The Rent Is Always Due!                                                                                 26 April 2024

A sure indicator that Dubai’s property sector is in rude health is borne out by Cavendish Maxwell posting that, on average, there was a launch of a new property project every eighteen hours in Q1. In March 2024, for example, close to thirty projects, with 10k units, were launched by local and foreign developers, and, in Q1, one hundred and twenty projects, housing 34k units. Reports show that the pipeline of projects in the planning phase, being tracked by the Property Monitor team, exceeds one hundred additional projects across existing master communities.

Some of the major projects already launched in 2024 include:

• Emaar Properties’ US$ 15 billion Heights Country Club  
• Emaar Properties US$ 11.17 billion
• Arabian Hills Estate Grand Club Resort US$ 6.0 billion
• Danube Properties’ US$ 817 million Bayz101
• Danube Properties’ US$ 654 million Diamondz
• Deyaar Development’s US$ 191 million tower in Jebel Ali
• Swiss developer DHG Properties’ tower in JVC
• the Central Down Town by Aqua Properties

Some of the major projects already launched in 2024 include:

• Emaar Properties’ US$ 15 billion Heights Country Club  
• Emaar Properties US$ 11.17 billion
• Arabian Hills Estate Grand Club Resort US$ 6.0 billion
• Danube Properties’ US$ 817 million Bayz101
• Danube Properties’ US$ 654 million Diamondz
• Deyaar Development’s US$ 191 million tower in Jebel Ali
• Swiss developer DHG Properties’ tower in JVC
• the Central Down Town by Aqua Properties

According to Property Monitor, March sales transaction volumes surged by an impressive 14.7% to reach a total of 13.7k transactions – a new record for March and also the second-highest monthly sales volume ever recorded. Residential transactions, encompassing apartments, townhouses, and villas, accounted for 12.6k, (92%) of March sales There was also 7.8k off-plan Oqood transactions – up 21.7% on the month and a 3.3% uptick in market share to 56.9%. These were the highest-ever transactions witnessed since 2009.

Private developer Amwaj Development has launched The Starlight Park, as its first entrée into the Dubai property market, as, like others, it looks to cash in the current property boom. Located in Meydan, it is a four-building freehold community, with one hundred and seventy-two 1 B/R, 2 B/R and 3 B/R apartments. Its CEO, Murad Saleh, noted that “Starlight Park is the first of several new projects that we plan to develop with our existing land bank and through the acquisition of new plots in Dubai’s most popular areas”. All apartments have dedicated parking spots, a common outdoor garden oasis, a rooftop pool, a fitness studio, a rooftop cinema, indoor/outdoor kids play areas, yoga and boxing studios, paddle tennis, EV charging stations and a resident’s lounge. Completion date is slated for Q2 2026.

Danube Properties has become the first in the ME to launch a gym with Salman Khan’s ‘Being Strong Fitness Equipment’ at its upcoming US$ 654 million Diamondz project in Jumeirah Lake Towers. The sixty-five storey property is the company’s fifteenth project launched in the last twenty-four months. All apartments will be fully furnished and will come with more than forty facilities and amenities including a swimming pool, jogging track, sports arena, working space, business centre, meeting place, tennis court, barbecue area, jogging track and doctors on call. Prices start at US$ 300k.

Danube is probably the only developer that has the routine of launching one project at a time, and only when it is sold out, puts it under tendering and construction, before moving to the next project. The launch of Diamondz comes a few weeks after the sell-out of the developer’s Bayz101 project in Business Bay, within two months of its launch. The developer also has a 1% payment plan, home buyers usually receive the keys after paying around 60% of the project and keep on paying the balance 40% in forty monthly instalments.

Yesterday, Samana launched the US$ 272 million Samana Lake Views Project, located in Dubai Production City, with the group aiming to invest US$ 3.41 billion into UAE real estate this year. This twin-tower project, spanning 794 sq ft, comprises 1k apartments, (a range of studios, 1 B/R and 2 B/R units) and is expected to be completed by Q4 2027; there will be private pools and smart home technology in all apartments. In response to the demand from investors, who prefer the resort-style communities, the Dubai-based private developer will complete projects near the waterfront developments. The development will have all the usual amenities including kids’ pools, aquatic indoor/outdoor gyms, outdoor cinema, lazy rivers and trampoline park. The developer will offer a convenient eight-year payment plan, a five-year post-handover plan, and an option of 1.0% or 0.5% monthly instalments,  with prices from US$ 174k.

