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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!

It’s A Sign Of The Times!                                               29 March 2024

Q1 is well on course to see the Dubai real estate sector post over US$ 27.2 billion, (AED 100 billion) in sales and over 30k transactions. The first two months of the year witnessed a 30.9% increase in sales to US$ 19.6 billion and a 26.6% rise in transactions to 22.9k. There is no doubt that the promising start to the new year bodes well for another positive year for the sector, driven by government initiatives and infrastructure developments, along with significant launches from Emaar and Nakheel. It is hard to disagree with Realiste, a specialised prop-tech firm in real estate investment solutions, anticipating a 15% growth in Dubai’s real estate market this year, with its founder Alex Galt noting Dubai’s appeal in aspects such as safety, cleanliness, tourism, and overall quality as a driving force behind its anticipated rise as a global real estate hub in 2024. Its latest analysis sees specific areas within Dubai, including Business Bay Second and Palm Jumeirah, posting substantial price increases this year, further enhancing the attractiveness of real estate investments in these locales. The fact that Dubai

saw a 12% increase in enrolments, with an additional 39k students enrolling in private schools, indicates that Dubai is becoming an ever-increasing hub for growing families. One major obstacle could be affordability in the low to mid-market segment, but this could be partly offset by declining mortgage rates and easing inflation/cost-of-living, along with limited post-handover payment plans now seen in the off-plan market.

CBRE posted that “looking ahead, price growth in both Dubai’s apartment and villa segments of the market are likely to remain relatively strong; however, we do expect that the rate of price growth will taper off. In the rental market, on the back of the prevailing market fundamentals, the lack of supply and heightened demand levels, we expect that residential rents in Dubai will maintain their upward trajectory; that being said, the rate of growth will likely moderate further.” A common theme seems to be that growth will continue this year but at a slower pace. Further down the road, it is inevitable that this bull market, which is now over three years in the making, will turn. Unlike the last bear market, any downturn will be orderly and could still be some two years away.

February’s ValuStrat Price Index (VPI), 23.1% and 2.1% higher on the year and the month, registered 164.1 points. Compared to its 100 points base set in January 2021, villas were at 206.1 points, and apartments were 136.6 points. The index is meant to show updated residential capital values on a monthly basis and for Dubai’s residential rental values on a quarterly basis. On a monthly and annual basis, the apartment submarket rose by 1.9% and 18.6%, with the highest year on year capital growth in apartments posted in Discovery Gardens (30.7%), The Greens (27.9%), Palm Jumeirah (27.4%), Town Square (23.0%), and Dubai Production City (22.9%). Villa gains were more noticeable – at 2.4% and 28.0% on a monthly and annual basis. The top annual performers were Jumeirah Islands (36.1%), Palm Jumeirah (35.1%), Dubai Hills Estate (33.6%), and Mudon (29.6%). Off-plan Oqood (contract) registrations jumped 32.6% annually and 5.7% monthly, with ready home transaction volumes growing 30.5% annually and 9.0% monthly, representing a minority 36.9% share of overall February residential sales. There were twenty transactions of ready properties priced over US$ 8.17 million, (AED 30.0 million), located in Emirates Hills, Palm Jumeirah, District One, Jumeirah Bay Island, and Dubai Hills Estate.

The top four selling developers in the month were Emaar (13.3%), Damac (9.9%), Danube (7.6%), and Sobha (5.7%). Top off-plan locations transacted included projects in Jumeirah Village Circle (11.8%), Dubai Maritime City (11.4%), Business Bay (6.4%), and Bu Kadra (4.5%). The majority of ready homes sold were in Jumeirah Village Circle (9.0%), Business Bay (7.2%), Dubai Marina (5.9%), Downtown Dubai (5.8%), and Dubai Hills Estate (5.1%).

Within a few days of its launch, AHS Properties has confirmed that it had already sold 80%, (valued at US$ 681 million), of its US$ 845 million Casa Canal Interiors by Fendi Casa. The tower houses a diverse range of luxurious units, of between 4.5k sq ft – 30.0k sq ft, including exclusive boutique houses, four to six-bedroom sky villas, penthouses and sky palaces. The project was designed by Shaun Killa and interior designs will be by Hirsch Bedner Associates – HBA. Amenities will include a cigar lounge, private pools, fine-dining options, a state-of-the-art spa, wellness, and recreational arenas (yoga and beauty rooms), a screening room and a concierge/chauffeur service. The Dubai-based luxury real estate developer was founded seven years ago by Abbas Sajwani.

It is reported that Samana Developers is planning to launch eighteen projects this year, valued at US$ 3.40 billion, with contracts for all those projects being signed in 2024. The Dubai-based private real estate firm said it will launch 11k units in locations such as Arjan, Jumeirah Village Circle, Marjan, Dubailand, Discovery Gardens, Furjan, Motor City, Sports City and Meydan. By the end of last year, Samana was one of the top ten developers in Dubai – this year, it hopes to be in the top five fastest-growing firms. It is also looking at an inaugural development in Ras Al Khaimah, and “also planning a five-star hotel in Marjan island”. Samna has already appointed an advisory firm to apply corporate governance to be IPO-ready for the Dubai listing, “towards 2025-2026.”

According to Valustrat, there are now almost 25k active Airbnb listings in Dubai – a massive 227% increase from 2021’s figure of 11k; current annual average occupancy is at 56%. The agency notes that over 50% of listings are to be found in the following four locations in Dubai’s prime tourist hotspots – Dubai Marina, Jumeirah Beach Residence, Downtown Dubai and Business Bay. The average profit margin of about US$ 1k per unit each month and most will aim to build a portfolio comprising tens of properties. In 2022, Dubai was ranked as the most profitable and expensive location in the world for Airbnb landlords, according to a survey by UK-based landlord insurance company CIA Landlords. The sector is heavily regulated with anyone, with a holiday home for rental, having to register with the Department of Economic Development to get a licence from the Department of Tourism and Commerce Marketing. Each subleased property has to have permission from the owner and a move-in permit is required from each building.

Over the past twelve months, the Department of Economy and Tourism noted that it had closed down three Dubai car rental companies for violating the laws related to consumer protection rights. Ahmed Ali Mousa, director of consumer protection at Dubai’s DET, advised that “there are different categories of fines, depending on the violation, with a minimum of Dh10k, (US$ 2.72k). If the violation is repeated, the fine is doubled each time. However, we don’t wait till that time. If the violation is repeated, such companies’ offices are closed.” Recently, it issued a circular to all vehicle rental firms to return deposits of the customers, within thirty days of returning the vehicle. The RTA notes that there has been a 23.7% rise in the number of companies registered, with an increase of registered vehicles to 78k. The director also noted that the Department also penalised some car rental firms for exorbitantly charging for car washing, and advised users to ensure they have a clear contract with the company and if “they face any challenges, they are welcome to reach out to us for any protection through our call centre or website.”

An aviation company in Dubai has signed a deal with a Dutch business to bring the world’s first flying car to the Middle East and Africa. Aviterra, which will be PAL-V’s exclusive agent, will order one hundred PAL-V’s Liberty flying cars and invest in the European company; no details or delivery timetable were available. The two-seat Liberty – described as the world’s first flying car because it combines a gyroplane and a car – transforms from a road vehicle into an aircraft, within five minutes. This vehicle, which will be able to be used from home to home, can reach 100 kph, within nine seconds, and has a top speed of 160 kph; as an aircraft, it has a flight range of between 400 km and 500 km and a maximum speed of 180 kph. It can reach an altitude of 11k ft and requires an airstrip or airfield stretching at least 200 mt to take off and land. Its current price is set at US$ 799k.

Last year, the Dubai International Chamber posted a 550% increase in attracting one hundred and four SMEs to the emirate, with businesses from the ME/Eurasia and Asia/Australia accounting for 32% and 29%. Sector-wise, trade/logistics, IT – including AI, blockchain, robotics and software, food/agricultural, healthcare/pharmaceuticals and public services accounted for 17%, 13%, 10%, 9% and 7%. The total number of global representative offices operated by the Dubai International Chamber almost doubled to thirty-one last year, from sixteen a year earlier. Mohammad Ali Rashed Lootah, President and CEO of Dubai Chambers, commented that “our network of international representative offices in key global markets has effectively promoted Dubai’s business community and highlighted the emirate’s value for companies seeking global expansion.”

Formed only two weeks ago – and to coincide with the start of the holy month of Ramadan – by HH Sheikh Mohammed bin Rashid, an education fund to help disadvantaged families around the world has already raised US$ 210 million, (AED 770 million); its target is US$ 272 million (US$ 1.0 billion). The Mothers’ Endowment campaign, inspired by the role mothers play in society, was created to provide educational materials, start social programmes and equip schools. Mohammad Al Gergawi, secretary-general of Mohammed bin Rashid Al Maktoum Global Initiatives, noted it “builds upon the success of previous charity and humanitarian initiatives launched in the UAE, which helped to drive development across underserved communities through a series of sustainable programmes that improve quality of life and ensure well-being”.

Last week, the UAE Ministry of Finance announced the launch of a digital public consultation to gather the views of relevant stakeholders on the implementation of the Global Minimum Tax (GMT) or Global Anti-Base Erosion Model Rules (Pillar Two) (GloBE Rules) as well as other tax matters. The consultation will be open from 15 March to 10 April and accessible via the ministry’s website or the UAE’s Government Portal. The government is expecting a big response from all stakeholders ranging from multinational groups operating in the UAE, advisors, service providers and investors. There are two sections to the consultation – the first is to gather the views of stakeholders concerning the potential policy design options for the implementation of the GloBE Rules in the UAE, specifically the development of a domestic minimum tax. The second part of the consultation is to understand stakeholders’ views on the introduction of substance-based incentives to be applied in the UAE.

Driven by an almost doubling in its education platform and a 14% hike in healthcare, Amanat Holdings posted a 40% jump in 2023 revenue to US$ 196 million; EBITDA increased 46% on the year to US$ 75 million, with Adjusted Net Profit before Tax and Zakat 38% higher on the year to US$ 43 million. Consequently, the company was in a position to declare a US$ 14 million dividend, with additional interim dividends planned for 2024.

Dubai Electricity and Water Authority’s shareholders have approved a total dividend payment of US$ 845 million (AED 3.01 billion). The next twelve-month dividend yield is 5.0%, with reference to IPO share price of US$ 0.676, (AED 2.48), per share. Saeed Mohammed Al Tayer, MD and CEO, commented: “Dewa is committed to achieving operational excellence and sustainable growth. In 2023, Dewa’s annual revenue exceeded AED 29 billion, (US$ 7.90 billion), operating profit was over AED 8.7 billion (US$ 2.37 billion) and EBITDA was over Dh14.7 billion, (US$ 4.00 billion), all figures reflecting the highest in its history”.

At the Emirates Central Cooling Systems Corporation’s AGM, shareholders approved its board of directors’ proposal to distribute cash dividends of US$ 116 million (US$ 0.0158 per share, equivalent to 42.5% of the company’s paid-up capital). Earlier in the year, Empower had posted record annual revenue of US$ 827 million and net profit of US$ 262 million for the year ended 31 December 2023. The company was listed in 2022 on the DFM and the dividend distribution was in alignment with the company’s dividend distribution policy – to pay a minimum dividend amount of US$ 232 million per annum in the first two fiscal years; following its listing – a US$ 116 million H1 dividend was paid last October.    

The DFM opened the week on Monday 25 March 27 points (0.6%) higher the previous fortnight, shed 16 points (0.4%) to close the trading week on 4,246 by Friday 29 March 2024. Emaar Properties, US$ 0.05 higher the previous fortnight, shed US$ 0.05, closing on US$ 2.23 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.67, US$ 4.81, US$ 1.60, and US$ 0.39 and closed on US$ 0.66, US$ 4.77, US$ 1.59 and US$ 0.40. On 29 March, trading was at 326 million shares, with a value of US$ 114 million, compared to 275 million shares, with a value of US$ 418 million, on 22 March 2024.

The bourse had opened the year on 4,063 and, having closed on 29 March at 4,246 was 183 points (4.5%) higher. Emaar started the year with a 01 January 2024 opening figure of US$ 2.16, to close the quarter at US$ 2.23. 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$ 0.66, US$ 4.77, US$ 1.59 and US$ 0.40.  On 29 March, trading was at 326 million shares, with a value of US$ 114 million, compared to 138 million shares, with a value of US$ 58 million, on 31 December 2023.

