The Way It Is!                                                 15 March 2024

Muhammad Binghatti, CEO of Binghatti Holding, has given three important reasons why the Dubai property sector continues to expand, with him expecting average prices increasing by 14.0% this year.  They are population growth, (probably by 3.0% plus in 2024), higher demand for mortgages, due to an expected drop in interest rates, and more international millionaires investing in Dubai property. The 2024 Dubai market rally is entering its fourth year and is still ongoing, albeit at a slower pace, maybe with the exception of the ultra-luxury sector. Dubai’s property market rally that started after the Covid-19 pandemic will continue in 2024 also, but the pace is likely to slow down as the market matures. Residential property prices reached their peak in 2023 as both apartments and villas set  new records. The rally is mainly driven by the ultra-luxury segment on the back of a very strong inflow of high-net-worth individuals into Dubai and the growing popularity of luxury branded residences in the emirate.

The introduction of the ten-year visa by Dubai authorities has had a surprise impact on the emirate’s property sector, more so after banks dropped the requirement of a minimum down payment of US$ 272k (AED 1 million). It seems that many property developers are increasing the size of apartments to accommodate the growing demand for US$ 545k, (AED 2 million) residences which is the minimum requirement to be eligible for a Golden Visa; this is irrespective of the down payment and the property’s status (whether off-plan, completed, mortgaged, or not). Investors, with US$ 409k investments, are increasing their budget to reach the ten-year residency eligibility threshold. Since it was first introduced in 2019, foreign investment in realty has increased markedly.

As demand for Dubai ultra-luxury properties continues to soar, Arista Properties has launched a US$ 136 million project, designed by HBA Architects, in Wadi Villas, located in Mohammed Bin Rashid Al Maktoum City, District 11, Meydan.  The development will only have thirty villas, ranging from 4 B/R to 6 B/R, with prices from US$ 3.8 million to US$ 10.9 million; completion is slated for 2026. The gated community’s amenities will include a co-working lounge, café, concierge services, 24/7 security, maintenance, CCTV surveillance, visitor’s driver lounge, rainforest boardwalk, private parking, infinity lap pool clubhouse, fitness centre, games room, library and indoor/outdoor kids’ play area. Additionally, each villa features an elevator, private pool and patio BBQ terrace.

With a 3.4% year-on-year growth in occupancy levels, Dubai hotels attained 90.8% last month; other metrics also moved north – including average daily rate and revenue per available room up 9.3% to US$ 241 and by 13.1% to US$ 219. Between 20 – 22 February, occupancy, ADR and RevPAR reached 96.2%, 96.8% and 96.5% respectively, with daily occupancy levels in the market remaining above 80% throughout the entire month. The daily room rate increased on 21 February, reaching US$ 304. Three of the many events held last month, that contributed to these impressive numbers, were the Gulfood exhibition, the FIFA Beach Soccer World Cup and the Dubai Duty-Free Tennis Championships.

GlobalData’s latest report shows that the UAE construction market size was valued at US$ 94 billion last year, with the UK-based data analytics and consulting company forecasting that AAGR growth will be more than 3.0% between 2025-2028. It noted that the growth was more than assisted by an increase in investments in transport and renewable energy infrastructure, with improvements in the EV market. There was no surprise to see that residential captured the highest share of the UAE’s construction market last year, which indicated that the real estate sector continued its growth momentum, with expectations that the sector will maintain good growth rates during this year.

There was a marked improvement in new order volumes that helped February’s S&P Global Dubai Purchasing Managers’ Index to move 1.9 higher, on the month, to 58.5 in February – its highest level since May 2019, and its joint-strongest reading since 2015. The rise in Dubai’s non-oil private sector activity was also helped by favourable market conditions and a positive response to greater sales efforts. The PMI is derived from individual diffusion indices which measure changes in output, new orders, employment, suppliers’ delivery times and stocks of purchased goods. David Owen, the body’s senior economist, noted that “that the Dubai non-oil sector is one of the fastest growing worldwide according to global PMI data. Output and new order volumes are proving especially robust, with companies reporting new clients, higher demand and a still improving economy post-pandemic”. The economy’s growth will continue its upward momentum well into 2024, driven by slowing inflation, the fact that the UAE was removed from the FATF’s grey list, which will inevitably facilitate foreign currency exchange and boost FDI, and lower interest rates.