HH Sheikh Mohammed bin Rashid Al Maktoum, has chaired the UAE Cabinet’s meeting at Qasr Al Watan, where it discussed many important issues. HH Sheikh Mohammed noted “the impacts of the recent extreme weather conditions the country experienced over the past few days. The situation was unprecedented in its intensity. We are a country that learns from every experience. The central operations rooms responded to more than 200k reports, with the joint effort of over 17k members from the security, emergency and interior entities, 15k members from the local authorities, and thousands of volunteers to manage the consequences of this exceptional weather event.” He added, “Thanks to the follow-up and support of my President His Highness Sheikh Mohamed bin Zayed Al Nahyan, life returned to normal quickly. HH issued his directives to conduct damages assessments, provide support for families, and immediately assess the status of the infrastructure, emphasising that the safety of citizens and residents is the top priority.” HH Sheikh Mohammed continued, “In today’s Cabinet meeting, we allocated AED2 billion, (US$ 545 million), to address the damages suffered by citizens’ homes. A ministerial committee has been tasked with overseeing this file, assessing damages, and disbursing compensations in cooperation with other federal and local entities. Additionally, in today’s Cabinet meeting, we formed a committee to assess the damage caused by floods and rain to infrastructure and propose solutions and measures at the national level”. “The exceptional weather event turned out to be a blessing for us. The dams filled up, the valleys flowed with rainwater, and the underground water reserves replenished. We learned significant lessons on managing heavy rains in our cities, identified areas for development, and enhanced our readiness and preparedness, making us better prepared for the future.” He ended with “We extend our thanks and gratitude to everyone who has worked and is still working for our country, including emergency and crisis centres, security, military, and civilian entities, federal and local government entities, volunteers, and all citizens and residents who have demonstrated solidarity, cooperation, and profound love for the United Arab Emirates.”

Following the catastrophic floods the previous week, the country’s central bank issued a notice to all banks and insurance companies, asking them to allow a six-month deferment of repayments for personal and car loans for customers affected by the recent storms. This will result in customers avoiding any additional fees, interest or profit charges, nor an increase in the principal amount of the loan. The regulator also confirmed that “insurance companies shall be considered responsible for indemnification and that any damage to vehicles or homes would be covered by if there is an insurance policy against loss and damage that is usually referred to as “comprehensive insurance”. It also suggested they approach the recently launched Sanadak, the financial and insurance ombudsman, if they have a complaint or dispute with the insurance company.

A week after signing a similar agreement with Costa Rica, the UAE and Colombia have signed a Comprehensive Economic Partnership Agreement which aims to enhance bilateral trade flows by cutting tariffs, removing barriers and improving market access for both merchandise and service exports. The agreement follows an impressive increase in bilateral non-oil trade, which climbed 43% to reach an all-time high of US$ 53 million in 2023 – more than double the total achieved in 2021. Like other CEPAs, (that have already been signed with Cambodia, Congo-Brazzaville, Georgia, India, Indonesia, Israel, Kenya, Mauritius, South Korea and Turkey), it will also open pathways for investment and joint ventures in sectors such as energy, environment, hospitality, tourism, infrastructure, agriculture and food production. Such agreements have helped boost the country’s non-oil foreign trade, which, last year reached a record US$ 708.4 billion, (AED 2.6 trillion) and (AED 3.5 trillion including trade in services) in 2023.

According to the latest Reuter’s poll, growth in the UAE economy has been marked higher from the initial 3.8% in January to 4.0%, driven by strong performance in non-oil sectors. The IMF noted that “in the post-pandemic era, the UAE’s economy is being mainly driven by confidence in its policies, attracting talent and foreign direct investment from around the world in key sectors, especially real estate, travel and tourism and retail sectors. In addition, high oil prices are also supporting the growth of the economy.” A major factor that could impact on future growth is disruptions to shipping in the Red Sea that has seen freight and raw material costs pushed higher. Meanwhile, S&P Global Ratings estimates that increased oil production and support from non-oil sectors will drive economic growth in the UAE this year. The non-oil GDP is likely to continue growing, driven by the performance of the hospitality, real estate, and financial services sectors. It expects “inflation to slow over the second half of this year and remain lower in the Gulf relative to other emerging market economies this year;” it has forecast UAE inflation at 2.4%.

