An Awful Lot Of Coffee In Brazil!                                           13 December 2024

According to Betterhomes’ Rupert Simmonds, Dubai’s rental market continued to be bullish this year, with average increases of up to 20%, but at a slower pace than the highs of 2022 and 2023. Looking to next year, he commented that, “we anticipate a moderation in the growth rate, with an expected rise of around 5% – 10% in rentals across the city. The cooling pace reflects increased supply from new property handovers and tenants’ growing preference for securing long-term leases at current rates.”  Industry experts also point to significant increases in certain localities – high-end areas due to limited new supply and strong demand from millionaires, and the outskirts of the emirate, as residents will relocate to those areas due to high rates in central locations. Another reason why rents are surging higher is the booming population. It is estimated that by the end of 2024, the emirate’s population will be 3.820 million – a 4.51% increase, (165k) for 2024, from the year’s opening 3.655 million. Since the influx of professionals, high-net-worth individuals, and people seeking greener pastures is expected to continue in 2025, rents in the emirate will maintain an upward trend in the coming year.

Meanwhile ValuStrat’s Haider Tuaima, noted that this year’s residential rents for new contracts increased 5% for villas and 16% for apartments, with “the next twelve months are likely to see villa rents stabilising, whilst apartment rents continue climbing up to 10%.” This is almost in line with Savills’ 2025 estimate of between 10% – 12%, and that apartments are likely to see higher growth than villas; the consultancy noted that “the overall demand for rental properties is expected to outweigh supply in most submarkets, keeping rental values on an upward trend.”

ValuStrat’s November report paints a rosy picture of Dubai’s realty sector, indicating that villa prices gained 31.9%, on an annualised basis, as the ValuStrat Price Index moved 1.8% higher on the month to 197.3 points. With a January 2021 benchmark of 100, the VPI indicated that villas had reached 253.7 points, (with monthly and annual gains of 2.1%/31.9%), and apartments 160.5, (1.6% monthly and 23.9% annually).

For villas, the top performing locations were Palm Jumeirah, Jumeirah Islands, Emirates Hills and Dubai Hills Estate, with annual price rises of 42.5%, 42.4% (which is now more than triple its value at the start of 2021), 32.7% and 32.2%. The lowest gains were seen in Mudon (15.1%) and Jumeirah Village Triangle (20.4%). For apartments, the major winners were The Greens, Palm Jumeirah, Discovery Gardens and The Views with price increases of 31.6%, 29.0%, 28.5%, and 27.6%. At the other end, the least capital value gains were found in International City (16.6%) and Dubai Sports City (17.2%).

Although falling 41.9% on the month, Oqood (contract) registrations were still 76.5% higher on the year and accounted for 64% of all home sales this month. The volume of ready secondary-home transactions also posted a monthly 8.9% decline but were up 3.2% on the year.

There were twenty-four transactions for ready properties priced over US$ 8.17 million, (AED 30 million), situated in Palm Jumeirah, Emirates Hills, Jumeirah Bay Island, Al Barari, Dubai Hills Estate, and District One. The top five developers in the month – accounting for 39.3% of total transactions – were Emaar (14.7%), Damac (7.6%), Sobha (6.5%), Binghatti (5.9%) and Tiger Properties (4.6%).

Top off-plan locations transacted included projects in Jumeirah Village Circle (13.1%), Jumeirah Village Triangle (8.5%), Business Bay (5.4%), and Dubailand Residence Complex (5.1%). Meanwhile, most ready homes sold were located in Jumeirah Village Circle (10.2%), Dubai Marina (5.9%), Business Bay (5.1%), Downtown Dubai (4.7%), and Uptown Motor City (4.1%).

With an average sales price of just US$ 438 per sq ft, Dubai presents incredible value compared to London and New York. Despite its reputation for luxury and world-class amenities, Dubai’s property market remains accessible to a broader spectrum of buyers. Investors can enter a market that offers lavish lifestyles and state-of-the-art developments at a fraction of the cost of global counterparts.

Binghatti’s latest property delivery comprises six projects, consisting of 2.1k units, all located in record time in Jumeirah Village Circle:

• Binghatti Orchid         303 units        studio, 1 B/R, 2 B/R
• Binghatti Amber         640 units        1 B/R, 2 B/R
• Binghatti Onyx            495 units        1 B/R, 2 B/R, 3 B/R
• Binghatti House          270 units        plus 23 office spaces
• Binghatti Lavender     164 units        studio, 1 B/R, 2 B/R
• Binghatti Venus          190 units        1 B/R, 2 B/R

Damac Properties posted that on Thursday it sold over US$ 272 billion, (AED 10 billion), worth of properties in less than ten hours – not a bad return to end 2024. The developer, founded by Hussain Sajwani, sold 3.1k units, with all being located on Damac Islands which included six clusters – Maldives, Bora Bora, Seychelles, Hawaii, Bali, and Fiji. This must be the season to be merry for small and large developers – the latter seem to be selling their projects within hours, and the “smaller fish”, within days and weeks, with demand probably at its highest ever.