There are numerous issues that UAE consumers face with banks and insurance companies, from being overcharged fees to more serious problems such as financial fraud and the mis-selling of financial products. Now the government has come to their assistance. Last week saw the introduction of Sanadak, the UAE’s first ombudsman, with its prime raison d’etre being to resolve consumer issues, within the financial sector, by lodging complaints against banks and licensed insurance companies, directly to the new body. This will remove the current requirement to take claims to court and judicial authorities. Fatma al Jabri, the first chairman of Sanadak, noted that “the UAE is paving the way for a more coherent financial landscape where complaints are resolved efficiently and transparently, fostering an environment of trust and stability,” and “that is independent in the Mena region, setting the benchmark for consumer production and financial preparedness.” The previous process was that consumers were first required to lodge a complaint with their bank, and if they did not receive a response within thirty days or were not satisfied with the reply,  consumers could only escalate their complaint with the UAE Central Bank’s Consumer Protection Department if the bank had not responded to a complaint, within thirty calendar days, or if they were not satisfied with the outcome. Now consumers can submit complaints, free of charge, for any product, service or offering provided by financial institutions and licensed insurance companies. If the complaint is accepted – there are a number of eligibility criteria listed on the website such as misleading, deceptive, fraudulent or unfair conduct by, or on behalf, of a licensed financial institution or insurer – Sanadak may require parties to provide more information. If not satisfied with the decision, consumers can appeal the decision at a cost of US$ 136. It will also work with financial institutions and insurance companies to ensure they comply with consumer protection standards.

HH Sheikh Mohammed bin Rashid, in his capacity as Ruler of Dubai, issued Decree No. (13) of 2024 on the Unified Digital Platform for establishing companies in Dubai. Its main aim is to integrate various licensing processes in Dubai, including those managed by the Department of Economy and Tourism, the Authorities of special development zones and freezones, including the Dubai International Financial Centre (DIFC), and other relevant entities – and forms part of Dubai’s efforts to enhance its business environment and advance economic growth. It hopes to offer a streamlined channel for accessing information, obtaining licenses, and availing other services related to economic activities, and introduced for the benefit of the end-user, the investor. It also seeks to enhance electronic integration between licensing departments and other key entities to avoid duplication of procedures and supports Dubai’s digital transformation in line with the objectives of the Dubai Economic Agenda D33 to establish the city as a leading global digital economy hub. Furthermore, Resolution No (5) ensures that all licensing entities and federal and local entities, tasked with regulating and supervising business activities in Dubai, are responsible for facilitating a smooth journey for investors in Dubai and implementing the procedures required to facilitate this. It also outlines various measures to provide a smooth experience for investors including registration on the ‘Invest in Dubai’ digital platform, unified digital data registration, instant licensing, instant license renewal, one-step fee payment, streamlining of licensing requirements, and the standardisation of procedures, rules and conditions. The Decree stipulates that the Department of Economy and Tourism is responsible for operating, managing and developing the ‘Invest in Dubai’ platform in collaboration with relevant licensing bodies, in line with the digital transformation guidelines set by the Dubai Digital Authority.

The UAE and Hungary have signed an economic cooperation agreement aimed at stimulating trade and investment flows in priority sectors of mutual interest, aiming key sectors such as industry, commerce, investment, tourism, logistics, infrastructure and real estate. Since 2019, non-oil bilateral trade has more than tripled, and last year by 23.1%, to US$ 1.13 billion. As per the agreement, a joint committee will be established to facilitate and oversee economic engagement, developing mutually beneficial programmes and initiatives, while also establishing a mechanism to oversee their successful implementation.

Eagle Hills, which is chaired by Mohamed Alabbar, has been selected by the federal government to work on a US$ 6.3 billion mixed-use property project in Budapest which may increase to US$ 10.9 billion in later phases. This follows the signing of the agreement between the UAE and Hungarian governments. The Minister of State, Dr Thani Al Zeyoudi, confirmed that “this is a government-to-government agreement which laid out the foundation for companies like Eagle Hills to come in and do huge investments in the property development sector in Hungary.” The Budapest project is “comprehensive”, featuring residential and commercial towers, with the Hungarian government planning to connect the district with the railway network and direct access to the airport. The project should take a “couple of years” to complete but the emphasis now is on finalising the business terms between Eagle Hills and the Hungarian government.