During this week’s visit of Oman’s Sultan Haitham bin Tariq, as well as the UAE-Oman Business Forum, multiple agreements, with a total value of US$ 35.15 billion, have been announced. They include:

• an industrial and energy megaproject, valued at US$ 31.88 billion, encompassing renewable energy initiatives, including solar and wind projects, alongside green metals production facilities
• a US$ 180 million shareholder agreement to launch a technology-focused fund, signed by ADQ and OIA
• an agreement on a UAE-Oman railway connectivity project, valued at US$ 3.0 billion
• an investment cooperation agreement covering multiple sectors including digital infrastructure, food security, energy, transport and other areas of mutual interest
• a partnership agreement between Etihad Rail, Mubadala and Oman’s Asyad Group worth US$ 817 million
• a framework agreement to form a UAE-Oman alliance focused on enhancing bilateral economic and trade relations 

In 2023, the value of non-oil trade between the UAE and Oman reached nearly US$ 14.0 billion.

More than eighty-three million cyber threats were blocked and detected in the UAE last year using solutions from Trend Micro, a report from the company showed. The report, titled “Calibrating Expansion” showed the prevention of over twenty-six million email threats and more than eleven million malicious URL victim attacks. Furthermore, Trend Micro identified and stopped more than twenty-eight million malware attacks, showcasing its effectiveness in protecting digital infrastructure in the country. At this week’s three-day GISEC Global, the region’s premier cybersecurity exhibition, Trend Micro showcased its state-of-the-art security offerings, including the ground-breaking Trend Vision One, recently launched in the UAE.

Driven by robust growth and record income, Equitativa (Dubai) Limited, manager of Emirates REIT (CEIC) PLC, has posted impressive 2023 results. Total property income rose over 10.0% to US$ 74 million for FY 2023 – on a like-for-like basis, this growth amounted to 13%. Annual profit was 54.9% higher at US$ 127 million and operating profit, (37.5% higher), at US$ 44 million, after taking into account a slight 2.0% rise in property operating expenses. Because of rising benchmark rates and higher Sukuk profit, the net finance cost surged 72.4%, amounted to US$ 50 million, resulting in a negative US$ 6 million Funds From Operations. There was a 68.3% increase in the 2023 unrealized gain on revaluation of investment properties, reflecting the strong operating performance of the portfolio assets in a healthy real estate market, whilst the fair value of investment properties rose 18% to US$ 924 million. Total Assets rose past the US$ 1.0 billion mark to US$ 1,037 million, with the Net Asset Value closing 34.0% higher to close at US$ 500 million.

On Monday, Emaar Properties AGM approved the Board of Directors’ proposal for a notable dividend of US$ 0.136, (50 fils) per share amounting to US$ 1.20 billion. The higher-than-expected dividend was a result of the company’s robust sales stream of US$ 11.0 billion, including US$ 10.2 billion in the domestic market. 2023 revenue and profit figures were up 7.0% to US$ 7.3 billion and 70% higher on US$ 3.2 billion, with EBITDA up 67% to US$ 4.71 billion.

This week Emaar Development shareholders approved a directors’ proposal to distribute a 2023 dividend of US$ 567 million, equating to 52% of its share capital, (US$ 0.142 per share). It reported a 22.0% annual rise in property sales to US 10.19 billion resulting in a healthy sales backlog of US$ 15.56 billion, which will be recognised as revenue in the coming years. Earlier, the company had posted 2023 revenue of US$ 3.24 billion and net profit of US$ 1.80 billion, 74.0% higher on the year. In the year, it delivered over 12k residential units, including Dubai Hills Estate, Dubai Creek Harbour, Downtown Dubai, Emaar Beachfront, Arabian Ranches, and Emaar South. By the end of last year, Emaar had delivered over 70k residential units in the UAE with over 25.5k residences currently under development in the country.

