Don’t Believe Everything You Hear!                                                   07 June 2024

Records were broken last month, with Dubai’s real estate sector posted the highest ever volume and value of transactions at 17.7k, (53.3% higher compared to May 2023) and  up 38.0% on the year to US$ 12.67 billion. According to Property Finder, the previous peaks for volumes were in March 2024, and for value in December 2023, with May 2024 returns 10.0% and 30% higher. Further analysis indicated that in the:

Rental Market

• 78% were seeking apartments; 58% of those seeking apartments preferred furnished; 19%, 35% and 33% were looking for studios, 1 B/R and 2 B/R respectively; top search areas were Dubai Marina, Jumeirah Village Circle, Downtown Dubai, Business Bay and Jumeirah Lake Towers
• 22% were seeking villas/townhouses; 57% of those in the villa/townhouse market were looking for furnished units; 38% and 43% were searching for 3 B/R and 4 B/R, (or larger); top search areas were Dubai Hills Estate, Dubai South (Dubai World Central), Al Furjan, Arabian Ranches, and Palm Jumeirah

Buying Market

• 59% were seeking apartments; 14%, 32% and 36% were looking for studios, 1 B/R and 2 B/R respectively; top search areas were Dubai Marina, Downtown Dubai, Jumeirah Village Circle, Business Bay and Palm Jumeirah
• 41% were seeking villas/townhouses; 57% of those in the villa/townhouse market were looking for furnished units; 40% and 46% were searching for 3 B/R and 4 B/R, (or larger); top search areas were Dubai Hills Estate, Dubai South (Dubai World Central), Al Furjan, Arabian Ranches, and Palm Jumeirah

May also witnessed the highest ever monthly volume and value of off plan transactions, with the former posting over 11.1k transactions, (surpassing the previous peak of 9.8k registered as far back as April 2009), valued at US$ 6.19 billion.

The existing market continued to support Dubai’s real estate market with an annual increase of approximately 8.8% in volume and 6.6k transactions recorded. The value of these transactions experienced a notable annual increase of 21%, touching approximately US$ 6.49 billion.

There are claims that a Jumeirah Bay home, being rented out for US$ 1.0 million a year, is not only one of the ‘most valuable’ rental deals in Dubai’s property history but also the highest ever for a townhouse. The five-bedroom Villa Amalfi home, encompassing 5.2k sq ft, came fully furnished, including Christofle cutlery, Hermès furnishings and a selection of contemporary art. It also boasts a private gym, sauna, and a rooftop terrace with skyline and sea views.

Since its rebranding in November 2023, Tabeer Developments, has rapidly drawn up expansion plans, allocating US$ 272 million in inventory to be launched this year. The nine-year old developer has a real estate portfolio that spans across community areas like International City, (Dragon Views and Tabeer 1), Dubai Sports City, (V2), Arjan, (48 Parkside), and JVC, (99 Park Place); the last two mentioned projects will be handed over this year. Last week, the developer launched its new residential project, Parkside Boulevard, with six retail spaces and one hundred and sixty-five apartments, including studios (441 sq ft and prices starting from US$ 174k), one-bedroom (starting from 779 sq ft and US$ 286k), and two-bedroom apartments (starting from 1,267 sq ft and US$ 409k). Some of its many facilities include glass elevators, concierge services, wellbeing havens, kids’ areas and recreational zones.

This week, Dubai South Properties unveiled South Living, a luxury apartment project, comprising two hundred and nine spacious units, with options of studio to three-bedroom apartments; there will also be special-terraced units, offering a mix of indoor and outdoor living experiences. Located in Dubai South’s Residential District, it will also have the usual accoutrements such as a swimming pool/deck area, gymnasium, sauna, a multi-purpose room, a kids’ library, a yoga deck, BBQ area, gazebo seating area, and artistically landscaped elevated gardens. The Residential District is home to over 25k residents, and has amenities such as public parks, sports courts, retail shops, a 50k sq ft hypermarket, a mosque and a petrol station; currently, a premium British curriculum school is being built in the location. The community is also serviced by the RTA public bus network, with easy connectivity to the Expo Metro station.

Another property unveiling this week was Swank Development’s US$ 87 million Lua Residences project, located in the Mohammed bin Rashid City in Meydan. The gated community will be home to a limited collection of forty-two four- to six-bedroom villas, each with their own private pool, interior elevator, landscaped gardens, and innovative solutions such as smart home technology. It will have a raft of external amenities such as vast open spaces, a crystal lagoon, sports facilities, a mosque, retail shops, supermarkets, schools, and medical clinics.

The Dubai Land Department has announced that three unnamed developers have each been fined US$ 136k for promoting and marketing real estate projects, without completing the mandatory registration procedures for off-plan projects. It was said that they had violated a law on real estate development escrow accounts. Ali Abdullah Al Ali, director of the Real Estate Control Department, urged investors to verify that off-plan projects are licensed and registered with an escrow account. He also advised that investors must not “make any payments outside the project’s escrow account”.

At the IATA annual meeting, Emirates’ president, Tim Clark, announced that the historic storm, that hit the country on 16 April, cost the airline US$ 110 million, adding that “it was a very, very difficult situation to manage.” He also noted that “it got so bad that access to the airport was underwater, so nobody could get to the airport,” and that Emirates’ protocols were “under huge stress and challenges” and were overwhelmed by the situation. Now the airline is undertaking a major review of its procedures.

Emaar has revealed a US$ 409 million expansion plan for Dubai Mall, which will result in the addition of two hundred and forty retail and dining options, with preliminary work having already started. Last year, with a 19% hike in numbers to a record one hundred and five million visitors, it became the most visited place on Earth. Emaar’s chairman commented that “this expansion reflects Dubai’s ambitious vision to remain at the forefront of global innovation and culture, further solidifying our city’s position as a top global destination”.

A busy week for the Emaar chairman, as he also announced the launch of a multimedia fountain plaza, ‘Water, Colour and Fire Plaza’ in Dubai Square in Dubai Creek Harbour, which will feature a mesmerising display of fire, vibrant colours, and synchronised music. The design ensures the area remains functional and accessible even when the music feature is deactivated, so it becomes a lively public space inviting visitors to walk and engage with their surroundings. The developer is in discussions with a Chinese technology company, known for its expertise in creating iconic music and fire features. The plaza will surround the upcoming Dubai Creek Tower, part of Dubai Creek Harbour, which encompasses 7.4 million sq mt of residential space and 500k sq mt of gardens and open areas.

Following a directive from HH Sheikh Mohammed bin Rashid Al Maktoum, Dubai’s government has been tasked to develop two public beaches – Al Mamzar Beach and Jumeirah (1). The renovations, lasting some eighteen months, will see the two public beaches reach world-class standards, with the provision of health and public service facilities including restrooms, shower areas, and changing rooms. Contracts totalling US$ 97 million for the two beaches’ development have already been awarded spanning a total of 5.7 km (4.3 km at Al Mamzar and 1.4km at Jumeirah 1). Scheduled for completion in 18 months, these projects signify a significant advancement in beach design. According to the social media account of the Dubai Urban Master Plan 2040, there will be numerous upgrades and additions for recreational activities, as well as the two beaches using advanced technology—with advance safety deposit boxes, Wi-Fi internet services, electronic screens, and beach rescue services that uses AI technology. The two beaches will remain partially open during the upgrades, but beachgoers can always use the likes of Kite Beach, Sunset Beach, Jebel Ali Public Beach, and the Beach at JBR.

Emirates Islamic’s maiden US$ 750 million Sustainability Sukuk, (part of the US$ 2.5 billion Certificate Issuance Programme) was launched on Nasdaq Dubai, bringing the total value of EI’s Sukuk listings on the bourse to US$ 2.02 billion, through four listings. The issuance was oversubscribed 2.8 times with investors across different regions, 44% of which came from outside of MENA region. The robust demand and strong order book allowed the bank to tighten the expected profit rate to 5.431% at a spread of 100 basis points over five-year US Treasuries. Now known as a leading global centre for Sukuk listings, Dubai manages US$ 93 billion in Sukuk issuances, of which 44% by value are from UAE issuers. Nasdaq Dubai continues to consolidate its status as the premier platform regionally and globally for both fixed income, (with a total value of US$ 129 billion) and ESG-related listings, (at US$ 29 billion).

Parkin, the largest provider of paid public parking facilities and services across Dubai, has posted that it has signed an exclusive four-year agreement, with a private developer, to manage parking services at six locations in Dubai. The locations, at Al Sufouh Gardens, Arjan, Dubailand Residence Complex, Jaddaf Waterfront, Liwan 1&2, and Majan, will add 7.5k spaces to Parkin’s current 10.0k portfolio. Operations will be from 8.00am to 10.00pm, for all days except for Sunday, with the listed company responsible for issuing fines for non-compliance, with parking laws and regulations.

Tecom Group on Wednesday announced a record US$ 599 million in 2023 revenue, representing a 10%, on the year, increase and a 49% hike in annual net profit to US$ 300 million, driven by elevated occupancy rates, (up 3% to 89%), on the back of high customer retention rates and an almost 15% increase in the number of new customers. Ebitda rose 23% to US$ 463 million, as the margin climbed 8% to 76%, attributable to enhanced revenue quality, which is down to improving macro conditions. Funds from operations came in 21% higher on the year at US$ 381 million. Growth was underpinned by Dubai’s resilient economic performance, pro-growth and diversification government initiatives, and bullish consumer and business confidence. The Board recommended a US$ 109 million H2 2023 dividend payout.

The DFM opened the week on Monday 03 June, 183 points (4.4%) lower the previous three weeks gained 4 points (0.1%) to close the trading week on 3,982 by Friday 07 June 2024. Emaar Properties, US$ 0.04 lower the previous week, shed US$ 0.07, closing on US$ 2.02 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.62, US$ 4.24, US$ 1.50, and US$ 0.35 and closed on US$ 0.62, US$ 4.39, US$ 1.51 and US$ 0.36. On 07 June, trading was at two hundred and thirteen million shares, with a value of US$ 91 million, compared to two hundred and thirty-four million shares, with a value of US$ 175 million, on 31 May 2024.  

By Friday, 07 June 2024, Brent, US$ 0.27 lower (0.1%) the previous week, shed US$ 2.02  (2.5%) to close on US$ 79.57. Gold, US$ 12 (0.5%) higher the previous week, shed US$ 41 (1.7%) to end the week’s trading at US$ 2,305 on 07 June 2024.

Despite Sunday’s, Opec+ agreement, to extend output cuts of 3.66 million bpd another year until the end of 2025, oil prices dipped on Monday to US$ 80.77. At the same time, the eight Opec+ member states agreed to extend their 2.2 million bpd voluntary production cuts for a further three months until the end of Q3, as well as posting plans of unwinding the voluntary curbs on a monthly basis from October 2024 until September 2025. These combined cuts of some 5.86 million bpd equate to about 5.7% of global crude demand. Opec expects strong economic growth, of some 2.25 million bpd, from emerging economies, particularly China and India, to drive crude demand this year, in contrast to the US Energy Information Administration and the International Energy Agency forecasting a lower growth rate of 1.1 million bpd.

Last Sunday, Aramco started a secondary share sale in a deal that could raise US$ 13.1 billion, with the main beneficiary being the Public Investment Fund, the kingdom’s SWF. The banks involved in the deal took institutional orders until yesterday and today announced the share price of US$ 7.27; trading will start this Sunday, 09 June. There were 1.545 billion shares on offer, at a range between US$ 7.12 and US$ 7.73, with the banks able to increase the offering by a further US$ 1.0 billion. About 10% of the new offering was reserved for retail investors, subject to demand. This deal will see the Saudi government, with its 82.0% stake in the oil giant cut by 0.7%; the other shareholders are PIF (16%) and the remainder held by public investors. Currently, Saudi Arabia is producing about nine million bpd of crude – equating to some 75% of its maximum capacity.

A day after its chairman, Akio Toyoda, apologised for being guilty of providing incorrect or manipulated data for safety certification tests, Japan’s transport ministry raided Toyota’s headquarters. It was another bleak day for the country’s car industry as Toyota is not the only guilty party, with its peers, Honda, Mazda and Suzuki, all guilty of similar offences. Toyota, which sold over eleven million vehicles last year, noted the findings did not impact the safety of vehicles already on the road and has suspended production of its Corolla Fielder, Corolla Axio and Yaris Cross models.

The eightieth IATA AGM and World Air Transport Summit was held in Dubai, (for the first time), from 02 June – 04 June and hosted by Emirates Airline. Over 1.5k industry leaders and government officials were in attendance. One of the topics discussed was that of airline funds being blocked from repatriation by governments, with a call for governments to remove all barriers to airlines repatriating their revenues from ticket sales and other activities in accordance with international agreements and treaty obligations. The meeting did note that there had been a 28% decrease in the amount of airline funds blocked from repatriation by governments – reduced by US$ 708 million over the year to US$ 1.80 billion. Eight countries accounted for 87% of the total blocked funds, amounting to US$ 1.6 billion, including Pakistan and Bangladesh unable to repatriate revenues earned, totalling US$ 411 million and US$ 320 million. For the past few years, Nigeria had headed the list, and at June 2023 it had held back some US$ 850 million, most of which has now been cleared, whilst Egypt was one of the main culprits, it too has cleared a significant accumulation of blocked funds. However, in both cases, airlines were adversely affected by the devaluation of the Egyptian Pound and the Nigerian Naira.

At the meeting, it was announced that global airlines are expected to see an 11.3% increase in profits to US$ 30.5 billion, (well up on their last estimate of US$ 27.5 billion, made in December), whilst carrying over a record five billion passengers; revenue will rise 9.7% to US$ 996 billion with a 9.4% hike in expenses to US$ 936 billion.  Cargo revenue is expected to fall 13.0% to US$ 120 billion in 2024, as cargo yields are expected to fall by 17.5%, remaining slightly above 2019 levels. IATA expects ME carriers to show a 22.6% rise in profits to US$ 3.8 billion, equating to a US$ 15.20 return per passenger, compared to the global US$ 6.00. The 2024 average passenger load factor is expected to be 82.5%, compared to the 82.6% level in pre-pandemic 2019.

It noted that the UAE continues to benefit from its appeal to both leisure and business travellers, with the world body’s chief economist, Marie Owens Thomsen saying “to make more profit, you need efficient operations, high load factors and a population keen to travel and that’s not too price sensitive, if all those conditions are fulfilled than those airlines will make more money,” However, geopolitical risks are the main threat, especially to the Levant carriers, whilst “the Gulf carriers are relatively less impacted unless tensions between Iran and Israel escalate”.

By the end of last week, Bitcoin had entered uncharted territory, surging above US$ 72.1k, after the UK’s Financial Conduct Authority announced that it would welcome applications for crypto asset-backed exchange-traded notes to trade on the London Stock Exchange. The FCA added that it would not object to requests from recognised investment exchanges to create a UK-listed market segment for cETNs, including Bitcoin and Ethereum, and that “these products would be available for professional investors, such as investment firms and credit institutions authorised or regulated to operate in financial markets only.” However, the FCA said that the cETNs would not be available to retail investors as crypto assets are “high risk and largely unregulated”, and that it “continues to believe cETNs and crypto derivatives are ill-suited for retail consumers due to the harm they pose.”  This comes four months after the US Securities and Exchange Commission approved spot Bitcoin exchange-traded funds. At the time, the SEC approved eleven spot Bitcoin ETFs offered by major asset management companies including BlackRock, VanEck, Fidelity, Franklin Templeton and Cathie Wood’s ARC. Many believe that Bitcoin, 55% higher YTD, could soon push the US$ 80k boundary, at which time all bets are off, and it could top US$ 120k by year end.

On Wednesday, shares in Nvidia scaled new heights, helped by a 5.2% hike on the day topping the US$ 3.0 trillion mark, and overtaking Apple, to become the world’s second most valuable company. It is also fast approaching the current valuation of the most expensive company, Microsoft with a current market cap of US$ 3.15 billion. By the end of trading on Wednesday, the stock had risen a phenomenal 140% since the beginning of 2024; the main driver behind this is demand for its top-of-the-line processors far outstripping supply as Microsoft, Meta Platforms and Alphabet race to build their AI computing capabilities and dominate the emerging technology

In the UK, the Competition Appeal Tribunal Google has confirmed that Google (Alphabet) must face a US$ 17.40 billion lawsuit alleging it has too much power over the online advertising market. Ad Tech Collective Action LLP brought the case, (involving adtech, which decides which online adverts people see, as well as how much they cost to publishers), alleging that Google behaved in an anti-competitive manner which caused online publishers in the UK to lose money. Some estimates indicate that the digital advertising spend turned over US$ 490 billion in 2021 and proves to be a lucrative revenue stream for all stake holders, including many websites and especially Google which dominates web search; the basis of this massive claim is that Google is abusing that dominance, reducing the income websites get. Ad Tech Collective claims it is missing out on income in two ways – one is “very high” fees and the other is that Google utilises “self-preferencing”, where it pushes its own products and services more prominently than that of its rivals where publishers end up getting less money for the ads they host. The case is what is known as opt-out, meaning all relevant UK publishers are included unless they indicate otherwise. UK is not the only jurisdiction taking Google to task, with the tech giant facing probes into its adtech business in the EU and the US.

The founder of software company Autonomy, Mike Lynch, has finally found justice in a US court some thirteen years after selling the company to Hewlett-Packard for US$ 10.62 billion. He had long been accused by HP of deliberately overstating the value of Autonomy, with the US tech giant writing down US$ 7.04 billion from Autonomy’s value within a year of completion, claiming revenue streams had been inflated. The acquisition was initially investigated by the UK’s Serious Fraud Office but it dropped the probe in 2015, while US prosecutors continued their own inquiry. He was extradited to the US to face trial just over a year ago, and this week  was acquitted of all charges by a US jury, alongside a former finance executive Stephen Chamberlain who had faced the same charges. He had taken to the witness stand at the trial to argue that the US firm rushed the deal, did not understand what it was buying and had not completed its due diligence sufficiently. Fortunately, the jury agreed.

Probably the UK’s largest fancy dress manufacturer is in financial distress and, having failed to find a buyer, is on the brink of insolvency, having filed a notice of intention to appoint administrators late last week. The company posted that “following four extremely challenging years, as a result of the pandemic, the subsequent supply chain crisis, and the ongoing inflationary burden on both businesses and consumers, Smiffys was required to take the difficult decision yesterday to file a notice of intention to appoint administrators.” Family-owned Smiffys, founded in 1894, reportedly ships more than twenty-six million items of fancy dress annually and distributes 7.5k products to thousands of stockists around the world, and some reports indicate that it has been beset by overstocking problems in recent months.

This week, Live Nation confirmed “unauthorised activity” on its database, after a group of hackers said they had stolen the personal details of five hundred and sixty million customers; this after ShinyHunters posted that it was responsible for theft of  data including names, addresses, phone numbers and partial credit card details from Ticketmaster users worldwide, with the hacking group demanding a US$ 500k ransom payment to prevent the data from being sold to other parties. Live Nation notified shareholders on 31 May that on 27 May “a criminal threat actor offered what it alleged to be company user data for sale via the dark web”, and that it was investigating, even though the breach was first revealed by hackers who posted an advert for the data on 29 May.

There is every chance that this breach is part of a larger ongoing hack involving a cloud service provider called Snowflake which is used by many large firms to store data in the cloud. Last Friday, Santander confirmed it had data from an estimated thirty million customers stolen which was being sold by the same hacking group as the Ticketmaster hackers. Ticketmaster has form – in 2020, it admitted it hacked into one of its competitors and agreed to pay a US$ 10 million fine, and last November, it was allegedly hit by a cyber-attack which led to problems selling tickets for Taylor Swift’s Era’s tour. It will be no surprise to see other companies posting in the coming weeks that they have been hacked.

Shein is considering to IPO on the London Stock Exchange, which could value the Chinese fast fashion giant at an impressive US$ 66 billion. It relies on thousands of third-party suppliers, as well as contract manufacturers, near its headquarters in Guangzhou, China. Although it has fast become one of the biggest global fashion retailers, it has courted controversy over its environmental practices, as well as allegations around the use of forced labour in its supply chain. There are claims that Uyghur forced labour is used to make some of the clothes it sells, and a report last month indicated that some of its suppliers are still working seventy-five hours a week. The UK seems to be a better option for Shein, as it faces mounting pressure, and increased scrutiny, from US lawmakers at a time when there are rising tensions between the Biden and Xi Jinping administrations. If their UK bid is successful, it would be a huge boost for the LSE that has seen too many clients exiting to overseas bourses.

In April, Zambian authorities broke a sophisticated crime ring that was involved in specialised  cyber-related crime in a “sophisticated internet fraud syndicate”, with seventy-seven arrests including twenty-two Chinese nationals. This followed an alarming rise in internet fraud cases in the country, targeting people in countries around the world, along with increasing cases of Zambians losing money from their mobile and bank accounts through money-laundering schemes which extend to other foreign countries. Dozens of young Zambians were also arrested after allegedly being recruited to be call-centre agents in the fraudulent activities, including internet fraud and online scams. All the Chinese accused, along with one Cameroonian national, were charged with manipulating people’s identities online with intent to scam them and all pleaded guilty of computer-related misrepresentation, identity-related crimes, and illegally operating a network or service. The Zambian nationals were charged in April and released on bail so they could help the authorities with their investigations. Among equipment seized were devices allowing callers to disguise their location, 13k Sim cards, and eleven Sim boxes which are devices that can route calls across genuine phone networks.

Only last month, the ‘Tears Of A Clown’ blog highlighted that Live Nation was being sued by the DoJ:

“Live Nation, the owner of Ticketmaster, is being sued by the US Justice Department over claims it is running an illegal live event “monopoly” which is driving prices up for fans and pushing out smaller competition. It claims that they are squeezing out smaller promoters by using tactics such as threats and retaliation The accused countered that it will defend itself against “baseless allegations” and claims the lawsuit would not solve ticket price or availability issues. Filed yesterday in a Manhattan federal court, the sweeping antitrust lawsuit was brought with thirty state and district attorneys-general. The US Attorney-General Merrick Garland commented that “it’s time for fans and artists to stop paying the price for Live Nation’s monopoly,” and “it is time to restore competition and innovation in the entertainment industry. It is time to break up Live Nation-Ticketmaster. The American people are ready for it.” Ticketmaster, which merged with Live Nation in 2010, is the world’s largest ticket seller across live music, sports, theatre and more. The company said it distributed more than six hundred and twenty million tickets in 2023”.

This week, Live Nation confirmed “unauthorised activity” on its database, after a group of hackers said they had stolen the personal details of five hundred and sixty million customers; this after ShinyHunters posted that it was responsible for theft of  data including names, addresses, phone numbers and partial credit card details from Ticketmaster users worldwide, with the hacking group demanding a US$ 500k ransom payment to prevent the data from being sold to other parties. Live Nation notified shareholders on 31 May that on 27 May “a criminal threat actor offered what it alleged to be company user data for sale via the dark web”, and that it was investigating, even though the breach was first revealed by hackers who posted an advert for the data on 29 May.

‘Tears Of A Clown’ blog of 24 May also outlined the problems with the various water companies in the UK including:

“A study of ten water and sewage firms in England and Wales bythe University of Greenwich has concluded that shareholders in some of the UK’s largest water companies, including Thames Water, United Utilities and Severn Trent, have taken out US$ 108.3 billion in dividends but failed to invest. It said that between privatisation in 1989 and 2023, money invested by shareholders in the largest firms shrunk by US$ 7.0 billion, when adjusted for inflation. Over the same period, the amount of “retained earnings” – profits left over once things like dividends have been paid out, that can be used to invest in a business – had dropped by US$ 8.52 billion in real terms. Ofwat, the industry regulator, said it “strongly refuted” the figures.  “While we agree wholeheartedly with demands for companies to change, the facts are there has been huge investment in the sector of over US$ 254.0 billion.” Water UK, which represents the industry, said investment in the sector was “double the annual levels seen before privatisation”. Water and sewage firms want to spend around US$ 127.10 billion over the next five years”.

This week, the embattled Thames Water, UK’s biggest water company has been told by Ofwat it faces a fine of more than US$ 51 million over the payment of a US$ 47 million shareholder dividend late last year, in spite of its poor performance. This is another nail in the utility’s coffin, as it moves towards a potential temporary nationalisation under a debt mountain of more than US$ 19.1 billion.

According to Zoopla, UK rents for new lets stand at US$ 1,569 having increased by 6.6%, US$ 102, over the year to April – its slowest annual rise since October 2021. Even with demand slowing, the property portal noted that there were still fifteen people on average chasing every home for rent – pre pandemic, this figure was six. There are various reasons for sharp rises in new let rentals including demand rising from students, but primarily because supply has not matched demand. It forecasts that the slowdown will continue for the rest of the year, with increases hovering around the 5% level.

Thanks to the secret intervention by the then Cameron/Osborne government in 2012, Standard Chartered, one of the UK’s largest banks, avoided prosecution by the US Department of Justice but now new documents filed to a New York court claim the bank processed thousands of transactions, worth more than US$ 100 billion, from 2008 to 2013, in breach of sanctions against Iran. It appears that an independent expert has identified US$ 9.6 billion of foreign exchange transactions, with individuals and companies designated by the US government as funding “terror groups”, including Hezbollah, Hamas, al-Qaeda and the Taliban. The bank has twice, (in 2012 and 2019), admitted breaching sanctions against Iran and other countries, paying fines totalling more than US$ 1.7 billion but not for conducting transactions for “terrorist” organisations.

Latest data for May, from the Society of Motor Manufacturers and Traders, indicates a 2.0% decline on the year in UK sales of new EVs – and this despite “very attractive offers” to lure buyers. The decline in sales has been put down to various factors including the cost-of-living pressures on household budgets, as well as a lack of affordable vehicles and charging infrastructure. The body’s supremo, Mike Hawes, warned that manufacturers could not sustain the level of discounting indefinitely and argued that a fairer transition was needed with “carrots, not just sticks” required from ministers to help improve future uptake. The SMMT were also disappointed with the recent Sunak Government’s U-turn on the sale of new cars powered by petrol and diesel – it had been policy that this would happen from 2030 but in March it was changed to 2035, and this has had a negative knock-on impact on EV sales, and investment in the sector. Another factor in play is affordability as indicated by the fact that the share of new models for sale below US$ 25.6k, (GBP 20k), in the past five years has dropped from 17% to just 4%; this may change with many new low-cost options expected on the market this year which may tempt consumers to make the transition to electric.

Following Canada’s decision, a day earlier to cut rates, the ECB followed suit yesterday, 06 June, knocking 0.25% off its main interest rate from an all-time high of 4% to 3.75%, whilst noting that the EU had made progress in tackling inflation, even though the monthly rate nudged 0.2% higher to 2.6% in May. Having posted that the outlook for inflation had improved “markedly”, Christine Lagarde, president of the ECB, warned that inflation was likely to remain above the bank’s 2% target “well into next year”, averaging 2.5% in 2024 and 2.2% in 2025 and that the bank would keep interest rate policy “sufficiently restrictive for as long as necessary” to bring inflation down to the Bank’s 2% target. This marginal cut in rates should be enough to start the ‘economic activity ball’ rolling by making it cheaper for consumers and businesses to borrow. The world waits for similar moves from the Fed and the BoE

Consulting firm Capgemini estimates that the number of ‘high net worth individuals’, (people with liquid assets of at least US$ 1 million), rose by 5.1% last year to 22.8 million. Much of the increase was the result of soaring global stock markets which has helped their cumulative wealth  rise by 4.7% to US$ 86.8 trillion. In 2022, the number of HNWIs and their wealth had each fallen by more than 3.0%, attributable to macroeconomic uncertainty and geopolitical tensions – the steepest fall recorded in a decade. With the gap between the rich and poor widening by the year, the inequality debate continues on whether the rich should pay their fair share of taxes, with countries like France and Belgium pressing developed countries  to set a global minimum tax on the world’s wealthiest people.

There is no doubt that both Prime Minister Narendra Modi and the benchmark NSE Nifty 509 share index received a shock this week, when his Bharatiya Janata Party failed to secure a majority in the five hundred and forty-three-member lower house of parliament. Indian stocks fell sharply, with the benchmark NSE Nifty 50 share index closing down nearly 6%, its steepest fall since India’s first Covid lockdowns in March 2020. The rupee slid 0.5% against the US dollar, its biggest fall in sixteen months. According to one commentator, there is every possibility that the new Indian coalition government may have to shift its focus to put more emphasis on welfare rather than concentrating on reforms during next month’s budget.

Two lessons could be learnt from this episode of Indian politics. One is that it seems that after two terms of government, whether it be for eight years or ten, something happens. Two examples from both the UK and France and one from Australia will illustrate the point. Margaret Thatcher was in power from 1979 – 1990 and Tony Blair from 1997 – 2007 and both were disposed of when in office; both parties lost the next general election.  Whether it was egotism, familiarity, sleaze, loss of ideas, over confidence, corruption, cronyism, low approval ratings, internal wranglings, not doing their homework, relying on partial advice and so on, both had stayed in office for too long and paid the price. Likewise, French presidents, Francois Mitterrand (1981 – 1995) and Jacques Chirac (1995 – 2007) and Australian prime minister, John Howard (1995 – 2007) all leaving office with their reputations tarnished. It seems that the US and France (since 2002) may have the right idea by restricting the position to two terms only. (Ironically, the current president of France, Emmanual Macron is highly critical of this and would like the opportunity of a third term in office – I wonder why?) Maybe the same for Modi and his government?

Markets had soared on Monday after exit polls over the weekend had suggested Mr Modi and the BJP would gain a significant victory. The second lesson to be learnt (again) is that in recent times as polls become more sophisticated it does seem to many observers that, on too many occasions, they are hopelessly wrong. Two 2016 cases in point are the Trump/Clinton 2016 US presidential election and the Brexit referendum in the UK. The pollsters had long concluded that Hilary Clinton would become the country’s first woman leader, even calling it on the morning after the election, whilst if you followed the pollsters, Brexit was a near certainty. Both results went the other way. In the recent Indian election, the “experts’ were still calling for a majority vote for the current incumbent on the day after the polls closed – and were wrong again. The lesson to be learnt is Don’t Believe Everything You Hear!

We Will Rock You!                                                                             31 May 2024

Data from the Dubai Land Department indicates that, in the twelve months to 31 March, there was a 5.8% rise in the number of rental registrations to over 159.9k, split between a 12.3% growth in renewed rental registrations, compared to a 4.1% decline in new contracts. A CBRE report noted many residents are not prepared, or are able, to pay higher rates on new leases, with one of the main factors being the lack of available stock, particularly in prime and core residential areas. In March, average residential rents reported an annual increase of 21.2%, 0.8% higher than a month earlier; over the period, average apartment and villa rents grew by 22.1% and 14.5%, with median rents of US$ 33.6k and US$ 93.9k. In line with other analysts, CBRE expects “residential rents will continue to increase; however, not at the same rate that we have been seeing to date, and we expect that the rate of change will diminish in the second half of the year.” Cushman & Wakefield reported that 2023 and 2022 rents had risen by 19% and 27% – an indicator that they were slowing. The RERA rent calculator was recalibrated on 01 March to become more representative of open-market pricing; it uses criteria such as location, property type, current rent and number of rooms and works by comparing properties with similar ones nearby. Previously, many tenants opted to stay because rental increases during renewals tended to be much lower, compared to signing new leases, but several renewing this year will face higher rent due to the adjustment in RERA’s calculator. Q1 price increases were up 20.7% – villas and apartments by 22.1% and 20.4%. As of March, mean apartment prices stood at US$ 405 per sq ft, and average villa prices reached US$ 484 per sq ft, with standard villa sales rates currently 22.9% above their 2014 baseline. In Q1, of the 6.5k residential units delivered, 59.7% were located in Meydan One, Jumeirah Village Circle and Al Furjan, with a further 46.1k expected by the end of 2024, of which 31.4% will be delivered in three areas – District Seven, Damac Lagoons and Business Bay. CBRE estimated that only a limited portion of this upcoming stock will come online as planned.

This week, Danube Properties announced the handover of its Pearlz project some six months ahead of schedule. Located in Al Furjan, with a built-up area of 480.2k sq ft, the project has three hundred units — studios, one-, two-, and three-bedroom apartments — and retail outlets. The Dubai-based developer has already delivered numerous projects in the emirate, including Jewelz, Wavez, Elz, Lawnz, Bayz, Miraclz, Glamz, Starz, Glitz 1, Glitz 2, Glitz 3, and Dreamz. Danube Properties also offers homeowners a ten-year Golden Visa – especially those who qualify as per the investment criteria – subject to government approval. Founder and Chairman, Rizwan Sajan, noted that “the Dubai property market has a long way to go. It is highly affordable and, at the same, it offers one of the best returns on investment also both in terms of rentals and capital appreciation. With population outpacing supply in the market, the property outlook for Dubai is highly optimistic and promising.” It is difficult to disagree with him.

Local property brand Binghatti has launched its latest project, One by Binghatti, located in Dubai’s Business Bay district. The latest mega waterfront development, with views of Burj Khalifa and the Dubai Water Canal, is located in Business Bay near other Binghatti branded residences including Binghatti, Mercedes Benz Places, as well as Binghatti, and Burj Binghatti Jacob & Co Residences. The project features adult and children swimming pools and a variety of athletic facilities including basketball, paddle, tennis and street football. Amongst the project’s rejuvenation facilities are a jacuzzi, sauna, steam room and a state-of-the-art health club. The project amenities also extend to outdoor facilities, including sunken seating, a running lane, and viewing deck.