January saw a 29.0% hike in Dubai’s lifestyle business to over US$ 272 million, as the emirate welcomed 1.77 million international tourists in January 2024, an increase of 20.4%, compared to a year earlier. The top three source markets – accounting for 52.7% of the total – were Western Europe, the GCC and South Asia, with totals of 327k, 311k and 294k. Last year, Dubai World Trade Centre welcomed 2.47 million participants – a 25% increase on the year, as the number of MICE (Meetings, Incentives, Conferences and Exhibitions) events was 23% higher at three hundred and one. There were one hundred and seven Exhibitions and International Association Conventions and Industry Conferences, which attracted 1.56 million attendees – 33% up on the year – of which 46.3%, (722k), were from overseas, a massive 60% increase from 2023. The events saw a 45% increase in the number of exhibitors to 53.8k – 78% of which were from overseas. 850k attended the thirty-five entertainment, live, and leisure events. Figures like these go a long way to helping the D33 Agenda achieve the emirate’s aim to be in the top three global economic cities by 2033. There were thirty-three new entrants in 2023’s calendar of events – seventeen Exhibitions, nine International Associations Conventions and seven conferences, collectively attracting nearly 95k participants and over 2k exhibiting companies. They included World of Coffee, World Police Summit, International Federation of Oto-Rhino-Laryngological Societies – IFOS 2023, Seatrade Maritime Logistics Middle East and Asia Baby Children Maternity Exhibition. The top-performing industries in 2023 were the Healthcare, Medical, and Scientific sector, with twenty-four events, (including AEEDC and Arab Health), that attracted 275k attendees, the Information Technology sector, attracting 260k attendees, dominated by GITEX Global and its associated events and the Food, Hotel, and Catering sector, attracting 226k attendees, led by Gulfood and Gulfood Manufacturing.

DWTC Authority Free Zone issued six hundred and one new licenses last year, bringing its total to 1.9k – an indicator of its pivotal role in driving economic growth and entrepreneurship in Dubai. It is the emirate’s leading driver of global competitiveness, known for fostering innovative SMEs. Its real estate and asset management business performed well in 2023, with the stand-out being One Central, its flagship development, registering a 95% occupancy rate.

The emirate’s first stand-alone free zone, dedicated exclusively to digital commerce, Dubai CommerCity, is a JV between Wasl Properties and the Dubai Integrated Economic Zones Authority. Last year, it registered record growth in its digital trade operations and transit portal, with increases of 56%, 158% and 92% posted for the volume of goods processed through its transit platform, DCC Way, the number of orders fulfilled via its digital trade platform and the increase in goods shipping operations from distribution centres facilitated by its digital trade platforms. Its VP of Operations, Abdulrahman Shahin, noted that “these achievements further underscore Dubai’s standing as a regional pivotal economic hub and a leading logistics centre, aligning with the objectives of the Dubai Economic Agenda D33, which aims to double Dubai’s GDP and attract foreign direct investment.” The free zone, spanning an area of 2.1 million sq ft, provides a competitive digital trade system, innovative solutions, advisory services on sector regulations, integrated logistics solutions, including warehousing and last mile delivery solutions, integrated digital trade platform solutions, digital marketing services, and other support services.

Preliminary data from the Ministry of Finance indicate that the UAE Q4 government’s revenue rose 8.0%, to US$ 42.5 billion, on the year, as it continued to diversify its sources of revenue. The Q4 total expenditure – comprising net investment in non-financial assets and current expenses, consumption of fixed capital, paid interest, subsidies, grants, social benefits and other transfers – also rose, by 9.1%, to US$ 35.8 billion. The value of the government’s net lending/net borrowing – an indicator of the financial impact of government activity on other sectors of the economy – amounted to US$ 6.7 billion. The Ministry of Finance’s Younis Al Khoori added that “the UAE government is keen to diversify its revenue sources, while also ensuring optimal use of financial resources and improved efficiency of government spending.”

Al Etihad Credit Bureau posted that, last year, the number of bank loans and credit cards, issued by banks and financial institutions operating in the country increased, by 3%, to reach 2.52 million contracts (loans and credit cards). The number of active contracts (loans and cards) reached 9.8 million contracts at the end of December 2023, with an increase, year on year, of 10.1%. Its database has records of 16.6 million individuals and companies, including 7.1 million borrowers (individuals and companies), of which 4.2 million are active borrowers (individuals and companies). The number of individual borrowers reached 3.99 million clients, while the number of borrowing companies topped 189k, in addition to 1.7 million companies in the records of the AECB.

Majid Al Futtaim posted a 12.0% hike in net profit to US$ 740 million, with revenue nudging 1.0% higher to US$ 940 million, driven by strong property and entertainment businesses; EBITDA rose 12.0% to US$ 1.25 billion, as total assets increased 5.4% to US$ 18.99 billion. Despite the economic problems, especially involving currency devaluations in in Egypt, Lebanon, Pakistan and Kenya, and the general turmoil in the geopolitical environment, the company is “confident in our ability to navigate the path ahead while delivering value to our stakeholders in 2024 and beyond.” Founded in 1992, MAF is the largest mall operator in the region and has extensive business interests ranging from retail and leisure to property development. The Group employs 43k and hosts six hundred million visitors to its various malls every year.