By Friday, 29 March 2024, Brent, US$ 3.46 higher (4.2%) the previous fortnight, gained US$ 1.44 (1.7%) to close on US$ 87.00. Gold, US$ 299 (11.0%) higher the previous five weeks, gained US$ 73 (3.4%) to trade at US$ 2,238 on 29 March.

Brent started the year on US$ 77.23 and gained US$ 9.77(12.7%), to close 29 March 2024 on US$ 87.00. Meanwhile, the yellow metal opened 2024 trading at US$ 2,074 and gained US$ 164 (7.9%) to close YTD on US$ 2,238.  

Driven by an unexpected increase in US crude inventories, by 9.3 million barrels, in the week ended 22 March, on top of a two million barrel jump a week earlier, oil prices slumped mid-week, with Brent trading at US$ 85.35. The American Petroleum Institute also reported a 2.4-million-barrel rise in crude stocks – a fifteen-month high weekly increase – at the Cushing, Oklahoma storage centre, (with a capacity of ninety million barrels and accounts for 13% of total US oil storage). YTD oil prices had risen by some 11.0% due to Opec+ supply cuts and geopolitical uncertainty, and many analysts expect prices to settle around the US$ 90 level. The Opec+ alliance recently extended voluntary cuts of 2.2 million bpd into Q2 to stabilise oil markets, with every likelihood that the bloc will restore some barrels, (that could be as high as 1.5 million bpd), to the market in H2 to meet higher demand.

Probably not before time, Dave Calhoun will leave embattled Boeing by the end of the year, amid a deepening crisis over the firm’s safety record, further tarnished by an unused door being blown out on an Alaskan Airline Boeing 737 Max; in addition to its chief executive, the head of commercial activities will retire with immediate effect, whilst its chairman will not stand for re-election. The current supremo took over from Dennis Miulenburg, in early 2022, after the outcry from two brand new 737 Max planes having been lost in almost identical accidents that claimed the lives of three hundred and forty-six passengers and crew. On his appointment, he promised to strengthen Boeing’s “safety culture” and “rebuild trust”. Following the latest incident, a report from the US National Transportation Safety Board concluded that four bolts meant to attach the door securely to the aircraft had not been fitted, and to exacerbate the problem, Boeing is facing a criminal investigation into the incident itself, as well as legal action from passengers aboard the plane. In a letter to staff, he described the Alaska Airlines incident as a “watershed moment” for Boeing and it had to respond with “humility and complete transparency”. The question has to be asked if this was a “watershed moment,” what were the fatal crashes involving Lion Air and Ethiopian Airlines?

Under EU jurisdiction, justsix companies – Alphabet, Apple, Meta, Amazon, Microsoft and ByteDance – have obligations, under their 2022 Digital Markets Act, over uncompetitive practices; it is no coincidence that they are also the world’s largest tech firms. Now the EU has announced it would be investigating three of them – Meta, Apple, and Alphabet, which owns Google – for potential breaches of the DMA. If rules have been broken, fines can be onerous, with fines of up to  10% of annual turnovers. The EU said it will investigate five different possible acts of non-compliance:

• 1 & 2 – Whether Apple and Alphabet are not allowing apps to freely communicate with users and make contracts with them
• 3 – Whether Apple is not giving users enough choice
• 4 – Whether Meta is unfairly asking people to pay to avoid their data being used for adverts
• 5 – Whether Google preferences the firm’s own goods and services in search results

Another stock riding the current wave of AI optimism is Dell Technologies, with its founder and chief executive, Michael Dell, joining the likes of other tech billionaires, such as Bezos, Theil, and Zuckerberg who have been cashing in by selling stakes in their companies during the current price boom. It seems the fifty-nine-year-old, who formed the company in 1984, has been unloading his stock, to the value of US$ 465 million, for the first time in three years, this month. He still owns 50% of the company, currently valued at almost US$ 80 billion, (having gained 52.4% YTD), and is currently the thirteenth richest person in the world, with assets of US$ 99.7 billion. Maybe it is time for lesser mortals to do likewise, before some sort of reality returns to the market.

On its first day of trading, shares in Donald Trump’s media company soared past US$ 70, which then priced Trump Media’s Truth Social, at more than US$ 9.0 billion, but slipped back by the end of trading to US$ 58 – still 16.0% higher on the day. This will see Trump Media & Technology Group’s finances bolstered by a much needed US$ 200 million, with Trump’s stake currently worth more than US$ 4.0 billion; however, this comes with a caveat that many analysts say that this is far more than the firm’s performance warrants; in the first nine months of 2023, its revenue crawled to just US$ 3.3 million, with 8.9 million accounts, whilst it lost in the region of US$ 50 million; in comparison, recently-listed Reddit, with seventy million users, posted revenue figures of US$ 800 million and has an US$ eleven billion market cap.

Having been found guilty of stealing billions of dollars from customers, Sam Bankman-Fried, co-founder of the failed crypto exchange FTX, has been sentenced to twenty-five years in prison. FTX was one of the world’s largest crypto exchanges before its 2022 demise, turning Bankman-Fried into a business celebrity and attracting millions of customers who used the platform to buy and trade cryptocurrency. He was convicted by a New York jury last year on charges, including wire fraud and conspiracy to commit money laundering, after a trial that detailed how he had taken more than US$ 8 billion from customers, and used the money to buy property, make political donations and put toward other investments. There is no doubt that he got off fairly lightly, as the maximum sentence could have been for more than one hundred years.  Judge Kaplan also ordered the defendant to forfeit US$ 11.0 billion that can be used to compensate victims.

Following a review of its four hundred and fifty outlets, US-owned pizza chain Papa Johns has decided to close almost 10% of its restaurants that have been “underperforming”, having identified forty-three sites, all located in England, that were “no longer financially viable. Papa Johns had previously said it planned “strategic closures” in order to free up money for investment and improving profitability at its remaining UK sites, with plans also to expand further into non-traditional sites like holiday parks and the chain said it would “announce other large retail partners in the coming months”. With UK its second biggest market, it confirmed it was “committed to driving growth in the UK and improving results over the long term”.

Another leisure sector company, the London-listed leisure group Revolution Bars, which owns Peach Pubs and the Revolucion de Cuba chain, is also looking at closure of some of its venues – about 25% of its eighty locations – as it holds talks with investors about an emergency fundraising and also considering putting itself up for sale. This follows a period of “external challenges” which had hit trading it was “actively exploring all the strategic options available to it to improve the future prospects of the group”. When reporting on trading results in January, the company said that the Revolution brand was underperforming because the cost-of-living crisis had hit younger people harder.

Chris O’Shea is a lucky man having found out that his annual 2023 remuneration had jumped 82.2% to US$ 10.36 million, which includes an annual bonus (US$ 1.77 million) and long-term bonus, pension and benefits, (US$ 7.45 million). Most of the increase for Centrica’s chief executive, (who earlier in the year said his pay was “impossible to justify”, and a “huge amount of money” and that he was “incredibly fortunate”), came from the gas provider’s soaring share price over the past three years. In 2023, British Gas posted a tenfold increase in profits to US$ 1.04 billion after regulator, Ofgem allowed it to take a bigger slice of profits to recoup US$ 632 million it lost in the aftermath of the Russian invasion of Ukraine.

China’s third largest seller of smartphones, Xiaomi posted that it had received over 50k orders in the first twenty-seven minutes of sales of its Standard SU7 model, priced at US$ 29.9k, with the Max version selling at US$ 41.5k. Its entry into the very competitive EV market, with global sales slowing, will see Xiaomi in a price war with the big players such as BYD and Tesla, whose Model 3 retails for US$ 34.1k. SU7 will have a range of 700 km, compared to Model 3’s 567 km. The SU7 has drawn comparisons to Porsche’s Taycan and Panamera sports car models. It will be made by a unit of state-owned car manufacturer BAIC Group at a plant in Beijing that can produce as many as 200k vehicles a year, helped by a US$ 10.0 billion investment over the next decade.

2020 was a bad year for Australian/Chinese bilateral relations after Beijing imposed a series of tariffs and other economic burdens on more than a dozen Australian goods and commodities – including coal, barley, timber and lobsters – citing trade or production issues. However, other parties saw the move as a retaliatory campaign of economic coercion for political steps the Australia government had taken, including being the first Western country to bar Chinese tech firm Huawei from bidding for the country’s 5G tender and demanding an inquiry into the origins of Covid-19. This week, China has announced it will remove significant tariffs, of over 200%, on Australian wine, with the Albanese government managing to reduce other trade barriers; last August, China lifted tariffs on Australian barley. China had previously been the most lucrative market for Australian winemakers – accounting for nearly a third of all bottles shipped overseas – and despite pivoting to other markets, not all wine produced was sold so there has been a marked wine glut since 2021. It is estimated that the industry lost US$ 1.37 billion in 2021. China remains Australia’s number one trade partner and export destination for several commodities. Despite the tariff hits to certain industries – estimated to be worth about US$ 13.0 billion – the value of the China-Australia trade relationship has remained at a consistent level and trade has increased 12%. The majority of the value in the US$ 206.8 billion trading relationship comes from China’s reliance on Australian raw materials such as iron ore.

Over the past twelve months, CoreLogic’s Home Value Index has risen 8.9% – an indicator that Australian property prices continue to climb at an impressive rate; the current median dwelling value stands at US$ 208.6k – a new all-time high – and despite impressive price gains in recent years, demand continues to be robust, with little signs of a marked slowdown this year. The obvious main driver continues to be an excess of property demand over supply, with the consultancy noting that “the broad-based capital gains seen over the past year reflect the ongoing imbalance between housing supply and demand, which has helped to counteract the less favourable market and affordability conditions.” One of its market tools showed that 88.4% of the 4.63k house and unit markets analysed nationally saw values rise over the year, with Brisbane, Adelaide, and Perth witnessing the most widespread value uplift year-on-year, across both houses and units. It concluded that “positive net migration flows, low housing supply and comparatively low housing prices have all helped support widespread growth”.

On the rental side, the CoreLogic’s report also showed 94.2% of the 4.03k house and unit markets analysed recorded an annual rent rise, while nearly 40% saw rental values rise by 10% or more. Interestingly, the study noted that “over the past few years, rental growth has been skewed to capital city units, but as unit rent affordability has been eroded, some prospective tenants may be shifting towards house rentals, likely reforming larger households as a way of sharing the rental burden or to more affordable markets further afield.”

In its latest Financial Stability Report, issued this week, the RBA expects another tough year for households and businesses, but that the banking sector was well capitalised to absorb any losses from rising arrears. The RBA posted that “conditions will remain challenging for many households and businesses in Australia this year,” with many households facing financial pressure, not helped by decade-high interest rates and painful inflation. It noted that around 5% of borrowers with variable rate mortgages have had expenses exceeding their incomes, and that an expected half percentage point increase in the jobless rate would push most affected borrowers into cash flow shortfall, but not necessarily straight into mortgage default; February unemployment returned to 3.7% from a two-year high of 4.1% the month before. In a scenario analysis, the RBA found that most mortgagors and larger businesses would still be able to service debts if interest rates were to increase by another fifty bp from the current twelve-year high of 4.35%, and that less than 1% of all housing loans are ninety or more days in arrears and less than 2% of high-leveraged borrowers are in arrears. Concluding with some good news – the RBA expects pressures facing households will start to ease as inflation slows, real wages move higher and rates begin to decline, (probably in July).

The state-controlled Xinhua news agency has posted that Chen Xuyuan, a former president of the Chinese Football Association, has been sentenced to life in prison for bribery, after he recently pleaded guilty to taking bribes worth a total of over US$ eleven million. He is but one of more than a dozen coaches and players that have been investigated, as part of an anti-corruption crackdown, led by President Xi Jinping, that started with the real estate sectors and now encompasses sport, banking and the military. Chen abused his various positions as the president and chairman of Shanghai International Port Group by accepting money and valuables in exchange for his help with obtaining project contracts and arranging sporting events. The court ruling said he had brought “tremendous damage” to China’s football cause, with three other senior football officials having been sentenced to between eight and fourteen years in prison for corruption. Earlier in the year, Li Tie, an ex-Everton midfielder and former head coach of China’s national men’s soccer team, confessed to fixing matches and offering bribes to people, including Chen, to get China’s top coaching job.