This week, Acube Developments launched its second project Electra, a thirty-eight-storey residential tower in Jumeirah Village Circle, including two hundred and seventy-eight studio, 1 B/R, 2 B/R and 3 B/R apartments, all equipped with Bosch appliances and Roca sanitary items. All units are installed with the latest smart home solutions and come with the option of three fully furnished options. Anyone buying 2 B/R apartments will also be offered large terrace pools, (4.6 mt by 1.8 mt). Studio apartment prices start at US$ 205k, with construction starting in June and handover slated within three years. The facilities include a beach themed pool, private pools, a mini-water park with slides, a mini golf area, a bowling alley, an indoor and outdoor play area, an indoor and outdoor Jacuzzi, an indoor children’s cinema, and picnic areas. The 37th and 38th floors cater to adults and include a gym, yoga and aerobics rooms, cinema, sauna, and steam rooms, while the 38th floor hosts a large, 18 mt long sky pool. It will also have commercial spaces for shops and other services.

According to Knight Frank, The Islands registered more than 10% of all the deals valued at over US$ 2.72 million, (AED 10 million), over the past three years. Last December witnessed the sale of the most expensive home, at US$ 7.63 million, to sell in the man-made island cluster; the four-bedroom 5.5k sq ft home equates to a value of US$ 1.39k per sq ft. Over the past twelve months, ninety-seven homes were sold with a cumulative value of over US$ 272 million. The consultancy’s regional partner commented that “the growing list of prime residential neighbourhoods is yet another sign of maturity bedding in and it is only a matter of time before other areas such as Tilal Al Ghaf, Jumeirah Golf Estates, Al Barari and/or Blue Waters also make the transition to prime status.”  Because of the current high demand for residential units on Jumeirah Islands, the number of homes available for sale has declined by 28%, over the last twelve months, to 279 homes, adding to the 44% decline in prime home listings in the emirate to around 4.9k properties.

According to reports from the UN Tourism 50th Regional Commission Meeting for the Middle East in Muscat, the UAE expects that by 2031 to attract US$ 27.25 billion in new investment to the tourism sector, accounting for 12.0% of UAE’s GDP, and welcome forty million guests to the country’s hotels. Last year, the tourism sector contributed US$ 60.0 billion, equating to 11.7%, to the country’s GDP, expected to rise to US$ 64.30 billion.  This year, the sector expects employment to reach 833k, (equating to one in nine of all jobs in the country), operating in 1,235 hotels in the UAE, with a total of 210k rooms. With domestic visitor spending fully recovered in 2022, 2023 witnessed further growth in 2023 to reach more than US$ 15.12 billon – almost 40% higher than 2019. International visitor spending surged by almost 40% last year to top US$ 47.68 billion – 12% above 2019 levels. This year and 2025 will see thirty-one and sixteen new hotels opening in the emirate, bringing the number of establishments, by 31 December 2025, to eight hundred and sixty-seven. Currently, Dubai has 150.3k rooms.

In Q1, Dubai attracted 5.18 million international visitors, after welcoming 17.15 million overnight visitors in 2023, compared to 14.36 million a year earlier and the previous record year of 16.73 million in pre-pandemic 2019. The World Economic Forum’s Travel & Tourism Development Index ranked the UAE first in Mena and eighteenth globally in 2024 – seven places higher than the previous 2021 report. The report ranks one hundred and nineteen economies based on a set of factors, and the index consists of five sub-indices, including the enabling environment, travel/tourism policy and infrastructure, infrastructure/services, travel/tourism resources such as nature and culture, and the sustainability of the travel and tourism sector. Industry experts said the upcoming unified GCC visa would allow member nations to present the region as a connected destination, boosting accessibility and driving KPIs such as length of stay, average spend and employment. Accessibility, within and between the Gulf nations, will also benefit from huge capex in the region’s infrastructure in roads, airports, cruise terminals and ‘the new kid on the block’ – the upcoming GCC Railway.

Latest figures from the Ministry of Economy noted that last year, the country’s GDP rose by 3.6%, on the year, to US$ 457.8 billion at constant prices, with the non-oil GDP 6.2% higher at US$ 340.6 billion. The Minister, Abdullah bin Touq Al Marri, commented that “these figures solidify the UAE’s position as the fifth-largest economy globally in terms of real GDP growth index. Moreover, the UAE ranks among the top ten economies globally across various competitiveness indicators tied to GDP.” He added that “the accomplished indicators and notable outcomes underscore UAE’s progress in achieving the objectives outlined by the ‘We the UAE 2031’ vision, which aims to elevate the country’s GDP to AED3 trillion, (US$ 817.4 billion) within the next decade and foster a shift towards a new economic model centred around diversity and innovation.” Interestingly, the UAE’s contribution of non-oil sectors came in 2.5% higher on the year to reach a record 74.3% Last year, various economic sectors registered double digit growth on the year including financial activities/insurance, up 14.3%, and transport/storage activities at 11.5% higher, (attributable to a significant increase in airport passengers, with the total number of international visitors surging 25.0% on the year to 31.5 million), and hotel guests rising 11.0% to twenty-eight million.  Meanwhile, construction/building and real estate activities grew by 8.9% and 5.9%, whilst the residency/food services sector witnessed a 5.5% hike. At current prices, the GDP was up 2.3% to US$ 512 billion last year, with non-oil GDP, 9.9% higher, reaching US$ 390 billion. The country also performed well in various GDP-related global competitiveness indicators, being ranked fifth worldwide in the Real Economic Growth Rate Index, sixth in GDP (PPP) per capita in the IMD World Competitiveness Yearbook 2023, and sixth in the GNI Index, in the UNDP Human Development Index Report 2024.

With the UAE intensifying its efforts to expand its domestic manufacturing capabilities and boost self-sufficiency, Dr Sultan Al Jaber, Minister of Industry and Advanced Technology, speaking at the third Make it in the Emirates forum, advised that the country’s industrial sector will receive an additional US$ 6.27 billion in funding, backed by two of its major companies. Adnoc announced that it will contribute US$ 5.45 billion, with Pure Health, the country’s largest healthcare group, chipping in with US$ 820 million. This latest development sees the total funding, for the sector, to date, now totals US$ 38.96 billion, being utilised to support the domestic manufacturing of more than 2k products. In co-ordination with Emirates Development Bank, and other commercial banks, a new lending programme, worth US$ 300 million to support SMEs, was introduced. EDB will also provide financing worth US$ 100 million to support AI start-ups, in a boost to the fast-growing technology. The Minister commented that “AI has become the backbone of next-gen industrial innovation. AI doesn’t just automate tasks; it redefines them, paving the way for smarter, safer and more sustainable operations.”

At the 121st meeting of the GCC Financial and Economic Cooperation Committee in Doha, the UAE and Qatar signed an agreement to avoid double taxation and prevent fiscal evasion of income taxes. According to Mohamed Hadi Al Hussaini, Minister of State for Financial Affairs, the deal will not only enhance financial, economic and investment partnerships, between the UAE and Qatar, but also bolster coordination and cooperation in tax matters, open up new investment opportunities, and stimulate trade. He also pointed out that the agreement contributes to strengthening economic and trade relations between the two countries and provides full protection for companies and individuals from direct and indirect double taxation. To date, the UAE has signed one hundred and forty-six double taxation avoidance agreements to date, as well as having signed one hundred and fourteen pacts to protect and promote investments.

Seven months after talks had started last October, the UAE and South Korea, (Asia’s fourth biggest economy), formally signed a Comprehensive Economic Partnership Agreement (CEPA) on Wednesday, aiming to expand trade and enhance cooperation in a wide array of areas from energy to supply chains. The event came in line with UAE President Mohamed bin Zayed Al Nahyan’s two-day visit to South Korea, which started the previous day, for a summit with President Yoon Suk Yeol. Under the agreement, the two countries will lift tariffs on more than 90% of goods traded over the next ten years. The CEPA will gradually eliminate the 3% tariffs on crude imports from the UAE, which currently accounts for 11% of South Korea’s total crude imports, over the next decade. The two countries are anticipated to bolster exchanges in energy, supply chain, digital and biotechnology sectors to seek future-oriented economic cooperation through the CEPA. It marks the first time South Korea has clinched a free trade agreement with a ME nation; the UAE is South Korea’s fourteenth-largest trade partner – and second in the ME, after Saudi Arabia. South Korea becomes the latest nation to sign a ‘UAE CEPA’, following Cambodia, Colombia, Congo-Brazzaville, Costa Rica, Georgia, India, Indonesia, Israel, Kenya, Mauritius, Turkey and Ukraine.

The Federal Tax Authority (FTA) has issued a guide outlining the application of Corporate Tax to Free Zone Persons, in line with the Free Zone Corporate Tax regime, which enables Qualifying Free Zone Persons to benefit from a 0% Corporate Tax rate on Qualifying Income. It provides an overview of the conditions required to be met for a Free Zone Person to be a Qualifying Free Zone Person and benefit from the 0% Corporate Tax rate, and the activities that are considered Qualifying Activities and Excluded Activities for a Qualifying Free Zone Person. The guide also includes an explanation of the calculation of Corporate Tax for Free Zone Persons, determination of Qualifying Income, and determination of taxable income that is subject to the 9% rate of Corporate Tax. In addition, the guide outlines the conditions for maintaining adequate substance for Qualifying Free Zone Persons and the criteria for determining a Foreign Permanent Establishment or a Domestic Permanent Establishment. Furthermore, the guide clarifies the treatment of income derived from immovable property, as well as the treatment of income derived from Qualifying Intellectual Property. The Guide also included a detailed explanation of Qualifying Activities, Excluded Activities and compliance requirements. The FTA added that where a Qualifying Free Zone Person operates through a Permanent Establishment in the UAE (outside the Free Zones), or in a foreign country, the profits attributable to such Permanent Establishment will be subject to the 9% Corporate Tax rate.

DP World and Saudi Ports Authority (Mawani) have commenced construction of a new US$ 250 million logistics park, encompassing 415k sq mt, at the two-year old Jeddah Islamic Port, set to provide state-of-the-art storage and distribution facilities, as well as boost trade in the Kingdom of Saudi Arabia and the wider region. The greenfield facility, set to become the country’s largest integrated logistics park, will feature 185k sq mt of warehousing space and a multipurpose storage yard, with a capacity for more than 390k pallet positions. Development will be in two phases. Established in 2022, as part of a 30-year concession, Jeddah Logistics Park will be developed in two phases, with a planned opening in Q2 2025. Another collaboration between the two parties includes the management of South Container Terminal, through a separate thirty-year concession signed in 2020; the final phase of a comprehensive modernisation project is scheduled for completion by year-end, at which time the handling capacity will have been ramped up to five million twenty-foot equivalent units. These two DP World projects represent a combined investment of almost US$ 1.0 billion. The groundbreaking follows on the heels of the opening of freight forwarding offices in Dammam, Jeddah and Riyadh, expanding the logistics footprint of DP World and strengthening end-to-end supply chains in the Kingdom of Saudi Arabia and beyond.

Eight years ago, the federal government liberalised fuel prices so that they could be aligned with market rates until the onset of the pandemic which saw prices frozen by the Fuel Price Committee. In March 2021, prices were amended to reflect the movement of the market once again. With prices having risen for the previous four months to 31 May, June finally sees a decline across the board. The breakdown in fuel price per litre for June is as follows:

• Super 98: US$ 0.856, from US$ 0.910 in June (down by 6.0%)         YTD from US$ 0.768 – 11.5%

• Special 95: US$ 0.823, from US$ 0.877 in June (down by 6.2%)       YTD from US$ 0.738 – 11.5%

• Diesel: US$ 0.785, from US$ 0.842 in June (down by 6.2%)               YTD from US$ 0.817 – 4.1%

• E-plus 91: US$ 0.804, from US$ 0.858 in June (down by 6.3%)            YTD from US$ 0.719 – 11.8%

Drake & Scull fell on hard times during the three-year oil price slump from 2014, which heavily affected the property and construction sector in the region, resulting in its shares being suspended in November 2018 after the company reported heavy financial losses. In 2022, it finally completed its restructuring plan, after the company achieved the required voting percentage from its six hundred-plus creditors for a consensual agreement. It posted losses of US$ 61 million and US$ 96 million in 2022 and 2023; at the end of 2023, it posted a 16.0% rise in revenue to US$ 26 million and had assets totalling US$ 97 million. In a filing this week, the company said accumulated losses stood at US$ 1.50 billion, as of 31 March. It expects the benefits of restructuring to materialise in Q2, leading to an overall equity improvement of about US$ 1.25 billion, and posted a capital gain of US$ 926 million by writing off 90% of creditor claims. Accrued interest expenses and provisions for legal cases, totalling about US$ 113 million, were reversed, and mandatory convertible securities amounting to US$ 100 million were issued.

The DFM opened the week on Monday 27 May, 148 points (3.9%) lower the previous fortnight shed 35 points (0.9%) to close the trading week on 3,978 by Friday 31 May 2024. Emaar Properties, US$ 0.07 higher the previous four weeks, shed US$ 0.04, closing on US$ 2.09 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.63, US$ 4.28, US$ 1.50, and US$ 0.35 and closed on US$ 0.62, US$ 4.24, US$ 1.50 and US$ 0.35. On 31 May, trading was at two hundred and thirty-four million shares, with a value of US$ 175 million, compared to two hundred and forty-five million shares, with a value of US$ 101 million, on 24 May 2024.  The bourse had opened the year on 4,063 and, having closed on 31 May at 3,978 was 93 points (2.1%) lower. Emaar started the year with a 01 January 2024 opening figure of US$ 2.16, to close YTD at US$ 2.09. Four other bellwether stocks, DEWA, Emirates NBD, DIB and DFM started the year on US$ 0.67, US$ 4.70, US$ 1.56 and US$ 0.38 and closed YTD at US$ 0.62, US$ 4.28, US$ 1.50 and US$ 0.35. 

By Friday, 31 May 2024, Brent, US$ 3.08 higher (0.1%) the previous week, shed US$ 0.27 (0.3%) to close on US$ 81.59. Gold, US$ 80 (3.3%) lower the previous week, gained US$ 12 (0.5%) to end the week’s trading at US$ 2,346 on 31 May 2024.

Brent started the year on US$ 77.23 and gained US$ 4.36 (5.6%), to close 31 May 2024 on US$ 81.59. Meanwhile, the yellow metal opened 2024 trading at US$ 2,074 and gained US$ 272 (13.1%) to close YTD on US$ 2,346.

April data from the International Air Transport Association (IATA) indicated that global Q2 air cargo markets demonstrated strong 11.1% annual growth in demand, measured in cargo tonne-kilometres – the fifth consecutive month of double-digit year-on-year growth. Capacity, measured in available cargo tonne-kilometres, rose by 7.1% on the year, (10.2% for international operations). IATA’s Director-General, Willie Walsh, noted that “while many economic uncertainties remain, it appears that the roots of air cargo’s strong performance are deepening. In recent months, air cargo demand grew even when the Purchasing Managers Index (PMI) was indicating the potential for contraction. With the PMI now indicating growth, the prospects for continued strong demand are even more robust.”

Mining giant BHP has pulled out of its planned takeover of rival Anglo-American, having been attracted by Anglo’s copper assets, with the metal rising in value because of its role in the green energy transition; discussions had been going on for about six weeks before the deal finally collapsed on Wednesday , as Anglo rejected BHP’s calls to extend talks as it was “unable to reach agreement with Anglo American on our specific views in respect of South African regulatory risk and cost”; it seems that Anglo American rejected the extension plea, arguing that the deal terms were still not good enough – the initial offer made by BHP, at the end of April was US$ 39.58 billon, then US$ 43.28 billion and finally US$ 49.13 billion. Anglo American rejected the extension plea, arguing that the deal terms were still not good enough. LSE will be breathing a sigh of relief as it was in danger of losing one of its finest assets at a time when several listed companies have left for foreign shores.

The Federal Aviation Administration has extended a ban, initially initiated in February, for the “next few months”, restricting Boeing on the number of 737 Max planes.  This came after the US watchdog met with outgoing chief executive Dave Calhoun and other senior figures at the company where the plane maker continues to be subject to “enhanced oversight” by regulators, after part of An Alaskan Airlines’ fuselage blew out in January, followed by a series of other incidents. It also noted that the regulator did not expect Boeing to win approval to increase production “in the next few months” and said it faced a “long road” to address safety issues. The FAA said it would continue with weekly meetings and other scrutiny of the company, adding that “regardless of how many planes Boeing builds, we need to see a strong and unwavering commitment to safety and quality that endures over time. This is about systemic change, and there’s a lot of work to be done.” It is reported that the plane maker is currently producing significantly fewer than the thirty-eight 737 MAXs per month it is permitted to by the FAA.

After a rather chequered recent history, Abercrombie & Fitch, founded in 1892, is once again making headlines for the right reasons. One century after the retailer’s founding, Mike Jeffries took over as CEO in 1992 and, within a decade, he had transformed A&F from a “fashion backwater”, losing US$ 25 million yearly, to a lifestyle brand grossing over US$ 2 billion by the early 2000s. Known in the 90s for appealing to teens, and infamous for its shirtless models,  and since Jeffries left in 2014, the company is now going after grown-ups with wedding-wear, work appropriate offerings and wide leg, baggy jeans. Last year, Abercrombie & Fitch saw revenue surging over 16.0%, with another double-digit jump expected this year. This complete turnaround has seen its shares rocket from US$ 25 per share at the start of 2023 to its current level of US$ 189, with the firm posting a 22%, year on year, jump in Q1 revenue to a record US$ 1.0 billion.

There is no doubt that the iconic boot-maker, Dr Martens, is struggling, as it posted a 43% slump, to US$ 123 million, in annual profits, for the twelve months to 31 March,  following a “challenging year” for the business; revenue came in 12.0% lower at US$ 1.12 billion. The main driver behind these disappointing figures appears to be a 17% fall in sales of its boots in the US, with its chief executive, Kenny Wilson, noting “We are clear that we need to drive demand in the USA to return to growth”. In contrast it notes that its performance in Europe, the ME, Africa and the Asia-Pacific region as “robust”. The company said it aimed to make savings of up to US$ 32 million via “organisational efficiency and design, better procurement and operational streamlining” to help revive its fortunes. Founded in 1960, it made its FTSE 250 index listing in January 2021 but since then its market cap has slumped by a worryingly high 80%.

The board of the company that owns Royal Mail, founded in 1516, has agreed to a formal US$ 6.36 billion takeover offer by Czech billionaire Daniel Kretinsky, which will include retaining the name, brand and UK headquarters, assuming debts, respecting the unions’ demands for no compulsory redundancies (until 2025), negotiating with the Communication Workers Union to extend that commitment and protecting employee benefits and pensions, for its 150k payroll. Although the initial news is positive, there is every chance that Business Secretary Kemi Badenoch, may decide to scrutinise and potentially block the deal; Chancellor Jeremy Hunt has weighed in by noting that any takeover bid for Britain’s Royal Mail would be subject to “normal” national security scrutiny, but it would not be opposed in principle. Parent company, International Distribution Services, made a small profit last year which was entirely generated by its German and Canadian logistics and parcels business, off-setting losses in the UK. Royal Mail, which is legally obliged to deliver a one-price-goes-anywhere “universal service”, (meaning it has to deliver letters six days per week, Monday to Saturday, and parcels Monday to Friday), has seen volume of letters halving since 2011, whilst parcel deliveries have become more popular – and more profitable. The next stage is for the September AGM to vote on the deal before it undergoes further government approval. The Czech entrepreneur, who owns 10% of Sainsbury’s and 27% of West Ham FC, made his fortune in the energy industry but has since diversified his interests into retail and logistics.

One of Britain’s biggest housebuilders is exploring a US$ 1.26 billion takeover bid for Cala Group, a rival player in the sector, which has been put up for sale. The potential buyer, Persimmon, with a market cap of US$ 6.04 billion, and the UK’s third-largest housebuilder behind Taylor Wimpey and Barratt Developments, is seen as an early favourite to acquire Cala, whose homes have a significantly higher average sale price; over the past twelve months, the company’s share price has gained over 20.0%. Cala is being auctioned by Legal & General next week, with other interested parties being Persimmon’s larger rival, Taylor Wimpey, and Avant Homes, which is owned by Elliott Advisors and Berkeley DeVeer. Both Persimmon and Taylor Wimpey were among eight housebuilders named by the Competition and Markets Authority in February over suspicions they had exchanged commercially sensitive information.

Not one to take half measures, the El Sisi government has announced sharp tax increases for the current 2024-25 tax year, with tax revenue projected to rise by 32% to US$ 42 billion, after growing 38 % a year earlier. There were marked increases of 32.4% in VAT, (112% higher over the past four years), and 31.6% in income taxes, (including a 26.4% hike in taxes and government workers’ salaries). This comes after the IMF, and other creditors, stipulated the introduction of austerity measures in return for more than US$ 50 billion in financial assistance.  With the Egyptian pound almost halving against the greenback, tax revenue from the Suez Canal will surge because of toll collections being made in US$. The fund had requested that the Egyptian state reduce public spending while maintaining a tight monetary policy to curb inflation and make room in the state-dominated economy for the private sector. To say that the Egyptian economy is in trouble is beyond doubt and the steep rise in tax coming on the back of food, fuel and education subsidies, along with other austerity measures will inevitably stir civil unrest.

It was a well-known fact that when Australian capital city rents started to peak, there was always some reprieve with lower, more affordable rents found in its regional areas. But times are changing as real estate analysts CoreLogic indicated that rents in 75% of Australia’s biggest regional areas were now higher than ever, and there not a single major regional centre that recorded a significant fall in rental prices. The biggest increases were noted in Batemans Bay, in New South Wales, (with Q1 rents 6.0% higher, equating to US$ 21.30 a week), WA’s Bunbury and Queensland’s Sunshine Coast, both registering 4.0% quarterly rises. The consultancy noted that rental prices rarely went backwards unless forced down by an economic slowdown, but the current increases were still unusual, “rising at a pace much faster than the sort of typical pace, pre-pandemic.”

Nationwide posted that May UK house prices were up 0.4% on the month to US$ 337.1k, and 1.3% higher on the year – an indicator that the housing market is showing signs of “resilience”, despite ongoing affordability pressures as a result of historic high interest rates and surging inflation. However, it seems that consumer confidence has headed north over the past few months with wages moving higher and inflation lowering – last month it had fallen to 2.3%, its lowest level in nearly three years.

The Institute for Fiscal Studies warns more tax rises and/or cuts to public services could lie ahead if whatever government is elected next month does not keep a cap on public spending. Both Labour and the Conservatives have committed to get debt falling as a share of national income. The think tank claims that high interest payments on existing debt, allied with low expected economic growth, could make reducing future debt more difficult to achieve. To meet existing rules, the current chancellor, Jeremy Hunt, had already pencilled in what could amount to potential cuts in funding for some public services – such as justice or higher education – of more than 10% in coming years, once population growth and inflation is taken into account. The IFS says that barring a dramatic improvement in growth, the next government could face three broad choices – to go forward with the spending squeeze for services, raise taxes further or increase annual borrowing – which could risk preventing total debt from falling.

The IMF, not known for its forecasting, has recommended that the UK should cut interest rates by 1.75% to 3.50% by the end of 2025, including dipping to between 4.50% – 4.75% before year-end; that would normally mean seven rate cuts over a period of eighteen months. The global body also upgraded this year’s growth forecast, by 0.2% to 0.7%, whilst advising against any further cuts, as well as commenting that the UK will grow faster than any other large European country; 2025 growth is expected to touch 1.5% next year. In line with many other observers, the IMF sees the BoE’s 2.0% target almost being met in the short-term before rising a little over the course of the rest of the year, before “durably” settling at the target rate in early 2025. It also warned of the dangers to the UK economy, advising that the Bank had to balance the risk of not cutting too quickly before inflation is under control, against that of keeping rates too high, which could hit growth. IMF MD, Kristalina Georgieva said that the UK needed to bolster its public finances, which were hit by heavy spending during the Covid pandemic, and that given the state of the public finances, the IMF said it would “advise against additional tax cuts”.

One worrying note from the IMF report was its long-term concern of a lack of workers, arising from long-term illness and fewer foreign workers, and cited that if there was a new global financial crisis, “a shock to UK sovereign risk premia cannot be ruled out” which would push up interest rates. It also suggested that extra tax revenue from road usage, VAT, inheritance and property should be required, and advised the government to abandon its much-talked about triple lock on the state pension – and instead just to peg increases to inflation alone. After Rishi Sunak had back-tracked on some of his previous environmental pledges, for example on electric cars, the global body managed a sideswipe, advising the government to “stay the course on climate policy”. But economic forecasters are not always right with their predictions, and this could be another case when the IMF and UK government agree to differ.

There are reports that Sony Music is in discussions to buy the music catalogue of the rock band Queen, and is working with Universal Music on the transaction, which “could potentially total US$ 1 billion”. If it goes ahead, the deal would cover Queen’s songs and all related intellectual property – including the rights to logos, music videos, merchandise, publishing and other business opportunities. In 1972, the band signed with the British label EMI and remained with that company after it was bought by Universal in 2011. If this were to materialise, it would dwarf similar deals involving the likes of Bruce Springsteen, (with Sony paying US$ 500 million for his catalogue in 2021) and Michael Jackson.  Over the last eight years, the likes of David Bowie, Bob Dylan, Justin Bieber, Shakira, Neil Young, Blondie and Fleetwood Mac have been involved in multi-million deals for their musical catalogues.

There is no doubt of the band’s popularity, even though its front man died in November 1991. Spotify estimates that Queen has fifty-two million listeners every month compared to The Boss’s twenty million and the King of Pop’s forty-one million. In the UK, the first volume of Queen’s Greatest Hits is the most popular album of all time, with sales in excess of seven million copies. It was even the twentieth-biggest seller of 2023, beating new releases by Ed Sheeran and the Rolling Stones. According to its most recent financial statements, Queen Productions Ltd made $52 million in the year ending September 2022. If the sale were to go ahead, the proceeds would be shared equally between guitarist Brian May, drummer Roger Taylor, bass player John Deacon and the estate of late singer, Freddie Mercury. The band own the rights for the rest of the world, and also retain the global publishing rights – the copyright for the music and lyrics. The fact that Queen is in this position proves that, with hits such as  Bohemian Rhapsody, Radio Ga Ga,  A Kind of Magic and Another One Bites The Dust, they can still honestly say We Will Rock You!

Tears Of A Clown!                                                                             24 May 2024

Knight Frank has indicated that global high net worth individuals are expected to spend 76% more, on the year, to US$ 4.4 billion buying in the burgeoning Dubai property market in 2024. There seems to be no respite in the demand for luxury homes in the emirate, despite ongoing double-digit growth. The consultancy projects that GCC-based resident HNWIs are projected to spend US$ 3.1 million to buy a house in Dubai while the global ultra-rich will allocate US$ 36.5 million on average on property deals. Faisal Durrani, head of  the firm’s ME research commented that, “the level of interest to invest in Dubai rises with the level of personal wealth growing, from 28% for those with US$ 2 to US$ 5 million, topping out at 70% among those worth more than $15 million”. Top purchase locations include Dubai Marina, Downtown Dubai, Business Bay, Dubai South/Expo City, Dubai Canal, Dubai Hills Estate, Palm Jumeirah and Jumeirah Bay Island. Q1 prices of Dubai prime residential properties, valued at US$ 10 million plus, rose 18.2% on the year, with overall prices increasing by 20%. Its 2024 forecast, which to this observer is too conservative, is for overall residential prices to rise by 3.5% and prime properties by 5.0%.

Omniyat announced that it had sold a four-bedroom penthouse at the newly opened The Lana Residences, Dorchester Collection for US$ 38 million, making it the most expensive property in the Burj Khalifa district. It spans nearly 16.6k sq ft, overlooking the Marasi Marina between the Burj Khalifa District and the Dubai Design District. The latest Knight Frank report shows that fifty-six properties, with a value of over US$ 25 million, were sold in Dubai last year, with a further twelve sold in Q1.

Latest data from the Dubai Land Department indicates that occupier activity remained robust in Q1, with the total number of rental registrations reaching almost 46.9k, registering an increase of 35.8% on the year. CBRE noted that “this headline growth has been largely underpinned by a 51.1% increase in new rental registrations, which totalled 34.5k. Renewed contracts posted a total of 12.4k, marking a 6.1% growth from the previous year.” Despite the lack of supply, free zone locations are still capturing a substantial share of market activity. To cater for this rising demand, developers are fast-tracking future developments across a range of free zone and non-free zone locations. The robust levels of demand continued to be seen in the UAE’s occupier market in Q1, largely driven by the strong levels of economic growth that continue to attract occupiers to the country. The average Q1 occupancy rate, within this market segment, nudged 1.2% higher on the year to 91.3%. In the period, the average Prime, Grade A, Grade B, and Grade C rents registered year-on-year increases of 7.6%, 17.9%, 21.6%, and 16.8%. Average Prime Grade A, Grade B and Grade C rental rates reached US$ 69.48, US$ 52.32, US$ 44.14 and US$ 35.69 per sq ft, respectively, as at Q1 2024.

2023 was a very successful year for Dubai World Trade Centre that saw it generating a total economic output of US$ 4.98 billion from seventy-six large-scale exhibitions, international association conventions and industry conferences (of the overall total of three hundred and one exhibitions and events). It is estimated that these events added US$ 2.87 billion to the GDP, equating to 58% of the total economic output being retained within the local economy, whilst fostering 69.3k jobs and generating US$ 916 million in disposable income. The notable 53% annual increase in international participants yielded significant contribution to Dubai’s GDP, with an average participant spend of US$ 2,810 per event, which is 6.2 times higher than that of local participants. The large-scale business events attracted 1.54 million attendees, with 46% being international attendees – 53% higher on the year. Helal Saeed Almarri, Director General – DWTC Authority, said “the increase in international participation, along with the significant economic impact generated across diverse sectors such as travel, accommodation and retail, highlights the city’s steadfast commitment to propelling business tourism.” Direct revenue generated through expenditure, in adjacent sectors, reached over US$ 2.95 billion. The key sectors in the domestic economy that benefited were hotel accommodation (US$ 807 million, up 54%), air travel/local transport (US$ 719 million, up 20%), retail (US$ 537 million, up 71%), restaurants (US$ 466 million, up 51%), and business entertainment (US$ 357 million, up 27%). The success of DWTC’s own events and exhibitions, such as GITEX Global and Gulfood, generated US$ 1.97 billion in economic output and US$ 1.13 billion in GVA – a 53% increase over 2022.

Q1 saw Dubai International Airport handle over twenty-three million passengers, becoming its “busiest quarter in history”, and 8.4% higher on the year. In 2023, handling almost eighty-seven million passengers, the airport surpassed its pre-coronavirus annual total, with a 31.7% hike in numbers and is well on its way to top ninety-one million this year. The main drivers behind these impressive returns are the global rebound in air travel and that both Emirates and flydubai have boosted their network operations – and this despite geopolitical tensions, a shortage of Boeing planes and inflationary pressures. Last year, EK carried 51.9 million passengers, 19% higher on the previous financial year, while its seat capacity increased by 21%; flydubai carried nearly five million passengers between January and April 2024 – up 13% on the year.

The DFM opened the week on Monday 20 May, 105 points (2.5%) lower the previous week shed 43 points (1.4%) to close the trading week on 4,013 by Friday 24 May 2024. Emaar Properties, US$ 0.19 lower the previous four weeks, gained US$ 0.07, closing on US$ 2.13 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.63, US$ 4.54, US$ 1.51, and US$ 0.36 and closed on US$ 0.63, US$ 4.28, US$ 1.50 and US$ 0.35. On 24 May, trading was at two hundred and forty-five million shares, with a value of US$ 101 million, compared to two hundred and twenty-one million shares, with a value of US$ 111 million, on 17 May 2024.

By Friday, 24 May 2024, Brent, US$ 3.08 higher (0.1%) the previous week, lost US$ 4.00 (4.7%) to close on US$ 81.86. Gold, US$ 111 (4.8%) higher the previous fortnight, shed US$ 80 (3.3%) to end the week’s trading at US$ 2,334 on 24 May 2024.

As Boeing flies from one crisis to another, seemingly on a regular basis, it does seem odd that not only have shareholders signed off a 2023 US$ 33 million pay-out to outgoing boss Dave Calhoun, but also to keep him as a Board member, as he leaves his day job this October; in 2022, he was paid almost US$ 23 million. When the board chairman Steve Mollenkopf was asked how the compensation for Mr Calhoun and others were “justified”, given the severe challenges now facing the company, he commented that some 2024 executive awards had been reduced after the Alaskan Airlines incident and that in future product safety has been given the primary weight in determining performance, instead of financial factors – such as cash flow and share price – as had been the case previously. He also mentioned that “the months and years ahead are critically important for our company as we take the necessary steps to regain the trust lost in recent times.” Last week, this blog noted that the US Department of Justice said it was considering whether to prosecute Boeing over deadly crashes involving its 737 Max aircraft in 2018 and 2019. There are some who consider that both the chairman and the chief executive are very lucky to still have a job with Boeing – and picking up handsome bonuses in the process.