Following last week’s news that Spinneys was to sell a 25% shareholding in an IPO on the DFM, the indicative price range was set at between US$ 0.387 to US$ 0.417, (AED 1.42 to AED 1.53), implying a market capitalisation of between US$ 1.39 billion to US$ 1.50 billion ($1.39-1.50 billion). Supermarket chain Spinneys is seeking to raise as much as $375 million from the sale of a 25% stake in an IPO, it disclosed on Tuesday. Two cornerstone investors will be Emirates International Investment Company (EIIC), the strategic investment arm of Abu Dhabi-based National Holding, and Franklin Templeton, who have agreed to take up an aggregate US$ 75 million in the offering. The final pricing will be determined at the end of the book-building period, which is slated for next Tuesday, 30 April, with trading expected to start on 09 May.

Emirates NBD’s Q1 profit, at US$ 1.83 billion, was 67.0% higher on the quarter and 12.0% up on the twelve months, attributable to regional growth, increased transaction volumes, a low-cost funding base, and substantial impaired loan recoveries. Its EPS rose 11.8% to US$ 0.28, whilst its total income rose 3.0%, quarter-on-quarter, to US$ 2.92 billion driven by excellent deposit mix, solid loan growth, and strong fee and commission growth across all business segments.  The Group’s asset base increased 5% to top US$ 245.2 billion, driven by record retail lending of US$ 2.45 billion and robust corporate lending of US$ 6.45 billion. Last year, its branches in Saudi Arabia more than doubled to eighteen, whilst the bank’s enhanced Egyptian franchise resulted in further growth. The bank noted that “our market-leading deposit franchise grew US$ 7.08 billion in Q1, with customer campaigns, digital banking and promotions delivering a remarkable US$ 5.72 billion increase in low-cost current and savings accounts.” To support the government’s ‘Dubai International Growth Initiative’, ENBD has allocated US$ 136 million, (AED 500 million), of competitively priced financing to Dubai-based SMEs to facilitate their global expansion.

Emirates Islamic posted a record 35% hike in Q1 net profit, to US$ 221 million, as total income, driven by higher funded and non-funded income streams, grew 19%, compared to Q1 2023; net profit margin reached 4.7%. Operating profit was 28.0% higher, helped by the double whammy of the bank’s enhanced operational efficiency and the positive economic outlook within the buoyant regional economy. There was a 9.0% increase in customer deposits, with Current Account and Savings Account balances at 77% of total deposits. The bank’s cost-to-income ratio was at 28.4%. EIB recently announced the successful conclusion of its debut three-year US$ 500 million syndicated Financing Facility.

The Commercial Bank of Dubai posted a 21.9% hike in Q1 net profit after tax of US$ 191 million, with operating income 10.9% to the good at US$ 374 million, attributable to net interest income, (mainly due to strong growth in loans and current and savings accounts and high interest rates),  fees, and commissions. The bank’s operating expenses rose 9.0% to US$ 86 million, a 9.0% increase, while operating profit was 11.5% higher at US$ 288 million. CBD expects the UAE business activity and business confidence to continue its positive trend in 2024, with the bank well positioned to deliver on its strategic objectives and financial targets in 2024 and beyond.

The DFM opened the week on Monday 22 April, 87 points (2.0%) lower the previous three weeks and shed 27 points (0.6%) to close the trading week on 4,148 by Friday 26 April 2024. Emaar Properties, US$ 0.06 lower the previous week, shed US$ 0.04, closing on US$ 2.22 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.65, US$ 4.51, US$ 1.57, and US$ 0.38 and closed on US$ 0.65, US$ 4.56, US$ 1.50 and US$ 0.37. On 19 April, trading was at 139 million shares, with a value of US$ 80 million, compared to 112 million shares, with a value of US$ 59 million, on 05 April 2024.  

By Friday, 26 April 2024, Brent, US$ 3.07 lower (3.4%) the previous fortnight, gained US$ 1.73 (2.0%) to close on US$ 89.50. After six weeks of growth, of US$ 549 (29.6%), gold finally surrendered and shed US$ 64 (2.7%) to trade at US$ 2,350 on 26 April 2024.

