Highway To Hell!                                                  20 December 2024

This week, a nine-bedroom mansion in Hills Grove, Dubai Hills Estate, sold for a record-breaking US$ 54.5 million. Hills Grove, with just twenty-six residences along a single street, has become known as the ‘Street of Dreams’ and is one of two exclusive mansion enclaves in Dubai Hills Estate; it is surrounded by the golf course and picturesque lakes.  The mansion, set on a 37.7k sq ft plot, covers four levels, including a rooftop terrace and basement, along with a large private garden and a unique boomerang-shaped swimming pool.

With over two decades of European expertise, Mr. Eight Development announced that it was to enter the burgeoning Dubai property market, introducing innovative, boutique-inspired residences that prioritise stylish design and bespoke guest experiences. The developer has secured eight plots on Dubai Island and plans to invest US$ 272 million in launching five projects next year. Residents will be able to join an exclusive Members Club which will give them access to a number of unparalleled privileges, including the use of in-house Rolls-Royce cars, (with professional chauffeurs, available on-demand for personal use), a 24 mt motorboat with a skilled captain, an on-site bell boy, beach club access, valet parking and other facilities.

Keeping their cards close to their chest, Dar Global is keeping the location and other details of a possible Trump Tower project in Dubai. Its CEO, Ziad El Char, did admit, “we are looking at a Q2-25 launch – I feel doing the launch in Q1-25 would be a bit tight”. Possibly located in the Downtown area, the US$ 545 million project will also feature the ‘first Trump hotel in Dubai’. Twenty years ago, a similar project was in fact announced on the Palm Jumeirah, but then the 2008 GFC happened and that got scrapped.

Recently marked as “under cancellation” by the Dubai Land Department, Dubai Lagoon, first launched nineteen years ago in 2005 by Schon Properties, comprised fifty-three mid-rise buildings, with 4.2k residential units, ranging from studios to four-bedroom apartments. In March 2006, it was announced that the project’s first phase was sold out eight weeks after its launch. The first-phase construction was set for completion by September 2007 and handover by 2008. However, the project, impacted by stakeholders’ disputes and financial problems, (most of their own doing), failed to meet deadlines which came and went at regular intervals. By 2017, the Dubai Land Department became involved – and the Lily Zone was then handed over to Xanadu Real Estate Development for completion. But that failed.

The RTA announced that it had awarded three contracts, totalling US$ 5.59 billion to three contractors  – Turkey’s Mapa and Limak, along with China Railway Rolling Stock Corporation – to construct the Dubai Metro Blue Line; operations are slated to start on 09 September 2029 – exactly  twenty years after the start of the Metro on 09-09-09, at exactly the ninth second of the ninth minute at 9pm. Spanning thirty km, with fourteen stations, it will utilise twenty-eight trains, carrying 200k passengers, rising to 320k by 2040. The nine key areas include Mirdif, Al Warqa, International City 1 and 2, Dubai Silicon Oasis, Academic City, Ras Al Khor Industrial Area, Dubai Creek Harbour and Dubai Festival City.

Space42 has signed a US$ 5.09 billion contract with the federal government to supply critical, secure communication services until 2043. The locally based AI-powered SpaceTech company will provide secure and reliable satellite capacity and related managed services with the existing Al Yah 1 and Al Yah 2 satellites in orbit; two more satellites – Al Yah 4 and Al Yah 5 – are expected to be launched in 2027 and 2028, with the company receiving an advanced payment of US$ 1.0 billion to construct them. Space42 recently contracted Airbus to construct the satellites and has selected SpaceX to launch them into orbit using the reliable Falcon 9 rocket launch vehicle. The new satellites will provide secure governmental communications across the ME, Africa, Europe, and Asia.