Eleven years ago, the scandal of fixing the Libor and Euribor rates broke following which various banks were fined a total of over US$ 9.0 billion but rather predictably  no senior executives were ever prosecuted – in other words many picked up bonuses for what some would call dubious behaviour whilst other stakeholders, customers,  paid some years later; subsequent prosecutions in London and New York focused the blame on individual traders, with thirty-seven of them prosecuted for rate manipulation. Two of them, Tom Hayes and Carlo Palombo, both of whom have spent time “inside” before being released in 2021, were found guilty of rigging key interest rates have had their appeal against their convictions dismissed by the Court of Appeal. The convictions hinged on whether the traders acted dishonestly by influencing the setting of key Libor and Euribor interest rates, or whether it was normal practice at the time. In the US, rate rigging convictions, including for Mr Hayes, have been overturned after an appeal court said the US government had failed to provide evidence the traders had said anything false or broken any rules. However, the UK Court of Appeal said the US judgment “is not, and could not be, relevant” to the issues in English law; it also dismissed concerns that judges had decided whether their conduct was permitted, but this should have been for the jury to decide. The traders say they will now apply to take their cases to the Supreme Court. The UK is currently the only jurisdiction in the world that treats what traders did as criminal.

Despite declining falling food and fuel sales, (with the former mainly because of the month was the fourth wettest in history), February shop sales stayed flat, with clothing sales moving higher, driven by shoppers splashing out on the new season’s collections.; this has followed a lacklustre December, (down 3.2%), return, with a robust 3.6% bounce back in January. The sector is being hit by the double whammy of poor weather and challenging economic conditions., as the country recovers from the Q4 mild recession. Although Prime Minister Rishi Sunak has said the UK economy will “bounce back” in 2024, little credence should be given, as he has been proved hopelessly wrong with his previous forecasts.

Jeremy Hunt epitomises how out of touch the Sunak government is from economic reality. Last week, the millionaire Chancellor said that people on higher salaries still ‘feel under pressure’ and argued that his new tax cuts will help people on the average salary. He claimed that US$ 126k (GBP 100k), is ‘not a huge salary’ for people in his SW Surrey constituency after critics accused him of being out of touch. The Chancellor said “what sounds like a large salary – when you have house prices averaging around GBP 670k (US$ 846k) in my area and you’ve got a mortgage and childcare costs – it doesn’t go as far as you might think”. It seems that UK’s median gross annual salary for full-time employees was US$ 44.1k, (GBP 35.0k)  and in Surrey US$ 53.0k, (GBP 42.0k) – 58% lower than the Chancellor’s US$ 126k. The average punter in the UK must be asking how can politicians, with relatively huge fortunes, understand the impact of their decisions on people on the breadline? The names of some include the prime minister, Rishi Sunak, who according to The Times, was a “multimillionaire in his mid-twenties”, and his wife who claimed non-dom status for so long and did not have to pay UK tax. His family are believed to own four properties including a grade II-listed manor house in the village of Kirby Sigston, near Northallerton, in his Richmond constituency, which was bought for US$ 1.9 million in 2015 and a five-bedroom townhouse in South Kensington, London, which records show was last sold for US$ 5.7 million in 2010. He is also believed to own a flat in South Kensington in addition to a penthouse apartment with views of the Pacific Ocean in Santa Monica, California. His wife, Akshata Murty, is the daughter of the co-founder of Indian tech giant Infosys and her shares in the company are believed to be worth around US$ 543 million. Other millionaire Tories include the likes of Jacob Rees-Mogg, Nadhim Zahawi, Alister Jack and Sajid Navid.

Oji Holdings, a Japanese nappy maker, is the latest firm  to announce that  it will stop producing diapers for babies in the country and, instead, focus on the market for adults – an indicator that Japan has fast become an ageing population, where birth rates are at a record low; in the country last year, the number of babies born totalled 758.6k – 5.1% lower than the 2022 figure and the lowest number since the Nineteenth Century. In the 1970s, annual birth rates topped two million. Oji Holdings said its subsidiary, Oji Nepia, currently manufactures four hundred million infant nappies annually, compared to seven hundred million at its peak in 2001. It seems that sales of adult nappies outpaced those for infants in the country for more than a decade. the adult diaper market has been growing and is estimated to be worth more than $2.02 billion. Oji Holdings also said it would continue to make baby diapers in Malaysia and Indonesia where it expects demand to grow.

Japan now has one of the world’s oldest populations, with almost 30% of them aged sixty-five or older, and in 2023, the proportion of those aged above eighty surpassed 10% for the first time. This is creating a crisis for the Kishida government as it loses its third position in the economic world to Germany, not helped by a shrinking population.Efforts to date to address these challenges have met with little success for a variety of reasons – lower marriage rates, more women joining the workforce and the increased costs of raising children. Even the Prime Minister has noted that “Japan is standing on the verge of whether we can continue to function as a society,” adding that it was a case of “now or never”. Other Asian nations are in the same boat including South Korea, (which has the lowest birth rate in the world), Hong Kong, Singapore and Taiwan, where birth rates continue in decline. On top of that, an ageing population and the impact of a decades-long one child-policy, which ended in 2015, are also creating demographic challenges in China. It’s A Sign Of The Times!

According to panellists at JLL’s “Navigating the growth spectrum: Exploring Strategies for sustained success”, Dubai’s real estate sector is expected to continue its upward trajectory in 2024, despite a softening global outlook, and on track to deliver approximately 34k units, compared to an estimated 42k last year – an indicator that the pace of increase is slowing.  (Meanwhile, Property Monitor expects 40k units to be handed over by the end of 2024, after 100k were launched last year, with most of that total not hitting the market until the end of 2025 at the earliest). The triple factors that continue to keep the market hot are robust economic fundamentals, government initiatives, and increased investor confidence; all this in an era of continuing inflationary pressures, with escalating land prices and construction costs. The JLL experts noted that “the positive sentiment and performance of various macroeconomic indicators reflect trust and resilience both in the UAE and GCC markets, even as Dubai continues its run as a dominant force in the region’s property sector.”

Looking at other assets in the property sector, the panel noted that “buoyed by its high desirability index, residential, hospitality, and office remain the top-performing segments in the UAE. Commercial real estate represents a competitive landscape with supply-demand gaps for high-quality spaces. Core asset classes continue to generate interest in the UAE’s capital market and the aggressive pricing strategy, pursued by asset managers, witnessing prime office and hospitality yields about to break the 7.0% threshold.” In the office market, robust demand for office space continued in a sellers’ market, rents continued maintained growth, due to the limited availability of quality space, and rising inquiries from occupiers. Despite a growing preference for quality over quantity, Grade A offices were limited in supply. As a result of the introduction of progressive government visa, changing work patterns and remote working opportunities, there was a surge in demand for flex offices.

With development in the emirate’s most prime areas – including the likes of Downtown, Maritime City, Jumeirah Village Circle, Meydan City, Arjan and Business Bay – having almost reached capacity, the law of supply and demand comes into the equation which means that the prices of plots of land are heading north. An increase in land values, allied with the rise in building costs, can only have one conclusion – villa/apartment prices have to move higher. S&P analysts said that the Dubai developers’ financial health is improving “due to record pre-sales and faster cash collections,” but have warned that oversupply risks “could precipitate a cyclical reversal.” This observer notes that any slowdown is still some way off because many of the projects post Covid will have a gestation period of thirty months optimum and the majority will only be ready for hand off late 2025-early 2026. Whether the cooling off takes place then will depend on several factors – the population growth, the increase in the number of short-term lets, the number of two-home families, people working in Dubai and currently living in other emirates deciding to move because of the daily ‘traffic carnage’ and the rise of overseas, (and indeed local), investors.

Dubai’s Department of Economy and Tourism posted that in January, the emirate’s hotel revenue reached US$ 560 million – 16.5% higher than a year earlier. In the month, the total number of hotel nights reached 3.84 million, up 10.5% on the year, and the average return per room was US$ 146.

Under the directives of HH Sheikh Mohammed bin Rashid, Nakheel and Meydan are set to become part of Dubai Holding, under the leadership of HH Sheikh Ahmed bin Saeed in an effort to sustain and advance growth through a unified and integrated vision that builds on gains, spurs efforts and boosts Dubai’s global competitiveness. The Board of Directors of both Nakheel and Meydan Company will be abolished. The Dubai Ruler noted that “today we directed the inclusion of Nakheel and Meydan companies under the umbrella of Dubai Holding, forming a global economic entity with a diverse portfolio in sectors such as technology, media, hospitality, real estate, retail, and more”. He added, “The goal is to create a more financially efficient entity, owning assets worth hundreds of billions, and comprising global expertise across various sectors with which we can compete regionally and globally, achieving our national objectives, and realising the Dubai Economic Agenda D33”.

Established twenty years ago, Dubai Holding’s portfolio includes Jumeirah Group, Dubai Properties, Tecom Group, Arab Media Group, Dubai International Capital, Dubai Group, EITC, Meraas, Wild Wadi Waterpark, The Emirates Academy of Hospitality Management and Dubai Park & Resorts. Investments and joint ventures under the Dubai Holding portfolio include Dubai Hills Estate, du, Rove Hotels, and Dubai Waste Management Centre. It has always targeted to create an innovation-driven knowledge-based economy. Today, it has assets valued at US$ 32.4 billion across twelve nations. Tecom Group alone owns and operates ten sector-focused business clusters, with Dubai Internet City and Dubai Media City being the flagships with the other eight being Dubai Outsource City, Dubai Studio City, Dubai Production City, Dubai Knowledge Park, Dubai International Academic City, Dubai Science Park, Dubai Industrial City and Dubai Design District (d3). Projects under Meraas Holding and Merex Investment – a joint venture with Brookfield Asset Management – are also partly under the Dubai Holding umbrella. These include City Walk, La Mer, and Bluewaters Island.

Sheikh Hamdan bin Mohammed, chairing the first meeting of the reconstituted Executive Council of Dubai since its reconstitution, approved a portfolio of PPP projects of the Dubai Government valued at US$ 10.90 billion. Encompassing a gamut of projects, as part of its PPP strategy, the new portfolio targets to further enhance cooperation and inspire new collaborations between the Dubai public and private sectors; its main ambitions are for Dubai to become a strong, vibrant hub for global economic development and a platform for emerging sectors. Over a three-year period, until 2026, the new PPP projects portfolio will cover ten fundamental economic sectors. The Department of Finance (DoF) has built a comprehensive performance framework programme to ensure accurate management of the PPP ecosystem performance,  revolving around five strategic objectives:

• ensuring compliance with the PPP Law, policies and guidelines throughout the partnership lifecycle
• encouraging government entities to adopt the PPP model
• encouraging private sector participation in public sector projects
• stimulating innovation in project financing, development and operation through private sector participation
• pushing towards the adoption of environment, social and governance

practices in the PPP ecosystem

Over the past year, the Central Bank of the UAE has overseen record levels of growth in assets, credit, deposits and investments, and maintained strong levels of capital efficiency, provisions and reserves, to ensure compliance with the highest standards of governance, transparency and risk management.  All the cumulative indicators, year on year, for banks operating in the country have headed north:

Total Assets                                     11.1%                                 US$  1.11 trillion
Gross Credit                                       6.0%                                 US$ 542.78 billion

Total of all Deposits                          13.5%                                 US$ 687.19 billion
Aggregate Capital/Reserves               5.2%                                  US$ 133.16 billion

Total Capital Adequacy Ratio             17.9%

Foreign Assets of the Central Bank    16.7%                                 US$ 185.61 billion

Liquid Assets                                         29.0%                                 US$ 202.18 billion

Tier1 Capital Adequacy Ratio               16.6%
CET 1 Capital Ratio                                14.9%

It expects that there will be further growth this year, with the upward momentum continuing, despite all the global geopolitical and economic challenges and changes.