Handovers have started for the seven ultra-luxury Bvlgari Ocean Mansions on Dubai’s Jumeirah Bay island, with the homes currently having listing prices of US$ 49.0 million and over. Each five-bedroom mansion, encompassing almost 10k sq ft, features a ‘unique over-water design’ and ‘hug the curve of Jumeirah Bay Island’, making the residences appear to be ‘floating above the waves’.

This week, a five-bedroom beachfront Signature Villa, at Six Senses Palm Jumeirah, has been sold for over US$ 35 million – yet another indicator of how robust the Dubai ultra-luxury real estate market is. It is the highest sale achieved, in this particular project, and is one of the top ten most expensive branded residences sold in 2024. The villa boasts hand-selected Italian marble teakwood finishes, along with high-end branded fittings. Fully serviced and managed by Six Senses, the villa is expected to be ready by October 2025. George Azar, CEO of Dubai Sotheby’s International Realty, noted that “super prime branded residences have become one of the driving forces in the global real estate market, attracting the attention of buyers in key cities like Miami, New York, and London. Dubai, which has become an epicentre for luxury living, holds the distinction for having the highest number of branded residences in the world and continues to set new benchmarks in that very exclusive space.”

Branded properties’ increasing popularity is borne out by figures – in H1, their sales of US$ 7.85 billion were 44.0% higher on the year and accounted for 12.6% of Dubai’s total sales. Furthermore, in the prime and super-prime segments, new branded projects, between June 2022 and June 2024, increased by 43.0%, including seventeen new launches comprising 7.26k units in H1. This year, the firm has been involved in the most expensive villa sales in Jumeirah Bay Island – for US$ 48 million – and in Abu Dhabi, for US$ 35 million.

On the global investment stage, Dubai seems to reign supreme, compared to the likes of New York and London, offering gross investment yields of 7.0%, compared to New York’s 4.2% and London’s 2.4%. On an annual basis, the comparison on inflation-adjusted property price growth is similar – 16.5%, 8.1% and 1.6%. Apart from the financial advantages, Dubai offers other benefits, including a pro-investor ecosystem through initiatives such as visa reforms, zero property taxes, and its ambitious Dubai Economic Agenda D33, enhancing the emirate’s reputation as a hub for businesses, expatriates, and high-net-worth individuals. Add to the mix, the likes of its lifestyle offerings, blending safety, connectivity, and modern infrastructure, along with its position as a global travel hub, coupled with its family-friendly environment and favourable climate, makes it an obvious choice for many.

Beyond has launched a second project, following its first highly successful entrée into the Dubai realty market, with Saria. Its second project, Orise, located in Dubai Maritime City, and spanning a gross floor area of 62k sq mt, will comprise five hundred and thirty residences. Average unit sizes range from 758 sq ft, 1,284 sq ft, 1,658 sq ft, 2,023 sq ft and 2,465 sq ft for a one-bedroom, a two-bedroom, a three-bedroom, a two-bedroom chalet, and a three-bedroom chalet respectively. Simplex and duplex penthouses have an average area of 5,486 sq ft, while a signature collection of premium units averages 3,114 sq ft. The residences feature over thirty layout options and allow homeowners to choose their interior finishes, including custom colours for flooring, kitchens, and joinery, tailoring their homes to personal tastes.

MVS Real Estate Development becomes the latest European developer to move to the emirate, and take advantage of a bullish market, with its plans to deliver high-quality residential projects. The developer, with over eighteen years of international real estate construction experience, has a portfolio of more than 22k apartments, in forty-two buildings, delivered in Russia and the UK. It has also delivered four hundred and fifteen commercial real estate projects spanning 56k sq mt of leasable area including over twenty hypermarkets, two multifunctional family shopping complexes and storage facilities. Furthermore, it has developed two hotels in St Petersburg and operates them. It is expected to soon announce details of its first Dubai foray – a residential tower in one of the emirate’s most sought-after upcoming destinations. Ivan Baciu, its CEO, commented that Dubai “is a world-leading residential real estate market that provides high returns and unparalleled growth opportunities underpinned by a stable political environment and strong economic foundations”.

In the nine months to 30 September, it is estimated that the country’s tourism sector generated US$ 9.13 billion – a 4% increase compared to the same period in 2023. Average hotel occupancy rose to 77.8%, one of the highest globally, whilst hotel nights climbed 8.0% to 75.5 million.