With the exception of retail, all units performed well in 2023 including:

property                     revenue and EBITDA up 20.0% to US$ 1.88 billion and 21.0% to US$ 981 million, driven by increased footfall in UAE shopping malls and strong sales at its Tilal Al Ghaf residential property development

shopping malls           tenant sales of US$ 8.17 billion, an increase in overall occupancy to 96% and an 8% rise in footfall

hotels                          revenue 4.0% higher at US$ 191 million and 82% occupancy rate

retail                           declines in both revenue, 4.0% to US$ 6.73 billion, and EBITDA, 15.0%, “impacted primarily by currency devaluations” and a “shift in consumer sentiment related to geopolitical tensions in the region”

digital                          having opened twenty regional stores in 2023, digital retail business posted a 17.0% hike in revenue to US$ 708 million. In September, it rolled out its Launchpad X concept store – a collaborative commercial shop for entrepreneurs

entertainment            business rose 7.0% annually to US$ 490 million. Last June, it opened its fourth regional snow park in Abu Dhabi

DMCC noted that last year it welcomed almost 2.7k new companies – its second-best year – bringing the free zone’s total number of companies to over 24k, attributable to factors such as the launch of new industry ecosystems, the expanded service offerings and the physical growth of the Uptown Dubai district with the launch of Uptown Tower. The DMCC accounts for 11% of the emirate’s total foreign direct investment, growing its ongoing status as a global hub for trade in commodities like diamonds and precious stones, gold, energy and agri-softs as well as high-value services such as crypto, gaming and Web3.

Over the past five years, DMCC has posted an impressive 11% CAGR growth in the emirate’s diamond trade figures to US$ 38.3 billion. The value of polished diamonds traded in the UAE surged by 32%, year-on-year, reaching US$ 16.9 billion in 2023 – and now accounts for 44.1% of the total trade value – with a total of US$ 21.3 billion-worth of rough diamonds being traded in the UAE last year. Despite the global price of rough diamonds decreasing approximately 20% in 2023, the UAE’s rough diamond trade only decreased 13%, year-on-year, by value whilst maintaining strong trading volumes. Ahmed Sultan bin Sulayem, executive chairman, noted that “the polished segment now represents almost half of our diamond trade, consolidating our status as the world’s number one hub for rough and polished and, with major industry players continuing to be drawn to Dubai away from the old hubs of yesterday, DMCC will continue to set the benchmark for the services and value that diamond traders need to grow and prosper.” Dubai has also bolstered the support it provides for traders of lab-grown diamonds (LGDs) as it looks to replicate the success it has seen in the natural diamond industry. The value of LGDs traded in 2023 rose 10% year-on-year, reaching a total of US$ 1.6 billion.

DP World Limited posted positive 2023 results, with revenue 6.6% higher at US$ 18.25 billion, as adjusted EBITDA rose 1.9% to US$ 5.11 billion, at a 28.0% margin. Revenue growth was driven by Drydocks World (+US$ 400 million) and the full-year consolidation benefit of the Imperial Logistics acquisition (+US$ 900 million), with like-for-like growth driven mainly by the Ports and Terminals and Logistics business. The like-for-like adjusted EBITDA margin stood at 28.9%, while the profit for the year decreased by 17.7% to $1.51 billion, mainly due to higher finance costs. There was a 2.9% rise, to US$ 4.58 billion, in cash generated from the company’s operating activities. Chairman Sultan Ahmed bin Sulayem, stated, “this achievement is particularly noteworthy considering the significant challenges posed by a deteriorating geopolitical landscape and challenging macroeconomic conditions”, and “despite the uncertain start to 2024, with the ongoing Red Sea crisis, our portfolio has continued to demonstrate resilience. The outlook remains uncertain due to the challenging geopolitical and economic environment. Nevertheless, we anticipate our portfolio will sustain robust performance, and we maintain a positive outlook on the medium to long-term fundamentals of the industry and DP World’s capacity to deliver sustainable returns consistently”.

With the aim of expanding its supply chain services, amid increasing disruption to global trade, DP World has already opened one hundred freight-forwarding offices since the start of H2 2023 and is planning a further eighty by year end. Those freight forwarding offices, already set up, employ 1k staff, adding to DP World’s 108k-strong workforce, and the eighty planned offices are expected to add a further 800 employees. The global ports operator added that the move aims to provide customers with efficient access to cost-effective and reliable supply chains, while helping them navigate the complexities of global trade. A DP World’s spokesman said plans to expand the freight-forwarding services were “unrelated” to the Red Sea shipping attacks and are instead part of a “long-term strategy”, and that “customers will benefit from a single-source solution to getting their products from the point of creation into the hands of their customers.” Its freight-forwarding service spans order and origin management, port handling and freight management for ocean and air, and at-destination services such as customs, logistics, last-mile delivery and warehousing services.