There are a number of reasons for the gold price to have risen by nearly 30% over the over the past six weeks to top 2.3k per oz before moving lower this week. One of the main drivers is the world’s central banks who, in these troubled economic and geo-political times are becoming increasingly concerned about holding too many US$ or other major currencies. In line with other commodities, that have had a sudden surge, non-investors want an entrée so as to make money out of their investment – whilst some current investors wished to sell to realise their gains, with others increasing their portfolio to make even more money. In a market that benefits from global uncertainty, gold prices have also been boosted by a range of factors such as rising interest rates, an upcoming US presidential election along with wars in Ukraine and the ME. There has been a spike in interest from China, where investors are worried about the state of their country’s economy. In Australia, records show that domestic gold miners produced a combined three hundred and four tonnes of gold last year, valued at US$ 20.61 billion – slightly down from 2022’s three hundred and thirteen tonnes. The 2.9% fall was attributable to miners blending in lower grade ore amid higher prices.

It seems that every four years or so, Bitcoin completes its “halving”, a process that has been designed to reduce the rate at which new tokens are released into circulation; the latest halving sees Bitcoin’s value dipping to US$ 64.8k. Previous halvings occurred in 2012, 2016 and 2020. The halving was written into Bitcoin’s code at its inception by pseudonymous creator Satoshi Nakamoto, who capped the “currency’s” supply at twenty-one million tokens. The operation works by halving the rewards cryptocurrency miners receive for creating new tokens, making it more expensive for them to put new bitcoins into circulation. It ended 2023 at US$ 16.5k, then surged to US$ 43.0k by 01 February and to a record US$ 69.7k high by 29 March; yesterday, it was at US$ 63.9k. Two major fillips came in January when the US Securities and Exchange Commission’s decided to approve spot bitcoin exchange-traded funds, as well as expectations that central banks will cut interest rates.

Tesla has had better years with YTD seemingly only posting news of price cuts, staff reductions and its share price slumping. This week started with lower prices again in a number of major markets – including the US, (by US$ 2k for Models X, Y and S), China, (by over US$ 1.9k for the revamped Model X), and Germany – as it tries to deal with falling sales. Its situation is being exacerbated by fierce competition from several of its Chinese peers, and it reporting a marked decline in Q1 EV deliveries. Its founder commented that “Tesla prices must change frequently in order to match production with demand”. It has been slow in refreshing its aging fleet portfolio, with the Chinese EV factories, including BYD and Nio, taking advantage and producing cars cheaper, and with the latest updates. To some observers, Tesla started the price war in 2023 by an aggressive stance in slashing prices at the expense of cutting margins. Only last week, the US firm announced plans to lay off over 10% of its global workforce and that it had recalled thousands of new Cybertrucks over safety concerns; by last Friday, its share value had slumped 40% YTD. The fact that over the weekend, Mr Musk said he would postpone a planned trip to India  where he was due to meet Prime Minister Narendra Modi, due to “very heavy Tesla obligations”, indicates his growing concern about the future of Tesla.

The stock market is a strange beast. The day that Tesla posted a 55.0% slump in Q1 profits, to US$ 1.13 billion, and in the week, the EV maker cut thousands of job cuts, its share price headed north, surging 11.7% to US$ 162, but YTD it still has fallen by 37.3%. However, Elon Musk told investors the launch of new models would be brought forward, at a time when cheaper Chinese imports are flooding the market, it remains to be seen whether the prices for the new models will be able to compete.

No surprise to see Meta’s shares plunge 16.5%, to US$ 412, in after-hours trading on Wednesday, after it issued a sluggish Q2 forecast, and said it expects a substantial increase in operating losses in its Reality Labs division for the remainder of the year. The Californian-based tech company, which includes augmented and virtual reality-related consumer hardware, software and content for the Metaverse, reported an operating loss of more than US$ 3.8 billion in Q1, with a Q2 revenue estimate of between US$ 36.5 billion to US$ 39.0 billion. Reality Labs’ operating losses are set to increase “meaningfully year over year” in 2024 due to continuing product development and investments to further increase its ecosystem. However, the parent company of Facebook had posted a 27.0% jump in Q1 revenue to US$ 36.5 billion, as net income came in 117% higher to almost US$ 12.4 billion. Meta, which employs more than 69.3k people, expects its full-year 2024 total expenses to be between US$ 96 billion and US$ 99 billion. The tech giant claims to have 3.24 billion “family daily active people” – it no longer distinguishes between daily active users and monthly active users. The company expects its 2024 capital expenditure to hover in the range of US$ 30 billion and US$ 35 billion and will continue to increase in 2025 as Meta invests “aggressively to support ambitious AI research and product development efforts”.