With the Christmas rush nearly upon us, Dubai airport expects average daily traffic numbers to be at 274k, with Friday, December 20, anticipated to be the busiest day of the period, hosting nearly 296k guests. The weekend from December 20 to 22 will also see peak activity, with an estimated 880k passing through the airport. Of the 3.2 million expected to use DXB, over the festive period, 1.7 million will be arrivals and 1.5 million departures. Authorities also advised that “The Family Zone at Terminal 3 will transform into a winter wonderland featuring a unique fusion performance of carollers and beatboxers, a Magic Station offering gift-wrapping and photo opportunities, a Nutcracker marching band, and more.”

HH Sheikh Mohammed bin Rashid Al Maktoum, has approved a new initiative, named the Dubai Walk Master Plan (Dubai Walk), to turn Dubai into a pedestrian-friendly city, on par -and probably better – than the likes of London, Paris and New York. The groundbreaking and ambitious plan to transform the city for pedestrians will involve a series of walkways, together with vast areas of greenery, shaded areas, interactive screens, sports and entertainment spaces (with equipment included) and several art displays.  Set for final completion by 2040, it will result in a massive 6.5k km interconnected network, involving 3.3k km of new pathways and enhancing 2.3k km of existing structures. Connecting the city will also see one hundred and ten new pedestrian bridges and underpasses. Accessibility and safety will be prioritised.

The latest Comprehensive Economic Partnership Agreement is with the five members of the Eurasian Economic Union – Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia. The Minister of State for Foreign Trade, Dr. Thani bin Ahmed Al Zeyoudi, commented that the CEPA reflects the UAE’s firm belief in constructive international cooperation and promotion of open rules-based trade, as a cornerstone of global economic growth and stability. He also noted that “with a combined population of some two hundred million people, and a GDP approaching US$ 5 trillion, the EAEU offers a rich seam of opportunity for our private sector, while the UAE and its growing network of global trade partners offers EAEU exporters streamlined access to the competitive, high-growth markets in the ME, Africa, Asia and South America”. In H1, the UAE shared non-oil trade worth US$ 13.7 billion with the bloc, representing a jump of 29.6% on the year. As with other similar agreements, already signed with an increasing number of nations, this deal aims to boost these figures through reducing or removing tariffs, eliminating technical barriers to trade, expanding market access, and aligning customs procedures. The EPA will also seek to harmonise digital trade and e-commerce in addition to creating new platforms SME collaboration.

November’s seasonally adjusted Dubai S&P Global UAE Purchasing Managers’ Index came in 0.7 higher on the month to 53.9 – slightly lower than the 54.2 level attained by the UAE PMI, which had nudged up by 0.1 on the month. Both indices were well above the 50.0 threshold which delineates contraction and expansion. Dubai’s return indicates that there was a marked increase in new order inflows – more robust than the national return. It was noted that even though sales headed higher, which resulted in an increase in business activity, employment levels dropped marginally for the first time since April 2022. Margins continued to tighten, whilst output expectations slipped to a twenty-three-month low.  There were falls with inventories, cut for the first time since July, with output charges falling for the second straight month despite a sharp uplift in input costs.

According to the Ministry of Finance, the 15% Domestic Minimum To-Up Tax, on large multinational companies operating in the country, will be effective for financial years starting on or after 01 January 2025. DMTT will apply to MNCs, with consolidated global revenue of US$ 793.50 million or more in at least two out of the four preceding financial years. This brings the country in Iine with the OECD’s two-pillar solution to implement a fair and transparent tax system and stipulates that large multinational firms pay a minimum effective tax rate of 15% on profits in each country where they operate. The Ministry is also considering the introduction of a number of corporate tax incentives, including one for R&D that would apply for tax periods starting in 2026, that could see a potential 30%-50% refundable tax credit depending on the size of the company’s operations in the UAE and revenue. It could also introduce a refundable tax credit for high-value employment activities, which aims to encourage businesses to engage in activities that deliver significant economic benefits, stimulate innovation, and enhance the UAE’s global competitiveness. Although tech companies would be an obvious beneficiary of the UAE’s move to offer tax refunds for those engaged in ‘high value’ employment activities, other sectors’ businesses could do likewise. This could apply to sectors with high-value investment, high employment generating activities, sustainable developments, and export-oriented industries.

Following recent regulatory updates, issued by the country’s Commercial Gaming Regulatory Authority, Emirates Draw has discontinued its operations in the country and announced its plans for a global expansion strategy. An Emirates Draw spokesperson noted that it had “shifted our focus to international markets, now reaching participants in over one hundred and seventy-five countries”, adding, “we now operate exclusively in the digital space, offering our products to international markets. However, UAE residents can no longer access the Emirates Draw website or participate in its draws, as the site is restricted within the country. Physical tickets are also no longer available in the UAE.” The GCGRA, established under Federal Law by decree, has introduced a new regulatory framework for lottery operations in the UAE, and has granted a licence to The Game LLC, operating as The UAE Lottery, to conduct lottery operations under their supervision. Currently, the law has ordered all pre-existing lotteries, with the exception of Dubai Duty Free and Big Ticket, (both airport-based lotteries), to cease operations immediately.