To nobody’s surprise, Parkin has increased the number of shares, by 20.0%, to 89.96 million shares for retail investors interested in investing in its IPO; this equates to 12.0% of the total shares on offer from the initial 10.0%, due to “an exceptional level of oversubscription and demand from retail investors”. The 2.0% increase has been taken up by the qualified investor tranche being reduced to 659.73 million shares. The overall size of the public float remains unchanged at 749.7 million shares, equating to 24.99% of Parkin’s total issued share capital. Parkin is looking to raise as much as US$ 428 million through its listing on the DFM, with a price offering of between US$ 0.545 – US$ 0.572, (AED 2.00 – AED 2.10), which would give Parkin a market cap of between US$ 1.63 billion – US$ 1.72 billion (AED 6.00 billion – US$ 6.30 billion).

By Thursday, it was announced that the IPO received a record investor demand of US$ 70.52 billion, raising US$ 429 million, with a share value of US$ 0.572, (AED 2.10). It was oversubscribed 165 times across retail and institutional tranches of the deal, “the highest ever oversubscription level achieved on the DFM”. The company expects to start trading on the Dubai bourse on 21 March.

.According to the Dubai Securities and Exchange Higher Committee, companies in Dubai raised US$ 9.4 billion through selling shares on the DFM since 2021, with aggregate investment demand topping US$ 272.5 billion (AED 1 trillion). Strong investor interest, along with continued IPO activity, helped the general index to become the fifth best performing in the world. Sheikh Maktoum bin Mohammed, Deputy Prime Minister, noted that the General Index delivered “exceptional performance” last year, crossing the 4,000-point mark for the first time in eight years. A significant increase in trading activities, a rise in capital inflows and an influx of investors drove the record performance of the emirate’s bourse. The DFM, in attracting 230k new investors since 2022, improved its capitalisation by 18.2%, on the year, to US$ 187.5 billion.

The DFM opened the week on Monday 11 March 104 points (2.4%) lower the previous week, gained 9 points (0.2%) to close the trading week on 4,262 by Friday 15 March 2024. Emaar Properties, US$ 0.03 lower the previous week, gained US$ 0.01, closing on US$ 2.24 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.66, US$ 4.67, US$ 1.57, and US$ 0.36 and closed on US$ 0.66, US$ 4.85, US$ 1.57and US$ 0.36. On 15 March, trading was at 424 million shares, with a value of US$ 201 million, compared to 136 million shares, with a value of US$ 70 million, on 08 March 2024.

By Friday, 15 March 2024, Brent, US$ 1.93 lower (2.3%) the previous week, gained US$ 3.46 (4.2%) to close on US$ 85.39. Gold, US$ 138 (7.1%) higher the previous three weeks, gained US$ 79 (3.8%) to trade at US$ 2,083 on 15 March.

This week, Opec confirmed that it was sticking to its initial forecast that oil demand will increase for this year and next by 2.2 million bpd and 1.8 million bpd. However, it did see that global economic growth would be 2.8% in 2024, 0.1% higher than an earlier forecast, citing “robust” expansion in economic activity in H2, particularly in the US, India and Brazil, with China and Russia at steady levels and Japan in decline. Because of an extension of the production cut, extending to 2.2 million bpd by some Opec+ producers, including the UAE, Saudi Arabia and Kuwait, non-Opec crude production this year is now projected to grow by 1.1 million bpd, down 120k bpd from last month’s estimate. Production by core Opec members, which now excludes Angola, increased by 203k bpd last month, on the month to average 26.57 million bpd.

In 2023, Saudi Aramco posted a 17.0% decline in revenue to US$ 440.88 billion, with net profit 24.7% (US$ 39.8 billion), lower on the year to US$ 121.3 billion. The main reasons for the decline were reduced oil prices in 2023, lower volumes sold, and cuts in refining and chemical margins. In contrast, lower revenue and profit figures resulted in reduced royalty, tax and zakat payments; dividends rose by 30% to US$ 97.8 billion.  Capex was up 28.0% to US$ 49.7 billion.

Little wonder that Airbus is batting the embattled Boeing out of the park, with the US plane maker having to put quality ahead of quantity, as it tries to come to terms with all its manufacturing problems and shortfalls. In the first two months of 2024, Airbus has delivered seventy-nine jets, (including last month delivering forty-nine commercial planes to twenty-eight customers), well ahead of Boeing’s fifty-four, (delivering twenty-seven commercial planes to twenty-two customers). Having fallen by almost 29.0%, the US company’s share value on Tuesday stood at US$ 112.4 billion, some US$ 24.0 billion lower than the other member of aviation’s duopoly – the lag between both totals is the most ever.

