.” Its sales guidance for the current quarter is for revenue to hover between US$ 138 billion and US$ 143.5 billion, jumping 8% – 13%, compared with the same period a year earlier; operating income is expected to be between US$ 8 billion and US$ 12 billion, compared with US$ 4.8 billion in Q1 2023. For the 2023 year, its net income stood at US$ 30.4 billion, (compared with a net loss of US$ 2.7 billion in 2022), while its revenueincreasing 12% on the year to US$ 574.8 billion in 2023.

PayPal announced that it plans to slash its payroll by another 2.5k; twelve months earlier, the tech firm went through a similar exercise. It indicated that the decision was made to “right-size” the company “through both direct reductions and the elimination of open roles”.  The digital payments giant – which has been facing rising competition from rivals such as Apple, Zelle and Block – has seen its share value slump 20% over the past twelve months. Last week, the firm launched new AI-driven products as well as a one-click checkout feature. In 2023, more than 260k tech industry jobs were lost, and even in the first month of 2024, almost one hundred tech firms – including Meta, Amazon, Microsoft, Google, TikTok and Salesforce – have announced a total of 25k job cuts, with the latest being Block retrenching some 1k.

With major assistance from sales of its iPhone sales, Apple’s net profit rose 13%, in fiscal quarter ending December 2023, to US$ 33.9 billion – 48% higher on the quarter; revenue nudged up 2% to US$ 119.6 billion, the first quarter of increased sales after four consecutive quarters of yearly decline.

Facebook’s parent company, Meta saw Q4 revenue jump 25.0% to US$ 39.1 billion – the third consecutive quarter that the company has reported double-digit revenue growth since Q4 2021; net profit surged by 201% to more than US$ 14.0 billion. On the news, the share value of the tech giant – which owns apps including Facebook, Instagram, Messenger, WhatsApp and other services – closed 15.1% higher at US$ 454.40, which pushed its market cap to US$ 1.01 billion. The company’s earnings per share jumped 201% annually to US$ 5.33., with daily active users increasing by 6.0%, to 2.11 billion. Meta, which employs more than 67k people, expects its March quarter total revenue to be in the range of US$ 34.5 billion to US$ 37 billion.

The world’s fifth richest person, with a net worth of US$ 142 billion, is about to become even wealthier. The chief executive, Mark Zuckerberg, could receive an annual pay out of about US$ 700 million a year from Meta’s first-ever dividend, announced for investors. It also noted plans to buy back an additional US$ 50 billion in shares and issue its first quarterly dividend since listing in May 2012.; holding three hundred and fifty million shares, the chief executive would take home about US$ 175 million every quarter.

Calling it “an unfathomable sum” that was unfair to shareholders, a Delaware judge rejected Elon Musk’s record-breaking US$ 56 billion Tesla pay package, which had been approved by its Board. The judge found the share-based compensation was negotiated by directors who appeared beholden to Musk. The Tesla board has been criticised as failing to provide oversight of its combative, headline-making CEO, who has fought regulators and led several other companies at the same time. In typical Musk fashion, the Tesla supremo advised “never incorporate your company in the state of Delaware.”

In sync with many financial institutions seeing a fall in deal-making activity after interest rates rose, Deutsche Bank is the latest lender to reduce its workforce, planning to cut 3.5k, of its 90k global payroll, by the end of 2025. Germany’s largest bank employs around 7k in the UK but no news is currently available about their future. The industry has seen a fall in takeovers and share listings, which has dented revenues for many financial institutions, and this is the main driver in the current round of redundancies. A drop in deal activity has prompted many firms, including some in the City of London and on Wall Street, to cut their head counts. Citigroup and Goldman Sachs have shed posts, while Barclays – one of the UK’s largest lenders – cut 5k globally in 2023.