At this year’s Quality Infrastructure for Sustainable Development Index1, (launched, in 2022, by United Nations Industrial Development Organisation), the UAE managed to climb six places to fifth. The QI4SD Index categorised the UAE in the ‘L’ group that includes countries with GDP between US$ 100 billion and US$ 1 trillion such as Switzerland, South Africa, Singapore and Finland. The Index serves as a comprehensive framework converging multiple indicators that evaluate the readiness of national QI systems to contribute to sustainable development goals.  To progress further, the country’s National Committee for Quality Infrastructure has been established to oversee progress and provide strategic direction to activities related to the growth and development of QI.

As from 01 January 2025, Dubai is set to reinstate a 30% tax on the sale of alcohol, following a two-year suspension of the levy. The process of obtaining an alcohol licence in the emirate will be unchanged. This means that from next year, businesses selling alcohol – including off-licence chains such as MMI and A&E, as well as bars and restaurants – are required to pay the 30% levy on supplies received. Most will pass on the extra cost to the consumer, but the actual costs should not be as high as 30% on the selling price in the restaurant/bar; it does seem that some establishments did not alter their prices to reflect the tax cut in the first place two years ago.

The Landmark Group has opened the region’s first textile recycle facility at Dubai World Central. This follows the company’s initiative to introduce a takeback programme last year, across some of its larger UAE stores to receive – and reward – customers for bringing their used garments and textiles, regardless of the brand. The aim of the factory is to give a ‘second life’ to used fabrics, across fashion and home products, which will recycle the used items into a selection of fibres. These are then shipped to manufacturing units to be spun into yarn and transformed into new products across apparel and home furnishings. Renuka Jagtiani, Chairwoman of Landmark, said “our recycling facility is a crucial step in the region’s fashion and textile industry towards closing the loop on product lifecycles to achieve circularity.”

As part of its US$ 45 billion Trust Certificate Issuance Programme, Indonesia, for the fourth time this year, has listed a further US$ 2.75 billion with Nasdaq Dubai – US$ 1.1 billion 5.00% Trust Certificates, due 2030, US$ 900 million 5.25% Trust Certificates, due 2034, and  US$ 750 million 5.65% Trust Certificates, due 2054; the issuance was 1.8 times oversubscribed. The government now has a total of twenty-one listings, totalling US$ 24.6 billion, of Sukuk on the local bourse accounting for 24.87% of Nasdaq’s total of US$ 98.9 billion, which makes it the world leader for Sukuk issuances.

On Tuesday, shares in delivery firm Talabat debuted on the DFM and jumped 7.5% soon after the listing to US$ 0.463, (from its starting price of US$ 0.436 – AED 1.60), as over two hundred and twenty-eight shares, valued at US$ 106 million, changed hands. The 20% IPO, involving 4.658 billion shares, raised US$ 2.044 billion and valued the company at US$ 10.16 billion. The offering, which Talabat said was “the largest global technology IPO in 2024 to date”, attracted a double-digit oversubscription level last month. At the closing of the trading week, on 13 December, its share value was at US$ 0.409, (AED 1.50).

The DFM opened the week, on Monday 09 December, one hundred and twenty-eight points (2.7%) higher the previous week, shed twenty-four points (0.5%), to close the trading week on 4,830 points by Friday 13 December 2024. Emaar Properties, US$ 0.24 higher the previous four weeks, shed US$ 0.03, closing on US$ 2.61 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.76, US$ 5.35 US$ 1.84 and US$ 0.38 and closed on US$ 0.72, US$ 5.40, US$ 1.85 and US$ 0.37. On 13 December, trading was at two hundred and eighteen million shares, with a value of US$ 111 million, compared to five hundred and seventy-eight million shares, with a value of US$ 160 million, on 06 December.  

By Friday, 13 December 2024, Brent, US$ 3.93 lower (5.2%) the previous fortnight, gained US$ 1.46 (2.0%) to close on US$ 74.40. Gold, US$ 61 (2.2%) lower the previous fortnight, gained US$ 19 (0.7%) to end the week’s trading at US$ 2,676 on 13 December 2024. 

It may surprise readers that the value of Russia’s natural resources, at an estimated at US$ 100 trillion, is almost double that of the US. Igor Sechin, executive secretary of the Presidential Commission on Fuel and Energy Development strategy and environmental safety and head of Rosneft, noted that this unique resource base ensures the reliability of Russian supplies to foreign partners in the long term.