TikTok users in the United States could soon be shut out of the country, as House of  Representatives politicians move forward with a bill giving its Chinese-based owner ByteDance an ultimatum – to sell or face a ban; if ByteDance chooses to divest its stake, TikTok will continue to operate in the US, but the latter happens only if President Biden determines “through an inter-agency process” that the platform is “no longer being controlled by a foreign adversary”. If the current bill becomes a law, which will also have to pass through the Senate, it would require ByteDance to give up control of TikTok’s well-known algorithm, which feeds users content based on their preferences. The main worry to politicians, and those who want the app banned, is that the Chinese authorities could force TikTok to hand over data on the one hundred and seventy  million Americans who use it, even if  the Chinese firm has confirmed that it has never shared US user data with local authorities and will not even if it is asked; two other worries are that TikTok censors content unfavourable  about China and that the government has used TikTok to influence recent US elections. Meanwhile, small businesses, who rely on the platform for marketing or to sell products on the TikTok Shop, warned against the ban, with many heading for Washington to participate in a lobbying blitz against the bill. The company told users, Congress was planning a “total ban” on the platform which could “damage millions of businesses, destroy the livelihoods of countless creators across the country and deny artists an audience”.

At the High Court in London, Mr Justice Mellor ruled that Dr Craig Wright was not the person who invented Bitcoin, something that the Australian computer scientist had previously claimed that he was actually Satoshi Nakamoto. Nobody has known the identity of the cryptocurrency founder(s) but it is widely accepted that on 03 January 2009, the bitcoin network was created when Nakamoto mined the starting block of the chain, known as the genesis block. Ever since 2016, Dr Wright has professed that he is Satoshi but his claims and evidence to back them up have long been questioned by cryptocurrency experts, with this case being brought by a group of Bitcoin companies.

Last June, TikTok estimated it has 8.5 million Australians and 350k businesses using the app, and that the number continues to grow. For what it is worth, and despite TikTok Australia saying it does not, and would not, share its data with any foreign government, this has not stopped Prime Minister Anthony Albanese saying he had no plans to ban TikTok, commenting “you also need to acknowledge that for a whole lot of people, this provides a way of them communicating”. However, it must be noted that last April, the Australian government also banned TikTok on government-issued devices – based on advice from intelligence and security agencies – and last December, the Australian Information Commissioner commenced investigations into the app after it was accused of taking data from the devices of people who don’t even have TikTok. 

Altria Group, the maker of Marlboro cigarettes, is to divest thirty-five million of its shares in AB InBev, (the owner of the Bud Light and Stella Artois beer brands, as well as other brands such as Beck’s, Corona and Leffe), worth more than US$ 2.2 billion and equating to about 17.3% of its total holding. Altria’s chairman, Dylan Mulvaney commented that the sale is “an opportunistic transaction that realises a portion of the substantial return on our long-term investment.” This comes after Bud Light sales had been hit by a US boycott over its work with transgender influencer Dylan Mulvaney, resulting in Modelo taking over as the top-selling beer in the US, with other brands, including Coors Light and Miller Light, gaining fast. The Belgian-based brewer, which saw annual US revenues dive 9.5% “primarily due to the volume decline of Bud Light”, confirmed in a regulatory filing that it had agreed to buy US$ 200 million of its shares from Altria. However, annual global revenues rose by 7.8% for the year, with profits of more than US$ 6.1 billion. Following the news, AB InBev’s US-listed shares fell by almost 4% in extended trading in New York.

Sanjay Shah, the founder of London-based hedge fund Solo Capital Partners, has gone on trial in Denmark accused of defrauding the country out of US$ 1.8 billion, through major tax evasion and avoidance schemes; he has been held in Denmark since being extradited to the country, following his arrest in Dubai in 2022. He is one of one of nine British and US nationals accused of being involved in the so-called cum-ex schemes which were designed to exploit weaknesses in national tax laws and focused on huge share trades, which were carried out with the sole purpose of generating multiple refunds of a tax that had only been paid once. It also involved the sale of shares from one investor to another immediately before the payment of a dividend to shareholders, with both parties claiming the dividend even though the tax itself, charged on the dividend at source, would only have been paid once.

The latest news on the takeover bid for Currys is that Elliott Advisors, which had offered US$ 970 million, has walked away after being rejected by the retailer’s board “multiple times” and that it was “not in an informed position to make an improved offer for Currys on the basis of the public information available to it”. Currys retorted stating that the US investment had “significantly undervalued” the business. Shares in the UK electrical retailer, which could still receive a bid from China’s JD.com, fell 10% on Monday following the news. By Friday, the Chinese retail giant confirmed that it will not be making an offer to buy Currys. It is reported that one of its major shareholders, JO Hambro Capital Management, indicated that an offer of say US$ 1.15 (GBP 0.90) would be acceptable; this would equate to US$ 1.0 billion.