According to Younis Haji Al Khoori, Undersecretary of the Ministry of Finance, indirect taxes in the UAE generate between US$ 2.72 billion and US$ 3.00 billion annually, a substantial portion of the federal budget, which totals approximately US$ 17.71 billion. He noted that “this underscores the robustness of the UAE’s tax framework, which is aligned with its strategic vision of achieving economic diversification and financial sustainability.”

This week, Emirates NBD listed a US$ 500 million, five-year Sustainability-Linked Loan Financing Bond, at a fixed coupon rate of 5.141%, being  the latest of nine issues on Nasdaq Dubai, totalling US$ 5.77 billion. This was the world’s first SLLB issued under the new International Capital Market Association and Loan Market Association framework. Rated A2/A+ by Moody’s and Fitch, the bond is issued under Emirates NBD’s US$ 20 billion EMTN (Euro Medium Term Note) Programme. This latest issue enhances the bourse’s stature on the global stage and solidifies its position as the premier platform for regional and global fixed-income and ESG-related listings. It now has an outstanding total value of US$ 139 billion in listed fixed-income securities.

The DFM opened the week, on Monday 16 December, twenty-four points (0.5%) lower the previous week, gained two hundred and twenty-seven points (4.7%), to close the trading week on 5,057 points by Friday 20 December 2024. Emaar Properties, US$ 0.03 lower the previous week, gained US$ 0.90, closing on US$ 3.51 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.72, US$ 5.40 US$ 1.85 and US$ 0.37 and closed on US$ 0.74, US$ 5.56, US$ 1.91 and US$ 0.40. On 20 December, trading was at three hundred and sixty-five million shares, with a value of US$ 329 million, compared to two hundred and eighteen million shares with a value of US$ 111 million, on 13 December.  

By Friday, 20 December 2024, Brent, US$ 1.46 higher (2.0%) the previous week, shed US$ 1.47 (2.0%) to close on US$ 72.94. Gold, US$ 19 (2.2%) higher the previous week, shed US$ 49 (1.9%) to end the week’s trading at US$ 2,627 on 20 December 2024. 

It is reported that the two titans of the Japanese auto industry are in discussions to establish a holding company. This would allow Nissan and Honda to share resources and cooperate more closely on technology, at a time when they are losing EV global market share to the likes of Tesla and BYD. In addition, like other major players, they face stalling demand in Europe and the US. There is every possibility that a merger could take place and if it were to occur, it would be the second biggest in the industry, since the 2021 US$ 52.0 billion merger between Fiat Chrysler and PSA, to create Stellantis. Honda’s market cap of US$ 38.8 billion dwarfs Nissan’s US$ 7.6 billion. The two had combined global sales of 7.4 million vehicles in 2023.

Having “knowingly and intentionally” conspired with pharmaceutical firm Purdue Pharma to “aid and abet the misbranding of prescription drugs… without valid prescriptions”, consulting firm McKinsey has agreed to pay US$ 650 million to settle criminal charges related to its role in the US opioid crisis. Prosecutors said the firm gave Purdue Pharma advice on how to “turbocharge” sales of OxyContin, a brand name for the painkiller oxycodone hydrochloride. Rather belatedly, McKinsey apologised in a statement, saying “we should have appreciated the harm opioids were causing in our society”, had already previously settled nearly US$ 1 billion in lawsuits over its work with Purdue and other pharmaceutical companies. Purdue Pharma had pleaded in 2020 to criminal charges related to its role in the US opioid crisis in an US$ 8.3 billion settlement.

Vacuum cleaner manufacturer, Dyson, has been taken to court in the UK, with the Court of Appeal ruling that two dozen Nepalese and Bangladeshi migrant workers can sue Dyson Technology Ltd. It was alleged that the workers, employed by Malaysian firm ATA Industrial, were subjected to forced labour at a Malaysian factory while making parts for the company. Prosecution lawyers claim that the workers had money unlawfully deducted from their wages and were sometimes beaten for not meeting onerous targets, and that the Dyson companies were ultimately responsible.