IATA’s October figures indicate that global passenger demand, in revenue passenger kilometres, was 7.1% higher on the year, with total capacity, measured in available seat kilometres, up 6.1% year-on-year; October load factor was 0.8% higher at 83.9%. International and domestic demand rose 9.5%/3.5%, capacity up 8.6%/2.0% and load factor up 0.6% to 83.5%/1.2% to 84.5%. Willie Walsh, IATA’s Director-General, noted that “average seat factors have risen from around 67% in the 1990’s to over 83% today.” All regions showed growth for international passenger markets in October 2024 compared to October 2023. On a regional basis, demand, capacity and load factor, Asia-Pacific, (17.5%, 17.2% and up 0.3% to 82.9%) – Europe, (2.2%, 2.5% and minus 0.2% to 80.2%) – N America, (3.2%, 2.9% and 0.3% to 84.2%) – Latin America, (10.9%, 11.6% and minus 0.6% to 85.3%) – and Africa, (10.4%, 5.3% and 3.4% to 73.2%).

There are reports that Sycamore Partners, the US private equity firm, is planning a US$ 10 billion plus bid for Walgreens Boots Alliance. If successful, it is expected to seek separate ownership for Boots that could trigger a fresh auction of Boots the Chemist after several failed attempts to sell the UK retail giant. WBA has seen its market value dip below US$ 8.0 billion this year. In the past it has orchestrated, and abort at least two processes to explore a sale of Boots in the last few years, deciding that offers from parties including Apollo Global Management did not offer sufficient value. John Boots opened his first herbal remedies store in Nottingham in 1849, and one hundred and seventy-five years later, it employs some 52k and has about 1.9k outlets. In 2012, Walgreens acquired a 45% stake in Alliance Boots, completing its buyout of the business two years later.

Last month, US based restaurant, Dave’s Hot Chicken, opened its first site in the UK – now it is the turn of Chick-fil-A which has announced plans to launch in the UK next year. Chuck E Cheese, which operates nearly six hundred child-friendly restaurants in sixteen countries, is known for its mouse mascot, pizza and arcade games – and sees the UK as a “key target market”. 

Following “challenges” including poor performance and increased competition across its last financial year, Poundland is to take a US$ 820 million hit in its accounts by writing back amortisation charges – thus reducing the goodwill value on the original acquisition of the chain. Pepco, the owner of the UK discount retailer, posted that this was due to several major headwinds including rising costs amid the budget burden facing businesses, a weaker economic outlook and higher costs. The group, with a 15k payroll, posted a US$ 700 million loss in its financial year ending 30 September 2024, with sales flat on the year. The private sector has widely warned of a hit to investment, jobs and pay on the back of the October budget which will see costs head north, with the retail sector, as a whole, warning of an almost US$ 9.0 billion hike to its costs next year.

The market is digesting the possibility of Mondelez International, which owns UK-based Cadbury, buying out US chocolate maker Hershey, (with brands including Hershey’s Kisses and Reese’s Peanut Butter Cups). Shares have jumped by more than 10% on the news. In 2016, Hershey rejected a US$ 23 billion offer from Mondelez, but if this deal were to go through, it would create a snack food giant, with combined annual sales of almost of almost US$ 50 billion. Any deal would need the approval of the Hershey Trust Company, that maintains voting control over the business. With consumer spending slowing, the packaged food industry has been impacted and especially chocolate companies having to face surging cocoa prices that had started the year at US$ 4.275k, rose to US$ 12.218k, on 19 April and is trading at US$ 9.972k on 10 December. The increased cost has largely had to be transferred to the customer, and last month, Hershey cut its revenue and profit forecasts.

GM, which owns about 90% of the Cruise self-driving taxi, has announced that it will stop funding its development and said it has agreements with other shareholders that will raise its ownership to more than 97%. The Detroit-based manufacturer’s chief executive, Mary Barra, has previously predicted that the Cruise business could generate US$ 50 billion in annual revenue by 2030. GM confirmed that it would now “refocus autonomous driving development on personal vehicles”, after citing the increasingly competitive robotaxi market as a reason for the move, and the “the considerable time and resources that would be needed to scale the business”. Although Ford and Volkswagen announced in 2022 that they would shut down Argo AI, their self-driving car joint venture, last October Tesla unveiled the electric car giant’s long-awaited robotaxi, the Cybercab. Furthermore, other tech giants such as Alphabet’s Waymo and Amazon are still players in this sector.