Money Supply M1, which comprises Currency in Circulation outside Banks (Currency Issued – Cash at banks) plus Monetary Deposits, increased by 12.4% to US$ 225.97 billion. Money Supply M2 (M1 plus Quasi Monetary Deposits (Resident Time and Savings Deposits in Dirham, plus Resident Deposits in Foreign Currencies), grew by 18.8% reaching US$ 551.34 billion. Money Supply M3 (M2 plus government deposits at banks and at the Central Bank) rose by 16.0% at US$ 666.27 billion.

Following an independent 2019 investigation that found that NMC had not reported more than US$ 4.0 billion in debt, UAE-based hospital operator, NMC Healthcare, was placed into administration in April 2020. Almost four years later, it has signed an out-of-court settlement with Dubai Islamic Bank to resolve all ongoing and pending legal disputes between them and any associated third parties. Details of the agreement were not disclosed but it appears that DIB will receive a cash consideration and Holdco notes to settle certain claims, which will entitle the bank to become an economic owner of NMC Holdco, NMC Healthcare’s new holding company. NMC Holdco owns the restructured NMC operating companies through its wholly owned subsidiary, NMC Opco, which owns and runs eighty-five healthcare facilities in the UAE and the ME region. Legal claims were filed in the UK and Abu Dhabi against NMC founder BR Shetty, M Prasantanghat and the Bank of Baroda, in a US$ 4 billion case alleging fraud.

Borse Dubai, the holding company for the DFM and Nasdaq Dubai, and owned by the Investment Corporation of Dubai, is to sell about twenty-seven million shares, at US$ 59 a piece, in a secondary offering, with the holding company of the DFM selling almost a third of its stake in Nasdaq, the New York-based exchange operator for US$ 1.59 billion. Borse Dubai will receive all of the proceeds from the secondary offering, and the transaction remains subject to market conditions, and on conclusion, it is expected to hold about 62.4 million shares, equating to 10.8% of Nasdaq; it has also agreed to an eighteen-month lock-up of its remaining stake. Borse Dubai invested in Nasdaq in 2008, as part of a complex deal, where Nasdaq acquired the Dubai company’s shareholding in Sweden’s OMX.

On its opening day of trading on Thursday, shares of Parkin debuted on the DFM and saw its value soar by 30.0% from its opening of US$ 0.572, (AED2.10), to US$ 0.744, (AED2.73); thirty-six million shares changed hands; it closed the week on US$ 0.755, (AED 2.77). The company was established last year to oversee parking operations in the emirate. The Dubai Investment Fund had sold 749.7 million ordinary shares of Parkin, 24.99% of the total issued share capital, in the IPO which closed on 14 March, with the final offer price implying a market cap of US$ 1.72 billion; its IPO was oversubscribed by 165 times.

 The DFM opened the week on Monday 18 March 9 points (0.2%) higher the previous week, gained 18 points (0.4%) to close the trading week on 4,262 by Friday 22 March 2024. Emaar Properties, US$ 0.01 higher the previous week, gained US$ 0.04, closing on US$ 2.28 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.66, US$ 4.85, US$ 1.57, and US$ 0.36 and closed on US$ 0.67, US$ 4.81, US$ 1.60 and US$ 0.39. On 22 March, trading was at 275 million shares, with a value of US$ 418 million, compared to 424 million shares, with a value of US$ 201 million, on 15 March 2024.

By Friday, 22 March 2024, Brent, US$ 3.46 higher (4.2%) the previous fortnight, gained US$ 0.17 (0.2%) to close on US$ 85.56. Gold, US$ 217 (7.1%) higher the previous four weeks, gained US$ 82 (3.9%) to trade at US$ 2,083 on 22 March.

Hui Kaa Yan and Evergrande, the Chinese property giant he founded, have been accused of inflating revenues by a massive US$ 78 billion in the two years before the firm defaulted on its debt. The China Securities Regulatory Commission has fined the company’s mainland business, Hengda Real Estate, US$ 584 million, and its owner over US$ 6 million, and laid much of the blame on him for allegedly instructing staff to “falsely inflate” Hengda’s annual results in 2019 and 2020. Last September, Mr Hui, who was once the richest person in the country, was put under police surveillance, as he was investigated over suspected “illegal crimes”, and, in January, the company was ordered to liquidate by a Hong Kong court. With a debt totalling over US$ 300 billion, the liquidators will investigate Evergrande’s overall financial position and identify potential restructuring strategies. Normally this would involve, inter alia, selling off but it is highly likely that this will not happen, as the Chinese government may be reluctant to see work halt on property developments in the country, where many would-be homeowners are waiting for homes, they have already paid for. The other factor to bear in mind is that the property sector accounts for over 33% of the Chinese economy and, if that were to see a major slowdown, it would have a knock-on effect not only on the domestic, but also the global, economy. The building sector has had major liquidity problems, ever since 2021, when authorities introduced measures to curb the amount big real estate developers could borrow. Latest data indicate that property investment in China fell 9% in January and February from a year ago, whilst new construction starts also dropped by 30% – their worst fall in more than a year.

The US Department of Justice is suing Apple, accusing the tech giant of maintaining an illegal monopoly on smartphones, with the lawsuit citing five examples of Apple suppressing technologies that would have increased competition – so-called “super apps,” cloud stream game apps, messaging apps, smartwatches and digital wallets. Attorney General Merrick Garland described the company’s behaviour as “exclusionary, anticompetitive conduct that hurts both consumers and developers”, and that “they stifle innovation, they hurt producers and workers, and they increase costs for consumers”. Apple’s share of the US smartphone market is at a stifling 65%. It claims that Apple encourages banks to participate using their digital wallet but at the same time “exerts its monopoly power” to block them from developing similar products for iPhone users. The lawsuit also adds if an iPhone user messages a non-iPhone user through Apple Messages, the text is only a green bubble, it is not encrypted, videos are pixelated, and users cannot edit messages or see typing indicators. Apple is also in the headlights of the EC regulators who are expected to announce investigations in the coming days into whether it has breached Europe’s Digital Markets Act. Apple shares were down 3.5% in US morning trading.

Following the release of its latest B200 “Blackwell” AI chip, which is thirty times speedier at some tasks than its predecessor, it is almost certain that Nvidia the firm will increase its already 80% dominant market share. Furthermore, the firm, which is the third-most valuable company in the US, behind only Microsoft and Apple, has seen its share value surge 240% over the past twelve months when its market value touched US$ 2.0 trillion in February. Nvidia said major customers, including Amazon, Google, Microsoft and OpenAI, are expected to use the firm’s new flagship chip in cloud-computing services and for their own AI offerings. It has also outlined a new series of chips for creating humanoid robots, as it enters a period of intense competition, from the likes of AMD and Intel, but noted that “even if Nvidia loses some share, they can still grow their overall business because there’s just a lot of opportunities for everybody”.

In a class action brought on behalf of over 8k Australian taxi and hire car owners and drivers, Uber has agreed to settle a lawsuit, valued at US$ 178 million. The class action, filed in 2019, alleged they lost income when the ride-hailing giant “aggressively” moved into the country. The law firm, Maurice Blackburn, noted that “Uber fought tooth and nail at every point along the way,” and that “this case succeeded where so many others have failed”.   .   .   . “what our group members asked for was not another set of excuses – but an outcome – and today we have delivered it for them.” The court still needs to approve the proposed settlement as being in the best interests of group members. The San Francisco-based Uber, founded in 2009, operates in around seventy countries and more than 10k cities globally.

The German Football Association’s (DFB) has decided to switch the supplier of the national team’s kit to US firm, Nike as from 2027. Its previous kit supplier was the German company Adidas, who had been its supplier for the past seventy years. Although many politicians and the German footballing world appeared stunned with the news, the DFB said the deal made financial sense and would support grassroots German football. Reports indicate that the Nike offer of US$ 108 million a year was more than double that of its German counterpart. Adidas will now be looking over their shoulder and becoming concerned about their fifty-year link with FIFA going the same way.

Whilst sales at rivals, LVMH and Hermès, remain resilient as they both post higher than expected 2023 sales, Kering, the owners of Gucci, is expecting Q1 sales to be 20% lower because of a slowdown in Asia, especially in China which accounts for 33% of its total revenue. The overall sector has grown over the past decade, but recent sales have not been as impressive. Kering, whose other brands include Yves Saint Laurent, Balenciaga and Bottega Veneta,  has noted that its profit warning “reflects a steeper sales drop at Gucci, notably in the Asia-Pacific region”. With annual 2023 profits having fallen by 17%, it was no surprise to see its share value had also slumped – by 23%. Last year, Kering overhauled Gucci’s top management by appointing Jean-François Palus as its chief executive officer and Sabato De Sarno as its creative director; 2024 will see whether this will result in improved financials.

There are reports that Ted Baker is heading for administration, as it commented that “damage done” during a tie-up with another firm was “too much to overcome”. It seems that No Ordinary Designer Label (NODL), Ted Baker’s holding company in the UK and Europe, had “built up a significant level of arrears” during a tie-up with Dutch firm AARC. The partnership with AARC, which ran Ted Baker’s shops and online business in Europe, ended in January. Authentic Brands Group, the Ted Baker brand owner since 2022, confirmed it will continue to trade and customer orders will be fulfilled, and that it was in “advanced discussions” with several potential buyers.  Authentic, which owns brands including Reebok, Hunter and Juicy Couture, as well as licensing agreements in place for stores in cities in Asia and the ME, bought Ted Baker two years ago in a US$ 268 million deal. Although Ted Baker “will continue to trade online and in stores, “there are no indications about the future of its almost 1k staff numbers and its forty-six stores.

As part of an extensive three-year cost-saving plan, Marmite and Dove soap-owner Unilever is planning to cut global staff  numbers by 7.5k, (out of a total of 128k), and that it would split off its ice cream business which includes the Wall’s, Ben & Jerry’s and Magnum brands which will start immediately and should be completed by the end of next year. The redundancies will primarily involve office staff and is expected to save US$ 868 million over the next three years. The company chairman noted that “the separation of ice cream and the delivery of the productivity programme will help create a simpler, more focused, and higher performing Unilever,” and “it will also create a world-leading ice cream business, with strong growth prospects and an exciting future as a standalone business.” There appears to be two options available – either a demerger, which would mean current shareholders receiving shares in a newly listed entity, or a direct sale.

There are reports that London-listed Naked Wines has hired Interpath to advise it on options for its debt facility, after a share price slump, in the midst of tough trading conditions. Over the past twelve months, its shares have slumped by over 30%, giving it a market cap of of around US$ 63 million. Last month, it named Rodrigo Maza, its UK chief, as its new group CEO, reporting directly to the company’s founder and chairman, Rowan Gormley. The company, which, works with hundreds of independent winemakers and has nearly one million customers, is confident that it will be able to “to secure a similar-sized facility that has less limitation on utilisation and more flexible covenants”.

Thames parent company, Kemble Water, has seen accounting experts appointed by a group of its creditors to advise them how to recover US$ 242 million owed by the water company. The debt is held by the UK’s biggest water utility, with fifteen million customers, and falls due next month. Some reports indicate that a syndicate of financiers, which is owed the sum by Kemble Water, under which Thames’s regulated operations sit, has drafted in a big four accountancy firm amid growing concerns about the company’s survival; last December, the utility’s senior management told a MPs’ hearing that it was “not currently” able to repay the funding. In recent times, it has been beset by problems because of the “generous” dividends given to shareholders, poor record on leaks, sewage contamination and executive pay. It thinks that a 40% hike in consumer bills, and a delay in its capex plans, may help with payments.

Marks & Spencer is close to a deal with HSBC, whose UK arm owns M&S Bank, to overhaul its banking arm as a financial services and loyalty ‘superapp’. Their current contract expires shortly and there is hope that a new deal can be put in place before then. M&S Bank has more than three million customers, offering personal loans, travel insurance, store payment cards and a buy now pay later credit product. Under the existing agreement, M&S is entitled to a 50% share of the bank’s profits, subject to certain deductions. The retailer’s long-term target is to set up a ‘superapp’, encompassing payments, financial services and its Sparks loyalty programme. This announcement comes weeks after both Sainsbury’s and Tesco pulled out of the banking sector. The former’s advisers are still seeking a buyer, whilst Tesco is in line to sell its bank to Barclays in a deal worth an initial US$ 764 million.