With US authorities claiming that TikTok might share user data with the Chinese government, President Biden has signed into law a bill which gives the social media platform’s Chinese owner, ByteDance, nine months to divest the app or it will be blocked in the US. The Chinese tech firm consider the law ‘unconstitutional’ and “the fact is, we have invested billions of dollars to keep U.S. data safe and our platform free from outside influence and manipulation,” and that “this ban would devastate seven million businesses and silence one hundred and seventy million Americans.” ByteDance, insisting it is not a Chinese firm, pointing to the global investment firms that own 60% of it, will inevitably go to court and experts have opined that it could take several years before the app is blocked as legal action, likely all the way to the Supreme Court, would delay the process. The other question is who would buy TikTok in an enforced sale that would run into the tens of billions of dollars.

A year of cutting costs and laying off staff seem to have paid dividends for Spotify, with record annual profits of US$ 1.07 billion, as Q1 revenue rose 20% to US$ 4.54 billion. Much of the streaming giant’s profits were driven by its podcast business, with Q1 gross margins up 2.4% to 27.6%; this was the result of investments of US$ 1.0 billion in the sector, including spending hundreds of millions for popular shows such as “The Joe Rogan Experience”. The Swedish company, founded in 2006, has been growing its user base for years, offering subscribers access to podcasts and audiobooks. With a target of one billion users by 2030, its current customer base stands at 615 million, as the number of premium subscribers rose by 14%, in Q1, to 239 million, in line with estimates.

Reports indicate that Australia’s BHP, (with a pre-public approach market cap of US$ 148.9 billion), has approached UK-based mining giant Anglo American, (with a market cap of US$ 36.1 billion), about a potential US$ 38.63 billion takeover, which is now being reviewed by the Board. It seems that the “Big Australian” – also the world’s largest publicly listed mining company – confirmed the proposal which it said would give it access to “Anglo American’s world class copper assets”; it operates mines in countries like Chile, South Africa, Brazil and Australia. If the deal goes ahead, it would be one of the mining industry’s biggest mergers in many years.  Last year, BHP bought copper producer Oz Minerals for US$ 6.2 billion. YTD, copper prices are 15% higher as the shift to clean energy gathers momentum, the metal is in high demand. Although Anglo’s share price has weakened over the past twelve months, yesterday it climbed 12% to US$ 31.00. If the deal were to go through, it could be unwelcome news for the LSE – last week, the blog mentioned how energy and mining giants were leaving that exchange; BHP used to be listed in both the UK and Australia but in 2022 shifted its primary listing to Sydney. When Friday trading closed in Sydney, Anglo American wasted no time, (in fact notifying the LSE of its decision just fifty-six seconds after the ASX had shut for the week), in confirming it was rejecting the proposal, labelling it “opportunistic” and significantly undervaluing the company. Earlier in the day, BHP had notified the ASX, confirming that they had put forward a bid for Anglo American – the market reacted by shaving 4.6% off BHP’s share value. The final part of Anglo American’s full statement to the LSE advises its shareholders “to take no action in relation to the possible offer”, ending with “this announcement is not being made with the agreement or approval of BHP.”

Last December, the US Federal Trade Commission issued new merger guidelines to encourage fair, open and competitive markets, and has now used some of the new regulations to block the proposed Tapestry US$ 8.5 billion takeover of its rival Capri; the buyer owns handbag makers, including Coach and Kate Spade, while Capri’s brands include Versace, Jimmy Choo and Michael Kors. The authorities have argued that the merger would directly affect hourly workers who may lose out on higher wages due to reduced competition for employees, arguing that “the deal would eliminate direct head-to-head competition between Tapestry’s and Capri’s brands”; it is estimated that there are 33k employed by both companies. Tapestry has retorted that “the FTC fundamentally misunderstands both the marketplace and the way in which consumers shop”, and that “in bringing this case, the FTC has chosen to ignore the reality of today’s dynamic and expanding US$ 200 billion global luxury industry”. Capri has also waded into the argument noting that “this transaction will not limit, reduce, or constrain competition” as the two firms “operate in the fiercely competitive and highly fragmented global luxury industry”. European and Japanese regulators have already cleared the deal.