Having not posted an annual profit over the past three years, John Lewis went into the black in 2023, with a US$ 71 million profit following a US$ 298 million deficit a year earlier. Waitrose profits and sales grew by 19% and 5%, while at John Lewis, profits were up by just 2%, as sales lost 4%. Despite making a profit, staff, numbering 75k, at John Lewis will face another year with no bonus being paid, as well the possibility of job cuts; numbers as high as 11k, over five years, have been bandied about. The company, behind Waitrose grocery shops and the John Lewis department stores, is employee-owned by permanent staff, known as partners. Those 76k workers typically get an annual bonus payment and 2023 was only the third time since 1953 that they did not. The firm said it was investing in its retail businesses and in staff base pay which could be increased by a record of US$ 148 million this year, as 67% of staff possibly get a 10% uplift.

With the decision to combine its brand and licensing arm, Virgin Management, and loyalty programme, Virgin Red, it seems that the Virgin Group will retrench about 8.0% of its 425-strong London staff. The redundancies were designed to remove “duplication and streamline operations”. This comes a week after a surprise move saw Nationwide acquire Virgin Money for US$ 3.85 billion, with Richard Branson on the receiving end of a US$ 511 million windfall, from his minority shareholding, as well as a US$ 320 million exit fee when its brand disappears from the combined group.

It has taken some time, (twenty-three years), to reach a conclusion but finally the Australian Tax Office has managed to nail Singtel, the parent company of telco giant Optus, which has lost its bid to get almost US$ 595 million deducted from its taxable income in Australia. Following its 2001 acquisition of Optus, Singapore Telecommunications had attempted to claim the deductions based on interest paid on loans between two of the company’s subsidiaries. In 2021, the Federal Court ruled that the lending did not comply with requirements under the “arm’s length” test – related companies dealing with each other have to behave as independent entities and to ensure they are not entering deals geared towards enabling tax avoidance.

This has proved to be a huge victory for the ATO and its Tax Avoidance Taskforce, which had been formed in 2016 to eradicate illegal and fraudulent tax arrangements. Deputy Commissioner Rebecca Saint noted that “this decision is another win for the Tax Avoidance Taskforce towards maintaining the integrity of the Australian tax system and holding multinationals to account”, adding that “whilst many large businesses are meeting their tax obligations, there are some that continue to engage in profit shifting practices. Taxpayers that set excessive prices for their related party dealings to shift their profits to low-tax jurisdictions should be on notice.” She estimates that the Taskforce has removed almost US$ 29.9 billion of past and future interest deductions from the tax system, resulting in billions of dollars of additional tax being collected in Australia, and has helped secure more than US$ 19.6 billion in additional tax revenue from multinational enterprises, large public and private businesses.

Last Friday, the ASX 200 closed on yet another record high at 7,847 points – an indicator that the Australian bourse has recovered well from its 6,781 points level of 31 October 2023. Four years ago, in March 2020, the bourse was sitting on 4,817. The main driver seems to be a strong rally in bank shares, as it seems that the US Federal Reserve is leaning towards an earlier rate cut, with inflationary pressures dissipating, with the RBA following suit.

By the end of last week, and after a mammoth fifteen years of negotiations, India had signed a free trade agreement with the European Free Trade Association – comprising Norway, Switzerland, Iceland and Liechtenstein – which will see investments in India of US$ 100.0 billion Prime Minister, Narendra Modi, noted that “this landmark pact underlines our commitment to boosting economic progress and creating opportunities for our youth.” The deal will see the host nation lifting most import tariffs on industrial goods from the four countries, in return for investments over fifteen years; the investments are expected to be made across a range of industries, including pharmaceuticals, machinery and manufacturing. Over the past two years, India has signed trade deals with Australia and the UAE, with the UK hoping to sign a free trade deal prior to the coming Indian general election later this year.

Visiting Pakistan, an IMF delegation has carried out its second and last review of a US$ 3 billion standby arrangement. If successful, the IMF will release a US$ 1.1 billion tranche, after the country secured the last-gasped rescue package last summer to avert a sovereign default. Prime Minister Shehbaz Sharif has already directed his finance team, headed by newly installed Finance Minister Muhammad Aurangzeb, to initiate work on seeking an Extended Fund Facility after the standby arrangement expires on 11 April. The world body has said it will formulate a medium-term programme if Islamabad applies for one.