Two of the most integral metals, used in energy transition, are lithium and nickel, and one of the biggest players in this mining sector is Western Australia; both minerals are key components of batteries used in EVs.  Forecasts of huge demand, post pandemic, led to sudden price hikes that ultimately fed a surge in exploration and production. For example, in October 2021, lithium was selling at US$ 384 but at the end of last week was 52.3% lower at US$ 183, with nickel, in March 2022, at US$ 46.5 but slumping by 64.5% to US$ 16.5. Following Economics 101 principles, huge demand for the two metals, driven by nascent industries such as batteries for EVs, pushed their prices higher which in turn resulted in a surge in exploration and production – and new mines. When supply rises to outpace demand, then the inevitable happens, the boom-bust cycle goes against the market – mines are mothballed, miners lose their jobs and investors see their investments heading quickly south. Last week the world’s largest lithium producer, Albemarle, said it would cut jobs and pause expansion at its Bunbury refinery in WA’s south to reduce costs and optimise cash flow. Already this year, WA has seen job losses and mine curtailments for Ravensthorpe and Kimberley’s Panoramic Resource’s nickel operations, along with the suspension of Core Lithium’s mines in the NT. WA billionaire Andrew Forrest’s Wyloo Metals was one of the biggest players to take a hit, announcing it would cease nickel mining in Kambalda, with Nickel West to shut down part of its processing operations nearby.

With most western companies having closed operations in Russia, it is reported that Avon, the fourth biggest global beauty company, with over US$ 10.0 billion in global sales, continues to maintain links in Russia, with the BBC reporting that it is still recruiting new sales agents in the country and continuing production in a huge plant there. With its HQ in the UK, it commenced its Russian business in the nineties and has said that it provides “critical support” for women whose livelihoods depend on their business. At the start of the war, the company announced that it was shopping investment and suspending exports of its beauty items from Russia to other markets, including Ukraine. Earlier, Natura & Co, its parent company, commented that it was only maintaining local operations to support its sales agents who are reliant on their business, and that “we believe restricting their access to products would have an outsize impact on women and children there.” Even now, the BBC has found it is still possible to register as a new sales agent for the firm in Russia, with recruits offered prizes, cash bonuses and even holidays for hitting targets. It seems ironic that its Brazilian parent company’s website expresses concern for “all people impacted by this unacceptable aggression” in Ukraine, whilst Avon still has its Naro-Fominsk plant in the Moscow area, where it produces more than two hundred and twenty types of cosmetics and perfumes, and still claims to be the number one perfume brand in the country.

After a marked slowdown in sales, including the Christmas period, H&M chief executive, Helena Helm has resigned, after four years in the position, to be replaced by Daniel Erver, who having worked for the Swedish chain for eighteen years, will step in to Helena Helmersson’s role; on the news, H&M shares slumped by sone 10%.The retailer, lagging behind  rivals including the likes of Zara and Shein, has 3.9k  stores in seventy-seven countries and has had a UK presence since 1976; it is known for its mid-value fashion, including accessories and sportswear. Some of its stores recently introduced homeware. Business wass impacted as the cost-of-living crisis spiralled out of control, with shoppers spending less on items that are seen as discretionary.

With revenue figures such as a 23.5% slump in half yearly figures to 28 October 2023,Superdry may be planning a major overhaul that could result in significant numbers of store closures and job cuts. On news of these dismal figures, Superdry’s market cap dipped to just US$ 20 million. There are reports that the London-listed clothing retailer, with PwC as advisers, are looking at a possible company voluntary arrangement or a restructuring plan, both of which are insolvency mechanisms enabling businesses to reduce their liabilities to creditors. Inevitably, there would have to be shop closures and payroll cuts but currently, there are no details which of the two hundred and fifteen outlets will be closed and how many of the 2.35k workforce will be affected. Superdry commented that “as a management team, we continue to focus on the delivery of our cost efficiency programme and further opportunities to reduce the fixed cost base of the business, with in excess of GBP 40 million (US$ 51 million) of savings due to be realised within the year.” One other possible option is for the founder, Julian Dunkerton – and 25% shareholder – to take the company private.