Although many of its customers struggled to make ends meet last year, Asda managed to push 2023 profits 24% higher at US$ 1.36 billion. The UK’s third-biggest supermarket chain posted that its bottom line was boosted by growing supermarket sales, with 5.4% growth, (excluding fuel and the effect of new Asda shops opening), as revenue reached over US$ 27.0 billion. Over the year, sales growth slowed, with almost half of the sales emanating from its six million customers using its Asda loyalty app, noting that it was a “key revenue driver”. Despite Asda’s clothing section, George, being the UK’s biggest retailer for kids, (with sales 3.4% higher at  US$ 1.85 billion) and the retailer pledging to match the prices of hundreds of items sold at discount rivals Aldi and Lidl, its market share fell behind rivals, Sainsbury’s and Tesco, (who gained by growing out their convenience shops, to 13.6%, as it faced tough competition from the likes of the German interlopers. Asda has been playing catch up and now has almost five hundred convenience stores having acquired petrol forecourts from EG Group and the Co-op.

Asda is 45% owned by Blackburn brothers, Mohsin and Zuber Issa, 45% by private equity group TDR Capital and US grocery conglomerate Walmart, with the remaining 10%. The company was originally bought from Walmart for US$ 8.40 billion in October 2020, with some of the purchase money borrowed; in February interest payments of over US$ 37 million became due. There are reports that Zuber Issa is preparing to sell his stake to TDR for a reported US$ 618 million.

Getty ImaFive  of the UK’s biggest banks – Barclays, (who rose some rates by 0.2% the previous week), HSBC, NatWest, Leeds Building Society and the Co-op –   have raised some costs on fixed rate mortgage deals, by between of 0.1% and 0.41%, amid growing expectations of when the BoE will cut interest rates are pushed back. The former three banks are seeing certain rates up by 0.1%, whilst Leeds BS will increase the fixed rate on selected products by up to 0.2% for both new and existing customers and the Co-op raising rates on some of its fixed deals by 0.41%and reducing others by 0.07%. Many now consider that the central bank is now not expected to cut its benchmark rate as early or as often as previously thought. According to Moneyfacts, the average two-year fixed mortgage rate is 5.82%, while the average five-year fixed rate is 5.40%.

Everest, one of UK’s biggest double-glazing suppliers, has appointed professional service firm, ReSolve to handle affairs, as it goes into administration, and try to salvage three hundred and fifty jobs, in a belated attempt to find a potential buyer that are expected to include turnaround investors, as well as industry players. Everest has been owned by the prominent financier Jon Moulton’s investment firm Better Capital for more than a decade; it seems that he has been winding down the firm for years, with Everest one of its few remaining investments.

Last year, McLaren Group, now 100% owned by Mumtalakat, Bahrain’s sovereign wealth fund, posted a record US$ 1.09 billion loss, which included a US$ 468 million impairment charge, reflecting asset write-downs relating to production problems. The UK supercar maker and Formula One team-backer is currently engaged in talks about technology partnerships which could lead to the sale of a minority equity stake in McLaren. However, 2024 could be a new beginning for the luxury car maker, with news that in Q1, it posted its best quarter for nearly five years, with an underlying profit of US$ 4 million on revenues which rose by 52%. It is reported that McLaren said its start to the year reflected a 28% increase in wholesale volumes, with its 750S model sold out into 2025 and orders for the GTS ahead of expectations. To boost export sales, the car maker has expanded its retail network with opening dealerships in Australia, Japan and the brand’s largest showroom in Dubai.