For the first time in forty years, the Bank of France has raised its turnover threshold required to qualify for the bank’s rating, from US$ 777kt o US$ 130 million; this rating system, which is confidential and based on comprehensive data, checks the ability of companies to meet their financial obligations and is provided free of charge to clients. This adjustment is intended to adapt the system to changes in the economic environment while focusing resources on larger companies. In the current economic climate in France, this seems to be a wise move by the Bank. The decision to raise the turnover threshold means that approximately 7% of companies currently rated by the bank will no longer qualify for a rating, as the rating often influences trade credit insurance and payment terms.

The former chief executive of Bananacoast Community Credit Union Limited, a New South Wales credit union, has been sentenced to eighteen months in prison for financial crimes committed six years ago. Lyndon Allen Kingston, who was also a banking watchdog senior manager at Australia Prudential Regulation Authority, before joining the credit union in 2008, was found guilty of unlawfully pocketing payments from two credit union contractors, without knowledge of the board. He was also found guilty of providing false and misleading information to the auditor of BCU to conceal the payments. Two further offences were withdrawn by prosecutors when the jury was unable to reach a unanimous verdict.

El Salvador, the first country to make bitcoin legal tender, in 2021, has agreed to pare back its controversial bitcoin policies, as part of a US$ 1.1 billion loan deal with the IMF. The global body had indicated that “the potential risks of the Bitcoin project will be diminished significantly in line with Fund policies,” and that “legal reforms will make acceptance of Bitcoin by the private sector voluntary. For the public sector, engagement in Bitcoin-related economic activities and transactions, and purchases of Bitcoin will be confined.” The IMF did not favour the Salvadorean President Nayib Bukele’s crypto-friendly policies, warning they could become an obstacle to it offering financial assistance.

A mega trade deal this week saw the EU and four S American nations – Argentina, Brazil, Paraguay and Uruguay – agree to greatly reduce bilateral tariffs, along with greater amounts of exports and imports being permitted; the agreement will have an impact on eight hundred million. The deal still needs to be ratified by the twenty-seven EU member states – and no prizes for guessing who will not be a supporter, with France planning to block it, due to fears that it will harm its farming sector. It will also require France to persuade at least three other EU countries, representing at least 35% of the total population, to join it. Ireland, Poland and Austria are also opposed, but Italy will likely need to also come on board to achieve the required population quota. If it were to pass through next year, it will result in more S American beef, chicken and sugar coming to the EU, and at lower prices, with the likes of European cars, clothing and wine going in the other direction.

Although the Speaker of the House Mike Johnson has defended the 1.5k page stopgap bill to prevent the possibility of a US government shutdown, it seems that president-elect Trump wants to scrap the deal and pass an amended one. The short-term funding bill will need to be passed by Congress by the end of week to prevent many federal government offices from closing on Saturday. The bill, known as a continuing resolution, is required because Congress never passed a budget for the 2025 fiscal year, which began on 01 October. Elon Musk, a member of Trump’s cabal, is the tsar to cut government spending in his future administration role, and has lobbied heavily against the existing deal. There have been twenty-one US government shutdowns or partial shutdowns over the past five decades – the longest of which was during Trump’s first term when the government was closed for five weeks.

The Federal Reserve cut rates by 0.25% for the third month in a row, as inflation continues to cool. It noted that “economic activity has continued to expand at a solid pace” with an unemployment rate that “remains low” and inflation that “remains somewhat elevated.”

Latest figures relating to UK students’ loans provide distressing reading, with the highest amount owned by one student being over US$ 318k, whilst the highest repaid loan so far stands at US$ 172k, with another loan showing that US$ 80.6k had been accrued. More worryingly, it was estimated that by the end of last September, more than 2.2 million people had an outstanding loan balance of US$ 63k. It was only twelve years ago that David Cameron’s austerity measures included raising student loans threefold to US$ 11.3k. Last month, the new Labour government announced it was reversing the 2017 tuition fee freeze, and from next year it will cost students US$ 12.0k a year. It is estimated that since 2019, only 5.8% of student loan balances have been fully paid off.