The US central bank has left its key interest rate unchanged again, at the range of 5.25% – 5.50%, while it looks for more evidence that inflation is coming under control. Many other central banks – including the CBUAE, BoE, ECB and RBA – did likewise, but Turkey pushed rates up 5% to 50% whilst the like of Egypt and Nigeria saw their rates rising above 20%. Noting that it would expect to cut rates sometime this year, the Fed is proceeding cautiously and will wait until it is sure that the economy is growing, the labour market strong and inflation continues to head south. To date, despite high interest rates, the US economy has performed well – compared to many others – with its 2024 forecast 50% higher, at 2.1%, compared to the previous estimate last December at 1.4%. Furthermore, it is quickly heading to its inflation target rate of 2.0%, with officials expecting the rate to fall to 2.4% by year-end; last month, it nudged 0.1% higher to 3.2%.

For the first time since 2008, Japan’s central bank has raised the cost of borrowing, by increasing its key interest rate from -0.1% to a range of 0%-0.1%. It comes as wages have jumped after consumer prices rose. It also abandoned a policy, (started in 2016 when negative rates were first introduced), known as yield curve control, which saw it buying Japanese government bonds to control interest rates; this policy has for long been criticised because it kept long-term interest rates from rising. Earlier in the month, Japan’s biggest companies agreed to raise salaries by 5.28% – the biggest wage hike in more than three decades – which had resulted in wages flatlining since then, as consumer prices rose very slowly or even fell. This month, the country had avoided falling into a technical recession after its official economic growth figures were revised upwards to 0.4% in Q4.

Last Monday, Pakistan’s central bank held its key interest rate at 22.0% as inflation risks continued to loom; rate cuts are expected to commence in Q2. Inflation hit a record high of 38.0% last June, mainly attributable to new taxation measures imposed to comply with the IMF’s demands for a rescue programme. In January 2024, the central bank had raised the average inflation forecast for the fiscal year ending in June to 23%-25%, from a previous projection of 20%-22%, due to rising gas and electricity prices. The inflation rate last month rose 23.1%, on the year, its slowest since June 2022, partly due to the “base effect”. But the bank noted that it still remained high and subject to risks. The State Bank of Pakistan’s (SBP) monetary policy committee has taken a cautious approach and is looking at bringing “inflation down to the target range of 5–7% by September 2025.” Next month sees the expiry of a US$ 3.0 billion standby arrangement with the IMF.

The UK Office for National Statistics Government posted that February borrowing, at US$ 106.25 billion, was higher than expected, (but lower by US$ 4.30 billion than the same month in 2023), partly due to higher benefits payments such as cosy-of-living support, but also offset by growth in tax receipts exceeding growth in spending. Last month, public debt equated to 97.1% of the country’s GDP, which remains at levels last seen during the early 1960s. Despite a key government pledge that debt should fall as a percentage of GDP over the next five years, according to the Office for Budget Responsibility (OBR) – an independent body that looks at the government’s plans on tax and spending – that pledge is on track to be met, debt is forecast to keep rising until 2028-29.

UK February price rises eased 0.6%, on the month, to 3.4% – its lowest level since September 2021 –  and by more than the much anticipated 3.6%, raising expectations that the BoE may start cutting interest rates sooner than expected, probably by July at the latest The Office for National Statistics noted that easing food price inflation was largely behind the fall and although it has recovered well from its December 2022 high of 11.0%, led mainly by surging energy costs, it is still above the central bank’s 2.0% target In line with others, the BoE raised interest rates aggressively in late 2021 from near zero to counter price rises first stoked by supply chain issues during the coronavirus pandemic and then the Ukrainian crisis, which pushed up food and energy prices The BoE was extremely slow to tackle the problem of inflation and came late in the day to the party by being almost forced to raise rates which have eventually contributed to bringing down inflation worldwide.

The Tax Office is chasing more than US$ 22.31 billion (AUD34 billion) worth of debts owed by small businesses and self-employed Australians; these had been put on hold during Covid. Sometimes, using aggressive enforcement action to collect the money, the ATO is pushing some businesses over the edge, with the inevitable result of a marked rise in insolvencies, which could top levels last seen during the 2008-2009 era of GFC. The rate of company insolvencies in the past financial year is tracking 36% higher than last year and 25% higher than pre-Covid levels; over the past four months alone, they are now 49% higher than last year. These actions include the agency reporting tens of thousands of small businesses with debts to credit reporting agencies, issuing garnishee notices, which can result in the money being taken directly out of a business owner’s bank account, and the agency initiating wind-up applications. Many have been also hit by the double whammy of a slowing economy, including construction, hospitality and retail, and the fact that they still owe other creditors, apart from the ATO. Total collectable debt owed to the ATO jumped 98.5% to US$ 34.35 billion as of December 31, 2023, compared to the same period four years earlier in pre-Covid 2019. Small business account debt accounts for US$ 22.35 billion of total collectable debt. One thing is certain, Australia is the last place to think What If We All Stopped Paying Taxes?

The Way It Is!                                                 15 March 2024

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Say No More!                                                    08 March 2024

Despite fears from some analysts, (who probably should have known better), Dubai real estate transactions surged by 27.0% in February to 11.9k deals, compared to a year earlier, whilst value wise, there was a 35.0% jump to US$ 9.97 billion. A month earlier, January sales came in 26.9% higher, on the year, to US$ 9.65 billion. In February, the consultancy noted that there was a 23.0% increase in existing property transactions, to over 5.5k, with the value of these transactions having surged by 46.9%, year-on-year, to US$ 6.41 billion. Off-plan posted a 31.0% rise in transactions, with their value 18.5% higher to US$ 3.56 billion. Property Finder found out that two B/R and 1 B/R apartments were the most sought-after rental option, accounting for 35% and 33% of all searches, as well as 59% of homebuyers were searching for apartments, (and the 41% balance for villas/townhouses). Top areas searched to own apartments included Dubai Marina, Downtown Dubai, Jumeirah Village Circle, Business Bay, and Palm Jumeirah. Dubai Hills Estate, Al Furjan, Arabian Ranches, Palm Jumeirah and Mohammed bin Rashid City were the most desired areas to own villas/townhouses. Leading areas for rentals were Dubai Marina, Jumeirah Village Circle, Downtown Dubai, Business Bay and Deira. Dubai Hills Estate, Damac Hills 2, Jumeirah, Al Barsha and Umm Suqeim were popular when it came to searches to rent villas/townhouses.

Based on Q4 data, Palm Jebel Ali stands out as the top-performing location for long-term investors. Some industry executives indicate that there are investors who are selling up, already at a 10% premium, but others see the new Palm Island as the next big destination after the on-going success of the smaller Palm Jumeriah Island. Since the relaunch – after a twenty-year plus hibernation period – Nakheel Properties began launching villas last September, with more launched by the master developer in December; there was very strong demand from local and foreign investors. Seemingly, some people are considering it as a future residence, but for others, it is about potential capital appreciation. Research from Emirates NBD Research estimated that in Q4, Palm Jebel Ali generated US$ 3.87 billion in sales, followed by Dubai Marina, with US$ 2.26 billion, and Business Bay’s US$ 1.39 billion. In the prime villa sales segment, Jumeirah Islands and The Palm were the outstanding 2023 performers, with price increases of 33% and 36%, year-on-year. It is expected that when finalised, that could be as early as 2028, Palm Jebel Ali will have 110 km of beachfront, eighty hotels and resorts, and more than 35k households.

According to property consultancy Global Branded Residences, there are fifty-one branded residences currently in Dubai, most of which are well-known hotel brands, with a further seventy planned over the next five years; more than 75% of the new residences will be non-hotel brands, from the automotive, fashion and design industries. Dubai is seen as a magnet for global capital looking to invest in branded residences, driven by factors such as its position as a global hub, favourable government initiatives, a growing economy and robust investor demand, all of which encourage long-term residency. The majority of such future projects will be in Downtown Dubai, Business Bay, Dubai Marina and JBR. Despite having to pay a premium, of up to an estimated 15%, developers tend to prefer branded residences, as they can pass on this premium to buyers, who are happy to pay the extra amount because of the brand and the services/amenities that come with such properties.

Ahead of its launch, Shamal Holding unveiled details of its Dubai Harbour Residences – “a low-rise, boutique residential development, with three hundred and fifty apartment units, ranging from studio to four-bedroom apartments. Located within the district of Dubai Harbour, at the intersection of the Palm Jumeirah and Bluewaters Island, the developer “expects to have the combination of hotels, restaurants, and retail facilities. Additionally, we are adding more berths to the marina, so we’ll be over seven hundred berths. This is also because of the demand that we have, which is at about 90% occupancy, so you can tell that we’re ideally positioned to take the destination forward”. The RTA will undertake the construction of a two-lane bridge in each direction, spanning 1.5k mt and accommodating 6k vehicles per hour, which will extend from Sheikh Zayed Road to Dubai Harbour.

A new entrant to the Dubai property scene is Confident Group, a leading real estate brand of India, which has announced the completion of its first project, completed in just eleven months. It noted that 70% of its Lancaster units, (1 B/R and 2 B/R), have already been booked by customers. Residents of Confident Lancaster will enjoy a host of amenities, “including round-the-clock security, private parking, swimming pools, gyms, spa centres, a cinema, party room, barbecue area, and indoor games,” Confident, which has launched over two hundred and three projects, spanning nearly 100 million sq ft of development in Kerala and Karnataka, is expected to launch another five projects in Dubai, which will be developed individually or in partnerships.

NABNI Developments and Hilton have released plans for Waldorf Astoria Residences Dubai Downtown, set for completion in 2028; this will be the first-ever standalone Waldorf Astoria residential address outside of the US. Located on a 65k sq ft plot in Downtown, the design will be carried out by Carlos Ott Architects, (who have already collaborated with NABNI on several Dubai projects including Lamborghini Building), and interiors by award-winning hospitality design firm Hirsch Bedner Associates.

The latest CBRE study includes details that the total value of real estate projects, currently planned or under construction in the UAE, stands at US$ 409 billion, and accounts for 24.4% of the total projects in the GCC. The consultancy expects a slight drop in transactions but that “price growth in the apartment and villas segments of the market will continue. However, we expect this rate to moderate somewhat over the course of the year.” In its 2024 Market Outlook for Middle East real estate, residential properties are expected to provide a yield of 7.0% to 7.5%, with prime residential real estate in the UAE expected to provide a yield of 6.25% to 7.0%.

Last year, the Dubai retail sector saw average rents 17.6% higher and that levels of demand will continue to be robust even though the level of quality stock in Dubai remains a cause for concern; this may impact new rental registrations moving lower although demand will remain net positive. Rental rates are expected to continue to increase, but at a more moderate level. In the office space category, CBRE forecast that Prime and Grade A assets will continue to outperform the market, given the scarcity in supply and rising demand for high-quality assets. Rental rates will also move higher, albeit at a slower rate, partly attributable to the limited number of developments in the Dubai pipeline.

On 01 March, the Real Estate Regulatory Authority Index was updated and is likely to impact tenants who have been living in properties for over two years. The CEO of Betterhomes, Richard Waind, noted that this will bring future renewals more in line with rents found today on the open market. The calculator tells landlords and tenants how much rent on renewal can increase, based on a benchmark rent for each community. He noted that “the recent increase in the calculator is likely to impact those tenants who have been in situ for over two years and are now likely to see a larger rent increase on renewal than they would have prior to the revision. I expect this will mean some tenants may look to move, or downsize, while for other tenants this may mean they decide to take the plunge and buy a property.” Some analysts see the possibility of rents moving up to 20% in the short-term that could result in present tenants, especially in villas, deciding to downsize or make the move to buy rather than continuing to rent.

Last year, Sobha Realty – which finalised a multi-year principal partnership with Arsenal FC and a venture with IIFA 2023 to expand its global presence – posted a record 51% jump in revenue to US$ 42 million; this year, it expects a 29.0% increase to US$ 5.45 billion. In 2023, it handed over 1.8k units and now claims a 10% market share in Dubai. Its latest launches include Sobha Hartland-2 and Sobha Seahaven Sky Edition, and last year raised US$ 300 million with a Sukuk issuance.

Dubai Mall continues to be the most visited place in the world, and last year there was a 19.3% increase in visitor numbers to 105 million; 2024 promises to be even busier, as twenty million have already visited the attraction in the first two months of the year.