With a June cut by the US Federal Reserve on the cards, and following keenly awaited inflation data, the pan-European STOXX 600 closed up 1.0%, to a record high on Tuesday; the hike was down to automakers and banks. Expectations are that the ECB will follow suit, especially after the recent slowdown in inflation in the euro zone. Germany’s DAX index ended at a fresh record high after data confirmed domestic inflation eased in February to 2.7%. French blue-chip shares also rose to an all-time peak, while UK’s FTSE 100 scaled its highest level since May 2023.

Rishi Sunak has warned English football’s powerbrokers that a deal will be introduced regardless of their willingness to agree it and that legislation to establish the new watchdog is likely to be introduced this month. Earlier in the year, the PM commented that “my hope is that the Premier League and the EFL can come to some appropriate arrangement themselves – that would be preferable.” Talks over the New Deal have been dragging on since the beginning of 2023 and later in that year, a US$ 1.18 billion agreement looked on the cards, but talks, with the EFL ground to a halt, with the EPL chief executive, Richard Masters, confirming that this was caused by internal divisions about the scale and structure of the proposed deal. A planned meeting for last Monday was called off, as it became evident that it would not win support from the required majority of fourteen clubs.

The Office for National Statistics confirmed that January saw growth of 0.2% in the UK’s GDP, after falling into a technical recession (two consecutive quarters of negative growth) in December. However, GDP did fall 0.1% in the quarter ending 31 January – an indicator that the UK economy is definitely not out of the woods yet and still struggling. The main drivers behind the positive January news were the customer-facing services industry, (which accounts for about 80% of the country’s output), expanding by 0.2%, with construction output 1.1% higher.  Again, the caveat was that over the quarter ending 31 January saw a 0.9% fall and zero growth. It must be noted that January figures may be subject to change, as figures are often amended when more information becomes available. Strong retail sales could also point to the fact that the economy could start bouncing back.

Not the best news for the US economy was that February inflation rose 0.4% to 3.2%, as annual US inflation came in slightly warmer than expected; this sets a problem for the Federal Reserve as to when it should start cutting interest rates, but is unlikely to occur this coming Tuesday, with the rate staying at between 5.25% – 5.50%. Core CPI, which excludes food and energy, rose 3.8%, year-on-year, down from 3.9% in January. In the previous week, the Labour Department posted that employers added 275k jobs in February, adding that unemployment nudged up to 3.9%, while wage growth slowed; this could give the Fed some relief that the economy is cooling. Earlier in the month, Fed Chairman, Jerome Powell, told US politicians on Capitol Hill that the central bank was getting closer to cutting rates, but that he and others at the Fed have routinely said they need “greater confidence” before they can begin dialling back. He added that “when we do get that confidence, and we’re not far from it, it’ll be appropriate to begin cutting rates,”

It is no secret that the New York commercial property market is struggling especially when one hears of stories of say 360 Park Avenue South. This twenty-storey building was sold for US$ 300 million and has been vacant since 2021 for redevelopment. One of the owners handed over its 29% stake to another partner, walking away from commitments to fund US$ 45 million more in upgrades, in exchange for just US$ 1. Early last year,Jacob Garlick agreed to acquire the Flatiron Building at an auction, but failed to pay the required deposit, and three of the four existing ownership groups took over the building. It had been vacant since 2019 and the latest is that it will be turned into condos. According to Moody’s Analytics, almost 20% of US office space was said to be unoccupied – the highest vacancy rate in forty years – and is expected to head higher over the next eighteen months. That being the case, property values have already headed south to the tune of up to 25%. A recent report estimates that US$ 660 billion has been wiped out over the past four years. Even if the space gets rented, just 12% of Manhattan’s office workers are estimated to be showing up in person five days a week.

To add to the property owners’ woes of falling occupancy levels, dipping revenue returns, allied with high borrowing costs, have seen a growing number going into negative gearing, as property values soften, leaving the borrowing banks absorbing the losses. There are reports that some three hundred US banks are at risk of failure due to the problem, including the New York Community Bank skirting with investors already fleeing with their deposits. It is estimated that the six largest U.S. banks saw delinquent commercial property loans nearly triple to US$ 9.3 billion in 2023 amid high vacancy rates and increasing borrowing costs, with almost 50% of all US banks have commercial real estate debt as the largest loan category overall. While commercial loans are more heavily concentrated in small U.S. banks, several major financial institutions have amassed significant commercial loan portfolios. Even the Fed chairman has acknowledged that “there will be losses. “I do believe that it’s a manageable problem. If that changes, I’ll say so.” To make matters worse, in the coming months, many of the mortgages that were taken out before the US central bank raised interest rates will need to be refinanced, inevitably at higher rates. There are losers everywhere – the banks, the investors, the employees, the taxing bodies, the local economy and the US economy. That is The Way It Is!