It seems that the Starmer government and the UK building sector could be at loggerheads, with the Home Builders Federation arguing that skills shortages, ageing workers, (25% of the 22.67 million workforce), and Brexit were some of the factors behind the shrinking workforce, and that the country does not have enough construction workers to build the 1.5 million homes the government keeps promising; the target being an annual 300k every year until 2029, with the average, over recent times, being 220k. According to the HBF, the sector needs about 60k new recruits, including:

• 20k bricklayers
• 2.4k plumbers
• 8k carpenters
• 3.2k plasterers
• 20k groundworkers
• 1.2k tilers
• 2.4k electricians
• 2.4k roofers
• 0.5k engineers

The HBF also said the UK “does not have a sufficient talent pipeline” of builders to employ. It cited several recruitment constraints, including a poor perception and lack of training within schools, not enough apprenticeships and the costs of taking on apprentices. It also noted that the recruitment pool from the EU has largely dried up, following Brexit, and that up to 50% of skilled workers had also left the industry following the 2008 GFC and “restrictions” had made it harder to recruit from overseas. The independent think tank Centre for Cities also estimated the housebuilders will fall 388k short of the government’s 1.5 million, five-year target.

For the second consecutive month, UK inflation levels have headed north – this time by 0.3% in November to 2.6% – above the BoE 2.0% target; in October, it had risen from 2.0% to 2.3%. The main drivers behind the increase were higher annual cost of clothing, petrol and diesel, compared to last year, and costlier tobacco products also contributed to the change, after higher tobacco duty was increased in the October budget. On the flip side, plane tickets, had their largest monthly drop since records began. Other inflation indicators included core inflation, (measuring price rises excluding food and energy costs), and services inflation, (which is impacted by rising wages), which came in at 3.5% and 5.0% respectively – and lower than expected. Chancellor Reeves came in with the standard lame excuses such as the figures are a “reminder that for too long the economy has not worked for working people”, and “that’s why at the budget we protected their payslips with no rise in their national insurance, income tax or VAT, boosted the national living wage by GBP 1.4k, (US$ 1.77k) and froze fuel duty. “But I know there is more to do”.

Following a 0.7% decline in the previous period, in the four weeks ending 23 November, retail sales rose just 0.2%, and this despite discounting events in the run-up to Black Friday.  One of the main drivers was a marked decline of 2.6% in clothing sales – its lowest level since the pandemic lockdown month of January 2022. However, there were improvements noticed in food store sales, and supermarkets in particular, along with household goods retailers, most notably furniture shops. There is no doubt that higher energy bills had an impact on consumer spending, as did the fact that Black Friday took place after the close of the period.

High street retailer Shoe Zone, with two hundred and ninety-seven stores, employing 2.25k staff, has indicated a closure of stores, attributable to the negative impact of the Autumn budget. The company noted that it had experienced “very challenging” conditions recently, due to weakened consumer confidence and bad weather, and that it would incur “significant additional costs” due to the increases in employer national insurance contributions and the national living wage set out by the Chancellor in the budget. It expects its September 2025 EBIT to be “not less than” US$ 6.3 million, down from previous expectations of US$ 12.6 million, and it also cancelled its final shareholder dividend payout for 2023-24.

For the ninth consecutive month, UK car manufacturing posted another fall, with only 64.2k vehicles produced in November – over 30% lower on the year and the worst November figures since 1980. A government review of its EV mandate has not helped which has raised its target from its current 22% level to 80% of all sales by 2030; the industry has argued that the consumer demand is not there and EVs are costlier to produce. Separate figures from the Society of Motor Manufacturers and Traders has suggested a US$ 7.25 billion hit to the sector from the EV mandate, exacerbated by Chinese competition, high borrowing costs and comparatively more expensive raw materials. It does seem that the UK industry could be  On the Highway To Hell!