It is reported that John Lewis is planning to cut about 10%, (of its 76k payroll), in a bid to reduce costs and return to profitability, following a loss of US$ 297 million, after another deficit a year earlier; The cuts, spread over five years, will include redundancies, and not replacing vacant positions, across its supermarkets, department stores and head office. Every member of staff is considered a Partner, with the company owned by its workers through a trust, and who normally receive a bonus at year end; this was not forthcoming last fiscal year, ending 31 March 2023. At the same time, sixteen department stores and several supermarkets were closed, and thousands of jobs were lost.

The BoE has fined HSBC US$ 73 million for “serious failings” to accurately identify deposits eligible for UK’s Financial Services Compensation Scheme, which customer deposits are protected up to the value of US$ 108k. The regulator said the problems occurred between 2015 – 2022, relating to depositor protection rules, that requires banks must have systems and controls in place to make sure that financial information is logged correctly. One of HSBC’s subsidiaries – HSBC Bank – was found to have incorrectly marked 99% of its eligible beneficiary deposits as “ineligible” for FSCS protection; it also provided incorrect evidence that its systems satisfied certain requirements of the deposit protection rules. In 2021, HSBC was fined US$ 81 million by the UK’s financial regulator for “unacceptable failings” of its anti-money laundering systems.

One of Australia’s richest men, Andrew Budzinski, faces a class action over allegations that he, and his company, IC Markets, misled thousands of everyday investors who may have collectively lost hundreds of millions of dollars trading in risky contracts for difference financial products. Strangely, CFDs are illegal in countries, such as the US and Singapore, but can be traded, (albeit under strict conditions), in Australia. The class action alleges that, by offering these highly risky and unsuitable financial products to retail investors (before the ASIC restrictions came into force in March 2021), IC Markets engaged in misleading, deceptive and unconscionable conduct. Bu using CFDs, investors are able to trade on how much assets – such as cryptocurrencies, shares and commodities – will increase or decrease in value. Data shows that Budzinski paid himself dividends of US$ 617 million, (AUD 939 million), as his company posted profits of over US$ 657 million (AUD 1 billion), in the three years ending 30 September 2020. There is no doubt that CFDs are highly volatile and have historically been highly leveraged products, exposing investors to rapid losses, with allegations that IC Markets set “the buy and sell price for its CFDs in a way that was not transparent to retail clients”. It also claimed that the company sold “highly leveraged CFDs to retail investors that were complex, highly risky and unsuitable for those investors”, and that it “used language that made new users feel comfortable, such as representations that users could ‘trade with the world’s largest Forex CFD provider’ and ‘trade with the most trusted CFD provider in the world’ and did not contain prominent warnings of the risks of CFDs.”

India’s Tata group and France’s Airbus have signed an agreement to manufacture civilian helicopters together; the two companies already cooperate to make C-295 transport aircraft in the Indian state of Gujarat. It was noted that the production of H125 helicopters “would include significant indigenous and localisation component”, and the aircraft will also be exported to some of India’s neighbouring countries. The actual facility location has yet to be decided but it is expected that deliveries will start in 2026. President Macron, on his fifth visit to India since May 2023, discussed the possibility of French engine maker Safran assisting in manufacturing fighter jet engines in India. Coinciding with Macron’s visit, jet engine maker CFM International also announced an agreement ,with India’s Akasa Air, to purchase more than three hundred of its LEAP-1B engines, to power one hundred and fifty Boeing 737 Max planes.

A Hong Kong court has ordered that the embattled Chinese debt-ridden property giant Evergrande be liquidated, with judge Linda Chan saying “enough is enough” after the property giant failed to come up with a restructuring proposal. The mega giant, with liabilities of over a massive US$ 323 billion, defaulted on its debts two years ago. Little surprise to see its shares slump 20% on the news last Monday. There is every chance that China’s realty problems, which accounts for almost 25% of the country’s economy, will have an impact not only the local, but also the global, economy. The case was brought to court by Hong Kong-based Top Shine Global, in June 2022 but the vast majority of the money it owes is to lenders in mainland China who have limited legal avenues to demand their money. Following the making of a winding up order, the company’s directors will cease to have control, and a provisional liquidator will likely be appointed by the court, Whether the conclusions of this Hong Kong court are recognised on the mainland remains to be seen.