No doubt helped by raising its fares by 21%, to an average US$ 54.11, in most cases, Ryanair has reported a 34.0% rise in full-year profits, to US$ 1.92 billion, but the budget airline indicated that peak summer prices will only be “flat to modestly ahead” of last year. It also confirmed that there would be a shortage of about twenty-three Boeing 737s, that were due to be delivered by the end of July, because of the supply problems at Boeing; supremo Michael O’Leary estimated that if it had a complete fleet, it could have carried two hundred million passengers, (last year it carried 183.7 million passengers). The carrier said it was continuing to work closely with the aerospace giant to improve quality and increase the pace of deliveries. Whilst acknowledging that the carrier would receive compensation for these delays, O’Leary said it would be “modest” and did not reflect the cost to the airline of having to cut back its growth plans.

What the aviation world needs is an extra plane maker to challenge the current duopoly of Airbus and the embattled Boeing to add more planes to the global portfolio. Shanghai-based plane maker Comac is positioning the C919 as a viable alternative to the Airbus A320neo and Boeing’s 737 Max as the two plane makers struggle to meet demand for new aircraft, and Boeing battles a series of crises. It is reported that Saudia Group has offered the plane maker the chance to establish an assembly line in Jeddah, with the national airline also in discussions with the Chinese company to understand the specifications of the C919 narrow-body jet. The maintenance, repair and overhaul complex, covering about one million sq mt, is set to be completed next year and expected to house the manufacturing operations of global aerospace companies. It seems to be a win-win for both Saudia and Comac – the former to expand its domestic manufacturing sector to diversify its economy away from hydrocarbons, whilst the latter would benefit from expanding its manufacturing base and to establish a presence in the ME’s fast-growing aviation sector.

Once valued at over US$ 9.60 billion, Cazoo, the British online car retailer, has gone into administration this week, with the appointment of insolvency practitioners from Teneo to proceed with the process. To date, more than seven hundred employees have been made redundant but some at the New York-listed firm have been retained to operate the remaining marketplace model while they explore a sale. At the beginning of the week, the group’s wholesale arm was sold to G3, another industry player, with Constellation Automotive, the owner of Cazoo’s rival, Cinch, also having acquired a number of assets. There seems to be interest from a number of players, including BMW, Motorpoint, Motors.co.uk and Car Gurus.

One casualty from Getir’s decision to exit the UK market is Tottenham Hotspur Football Club, being owed over US$ 6.0 million. The Turkish grocery delivery app had a three-year training kit sponsorship deal with Spurs, expiring last Sunday which was the end of the EPL season. News of the outstanding debt comes as Getir tries to access a tranche of agreed funding from its major investors, Mubadala and G Squared, to help facilitate its withdrawal from the UK, Germany and the Netherlands. It leaving the UK would leave 1.5k unemployed and it is yet unknown whether it will be able to pay any of its current liabilities. The firm was once valued at over US$ 12.7 billion.

Mondelez is the latest food supplier accused of “shrinkflation”, where prices are kept the same but content reduced; in this case, the number of Ritz crackers per box has been reduced by up to 30%, but the price has remain unchanged. The size difference was first highlighted by The Grocer and confirmed by Mondelez, which owns the Ritz brand. The 200 gm packs of Original and Cheese crackers have now been replaced by packs, weighing 150g and 140 gm, whilst the prices remain at their historic price. The manufacturer, in confirming the size change, added that “we understand the economic pressures that consumers continue to face and any changes to our product sizes is a last resort for our business,” they said, adding that the food producer is experiencing “significantly higher input costs” across its supply chain as ingredients cost far more than they had previously, with other overheads – such as energy, packaging and transport – also higher. A blog earlier in the year, (‘Fool Me Once, Shame On You’ – 26 January) noted:

“One of the UK’s well-known food suppliers, Premier Foods, is planning to cut prices on more of its products, including Mr Kipling, Bisto and Angel Delight. Latest figures indicate that food prices are rising less quickly, with Premier planning to increase prices of own-brand products – this sector had seen marked growth attributable to surging food prices, as food inflation figures topped 19% only ten months ago in March 2023; last month, it had dropped to 8.0%. The company started lowering prices in Q4 and noted that discounts had helped it to report strong trading over Christmas, with group sales up 14.4% on the year”.

According to Which?, other products facing shrinkflation included:

• Listerine Fresh Burst mouthwash shrank from 600ml to 500ml. At Tesco it also went up in price by 52p
• PG Tips Tasty Decaf Pyramid tea bags went from containing 180 bags to 140 at a number of supermarkets
• Kettle Chips Sea Salt and Crushed Black Peppercorns Crisps shrank from 150g to 130g at Tesco
• Yeo Valley Organic Salted Spreadable went from 500g to 400g at Sainsbury’s and Tesco

Having concluded an alternative restructuring, FPR Advisory, Body Shop’s administrators, found it not viable and will launch an auction of the iconic high street retailer. Following a recent shop closure and redundancy programme, Body Shop, founded in 1977 by Anita Roddick, currently trades from about one hundred stores and did have interest from Next before Aurelius, the investment firm, took control of it only weeks before administrators were called in; it had acquired the chain from Natura & Co, a Brazilian company, which was reported to have paid more than US$ 1 billion to buy it in 2017. It was reported that the new owner was confronted with an immediate short-term cash flow position, which was adverse to what had been forecast, driven by poor results in the 2023 financial year and the unwinding of the company’s working capital. Aurelius is understood to have continued financing the business during the administration process. The Body Shop’s businesses, across most of Europe and parts of Asia, had already been offloaded to a family office prior to the insolvency of the UK arm.

A US Congressional report points to BMW, (including 8k Mini Coopers), Jaguar Land Rover and Volkswagen having used parts made by Sichuan Jingweida Technology Group, a supplier on a list of firms banned over alleged links to Chinese forced labour. Senate Finance Committee Chairman, Ron Wyden, noted that “automakers’ self-policing is clearly not doing the job,” and also urged the US Customs and Border Protection agency to “supercharge enforcement and crack down on companies that fuel the shameful use of forced labour in China.” JLR has now identified the banned imported spare parts and is destroying any such stock it holds around the world, whilst VW had voluntarily informed customs officials about the issue, noting that thousands of its vehicles, including Porsches and Bentleys, had been held by authorities because they had a component in them that breached America’s anti-forced labour laws. Congress had passed the Uyghur Forced Labor Prevention Act law in 2021 that was intended to prevent the import of goods from China’s north-western Xinjiang region that are believed to have been made by people from the Uyghur minority group in forced labour conditions.

Live Nation, the owner of Ticketmaster, is being sued by the US Justice Department over claims it is running an illegal live event “monopoly” which is driving prices up for fans and pushing out smaller competition. It claims that they are squeezing out smaller promoters by using tactics such as threats and retaliation The accused countered that it will defend itself against “baseless allegations” and claims the lawsuit would not solve ticket price or availability issues. Filed yesterday in a Manhattan federal court, the sweeping antitrust lawsuit was brought with thirty state and district attorneys-general. The US Attorney-General Merrick Garland commented that “it’s time for fans and artists to stop paying the price for Live Nation’s monopoly,” and “it is time to restore competition and innovation in the entertainment industry. It is time to break up Live Nation-Ticketmaster. The American people are ready for it.” Ticketmaster, which merged with Live Nation in 2010, is the world’s largest ticket seller across live music, sports, theatre and more. The company said it distributed more than six hundred and twenty million tickets in 2023.

Diplomats owe more than US$ 182 million to Transport for London for unpaid congestion charges, led by the US and Japan owing a reported US$ 18 million and US$ 13 million respectively; at the other end of the scale, Togo owes just US$ 51. The TfL commented that “we and the UK government are clear that the congestion charge is a charge for a service and not a tax – this means that diplomats are not exempt from paying it”. A spokesperson for the US Embassy in London said, “in accordance with international law, as reflected in the 1961 Vienna Convention on Diplomatic Relations, our position is that the congestion charge is a tax from which diplomatic missions are exempt. It appears that “the majority of embassies in London do pay the charge, but there remains a stubborn minority who refuse to do so, despite our representations through diplomatic channels”. The scheme involves a US$ 19 daily fee for driving within an area of central London between 07:00 and 18:00 on weekdays, and between noon and 18:00 on weekends and bank holidays.

A World Bank report, published this week, noted that the percentage of the Lebanese population living below the poverty line had more than tripled from 12% in 2012 to 44% in 2022, as overall prices jumped fifteen times higher over the decade. The World Bank found the spread of poverty was uneven throughout Lebanon and is increasing quickly in the northern regions. For example, the poverty rate in Beirut is 2%, but it rises to 62% in Akkar which has a significant agricultural workforce who are among the poorest in the country, followed by those who work in construction. The situation is made worse by a plummeting currency that lost 98% of its pre-crisis value by last December, having remained in triple digit territory since 2021.

A study of ten water and sewage firms in England and Wales bythe University of Greenwich has concluded that shareholders in some of the UK’s largest water companies, including Thames Water, United Utilities and Severn Trent, have taken out US$ 108.3 billion in dividends but failed to invest. It said that between privatisation in 1989 and 2023, money invested by shareholders in the largest firms shrunk by US$ 7.0 billion, when adjusted for inflation. Over the same period, the amount of “retained earnings” – profits left over once things like dividends have been paid out, that can be used to invest in a business – had dropped by US$ 8.52 billion in real terms. Ofwat, the industry regulator, said it “strongly refuted” the figures.  “While we agree wholeheartedly with demands for companies to change, the facts are there has been huge investment in the sector of over US$ 254.0 billion.” Water UK, which represents the industry, said investment in the sector was “double the annual levels seen before privatisation”. Water and sewage firms want to spend around US$ 127.10 billion over the next five years.

As can be seen from the table below, Southern Water is asking for the biggest jump of 91%, according to the Consumer Council for Water. It is owned by Australian firm Macquarie which has faced fierce criticism for the period when it was Thames Water’s biggest shareholder. In five of the ten years, it owned Thames, the company paid out more in dividends than it made in profits, while debt rose from US$ 3.18 billion to over US$ 12.71 billion in the same period.

The following table lists the details of water firms’ requirements, with increases between 29% to 91%.

• Southern Water – 91% increase to £915 a year by 2030
• Thames Water – 59% to £749
• Hafren Dyfredwy – 56% to £676
• Severn Trent – 50% to £657
• Wessex Water – 50% to £822
• Yorkshire Water – 46% to £682
• Dŵr Cymru – 43% to £702
• United Utilities – 38% to £666
• South East Water – 35% £330
• Pennon – 33% to £644
• Portsmouth Water – 31% to £157
• SES – 30% to £315
• Anglian Water – 29% to £682
• Northumbrian Water and Essex & Suffolk Water – 26% to £530
• Affinity Water 25% to £294
• South Staffs & Cambridge Water – 24% to £221

Source: Consumer Council for Water

Even though UK food prices are slowly returning to “more normal” rates, currently down to 2.4%, it seems that many shoppers are still seeking out cheaper own-brand goods. Research firm Kantar noted that price inflation – the rate at which prices increase – was at its lowest rate since October 2021. Under normal circumstances, it would be expected that 3% inflation is a threshold which over that figure shoppers would start to trade down to cheaper items to save money and vice versa when the level heads below the 3% mark.  Because the market has seen over thirty months of high prices, it appears that it is taking a little longer for shoppers to adjust back to their previous shopping habits. It must be remembered that although overall inflation peaked at 11.1%, in late 2022, food inflation was at a rate of almost 20% last year – the highest since the 1970s. Meanwhile, Kantar reckons that “own-label lines are proving resilient, for example, and they are still growing faster than brands, making up over half (52%) of total spending,” whilst sales of premium own-label ranges remained popular, up by 9.9% from a year earlier.

The Office for National Statistics posted that April retail sales fell a marked 2.3%, as official figures show that wet weather once again put shoppers off. Sales volumes fell across most sectors, with the biggest impact being felt in clothes shops, sports equipment, games/toys stores, and furniture shops doing badly as poor weather reduced footfall. A greater proportion of sales happened online, though the volume of orders declined. Retail sales is the largest expenditure across the UK economy.

Falling gas and electricity prices have driven UK inflation to its lowest level in almost three years. Prices rose at 2.3% in the year to April, down from 3.2% the month before – a figure that is fast approaching the BoE’s 2.0% target. Falling inflation does not mean the prices of goods and services overall are coming down, it is just that they are rising at a slower pace. The major factors pushing prices lower included energy prices, (27% lower on the year – including gas which fell 38%), declining tobacco, food, (milk, butter, poultry and fish), which were partially offset by rising costs of mobile phone bills, rents, olive oil, cocoa and crisps. Prices for all goods – ranging from food to household appliances – decreased marginally by 0.8% in April but services inflation, which measures price rises for things such as haircuts or train tickets, remained elevated at 5.9%.

It has been a bad week for the trustworthiness of UK politics, starting, on Monday, (with the Sunak administration having to admit that successive governments, from the 1980s had shown lack of openness  and elements of “downright deception”, including the destruction of documents), relating to more than 30k people in the UK being infected with HIV and hepatitis C, after being given contaminated blood products in the 1970s and 1980s. The inquiry chairman Sir Brian Langstaff also added half-truths were also told, so people did not know about the risk of their treatment, the availability of alternatives, or even whether they were infected adding that “the disaster was not an accident, “and that those in authority — doctors, the blood services, and governments — committed the ultimate folly in healthcare and healing: they “did not put patient safety first”. The six-year-long inquiry uncovered a coverup that was “more subtle, more pervasive, and more chilling in its implications” than an orchestrated conspiracy. It was undertaken “to save face and to save expense”. The calamity was made more catastrophic by the “defensiveness of government…and its refusal over decades to hold a public inquiry.” A public inquiry has described the scale of the scandal as “horrifying” and accused doctors, the government and NHS of repeatedly failing patients. The government says a final compensation scheme is being set up, and that some victims will receive interim payments of US$ 268k from the summer onwards.

Then there is the ongoing Post Office enquiry which could eventually cost the taxpayer upward of US$ 125 billion. This week saw the ex-chief executive, Paula Vennells, spending three days in the witness stand for the first time in nine years. Not the most popular person in the country, her presence was full of self-justifications and continually insisting that she had not put the Post Office above the cases of sub-postmasters was a recurrent theme. When she told the enquiry “my only motivation was for the best for the Post Office and for the hundreds of postmasters that I met, and I regret deeply that I let these people down,” Sam Stein KC told her she was talking “absolute rubbish”. She has been accused of being in “la la land” and told an answer was “humbug”, watched on by some of the hundreds of sub-postmasters wrongly prosecuted by the Post Office. She was acutely aware of the PR risk to the organisation, and that she listened to advice from her communications staff, concluding that brand was of prime importance. What was evident from her presence this week was to show her complete ignorance of many factors impacting the Post office and her obsession with spin, public relations, media management, and the Post Office’s reputation being placed over and above concern for sub-postmasters.

During her seven year tenure as chief executive, hundreds of sub-postmasters were sent to jail based on flawed evidence thrown up by the Post Office’s Horizon IT system. Her defence that despite her experience, she just did not know; likewise, she did not know that there were bugs in the Horizon system, (before she became CEO), that branch accounts could be accessed remotely, and that the Post Office carried out its own prosecutions. An indicator that the good lady may have been lying on several occasions concerned her 2013 suggestion that the Post Office conduct a review of all false accounting cases over the previous five to ten years. Her PR guru, Mark Davies responded, “if we say publicly that we will look at last cases… whether from recent history or going further back, we will open this up very significantly into front page news. In media terms it becomes very mainstream, very high-profile.” “To what extent did what Mr Davies advice here affect your decision-making?” she was asked. “I would never – it was simply not the way I worked,” she said. Mr Beer then produced her reply to Mr Davies: “You were right to call this out. And I will take your steer, no issue,” she wrote. What maybe her swansong was when asked about a 2013 board meeting: “My recollection,” she said, “is that I don’t recall.” On many occasions over these three days, Paula Vennels broke down in tears but many of her “victims” think that were only crocodile tears, in a futile attempt to show herself as a considerate and caring person. To others, they were Tears Of A Clown!

 Livin’ On A Prayer                                                                             17 May 2024

Mainly attributable to marked growth in affordable and mid-market communities, Q1 property prices in Dubai rose for the fifteenth consecutive quarter. Cushman & Wakefield Core noted that “there are no signs of capital values slowing down yet”, and “city-wide sales prices are up by 20% year-on-year and 66% higher than Q1 2020 (pre-Covid19).” The consultancy also noted that apartment prices, particularly in the prime sub-markets including Palm Jumeirah, City Walk, Downtown Dubai and Dubai Marina, are still increasing but at a more subdued level than earlier annual 20% plus growth. It also stated that “affordable and mid-market apartment communities, owing to a lower base, have seen a sharper increase of 30% and above in Discovery Gardens (37%), Dubai Sports City (34%) and Dubailand (32%).” Further data showed that the majority of villa districts experienced an annual increase in sale prices of above 20%, with units in Jumeirah Village Circle, The Lakes and Jumeirah Park seeing the highest increments.

A new branded residential project, incorporating Italian brand Tonino Lamborghini Group’s designs, (including materials, interior design, fittings, and kitchens from his design studios), has been launched in Dubai by Gulf Land Property Developers. Located in Meydan, the four-tower project, encompassing some 750k sq ft, will incorporate five hundred and forty-one units, ranging from studio to 4 B/R apartments. Two of the buildings will have six floors and the other two, twelve – and all four will have two basement parking levels. It is estimated that Dubai, already among the top global cities for branded residences, numbering around fifty, will see a further seventy added to its portfolio in the coming years.

With some sectors reporting up to 30% rental increases, (in locations such as Jumeirah Lake Towers, Business Bay, Dubai Marina, One Central, and DIFC), there has been an average 14% rate increase for Grade A offices. Savills noted that the emirate’s office market sector has been boosted by a resilient regional economic rebound and strong demand from overseas investors and businesses. The international real estate advisor also added that other factors such as the government’s business-friendly initiatives, including full foreign ownership, changes in residency visa rules, and support for tech firms through platforms like FinTech Hive, Dubai Technology Entrepreneur Campus, and C3 Social Impact Accelerator. Savills also noted a change in work models, with a marked increase in demand for flexible office spaces, including serviced and co-working spaces, reflecting changing work models. Not only has there been an increasing number of new businesses entering the Dubai market, that would prefer serviced office spaces as they bed down in a new location, but also there has been an upward trend in existing occupiers in Dubai transitioning to serviced office spaces to adopt more flexible work models and to save on capex.

Driven by route expansion and robust global travel demand, Emirates turned in a record profit, up 62.3% on the year, to US$ 4.70 billion, with revenue 13.0% higher at US$ 33.02 billion; despite EK carrying more passengers, up 19.0% to 51.9 million, (with seat capacity increasing 21%), it was negatively impacted by currency fluctuations – mainly in Egypt India and Pakistan – to the tune of US$ 545 million. The Emirates Group also announced a US$ 1.09 billion dividend for its owner, the Investment Corporation of Dubai, with staff the beneficiaries of a massive twenty-week bonus. During 2023, it added capacity to twenty-nine destinations and also signed new codeshare and interline agreements, with eleven airlines, further extending its network’s reach. By its fiscal year end, 31 March, EK’s network spanned one hundred and fifty-one destinations, including ten cities served by its freighter fleet only. Notwithstanding passenger yield dipping 2.0%, to US$ 0.10 per revenue passenger kilometre, due to a change in cabin and route mix, fares and currency, it closed year end with a record US$ 11.69 billion of cash assets. During the year, it paid off all its regular aircraft-related payment obligations and repaid an additional US$ 600 million from the US$ 4.77 billion borrowed during the Covid-19 pandemic.

Both revenue and net profit returned record returns for the Emirates Group, (which includes global airport services company Dnata), posting a 15% rise to US$ 37.41 billion and a massive 71% profit surge to US$ 5.10 billion. It ended the year with its highest ever cash balance of US$ 12.83 billion. Driven by robust growth across its business divisions, Dnata’s profit quadrupled to US$ 381 million, while its revenue rose by 29.0% to a record US$ 5.23 billion.

Following an agreement with DP World, Sweden’s Einride is to be the catalyst to assist with the electrification of inter-terminal container flows at Jebel Ali Port. With the electric freight mobility company’s collaboration, it will assist with the electrification of inter-terminal container flows at Jebel Ali Port, which, in turn, will improve efficiency and sustainability. DP World’s chief executive, Abdulla bin Damithan, commented that “our partnership will drive greater operational efficiencies, further decarbonise terminal operations and pioneer greener practices for the logistics sector.” Founded in 2016, Einride makes driverless electric freight lorries, charging ports and sustainable freight technology to improve efficiency of transporting goods. By the end of the year, it is hoped that this partnership will be scaled up to support 1.6k container movements daily, with the assistance of one hundred connected electric lorries.

This week, DP World opened three major Romanian sites – two in Constanta, and the other in Aiud – which will enhance the country’s growing status as a key hub for European trade The global port operator has invested US$ 71 million in a five-hectares ‘project’ terminal for heavy, large and complex cargo, and a new ‘roll-on, roll-off’ (RO-RO) terminal that will handle up to 80k vehicles per year at its peak; a further US$ 50 million will see a new multi-transport platform in Constanta that will open next year A further US$ 23 million will be spent in Aiud to build a new eight-hectares ‘intermodal’ logistics hub, connecting rail and road. The latest investments will improve the connectivity between DP World’s existing sea, rail, barge and truck services across Romania and will enhance the movement of goods between mainland Europe through to the Black, North and Adriatic Seas.  It will increase the cargo flows by around two million tonnes per annum through the country. DP World also plans to open a centre of excellence for services in the Balkans, to facilitate trade for the countries around Romania.

In its latest report, the FTTH Council confirmed that, for the eighth consecutive year, the UAE has once again been recognised as the global leader in Fibre to the Home penetration, with a 99.3% rate. The survey encompasses twenty countries, that have exceeded 50% FTTH availability, and compared global statistics on fibre optic network penetration. It placed the UAE above Singapore (97.1%), Hong Kong (95.3%), China (92.9%), and South Korea (91.5%).

The definition of a greenfield investment is when a parent company creates a subsidiary in a different country, building its operations from the ground up. The latest Financial Times fDi Markets report places Dubai the world’s top destination for greenfield foreign direct investment projects for the third consecutive year. Last year, it managed to secure 1.07k FDI projects, well ahead of Singapore and London, with totals of 442 and 431 respectively. Over the past five years, the emirate’s share on the global stage has more than tripled from 2019’s 1.7% to 6.0%, which is in line with the emirate’s strategy to become a top global city under its D33 economic agenda. It also secured the top global ranking for headquarter FDI projects, for the second consecutive year, attracting sixty projects, followed by Singapore (forty) and London (thirty-one). Nearly 44.8k estimated jobs, up 15.5%, were created through FDI in Dubai, as the emirate attracted nearly US$ 10.71 billion in total FDI capital last year. Crown Prince, Sheikh Hamdan bin Mohammed noted that “in 2024, as we work to accelerate the D33 Agenda, we will continue to intensify our initiatives to nurture a competitive economic ecosystem that fosters value creation. We are committed to making Dubai a place where the world’s leading companies, entrepreneurs and innovators come to build the future.” It is forecast that by 2033, under its D33 strategy, Dubai’s economy would have doubled to US$ 8.71 billion and that it would be counted as one of the world’s top three cities. GlobalData posted that the UAE attracted US$ 23 billion of FDI in 1,277 projects spanning business and professional services, software and IT services and financial services inter alia.

At a meeting in Abu Dhabi, Zhang Yiming, China’s ambassador to the UAE, announced economic ties between the two countries were strengthening, as indicated by Chinese investments in the UAE rising by more than 16% annually in 2023 to $1.3 billion; this amount accounted for 60% of China’s total investment in Arab countries. On the flip side, UAE investments in China rose by 120% on the year and accounted for “90% of Arab countries’ investments in China”. The ambassador continued by adding that the Emirates “remains China’s second-largest trading partner, the largest export market and the third largest engineering market among Arab countries”.

The fourth edition of theE-commerce in the Middle East and North Africa 2023 report, published by EZDubai – in partnership with Euromonitor – indicated that, last year, the total size of the UAE e-commerce market reached US$ 7.49 billion, with expectations that it could grow 77.5% to US$ 13.30 billion by 2028. This improvement and positive forecast are down to many factors such as a tech-savvy youth demographic, strong government support in terms of legislation/regulations, and substantial investments in digital infrastructure. In 2023, the leading sectors by value were clothing and footwear, consumer electronics, and media products. The survey concluded that smartphones are highly popular as a means for online shopping, and that credit and debit cards are the most common payment methods for online purchases, favoured by 93.2% of respondents. The sector in MENA grew 11.8% in 2023 to US$ 29.02 billion, with a 72.40% expansion forecast by 2028. Mobile commerce in the country has more than quadrupled in the five years to 2023 to US$ 3.90 billion.

Tecom Group is to invest US$ 463 million in an acquisition and development plan that will see it support further growth as it will invest US$ 278 million in acquiring commercial and industrial assets from Dubai Holding Asset Management (DHAM) and has earmarked US$ 184 million to develop grade A offices in Dubai Design District (d3). Combined they have a gross leasable area of 334k sq ft and have high occupancy levels with “a loyal and quality customer base” that includes regional and international tech companies. It will also spend US$ 112 million to acquire 13.9 million sq ft of land for industrial use in Dubai Industrial City from DHAM.

The market cap of Arab stock exchanges exceeded US$ 4.361 trillion at the end of April 2024. According to the Arab Monetary Fund (AMF), the top six local exchanges were Saudi Stock Exchange, (US$ 2.87 trillion), Abu Dhabi Securities Exchange, (US$ 754.7 billion), Dubai Financial Market, (US$ 193.4 billion), Qatar Stock Exchange, (US$ 155.4 billion), Kuwait Stock Exchange, (US$ 135.6 billion), Casablanca Stock Exchange, (US$ 68.9 billion), Muscat Stock Exchange, (US$ 63.2 billion), and Egyptian Stock Exchange, (US$ 34.9 billion). The remaining six exchanges – Amman, Bahrain, Beirut, Tunis, Damascus and Palestine – had market values of US$ 23.4 billion, US$ 21.2 billion, US$ 17.2 billion, US$ 8.1 billion, US$ 5.9 billion and US$ 4.3 billion respectively.

In January 2017, excise tax was introduced to the UAE economy and a year later, the country saw the appearance of VAT. This week, Younis Haji Al Khouri, Under-Secretary of the Ministry of Finance announced from their initiation dates through to 31 December 2023, total revenues were at US$ 47.30 billion. He added that VAT revenues at the state level reached US$ 43.48 billion, while the federal government collected approximately US$ 13.04 billion over the same timeframe. In the Excise Tax sector, collections at the state level totalled US$ 3.83 billion, with the federal government having collected approximately US$ 1.42 billion. He also noted that this year, the estimated total expenditures of the federal general budget are US$ 17.44 billion, with expected revenues of US$ 17.90 billion; this results in an expected surplus of US$ 0.463 billion.

The recently DFM-listed Spinneys posted positive Q1 financial results, with revenue up 10.9% to US$ 222 million, (driven by an increase in retail revenue, with transactions 9.5% higher on the year), and gross profit posting a 15.0% gain to US$ 92 million, as gross margins rose 1.5% to 41.2%; this was down to its successful private label strategy, as well as its efficient sourcing and supply chain capabilities. Profit for the period increased, on the year, 12.8% to US$ 20 million, with net profit margin 0.20% higher at 9.2%. Adjusted EBITDA1 came in 8.7% higher, at US$ 41 million, whilst an Adjusted EBITDA margin2 of 18.5%, impacted by the one-off IPO-related costs of US$ 3 million and pre-store opening expenses in Saudi Arabia.

Last Friday, Drake & Scull International closed its subscription for new capital, with proceeds exceeding US$ 123 million. The subscription process, for the period of 25 April to 10 May, at a discounted rate of US$ 0.068 per share, exceeded one and a half times the minimum required to complete the restructuring process; the new capital of 2,887 million shares is valued at US$ 787 million. Its shares will resume trading on the DFM next Monday, 20 May, after completing the procedures required by the regulatory and supervisory authorities.

Two factors have had a negative impact not only for Ansari Financial Services but also for other firms in the same sector; they were the uncertainty of the prevailing macroeconomic conditions and pressure from the parallel market, within major remittance corridors. Q1 saw a 4.3% decline in operating income, and a 26.0% fall in net profit after tax to US$ 27 million, (attributable to the introduction of 9% Corporation Tax and increased capex in expanding the branch network). On the year, total transactions increased by 5.1%. There was a 24% increase in Wage Protection System (WPS) volumes, with digital channels reporting an increase of 25%, accounting for 21% of the overall outward remittances. By the end of March, Al Ansari had two hundred and fifty-nine outlets.  Al Ansari Exchange in Kuwait integration with Oman Exchange will be consolidated in Q3, with Al Ansari Digital Wallet set to be launched before the end of year.

In Q1, Emaar Properties posted its highest ever quarterly group property sales, 47% higher at US$ 3.68 billion, compared to Q1 2023, with revenues of US$ 1.83 billion and net profit before tax at US$ 1.17 billion – 16% higher on the year. Emaar’s revenue backlog from property sales, growing at 9%, reached US$ 21.34 billion as of March 2024. Driven by incremental property sales, the developer’s backlog from property sales was US$ 19.3 billion, which represents future revenue from property sales to be recognised over the next four to five years.

Emaar Development PJSC, majority-owned by Emaar Properties, announced a 50.0% annual increase in property sales in Q1 2024, reaching US$ 3.51 billion, and a 48.0% annual hike in EBITDA of US$ 463 million. Emaar now has a sales backlog of US$ 17.90 billion, which will be recognised as revenue in the coming years due to the sector’s robust performance. The country’s largest build-to-sell property development company successfully launched ten projects across various master plans during the quarter, and also made a significant acquisition of a land plot measuring sixty million sq ft near The Oasis masterplan, with a development value of US$ 11.17 billion. In Q4, it had acquired eighty-one million sq ft of land in the same location and used the plots to announce two major developments – The Heights Country Club & Wellness and Grand Polo Club & Resort – spanning over a total one hundred and forty-one million sq ft, with a total development value of US$ 26.16 billion.

DFM-listed Deyaar Development posted a 37.4% increase in Q1 net profit before corporate tax, to US$21 million, on the back of a 4.9% revenue jump to US$ 85 million. Total assets increased 7.4% to US$ 1,826 million as of 31 March 2024. Liquidity increased by US$ 124 million due to robust receivables and increased advances from customers, whilst earnings per share increased by 29.4% to US$ 0.0045. In March, the developer, majority-owned by Dubai Islamic Bank, announced its first ever dividend of US$ 0.0109, equating to 4% of its share capital of US$ 47.68 million.

Dubai Investments announced a 61.9% dip, on the year, in Q1 net profit attributable to shareholders after tax, to US$ 33; excluding the one-off gain on the fair valuation of investment properties last year, the group’s profit for the same period in 2024 has surged by 90%. Total income over the period was US$ 216 million – 21.7% lower compared to the same period in 2023 – with total assets remaining stable at US$ 58.47 billion. The company commented that “the Danah Bay project on Al Marjan Island in Ras Al Khaimah continues to witness robust demand, with steady construction progress”. It also recently launched its Violet Tower project in Jumeirah Village Circle, comprising studio, 1 B/R and 2 B/R apartments; prices start at US$ 158k, with completion slated for Q2 2026.

Salik Company PJSC posted an 8.1% hike in Q1 revenue to US$ 153 million, attributable to an 8.1% jump in toll usage fees to US$ 134 million, revenue from fines, 6.4% higher at US$ 16 million, (from 683k violations), and tag activation fees coming in 13.6% higher at US$ 3 million. In Q1, Dubai’s exclusive toll gate operator, saw 122.8 million cars pass through its eight gates. Net profit before taxes came in 10.9% higher to US$ 83 million during Q1. Mainly driven by the closure of the ongoing Floating Bridge, Al Maktoum Bridge gate posted a 49.0% Q1 increase in the number of revenue-generating trips, and Al Garhoud Bridge with numbers 9.1% higher. Excluding these two, the other six gates saw trip numbers up 5.3%, including Jebel Ali growing 12.0%. Two new toll gates will open in Q4 – Business Bay Crossing and Al Safa South. The company is also initiating new revenue streams, with the use of barrier-free paid parking system at Dubai Mall starting Q3. Ibrahim Sultan Al Haddad, CEO of Salik, said: “We continue to thrive in our core tolling business and remain focused on diversifying our portfolio through the expansion of ancillary revenue streams”.

The DFM opened the week on Monday 13 May, 30 points (0.7%) higher the previous week shed 105 points (2.5%) to close the trading week on 4,068 by Friday 17 May 2024. Emaar Properties, US$ 0.06 lower the previous three weeks, lost US$ 0.13, closing on US$ 2.06 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.64, US$ 4.56, US$ 1.54, and US$ 0.37 and closed on US$ 0.63, US$ 4.54, US$ 1.51 and US$ 0.36. On 17 May, trading was at two hundred and twenty-one million shares, with a value of US$ 111 million, compared to one hundred and sixty-nine million shares, with a value of US$ 83 million, on 10 May 2024.

By Friday, 17 May 2024, Brent, US$ 0.09 lower (0.1%) the previous week, gained US$ 3.08 (3.7%) to close on US$ 85.86. Gold, US$ 65 (2.8%) higher the previous week, gained US$ 46 (1.9%) to end the week’s trading at US$ 2,414 on 17 May 2024.