Following a slowdown in the previous month, the latest S&P Global PMI indicates that, in February, the UAE non-oil sector rose at its fastest pace since pre-Covid 2019, driven by a rise in output and business confidence. Despite supply constraints, caused by disruptions in the Red Sea, the Index rose 0.5 to 57.1, while the output sub-index jumped 2.6 to 64.6, attributable to new business, stronger client activity and marketing activities.  Global shipping has indeed been impacted by this ongoing disruption, with some companies reporting delays to input deliveries, resulting in a sharp accumulation of outstanding work. New orders rose at their softest rate for six months, suggesting output growth could also begin to slow. However, employment levels rose at their quickest pace since May 2023, with hiring higher to support workloads and offset backlog growth. February also witnessed client orders improving, but increased competition for business resulted in more price cuts – the strongest since mid-2020. An interesting fact confirmed by the Minister of Economy, Abdullah bin Touq Al Marri, was that the country achieved “a historic first” in 2023, as its non-oil sector accounted for 73% of the UAE’s GDP – a sure sign that the country’s diversification move is paying dividends.

With the holy month of Ramadan due to start this Sunday, 10 March, the Ministry of Human Resources and Emiratisation announced a two-hour reduction in work hours for private sector employees during the holy month. The working hours apply to both fasting and non-fasting employees. Companies have the option to implement flexible or remote work schedules within the limits of daily working hours. Any additional hours worked beyond the reduced schedule may be considered overtime, for which workers will be entitled to extra compensation. All ministries and federal agencies will operate from 9am to 2.30pm from Monday to Thursday, and 9am to 12 noon on Friday.

Under the name, ‘Project Landmark’, Emirates General Petroleum Corporation has launched a first-of-its-kind project in the UAE, and globally, where companies and brands can secure naming rights for their service stations. At the ceremony, held at Dubai’s Museum of the Future, a new model for strategic partnerships, between Emarat and other businesses, (both local and international brands), was launched; each service station will provide a business platform for companies to reach customers and deliver services.

In the latest IPU’s ‘Women in Parliament 2023′ report, UAE is positioned fifth in the world behind Rwanda, Cuba and Nicaragua where women account for 61.3%, 55.7% and 53.9% of total parliamentary seats. The UAE women have parity with the men, as do Andorra and Mexico. The global proportion of MPs who are women nudged 0.4% higher to 26.9%, based on elections and appointments that took place in 2023. In the Americas, women accounted for 42.5% of all MPs elected or appointed in chambers that were renewed in 2023, the highest regional percentage. The region thus maintains its long-held position as the region with the highest representation of women in the world, at 35.1%.

By the end of the week, HH Sheikh Mohammed bin Rashid Al Maktoum, had  issued a law regarding a 20% tax on all foreign banks operating in Dubai; these will include special development zones and free zones, except those licensed to operate in the Dubai International Financial Centre. It will be imposed on the taxable income of a foreign bank, and the corporate tax rate will be deducted from this percentage.

The Dubai Integrated Economic Zones Authority, which encompasses the Dubai Airport Free Zone, Dubai Silicon Oasis, and Dubai CommerCity posted a 15.3% jump in 2023 net profit, with its contribution to the emirate’s GDP moving slightly higher to 5.1%. With its revenue climbing by 8.1%, and its market value of its net assets at US$ 5.67 billion, its EBITDA rose to 49.2%. DIEZ economic zones have witnessed marked growth in the six key sectors which collectively represent 95% of total companies. Wholesale/retail, professional/scientific solutions/services, information/IT, financial/insurance, administration/support and transportation/storage posted growth levels of 24.4%, 89.6%, 18.1%, 106.9%, 93.0% and 48.3% respectively. The total number of personnel working in DIEZ economic zones saw a marked rise of 30.5% to top 70k. During the year, DIEZ achieved record sustainability results by reducing carbon emissions; it increased solar energy generation by 30%, initiated adaptive air conditioning control systems to reduce electricity consumption by 30% and transitioned to LED lighting, resulting in more than 50% savings in total consumption. These measures resulted in a 12% reduction in carbon emissions. During the year, DIEZ finalised its new strategic approach to strengthen the emirate’s position as a premier regional and global investment destination, by targeting the Authority’s contribution to empower businesses and drive economic growth. During the year, it launched a US$ 136 million venture capital fund to support entrepreneurs, investors and emerging companies.

The shareholders of TECOM Group have approved the Board’s recommendation to distribute a cash dividend of US$ 109 million (US$ 0.0218 per ordinary share) for H2 2023. The approved cash dividend payment is in line with the dividend policy set out in the IPO prospectus, in which the company committed to paying a total annual dividend amount of US$ 218 million until next September.

The DMCC, the world’s flagship free zone and Government of Dubai Authority on commodities trade and enterprise, has hosted three events in Hong Kong and China in its quest to attract Chinese businesses to Dubai. The strategy seems to be working as the number of Chinese companies now operating in the free zone rose 25% last year to 852– and also 25% a year earlier in 2022. DMCC is home to over 14% of the estimated 6k Chinese businesses based in the UAE.

Emirates Global Aluminium posted declines in both revenue and net profit driven by a fall in global prices from the decade-highs reached in 2022, (average LME prices in 2023, at US$ 2,264, were 16.6% lower than 2022’s US$ 2,715). Revenue fell 15.0% to US$ 8.04 billion and profit by 54.1% to US$ 926 million, with EBITDA down 38.0% to US$ 2.10 million. However, there were marginal increases in production, to 2.48 million tonnes, and sales volume. Its total debt at the end of the year was 15.7% lower on the year at US$ 4.52 billion. The dividends were set at US$ 1.00 billion – the same as seen in 2022. However, it is expected that global aluminium demand is expected to grow significantly over the coming decade, particularly for low carbon and recycled metal. The company is one of the world’s largest aluminium producers, with smelters in Abu Dhabi and Dubai, a refinery in Abu Dhabi and a bauxite mine in Guinea.

For the first time in its history, the Board of Deyaar Developments announced the approval of a dividend distribution of US$ 48 million – US$ 0.019 per share – equating to 4% of share capital. In 2019, a UAE court ordered Dubai-based developer Limitless to pay Deyaar US$ 112 million in a land dispute and US$ 17 million in fees and compensation.^[4][5] In October 2022, the Board approved a US$ 136 million cash settlement, following which Deyaar reset its business model and since then the results have been impressive.

Driven by soaring revenue from its toll gates, Salik posted a 3.0% hike in Q4 net profit to US$ 80 million, as revenue climbed 12.2% to US$ 153 million, with net finance costs up 21.0%. The toll-gate operator said Q4 revenue-generating trips rose 11.1%, year-on-year, to 123.2 million. The revenue from toll usage fees, primarily generated through trips, constitutes the bulk of Salik’s overall revenue, but this will change this year as it plans to pursue additional revenue sources beyond its core tolling business, including providing technology solutions for parking. It does expect its core business – toll gate revenue – will increase by up to 6% in 2024 and EBITDA margin in the region of a credible 65%. For the whole year, 2023 revenue and net profit were 11.4% higher at US$ 575 million but 17.3% lower at US$ 300 million; revenue-generating trips for the year were 11.7% higher at 461.4 million.

An old stalwart of the DFM returns after trading in its shares were suspended in November 2018, after it reported heavy financial losses. Dubai-based contractor Drake & Scull International plans to return to the bourse, after it had increased its capital by US$ 82 million and received court approval of its restructuring plan that writes off 90% of its debt. This came about when it gained approval from creditors who accounted for 67% of the company’s total debt value. A 27 March EGM will vote on whether the shareholders approve of the move and if so, it could return to trading again on the DFM. The contractor was impacted by the three-year oil price slump that began in 2014, with an almost disastrous effect on the property sector and heavily affected the local property and construction sector. Last year, the company posted a higher net loss compared to its 2022 return – US$ 96 million to US$ 61 million – with 2023 revenue 16% higher at US$ 26 million; it had US$ 97 million worth of assets at year-end.

The DFM opened the week on Monday 04 March 113 points (3.1%) higher the previous week, lost 104 points (2.4%) to close the trading week on 4,253 by Friday 08 March 2024. Emaar Properties, US$ 0.07 higher the previous week, shed US$ 0.03, closing on US$ 2.23 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.67, US$ 4.70, US$ 1.77, and US$ 0.37 and closed on US$ 0.66, US$ 4.67, US$ 1.57and US$ 0.36. On 08 March, trading was at 136 million shares, with a value of US$ 70 million, compared to 213 million shares, with a value of US$ 112 million, on 01 March 2024.

By Friday, 08 March 2024, Brent, US$ 2.19 higher (2.7%) the previous week, shed US$ 1.93 (2.3%) to close on US$ 81.93. Gold, US$ 44 (2.1%) higher the previous fortnight, gained US$ 94 (4.5%) to trade at US$ 2,083 on 08 March.

In coordination with other members, the UAE has confirmed it would extend an additional voluntary cut of 163k bpd, for Q2, in coordination with some OPEC+ countries; production will remain at its current level of 2.912 million bpd; this is in addition to the April 2023 announcement that it would cut 144k bpd extending until the end of December 2024. The latest cut volumes will be reversed gradually subject to market conditions.

As annual air traffic is set to increase 4.6% in the ME, Airbus’ latest Global Services Forecast sees the region’s commercial aircraft services market will more than double in value – from US$ 12.0 billion to US$ 28.0 billion – by 2042, equating to a 4.4% CAGR. Airbus expects the market for ‘Maintenance’ to grow from US$10 billion to US$23 billion. Meanwhile, the market for enhancements and modernisation will show the biggest growth in the period, expanding at 5.5% to US$ 3.6 billion, driven specifically by cabin and system upgrades. The market for training and operations is expected to double in 2042, reaching US$1.6 billion. For the ME region, Airbus anticipates the need for a further 208k highly skilled professionals – comprising 56k new pilots, 52k and 100k new cabin crew members.

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.

Pursuant to “challenging trading conditions” over the past six months, there are reports that the Alshaya Group, (the licensed franchise partner for Starbucks in Mena for more than twenty-five years, operating more than 1.3k coffee shops and employing 11k workers), plan to lay off some 2k workers. The reason for this move comes on the back of a downturn in business arising from consumer boycotts linked to the Gaza war. Laxman Narasimhan, chief executive of Starbucks, noted that “first, we saw a negative impact to our business in the Middle East. Second, events in the Middle East also had an impact in the US, driven by misperceptions about our position”, and “it’s important to note that Starbucks is not the only brand targeted by activists during this war. The situation remains complex and sensitive, affecting businesses and individuals alike.”

OpenAI was founded in December 2015 by several individuals including Elon Musk and Sam Altman. Now the Tesla founder is suing the company he helped start, accusing it of prioritising profit over developing AI for the public good. In a court filing, he is suing the firm, and its chief executive Sam Altman, for a breach of contract by reneging on its pledge to develop AI carefully and make the tech widely available; the AI giant was originally founded as a not-for-profit company but has grown to have commercial interests, with Elon Musk claiming that “under its new board, it is not just developing but is actually refining an AGI [artificial general intelligence] to maximise profits for Microsoft, rather than for the benefit of humanity”. The filing also noted that the company has “been transformed into a closed-source de facto subsidiary of the largest technology company, Microsoft”, which had provided a US$ 1 million investment in 2019 and another for US$ 10 million two years later.; a significant share of this was in the form of computational resources on Microsoft’s Azure cloud service.

A report by Counterpoint shows that Chinese sales of Apple’s iPhones fell 24% in the first six weeks of this year, having been hammered by the local favourite Huawei which saw sales, over the same period, coming in 64% higher. The US tech giant, which was also being attacked by aggressive pricing from the likes of Oppo, Vivo and Xiaomi,” saw its overall smartphone sales shrink by 7% in the same period. Having struggled for years, following US sanctions, sales suddenly surged last August following the release of its Mate 60 series of 5G smartphones which came as a surprise to the market as Huawei had been cut off from key chips and technology required for 5G mobile internet. In the first six weeks, Honor, which is the smartphone brand spun off from Huawei in 2020, was the only other top-five brand to see sales increase in China with sales of Vivo, Xiaomi and Oppo also declining. Vivo remained China’s top-selling smartphone maker last year, followed by Huawei claiming 16.5% market share, with Apple, (having a 15.7% share down from 19.0% in 2022) coming in fourth place. In Q4, Apple’s sales dipped 12.9% to US$ 20.82 billion – a sure indicator, that despite introducing discounts on its official sites in China, Apple returns are disappointing investors.