In a bid to tighten a worryingly high sell off of shares, which has seen nearly US$ 6.0 trillion lost since its last peak in 2021, the Chinese government has tightened its financial industry rules.  They include new rules that will limit “short selling”, that the China Securities Regulatory Commission says will create “a fairer market order”. This is but the latest measure that the watchdog has introduced over the past twelve months, most of which have had a minimal impact. The CSRC said that following “a complete suspension of the lending of restricted stocks”, which takes effect today, further limitations on securities lending will be introduced from 18 March. It is no coincidence that last week, the country’s premier Li Qiang asked authorities to take more “forceful” measures to stabilise share prices, as there are concerns that many investors are selling shares because of the real risk that the country’s economy could face a long period of slow economic growth.

A US judge, who has agreed with Florida Governor Ron DeSantis in his fight with Disney, rejected a lawsuit that had accused the Republican of organising a campaign of “government retaliation”. He indicated that the actions that Disney opposed were legal and it lacked standing to sue the governor, noting that state legislators had the right to make the changes and the company had failed to prove it faced any imminent harm from the governor. The two sides started feuding after Disney, under pressure from its staff, criticised the Parental Rights in Education Act – dubbed the “Don’t Say Gay” bill by critics – which banned discussion of sexual orientation and gender identity for young students, later expanded the ban to cover all school grades.

As widely expected, the Federal Reserve left interest rates at their current 5.25%-5.00% twenty-three year high but noted that rate cuts are coming – but not yet. In the current economic environment, a rate cut will occur probably before the end of June and in the words of Fed Chair, Jerome Powell, the bank was looking for “greater confidence” that the inflation would continue to fall, and that “we’re wanting to see more data.”  Some analysts will be looking for earlier cuts arguing that the soaring price increases, that pushed the central bank to start raising rates in 2022, have slowed, with the December inflation rate at 3.4%. The conundrum facing the US central bank – and other global entities – is that if they keep rates high borrowing remains more expensive, discouraging people and businesses from taking on debt; if pushed lower too quickly, then credit spending may result in excessive growth and subsequent inflation, reducing purchasing power and undermining the sustainability of any economic expansion.

The Labour Department posted that January saw US employers add 353k jobs, well above initial estimates of 185k; the unemployment rate remained unchanged at a near-historic low of 3.7% and annual wages rose 4.5%. Job gains were made in professional and business services, health care, retail trade and social assistance, with losses noted in mining, quarrying and oil and gas extraction. The robust state of the sector is an indicator for the Federal Reserve, to believe it can achieve its inflation goal without widespread job losses. Furthermore, consumer spending has remained resilient and in Q4, 3.3% growth outperformed the Fed’s expectations.

The British Retail Consortium posted that January shop prices rose at their slowest rate – 2.9%, compared to December’s 4.0% – since May 2022, mainly attributable to discounts and lower prices for milk and tea. On average, food prices are still rising by more than 6% a year, whilst price increases for non-food products, which dipped 1.3%, down from December’s 3.1%. It must be remembered that the current political/economic global environment may point to higher prices in the near future. Interestingly, the BRC posted that some eighty-six million more lunchboxes were taken to work in 2023 as people sought to manage budgets more closely, as well as spending on alcohol fell by more than 50%, compared with December – maybe to the increasing impact of the Dry January movement?

The IMF seems to be disagreeing with Jeremy Hunt “advising the UK against further tax cuts”; it noted that preserving public services and investment implied higher spending than was reflected in the government’s current plans. The Chancellor has hinted that tax cuts could be a big help in boosting growth, with the world body hinting that planned spending cuts for this year were unrealistic. This comes at a time when the IMF downgraded the UK’s growth forecast by 0.4% to 1.6%, and when 2023 figures are expected to be around 0.6% – the second slowest in the G7 major economies, behind Germany. One of the IMF jobs is to advise its members on how to improve their economies – luckily, they seem to be often wrong with many of their forecasts and perhaps should keep away from such forecasts until they put their own house in order. The message from the Chancellor is to Mind Your Own Business!”.