Exxon Mobil posted that it wants to raise its oil/gas output by 18% to between US$ 28.0 billion and US$ 33.0 billion in the five years from 2026 to 2030, (from its current US$ 22.0 billion to US$ 27.0 billion). Its plan will see the top US oil producer raise its earnings from their current US$ 20.0 billion to US$ 34.2 billion. Exxon’s profits have benefitted from its Guyana operations – generating huge profits – and its US shale business which is on track to double oil production this year through its acquisition of Pioneer Natural Resources. On the news, Exxon shares dipped 0.7% to US$ 111.92, with many of the projects and targets already known. The higher spending took analysts by surprise. Its prior capital spending, excluding Pioneer-related outlays, called for US$ 22 billion to US$ 27 billion a year through 2027. President-elect Donald Trump’s pledge to encourage US oil production and “get out of the way of the industry” bodes well for Exxon and energy producers.

It is reported that at least six banks are in discussions with Reliance Industries for a loan of up to US$ 3 billion to refinance debt due next year; terms have not been finalised yet and could be subject to changes. The Mukesh Ambani conglomerate has US$ 2.9 billion worth of debt falling, including interest payments, due next year. Only last year did Reliance return to the international market and raise over US$ 8.0 billion for the parent company and subsidiary Reliance Jio Infocom Ltd. Moody’s Ratings reaffirmed Reliance Industries’ rating at Baa2 last week, as the company’s credit metrics are “solidly positioned” and “are likely to remain so despite high ongoing capital spending”.

Q3 data shows that although it is still performing well on a global comparison with other countries, India’s latest GDP figures disappoint, with the economy declining to a seven-quarter low of 5.4%; the Reserve Bank of India had forecast 7%. There are several drivers behind this slump, including weakening consumer demand, continuous slowing private investment, a marked cut back in government spending and sluggish exports, (with only 2% of the global total). Furthermore, weak sales are seen in fast-moving consumer goods companies while salary bills, at publicly traded firms, dipped last quarter. Finance Minister, Nirmala Sitharaman, blamed the decline on the reduction in government spending during an election-focused quarter, and expects Q3 growth to offset the recent decline.

Having been found guilty of managing a tax fraud, that cost Denmark’s government up to US$ 1.25 billion, Sanjay Shah, has been sentenced to twelve years in a Danish prison cell, as well having assets worth US$ 1 billion seized, plus a string of properties. The UK hedge fund trader, who had been living in Dubai before his arrest in 2022, was extradited last December, received the heaviest penalty ever given out in Denmark for a fraud case. Prosecutors had accused Shah of being the mastermind of a so-called cum-ex scheme, using a series of complex trades in order to fraudulently reclaim more than US$ 1.25 billion in dividend tax refunds from the Danish treasury between 2012 and 2015. Previously, the Danish government has said cum-ex schemes have cost it more than US$ 1.8 billion, with Shah being one of nine British and US nationals accused of defrauding the state. Shah, who was the founder of London-based hedge fund Solo Capital Partners, also faces a parallel civil tax fraud case in London, filed by the Danish tax authority, that is due to conclude in April.

Because China’s State Administration for Market Regulation has accused Nvidia of violating its anti-monopoly law, US$ 100 billion, (about 3%), was wiped off its market value on Monday; it also accused the world’s largest chip maker of violating commitments it made when it acquired Mellanox Technologies in 2020. It is no coincidence that the imminent arrival of Donald Trump into the White House, (and the distinct possibility of more tariffs), has spooked Chinese administrators. This announcement followed the Biden administration blacklisting hundreds of Chinese semiconductor companies just days ago – the third crackdown in as many years on the sector.

The disappointing trade figures follow other indicators showing patchy growth in November, suggesting Beijing needs to do more to shore up a faltering economy that is only likely to face further challenges next year. Of immediate concern for authorities, imports shrank 3.9%, when expectations were for a paltry 0.3% increase – their worst performance in nine months. In the month, shipments grew 6.7% – down on the 8.5% forecast and 12.7% lower on the month. The administration has vowed to rectify the situation next year by revving up demand and enticing consumers back into spending. US President-elect Trump has already pledged to slap an additional 10% tariff on Chinese goods in a bid to force Beijing to do more to stop the trafficking of chemicals used to make fentanyl and has previously said he would introduce tariffs in excess of 60%. His rhetoric is of major concern to traders whose US market is in excess of US$ 400 billion a year. On top of that, there are also concerns with the EU over tariffs of up to 45.3% on Chinese-made EVs, and markets nearer home – including South Korea and Vietnam – having their own economic problems which will impact on their trade with China. It also has its internal problems, with household and business confidence impacted by an ongoing and huge property crisis. Despite all these problems, China’s trade surplus grew US$ 1.28 billion to US$ 97.44 billion last month.