In its latest LexisNexis True Cost of Fraud™ Study – Europe, Middle East and Africa, it is estimated that UAE entities incurred an average cost of US$ 1.20 (US$ 0.99 for retailers and US$ 1.36 for financial institutions) for every dollar lost to fraud. These costs encompass financial losses due to fraud, as well as internal labour expenses, external costs, interest and fees, along with the expenses associated with replacing or redistributing lost or stolen merchandise. Fifty-five of the 1.85k financial institutions and retail companies surveyed were UAE based and the study was over a twelve-month period. The report focused on the current state of fraud and the challenges associated with digital payments in emerging markets, and posted that a cost of fraud that is 3.90 times the face value lost in fraudulent transactions. 52% of overall fraud losses, in the EMEA region, emanated from digital channels. More than half of businesses in EMEA identify the rise of synthetic identities as the primary challenge in customer identity verification. It is estimated that 42% of companies had reported an increase in fraud.

Many Australians already knew – but will still be upset – to hear that the country recorded the biggest increase in average tax rates, at 7.6% in the developed world last financial year, due to bracket creep and the end of a tax offset that disproportionately affected low- and middle-income earners. Other bad news was that Australians spent 24.9% of their average wage on income tax, which was the fourth-highest of the developed world, behind Denmark, Iceland and Belgium, and well above the 15.4% average for the thirty-eight OECD countries.

The OECD Taxing Wages report indicated that a single person, with no children, paid US$ 16.16k, equating to 24.9% of their gross pay. There are some anomalies at play. Those earning 66.67% of the average wage, (US$ 43.49k), paid US$ 8.78k, (equating to 20.2%) in tax in 2023, compared to those, in 2022, earning 66.67% of the average wage, (US$ 41.82k), paying US$ 7.19kk, (equating to 17.2%) in tax in 2022. The world body found nominal earnings — or the money paid by employers to workers — increased due to higher inflation, which resulted in a greater proportion of workers’ pay crossing into a higher tax bracket and being taxed at a higher rate, also known as bracket creep.

Yesterday, the US Department of Commerce posted that Q1 inflation had increased by 3.4%, compared to 1.8% a quarter earlier, showing that there is still some way to go before the Fed’s 2,0 target is met. Just as inflation gathered pace again, the US economy headed in the other direction, growing by just 1.6% in the March quarter compared to 3.4% in the last quarter of 2023. Figures like these indicate that there could be a further delay in future interest rate cuts. If the trend of slowing economic growth, allied with rising inflation continues, then there is every chance that rate cuts are off the agenda for the rest of 2024, with a distinct possibility of a rate hike that would see the rate advance from its current 5.25% – 5.50% – its highest level in more than twenty years. How the situation has changed over the past four months after many analysts were betting on a series of interest rate cuts.

With the FTSE 100 climbing 128 points, 1.4%, to 8,042 on Monday, to close the day on 8,023, the index beat its previous best of 8,012. The index, which comprises the 100 most valuable companies on the London Stock Exchange, closed Monday’s session on 8,023 points following a jump of 128 points or 1.6%. That was the highest closing sum since February 2023, when the 8,000 barrier was breached for the first time in its history. Financial and consumer-linked stocks such as those for retailers led the charge including M&S, Sainsbury, Vodafone, Tesco, Ocado and Next with daily rises of 4.39%, 3.94%, 3.91%, 3.45%, 3.23% and 3.21%. The triple whammy of a cut in UK rates, as inflation deflates, hopes that a major escalation in the ME will be avoided and a softening in the value of the pound, (at a five-month low of US$ 1.23), against the greenback; the latter resulting from the Fed will probably maintain current rates for longer than expected. The current indicators of growth are  positive, not only for the FTSE 100 but also pension pots, with many having major investments in blue-chip stock on the LSE.

It seems that the UK’s Levelling up Secretary, Michael Gove, (the Judas Iscariot of Conservative MPs), could be upsetting the country’s pension funds by overhauling the UK’s centuries-old property leasehold system. They could be on the receiving end of a US$ 37.3 billion windfall, as he considers the option of imposing a US$ 311 cap on ground rent and transitioning to ‘peppercorn’ levels over a twenty-year period which will bring in that much money for the Exchequer. His actions have upset the pensions industry and City investors, such as the asset management arms of big insurers, which have amassed large ground rent portfolios. Gove’s initial report had had to be watered down following an intensive industry lobbying campaign and opposition from some cabinet colleagues, with government lawyers reportedly raising concerns about the prospect of legal challenges to moves to retrospectively amend property rights. The Rent Is Always Due!