In what it considered was breaking the bloc’s competition laws, the EU has fined Apple over US$ 3.0 billion by unfairly favouring its own music streaming service; the investigation followed a complaint from music streaming giant Spotify. In challenging the decision, Apple retorted by saying the decision failed to “to uncover any credible evidence of consumer harm” and “ignores the realities” of the market, which is dominated by Spotify. The EC noted that Apple banned app developers from “fully informing iOS users about alternative and cheaper music subscription services outside of the app”, with the EU’s competition commissioner adding that “this is illegal, and it has impacted millions of European consumers.” Apple should have no problem paying this fine when its Q4 profit came in at US$ 33.92 billion. An appeal will take years to go through the courts but meanwhile, Apple will have to pay the fine and comply with the EU order. The commission also has opened a separate antitrust investigation into Apple’s mobile payments service, and the company has promised to open up its tap-and-go mobile payment system to rivals in order to resolve it.

After HelloFresh posted an earnings warning, down to US$ 438 million from US$ 622 million, its shares slumped by over 40%; at the same time, the German meal-kit maker also cancelled its revenue and profit targets for next year, pointing to higher costs in the development of its “ready to eat” business; the same problems are faced by its peers such as the Mindful Chef and Gousto. Covid was a boom time for such companies when many were ensconced at home, but since then customer numbers have fallen – in 2022, global numbers for HelloFresh were 8.5 million, now 7.1 million; the decline in business has had an impact on its share value that has fallen from US$ 109, at the height of Covid, to less than US$ 8 at the beginning of this week.

In December, Mike Ashley’s Frasers Group acquired the loss-making designer brands platform Matches for US$ 67 million, with the aim of turning it around to a profitable enterprise. Three months later, Matches, which sells items from established designers such as Balenciaga, Gucci and Prada, is put into administration with Frasers adding that its acquisition was making unsustainable losses.; most of its sales are online, selling merchandise to one hundred and seventy-six countries.

Following the sudden departure of Bernard Looney last September, BP appointed Murray Auchincloss, formerly BP’s CFO, as its new chief executive. He has not done so badly as it is announced that his pay packet last year was over US$ 10 million – including his salary, a bonus and share based rewards of US$ 1.3 million, US$ 2.3 million and US$ 5.9 million, as well as other benefits. Late last year, BP announced that is predecessor would forfeit up to US$ 42 million after his departure, including US$ 32 million in long-term share awards. Global Witness accused BP of giving its chief executive” a multi-million, fat cat pat on the back” after becoming “one of the biggest winners of Russia’s war in Ukraine while most people were “living pay check to pay check”.

On Tuesday, Bitcoin broke through to hit a new all-time high of more than US$ 69k surpassing the previous high posted in November 2021 – a year later, the cryptocurrency had sunk to around US$ 16.5k; it ended the week at US$ 68.6k. The latest surge is down to major US finance giants pouring billions into buying bitcoins; these entities are the same that vehemently voiced their opposition to cryptocurrencies from their very existence start in 2009, supposedly invented by the now infamous Satoshi Nakamoto. Finally realising that they were ‘walking on quicksand’, in January, US regulators reluctantly approved  several spot Bitcoin Exchange-Traded Funds (ETFs) and billions of dollars started pouring in for Bitcoin. That allowed giant investment firms, like Blackrock, Fidelity and Grayscale, to sell products based on the price of Bitcoin. Between them, they have been buying hundreds of thousands of bitcoins, rapidly driving up their value. Retail investors have probably left it too late in this cycle to cash in but one thing is certain about this volatile currency – it will go down as quickly as its value has risen. When it sinks to US$ 30k, then is the time to buy and hold until it tops US$ 65k and then leave the market. Such a scenario could easily occur over the next twelve months.

When most of the population thought that things could not become worse, they did overnight, with Egyptians waking up on Wednesday to a further 6.0% rate hike and the Egyptian pound being devalued, for the fourth time since 2022, and losing 60% in value by midday. This is after the Central Bank of Egypt decided to allow market forces to determine the value of the currency. The Monetary Policy Committee aims to unify the exchange rates and eliminate foreign exchange backlogs following the closure of the spread between the official and the parallel exchange rate markets. It also hopes that this strategy will bring underlying inflation under some sort of control, with headline inflation slowly dipping south.

Premier Li Qiang announced that China had set a 2024 growth project of around 5.0% and would introduce a series of measures, aimed at boosting its flagging economy, after admitting that the country’s economic performance had faced “difficulties”, adding that many of these had “yet to be resolved”. Measures included the development of new initiatives to tackle problems in the country’s crisis-hit property sector, aims to add twelve million jobs in urban areas, increased regulation of financial markets, with research being stepped up in new technologies, including AI and life sciences. Premier Li Qiang almost admitted that “risks and potential dangers in real estate, local government debt, and small and medium financial institutions were acute in some areas,” and that “under these circumstances, we faced considerably more dilemmas in making policy decisions and doing our work.” There are still many economists who still think that for years, the Chinese economies have been fabricated and even last year’s official 5.2% could really have struggled to top 2.0%. The economy will also suffer by the double whammy of low birth rates and an increasing ageing population, as youth employment becomes an increasing challenge to the government. As most global economies have had to deal with soaring inflation rates over the past thirty months, China seems to have missed its brunt and avoided soaring inflation rates.

Now the shoe is on the other foot, as the country is starting to come to terms with the problem of deflation, with consumer prices in China falling in January at the fastest pace in almost fifteen years, marking the fourth consecutive month of declines – the sharpest decline since post GFC 2009. In a deflationary cycle, consumers (and businesses) will keep putting off buying big ticket items on the expectation that they will be cheaper in the future. Another feature is probably more damaging – with prices and incomes may decline, debts do not, resulting in debt repayments becoming more onerous, as companies have to deal with revenues heading south and households having to manage with a declining income. It also has an impact on people and businesses with debts. Prices and incomes may fall, but debts do not. For a company with falling revenue, or a household with a declining income, debt payments become more of a burden.

Following the well-publicised demise of Silicon Valley Bank last year, the IMF is warning that US lenders’ continued exposure to risk could spark a new financial crisis, as high interest rates, economic uncertainty and declining commercial real estate prices still put US banks at risk of failure. The report specifically mentioned a “weak tail of banks” that are vulnerable because of high interest rates. The world body noted that the episode showed how a group of weak banks can force regulators to enact emergency measures, even if that group of banks is “not individually systemic” and that regulators were partly to blame for not flagging the problems faced by SVB sooner.

Despite more jobs being created in February, (270k), the US unemployment rate nudged up, by 0.2%, to 3.9% on the month, to its highest rate in two years. The jump in the unemployment rate was due to an estimated 334k more people reporting being out of work. Overall, analysts said there was little in the report to fuel major worries or raise fears that the economy would be harmed by higher interest rates, although Harvard professor Josh Furman added that the latest figures tilted the “balance of worry ever so slightly away from inflation and towards recession”. The job gains were attributable to increased. hiring by health care firms, the government and bars/restaurants.

With the Nationwide Building Society edging in on a US$ 3.72 billion deal to acquire Virgin Money, with both entities continuing to be run as separate units, it will become the UK’s second largest mortgage and savings group by market share and be worth some US$ 469.0 billion, with total lending and advances of about US$ 363.0 billion. It is expected that there will be no material change in the size of the 7.2k Virgin Money payroll – at least in the short term – and that the Virgin Money brand will be retained for around six years. The all-cash offer of US$ 2.82 per Virgin Money share equates to a 38% premium on Virgin Money’s share price last Wednesday; a further US$ 0.0256 a share dividend pay-out would come on top of that payment. The bank was formerly the Clydesdale and Yorkshire bank group and rebranded after a US$ 2.05 billion takeover of Sir Richard Branson’s banking group in 2018.

The Australian Transaction Reports and Analysis Centre has ordered an external audit of UK’s Bet 365 over its compliance with anti-money laundering and counter-terrorism financing laws. With the online betting sector coming under increased  scrutiny, Austrac’s CEO, Brendan Thomas noted that “businesses without adequate processes in place to manage those risks leave themselves vulnerable to exploitation by criminals,” The watchdog, which investigates banks, casinos and betting companies to make sure they have robust compliance systems to prevent them from profiting from the proceeds of crime,  have been probing Ladbrokes owner Entain since 2022, while another rival Sportsbet is facing an external audit. In the country, all customers have to be assessed by such firms and all transactions monitored in order to identify, mitigate and manage the risk that they might be engaging in money laundering or financing terrorism. Laws have recently been strengthened that have seen the use of credit cards banned for online gambling, whilst stricter rules have been introduced relating to advertising.

As an aside, Bet365 made a US$ 78 million loss, in the year ending 31 March 2023, despite revenue growing to US$ 4.32 billion; the previous year it turned in a US$ 42 million profit. Last year, its chief executive Denise Coates was paid around US$ 282 million as well as a further US$ 64 million in dividends. Ms Coates, who has a degree in econometrics, founded the Bet365 website in 2001 and the company is now the biggest private sector employer in the UK.

For the first time, it is reported that chicken meat has surpassed lamb. The Australian Bureau of Statistics posted that, in Q4, poultry slaughter increased by 0.02% to US$ 662 million, while lamb and sheep meat slumped by 7.6% to US$ 586 million, as the volatile nature of the lamb supply chain between the farm gate and the supermarket led to a reduction in the value of sheep meat. Another reason for the decline is that farmers have been selling off sheep and lambs, at a lower weight, which caused a drop in price and overall drop in value. Last Spring, lamb prices almost halved compared to a year earlier, whilst some reports indicated that sheep were being sold for just US$ 0.66; however, it took some time for supermarkets to adjust prices lower.

As with other major retailers trying to retain staff, and keeping ahead of the minimum wage threshold, both John Lewis/Waitrose and the Co-op are raising their minimum pay levels. The former will raise pay for store workers to US$ 14.72 and to US$ 16.43 for those in London, whilst the Coop will raise pay by 10.1% to US$ 15.30 and US$ 16.77 in London; the National Living Wage currently stands at US$ 14.59. Tesco, Sainsbury’s, Aldi and Lidl have already raised pay rates, with M&S and Asda starting next month.

There are reports that UK Finance, the country’s banking association, has warned its members that some eight hundred ‘rogue’ filings, related to one hundred and ninety companies, have been lodged at Companies House, the UK’s central corporate register. The banking body also confirmed that it had warned both Companies House and the Department for Business and Trade that the forms related to the discharging of financial liabilities were submitted in late February. It also stated that a number of members and law firms had “flagged an issue regarding the apparently erroneous satisfaction of security (registered charges) on Companies House relating to a number of live business clients”.

Following the Chancellor’s Wednesday Budget, the Institute for Fiscal Studies said households would be worse off at the election, expected this year, than they were at the start of this parliament, even though the Chancellor cut US$ 0.0255 off National Insurance, equating to UD$ 12.73 billion; the think tank also noted that this will be a record tax-raising exercise. Raising a slight laugh among Opposition MPs, Jeremy Hunt pointed to upgrades to short-term forecasts saying the UK would soon be “turning a corner” on growth as it has on inflation. He tried to get away with the fact that the cut would benefit millions of workers, on average earnings, who would be some US$ 1.27k better off, but failed to mention that he was only giving back “a portion” of the money taken away through other tax changes; previous freezing of tax thresholds has resulted in many having to pay more tax – overall, for every US$ 1.27 given back to workers (including the self-employed) by the NICs cuts, US$ 1.66 will have been taken away due to threshold changes between 2021 and 2024, with this rising to US$ 2.42 in 2027. The IFS estimates that by 2027, the average earner would be only US$ 178 better off, and only people, earning between US$ 40.8k and US$ 70.1k a year, would be better off from the combined tax changes. The Resolution Foundation said that, after taking account of rising prices, the average wage will not regain its 2008 level until 2026. Say No More!