In 2021, the Australian government made history by passing legislation to make giants like Meta and Google pay for hosting news on their platforms. Earlier this year, Meta said that it would not renew the payment deals, (leading to a roughly US$ 128 million loss in revenue for Australian publishers), it had in place with local news organisation; however, new rules announced this week will require firms that earn more than US$ 160 million, in annual revenue, to enter into commercial deals with media organisations, or risk being hit with higher taxes. It seems likely that the tax will impact companies such as Facebook, Google and TikTok, and already Meta has expressed its concern that the government was “charging one industry to subsidise another”. In addition, the new framework – known as the News Bargaining Incentive – will require tech firms to pay despite not having any agreements with publishers. This deal also aims to offset some of the losses traditional media outlets have faced due to the rise of digital platforms. Beginning next month, the new taxation model, which aims to make tech companies fund Australian journalism in exchange for tax offsets, and not to raise revenue – will be enacted once parliament returns in February.

The Australian Council of Social Service has released its 2024 Faces of Unemployment report, in which it sees a “mismatch” between those seeking jobs and the number of entry-level positions available, (which has locked more people into relying on income support long-term, and criticises “erroneous” support services; revealing that a total of 557k – of which 50% were related to illness – have been receiving unemployment benefits, (and also 190k for more than five years), it calls for a “complete overhaul” of the employment services system, making key policy recommendations. Furthermore, it is accused of “harming” Australians with “unrealistic” requirements and failing to get them into sustainable jobs and noted that unemployed Australians were relying on “punishingly low” support payments as job opportunities continue to decline. Interestingly, Australia has the lowest unemployment payment of all thirty-eight OECD countries — currently just at US$ 36 a day – which the organisation is urging the government to lift the rate of the unemployment payment to at least the US$ 53 pension rate. It estimates that 40% of people receiving JobSeeker have a partial capacity to work, with many unable to secure sufficient paid work to sustain a living, and that only 8% of people receiving support for more than five years, and 14% receiving it for more than a year, leave the support program. It is patently obvious that the longer a person has been receiving income support, the less likely they are to transition out of it. Those who do normally will move into “part-time or temporary employment”.

The other problem is unemployment services giving ‘little practical help’ with ‘onerous’ rules and that the country is well behind not only support payments but also on spending on programs to boost employment. The report opines that Workforce Australia focuses mainly on compliance and offers most people little practical help to secure employment, with very few being referred directly to employers and assistance to overcome barriers to employment. In the twenty-one months, to March 2024, figures show that only 12% of those using Workforce Australia services managed to obtain sustained employment. Furthermore, 38%, (256k), and 16%, (106k), of those registered had less than year 12 qualifications, and had only completed year 12 in September of this year, respectively.  ACOSS has made several recommendations including asking for increased payments, commitments to reform and employment targets, ending the “automated payment suspensions” in use by employment services and for an “independent quality assurance body” for employment services, and trialling partnerships between providers, training organisations, government and community services to assist people in finding sustainable work.

A report by the CSIRO indicates that building a nuclear power plant in Australia would likely cost twice as much as renewable energy, and that it found nuclear plants enjoyed relatively little financial advantage from their long lives, which could be double a solar or wind farm. The report is in contrast to the thinking of Opposition leader Peter Dutton who is on record saying that his nuclear policy would help bring down power bills; the CSIRO has consistently found renewables to be the cheapest option. Earlier in the year, the company found Australia’s first nuclear power plant would cost up to US$ 11 billion in today’s dollars and not be operational until 2040.

Yesterday, the ECB cut rates again, for the third consecutive month, by 0.25% to 3.0%, to try and stop an economic slowdown across the euro area, by helping stoke weakening demand in the twenty-nations bloc that use the euro; further monthly decreases are expected in the New Year. It noted that it now expects a slower economic recovery than in its September projections, by 0.7%, 1.1%, 1.4% and 1.3%, over the next four years from 2024. The hope is that this will be achieved by rising real incomes – which should then enhance household expenditure – and firms increasing investment. Meanwhile sterling was reaching an eight-year high against the euro, at 1.2134, driven by the fact the ECB shows no sign of slowing its pace of rate reductions, while the Bank of England is tipped not to touch rates until next year. It is not often that the world sees the ECB panicking and the UK economy, itself spluttering, but still ahead of its European neighbours, because of the dismal economies and political uncertainty facing the two powerhouses – Germany and France. Both are awaiting the daunting prospect of Donald Trump and more tariffs being introduced.  The former is facing snap elections in February, and is in a sorry state, whilst their exports head southwards because of falling demand and stiff global competition. Meanwhile Emmanuel Macron seems to be the lead in a French farce pushing his country into a self-made economic crisis, following the ousting of his Prime Minister, Michel Barnier, and his government, only appointed in September. Rising bond yields and an increasing number of insolvencies are making investors wary, with economic activity being impacted by the political stalemate – it has still not agreed a budget for 2025.