In the middle of a take-over battle, with BHP attempting to acquire it, (mainly for its copper operations), with a US$ 42.65 billion bid, Anglo American has announced plans to break up the business, announcing that it will sell or demerge major parts of the firm, including its De Beers diamond operation, Anglo American Platinum and its steelmaking coal businesses. This divestment would then leave the one hundred and seven-year-old UK mining giant focussing only on its copper, iron ore and crop nutrients businesses, with its chief executive, Duncan Wanblad, commenting that “we expect that a radically simpler business will deliver sustainable incremental value creation through a step change in operational performance and cost reduction.” Anglo American also said it expected the reshaping of the firm would lower its costs by US$ 1.69 billion. It seems that BHP only wanted to buy Anglo American for its two copper mines in Chile and Peru.

Another week and yet another problem for Boeing management. In 2017 and 2018, two fatal aircraft crashes, both involving Boeing 737 Max aircraft, killed three hundred and forty-six people. Six years later, the US Department of Justice is considering whether to prosecute Boeing for breaching the terms of a 2021 agreement that shielded the firm from criminal charges linked to the incidents. The government body claimed that the plane maker failed to “design, implement, and enforce a compliance and ethics program to prevent and detect violations of the US fraud laws throughout its operations.” Under the deal, Boeing paid a US$ 2.5 billion settlement, while prosecutors agreed to ask the court to drop a criminal charge after a period of three years. Relatives of the victims have called for criminal action against the company.

No need to feel sorry for Tesco’s chief executive who has been told that his basic pay will increase by only 3% this year which is lower than the raise given to his UK hourly-paid colleagues; it had recently raised pay for hourly earners by 9.1% to between US$ 15.14 to US$ 16.57. In the year ending 28 February, Ken Murphy was paid US$ 5.92 million in salary and bonuses, but this doubled to US$ 12.6 million following a bumper share award. The shares were awarded to him when he joined and paid out this year after he surpassed a number of performance targets. Pre-tax profits jumped 160.8% to hit US$ 2.90 billion, as sales rose by 4.4% to US$ 85.92 billion. To some observers, it seems incongruous that customers, having to pay higher prices, and staff, having to live on minimum wages, when the fat cats seem to be reaping all the benefits.

Latest data from the China Association of Automobile Manufacturers posted an annual 12.8% rise in automobile manufacturing to 2.406 million, as sales also headed higher, climbing by 9.3%, to reach 2.359 million units. New energy vehicle production surged 35.9% to 870k units, with sales up 33.5% to 850k units; they now account for 36.5% of all vehicles manufactured in April. Furthermore, the sales of Chinese-brand passenger vehicles, accounting for 63.5% of sales volume, posted an annual 8.4% rise to reach 1.272 million units.

In 2022, Mine One Partners, which it is claimed to be majority-owned by Chinese citizens, acquired land adjacent to Francis E. Warren Air Force Base in Wyoming, home to Minuteman III nuclear intercontinental ballistic missiles; subsequently, it installed cryptocurrency mining equipment. This week, citing spying concerns, a directive from President Joe Biden ordered that the company sells the land, within one hundred and twenty days. The White House commented that “the proximity of the foreign-owned Real Estate to a strategic missile base… and the presence of specialised and foreign-sourced equipment potentially capable of facilitating surveillance and espionage activities, presents a national security risk”. It is reported that the Committee on Foreign Investment in the US (CFIUS), a powerful body that scrutinises deals for national security threats, was not notified about the purchase by the company. When notified, it determined that the purchase had national security implications.

The US Department of Justice has charged the two Peraire-Bueno brothers with stealing US$ 25 million in cryptocurrency, in just twelve seconds, last year. Accusing the pair of wire fraud and money laundering, it noted that the alleged heist was the first time that such a “novel” form of fraud had ever been subject to criminal charges. Deputy Attorney General Lisa Monaco stated that they “stole US$ 25 million in Ethereum cryptocurrency through a technologically sophisticated, cutting-edge scheme they plotted for months and executed in seconds.” Prosecutors allege the two used highly specialised skills that they learned at “one of the most prestigious universities in the world” to exploit Ethereum’s process for validating transactions. When confronted by a representative for Ethereum, the brothers declined to return the funds and took steps to launder and hide their stolen gains. If found guilty, the brothers, who studied mathematics and computer science at MIT, could face up to twenty years in prison.

This week, the People’s Bank of China (PBOC) said it would set up a US$ 41.5 billion facility to support affordable housing, at a time when the sector has been in crisis mode for the past three years. It has effectively scrapped the minimum mortgage rate and cut the minimum down payment for first-home buyers from 20% to 15% and from 30% to 25% for second homes. The money would be aimed to support local state-owned enterprises to buy unsold homes, as well as encouraging local governments to buy properties at “reasonable prices” and sell them as affordable housing.  It has also instigated several measures to help the embattled sector which include cutting the amount home buyers need for a deposit and encouraging local authorities to purchase unsold properties. In April, new home prices fell for a tenth month in a row by 0.6% on the month – the sharpest monthly decline since November 2014.

With only six months until the US presidential election, current incumbent, Joe Biden is seemingly getting tough on anything Chinese – this time ramping up tariffs on Chinese-made electric cars, (up to 100% from 25%), solar panels, (doubling to 50%), steel, (up from 7.5% to 25%) and other goods – to bank votes in what promises to be a divided and turbulent November for US politics. The measures include a 100% border tax, on electric cars from China, with the twin aims of protecting US jobs and responding to their unfair policies. The tariffs announced would hit an estimated US$ 18 billion worth of imports. There are many business owners that would prefer such tariffs being removed altogether, arguing that they were driving up prices for everyday Americans.

After several months of higher-than-expected inflation in the US, the pace of price increases indicated signs of slowing in April, down 0.1% to 3.4%, and this has bemused the Fed even further on whether it should adjust rates – either to twist, higher or lower, or ‘stick’. In the hope that it could tame inflation, the central bank, having had pushed rates to a heady 5.3% last July, had thought that the highest borrowing costs in two decades would help ease pressures pushing up prices. However, inflation is still someway off its 2.0% target and attempts to cool the economy have been thwarted by disappointingly high inflation data, leaving the Fed to decide its next step knowing that lower rates, in the present economic climate, could lead to a slowdown – and possibly major economic problems.

Still believing that interest rates will go lower this year, and following April labour market data, (that showed headline and core inflation declining 0.2% to 3.4%), the Dow Jones Industrial Average on Thursday broke through the 40,000-point level for the first time ever. This milestone is a sign that the US economy is in better shape than many had thought and is one of the best performing in the G20. Earlier in the week, the S&P 500 topped the 5,300 mark for the first time, whilst the Nasdaq Composite also reached an all-time high of 16,797.

Citing that it was in response to customer demand for cheaper prices, Morrisons has faced a customer backlash when it announced that it would be trialling the sale of New Zealand lamb, instead of 100% British lamb, in thirty-nine of its four hundred and ninety-eight stores. The supermarkets commented that “the blunt commercial reality is that New Zealand lamb is cheaper to source”, whilst adding that its butchers’ counters will also still sell British lamb. The National Farmers Union (NFU) said it was “disappointing” at a time the British livestock industry was under pressure and that New Zealand lamb is “produced to potentially lower standards”. NFU livestock board chair David Barton noted that the unprecedented wet weather” was an “enormous challenge” for British farmers, urging Morrisons to stick to its 100% British lamb commitment, whilst hoping the supermarket’s change was temporary and that the trial would soon come to an end. Morrisons announced in March that it had made a loss of more than US$ 1.25 billion last year, driven by soaring financing costs as the firm’s debt also grew. Many of its customers, struggling with overall higher costs, are changing their shopping habits and looking for cheaper products.

Consumer prices rose 3.4% in the year to April, down 0.1% on the month, driven by higher rents and petrol costs. A report on Wednesday indicated that spending was flat last month – a sign that the economy may be weakening – with multiple updates from big retailers warning that shoppers, especially those with lower incomes, are cutting back. Although there were price declines, in egg, milk, cheese and other dairy products, they were offset by rises in other sectors which pushed grocery prices 1.1% on the year. With rents 5.5% higher on the year, housing costs moved higher, as did car insurance and medical costs. Stripping out food and energy, prices rose 3.6% over the last twelve months – its slowest pace since 2021.

Although the Q1 UK jobless rate increased 0.1% to 4.3%, (outstripping inflation’s 3.2% rate), in the quarter ending 31 March, wage growth remained robust whilst the number of vacancies also slowed, indicating that more unemployed people were competing for the same jobs. The Office for National Statistics noted that pay, excluding bonuses, remained at 6.0%, that had been expected to slow to 5.9% over the period. Still higher than pre-pandemic levels, jobs on offer in the UK dipped 26k (2.8%) to 898k vacancies in the quarter ending 30 April. However, with unemployment also increasing, the number of unemployed people per vacancy has continued to rise. When taking inflation into account, wages grew by 2.4%. The wage figures will be closely watched by the BoE to decide if and when interest rates can be cut, but these latest wage growth figures, which came in higher than expected, may make it wary about cutting the 5.25% interest rate as early as next month.

A recent post-pandemic phenomenon, driven by historically high mortgage rates, has seen hundreds of thousands of homeowners, noticeably in the under-thirty age category take out new home loans that many of them will still be paying off into retirement. The number of such homeowners taking out such mortgages more than doubled over the two-year period, while for those aged under forty the number was up 30%. BoE figures show how the share of new mortgages, with a later end date, has increased, because many have no other option but to select an extended repayment period to control costs. Data shows that in Q4 2021, some 31% of new mortgages had an end date beyond state pension age, that two years later saw that rise to 42%. It must be noted that not only will many be paying off their mortgage for longer, but they will also be paying more interest, making the cumulative cost higher. How long such a trend might last will also depend significantly on whether mortgage rates drop and settle. Short-term, there appears to be no end to high mortgage rates so an increasing number are currently Livin’ On A Prayer!

Island In The Sun!                                                                         10 May 2024

Latest data from Knight Frank indicates that in Q1, Dubai’s ultra-luxury developments, (those residences valued at US$ 10 million plus), showed a 19% jump on the year to hit a new record high, with one hundred and five deals registered, driven by ongoing overseas demand. The total value of luxury homes sold in Dubai rose 6.0% to US$ 1.73 billion. The highest number of sales was recorded in the traditionally sought-after Palm Jumeirah and Palm Jebel Ali districts. Last year, the emirate recorded four hundred and thirty-one home sales above US$ 10 million – 79.6% higher than London’s sale numbers, (two hundred and forty), and 104.3% better than New York (two hundred and eleven). More of the same is expected for the rest of the year, with foreign investor confidence in the emirate remaining high.

One consequence of the April storms is that property service charges could move higher, with Cushman & Wakefield Core noting that “we would see this impact be reflected in higher service charges and insurance premiums over the near term.” Short-term, the government has mandated all developers and community managers to conduct the cleaning and repairs for flood-damaged residences, free of cost. On top of that, top developers, Emaar Properties, MAG, Damac Properties, Nakheel, Dubai Holding, Union Properties, Dubai Investment Park inter alia, offered free services to tenants, impacted by the more than inclement weather that hit last month.

The consultancy also noted that nearly 8.4k units were handed over in Q1, with an additional 29.7k units expected to be handed over before the end of the year, bringing the total annual figure to 38.1k. Over the quarter, Dubai Statistics Centre posted that the population grew by 25.8k which would take up 6.0k of these new Q1 units. By this blog’s workings, if the 2024 supply chain came in at 38.1k, it will just be enough to meet an annual 165k population growth. (It must also be remembered that YTD, the population has already increased by 1.0% to 3.692 million and the percentage of a more affluent influx, compared to pre-pandemic, is a lot higher and would be more likely to buy property). However, this does not include the needs of domestic/international investors, (which grow every year), increased Airbnb owners and second-home buyers – all of which will stress the supply chain. According to Cushman & Wakefield Core, city-wide rents increased for the thirteenth consecutive quarter, rising by 20%, year-on-year, and by 72% higher than Q1 2020. An unfortunate side-line is that household income is lagging rising rents, but if mortgage rates eventually head south, then it could lead to increased property purchases, as end users will be better off, paying off a mortgage than forking out for extra rent.

Off-plan sales continue to dominate, accounting for around 75% of the total sales, with waterfront properties and branded residences attracting most attention. One of the main factors for higher prices in this segment is a marked limited supply of readily available units, particularly completed properties. Some of the factors that continue to see an increasing number of HNWI looking to Dubai for a home base include accessibility, (with Dubai’s direct links with most places in the world), modern infrastructure, lifestyle, safety, security, proactive government policies, ten-year visas, growing economy, friendly tax environment, high real estate returns and relatively low property prices, compared to most major global cities.

Q1 saw demand from Russian investors softening, offset by increased interest from European, American and Central/South American buyers – this trend is expected to continue for the rest of 2024. Apart from the ultra-luxury sector, there was strong interest noted in both the premium, (properties over US$ 2.72 million – AED 10 million) and luxury, (properties over US$ 1.36 million – AED 5 million) segments. The former saw a 76% surge in transactions in this price bracket, whilst the latter constituted 7.6% of total completed sales, surpassing last year’s average by 2.2%. Q1 witnessed nearly 1.7k sales of both ready and off-plan homes valued at over US$ 1.36 million, including one hundred property transactions exceeding US$ 8.17 million, (AED 30 million). There is no doubt that growth in the luxury market will continue into the year but there is some debate whether 2024 growth rate will be higher or lower than seen in the previous three years. 

New analysis by Desert Safari Dubai Tours looked at Google search data over the past twelve months to find which holiday destinations were most popular in the UK. The most in-demand holiday destinations in 2024 were:

Amsterdam 57.5k Dubai 52.5k New York                               51.2k Paris 43.3k Tenerife 43.3k Barcelona 41.7k Dublin 38.8k Gran Canaria 33.9k Milan 28.5k Istanbul 28.1k

Latest figures from the Dubai Department of Economy and Tourism, ahead of the thirty-first edition of Arabian Travel Market, starting last Monday 06 May, the emirate welcomed 5.18 million international overnight visitors in Q1 – an 11.0% annual rise over the 4.67 million tourist arrivals during the same period in 2023. Last year, Dubai registered a record 17.15 million international overnight visitors, with the growth in line with the ambitious goals of the Dubai Economic Agenda, D33, to further consolidate Dubai’s position as a leading global city for business and leisure. Dubai’s Crown Prince, Sheikh Hamdan bin Mohammed, noted that Dubai “had also invested for years in developing world-class infrastructure that serves citizens, residents, and visitors alike. The performance of various sectors has been enhanced in line with the highest international standards and best practices with the ultimate goal of becoming the smartest, most advanced and agile city, serving everyone who resides on its land or visits it as an honourable guest.” He also emphasised the importance of strengthening cooperation between the public and private sectors to ensure that the emirate continued to retain its lead on the global tourism map in coming years as well. Sheikh Hamdan stated, “ensuring the highest levels of tourist satisfaction translates into each visitor becoming an ambassador for Dubai, carrying to the world the image of a city that spares no effort for the happiness and comfort of its guests”.

Dubai’s exceptional performance reinforced global recognition for the destination, having begun 2024 by being named the leading global destination for an unprecedented third successive year in the Tripadvisor Travellers’ Choice Awards, the first city to achieve this unique accolade. Tourism has also been boosted by several major industry events, such as ATM, Arab Health, Gulfood and the Dubai International Boat Show, and new hotel openings including The Lana, (Dorchester Collection’s first property in the ME), SIRO One Za’abeel, Dubai’s first fitness hotel Marriott Marquis Dubai, and Hilton Dubai Creek Hotel & Residences.

In Q1, the following were the main contributors to Dubai’s tourism were: 

• Western Europe region            1.138 million arrivals                                  22% overall share,
• South Asia                                    869k                                                        17%
• CIS and Eastern Europe              817k                                                        16%
• GCC                                             664k                                                        13%
• MENA                                          605k                                                         12%
• NE Asia/SE Asia                          470k                                                            9%
• the Americas                                344k                                                             7%
• Africa                                           202k                                                             4%
• Australasia                                     70k                                                              1%

With a brand-new identity, Jumeirah announced plans to double the size of its current property portfolio of twenty-six by 2030. It recently announced new properties including Jumeirah Red Sea in Saudi Arabia, Jumeirah Marsa Al Arab in the UAE, and Jumeirah Le Richemond Geneva in Switzerland. The new strategy focusses more on boutique-style properties, targeting operators in gateway cities and resort destinations in Europe, the Americas, Africa, and Asia.

At the beginning of the year, flydubai introduced a multi-million dollar retrofit project  of many its twenty-nine Next-Generation Boeing 737-800s; its eighty-six plane fleet also includes fifty-four Boeing 737 MAX 8s and three Boeing 737 MAX 9 aircraft; six new planes are expected to join the fleet by the end of the year. To date, eight aircraft have had a full cabin refresh with the installation of the carrier’s flagship lie-flat Business Class seats and the new economy seats from RECARO. The airline will retain an all-economy configuration on some of its aircraft and will upgrade the seats to the new RECARO economy seats with Inflight Entertainment. In the first four months of 2024, the carrier had carried almost five million passengers – a 13% rise in numbers on the year – and had expanded its network by adding Al Jouf, Langkawi, Mombasa, Penang, The Red Sea, Basel, Riga, Tallinn and Vilnius. As the summer season, (June to October), approaches, flydubai now operates to one hundred and twenty-five destinations in fifty-eight countries. CEO Ghaith al Ghaith noted that figures would be even higher had it not been for the ongoing delays in aircraft deliveries; however, he is confident that the carrier is “still on track for one of the busiest summers on record with the start of the seasonal summer schedule from June”. Summer flights will be introduced to locations including Batumi, Corfu, Dubrovnik, Mykonos, Olbia, Santorini and Sochi.

Emirates Airline has also confirmed plans to refit forty-three Airbus A380s and twenty-eight Boeing 777 aircraft, and on completion, the retrofit will have been carried out on one hundred and ninety-one aircraft. Its President, Tim Clark, noted that “the addition of more aircraft, fitted with our newest generation seats, updated cabin finishings and a contemporary colour palette also marks a significant step in ensuring more customers can consistently experience our premium products across both aircraft types.” The refurbishment includes updated first-class cabins, new business class seats and new premium economy seats.  Emirates has also announced nine destinations for its new A350 aircraft that will fly to Bahrain, Kuwait, Muscat, Mumbai, Ahmedabad, Colombo, Lyon, Bologna and Edinburgh.

Dubai Taxi Company PJSC announced its Q1 financial results, posting revenue 16% higher, on the year, to US$ 152 million, driven by revenue improvement across all its segments; net profit was 15% higher at US$ 29 million, not helped by the introduction of corporate tax as well as by rising finance costs. Excluding the tax impact, net profit increased 26%, with free cash flow at US$ 33 million; it had a cash balance of US$ 12 million, including Wakala deposits. There was a 40% YoY increase in EBITDA to US$ 46 million, with a 30% margin – up 5% on the prior year.  Its core taxi segment revenue came in 15% higher, attributable to increased trips and trip lengths, as well as higher tariffs, which was also supported by the additional taxis added to the fleet. There was a 7% increase – and 17% on the quarter – in its limousine segment, as its taxis and limousines completed twelve million trips, an increase of 8% on the year; it also acquired ninety-four new taxi licenses at the latest RTA auction. The bus segment revenue increased, on the year, by 28%, to US$ 10 million, also driven by the increase in fleet size and new service contracts. Revenue in the delivery bikes segment increased more than four times, on the year. The utility also added that, “in addition to our plans to grow further in Dubai, we see attractive opportunities to expand and broaden our services in neighbouring emirates.”

In Q1, Parkin Company posted an 8.0% hike in revenue to US$ 59 million, attributable to an increase in public parking revenue, issuance of seasonal permits, and developer parking demand.  Net profit was up 5.0% to US$ 28 million, on a higher EBITDA, partially offset by an increase in depreciation and amortisation provisions, higher interest expense and the introduction of the new 9.0% corporate tax rate from 01 January. Being the sole operator of public parking spaces in Dubai, its public parking revenue rose 11% to US$ 27 million, equating to 46.1% of total revenue. Other revenue streams saw seasonal cards and permit revenue increasing 17% to US$ 10 million, developer parking up 13% to nearly US$ 5 million and a 1% rise in fines to US$ 14 million. Q2 results will be impacted by the April storm which the firm estimates will cut quarterly revenue by at least US$ 1 million.

Dubai Electricity and Water Authority has posted positive Q1 consolidated financial results, with increases in revenue of US$ 1.58 billion, (6.7%), EBITDA of US$ 708 million, (9.0%), operating profit of US$ 271 million, (11.6%), and net profit of US$ 177 million. This was driven by growth of 6.4% in electricity and 5.9% in water, as customer account numbers climbed on the year, by 4.7%, to 1.17 million. DEWA’s net cash from operations was 26.9% higher at US$ 900 million. Q1 saw DEWA’s gross power generation increasing 6.2% to 10.3 TWh, with the utility generating 1.46 TWh of clean power, 19.8% higher than that recorded in Q1 2023.

DEWA’s dividend policy mandates that a minimum annual dividend of US$ 1.69 billion should be paid out in the first five years of trading on the DFM, starting October 2022, with the dividends paid semi-annually in April and October. Last October and last month, two dividends, each totalling US$ 845 million, were distributed pertaining to the 2024 financial year. The next interim dividend, relating to H1 2024, is due to be paid this October.

On Thursday, Spinneys saw its first day of trading on the DFM, with the final offer price set at US$ 0.417, (AED 1.53) per share, at the top end of the offer price range, which raised US$ 375 million and implying a market cap of US 1.50 billion. By the end of the day, and the trading week, the stock was trading 4.6% higher at US$ 0.436 (AED1.60) with 55 million shares changing hands, valued at US$ 69 million.

Starting fiscal year 2024, Spinneys’ dividend policy is to pay dividends on a semi-annual basis and maintain a dividend pay-out ratio of 70% of annual distributable profits, after tax. The supermarket chain operates seventy-five premium grocery retail supermarkets under the Spinneys, Waitrose and Al Fair brands in Oman and the UAE, where it plans to open new stores this year. It has a 27% share in its target market in Dubai and 12% of the US$ 6.27 billion, (AED 23 billion) target market in the UAE in 2022, amid continued growth in its online sales, its private label brands and its fresh food offerings. Spinneys expects to expand its footprint in the UAE and Saudi Arabia because of the growing demand of retail products in the region. The latest Kearney’s report points to UAE whitespace projected to have an annual CAGR 2.2% growth rate over the coming years, driven by a robust economy, strong population growth and accelerating real estate development.

The DFM opened the week on Monday 06 May, 119 points (2.8%) lower the previous five weeks and gained 30 points (0.7%) to close the trading week on 4,173 by Friday 10 May 2024. Emaar Properties, US$ 0.19 lower the previous three weeks, gained US$ 0.06, closing on US$ 2.19 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.65, US$ 4.55, US$ 1.54, and US$ 0.37 and closed on US$ 0.64, US$ 4.56, US$ 1.54 and US$ 0.37. On 10 May, trading was at one hundred and sixty-nine million shares, with a value of US$ 83 million, compared to ninety million shares, with a value of US$ 61 million, on 03 May 2024.

By Friday, 10 May 2024, Brent, US$ 6.72 lower (7.5%) the previous week, gained US$ 0.09 (0.1%) to close on US$ 82.78. Gold, US$ 111 (4.7%) lower the previous fortnight, gained US$ 65 (2.8%) to end the week’s trading at US$ 2,368 on 10 May 2024.

With Boeing having acknowledged several employees had committed “misconduct” by falsely claiming tests had been completed, the Federal Aviation Administration has opened a fresh investigation into the Boeing 787 Dreamliner. The main checks are to see whether Boeing completed inspections to confirm adequate bonding and grounding where the wings of certain 787 Dreamliner planes join the fuselage, and “whether company employees may have falsified aircraft records”. The government regulator noted that the embattled carrier is “reinspecting all 787 airplanes still within the production system and must also create a plan to address the in-service fleet” while the investigation is taking place. Boeing confirmed that after receiving the report “we quickly reviewed the matter and learned that several people had been violating company policies by not performing a required test but recording the work as having been completed”. At a recent Congressional investigation, a quality engineer, and whistle-blower, at the company said that Boeing was taking shortcuts to bolster production levels that could lead to jetliners breaking apart, and that excessive force was used to jam together sections of fuselage. To add to their on-going, self-inflicted problems, last Tuesday, Boeing had to call off its first-ever astronaut launch, at the final moment, after discovering a valve problem in the Atlas V rocket. It is the latest delay for Boeing’s Starliner after the project was delayed for years because of problems with the capsule.

The latest whistle-blower, Santiago Paredes, who worked for Spirit AeroSystems, has claimed that parts left the factory with serious defects. The former quality inspector at the firm, which used to be owned by Boeing, was nicknamed “showstopper” for slowing down production when he tried to tackle his concerns. In the twelve years, until 2022, he worked for the company and claimed he often found up to two hundred defects on parts being readied for shipping to the plane maker. He was accustomed to finding “anywhere from fifty to one hundred, two hundred” defects on fuselages – the main body of the plane – that were due to be shipped to Boeing, and “I was finding a lot of missing fasteners, a lot of bent parts, sometimes even missing parts.” Spirit AeroSystems and Boeing have both come under intense scrutiny after an unused door came off a brand new 737 Max shortly after take-off in January, leaving a gaping hole in the side of the plane. According to investigators, the door had originally been fitted by Spirit, but had subsequently been removed by Boeing technicians to rectify faulty riveting. The incident prompted the Federal Aviation Administration to launch an audit of production practices at both firms which found multiple instances where the companies failed to comply with manufacturing control practices.

Wednesday was another bad day for the plane maker when the front of a Boeing 767 FedEx cargo plane was seen dragging its nose across a runway after landing in Istanbul, causing sparks to fly out underneath it. The captain could only use its back landing gear to land, with the plane eventually dipping its nose onto the runway.

Although Q1 operating profit jumped 39.0%, to a record US$ 11.22 billion, (driven by a significant increase in income from insurance underwriting), Warren Buffett’s Berkshire Hathaway Inc posted a 64.6% slump in net income; the main driver behind the fall was much lower unrealised gains, from its common stock holdings, as the share price of Apple declined. During the period, it also repurchased US$ 2.6 billion of its own stock. An accounting rule requires Berkshire to report unrealised gains and losses with net results, and Buffett urges investors to ignore the resulting volatility.

Earlier in the week, Which? listed the results of a survey that priced the value of sixty-seven popular groceries last month in eight of the leading UK supermarkets; Aldi has come out as the cheapest, as it has been every month this year. As can be seen from the table below, the gap between Aldi and Waitrose, (the most expensive), was GBP 31.23.

		Supermarket		GBP
		Aldi		112.90
		Lidl		115.23
		Asda		126.98
		Tesco		128.17
		Sainsbury’s		131.02
		Morrisons		134.87
		Ocado		136.86
		Waitrose		144.13

Food inflation has slowed to 4.5% – its lowest level in over two years. According to research by Kantar, Waitrose and Ocado were the only UK grocers to win new shoppers in Q1.

Going against the trend, brewing giant Heineken will reopen sixty-two pubs that were closed in recent years and invest US$ 62 million in refurbishing more than six hundred sites across the UK; the cash injection will be invested into its 2.4k Star Pubs & Bars chain and will create more than 1k new jobs. By the end of the year, the UK operation will have reopened one hundred and fifty-six pubs over the preceding two years. The brewer will select locations it said reflect how many of its customers have cut back on how often they commute into city centres, and its “major refurbishments will concentrate on transforming tired pubs in suburban areas into premium locals.” Last week, major pub chain Greene King, with brands such as Abbot Ale, Greene King IPA and Old Speckled Hen, said it would open its new US$ 50 million brewery by 2027.

With Bethesda itself already facing cuts announced earlier in the year, Microsoft is closing three studios – Tango Gameworks, Arkane Austin and Alpha Dog –  with Roundhouse Games being absorbed into Elder Scrolls Online developer, ZeniMax Online Studios. Microsoft has yet to announce how many jobs will be lost but they will all be made at subsidiary Bethesda – which the tech giant bought for US$ 7.5 billion in 2020. This is but the latest string of cuts to come in an industry that has already seen tens of thousands of jobs lost, with more to come.

International Airlines Group posted a US$ 73 million profit, well up from the US$ 10 million posted in Q1 2023. While IAG’s fuel costs were 5.0% lower, operating costs were higher given the increasing number of flights; employee costs jumped by more than 14%, due to staff wages being pushed up and the recruitment of more staff before what is predicted to be a busy summer schedule. IAG, which not only owns BA and Iberia but also Iberia and Vueling, indicated that it was continuing to register a rebound in leisure travel, especially between European cities, and is expecting a profitable summer. It was noted that whilst leisure travel was performing well in a competitive market, business travel was lagging and recovering more slowly, after Covid had paralysed the sector. Q1 passenger revenue per available seat kilometre was 4.4% higher than in the same period last year.

As it tries to regain its former iconic reputation, tarred by the actions by some former senior staff, Qantas has agreed to pay US$ 66 million to settle a legal case accusing it of selling thousands of tickets for flights it had already cancelled. However, by the time Alan Joyce stepped down in September 2023, (earlier than his expected retirement date), Qantas was facing growing public anger over expensive airfares, mass delays and cancellations, and its treatment of workers. In a deal with the Australian Competition and Consumer Commission, Australia’s biggest airline will also launch a plan worth up to US$ 25 million to compensate affected passengers. Its Chief Executive, Vanessa Hudson, who took over from Alan Joyce late last year, acknowledged that the move represented an important step toward “restoring confidence in the national carrier.”  She also said the company had revamped its processes and invested in technology to avoid a repeat of the problem. Known as the “ghost flight” case, the ACCC claimed that in some instances, Qantas had sold tickets for flights that had been cancelled for weeks.

Because 1k artistes were played often enough to generate US$ 125k in royalties, Spotify confirmed that it has paid royalties in the UK, of US$ 937 million, to UK recording artists. The Swedish company was unable to say how much of those royalty payments actually went to musicians because of contracts having different T&Cs. Some estimates note that the average artiste’s share is about 16%.  75% of all the royalties paid to UK artists came from international listeners. It seems that Spotify has about a 50% share of the UK music streaming market, which means artistes could make the same amount again via platforms like Apple Music, Amazon Music and Tidal. No UK performer was in Spotify’s Top 10 most-played chart, with the three best being Ed Sheeran, Coldplay and Harry Styles with 6.35 billion, 5.58 billion and 5.11 streams respectively. No guesses who was top of the list – Taylor Swift (29 billion streams) – which also featured Puerto Rican star Bad Bunny, Mexico’s Peso Pluma and Colombia’s Karol G.

A lot has happened to online used car retailer Cazoo since Alex Chesterman, (who also founded the property website Zoopla and LoveFilm, a predecessor of Netflix), launched the company in 2018. A beneficiary from the pandemic, when car buyers were forced to make their purchases online, it saw its market cap on the New York Stock Exchange at a staggering US$ 7.5 billion – now it stands at just US$ 30 million. Never having turned in a profit in its history, it posted 2022 and 2021 losses of US$ 880 million and US$ 680 million respectively. Last December, it restructured US$ 630 million of debt. Its workforce in 2021 was 4.5k and the current 1k are in danger of losing their jobs, as Cazoo closes in on administration, with the SEC ordering it to find administrators within the next ten days.

Struggling fashion chain, Ted Baker, could well be on its way to having a new owner, Mike Ashley. Reports indicate that his Frasers Group has emerged as the preferred partner for the chain, following the collapse of No Ordinary Designer Label (NODL), Ted Baker’s existing UK licensing partner. Earlier in the year, the likes of Next and OSL, Ted Baker’s US licensing partner, had been in contention but subsequently pulled out. The billionaire retailer has many brands in his portfolio including Evans Cycles, Gieves & Hawkes, House of Fraser, Jack Wills and Sports Direct. Eighteen months ago, Ted Baker delisted from the London stock market after being bought by ABG, for US$ 262 million.

The National Housing Supply and Affordability Council has warned the Australian government that the country will miss its 2029 target, to add a further 1.2 million new homes to the nation’s portfolio. It warned of deteriorating conditions across the housing system, unless the government fulfils all of its promises. Describing Australia’s housing market as inequitable, unaffordable and undersupplied, it noted that its housing system was very far from healthy.  It is estimated that there are 170k on wait lists for public housing and another 122k homeless people experiencing homelessness. To meet its five-year target, it seems inevitable that the administration will have to double its US$ 6.60 billion, (AUD 10 billion) investment. The much-undersupplied market sector is not being helped by lagging construction times, a rising population, an underinvestment in social housing for many years and unaffordable mortgages and rents.

The US government says it has revoked some licences that allowed US chip makers to export certain goods to Chinese technology giant Huawei but has yet to be specific about which ones. This follows Huawei’s release of an AI-enabled computer, powered by a chip created by Intel. For the past five years, the Commerce Department had restricted technology exports, such as computer chips, to Huawei, citing alleged ties to the Chinese military. In 2019, during the presidency of Donald Trump, US officials added Huawei to a so-called “entity list,” which led to US companies having to apply for licences from the government to export or transfer some technologies. Despite this hurdle, licences have been granted to some US companies, including Intel and Qualcomm, to supply Huawei with technology that was not related to 5G.

Following the expected BoE decision to keep rates on hold, Andrew Bailey has said it needs to “see more evidence” that price rises have slowed further before taking action to cut interest rates, (currently at 5.25%), but that he was “optimistic that things are moving in the right direction”. The central bank’s governor also said he expected inflation, which currently stands at 3.2%, would fall “close” to its 2% target in the next couple of months. However, he did warn that “we need to see more evidence that inflation will stay low before we can cut interest rates”. After falling into a technical recession, he expects that the Q1 economy would show a 0.4% expansion, (up from an earlier 0.1% forecast), helped by to the size of the population increasing and some measures in the government’s spring Budget, such as the cut to National Insurance; its Q2 prediction is 0.2%. It noted that “consumer confidence has been on an upward trend during most of the past year,” but added that businesses investment remained “subdued” due to lower demand and “uncertainty”.

At the beginning of the week, more worrying news for the Sunak government emanated from ONS data showing productivity in the public sector, dominated by education and healthcare, was 6.8% below pre-pandemic levels, at the back end of last year. Figures like this show that the public sector is indeed a drag on the UK’s economy which is still not firing on all cylinders. The data showed that between Q3 and Q4, there was a 1.0% decline and 2.3% on the year, with long-term sickness one of the main drivers, along with a seemingly big increase in strikes seen in the NHS and other public utilities, including education and transport.

However, things got better for the embattled Rishi Sunak by Thursday, with The Office for National Statistics Stronger noting that, after falling into a minor recession late last year, the UK economy grew by 0.6% in Q1 – the fastest rate for two years, Yesterday, the governor of the Bank of England, Andrew Bailey, commented that the economy had turned a corner, but that it was not yet a strong recovery. It is expected that this improvement will continue for the rest of the year, and ahead of the year-end general election, with inflation dipping and wages heading higher. Most of the economy – including services, retail, public transport, car manufacturing and health – came to the party, the construction sector is still struggling. There is every indication that things are getting better and business picking up again and these results must have thrown a spanner in the works for Kier Starmer.

A week after the collapse of Bonza, Australia’s newest budget air carrier, Australian tourists are stranded in tropical South Pacific Vanuatu, after the country’s national airline cancelled international flights for four days. It is understood that the carrier had debts of US$ 77 million, of which US$ 51 million were loans. Its fleet of five Boeing 737s have already left the country – one returned to its lessor, Canada’s Flair Airline, and the other four, (Bazza, Shazza, Sheila and Malc) returned to AIP Capital. There are some twenty parties which could be in interested in saving the carrier. Yesterday, Air Vanuatu confirmed that all international flights until Sunday were cancelled, and flights after that day are “under review”. The airline confirmed its owner, the Vanuatu government, is considering putting it into voluntary administration. Meanwhile some lucky tourists are in limbo awaiting what will happen on the Island In The Sun!

Waiting for the Great Leap Forwards!                                  03 May 2024

Amali Properties unveiled its first master-planned community, Amali Island on The World Islands, housing twenty-four villas, priced at between US$ 13.6 million and US$ 34.0 million, with one villa valued at over US$ 68 million; each villa will have up to fifty mt of exclusive beachfront. Designed by architects Elastic, the villas at Amali offer two architectural approaches – Minima and Grande – with each villa featuring private berths, with direct access to villas, and luxurious amenities such as rooftop terraces, outdoor firepits, teppanyaki bars, jacuzzies and multiple pools. The Amali Island project – spanning a total area of 1.2 million sq ft and linking two of The World Islands, Uruguay and São Paolo – offers seven distinct architectural styles.  Residents will also have exclusive access to their own 10k sq ft clubhouse, which includes, inter alia, a world-class spa and gym facilities, a gourmet restaurant, swim-up bar, cigar lounge, horizon and saltwater pools, yoga decks. Amali Island will also have private berths, a floating helipad, as well as a floating padel court. Amali Properties was founded in 2023 by Dubai billionaire and Damac Properties chairman Hussain Sajwani’s son Ali and daughter Amira.

J1 Beach, formerly known as La Mer South, is due to reopen in September, with Merex Investment announcing that work is nearing completion. The updated location will introduce three beach clubs, chosen from up to twenty applications, and ten licensed restaurants and in total will be home to thirteen luxury cuisine establishments in a stunning beachfront setting. The three clubs will be Gigi Rigolatto, with Italian elegance, Sirene Beach by GAIA, with authentic Greek Mediterranean flavours, and Bâoli, East Asian techniques combined with French and Mediterranean flavours. The facility will also have swimming pools, sunbeds, and even a jetty guest service, with the developer’s vision being to make J1 beach a Reportage Properties’ project.

Reportage, a leading UAE real estate developer, reported YTD estimated sales at US$ 572 million, having sales of over US$ 1.0 billion in 2023. Two of the company’s special offers on selected projects are a 10% discount on all of their projects, with a 10% down payment, and 1% monthly instalments until units handing off, a 5% discount, with a 5% down payment, and 1% monthly instalments. It has a thirty-five-project portfolio not only in the UAE but also in Egypt, Turkiye, Morocco and Saudi Arabia. It recently completed the Oasis Residence 2 project in Masdar City, which includes about three hundred and four residential units, and last year started handing over units in two other Abu Dhabi projects. It also completed the first phase of the Rukan Lofts project, which is being developed in the Dubailand area, in cooperation with the Continental Investment Company, as well as launching the 1.8k-unit Reportage Village, and the 653-townhouse Bianca project, in Dubai.

Abu Dhabi’s Aldar Properties has unveiled its second residential project in Dubai. In partnership with Dubai Holding, its Athlon Project will feature 1.5k units comprising three to six-bedroom villas and townhouses starting at US$ 762k. Athlon will have green spaces, parks and zones for sports and fitness as well as having ten km of tracks and trails, with its cycling loop directly connected to Al Qudra cycling track. Sales at the Athlon project will begin next Tuesday, 07 May. Their first project was Haven by Aldar, launched last October, and located near the Global Village entertainment centre, focusses on wellness.

Swank Development, a real estate developer from Portugal, has recently opened an office in Dubai, and plans to launch its first project in Meydan, Mohammad bin Rashid City. Swank’s first project in Meydan will be a gated villa community, offering a range of four to six-bedroom villas and mansions.

According to a recent survey by Bayut, apartments in Dubai Investments Park, Discovery Gardens and Liwan offer the best Q1 rental returns of up to 11.0% to property buyers in the affordable category. Dubai Sports City, Dubai Silicon Oasis, and Motor City have seen returns on investment of 10.0%, based on projected rental yields for apartments, with Green Community, Al Sufouh and Damac Hills giving rental returns of over 8.0%. When it comes to villas, International City gives average RoI of over 7.0%, followed by Damac Hills 2 and The Valley, with returns of 6.0% plus. Mid-tier villas in Jumeirah Village Triangle, JVC and Mudon have projected RoIs ranging between 6.0% – 8.0%. In the luxury villa segment, Sustainable City has ROIs of over 7.0%, whilst Al Barari and Tilal Al Ghaf present robust RoIs exceeding 6.0%. Its CEO, Haider Ali Khan reckons that, despite continuing global uncertainties, Dubai’s realty sector stands up well and that “the emergence of new master communities and innovative approaches to off-plan developments underscore Dubai’s resilience and appeal as a real estate hub”.

As per Bayut’s data analysis, affordably priced apartment rentals increased from 1.0% to 17.0%, while mid-tier segment apartments rose by up to 12.0%. Conversely, luxury apartment rentals have witnessed decreases of up to 4.0%.

Reasonably-priced villas have generally become cheaper by up to 3.0% with rental houses in Mirdif recording upticks of 1.0% to 7.0%. Mid-tier villa rentals have recorded increases in the range of 2.0%to 17.0% with properties in Jumeirah Village Circle and Town Square posting price decreases of under 2.0%. Luxury villa rentals have surged by 13.0%, although four-bedroom homes in Al Barsha and Damac Hills have become relatively more affordable by 12.0% to 14.0%.

In the affordable sector, Deira and Al Nahda are the more popular choices for apartments, while, for villas, Damac Hills 2 and Mirdif stand out. In the mid-tier segment, Jumeirah Village Circle and Bur Dubai apartments continue to be highly sought, as do properties in JVC and Arabian Ranches 3 for villas. In the luxury category, Dubai Marina and Business Bay top the list for apartment rentals, along with Dubai Hills Estate and Al Barsha for high-end villa rentals.

The UAE’s property market continues to record strong growth on the back of government initiatives and the expansion of its economy. According to consultancy ValuStrat, in Q1, there was “significant” growth in Dubai’s real estate sector, with villa and apartment prices registering annual increases of 29.6% and 20.1%. Valustrat considers that Dubai’s real estate cycle is expected to head towards a “new phase”, with a projected resurgence in the apartment market and tempered growth for villas.

According to the consultancy, in Q1, the Dubai real estate market posted significant growth across its residential and commercial sectors. The capital values in the residential segment were 6.4% higher on the quarter and 24.7% on the year to 167.5, compared to the base of 100 points in Q1 2021. This growth was driven by a 5.7% quarterly and 20.1% annual increase in apartment valuations. Top annual performers were Discovery Gardens (32.6%), The Greens (29.8%), Palm Jumeirah (29.0%), The Views (24.8%), Town Square (24.5%), Al Quoz Fourth (24.1%), and Dubai Production City (23.9%). Villas witnessed an annual increase of 29.6%, reaching a decade high in prime villa values.  In Q1 2024, villa valuations grew 7.7%, on the quarter, with the highest annual performers beng Jumeirah Islands (32.2%), Palm Jumeirah (31.9%), Dubai Hills Estate (30.6%), and Mudon (27.2%).

Prices of prime properties in Dubai grew 26.7% on the year and 7.3% on the quarter, to a record 173 points, compared to 100 base points as of Q1 2021. Highly desired prime villas reached a new 10-year high of 211.8 points with annual capital gains of 33.1% and 8.5% on the quarter. Capital gains in the luxury apartments sector were 21.6% annually and 6.2% higher, when compared to the previous quarter, attaining a record 149.4 index points.

Residential asking rents jumped 11.7% on the year, and 3.0% on the quarter since the previous quarter. Apartment and villa rentals rose 4.4% and 1.3% on the quarter and 16.4% and 6.1% on the year to US$ 23.4k and US$ 110.0k. Residential occupancy in Dubai was estimated at 87.7%. There are 46.6k new builds entering the market this year, with estimated completions of 5.8k apartments and 1.0k villas in Q1. Interestingly, it is estimated that 86.0k apartments and 21.2k villas are currently under construction with promised handovers by 2028. For off-plan homes, the average price was 5.3% higher at US$ 736k, with the citywide average transacted price for off-plan properties at US$ 5,444 per sq mt (US$ 506 per sq ft).

Moreover, there was a significant uptick in the office sector, with valuations soaring by 29.9% annually and 4.3% quarterly – the twelfth consecutive quarter of growth. The pertinent ValuStrat Price Index reached a record 194.2 points, compared to the 100-point base set in Q1 2021. The weighted average price for office space was US$ 435 per sq mt (US$ 403 per sq ft). Continued double digit annual growth was seen in DIFC (38.7%), Jumeirah Lake Towers (36.1%), Business Bay (33.3%), and Barsha Heights (24.2%).

This week saw the ground-breaking ceremony of the Immersive Tower by DIFC, located within the heart of the financial district. The US$ 300 million, thirty-seven storey mixed use tower, conceptualised by AEDAS and developed by DAR Group, encompasses 58.6k sq mt of office space and approximately 10.6k sq mt of retail space while over 680 sq mt has been earmarked for amenities; it has a total built up area of 115k sq mt. Scheduled for completion in Q2 2027, the new commercial property is designed to suit the needs of the workplace of the future. In addition to office units – ranging in size from 60 sq mt to 158 sq mt – tenants will also have access to a Members’ Club, located across the 26th, 27th and 28th floor. Last year, commercial space in DIFC witnessed high demand and closed the year with 92% occupancy. The first residential project by DIFC to open for sale in 2023, DIFC Living, fully sold out within forty-eight hours – a sure indicator of the robust demand for residential property in the heart of DIFC.

Although no agreements are in place, China’s H World International is planning to introduce its Ji Hotel brand into the Dubai market. It is a subsidiary of H World Group – one of the country’s biggest multi-brand hotel chain management groups – and its portfolio includes European brands such as Steigenberger, IntercityHotel, Maxx and Jaz in the City. The company is “aggressively” looking to re-establish a Steigenberger’s presence in Dubai, having been deflagged from its location in Business Bay in 2021, and could have at least ten properties in the emirate over the next decade. H World Group operates 9.4k hotels in eighteen countries and has a market cap of US$ 12.0 billion.

Established in 2010 as a midscale brand, there are about 2k Ji Hotels in China and its first international foray was the Ji Hotel Orchard Singapore – opened in 2019. Ji Hotel uses a plug-and-play model – or modular – where the rooms’ interiors are part-assembled in China and then installed at the property within one hour. There are five modules designed to fit each room – bedside/headboard, toilet/shower, sink/mirror, TV/entertainment and desk area. This allows HWI to change and upgrade the interior every few years, and it is currently on its fifth design cycle. It would be looking at JVs for its Dubai plans, unlike its franchising strategy seen in China. HWI currently has one property in the city, the IntercityHotel at Dubai Jaddaf Waterfront, which opened in 2021.

An agreement between Dubai South and AGMC, one of the leading importers of luxury vehicles in the country, will see a new US$ 136 million showroom and service centre at Dubai South being built to serve customers of its automotive brands. Spanning 33k sq mt and located at The Business Avenue, a flagship location near the VIP Terminal and Al Maktoum International Airport, the new state-of-the-art facility, will feature BMW, Mini, Rolls Royce, and other brand vehicles and a fully-fledged service centre to provide customers with after-sales and maintenance services. Dubai South,the largest single-urban master development focusing on aviation, logistics and real estate, is also located close to Jebel Ali Free Zone and Expo.

With Emirates expecting delivery of sixty-five A350s on order from Q3 and a mix of two hundred and five 777-9s and 777-8s next year it is ratcheting up recruitment amid a change in its pilot recruitment strategies, which include higher salaries, new roles and a radical change to eligibility. This year, HR will host roadshows in more than twenty-six cities in over eighteen countries, focussing on three categories.

First Officers who are non-typed rated. Such pilots have normally only experience on turbo props and smaller jets. They will be fully trained to be able to fly all the carrier’s wide body fleet of one hundred and forty-four Boeing planes and will be in a position to fly two hundred and five of the new Boeing 777-Xs when these aircraft enter the fleet from 2025.

Accelerated Command Pilots. ACP was only available for its fleet of Airbus 380s but now has been extended to its fleet of Boeing 777s. It presents an opportunity for motivated captains, flying narrow-body aircraft, to graduate to wide-body on Emirates’ fast track promotion programme.

Direct Entry Captains. It is recruiting senior experienced pilots, already flying on wide-bodied aircraft, to command its A350 fleet of sixty-five aircraft, as well as its fleet of 380s. It has also increased the base salary for the new recruits on both the A350s and A380s.

The Dubai carrier currently has 4.4k pilots, having recruited four hundred and twenty last year. It is now offering enhanced salary packages for First Officers with experience of over 4k flying hours on modern Airbus fly-by-wire or Boeing aircraft.

Last week, DP World signed a significant partnership agreement in Malaysia, (its first in that country), and opened two new facilities in the Philippines. In moves that will bolster Dubai’s trade and logistics connectivity in SE Asia, the Malaysian deal was with Sabah Ports – a wholly owned subsidiary of Malaysia’s publicly-listed Suria Capital Holding Bhd – to establish a partnership to manage Sapangar Bay Container Port in Sabah. This will see a doubling in the port’s capacity and aims to enhance the state into a pivotal trade hub within East ASEAN Growth Area. In the Philippines, DP World has upgraded the Batangas Passenger Terminal, located 110 km from Manila, which has doubled in capacity to eight million passengers a year and has become country’s largest inter-island hub, enhancing connectivity between mainland Luzon and the surrounding island provinces. The newly opened Tanza Barge Terminal, handling up to 240k TEUs a year, will save approximately 150k truck trips annually, as well as providing a direct sea link to Manila. In 2021, DP World established Singapore as its Asia Pacific headquarters and currently, it operates ports and terminals in Australia, China, Indonesia, Malaysia, the Philippines, South Korea, Thailand and Vietnam.

According to a Boston Consulting Group report, Dubai has been placed as the third most popular destination for professionals to relocate to, behind London and Amsterdam but ahead of Abu Dhabi and New York. The other top ten locations were taken by Berlin, Singapore, Barcelona, Tokyo and Sydney. The Dream Destinations and Mobility Trends report analysed the work preferences of 150k people in one hundred and eighty-eight countries between October and December 2023. It also noted that Australia, US and Canada were the three most sought-after countries for professionals to move to for work.

Another study by Robert Half noted that the country’s jobs market has recovered well from the pandemic, mainly due to proactive government measures to attract skilled workers and incentivise companies to set up or expand their operations. It also suggested that the UAE is shifting to an employers’ market, with an increasing number moving in because of economic problems in their own countries. It notes that many candidates are willing to accept lower remuneration to gain a foothold in the labour market, with the influx of talent leading to greater competition.

The country’s non-oil private sector continued to expand in April, albeit at a slower pace mainly due to disruptions from the mega storm last month which saw the heaviest rainfall ever seen since records began in 1949; the S&P Global PMI dipped 1.3 to 55.3 – its weakest level since last August – but still well above the 50.0 threshold between expansion and contraction. New orders last month increased at their slowest pace since February 2023, and notwithstanding the adverse weather, overall growth is still in positive territory because of help from the buoyant domestic economic conditions. Again because of the weather, which caused major disruption as roads and buildings flooded, transport services stalled and several businesses were forced to close, there was a sharp slowdown in new business gains – but unsurprisingly a sharp rise in backlogs of work. Intense competition for new work resulted in falling average prices charged for the sixth consecutive month in April.

Meanwhile, April’s S&P Global Dubai PMI was 2.9 lower at 55.1 – the lowest in eight months – driven by a sharp slowdown in new business growth. Backlogs of work increased considerably in April, which was linked to temporary business disruptions and elevated pressure on operating capacity. Respondents noted robust domestic economic conditions and the impact of long-term business expansion plans, alongside competitive pricing strategies, have helped with the strong domestic economic growth. April saw higher staffing numbers, attributable to new projects and strong demand condition. There was an accelerated rise in purchasing activity and although there was robust inputs demand, with stocks of purchases rising at the slowest pace since March 2022, there were marked rises in staff costs and purchasing prices, (because of an increase in raw material costs), margins were further cut because average prices were reduced, with price discounting being attributed to competitive market conditions and efforts to boost sales. Business confidence remains upbeat, despite the weakening Index over the previous three months.

A week after signing a similar agreement with Columbia, the UAE and Ukraine 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, Costa Rica, 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. It will also support the rebuilding of key industries and infrastructure in Ukraine, while also helping to strengthen supply chains to the MENA region for major exports such as grains, machinery and metals. 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. Last year, the UAE and Ukraine shared US$ 386 million in non-oil trade, with joint FDI stock standing at US$ 360 million by the end of 2022.

In the latest Leading Maritime Cities report, compiled by Singapore’s DNV and Menon Economics, Dubai retained its leading position in the Arab world, whilst moving two places, on the global scale, to eleventh as an international maritime hub. The five key factors behind Dubai’s rise include shipping centres, maritime technology, ports/logistics, attractiveness/competitiveness, as well as financial/legal aspects. The report also highlighted Dubai’s accent on green technology in the maritime sector. Singapore has retained its position as the leading maritime city in the world for 2024.

Eight years ago, the federal government liberalised fuel prices so that they could be aligned with market rates until the onset of the pandemic which saw prices frozen by the Fuel Price Committee. In March 2021, prices were amended to reflect the movement of the market once again. With prices having risen every month in the quarter to 30 April, the trend continues into May 2024, (except for diesel). The breakdown in fuel price per litre for May is as follows:

• Super 98: US$ 0.858, to US$ 0.910 in May (up by 6.0%)                    YTD from US$ 0.768 – 18.5%

• Special 95: US$ 0.826, to US$ 0.877 in May (up by 6.3%)                  YTD from US$ 0.738 – 18.8%

• Diesel: US$ 0.837, from US$ 0.842 in May (down by 0.6%)               YTD from US$ 0.817 – 3.1%

• E-plus 91: US$ 0.807, to US$ 0.858 in May (up by 6.3%)                   YTD from US$ 0.719 – 19.3%%

The Central Bank of the UAE posted a February 11.0%, on the year, increase in cash deposits (equivalent to US$ 19 billion), to US$ 198 billion, with monthly cash deposits and quasi-monthly increases up 1.92% to US$ 194 billion and 27.4% to US$ 269.0 billion respectively. (Quasi-cash deposits are term deposits and savings deposits in dirhams for residents in addition to deposits by residents in foreign currency). Government deposits jumped 11.1% on the year to US$ 105.5 billion, as money supply rose 12.8% to US$ 33.7 billion.

Following the US Federal Reserve’s decision to maintain its Interest Rate on Reserve Balance unchanged, the Central Bank of the UAE has followed suit and has decided to maintain the Base Rate applicable to the Overnight Deposit Facility at 5.40%. The CBUAE has also decided to maintain the interest rate applicable to borrowing short-term liquidity from the CBUAE at 50 bp above the Base Rate for all standing credit facilities.

Dubai Aerospace Enterprise Ltd announced a 9% increase in its total Q1 revenue, on the year, to US$ 344 million, resulting in a 5.2% drop in profits before tax of US$ 70 million. Firoz Tarapore, DAEs CEO, stated, “strong demand for aircraft leasing and maintenance services drove total revenue growth”, and that “our order book positions until 2026 are committed on long-term leases to top rated airline customers”. Cash Flow from Operations increased by 14% and Available Liquidity climbed to US$ 5.0 billion.

e& posted its consolidated financial results for Q1 2024, with consolidated revenue 9.0% higher at US$ 3.87 billion, and consolidated net profit increasing 7.0% to US$ 626 million, on the year The group’s consolidated EBITDA rose on the year by 3.0% to US$ 1.74 billion, resulting in an EBITDA margin of 45.0%.The number of e& UAE subscribers reached 14.5 million in Q1 2024, while consolidated group subscribers were up 5.0%, topping 173 million,

Emirates Integrated Telecommunications Company posted an impressive a 62.7% surge in Q1 net profit to US$ 164 million, as revenue nudged 4.1% higher to US$ 975 million. EBITDA at US$ 433 million, was up 4.1% on the year, with a 44.3% margin – 4.6 points higher. Capex was at US$ 98 million, while operating free cash flow (EBITDA – Capex) for the year was up 28.2% to US$ 327 million. The company’s mobile customer base grew, at an annual 5.7%, to 8.7 million subscribers, with net additions of 108k, (1.7 million post-paid customers with net additions of 47k subscribers and seven million prepaid customers with net additions of 61k). Meanwhile the fixed customer base rose by a 11.1%, year-over-year, to 616k subscribers, with net additions of 12k subscribers over the quarter. Mobile service revenues grew 7.4%, to US$ 437 million, primarily driven by higher post-paid revenues. Fixed services revenues topped US$ 262 million, an annual 2.7% annual growth mainly driven by Home Wireless and enterprise broadband plans. Other revenues were broadly stable at US$ 277 million, as higher interconnect and inbound roaming revenues offset the reduction in hubbing revenues.

TECOM Group posted a 15% year-on-year increase in Q1 net profit to US$ 80 million, as revenue rose 10.0% to US$ 154 million, attributable to occupancy rates across the commercial and industrial leasing portfolio reaching an all-time high of 91%. Q1 EBITDA increased 10% YoY to US$ 120 million, while EBITDA margins remained at 78%. Funds From Operations stood at US$ 113 million, representing a 15% annual increase on improved collections and increased performance of income-generating assets.

This week, Spinneys announced that it would raise the number of shares allocated to the UAE Retail Offering of its IPO, due to high investor demand, from 5% to 7%, (forty-five million shares to sixty-three million); the total size of the offering remains unchanged at nine hundred million shares, representing 25% of the company’s total issued share capital. The IPO subscription period closed on Monday 29 April for the UAE Retail Investors, and a day later for Professional Investors. Trading on the DFM is expected to commence next Thursday, 09 May. Spinneys confirmed that the final offer price for its shares has been set at US$ 0.417, (AED Dh1.53) per share, at the top end of the previously announced offer price range of the IPO. This means that offer proceeds came in at US$ 375 million, (AED 1.38 billion), and values Spinneys at (AED 5.51 billion) and implies a market capitalisation at listing of US$ 1.50 billion, (AED 5.51 billion). The IPO was oversubscribed by sixty-four times in aggregate.

Dubai Financial Market has posted its Q1 consolidated financial results showing a 64.4% surge in revenue to US$ 40 million and a 170.8% increase in net profit before tax to US$ 26 million. Total revenue included US$ 17 million in operating income and US$ 23 million in investment returns and other income, whilst total expenses excluding tax reduced by 4.2% reached to US$ 14 million. Q1 trading was 31.6% higher at US$ 6.81 billion, whist the General Index was up 4.59%, whilst the market capitalisation increased 6.0% to US$ 198.91 billion from its level at the end of 2023. Sector wise, foreign investors accounted for 47% of trading value in Q1, with net purchases of US$ 354 million, and having 20% of the market cap by 31 March. In Q1, DFM attracted 44.3k new investors, of which 85% were foreign investors.

The DFM opened the week on Monday 29 April, 114 points (2.7%) lower the previous four weeks and shed 5 points (0.1%) to close the trading week on 4,143 by Friday 03 May 2024. Emaar Properties, US$ 0.10 lower the previous fortnight, shed US$ 0.09, closing on US$ 2.13 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.65, US$ 4.56, US$ 1.50, and US$ 0.37 and closed on US$ 0.65, US$ 4.55, US$ 1.54 and US$ 0.37. On 03 May, trading was at 90 million shares, with a value of US$ 61 million, compared to 112 million shares, with a value of US$ 59 million, on 26 April 2024.

The bourse had opened the year on 4,063 and, having closed on 30 April at 4,156 was 93 points (2.4%) higher. Emaar started the year with a 01 January 2024 opening figure of US$ 2.16, to close the quarter at US$ 2.13. Four other bellwether stocks, DEWA, Emirates NBD, DIB and DFM started the year on US$ 0.67, US$ 4.70, US$ 1.56 and US$ 0.38 and closed YTD at US$ 0.64, US$ 4.60, US$ 1.51 and US$ 0.38.  On 31 March, trading was at 153 million shares, with a value of US$  million, compared to 138 million shares, with a value of US$ 58 million, on 31 December 2023.

By Friday, 03 May 2024, Brent, US$ 1.73 higher (2.0%) the previous week, lost US$ 6.72 (7.5%) to close on US$ 82.78. Gold, US$ 64 (2.7%) lower the previous week, shed US$ 47 (2.0%) to end the week’s trading at US$ 2,303 on 03 May 2024.

Brent started the year on US$ 77.23 and gained US$ 9.77(12.7%), to close 29 March 2024 on US$ 86.33. Meanwhile, the yellow metal opened 2024 trading at US$ 2,074 and gained US$ 229 (11.0%) to close YTD on US$ 2,303.  

In March, global air cargo markets continued their recent double-digit growth, with a 10.3% increase, (in cargo tonne-kilometres, on the year), in demand – and 11.4% for international operations. Capacity, measured in available cargo tonne-kilometres also rose, increased by 7.3% (10.5% for international operations). The Q1 statistics were even better than the exceptionally strong Q1 2021 performance during the COVID crisis. Key operational environment factors included:

• global cross-border trade and industrial production increased by 1.2% and 1.6% in February
• the manufacturing output PMI climbed to 51.9 in March, indicating expansion. However, the new export orders PMI remained slightly below the 50 threshold indicating growth expectations, rising to 49.5
• inflation rates varied in March, with rates falling in the EU (2.6%) and Japan (2.7%), rising in the US (3.5%), and China experiencing slight deflation (-0.01%)

Regional performance in March:

• Airlines in Asia-Pacific, North America, Europe, ME and Latin America experienced 14.3% year-on-year demand growth for air cargo, with notable increases on the Asia-Europe route (17.0%) and within Asia (11.8%). Capacity increased by 14.3% year-on-year
• North American carriers saw modest 0.9% year-on-year demand growth, with decreases in March capacity (-1.9%)
• European carriers witnessed 10.0% year-on-year demand growth, with intra-European air cargo and Europe–ME routes as notable performers. March capacity increased by 8.0% year-on-year
• ME carriers reported the strongest growth at 19.9% year-on-year, with significant expansion in the Middle East–Europe market. March capacity increased by 10.6 percent year-on-year
• Latin American carriers experienced 9.2% year-on-year demand growth, while African airlines saw 14.2% annual growth, despite a contraction in the Africa–Asia market compared to February

Having cancelled all flights last Tuesday, Bonza, Australia’s newest budget airline went into voluntary administration, leaving thousands of passengers stranded around the country. The company has appointed Hall Chadwick as voluntary administrators for its operating and holding company. In 2021, the carrier became the first new launch, since 2007, and started flights last year, in air space dominated by Qantas and Virgin Australia, which account for 95% of the country’s domestic aviation market. It is reported that on Tuesday, its fleet of eight Boeing 737 Max fleet was repossessed by creditors. As soon as it started flying, it was beset by problems such as aircraft shortages, inability to find to find slots in the lucrative Sydney market and low patronage, with the latter seeing prices on several routes being slashed.

With a UK judge announcing that he had done “all that he reasonably could do” to fulfil his financial obligations, Boris Becker’s bankruptcy has officially ended. The former Wimbledon champion was declared bankrupt in June 2017, owing creditors almost US$ 62 million and the court was told that

he still owed about US$ 53 million – but lawyers said the 56-year-old had reached a settlement agreement with the trustees appointed to oversee his finances. The German tennis player was jailed in 2022 for hiding US$ 3 million in assets to avoid paying any liabilities but his lawyers noted that he will provide a “substantial sum” into the bankruptcy estate. Although bankruptcy orders end after a year in England and Wales, a judge suspended the automatic discharge of the order in 2018 because Becker was “failing to comply with his obligations”; this has now been lifted.

April UK house prices fell by 0.4% on the month, and 4.0% from its summer 2022 peak, to US$ 328k, as potential buyers continued to face pressure on affordability; on an annual basis, the pace of house price growth slowed from 1.6% in March to 0.6% in April. Nationwide noted that the rising cost of borrowing was the main driver behind this latest fall. The figures are based on the building society’s own mortgage lending, which does not include buyers who purchase homes with cash or buy-to-let deals. Surprisingly, cash buyers account for about a third of UK housing sales. This comes after several major financial institutions upped new fixed-rate mortgage deals because the dial has turned, with many now expecting rate rises rather than rate falls. Yesterday, Halifax became the latest by raising most of its mortgages by 0.2%. It is estimated that 1.6 million mortgage holders will see their relatively cheap fixed-rate deals expiring to be replaced by a more expensive repayment plan.

Still reeling from an seemingly arrogant, ignorant and inept senior management set-up  over recent times, the Post Office has turned to Nigel Railton  to become its interim chairman for twelve months. The former boss of Camelot was appointed by Business Secretary Kemi Badenoch after former incumbent Henry Staunton was sacked in January. He takes on the role as hundreds of sub-postmasters are still waiting for compensation over the Horizon scandal. The new Post Office chairman also chairs Argentex Group, a London-listed provider of currency management services, and is a trustee of the Social Mobility Foundation.

In a new strategy reducing the number of its restaurants, by two hundred and thirty-eight, in favour of building more hotel rooms, Premier Inn owner Whitbread is to cut 1.5k jobs, equating to 4.1% of its 37k workforce. It plans to sell one hundred and twenty-six of its less profitable restaurants, with twenty-one sales already having been agreed, and close one hundred and twelve restaurants and convert the space into new hotel rooms. It said the branded restaurants it plans to turn into hotel rooms made a loss of US$ 24 million in the year, while the restaurants it is selling made a loss of US$ 11 million. Whitbread said the changes would add more than 3.5k hotel rooms across its estate, and that the new hotel rooms would be served by unbranded restaurants. The cuts will leave it with one hundred and ninety-six branded restaurants, and three hundred and eighty-seven restaurants that are unbranded and part of the hotel. The food chains will be affected across the board, and closures will depend on where the restaurant is sited, rather than its brand. The moves are part of a three-year US$ 188 million cost-cutting programme. The cuts come after Whitbread’s pre-tax profit rose 21% to US$ 566 million for the year to 29 February.

Latest figures show Aldi’s market share has fallen – by 0.4% to 10.4% – as people seemingly head back to traditional supermarkets for their shopping. The NIQ survey was taken in the twelve weeks, ending 20 April, and indicated that sales rose just 1.3% in the period. Over the same period, Lidl, (which saw its market share climb to 8.2%), Sainsbury’s, Tesco and Morrisons saw growth figures of 9.5%, 6.6%, 5.8% and 4.4%.

Sergey Brin, one of the company’s co-founders, owns more than seven hundred and thirty million Class B and C shares, entitling him to a pay-out of US$ 146 million; the owner of Google confirmed that it intends to pay quarterly cash dividends in the future, but it will depend on “review and approval by the company’s board of directors”. Revenue was 15.0% higher at US$ 80.5 billion, whilst its Q1 net profit surged 57.2% to US$ 23.7 billion, attributable to enhanced business in Search, YouTube and advertising divisions. Operating income soared 46.2%, on the year, to about US$ 25.5 billion. Earnings per share jumped 61.5% to US$ 1.89, whilst its cash and marketable securities stood at more than US$ 108 billion as at 31 March. On the news, its share value soared 14.1% to US$ 180.20 in after-hours market trading.