There are plans afoot in the UK to make online marketplaces, such as Amazon and eBay, pay their “fair share” of the costs of recycling electrical waste under new government proposals. Circular Economy Minister, Mary Creagh, wants to put more pressure on international suppliers to contribute to recycling costs and to ensure that foreign sellers, who have escaped these costs by selling online, pay their share and not leave domestic companies such as Currys ‘picking up the tab’.  Meanwhile, disposable vapes will be banned across the UK next year, with e-cigarette firms being asked to pay more, but any legislation will not start until 2026. Last year, the UN estimated a massive eight hundred and forty-four million vapes were thrown away every year – but noted that “seventy-seven times more e-waste” is generated from unwanted toys.

It seems evident that, following the October budget, the demand for new staff among businesses slumped to levels last seen in August 2020 and that firms have had to “re-assess their hiring needs”. There are other warnings from various business groups that measures introduced, including braising employers’ NI contributions 1.2% to 15.0%, and raising the living wage, has impacted badly on investment, pay and employment. Even the BoE governor, Andrew Bailey, has weighed in, commenting that the reaction of business to the budget is the “biggest issue” facing Bank policymakers.

Currys is yet another major retailer suffering from the Labour government’s first budget in October, as it warns of a drop in consumer sentiment over the past six months, and price rises to help offset the impact of the increase in the employers’ national insurance payment by 1.2% to 15.0% and a hike in the minimum wage. Chief executive, Alex Baldock, noted that progress in tackling financial pressures on households had “stalled in recent months”, when in summer UK consumers were looking at falling inflation, interest rates and rising confidence; the budget helped change all that, with some price rises now “inevitable”. Like many others in the retail space, customers faced price rises to help offset the estimated impact, which for Currys is estimated to be over US$ 40 million.

With many businesses still reeling from the Reeves’ October Budget, there was no surprise to see that the UK economy contracted – by 0.1% – for the second consecutive month in October, as concerns about the Budget continued to weigh on confidence. The Office for National Statistics said that activity had stalled or declined with pubs, restaurants and retail among sectors reporting “weak months”. The Chancellor was quick to defend herself, agreeing that the figure was “disappointing”, but adding, “we have put in place policies to deliver long-term economic growth.” However, it does seem that consumer confidence is low, not helped by Labour party figures talking down the economy, and part of the population unsure in which direction the Starmer government is heading. The reality is that the economy has grown just once over the past five months, since the election, and perhaps the October Budget posted the wrong message. In Q3, the UK economy grew by 0.1%, despite manufacturing and construction dropping 0.6% and 0.4%, with the services sector, which makes up the bulk of the UK economy, stalled with zero growth.

In the UK, Zoopla has come out with housing figures that indicate that renting a newly let property is on average 26% higher, at U$S 345 per month to US$ 1.62k, than at the end of the pandemic in 2021. It was then after the lockdown that demand skyrocketed resulting in a limited number of available properties; demand is nearly a third higher than before the pandemic. The good news for renters is that rents are rising at their slowest rate for three years, the bad news is that average earnings, over that period, have not kept pace with the steep rise in rents. The property portal – which covers more than 80% of the rental market – said there were signs of this market cooling, but warned that those with the lowest spend capability, including students, may now be facing the sharpest rent rises, as city rents are typically rising faster at the lower end of the market. Its latest forecast is for an average 4% increase next year.

The British Retail Consortium noted that cash use in the shops rose for a second year in a row, after a decade of falls, with currency being used in about 20% of all transactions; it also noted that the average amount spent dipped 1.2% to just over US$ 28. It seems that certain entities, including essential services, parking services, community venues, leisure centres and universities, have started to refuse to accept cash. For example, this has impacted on women in abusive relationships, whose partners use a bank account as a form of control or to track their movements, elderly people and those with mental health issues, more so since banks have started to close so many of their branches. The BRC confirmed that all large retailers were committed to accepting cash in their stores. A recent report from UK Finance noted that the number of people who mainly used cash for day-to-day spending hit a four year high owing to the cost of living. Banking data shows cash remains the second most popular payment method, after debit cards.

In September, the cost of Robusta beans hit record highs and on Tuesday, the price for Arabica beans did likewise reaching US$ 3.44 per lb, after surging over 80% YTD. The end result is the inevitability that coffee drinkers will be paying more, as traders predict that there will be a global shortage after crop shortages in the world’s two largest producers – Brazil and Vietnam – both impacted by bad weather conditions. In the past, it seems that coffee roasters and brands like JDE Peet (the owner of the Douwe Egberts brand), Nestlé and Lavazza had borne most of the price rises themselves but that could end with consumers now having to pay more, as the drink’s popularity continues to grow; for example, consumption in China has more than doubled in the last decade. The last record high for coffee was set in 1977 after unusual snowfall devastated plantations in Brazil, but this year the country experienced its worst drought in seventy years during August and September, followed by heavy rains in October. Vietnam, the largest producer of that variety, has faced similar weather patterns. No longer is there An Awful Lot Of Coffee In Brazil!