The US and EMEA markets accounted for 77.5% of Q1 revenue, with figures of US$ 38.7 billion and US$ 29.5 billion. Services business, including advertisements, Android, Chrome, hardware, Maps and Google Play, accounted for nearly 87.4%, (US$ 70.4 billion), of the company’s total sales – 13.6% higher compared to Q1 2023; advertising revenue from Search, YouTube and other businesses increased 15.2% to more US$ 54.2 billion over the same period. Cloud business, including the company’s infrastructure and data analytics platforms, collaboration tools and other services for enterprise customers, rose 28.4% to nearly US$ 9.6 billion.

Following UK government action, in January, to stop the sale of The Daily and Sunday Telegraph newspapers to an Abu Dhabi backed RedBird IMI bid, the papers are up for sale again. Since then, legislation has been put forward to ban foreign states from owning UK newspapers and news magazines, with RedBird confirming it would halt the takeover and put the media firm up for sale. It noted that its plans were “no longer feasible” and would now look to secure the “best value” for the titles, which include the Spectator magazine, and stating that “we have held constructive conversations with the government about ensuring a smooth and orderly sale for both titles.” UK Culture Secretary Lucy Frazer said she had “raised concerns about the potential impact of this deal on free expression and accurate presentation of news” but added that she would “allow the parties to conduct an orderly transition”. The sale came about because the papers were seized by Lloyds Banking Group from long-time owners, the Barclay family, which had failed to pay back a loan of more than US$ 1.25 billion. The bank started an auction process but at the last minute the Barclay family paid off their debt with money lent by Sheikh Mansour bin Zayed al-Nahyan, and in return, the Barclay family agreed to transfer ownership to the Gulf-backed consortium.

After five years at the helm of Europe’s biggest bank, HSBC, its group chief executive Noel Quinn has surprisingly announced his retirement after working there for thirty-seven years; he will remain at the bank until a replacement is found. Last month, it announced a 1.8% drop in Q1 pre-tax profits to US$ 12.7 billion, and an interim pay-out of US$ 0.10 per share, as well as a planned US$ 3.0 billion buyback of its shares. In a bid to focus more on faster-growing markets in Asia, it has recently sold the off its operations in Canada and announced plans to do the same with its business in Argentina.

Changpeng Zhao resigned from Binance last November and pleaded guilty to violating US money laundering laws, with the firm he founded ordered to pay US$ 4.3 billion, after a US investigation found it helped users bypass sanctions. Although Judge Richard Jones said Zhao put “Binance’s growth and profits over compliance with US laws and regulations,” and prosecutors had sought a three-year sentence for the former Binance boss, he was only sentenced to four months’ detention. Furthermore, US officials said in November that Binance and Zhao’s “wilful violations” of its laws had threatened the US financial system and national security, and that “its wilful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform.” Nigerian authorities are currently investigating the company, registered in the Cayman Islands.

It is reported that Philips has reached a US$ 1.1 billion  deal to settle lawsuits in the US relating to potentially faulty breathing devices, manufactured by its US subsidiary Philips Respironics.  Three years ago, it was found that foam fitted in breathing machines, used to treat sleep apnoea and other disorders, could degrade, releasing potentially toxic particles into masks worn by patients. More than five million machines were ultimately recalled worldwide, and, in January, the US Food and Drug Administration said it had received 116k reports of problems, while five hundred and sixty-one deaths had been linked to the devices. (That being the case, it seems that Philips came out well from this episode). The Dutch medical products maker stated that it did not “admit any fault or liability, or that any injuries were caused” by the devices. Last month, Philips Respironics reached an agreement with the Department of Justice in a US court, a “consent decree” under which it will face regular inspections of its US facilities for the next five years. The latest settlement covers a class action lawsuit as well as individual personal injury claims in the US.

In a bid to resolve nearly all of the lawsuits it faces over claims that its talc products, including baby powder, caused cancer, Johnson & Johnson plans to offer US$ 6.48 billion over twenty-five years to former customers with ovarian cancer claims; this represents the vast majority of the more than 59k lawsuits it faces. In total it is setting aside about US$ 11 billion to address the talc litigation, with this being the third settlement offer the company has put forward to try to address the claims from former customers, which have weighed on the company’s reputation and stock price. Again noting that none of the cases against it had “merit”, it is keen to settle the long running saga. In 2023, it proposed to pay nearly US$ 9.0 billion for a more comprehensive deal, which would have addressed lung cancer and mesothelioma claims, as well as litigation from state attorneys general in the US. The company said it was working separately to resolve those matters and had addressed 95% of the mesothelioma claims. Johnson & Johnson said the US$ 6.48 billion sum was “far better recovery than the claimants stand to recover at trial” and that the slow nature of the legal process meant most of those effected would never have “their day in court”. It also announced a tentative US$ 700 million settlement with the states in January.

It is reported that Goldman Sachs is to abolish the existing pay ratio, imposed under EU rules, and which the Sunak government recently decided to scrap. The removal of the artificial cap will allow the bank to reward its best-performing staff by making multimillion pound payouts. Richard Gnodde, chief executive of Goldman Sachs International, said it had decided to bring its remuneration policy in the UK in line with its operations elsewhere in the world. He added that the shift would “mean lower fixed pay, but a higher proportion of discretionary compensation”, adding that it “also reflects the prudential objective of our regulators”. The removal of the cap means several hundred UK-based Goldman staff will now be eligible for variable pay worth up to 25 times their base salaries, according to insiders. Goldman is among the first major investment banks to signal its intention to pursue a revised approach to remuneration in the wake of the cap’s abolition by UK regulators last October. Other firms are also understood to be reviewing their UK compensation practices in light of the cap’s abolition.

Noting that UK, Europe and the US accounted for only 7% of its total revenue, grocery delivery firm Getir has said it will be leaving them to focus on its core market in Turkey where it generates the bulk of its revenue. It had earlier quit Italy, Spain, France and Portugal, and had auctioned off much of its equipment in the UK. The company had expanded quickly in Europe and had a payroll of 23k after three years but there had been speculation that its UK operations were in financial trouble. Since its entry into the UK in 2021, Getir had grown to become a multi-billion-dollar food delivery firm in just a few years. It confirmed that it will focus on its core market in Turkiye where it generates the bulk of its revenue and that FreshDirect, its US subsidiary, will continue its operations. It added that it had raised investment from Abu Dhabi’s Mubadala and US company G Squared to fund its exit from the Western market.

Claiming to be the world’s largest fast-charging network, Tesla’s Superchargers can be found all over the world. This week it was announced that the EV maker has sacked its entire Supercharger division, as part of strategy to cut 10% of the workforce, with Elon Musk noting that the company needed to be “absolutely hard core” about cost reduction. William Jameson, strategic charging programs lead at Tesla, noted that Mr Musk had “let our entire charging org go”, whilst the man himself wrote that he still planned to grow the Supercharger network, “just at a slower pace for new locations.” Last year, seven large car manufacturers including Mercedes, Honda, BMW and Hyundai-Kia, set-up a JV to build a rival fast-charging network. The quality and reach of the Supercharger network has long been a huge advantage for Tesla and was indeed a key selling point for potential buyers. However, with regulators in both Europe and the US pushing the firm to open the Supercharger network to owners of other electric vehicles, it will offer less of an advantage in the future. Tesla’s network of chargers is widely seen as industry leading, and recently it cut deals with several rival carmakers in North America to adopt its “NACS” charging standard so that their vehicles could use the network.

With declining global sales, the EV sector is going through a rough patch with slowing demand and the resulting price war in the world’s largest car market as carmakers try to maintain their sales numbers and margins. The latest is car giant BYD that saw Q1 profits slump by more than 47%, (on the quarter), to US$ 630 million, as sales of its battery-only vehicles slumped by more than 43.0% to 300k units; last year it exported 240k units.  BYD and its rivals have been involved in a price war in China, as they compete for market share at a time of slower domestic economic growth. At the end of 2023, Tesla regained its crown as the world’s biggest seller of EVs, as it continues to cut prices (and margins) and tries to expand into new global markets.

It is no surprise to hear that China is once again flexing its muscles on the world’s economic stage. Just a decade ago, a Chinese company bought the country’s first stake in an extraction project within the “lithium triangle” of Argentina, Bolivia and Chile, which holds most of the world’s lithium reserves. Since then, the Chinese have gone on a spending spree and now  own an estimated 33% of the lithium at projects currently producing the mineral or those under construction. The BBC Global China Unit has identified at least sixty-two mining projects across the world, in which Chinese companies have a stake, that are designed to extract either lithium or one of three other minerals key to green technologies – cobalt, nickel and manganese. According to the Chatham House think tank, China has long been a leader in refining lithium and cobalt, with a share of global supply reaching 72% and 68% respectively in 2022. There are quite legitimate concerns that China’s dominance may well have a negative impact in the future. The fact that it has made more than half of the electric vehicles sold worldwide in 2023, has 60% of the global manufacturing capacity for wind turbines, and controls at least 80% of each stage in the solar panel supply chain, are more than enough to start alarm bells ringing.

The prodigal son of the EU, Hungary, continues to upset the status quo of the bloc; its strong ties with Russia continue to draw the administration’s criticism and now its increasing cooperation with China is raising eyebrows in Brussels.  The country’s foreign minister, Peter Szijjarto commented that “we do not intend to become the world leader,” about his country’s ambitious plans for manufacturing EV batteries, “because the world leader is China”; it has a 79% share of the lithium-ion global battery manufacturing capacity, ahead of the US on 6%, with, to the surprise of many, Hungary with 4%, with aims to soon move into second place. To say it has embraced China would be an understatement, as Hungary’s prime minister, Viktor Orban, has commented that his government has trumpeted its “opening to the East”. In a bid to tempt Chinese investment into the country, it has promised CATL US$ 855 million in tax incentives and infrastructural support to clinch the deal – more than 10% of the US$ 781 million investment. China already has a presence in the country, with its biggest battery maker, CATL’s factory in the east of the country, whilst last year, SemCorp separator foil factory and the Chinese EcoPro cathode plant also opened. Near to the country’s BMW factory, another Chinese battery maker, Eve Energy, has started operations, whilst work has started for a “gigafactory” for China’s BYD electric cars. By this summer, there will be seventeen flights a week between Budapest and Chinese cities, whilst, last year, China became the single biggest investor in Hungary with US$ 11.5 billion. South Korean and Japanese factories have already started manufacturing batteries or battery components there.

Noting a “lack of further progress” toward lowering inflation, the Federal Reserve’s key rate remains steady in the range of 5.25% to 5.50% – continuing to hover at its highest level in two decades. Its ‘raison d’être’ is that high borrowing costs help to cool the economy and reduce the pressures pushing up prices. However, inflation remains stubborn, at 3.5%, and is staying above the Fed’s 2.0% target, with many analysts, who had signalled Q2 rate rises earlier in the year, having to change their minds, with a minority now looking at a rate hike this year.

Minor signs that the US economy may be cooling came with this week’s job numbers. The Labor Department noted that the unemployment rate nudged 0.1% higher to 3.9%, with employers adding 175k new positions – the fewest number seen since last October, and for the first time in months that growth was weaker than analysts expected. Average hourly earnings rose 3.9% over the twelve months to April, a slower pace from the previous month. Some analysts seem to consider that this could convince the Federal Reserve to actually cut rates later in the year if this trend were to continue in the coming weeks.

The Organisation for Economic Co-operation and Development predicted that UK GDP will rise by 1% in 2025. The six other nations do not fare much better, with growth rates of between 1.1% to 1.7%. The organisation blamed the after-effects of a succession of interest rate rises in the UK for the lethargic performance, noting that the UK economy would be “sluggish” this year. The UK economy is now forecast to expand by 0.4% this year, a downgrade from the OECD’s previous projection for 0.7% growth, with Germany the only country with a lower growth level and on par with Japan. The US is forecast to see its GDP rise 2.6%, with all the others, (except for Canada’s 1.1%) all well below 1.0%. The global body also noted that UK tax receipts would “keep rising to historic high of about 37% of GDP”. The government has cut NI twice last year, totalling 4%, but the OECD said this “only partially offsets the ongoing fiscal drag from frozen personal income tax thresholds”. It also said that last year’s 6% hike in corporation tax is “less than fully compensated by allowing businesses to deduct the full cost of investing in machinery and equipment from their tax bill”.

The Organisation for Economic Co-operation and Development has warned the UK that the current high rates of 5.25% should remain until the rate of price rises eases further and stays there. The OECD anticipates inflation will be “elevated” at 3.3% in 2024 and 2.5% in 2025 – still above the Bank’s 2.0% target.

HH Sheikh Mohammed bin Rashid, as Ruler of Dubai, reviewed the strategic plan of the Dubai Aviation Engineering Projects and approved designs for the new passenger terminal at Al Maktoum International Airport which on completion will be the largest in the world; when fully operational, the new terminal will ultimately enable the airport to handle an annual passenger capacity of two hundred and sixty million. It will comprise five parallel runways, with a quadruple independent operation, west and east processing terminals, four satellite concourses with over four hundred aircraft contact stands, uninterrupted automated people mover system for passengers, and an integrated landside transport hub for roads, Metro, and city air transport. Following a visit to the Dubai Aviation Engineering Projects, HH Sheikh Mohammed noted that “today, we approved the designs for the new passenger terminal at Al Maktoum International Airport and commencing construction of the building at a cost of AED 128 billion, (US$ 34.9 billion), as part of Dubai Aviation Corporation’s strategy. “It will be five times the size of the current Dubai International Airport, and all operations at Dubai International Airport will be transferred to it in the coming years.” He also added that “as we build an entire city around the airport in Dubai South, demand for housing for a million people will follow. That being the case, the location will need up to 240k housing units over the next ten years.

“It will host the world’s leading companies in the logistics and air transport sectors. We are building a new project for future generations, ensuring continuous and stable development for our children and their children in turn. Dubai will be the world’s airport, its port, its urban hub, and its new global centre.” The world’s largest airport, covering an area of seventy sq km, will also be able to handle in excess of twelve million tonnes of cargo per annum. Accompanying the Dubai Ruler, Sheikh Ahmed bin Saeed stated, “It is expected that the first phase of the project will be ready within a period of ten years, with a capacity to accommodate one hundred and fifty million passengers annually.” It seems inevitable that DXB will no longer exist and would be valuable land for the redevelopment of the whole of Al Garhoud. There is no doubt that the Al Maktoum International (AMI) is planned in such a way as to represent a leap into the future! The world is Waiting for the Great Leap Forwards!

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!

What’s Going On?                                                                        19 April 2024

A Knight Frank report indicated that, in Q1, there had been one hundred and five recorded sales of homes priced at more than US$ 10 million – 19% higher on the year, with Palm Jumeirah accounting for just over a third of transactions. Dubai’s prime residential market, which had grown by 44.4% in 2022 and 16.3% last year, has seen a twelve-month growth of 26.3%. No wonder that Dubai claims that this sector is the fastest growing in the world. The table below shows the value of all sales in Q1.

	Dubai’s Prime Residential Market Q1 2024 Sales Total Value of US$ 10 mil +
		US$ mil
	Palm Jumeirah		628.4
	Jumeirah Bay Island		191.5
	Dubai Hills Estate		121.0
	Al Wasl		112.0
	Palm Jebel Ali		110.1
	District One (MBR)		97.0
	Tilal Al Ghaf		95.0
	Business Bay		84.2
	Emirates Hills		56.3
	Downtown Dubai		53.0
	Al Quoz Second		50.3
	Palm Deira		45.5
	Al Jadaf		23.7
	World Islands		21.5

On the year, the total quarterly value came in 6% higher. Last year, the consultancy noted that Dubai’s luxury home market reached record levels, with sales of US$ 10 million-plus homes nearly doubling to US$ 7.6 billion and outstripping London and New York. The double whammy, of the emirate’s global connectivity and progressive government policies encouraging long-term residency, have played their parts. The inevitable end result is that the high demand is the cause of a steep decline in supply. Knight Frank commented that “the laser like focus of the global wealthy on Dubai is best reflected in the rapid deterioration in the volume of US$ 10 million-plus homes for sale, which has fallen by 59% across the city over the last twelve months to just eight hundred and sixty-four homes.” Dubai’s luxury home market sector is still one of the most affordable in the world, with US$ 1 million securing 980 sq mt, compared to 366 sq ft, 355 sq ft and just 172k sq ft in New York, London and Monaco.

Knight Frank predicts that Dubai’s prime market will see a more moderate increase of 5.0% this year, while the overall market is expected to grow by 3.5%. This forecast appears to be on the very conservative side, but the consultancy indicated several possible problems – “a global economic slowdown and the knock-on impact on the local economy, combined with the risk of an escalation in regional tensions are medium to high risks, with the latter potentially emerging as a key trigger for higher oil prices.” This in turn could fuel global inflation and higher interest rates, “which could drive up borrowing rates further and therefore dampen demand”.

The consultancy posted that one of the emirate’s fastest-growing prime areas for domestic buyers is Dubai Hills Estate, with prices 11% higher over the past twelve months – and, over the same time, the number of homes available for sale has fallen by 75% to just over 1k units, Some of its selling points include “its relative proximity to both Downtown and new Dubai, combined with access to international school, excellent neighbourhood facilities and amenities and, of course, its abundance of green space”.

Meanwhile, Espace Real Estate, which handled 20% of villa sales on Palm Jumeirah in 2023, said off-plan properties are largely responsible for the increase in sales in Q1 2024. It also indicated that Q1 2024 secondary market sales of properties, valued at more than US$ 10 million, numbering eighteen, were down on the twenty-one sales in Q1 2023, compared to  the off plan sector registering double the amount of transactions over the same period.

Preliminary data from the Airports Council sees Dubai International Airport retaining its position as the world’s busiest international hub for the tenth consecutive year; DXB does not have a domestic market and handled 86.9 million passengers in 2023 – up 31.7% on the year. Its 2024 forecast of 88.8 million, still lower than its record 2018 year of 89.1 million, and for 2025 93.8 million passengers, as EK start to take delivery of wide-body aircraft and as more foreign airlines launch flights from the Dubai hub.

According to the World Travel and Tourism Council, the country’s travel and tourism sector is projected to create 23.6k additional jobs, bringing the total number of jobs to 833k – 2.9% higher on the year, and up 14.7% from pre-pandemic 2019. Tourists are expected to increase their spending – during visits to the UAE – by 9.5% on the year to US$ 52.2 billion; it expects that domestic visitor spending will be 4.3% higher at US$ 15.8 billion. The sector will contribute US$ 644.1 billion to the national GDP, equating to 12% of the total economy – 7.6% higher on the year and up 23.0% compared to 2019’s return. According to Julia Simpson, the WTTC president and chief executive, five of this year’s drivers include the ease of travel through its airports, “sensible” visa policies, diverse tourism offerings, greater opportunities for business travel and the expected return of Chinese visitors to the country in larger numbers. In November 2022, the UAE announced an ambitious national tourism strategy that aimed to raise the sector’s contribution to the GDP to US$ 122.6 billion by 2031, to attract forty million hotel guests by then and to earn US$ 27.2 billion in tourism investment.

With the signing of a Comprehensive Economic Partnership Agreement with Costa Rica, it is expected that bilateral trade with the UAE will flourish and offer investors opportunities in priority sectors including logistics, energy, aviation, tourism and infrastructure development. President HH Sheikh Mohammed posted that “we look forward to the impact this agreement will have on trade and investment ties between the UAE and Costa Rica.” In 2023, non-oil trade between the two partners exceeded US$ 65 million – 7% higher on the year, and up 31% compared to 2021. Costa Rica President Rodrigo Chaves Robles said, “I firmly believe this economic partnership will unlock a myriad of trade and investment opportunities.” This is the latest in a string of Cepa signings by the UAE and follows the conclusion of negotiations for a deal with Kenya in February. The UAE is focused on boosting its non-oil trade with countries around the world as it seeks to diversify its economy and attract foreign investment. It expects to exceed its initial target of signing twenty-six Cepas because of its pace of work and interest from other countries and aims to conclude another seven to eight new Cepa deals in 2024.

A special edition of its Future of Trade by Dubai Multi Commodities Centre focused on Web3, examining the key drivers of growth, innovation and digital decentralisation in a number of technology trends. It noted that the UAE, continuing its efforts to attract further investment through accommodative regulatory stances, had secured US$ 25 billion of crypto transactions in 2022. It explores the market outlook and opportunities for Web3 trends rooted in a blockchain-based digital infrastructure, including cryptocurrency, decentralised finance (DeFi), and the metaverse. The report assesses recent challenges in these sectors and forecasts a period of maturity, with recommendations for industry and regulators to nurture and fast-track industry growth in the coming years.

A study by Business Name Generator, covering fifty-two nations, ranks the UAE in third position for the most preferred global hub for entrepreneurs to launch business in 2024, after Hungary and the Netherlands. It takes just four days to legally establish a business in the UAE thanks to a business-friendly regulatory environment. Some of the drivers behind the country’s success include a reasonable cost of living (US$ 984, without rent) environment, its extremely competitive 9% corporate tax regime, (the second-lowest figure in the study), 5% VAT, WiFi speeds, GDP growth predictions, and happiness scores. According to start-up experts, the latest ranking reinforces the UAE’s reputation as a magnet for start-ups, offering an environment conducive to innovation and growth. There is no doubt that the location of a business is of prime importance that can have a significant impact on its success, affecting access to resources, market demand, and competition.”

The market size for the metaverse is set to rise to US$ 3.4 trillion by 2027, supported by road-tested use cases and the rapid advancements of AI. The global DeFi market is expected to grow from US$ 13.6 billion in 2022 to US$ 600 billion by 2032, driven by the demand for fast and ‘feeless’ financial services. Meanwhile, the crypto market appears set to stabilise after a period of turbulence, with 2023’s Bitcoin revival casting a spotlight on renewed appetite among industry and institutions for durable and value-added services.

Emirates Islamic has announced the successful conclusion of its debut US$ 500 million syndicated three-year Financing Facility – the first of its kind raised by a Shariah-compliant financial institution. Structured as a Commodity Murabaha term financing facility, in compliance with Shariah principles, the proceeds will be used for Shariah-compliant general corporate funding purposes. At the same time, it will strengthen EIB’s balance sheet by increasing its ability to support its clients as well as its own strategic growth ambitions. Farid Al Mulla, Chief Executive Officer of Emirates Islamic, said, “as a prominent local Islamic bank, Emirates Islamic remains committed to contributing to the UAE’s progress by spearheading innovations in the Islamic banking sector and creating innovative Shariah-compliant products and services that adhere to the highest standards of ethical banking.” Last year, the bank issued a three-year AED 1 billion (US$ 272 million) public Sukuk which was oversubscribed 2.5 times, highlighting the strength of the Dirham Sukuk market, and emphasising confidence in the local currency market from global Shariah-compliant investors.

Before this week’s diabolical and damaging weather, Standard & Poor’s Global Ratings Agency said increased demand would likely result in total revenue growth of Gulf insurance companies, driven by economic growth in the region and rising prices. One analyst expects the growth to be in the region of 5% – 15% this year, with Saudi insurance companies expected to be the fastest-growing in the region. Demand for insurance will benefit from ongoing investments in infrastructure projects, population growth, and regulatory initiatives, such as expanding mandatory insurance coverage. Insurance companies will benefit from inflation declining, specifically in vehicle insurance claims and non-life insurance activities. S&P sees a rise in mergers and capital increases this year, driven by robust competition and stricter regulations, along with on-going stable credit conditions, supported by strong capital margins, growth prospects, and sufficient profits.

In January, the World Bank had raised its 2024 forecast for the UAE’s real GDP growth to 3.7%, amended this week to 3.9% in 2024, with its 2025 forecast up 0.3% to 4.1%. For the GCC economies, the annual growths have been amended to 2.8% and 4.7%, with the main drivers being higher oil output, due to the phasing out of oil production cuts, and robust growth in the non-oil sector, linked to diversification efforts and reforms. GCC GDP per capita growth in 2024 is projected to be 1.0% a major improvement on the 0.9% decline in GDP per capita last year.

With Dubai’s Virtual Assets Regulatory Authority granting of a full virtual asset service provider licence to allow Binance, the global cryptocurrency exchange, to operate in the emirate, it will allow it to extend its current services beyond spot trading and fiat services and expand its services to retail investors. Last June, the exchange was granted the operational minimum viable product licence which allowed it to provide exchange and broker-dealer services in Dubai. The decision will be critical to Binance’s strategy of growing its global user base, as it expects to cross the two hundred million user mark “quite shortly”; this would ensure it the title of the world’s biggest crypto exchange by number of users, almost double Coinbase’s one hundred and eight million. The firm noted that “we’re seeing much greater institutional adoption and institutional money coming into this space … [on] much greater regulatory clarity and a lot more jurisdictions approving [digital asset] products that bring in new investors classes.”

Founded in 1979 as a joint venture with BICC cables, Ducab is jointly owned by the Investment Corporation of Dubai and Abu Dhabi’s Senaat, with group companies including DMB, a leading metals group providing high-quality copper and aluminium industrial products, Ducab-HV, offering turnkey high voltage cable system solutions, and AEI, one of the world’s most respected cable suppliers. The leading cable supplier has operations in seventy-five countries, after its recent strategic expansion into twenty new markets, and has a product portfolio, featuring 85k cable variants from five distinct families, reflecting the company’s reputation of offering a broad selection of high-quality options to meet demand, whilst maintaining stringent international standards. Over the past forty years, it has recorded over 5k successful global projects and partnerships. Exports account for 60% of Ducab’s production, catering to a wide range of industries, including specialised solutions for nuclear energy, marine/offshore, and oil/gas sectors. Ducab’s interests extend to the research and development of new and more efficient energy solutions, particularly in the renewable energy sector.

Dubai Investments has announced the distribution of a 12.5% 2023 cash dividend. This comes on the back of a 30% decline in profit to US$ 308 million; however, the 2023 profit was inflated by US$ 137 million for the one-off gain on disposal of controlling interest and fair value gain on retained investment in Emirates District Cooling LLC. Last year’s profits are higher mainly due to the sale of real estate properties, increase in rental income, higher fair valuation gain on investment properties, fair valuation gain on investments and gain on sale of investments.

After a week’s break – because of the Eid Al Fitr holiday – the DFM opened the week on Monday 15 April, 18 points (0.5%) lower the previous fortnight, and shed 69 points (1.6%) to close the trading week on 4,175 by Friday 19 April 2024. Emaar Properties, US$ 0.09 higher the previous fortnight, shed US$ 0.06, closing on US$ 2.26 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.65, US$ 4.78, US$ 1.57, and US$ 0.39 and closed on US$ 0.65, US$ 4.51, US$ 1.575 and US$ 0.38. On 19 April, trading was at 174 million shares, with a value of US$ 85 million, compared to 112 million shares, with a value of US$ 59 million, on 05 April 2024.   

By Friday, 19 April 2024, Brent, US$ 0.10 lighter (0.1%) the previous week, shed US$ 2.97 (3.3%) to close on US$ 87.77. Gold, US$ 491 (26.3%) higher the previous six weeks, gained US$ 58 (2.5%) to trade at US$ 2,414 on 19 April 2024.

As would be expected, oil prices dipped on Monday, following the Iranian weekend reprisal attack on Israel but still hovered around the US$ 90 a barrel level. Until there is greater clarity on the next move by Israel, prices will tend to move sidewards, with analysts saying Israel’s reaction to the attack would be key for global markets in the days ahead; its Defence Minister, Yoav Gallant, has said the confrontation with Iran is “not over yet”. In line with Brent, gold fell from Friday record highs of US$ 2,431 to US$ 2,333 by Monday.

Yet again, Tesla is asking shareholders to vote on its chief executive’s record-breaking pay of US$ 56.0 billion that was set in 2018; this had previously been rejected by a US judge in January who described it as “an unfathomable sum”. Board chair Robyn Denholm wrote in a letter included in the regulatory filing: “Elon has not been paid for any of his work for Tesla for the past six years… That strikes us, and the many stockholders from whom we already have heard, as fundamentally unfair.” The re-vote comes at a tricky time for the company which has seen the fewest deliveries of EVs since 2022, and at a time when plans were announced to cut more than 10% of its global workforce.

In a staff memo, Elon Musk announced a 10%+ cut in its global electric vehicle workforce of 14k, telling staff there was nothing he hated more, “but it must be done”, and “this will enable us to be lean, innovative and hungry for the next growth phase cycle.” There are reports that those sacked have been locked out of his emails. Tesla is set to report its quarterly earnings later this month which will include confirmation that there had been a decline in Q1 vehicle deliveries – its first in nearly four years and also below market expectations. Four drivers behind the disappointing results have been high interest rates, (having impacted on demand for its more expensive EVs), it has been slow to refresh its aging models, the global demand for EVs has slowed, and the fact that Chinese carmakers seem to be flooding the worldwide market, with inexpensive EVs.

Apple’s position as the world’s leading company for Global smartphone shipments did not last long; Q4 saw it superseding Samsung but with a 20.8% Q4 market share, the South Korean tech giant easily overtook Apple’s 17.3% in a market that grew 7.8%, to 289.4 million units, in the quarter. Xiaomi, one of China’s top smartphone makers,  came in third with  a market share of 14.1% over the period. In Q1, Samsung shipped sixty million of its newly released Galaxy S24, 8% higher compered to S23 sales a year earlier, with Apple’s 50.1 million iPhones, 9.6% lower than the return in Q1 2023. The US company posted a Q1 2.1% decline in smartphone shipments to China, (its third biggest market), partly down to Chinese companies and government agencies limiting employees’ use of Apple devices, a measure that mirrors US government restrictions on Chinese apps on security grounds. Q1 has not been kind to Apple which also lost the crown as the world’s most valuable company to Microsoft.

By the end of last week, S3 Partners estimated that short sellers betting against MicroStrategy had shed US$ 1.92 billion since March, highlighting the hit from a rally that has helped the stock outperform Bitcoin. (Short sellers sell borrowed shares and hope to buy them back at a lower price later, pocketing the difference). Over the same period, they have also lost US$ 594 million and US$ 106 million, betting against crypto exchange Coinbase and bitcoin miner, CleanSpark. Such firms have benefitted from the Securities and Exchange Commission’s approval of several spot bitcoin exchange-traded funds, bringing them to near mainstream category. By 31 December 2023, MicroStrategy held nearly 190k Bitcoins on its balance sheet and has posted it would continue increasing its exposure; last month, it sold convertible debt twice within a week to raise money to buy more Bitcoin. The SEC has yet to approve other similar products, like spot Ethereum ETFs, so the USP for MicroStrategy is that it gives investors, who may be unable to invest directly in Bitcoin or in ETFs, the chance to have exposure to Bitcoin who may be unable to invest directly in the cryptocurrency or in ETFs. Another positive is that the firm has been able to raise capital to purchase additional Bitcoin.

There are mumblings in London that Shell, the LSE’s largest market cap company, with its chief executive, Wael Sawan has indicated that he was exploring “other options” if the company’s valuation fails to improve by the summer of 2025, and that it could exercise an option to move its share listing to New York. He also noted that the London market was not performing as well as it should for Shell, and that similar energy companies, such as Chevron and Exxon Mobil, were having a better time of it in New York; Shell currently trades at eight times earnings in London, while its contemporaries, on the NYSE, trade at twelve times earnings. But in London, it sees its shares trading around record levels of US$ 36, (GBP 29), and annual profits of US$ 28 billion, whilst boosting Q4 dividends by 4%. The main driver behind this inter-exchange skew is that European fossil fuel energy giants have consistently traded at lower levels than their NY counterparts, but this gap has widened with Europe’s tougher investment rules on themselves regarding money and carbon emissions; this is becoming a major issue. Major European tech giants have reinvested profits into renewables at a faster rate than their US counterparts, much to the annoyance of those investors who were keen for big returns in a high oil-price environment.

The investment malaise afflicting London’s markets is hitting companies large and small. The list of delistings and firms shunning the bourse is growing longer than IPOs, with several companies having already moved over “The Pond”, including building materials group CRH going because it would “bring increased commercial, operational and acquisition opportunities” to the business and deliver “even higher levels of profitability, returns and cash” for shareholders; Tui has already delisted and moved entirely to Frankfurt’s  Deutsche Boerse last week with its market cap rising 2% on the day. Meanwhile, there are plans by Flutter, the owner of Paddy Power and Betfair, to de-list from the LSE continue at pace. For so many years, a London listing was a prerequisite for major miners – those glory days are long gone, with the latest departees being Glencore, which has just spun off its coal business to be listed in New York, and this week, the Australian hedge fund Tribeca urged its board to relocate the resource company’s primary listing to Sydney. Last year saw the biggest IPO in the US since 2021 – UK’s chip maker Arm Holdings decided to list on the NY Nasdaq not in London. Notwithstanding IPOs, with the number of leavers outpacing the number of new entrants on the London bourse – the outlook is not bright. The value of the nineteen initial public offerings on the LSE fell below US$ 1 billion, its lowest-ever level, equating the LSE’s share of the global IPO market was less than 1.0%. At the end of the last century, the London market accounted for up to 10% of the global total market cap – now, it is down to 4%. Last year, Apple’s stock market value was more than the top 100 companies in London (including Shell) put together; even if Shell were to move over, Shell would swap having the largest market cap in the UK to being outside the top thirty in the US.

Shares in Donald Trump’s social media company sank a further 14% in Monday’s trading, (to less than US$ 28 per share), with reports that Trump Media is eyeing plans to issue millions more shares. This latest news points to a step toward letting insiders, including Mr Trump, sell their holdings. Last month, the company debuted on the Nasdaq Stock Exchange when it flirted over the US$ 70 per share threshold. Trump Media said a potential 146.1 million shares could be sold, including 114.8 million shares owned by Mr Trump – these cannot be sold until September – whilst it also notified investors of plans to issue roughly 21.5 million additional shares in connection with warrants, which give the owner the right to shares at a certain price. If you think Donald Trump will return to the White House next January, then this one-trick pony will prove a fruitful investment.Its auditor has warned it is at risk of failure, after it reported less than US$ 5 million in sales and more than US$ 50 million in losses in 2023.

There are reports that Superdry is in the throes of finalising a formal restructuring plan which seems to point to steep rent cuts at most of its ninety-four retail outlets, with the scale of the proposed rent cuts being determined by each store’s financial performance, whilst suppliers may not be impacted as much. Landlords will have the option of terminating Superdry’s leases if they were dissatisfied with the terms of the deal. Earlier, it had been confirmed that talks about a takeover by its founder, Julian Dunkerton, (who has a stake of almost 30%), have been abandoned. The UK company has a market cap of under US$ 11 million – with shares trading, on Monday, at US$ 0.111.

Ajay Banga, who took over the helm of the World Bank last June,  has wasted no time in shaking up the global body, having reduced its average nineteen-month project approval time by about three months and would cut it by another three months by the end of H2 2025; he also has plans to improve the accountability of its 16k employees and attract private capital to projects. The former MasterCard CEO also wants to diversify to not only include expansion of its traditional development and anti-poverty mission but also to include fighting climate change and other global crises; this would require a major expansion of its lending capacity, which was $128.3 billion in the fiscal year ended 30 June 2023.. It has also adjusted its loan-to-equity ratio to unlock another US$ 40 billion of lending capacity over ten years, but this falls far short of the trillions of dollars needed annually to finance the global energy transition and climate mitigation. He said more steps were underway, including joint work with other multilateral development banks and credit ratings agencies to unlock the use of callable capital, the emergency capital pledged by governments but not paid in.

The IMF says that the forecasts it makes for growth the following year in most advanced economies, more often than not, have been within about 1.5 percentage points of what actually happens. That does not seem to be such a difficult exercise especially when dealing in a range of say 1.0% to 3.5%. It has downgraded its forecasts across Europe, with the UK’s 0.5% 2024 growth, the second weakest in the G& behind Germany; next year, growth is set to improve to 1.5%, with the UK among the top three best performers in the G7. However, the IMF said that interest rates in the UK will remain higher than other advanced nations, close to 4% until 2029, as UK also gets the mantle of having the highest inflation of any G7 economy this year and next.

Despite its continuing and worsening housing crisis, (as property investment fell 9.5%), China’s economy made a stronger-than-expected start to the year, growing 5.3% in Q1. However, Q1 sales growth slipped, with National Bureau of Statistics’ data posting a 3.1% decline. Last week, Fitch cut its outlook for China, citing increasing risks to the country’s finances as it faces economic challenges. In March, the annual gathering of China’s leaders confirmed that 2023 economic growth was at 5.2%; until recent years, it was a common sight to see Chinese annual growth with double digit numbers.

In January 2023, Rishi Sunak came up with his now infamous five pledges to the UK public and “I fully expect you to hold my government and I to account on delivering those goals.” The following is a brief summary of the latest results:

·       Halving Inflation by the end of 2023. Success. Inflation at the end of last year had fallen from 10.7% to 5.3%, (and currently at 3.1%)       

Growing the economy. Failure. Nobody actually publicly said what measures would be used to assess the result. One mentioned that it would be growth as long as the Q4 2023 result was bigger than that posted in Q3 then it would meet the PM’s pledge – however, the economy contracted 0.3% in Q4. Overall, the economy grew by only 0.1% in the whole of 2023. On 28 March 2024, Chancellor Jeremy Hunt was asked if the government had failed in its pledge to create growth. He said that the promise had been to halve inflation but that the prime minister: “then said we would grow the economy. I don’t think any of us were expecting the economy to actually

· Reducing debt. Failure. In December, the statistics regulator criticised the prime minister  for saying debt was falling when it was actually rising. Government debt, at the end of February, was 2.3% higher on the year to 97.1%, which the Office for National Statistics pointed out, “remains at levels last seen in the early 1960s”. However, his pledge was that debt would be forecast to come down in five years (2028-29) and whether this will occur is still problematic and would be reliant on public spending restraint.

·       Cutting NHS waiting lists. Failure. The PM had said “NHS waiting lists will fall and people will get the care they need more quickly,” but his pledge only impacts England since Scotland, Wales and Northern Ireland manage their own health systems. T of waits for non-emergency treatment in England was 7.5 million in February, 200k lower over the previous six months – but still about 600k higher than it was when Mr Sunak came to office. The prime minister was asked on 05 February 2024 whether his government had failed to achieve his pledge, Mr Sunak said: “Yes, we have.”

Stopping small boats. Part Failure. His pledge was to “stop the boats” which bring people across the English Channel, after 45.8k migrants crossed over from France that way in 2022. In the whole of 2023, 29.4k people were detected crossing the English Channel, which is down more than a third from the previous year. In Q1 2024, 5.4k people crossed the English Channel – a new record for arrivals between January and March. However, the original legislation, passed last July, was  blocked by the Supreme Court, with the new legislation, that passed through the House of Commons, still awaiting final approval by the vacillating Lords.

• Latest March figures from the RBA sees Australia’s headline unemployment rate increase by 0.1% on the month to 3.8%, with employment falling by 7k people and unemployment rising by 21k. However, for the fifth consecutive month, the ‘trend’ unemployment rate remained steady at 3.9% – an indicator that Australia’s labour market remains very tight, reflecting some underlying strength in the national economy. Some analysts see the labour market running “slightly hotter” than the RBA was forecasting a few months ago – and, that being the case, unemployment may have to increase faster in coming months for the RBA to meet its inflation target. The treble whammy of labour market tightness, high inflation and on-going cost-of-living pressures is bad news for many Australian businesses and the country’s economy. An illustration that the labour market has become increasingly competitive comes from Seek that indicates that “applicants per job ad are up by 67.7% over the year. Indeed, applications per job ad are a little over 50% higher than pre-pandemic levels.

Yesterday, the Australian Federal Police arrested five Australians, who are among thirty-seven individuals who have been arrested in relation to an alleged massive global phishing scam which involved 10k global cybercriminals who used the platform LabHost to con victims into providing their personal information. The AFP estimate that there were 94k Australians who fell for the scam. Police confirmed that “LabHost was marketed as a one-stop-shop for phishing,” and impersonated one hundred and seventy fraudulent websites, such as “reputable banks, government entities and other major organisations. Once armed with various personal details, including one-time pins, usernames, passwords, security questions and pass phrases, they used the information to access legitimate enterprises, such as financial institutions, where they could steal funds from victims’ bank accounts.” The scam originated in Canada, to initially target North America, but soon spread to the UK and Eire before going global. Police said Australian criminals were among its three top user countries.

As part of the deal offered to users, cybercriminals would sign up to the website at the cost of US$ 175 per month and would in return be given phishing kits, which included “the infrastructure to host phishing websites, email and text content generation and campaign overview services, enabling them to effectively exploit their victims”. The authorities have warned that “in addition to financial losses, victims of phishing attacks are subject to ongoing security risks and criminal offending, including identity takeovers, extortion and blackmail.”

You can tell it is an election year when the US President calls for a tripling of tariffs on some steel and aluminium from China; in November, he will be facing Donald Trump, known for his tough trade stance against that country. Joe Biden told a union meeting that Chinese prices were “unfairly low” due to the government subsidising companies “who don’t need to worry about making a profit”, and that tens of thousands of steelworker jobs had been lost in the early 2000s because of Chinese imports. China continues to deny claims of dumping steel and aluminium overseas, with its US embassy saying said it “firmly opposes” the measures proposed by Mr Biden.

Since last summer, the Federal Reserve has maintained rates between 5.25% to 5.50%, and on Tuesday, its Chairman, Jerome Powell, confirmed it is now considering the timing of cutting interest rates, indicating that he expects recent data to delay the timing. He added that “the recent data have clearly not given us greater confidence and instead indicate that it’s likely to take longer than expected to achieve that confidence.” It seems that if higher inflation does persist, the current level of restriction could continue, but it does seem probable that there will be at least one cut in Q3. However, another member of the Fed, Raphael Bostic, has commented that inflation is only coming down “very, very slowly” and “let’s not be in a hurry” on interest rate cuts; he added that US interest rates will have to be kept at a “restrictive level” and might only ease “at the end of 2024”.

It is somewhat ironic that the IMF has forecast Russia’s economy will grow faster – at 3.2% – than all of the world’s advanced economies, including the US, in 2024, mainly because oil exports have “held steady” and government spending has “remained high” contributing to growth; it  will  be lower next year but still higher than the IMF’s January’s expectation of 1.8% and all this  despite Putin and his cohorts being sanctioned over its invasion of Ukraine. Other factors in play for Russia’s gain is that investments from corporate and state-owned enterprises and “robustness in private consumption.” Russia is not only the second leading global oil producer, at over ten million bpd, but is one of the world’s biggest oil exporters and in February, the BBC revealed millions of barrels of fuel made from Russian oil were still being imported to the UK, despite sanctions.

Not before time, the government has decided to act to safeguard the game of football in the UK. The Department for Culture, Media and Sport is to initiate a new football watchdog which will have three primary objectives – promoting clubs’ financial sustainability, developing the financial resilience of English football as a whole, and safeguarding the heritage of clubs, including their badges and traditional playing colours, (whatever that means). It is expected that the search for the inaugural chair of this body will commence shortly, and the successful incumbent is expected to be paid a six-figure salary, for being responsible for overseeing a landmark period in the English game. Its establishment, through primary legislation, comes amid an ongoing impasse between the EPL and EFL about future financial distributions. The Independent Football Regulator, with growing hints of opposition to its establishment from the EPL, will also have the power to prevent clubs from joining breakaway competitions, inspired by the putative efforts of English football’s big six clubs to join a European Super League.

President HH Sheikh Mohamed has ordered a study of the country’s infrastructure, following unprecedented severe storms, that hit on Tuesday and continued for two days. He directed that the necessary support be provided to all families impacted by the severe weather, whilst emphasising that the safety of the people is their top priority.  Furthermore, Dubai’s Crown Prince, Sheikh Hamdan bin Mohammed, said that government officials had already met to “prepare comprehensive plans in response to natural crises’ such as the unexpected current weather conditions”, adding “that updates were closely monitored, and highlighted Dubai’s resilience. We continuously adapt, improve, and progress for the sake of our people’s safety”. Dubai’s Ruler, Sheikh Mohammed bin Rashid also issued a statement appreciating the efforts of the “dedicated teams of citizens and residents.”

In the worst weather conditions in seventy-five years, it appears that several areas were impacted more than others, with flooded roads adding to the problem. Social media has been full of comments and accounts of the damage wreaked by the devastating storm. The government had issued warnings prior to the event and had closed schools and advised people to stay indoors. As a result, the government has encouraged private sector entities to allow their employees to work from home. Some residents were unable to go out in their vehicles also because of submerged roads.

Public facilities, such as shopping malls, government offices and sports clubs did not escape the storm, with many flooded. DXB seems to have been badly affected, with a total of 1,244 flights being cancelled, and forty-one diverted to Dubai World Central (DWC) until Thursday morning due to runway flooding. By yesterday, the world’s busiest international airport resumed partial operations out of Terminal 1, with authorities posting that “we are collaborating with strategic partners and local authorities to mitigate the impact of this crisis and expedite the recovery of normal operations within the next twenty-four hours”; it added that flights continue to be delayed and disrupted. Passengers have been advised only to come to the airport if they have a confirmed flight booking.

It is too early to discuss the cost to Dubai’s economy, but it could run into billions of dollars when the damage to public infrastructure and private residences are taken into account, along with lost working time, especially coming after following the previous week’s Eid Al Fitr break. However, there is no doubt that Dubai is probably the best place in the world where the government will ensure that normality will return in no time at all and proactive measures taken to see that Dubai returns in a much better position than it was on 26 April 2024, the day my granddaughter was born in Dubai. She must have woken up at the hospital wondering What’s Going On?

Cruel Summer!                                                                               12 April 2024

With RERA’s March amendment to its rental index, that allowed property owners to increase rents to bring them in line with the market value, many landlords in Dubai have started increasing rents upon renewal of their tenancy contracts. It is noted that under the amended rules, landlords can only increase the rent at the time of tenancy renewal, so for many, the impact will not be felt until towards the end of the year. The main “casualties” will be those tenants who have been staying in their property for more than two-years. Most of that sector had benefitted at the time because the then RERA guidelines had heavily restricted how much landlords were allowed to increase the rent, so it was more economical to stay in their existing unit rather than paying the much higher market rate if they had moved.

Starting this month, landlords are now required to attach a judgement or legal order to apply for the rent evaluation service. However, landlords must notify tenants of any rent increase, via registered email, ninety days before the current lease expires. There has been a sharp rise in landlords seeking rental valuations to increase the rent over the past year, with the rental valuation superseding the rental index. After years of low or no increases, the latest index revision will permit many landlords to increase rents by a larger percentage than before which in turn will close the gap with market prices. This in turn may have a double whammy on the sector – an increasing number of current tenants either in the market to rent a new property or make the decision to buy. Since 2021, the rental market has exploded but although now still in positive territory, the rate will slow, as rising new housing handovers enter the market in Q4 and onwards, especially in outlying areas where costs are cheaper.

This “new” rent increases are estimated to be in the region of half the difference between the current rent and the calculated market value:

• Less than 10% below market value: No increase allowed
• 11% to 20% below market value: 5% increase permitted
• 21% to 30% below market value: 10% increase permitted
• 31% to 40% below market value: 15% increase permitted
• 41% or more below market value: 20% increase permitted

The current owners, Investment Corporation of Dubai and Brookfield Corporation, of ICD Brookfield Place have agreed to sell a 49% stake in the fifty-three storey tower to Abu Dhabi-based global alternative investment management company Lunate, through one of its funds, and Saudi Arabia’s Olayan Financing Company; each of the two new companies will have a 24.5% stake, whilst both sellers will retain 25.5% shares. No financial details of the agreement were released but it is the largest institutional third-party single asset real estate transaction in the UAE and one of the biggest commercial real estate transactions globally since 2020.  The property has 92k sq mt of office space, about 15k sq mt of retail space and 13k sq mt of green space. Since its September 2020 opening, the property “has become a major landmark and the most coveted address in Dubai for businesses and leisure alike”, with Murtaza Hussain, managing partner at Lunate, noting that its investment in ICD Brookfield Place is aligned with its “long-term capital strategy to invest in premium assets, delivering attractive yields and capital appreciation”. Brookfield Properties will continue to manage the property, which is more than 98% leased at “premium” rents to global financial institutions, law firms and MNCs. 

On Monday, HH Sheikh Mohammed bin Rashid issued a decree to establish  a new body to resolve jurisdictional conflicts between Dubai courts, (including the Court of Cassation, the Court of Appeal and the Court of First Instance, and any other court that will be set up as part of the judicial authority in Dubai), and the DIFC, which will help streamline the justice system and enhance the efficiency of the judicial process; it will replace a previous tribunal with a new authority having a broader mandate. A jurisdictional conflict may arise when a company based in DIFC has a dispute with a firm based on the mainland, and there are questions over which court should handle the case. The president of the Court of Cassation will head the new body with the deputy chief justice of DIFC Courts serving as deputy chairman; other members of the authority include the secretary general of the Dubai Judicial Council, the president of the Court of Appeal, the president of the Court of First Instance, and two DIFC Courts judges, selected by the chief justice of DIFC Courts. The authority will determine the competent court for disputes, specifying enforceable judgments in case of conflicts, and implementing tasks assigned by the Ruler of Dubai or the chairman of the Dubai Judicial Council, with the authority’s decisions being final and not subject to appeal in any form.

Ahead of Eid Al Fitr, President HH Sheikh Mohamed bin Zayed Al Nahyan issued a directive to settle the outstanding financial dues of students enrolled in UAE government schools, amounting to a total cost of over US$ 42 million; this will cover all outstanding fees for the academic year 2023-2024. This move not only enables students to focus more on their studies but also eases the financial obligations on both students and their families. In collaboration with Emirates Schools Establishment, President HH Sheikh Mohamed highlighted the importance of education by extending support to students and enhancing their motivation to succeed in their studies.

Last year, National Bonds distributed US$ 790 million in profit pay-outs and prizes, with residents investing US$ 272k (AED 1 million) or more in saving bonds receiving 5.84% returns, while those who had investments between US$ 95k and US$ 272k, (AED 350k and AED 1 million), earning 4.22%. NB also reported an annual 215% increase in new savers in 2023. On 27 March, National Bonds launched the “Eibor Plus” scheme, with a minimum investment of US$ 7k, (AED 25k), which tracks the Emirates Interbank Offered Rate, providing investors with an expected return of 0.5% above the benchmark’s performance on an annual basis. Sector wise, its portfolio is split between fixed income assets, real estate, money markets, listed equities and alternatives – 43%, 26%, 19%, 11% and 1% – and location-wise investments emanate from UAE, international and GCC – 55%, 33% and 12%.

After being closed for the previous week because of the Eid Al Fitr holiday, the DFM will open next week on Monday 15 April 18 points (0.4%) lower the previous three weeks. Emaar Properties, US$ 0.09 higher the previous fortnight, will open on US$ 2.32. DEWA, Emirates NBD, DIB and DFM will open on US$ 0.65, US$ 4.78, US$ 1.57 and US$ 0.39. On 05 April, trading was at 112 million shares, with a value of US$ 59 million.

In the week’s trading prior to the Eid Al Fitr holiday, UAE stock markets attracted liquidity of nearly US$ 1.77 billion, driven mainly by the real estate, financial and banking sectors. Abu Dhabi accounted for US$ 1.25 billion (70.6%) and Dubai US$ 0.52 billion (29.4%) of the total weekly trades, with about 113.6k transactions as 2.3 billion shares changing hands. By the end of the week on Friday 05 April, the market caps for Abu Dhabi and the DFM reached US$ 774.1 billion, (79.7%) and US$ 197.3 billion, (20.3%), totalling US$ 971.4 billion. Over the week, the three most active trading companies were Emaar Properties, Union Properties and Emaar Developments – with trades totalling US$ 117 million, US$ 54 million and US$ 37 million. The three highest weekly increases in market caps were National General Insurance, (14.6%), Ethmar International Holding, (7.4%), and Union Properties (6.4%).

By Friday, 12 April 2024, Brent, US$ 8.74 higher (10.2%) the previous four weeks, shed US$ 0.10 (0.1%) to close on US$ 90.74. Gold, US$ 427 (22.9%) higher the previous six weeks, gained US$ 64 (2.7%) to trade at US$ 2,356 on 12 April 2024.

Yesterday, OPEC stuck to its forecast for relatively strong growth in global oil demand this year, with world oil demand set to rise by 2.25 million bpd in 2024 and by 1.85 million bpd next year. Last week, OPEC and OPEC+ agreed to keep oil output cuts in place until the end of June, with its latest report noting that “despite some downside risks, the continuation of the momentum seen in the beginning of the year could result in further upside potential for global economic growth in 2024”. It expects that Q2 fuel demand will rise by 600k bpd, year on year, gasoline by 400k bpd and diesel by 200k bpd. There is a wider than usual split between forecasters on the strength of oil demand growth in 2024, with OPEC, energy trader Vitol, the IEA and the US government energy forecaster posting daily figures of 2.25 million bpd, 1.9 million bpd, 1.33 million bpd and 950k bpd respectively.

Last month, global food prices headed north for the first time in seven months, by 1.1% to 118.3 points, but down 7.7% on the year. The Food and Agriculture Organisation posted that the main drivers were higher costs of vegetable oils, 8.0% higher to 130.6 points on the year, and dairy products rising for the sixth consecutive month – but still 8.2% lower on the year. Although March meat prices rose 1.7%, there was still a 1.5% decline from March 2023. The FAO noted that global poultry prices rose, underpinned by “continued steady import demand from leading importing countries, despite ample supplies mostly sustained by reduced avian influenza outbreaks in major producing countries”. Although March prices of bovine meat continued to nudge higher, mainly due to higher purchases by leading importing countries, ovine meat prices dipped, attributable to a surge in supplies exceeding seasonal levels, especially from Australia.

The global body has raised its 2023/24 forecast for world cereal production to 2,841 million tonnes, (1.3% higher on the year), with year-end cereal stock, up 2.3%, at 894 million tonnes. World trade in cereals is forecast to rise 1.7% to 485 million tonnes in 2023/24, whilst trade in coarse grains is expected to expand from 2022/23, with wheat and rice trade likely to contract. 2024 wheat production is likely to come in 1.0% higher in the year at 796 million tonnes. Harvesting for coarse grain crops has already started in the southern hemisphere and although Argentina’s output is expected to rebound, after the drought-impacted outturn of 2023, smaller outputs are expected in Brazil and across Southern Africa. The sowing in the northern hemisphere will begin shortly.

February cereal prices declined 2.6% for the third consecutive month, whilst posting its biggest annual decline of 20.0%, driven by sustained export competition among the EU, the Russian Federation and the US, enhanced supplies, cancelled wheat purchases by China (from both Australia and the US) and favourable crop prospects for the 2024 harvest in the Russian Federation and the US. Because of higher buying interest, and supply issues in Ukraine, maize prices inched higher.

Although on the year, sugar prices were 4.8% higher, (being the only commodity to post annual increases), they have been heading lower in 2024, driven by the upward production forecast in India and the improved pace of harvest in Thailand. Brazil, the other country in the sugar trifecta, was negatively impacted by prolonged dry weather, that “continued to exacerbate seasonal trends and limited the price decline”. Furthermore, higher international crude oil prices helped contain the decrease in sugar prices.

Having disclosed that world trade volumes unexpectedly declined by 1.2% in 2023, the WTO expects a rebound this year, to 2.6%, (and 2.7% in 2025), with the caveat that this could be derailed by regional conflicts, geopolitical tensions and economic policy uncertainty. Last year’s negative results were down “mainly due to the worse-than-expected performance of Europe,” with lingering high energy prices and inflation driving down demand for manufactured goods. In Q4, the eurozone economy stagnated, with Germany’s economy contracting by 0.3%. However, as inflation continues to decline – albeit at a much slower rate than initially expected – the world body expects merchandise trade volumes to increase by 2.6% in 2024, and by 3.3% next year. The WTO said trade developments on the services side were far more upbeat last year, growing by 9.0%, with major contributions from the upcoming the Olympic Games in Paris and the European football championships in Germany.

Mainly owing to higher costs for fuel, housing, dining out and clothing, March US consumer prices rose faster than expected, up 0.3% on the month at 3.5% – a sure indicator that the fight to slow inflation has stalled, and the distinct possibility that the Federal Reserve will have to maintain rates at their current level, 5.25% – 5.50%, or even push them higher – at least for this year. The logic behind this is that high interest rates make it more expensive to borrow for business expansions and other spending that results in slowing the economy and stabilising prices. Economic data, including strong jobs creation figures last week, has raised doubts about how soon those cuts might come, with rates having fallen from their 2022 high of 9.1%. Even Jamie Dimon, the head of JPMorgan Chase, has warned US interest rates could climb to 8% because of “persistent inflationary pressures”.

Citing risks to public finances, and following a similar move by peer Moody’s, Fitch has cut its outlook on China’s sovereign credit rating to negative. This  comes as Beijing ratchets up efforts to spur a feeble post-Covid recovery with fiscal and monetary support, with the credit rating agency  noting “Fitch’s outlook revision reflects the more challenging situation in China’s public finance regarding the double whammy of decelerating growth and more debt,” and “this does not mean that China will default any time soon, but it is possible to see credit polarization in some LGFVs especially as provincial governments see weaker fiscal health.” It noted that the country’s central and local government debt is set to rise to 61.3% of GDP this year from 56.1% in 2023, and 38.5% in 2019. It also expects that the country’s general government deficit – which covers infrastructure and other official fiscal activity outside the headline budget – to rise 1.3% to 7.1% of GDP. Its struggling property sector has impacted negatively on the general economy and its downturn, starting in 2021, has resulted in local governments’ revenue plunging and pushing debt levels to unsustainable levels. Fitch forecast China’s economic growth would slow 0.7% to 4.5% this year – almost the same as the IMF’s 4.6%.

InfluenceMap, a UK non-for-profit think tank, reports that most fossil fuel companies have produced more emissions since the 2015 Paris Agreement was signed, and that 75% of the fossil fuel and cement emissions since then have come from just fifty-seven producers, with 14.7% emanating from ten energy giants, as listed below. The following four Australian companies are included in the database – BHP, Woodside, Santos and Whitehaven Coal – with three of them posting increased emissions since 2016, as BHP had a “significant” decrease in emissions. Overall, China’s national coal production has been the biggest single source of pollution, accounting for 14% of global historical emissions, with the former Soviet Union coming in second. The agency hopes that the released data will assist in holding companies to account and assist in climate litigation. Indeed, the database was cited in a recent case in which a Belgian farmer argued that an oil and gas company was partly responsible for damage to his farm from extreme weather. Academics are also using the data that allows them to quantify the contribution that the emissions by these producers have made to, inter alia, sea level rise, forest fire risk etc. The report traces emissions as far back as the Industrial Revolution, when humans began burning fossil fuels and emitting increasing amounts of carbon into the atmosphere. Interestingly, the Paris Agreement also marked a change in coal emissions; while investor-owned coal companies have reduced their output since 2015, coal emissions from state-owned companies have increased.

	Total emissions (MtCO2e)	%age of global CO2 emissions
Chevron	57,898	3.0%
ExxonMobil	55,105	2.8%
BP	42,530	2.2%
Shell	40,674	2.1%
ConocoPhillips	20,222	1.0%
Peabody Coal Group	17,735	0.9%
TotalEnergies	17,584	0.9%
Occidental Petroleum	12,907	0.7%
BHP	11,042	0.6%
CONSOL Energy	1,709	0.5%

   Carbon Majors

In Q1, China posted car production 6.4% higher on the year to 6.6 million vehicles, and sales up 10.6% to 6.72 million units, as both passenger vehicles and commercial vehicles registered robust results. The market penetration of new-energy vehicles remained at above 30%, whereas car exports surged 33.2% to 1.32 million over the period. Being a growing pillar industry for the national economy, it continues to play an important role in stabilising growth and shoring up employment. Wang Wentao, Minister of Commerce of China, has stressed that Chinese electric vehicle manufacturers’ rapid development is a result of constant tech innovations, well-established supply chain system and full market competition, not subsidies.

A long-standing and acrimonious dispute between Disney chief executive, Bob Iger, and billionaire activist investor, Nelson Peltz, has finally come to an end. The former is seventy-one and the other is eighty-one and perhaps they could have both found a happier retirement. There is no doubt that the century old Disney empire is in a financial mess, partly due to uncertainty over the future of its legacy television businesses, several movie flops and an unprofitable streaming service, struggling in a highly competitive sector.

Iger was named president of Disney in 2000 and succeeded Michael Eisner as CEO in 2005, until his contract expired in 2020, and was followed by Bob Chapek; he then served as executive chairman until his retirement from the company on 31 December 2021. However, after his exit from the company, Iger served, at the company’s request, with a US$ 2.0 million package, as an advisor to his successor. However, at the request of Disney’s board of directors, Iger returned to Disney as CEO on 20 November 2022, following the unscheduled and immediate dismissal of Chapek. Last July, Disney renewed Iger’s contract until 2026.

Peltz had been highly critical of the direction Disney was taking to try and return to its glory days and had been buying shares in the entertainment giant so he could launch two separate bids for two seats on the board. He opined that Disney had lost its magic and could be making more money from its content and services, and that he was the right man to restore the ‘Mouse House’ to its former glory. No surprise to see that Iger had other ideas and would do anything to keep the billionaire out, with Disney reportedly investing US$ 40 million in one of the most expensive proxy battles in history, to stop Peltz from securing a seat on the board.

Events came to an end last week at Disney’s AGM, where shareholders chose to re-elect all twelve of the company-backed board members. No doubt that Iger has won this battle, but it is highly unlikely that Peltz will leave this alone and could still obtain the keys to the Magic Kingdom. He has been involved in major skirmishes, (and been successful), in the past including Heinz, Unilever and Dupont.

There are reports that Tesla has cancelled the long-promised inexpensive car that investors have been counting on to drive its growth into a mass-market automaker, but that it will continue to develop self-driving robotaxis on the same small-vehicle platform. This will be a blow for Elon Musk whose 2006 masterplan called for manufacturing luxury models first, then using the profits to finance a “low-cost family car.” Even in January this year, he indicated that the EV maker planned to start production of the affordable model at its Texas factory in H2 2025. Tesla’s cheapest current model, the Model 3 sedan, retails in the US for US$ 39k, whilst its now reportedly defunct entry level Model 2 was to retail in the region of US$ 25k. In comparison, it seems that Chinese car makers are looking to produce EVs that could retail at prices as low as US$ 10k – no wonder Tesla shares fell 5% on the news.

In an ongoing patent dispute with medical-monitoring technology company Masimo, Apple has requested a US appeals court to overturn a US trade tribunal’s decision to ban imports of some Apple Watches; the tech giant argued that the US International Trade Commission’s decision was based on a “series of substantively defective patent rulings” and that Masimo failed to show it had invested in making competing US products that would justify the order. Masimo had accused Apple of hiring away its employees and stealing its pulse oximetry technology after discussing a potential collaboration, with it convincing the ITC to block imports of Apple’s latest-edition Series 9 and Ultra 2 smartwatches after finding that their technology for reading blood-oxygen levels infringed Masimo’s patents.

A deal will see Grupo Financiero Galicia, a major private financial group, acquire HSBC’s business in Argentina twenty-seven years after the banking giant entered the country, when it took full control of the local Banco Roberts and renamed it; the bank has a payroll of 3.1k and over one hundred branches. The agreement saw a sales price of US$ 550 million that will see HSBC losing US$ 1.0 billion in the process, after years of battling with the country’s unstable exchange rate, (currently, US$ 1 equates to 860 pesos, five years ago only 43 pesos), and inflation, which in March was at 276%. Over the next twelve months, the business will also recognise US$ 4.9 billion in losses from historical currency translation reserves which had been counted in pesos – not dollars.

Some local expats may be disappointed to hear that Spain is planning to scrap a “golden visa” scheme that grants residency rights to foreigners who make investments of at least US$ 543k (eur 500k), without taking out a mortgage, in real estate, with Spanish Prime Minister Pedro Sanchez noting this move would help make access to affordable housing “a right instead of a speculative business”. From the start of the golden visa scheme in 2013 to November 2022, Spain issued almost 5k permits. Chinese investors top the list followed by Russians who invested more than US$ 3.69 billion, according to a 2023 Transparency International report. Portugal has recently revamped its own “golden visa” scheme and excluded real estate investment to tackle its housing crisis. The UN estimated in 2020 that 303k UK nationals lived in Spain, and the scheme allowed those with holiday homes in Spain to circumvent rules limiting non-EU citizens to a ninety-day stay in EU countries without needing a visa.

In Vietnam, Truong My Lan, chair of real estate company Van Thinh Phat, has been sentenced to death after being found guilty of embezzling US$ 12.5 billion – equating to almost 3% of the country’s 2022 GDP – in the country’s largest-ever financial fraud case. The court also ordered the sixty-seven-year-old tycoon to pay almost the entire US$ 27 billion damages sum in compensation. This could be seen as a major victory for the leader of the ruling Communist Party, Nguyen Phu Trong, who has pledged for years to stamp out corruption.

A further 277k Americans will benefit from President Joe Biden’s largesse, as he announces that he is cancelling US$ 7.4 million in student debt. The beneficiaries will be:

• 206.8k borrowers receiving US$ 3.6 billion, enrolled in the government’s Saving on a Valuable Education (Save) repayment plan
• 65.8k borrowers receiving US$ 3.5 billion through income-driven repayment plans
• 4.6k borrowers receiving US$ 300 million through fixes to Public Service Loan Forgiveness

To date, the Biden-Harris Administration has cancelled US$ 153 billion in debt for 4.3 million people. Last year, the US Supreme Court rejected President Biden’s initial plan to wipe away US$ 430 billion in student debt, completely erasing the outstanding balances of about twenty million people.

US Senator Sherrod Brown, the chair of the Senate Banking Committee, wrote to President Joe Biden noting that “Chinese electric vehicles are an existential threat to the American auto industry”, whilst urging him to ban imports of Chinese-made electric cars to the country; he added that “we cannot allow China to bring its government-backed cheating to the American auto industry”. This follows a White House announcement in February that it was opening an investigation into whether Chinese cars pose a national security risk, with the President noting that China’s policies “could flood our market with its vehicles, posing risks to our national security” and that he would “not let that happen on my watch.” There are also concerns that the technology in Chinese-made cars could “collect large amounts of sensitive data on their drivers and passengers”, warning cars that are connected to the internet “regularly use their cameras and sensors to record detailed information on US infrastructure; interact directly with critical infrastructure; and can be piloted or disabled remotely”. In 2023, both bilateral exports and imports headed south – by 4.0% to US$ 148 billion and over 20% to US$ 427 billion.

Rather surprisingly, state-owned China Construction Bank (Asia) has filed a US$ 202 million petition against Shimao, one of China’s major developers; as did several other peers, Shanghai-based Shimao defaulted on offshore bonds in 2022, so the bank is claiming that it should repay the loans. Despite Shimao indicating that it would “vigorously” oppose the lawsuit, its shares, which have lost a third of their value YTD, fell by more than 15% to hit an all-time low during Monday’s trading. Last month, it laid out detailed plans to restructure its debts. This latest case follows Evergrande, US$ 300 billion in debt, being ordered to liquidate by a Hong Kong court, and property developer Country Garden also defaulting on its overseas debt last year and facing a winding-up petition. The industry has yet to recover from a 2021 government move to curb the amount big developers could borrow. As the sector accounts for over a third of the country’s economy, the negative impact has been felt throughout the country and on the global stage.

Employers in the US added more than 303k jobs last month – the biggest gain in almost a year – as the boom in the world’s largest economy continued, with economists hopelessly wrong again with their monthly projections, this time expecting gains of 200k. The jobless rate fell to 3.8%, as most sectors, including health care, construction and the government added roles, with the average hourly pay was 4.1% higher on the year; an influx of more than three million immigrants last year may have helped pay rates to remain flat so as to keep a lid on wages, allowing the jobs boom to proceed without reigniting inflation. However, these figures may convince the Federal Reserve to think twice about reducing rates, currently at 5.25%-5.50% – in the near-term. Economics 101 points to keeping rates high, (and consequent high borrowing costs), may lead to a marked economic slowdown. There is no doubt that because of the strong job growth, the Fed will have its work cut out to return inflation to its 2.0% target.

A sign that the US still has a tight labour market was gleaned from the latest US Labor Department figures, for the week ending 06 April, that showed first-time applications for unemployment benefits dipped 11k to 211k more than expected last week. Although figures could be skewed somewhat, because of Easter and spring school holidays, they reflect that the labour market still remained in a healthy state. Job growth accelerated in March, while the monthly unemployment rate dipped 0.1% to 3.8 %; the number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 28k to 1.817 million during the week ending 30 March. Even though hiring growth is slowing, net payroll growth remains upbeat, partly attributable to a reduced level of layoffs throughout the economy.

Despite wet weather impacting on the construction sector, (with output falling by 1.9%), the UK economy grew 0.1% in February, boosted by production, (rising by 1.1%, compared to a fall of 0.3% in January), and manufacturing in areas such as the car industry. Figures like these may point to a green shoot recovery for the embattled UK economy. The Office for National Statistics noted that the economy grew, on a quarterly basis, for the first time since last summer, and upgraded January’s growth by 0.1% to 0.3%. Growth is likely to have been boosted by cuts in National Insurance and slowing price rises, meaning that businesses and households will have more confidence in their finances and therefore spending.

In Australia, comparison website Finder says the expansion of Qantas’ frequent flyer program is “a positive move”, with the airline promoting twenty million extra seats that will make it easier for the scheme’s members to book a flight when using their points. As with many other international frequent flying, it used to be relatively easy to earn points but extremely difficult to book the required seats. The website noted that “Qantas were hoping customers would instead use their points on hotels and buying goods from the Qantas site, both of which offer far lower value”, and that “what Qantas have done here is multiply the number of rewards seats available by five, with the drawback being that the new seats cost a higher number of points – from 2 to 3 times the usual Classic Rewards cost”.

It may surprise Australian readers that a country with a population of over twenty-six million, its Qantas Frequent Flyer and Velocity by Virgin Australia programs have more than fourteen million and eleven million members respectively. A lot has changed in the world since their introduction and now you do not even have to fly to participate in such schemes. There are three main players in the sector – the airline involved, its passengers and financial institutions offering branded credit cards. Who gains the most from them is debateable.

According to Qantas’ 2023 H1 reports, loyalty programs brought in US$ 660 million in revenue (more than double the 2019 revenue) and US$ 145 million in operating profit, with Velocity posting US$ 217 million and US$ 51 million. Furthermore, the carriers have the added advantage of not only creating the point system in the first place, but they decide the number of points required to pay for flights or upgrades – and can amend accordingly, by increasing the number of points required to take a flight, (or to buy a particular product). They can be sold on for money to the banks, (at zero cost until the points are redeemed, if ever), who then charge customers annual credit card fees to access these co-branded cards, which accumulate points and make further profit on every transaction. Then there are the consumers who need to consider two aspects of joining a loyalty programme – the best ways to earn the points and then to redeem them. If using a points-earning credit card, then the total balance should be paid off each and every month – otherwise the interest charged will negate any benefit, and additionally use the card for all your transactions. Before redeeming points, they should “know the programs well to maximise the earning opportunities, but also know the best ways to redeem your points”; in most cases, using points on flights is usually better value rather redeeming those points for products. The three main aims of any loyalty card are to gather data and then monetise that data, keep customers coming back, (the cost to maintain an existing customer is far less than recruiting a new one), and boost brand advocacy.

Another week with Boeing facing a new crisis after engineer Sam Salehpour blew the whistle on the plane maker, claiming safety concerns over the manufacturing of some of its 787 and 777 planes to US regulators. He claimed he was “threatened with termination” after raising concerns that Boeing were taking short cuts in its construction process; the plane maker said the claims were “inaccurate”. Shares in the plane manufacturer sank almost 2% on Tuesday, after the Federal Aviation Administration said it was investigating the claims, and the company reported it delivered just eighty-three planes to customers in the first three months of the year – the smallest number since 2021.

Although the FAA has imposed a monthly production cap of thirty-eight Boeing 737 MAX jetliners, it seems that the monthly output rate is fluctuating well below this level and in late March fell as low as single digits; Cirium Ascend, said Boeing flew thirteen MAXs in March, following eleven in February, with the monthly rate having peaked around thirty-eight a month in mid-2023. (Airbus, by contrast, flew an average of forty-six a month of its competing A320neos in Q1).This comes at a time when regulators are stepping up factory checks and workers slow the assembly line outside Seattle to complete outstanding work. Traditionally, production and deliveries went hand in hand, but the grounding of the MAX in 2019 and 2020 and disruption from the pandemic created a stockpile of surplus jets that mean it is harder now to glean the production rate from deliveries. Airbus has its own supply constraints and is producing around fifty A320neo-family jets a month, below the fifty-eight originally targeted early this year, as it faces ongoing shortages of maintenance capacity for some engines, leaving jets idle for months once in service.

Travel data firm OAG point to the fact that the global airline industry is facing a summer squeeze, with travel demand – at 4.7 billion – expected to surpass 4.5 billion pre-pandemic levels. The main reason seems to be the decline in new aircraft deliveries because of production problems, listed above, with the end result that some carriers are being forced to trim their schedules to cope with the lack of available planes, as they will receive 19% fewer aircraft than they initially expected. To ameliorate the problem, air carriers are spending billions on repairs to keep flying older, less fuel-efficient jets, and paying a premium to secure aircraft from lessors. Because of the supply/demand disequilibrium, there is every chance that some fares will be higher and that there is no chance that IATA’s forecast for a 9.0% annual growth in global airline capacity this year will now occur.

One beneficiary of this aviation mess is the aircraft leasing sector.  Data from Cirium Ascend Consultancy shows that lease rates for new Airbus A320-200neo and Boeing 737-8 MAX aircraft have hit US$ 400k per month, the highest since mid-2008, with airlines spending 30% more on aircraft leases than before the pandemic. Because of the need to hold on to jets that are past their useful economic lives and require heavy maintenance that now takes several months, repair costs at United, Delta and American were up 40% higher last year from 2019. It is obvious who will have to pay for these increasing expenses – passengers, for whom this could turn into a Cruel Summer!

Green Green Grass of Home!                                                    05 April 2024

There was an interesting fact, emanating from Property Finder’s Q1 survey, which showed that a marked 40% of property sales in Dubai have gone to home seekers looking to buy villas; 85% of that total were looking for a minimum 3 B/R plus unit, with the five leading locations, at the beginning of 2024, being Dubai Hills Estate, Al Furjan, Arabian Ranches, Palm Jumeirah and Mohammed Bin Rashid City. The four main drivers behind the current surge were:

• 39% of villa buyers were under the age of forty, (cf 31% in the same period in 2023) – an indicator that savvy millennials are seizing the opportunity for long-term investments in spacious villas, as prices continue to head north at double-digit levels
• Property buyers, earning less than US$ 13.6k (AED 50k), account for 47% of villa buyers, compared to 37% a year earlier; more buyers are capitalising on flexible payment plans to upgrade to larger living spaces
• Buying a villa is also a good investment option. Last year, a 5 B/R villa on Palm Jumeirah would give you an unbelievable 41% RoI, while Dubai Hills Estate and Arabian Ranches saw spikes of 38% and 29% respectively
• Buyers are looking for a larger range of amenities and facilities. Property Finder’s three top searches were for a maid’s room, a study area and a private pool

In a bold move to increases Emirati participation, as real estate brokers, in future project launches, the DLD has announced that it will initially encompass nine local developers and seek to allocate between 10% to 15% of units to be sold by Emirati brokers, The nine developers included in the initial phase of a tie up are Emaar, Expo Dubai, Deyaar, Damac, Azizi, MAG, Sobha Realty, Ellington Properties and Al Bait Al Duwaliy Real Estate Development. (In the next phase of the Dubai Real Estate Programme, the DLD said it will seek to establish partnerships with additional developers and real estate brokers to qualify more Emiratis to work in the property sector).This comes under the Dubai Real Estate Programme, unveiled to increase Emiratis’ participation and incentivise their involvement in the market, with the agreement aimed at enhancing the competitiveness of Emirati professionals and supporting their roles in the sector. In 2023, the value of real estate deals jumped 20% on the year and topped US$ 172.6 billion. A recent Knight Frank report noted that, although record a record number of luxury houses were sold last year, Dubai is still ranked towards the bottom end of the most expensive prime markets globally.

After selling out its initial three phases, comprising six hundred villas, Dubai South Properties has launched the fourth phase of its South Bay waterfront development. The master developer had awarded Al Kharafi Construction Company a US$ 408 million contract to build phases 3, 4 and 5. Located on Expo Road, the fourth phase includes one hundred and thirty-eight units, comprising three, four and five-bedroom villas and a limited number of five-to seven-bedroom mansions; completion is slated for Q1 2027. The centrepiece of the scheme is a one-kilometre lagoon that will provide more than three kilometres of a waterfront promenade. The planned amenities include a lake park, beaches, water parks, swimming pools and a clubhouse, as well as cafes and a shopping mall. The Residential District at Dubai South is already home to more than 25k people.

Sobha Group has signed a US$ 123 million land lease agreement with Dubai International City so that it can set up a second furniture factory. On a 84k sq mt land plot, encompassing 50k sq mt built-up area, the factory will manufacture a range of products including sofas, seats, armchairs, chairs, beds, car and airplane seats, assembled and flat-pack cabinets for the local market and for export customers. Another plus for the local industrial sector and ‘Make it In the Emirates’.

There are reports that the UAE government is looking at introducing new commercial licence regulations which could include a ten-year golden licence and a five-year silver licence in a bid to boost business activities in the country. It is expected that their introduction would spur business confidence among investors as well as enhancing the country’s image on the worldwide stage. It is obvious that any such move is a no brainer, if the emirate can attract global businesses to set up a presence here, and a sign that the UAE is open for business. The country has seen the number of companies operating rise to 788k by the end of 2023. The proposal was discussed by the Economic Integration Committee last week during its second meeting of the year, under the chairmanship of the Minister of Economy, Abdulla bin Touq.

On Monday, the Ministry of Human Resources and Emiratisation has announced that from Monday, 29th Ramadan (8th April 2024) to 3rd Shawwal (or what is corresponding to it in Gregorian calendar) will be a paid holiday for all employees in the private sector across the UAE on the occasion of Eid Al Fitr. This is in line with an earlier announcement for the public sector. The one proviso is that if Eid falls on Tuesday, the private sector will return to work next Friday, 12 April.

The seasonally adjusted S&P Global UAE Purchasing Managers’ Index (PMI) rose to 57.1 in February from 56.6 in January, while the output sub-index surged to 64.6 from 62.0 in January, the highest figure since June 2019, lifted by new business, stronger client activity and marketing activities. One of the PMI’s largest components, the Output Index, rose to its highest level since June 2019, pointing to a rapid expansion of business activity, as firms look to take full advantage of strong market growth. Mainly because of the Red Sea problems, backlogs of work rose at their fastest pace in nearly four years, with the overall supply chain performance improving at its weakest rate since in nine months. New orders rose at their softest rate for six months, suggesting output growth could also begin to slow, with hiring activity accelerating and employment levels expanding at their fastest rate since May 2023. February saw the strongest price cuts in over three years, with many firms offering discounts to retain market share – and this despite another solid increase in overall input costs, linked to rises in material prices and wages.

The latest Majid Al Futtaim State of the UAE Retail Economy proves to be interesting reading. It posted that 2023 consumer spending surged 13%, despite the jittery state of the global economy. Fashion, general and leisure/entertainment – growing at 31%, 16% and 15% – helped retail spending to increase by 14%; spending in hypermarkets/ supermarkets was up 3%. The report also found that non-retail spending – such as real estate, fuel, government services, airline tickets, transportation and education – increased by 12%. Quarterly spending spiked in Q4, contributing 27% of the annual total, mainly attributable to the Cop28 event. Even though shopping trips were higher on the year, consumers preferred smaller basket sizes, and split their buying between in-store and online, looking for the best deals while limiting the number of products purchased. E-commerce has risen from 5%, in 2019, to 12% in 2023, with about 70% of transactions attributed to mobile phones.

The latest Kearney’s Foreign Direct Investment sees the UAE jumping ten places to eighth and moved one place higher to second, behind China, in its emerging market index.The consultancy noted that the country’s higher ranking “is a clear reflection of its … decisive push towards economic diversification, which [has] firmly cemented the UAE’s position as a magnet for global investment”, and also “reflects growing investor confidence driven by the UAE’s sustained track record of policy reform”. The UAE has also set an ambitious target of attracting US$ 50 billion in foreign investment by 2031, as part of its diversification strategy, which will be helped by it signing Comprehensive Economic Partnership Agreements with a number of countries to grow trade and attract more investment. The top three countries heading the index are USA, Canada and China – the latter moving up four places amid the “loosening of capital controls for foreign investors in Shanghai and Beijing”.

Eight years ago, the federal government liberalised fuel prices so that they could be aligned with market rates until the onset of the pandemic which saw prices frozen by the Fuel Price Committee. In March 2021, prices were amended to reflect the movement of the market once again. With prices having fallen every month in the quarter to 31 January, they rose in February and March, and now again in April 2024, (except for diesel). The breakdown in fuel price per litre for April is as follows:

• Super 98: US$ 0.826, to US$ 0.858 in April (up by 4.0%).      YTD from US$ 0.768 – 11.7%

• Special 95: US$ 0.796, to US$ 0.826 in April (up by 3.7%).    YTD from US$ 0.738 – 11.9%

• Diesel: US$ 0.842, from US$ 0.861 in April (up by 2.2%).       YTD from US$ 0.817 – 3.1%

• E-plus 91: US$ 0.777, to US$ 0.807 in April (up by 3.8%).     YTD from US$ 0.719 12.2%

According to latest data from the Central Bank of the UAE, savings deposits in the UAE’s banking sector, excluding interbank deposits, attracted around US$ 6.81 billion (10.2% higher) to reach US$ 73.70 billion at the end of January 2024; savings deposits in banks have been on a consistently upward trajectory in recent years, rising from US$ 41.42 billion at the end of 2018. The local currency, the dirham, accounted for the largest share of savings deposits, (82.1% or US$ 60.50 billion), while the share of foreign currencies amounted to 17.9%, or US$ 13.20 billion. Demand deposits posted a 9.5% rise on the year to US$ 272.75 billion at the end of January 2024. Demand deposits total comprised US$ 196.34 billion in the local currency, accounting for 72.0%, and around US$ 76.51 billion in foreign currencies, accounting for 28.0%. Demand deposits continued to grow in recent years, having risen 73.3% from US$ 157.38 billion.Time deposits rose 30.3% to US$ 217.14 billion at the end of January 2024, with a 30.3% annual increase compared to about US$ 166.67 billion in January 2023, an increase of US$ 50.4 billion.The local currency accounted for the largest share of time deposits, 59.6% or US$ 129.40 billion, while the share of foreign currencies amounted to 40.4% or US$ 87.74billion.

Up and Down news this week from the UAE Central Bank, projecting a 5.2% 2025 GDP growth, whilst revising down this year’s forecast from 5.7% to 4.2% – attributable to a slower recovery in oil production, in light of the Opec+ agreement in November 2023, and a robust, yet declining, growth in the non-oil sector.  In 2025, the oil sector is expected to expand by 6.2%, driven by higher growth in the hydrocarbon sector, with the non-oil sector 4.7% higher. In this day and age, the forecast comes with the usual caveats:

• downside risks due to geopolitical tensions around Red Sea disruptions
• conflicts in Gaza
• war between Russia and Ukraine
• a global slowdown triggered by the need to hold higher interest rates for longer
• the possibility of further Opec+ agreed reductions in oil output

This week, Dubai Aerospace Enterprise signed a US$ 749 million, five-year, dirham denominated, unsecured term loan with Emirates NBD. Financing will be used for general corporate purposes and support the future financing needs of the business. This loan will “also serve to further strengthen DAE’s exceptional liquidity.”

On 01 April, Drake & Scull International’s General Assembly approved the implementation of the capital restructuring of the company and increasing the share capital by US$ 163 million, (AED 600 million), to become about US$ 946 million, (AED 3.470 billion), by issuing 2.4 billion shares at US$ 0.0681 per share (“Capital Increase”). Its chairman, Shafiq Abdelhamid, noted “we have developed a comprehensive capital restructuring plan aimed at avoiding the liquidation of the company, ensuring the best interests of shareholders, ensuring business continuity, in addition to achieving better returns for creditors compared to the returns they could obtain in the event of its liquidation”. Its restructuring strategy aims to rebuild confidence in the company by focusing on its core strengths, such as mechanical and electrical works, as well as the high potential water and environment operations “Passavant”, and Oil and Gas sector. The restructuring plan will be applicable on four “Plan Companies”, as approved by the courts – Drake & Scull International PJSC, Drake & Scull International LLC, Drake & Scull Engineering LLC and Drake & Scull for Contracting Oil & Gas Fields Facilities LLC. Creditors of these four Plan Companies have agreed to a 90% write-off of their claims, while the remaining 10% balance of Plan Creditors, whose total claims:

• exceed US$ 272k will be exchanged by a Mandatory Convertible Sukuk (the “MCS”)
• are between US$ 14k and US$ 272k will have the option to receive cash or MCS
• are less than US$ 14k will receive 10% of their balance in cash

The five-year MCS will be converted into Drake & Scull shares at maturity or earlier date, in case of certain early conversion events, as stipulated in the restructuring plan. It will not be eligible for a fixed profit rate but will be entitled a share of any dividends distribution paid by the company, and, on maturity, will receive 35% of the issued capital of Drake & Scull, subject to some adjustments related to the buyback of the instruments by the company. The MCS will also be eligible to 35% (or the adjusted creditor ownership percentage) of any payments collected by the company, in relation to the settlement of legal claims related to the previous management of the company and the previous auditors with respect to circumstances that arose before 31 December.

On Monday, there was a large single trade on the DFM amounting to 5.7 million Emirates NBD shares at a price of US$ 4.77 (AED 17.5), equating to a total value of around US$ 100 million. Such large transactions, executed outside the order book, do not affect the closing price of the company’s shares or the price index, and they also do not affect the highest and lowest prices executed during the session and over the past fifty-two weeks.

Salik Company PJSC, announced the distribution of cash dividends amounting to US$ 150 million, (equivalent to US$ 0.02 per share), representing 100% of its H2 net profit. Shareholders at Dubai’s exclusive toll gate operator’s AGM also approved the value of cash dividends distributable for the fiscal year 2023, which amounted to US$ 300 million (equivalent to US$ 0.04 per share), representing 100% of 2023 distributable net profit. The meeting also agreed to amend the Articles of Association to add new business activities into Salik’s operations, along with the allocation of a percentage of the company’s forecasted revenues towards the CSR initiatives.

The DFM opened the week on Monday 01 April 16 points (0.4%) lower the previous week, shed 2 points (0.1%) to close the trading week on 4,244 by Friday 05 April 2024. Emaar Properties, US$ 0.05 lower the previous fortnight, gained US$ 0.09, closing on US$ 2.32 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.66, US$ 4.77, US$ 1.59, and US$ 0.40 and closed on US$ 0.65, US$ 4.78, US$ 1.57 and US$ 0.39. On 05 April, trading was at 112 million shares, with a value of US$ 59 million, compared to 275 million shares, with a value of US$ 418 million, on 29 March 2024. The elongated Eid Al Fitr break will see the local bourse closed all next week, re-opening on 15 April.

By Friday, 05 April 2024, Brent, US$ 4.90 higher (6.0%) the previous three weeks, gained US$ 3.84 (4.4%) to close on US$90.84. Gold, US$ 372 (20.0%) higher the previous five weeks, gained US$ 55 (2.5%) to trade at US$ 2,293 on 05 April 2024.

With increased expectations that the Federal Reserve will post its first-rate hike of 2024 in June, as US inflation levels continues to head down, gold prices rose to a record high on Monday, trading at one stage at US$ 2,257 per oz, as US gold futures gained 1.8% to US$ 2,279. Silver joined the party rising 1.3% to US$ 25.25, with platinum and pallidum climbing 0.5% and 0.7% to US$ 916 and US$ 1,022 respectively. Gold rose even higher on Wednesday, following Fed Chairman, Jerome Powell’s assurance that it could be appropriate to begin lowering borrowing costs “at some point this year”, gold took notice and surged to a record US$ 2,305 on Wednesday; silver touched three-year highs. Gold has also benefitted support from heightened geopolitical risks, including the crises in Gaza, the Red Sea and Ukraine, as well as increased central bank purchasing.

Alaska Air has received a US$ 160 million payment from Boeing to make up for losses the airline has suffered following its January mid-air blowout; the carrier expects further pay-outs from the plane maker and said that the money already paid would address profits lost in H1. This has led to complaints that “Boeing thinks it more urgent and important to pay those whose corporate profits were at stake, but not those whose lives were at stake and nearly lost.” The knock-on impact of Boeing slowing production, as it tries to resolve manufacturing and safety concerns, will surely hit carriers’ revenue and profit figures as they have to cut flights because of slow delivery of new planes. Boeing did not comment but warned earlier this year that it expected to spend at least US$ 4 billion more than expected in the first quarter.

With higher mortgage rates still impacting affordability, the Nationwide posted that UK house price growth was “subdued” in March – 1.6% higher on the year but down 0.2% on the month. Although they are declining slower than many would want, they are still higher than pre-Covid rates. UK’s largest building society noted that affordability pressures on buyers was “weighing down” on activity in the housing market and price growth. It noted that people on the average annual US$ 44.3k wage, purchasing a typical home, will have to pay over 40% of their take home pay – well above the 30% long-run average. February mortgage approvals – at 60.4k – were at their highest monthly level since September 2022, (the disastrous Liz Truss month). Much to the relief of many mortgage-holders, the BoE announced that rate cuts were “on the way”, from its current 5.25% rate.

On its stock trading debut last week, Donald Trump’s social media company was valued at US$ 11 billion, despite having lost nearly US$ 60 million last year on a paltry revenue of some US$ 4 million. In Monday’s trading, and less than a week after it began publicly trading, shares of his social media company have fallen by more than 20%, resulting in the former, (and possible future), president’s net worth losing about US$ 1.0 billion. However, shares of Trump Media, which makes its money exclusively through advertising on Truth Social, are still up nearly 200% YTD. He is suing two co-founders of Trump Media, Wes Moss and Andy Litinsky, claiming they should lose their cumulative 8.6% shares of the company for mismanaging his social media site.

Last week’s blog noted that China’s third largest smartphone maker Xiaomi had launched its first electric vehicle, with pre-orders almost topping 89k vehicles, within twenty-four hours of it starting to take orders on Thursday. By last Monday, the firm was advising buyers it could take twenty-seven weeks to deliver the SU7 Max. The SU7 model is priced at US$ 29.9k, with the Max version at US$ 41.5k.

The 08 March blog – Say No More – posted “There are reports that Bridgepoint, the biggest shareholder, at 40%, in Moto GP’s parent company, Dorna Sports, is in advanced discussions to sell the business for more than US$ 3.80 billion. Over the past eighteen years, Bridgepoint has driven Moto GP to expand internationally, resulting in soaring revenue and a sharp increase in profitability. The Canada Pension Plan Investment Board owns slightly less than 40%, with the balance held by Dorna’s management. Uniting Moto GP and F1 under common ownership would provide Liberty Media with the opportunity to derive financial and commercial synergies, but any potential competition probe could scupper the deal – Bridgepoint acquired Moto GP’s parent in 2006 from CVC Capital Partners after the latter bought into F1, drawing scrutiny from EU watchdogs”.

Samsung Electronics, the world’s largest maker of memory chips, smartphones and televisions, expects an almost tenfold surge in Q1 profits, as prices of chips have recovered from a post-pandemic slump and demand for AI-related products booms. The South Korean conglomerate has estimated its Q1 operating profit rose by 931% to US$ 4.9 billion. Estimates are that there had been about a 20% hike in global memory chip prices last year. This week’s earthquake that hit Taiwan, (which is home to several major chipmakers, including TSMC), may also tighten the global supply of chips, which could allow Samsung to raise prices further. On top of that it should benefit from sales of its new flagship Galaxy S24 smartphones, which were launched in January.

Last Monday, it finally happened – Liberty Media announced a takeover of MotoGP’s parent company Doran, valuing the world’s leading motorcycle racing championship at US$ 4.53 billion. Dorna will stay an independently run company, attributed to Liberty Media’s Formula One Group tracking stock, and continue to be based in Madrid, with long-serving Dorna CEO Carmelo Ezpeleta remaining in his position. The deal will see Liberty Media acquiring approximately 86% of Dorna, with Dorna management retaining around 14% of its equity. Dorna/MotorGP has an equity value of US$ 3.76 billion and an enterprise value of US$ 4.51 billion.

Amazon Web Services – which accounts for 14% of the tech giant’s total revenue – is to slash hundreds of jobs at its cloud computing business, as its continues to move its strategy with physical stores, Amazon Fresh, which were launched in 2020. The job losses will be mainly in sales, marketing, global services and its physical stores technology team, as it plans to remove its self-checkout system called Just Walk Out from all the stores. It noted that cuts will be at its operations around the world, though the majority of AWS roles are in its home city Seattle, and also confirmed,

“it will continue to hire and grow, especially in core areas of our business”, adding that there are thousands of jobs available and it is working to find internal opportunities for employees whose roles are affected. Its current payroll, which excludes contractors and temps,  comprises more than one and a half million full-time and part-time employees.

The IMF has finally approved an US$ 8.0 billion loan package for Egypt, which adds US$ 5.0 billion to the US$ 3.0 billion forty-six-month Extended Fund Facility signed in December 2022; the government will be able to immediately draw US$ 820 million. This will be a major boost to its economy badly impacted by the Israel-Gaza war but also to a lesser degree by the Russia-Ukraine crisis and tensions in the Red Sea. Last month, the Central Bank of Egypt pushed rates higher and allowed the local currency to freely float, with no interventions from the state. On 06 March, when the news broke, the currency dropped to fifty-two pounds to the greenback – its lowest level in history on official markets. By the end of the month, it had recovered somewhat, trading at 47.35. The IMF acknowledged that the government had taken positive steps to improve the economy, including difficult measures to correct macroeconomic imbalances, to unify the exchange rate, to clear the foreign exchange demand backlog, to attract more foreign direct investment and to tighten monetary and fiscal policies.

Although business activity in its non-oil private sector contracted at the sharpest rate in thirteen months, driven by a worsening foreign exchange crisis and a steep drop in customer sales, two weeks later on 18 March, S&P upgraded Egypt’s credit outlook to positive from stable, citing government moves to improve its currency, attract more foreign direct investment and a growing list of donors pledging to support the economy. One of the major contributors was a consortium led by Abu Dhabi’s holding company, giving ADQ, rights to develop its Mediterranean city of Ras El Hekma, in exchange for US$ 35 billion in cash.

For not having published its annual accounts on time, embattled Chinese property developer Country Garden has seen its share trading suspended, on Tuesday 02 April, by the Hong Kong Stock Exchange. With it defaulting on its overseas debt in 2023, the company posted that it needed more time to collect information, as it restructures its debts; because of this debt default, it faces a winding-up petition. The firm commented that “due to the continuous volatility of the industry, the operating environment the Group confronting is becoming increasingly complex”. On the same day, shares in Chinese state-backed property developer China Vanke fell to a record low after it had posted a 50%+ profit slump in its annual profit and told investors that it aimed to boost its cash flow by slashing debt over the next two years. The industry has yet to recover from a 2021 government move to curb the amount big developers could borrow; since then, several large Chinese property developers, including Evergrande and Country Garden, have defaulted on their debts. As the sector accounts for over a third of the country’s economy, the impact has been felt throughout the country and on the global stage.

Over the next decade, some three hundred million people, who are currently aged between fifty and sixty, are set to leave the Chinese workforce, and a major problem facing the Xi Jinping government is how to finance the growing pension pot; the country is heading to an inevitable demographic crisis which will not be helped by a slowing economy and a race against tie to bolster funds to care for the growing number of elderly. In 2020, the UN’s International Labour Organisation estimated the average monthly pension at US$ 23.50. For generations, China has relied on filial piety to fill the gaps in elderly care, but now there fewer offspring for ageing parents to rely on, who have moved away to the cities to benefit from the country’s recent rapid growth; that leaves seniors to fend for themselves or rely on government payments. A problem is that a 2019 estimate, by the state-run Chinese Academy of Sciences, forecast that the pension could run out of money by 2035. One option, that would only have a temporary impact, is to raise the age of retirement, in a country that has one of the lowest retirement ages in the world – sixty for men, fifty-five for white-collar women and fifty for working-class women. It appears that more and more older Chinese have had to fend for themselves, with many having to dip into their pensions. Last week, this blog looked at the problems facing Japan, as up to 10% of the population is now over eighty. The difference is that China’s population is ageing fast, and the government has not spent enough money on dealing with this major problem – the Japanese have.

The Indian rupee fell to its lowest level on record against the US dollar and the UAE dirham last Friday, attributable to falling Asian markets and aggressive local dollar demand; the rupee dipped to intra-day low of 22.732 to the dirham, edging higher by the end of the day to close on 22.7316, but still down 0.3% for the day, driven it appears because of the RBI’s “MiA”, and strong dollar bids close to the end of the session. Earlier, it seems that the central bank had sold dollars at 83.38/83.39 to ease the pressure on the rupee. By today, 05 April, it was trading at 83.33.

In 2022, the EU had a trade in goods deficit balance of US$ 470.9 billion, due then mainly to the increased value of energy imports resulting from high prices for energy. However, a marked improvement in 2023 saw the balance move into positive territory, registering a US$ 41.0 billion surplus, because of a 16.0% fall in the value of extra-EU imports, driven mainly by 34.0% declines for ‘energy products’, and a 21.0% drop in ‘manufactured goods classified chiefly by material’ – because of the combined impact of a drop in prices and a drop in volume. Data show that the EU’s internal market continued to take centre stage in EU countries’ trade of goods, with the highest share of intra-EU imports, at 90%, being recorded in Luxembourg, and the highest share of intra-EU exports, at 82%, was registered in Czechia. At the other end of the scale, Ireland has the lowest share of intra-EU imports, at only 39%, mainly because its primary trade partners are the USA and the UK. The Netherlands, as it continues to be the main entry hub for the EU, is the country which imports mostly from outside the EU, and exports mostly inside the EU; Cyprus, on the other hand, is the country exporting mainly outside the EU, while importing mainly from inside the EU.

Last Friday, the Biden administration revised rules to make it harder for China to access US AI chips and chipmaking tools, in an effort to mitigate that country’s growing influence in the sector, citing national security concerns. Its main aim is to halt shipments to China of more advanced AI chips designed by Nvidia NVDA.O et alia. There are also concerns that Beijing efforts to advance its tech sector could also be utilised to help boost China’s military. The new rules clarify restrictions on chip shipments to China, which also apply to laptops containing those chips, with the Commerce Department confirming plans to continue updating its restrictions on technology shipments to China.

As the Dubai economy continues its buoyant trend, it is no surprise to see that there has been an increase in reverse migration, as more former residents are returning to these Gulf shores.  Andrew Amoils, head of research at New World Wealth, said there is indeed reverse migration to Dubai due to high taxes in Canada, and that “many wealthy expats that leave UAE return later. Tax rates in Canada are much higher than UAE which is probably a factor. Also, the winters in Canada are very long”, and that Dubai is seen as a better alternative. Imran Farooq, CEO of Samana Developers, said the increase in the number of buyers from Canada and the US was “a completely new trend”, and that “now reverse migration trend has started due to the economic slowdown and law and order issues there. Canadians now account for up to 6% of investors in Samana’s projects.” Other drivers in this reverse migration trend also include high taxes, quality of life, public safety issues, soaring rents, rising cost of living and fewer job opportunities in their new home country.  Over recent decades, many, from S Asia, SE Asia and Arab countries, have migrated to Canada, with research showing that those, that have actually lived in the UAE before emigrating to Canada, were more likely to move back to the UAE than those who moved directly to their new home country; such expatriates, whilst retaining their new passports,  are mainly end users in the emirate’s residential property market. All returning to the Green Green Grass of Home!