Lipstick On Your Collar!                                                    01 March 2024

Emaar Properties announced that it would be investing US$ 26.14 billion on two luxury projects – The Heights Country Club, (at an estimated US$ 15.0 billion) and Grand Club Resort, (at US$ 11.17 billion) – situated adjacent to one of its current developments, The Oasis, on the outskirts of Dubai. No specific details were released but according to the developer, both “are expected to significantly enhance sales and profitability” and include “a substantial number of villas and townhouses.” Last June, Emaar launched the US$ 20.0 billion The Oasis, a luxury waterfront property development, with 7k residential units, including mansions and villas. The market is still awaiting further details of its tower to be built at Dubai Creek Harbour, which initially was thought  was to become the world’s tallest, but plans have been reportedly pared back.

A Betterhomes study concludes that sellers are currently positioned advantageously, capitalising on a surge in property transactions and escalating prices driven by growing buyer demand, resulting in Dubai’s realty sector fast turning into a sellers’ market, as the move to cash in on ‘profits’ gains traction post Covid. There is no doubt that property prices are slowing down after a three-year rally, with some investors having already sold out. The consultancy’s MD, Louis Harding, added that “one of the key benefits for sellers in this swiftly expanding market is the potential for a lucrative return on investment, with property owners currently enjoying favourable rates”, and that “the rapid growth in Dubai’s population further amplifies property demand and prices, creating an advantageous landscape for sellers, particularly areas with limited supply.” In terms of RoI, it noted that Downtown, District1 MBR, Jumeirah, Dubai Hills, Palm Jumeirah and DIFC were the best performing locations.

Emirates NBD’s Mayed Alrashdi warned that the sector could face “some headwinds in 2024, including continued high-interest rates, declining affordability for the average household, and a growth in the supply of new units,” whilst noting that there had been a 7.0% dip in 2023 mortgage transactions to US$ 34.1 billion as the continuing impact of high mortgage rates dented household spending. By the end of the year, demand was still outpacing supply but there are analysts who see the increase in inventory (which one put at 60k – 41.5k apartments and 18.5k villas) could swing the balance towards equilibrium. Indeed, if this amount of 60k units were added to Dubai’s property portfolio, at 2023-year end, of 823k, (official 2022 figures of 783.6k plus an unofficial 2023 estimate of 39.4k), it would bring the 2024 total to 31 December to 883k.

The US-based Discovery Land Company has launched an ultra-luxury, two sq km, development, adjacent to the Jetex private jet terminal at Dubai World Central; the land was bought for US$ 272 million in 2022. The development will comprise one hundred and ninety-eight mansions and villas, as well as one hundred and thirty-two apartments, on various plot sizes; plot prices start at US$ 7.5 million, up to US$ 50 million, and since December there has been an average 25% price increase. Buyers can select one of Discovery Land’s Olson Kundig designs for villas, starting at US$ 681 per sq ft, or approved custom designs for their villas, which are expected to start at around US$ 409 per sq ft. It is forecast that the site will generate approximately US$ 6 billion in total sales. There will be an annual management fee, yet unknown, for buyers that pays for the multitude of services offered on-site, including doctors and wellness specialists. According to the developer, there has been strong demand to date to live in Dunes, (with 50% of phase 1 already sold out, which will be a members-only community), with a Tom Fazio-designed golf course and several luxury amenities. The site is already home to the Lakehouse, a farm-to-table restaurant and bar overlooking the 11th hole and is close to a variety of lake-focused recreational activities, including swimming and paddle boarding. Up to 70% of the project is set aside for common space, open greenery and the golf course, which will be limited to members and their friends. The community will also have a wellness centre and spa, equestrian centre, organic farm, adventure park and kids club, and a trail that circumnavigates the site. The developer already operates more than thirty high-end global communities.

The latest Which? “best and worst airlines for 2024” ranking surveys seventeen international carriers and once again Emirates performs well, being placed second to Singapore among the top long-haul economy airlines.

		Customer	On Time	Last Minute
		Score		Cancellation
	Singapore	83.0%	64.0%	0.0%
	Emirates	81.0%	75.0%	0.1%
	Virgin Atlantic	76.0%	77.0%	0.8%
	Qatar	74.0%	83.0%	0.0%
	Qantas	71.0%	43.0%	1.2%
	Etihad	70.0%	85.0%	0.0%

Seats on Singapore and Emirates had a similar pitch of 32 inches to 34 inches, compared with Etihad’s 31 inches to 33 inches, whilst both leading carriers were rated the same on customer service, seat comfort, food and drink, in-flight entertainment, cleanliness, cabin environment and value for money; they also stood out “for spotless planes, excellent entertainment systems and friendly service”. However, Singapore was rated slightly higher on boarding, with five stars as opposed to four for Emirates. British Airways was ranked joint third lowest out of the seventeen carriers at a score of 59%, followed by American Airlines, also at 59%, Air Canada at 58% and Lufthansa at 56%. Jet2.com was named the best short-haul airline with a score of 81%, whilst Wizz Air was ranked bottom for short-haul flights for the second year in a row, at 44%, followed by Ryanair at 47%, Iberia at 49% and Vueling at 53%.

Emirates has promoted two veteran senior executives, Adel Al Redha and Adnan Kazim, to added roles of deputy presidents, under President Tim Clark; both will retain their current roles of COO and CCO. The President had postponed retirement plans during Covid and there has been no apparent decision on any new date for his departure.

Boeing has been brought to task by the US Federal Aviation Administration, who has given the plane maker ninety days to come up with a plan to improve quality and meet safer safety standards. FAA administrator Mike Whitaker has told Boeing he expects it to provide the FAA with a comprehensive action plan within three months that will incorporate the coming results of the FAA production-line audit and the latest findings from an expert panel report. Now its biggest customer, Emirates has seemingly joined forces with the industry watchdog, agreeing that there was a “disconnect between the management and the safety system”, with supremo, Tim Clark, hinting at delivery delays. The carrier is the largest buyer of the 777X, with two hundred and five on order, with the first due to have been delivered in 2020, but now expected next year. There is no doubt that Boeing must take a fresh look at every aspect of their quality control and focus more on safety, with the Emirates boss agreeing and noting that “whether this means a change in the governance model, I don’t know. When you change the governance model, it invariably involves changing the people around the old governance model.”

Kenya, East Africa’s largest economy, has become the latest nation to conclude a comprehensive economic partnership agreement after becoming one of the first African countries to begin bilateral trade deal talks, with the UAE, in 2022; this was part of a strategy to diversify its oil-based economy. UAE Minister of Foreign Trade, Thani Al Zeyoudi, noted that bi-lateral non-oil trade rose 26.4%, on the year, to US$ 3.1 billion in 2023 and “we will now look to expand across sectors from food production and mining to technology and logistics.” Foreign trade is an integral part of the UAE’s economic agenda – in 2023, the country’s non-oil trade in goods came in 12.6% higher, at US$ 710.0 billion, compared to a year earlier, and up 34.7% on 2021.

Brand Finance’s latest survey shows the UAE ranked tenth globally in its latest Soft Power Index – and ranked first in the region – with its value climbing 43% from US$ 700 million to US$ 1.0 trillion. The survey, including 170k from one hundred and ninety-three nations, placed the US, the UK and China in the top three positions. Encompassing fifty-five main and sub-indicators, it measures the positive reputation of countries and their ability to have a positive impact, as well as to understand the perceptions and opinions of the global public on matters including the investment environment, products and services, living, working, studying, and visiting. The country scored well in indicators related to ‘Strong and Stable Economy’, ‘Future Growth Potential’ and ‘Influence in Diplomatic Circles’.

After February price rises, (except for diesel), the UAE Fuel Price Committee has increased all retail fuel prices, for March. Eight years ago, the federal government liberalised fuel prices so that they could be aligned with market rates until the onset of the pandemic saw prices frozen by the Fuel Price Committee. In March 2021, prices were amended to reflect the movement of the market once again, with all March 2024  retail prices heading north:

The breakdown in fuel price per litre for the month is as follows:

• Super 98: US$ 0.768, to US$ 0.826 in March (up by 5.2%)

• Special 95: US$ 0.738, to US$ 0.796 in March (up by 5.2%),

• Diesel: US$ 0.815, to US$ 0.861 in March (up by 5.7%)

• E-plus 91: US$ 0.777, to US$ 0.733 in March (up by 6.0%)

Dubai Taxi Company posted an 11.0% jump in 2023 revenue, to US$ 531 million, as the number of taxi trips in the emirate increased. EBITDA rose a credible 55% to US$ 134 million, (at a 25% margin), whilst net profit was at US$ 94 million, 54.0% higher on the year. By the end of the year, its fleet of 7.4k vehicles had managed to complete forty-six million trips – 8.0% higher on the year. The Board recommended a US$ 19 million Q4 dividend, equating to US$ 0.0077 per share, in line with the company’s IPO commitment.

Established in January, Parkin, which was set up to oversee Dubai’s parking operations, becomes the latest government entity to offer shares to the public. The latest initial public offering will see 24.99%, (equating to 49.7 million shares), being sold to the public. Subscriptions will open next Wednesday, 05 March, for a week, with up to 10% being offered to retail investors, with a minimum subscription amount of US$ 1.36k. As part of the qualified investor offering, 5% will be reserved for the Emirates Investment Authority and 5% for the Pensions and Social Security Fund of Local Military Personnel. The price range for the deal will be announced on 05 March and the final offer price will be set on 14 March, with listing on 21 March. Parkin is the largest provider of paid parking spaces and services in Dubai, accounting for more than 90% of the emirate’s on and off-street paid parking market. It manages about 175k on and off-street parking spaces across eight-five locations, and close to 18k spaces across seven developer-owned parking lots and also issues permit to drivers, enabling them to subscribe to public parking, use and operate it, and to reserve parking spaces. It becomes the sixth state-owned entity that has listed on the DFM following in the footsteps of DEWA, (which raised US$ 6.1 billion), Tecom, Salik, Empower and Dubai Taxi Company.

Dubal Holding LLC posted a 2023 US$ 488 million net profit, compared to a US$ 1.0 billion return the previous year. DH, the investment arm of the Dubai Government in the commodities and mining, power and energy, and industrial sectors, expanded operations and acquired international assets during the year. Further to the acquisition of Thermalex, (a US aluminium extrusion company specialised in aluminium multiport extruded tube), the company is also exploring the possibility of other opportunities, including large profiles and machined components for the automotive, industrial and new energy verticals such as hydrogen, as well as building a recycled aluminium/cast house facility from extrusions/ profiles. Dubal Holding is the wholly owned subsidiary through which the Investment Corporation of Dubai holds a 50% stake in EGA along with other industrial entities. Other investments comprise a minority stake in Sinoway Carbon Company Ltd, a Calcined Petroleum Coke production facility in China’s Shandong Province, full ownership in OSE Industries LLC (an aluminium extrusion company in Dubai), and a 50% shareholding in Emirates Global Aluminium.

Deyaar Development is launching a US$ 191 million, thirty-three storey project in Jebel Ali, comprising a range of studios to 3 B/R apartments. Eleve becomes Deyaar’s second project of 2024, following the January launch of Rosalia Residences in Al Furjan, which has fully sold out; completion is slated for early 2027. Chief Executive, Saeed Al Qatami, noted that Dubai had been recording “fundamental growth” in its property market and is “not a bubble”; he forecast price rises of up to 15% this year as the demand for property, especially in the affordable sector, is expected to continue growing this year, but that prices of luxury homes will stabilise. He commented that end users are buying property in the secondary or ready home market, while investors – mostly from India, Pakistan and the UAE – dominate the off-plan sector. The developer, majority owned by Dubai Islamic Bank, expects its revenue to rise 30% annually this year.

The DFM opened the week on Monday 26 February, 33 points (0.8%) lower the previous week, gained 131 points (3.1%) to close the trading week on 4,357 by Friday 01 March 2024. Emaar Properties, down US$ 0.04 the previous week, was up US$ 0.07, 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$ 4.81, US$ 1.74, and US$ 0.36 and closed on US$ 0.67, US$ 4.70, US$ 1.77and US$ 0.37. On 01 March, trading was at 213 million shares, with a value of US$ 112 million, compared to 100 million shares, with a value of US$ 79 million, on 23 February 2024.

The bourse had opened the year on 4,063 and, having closed on 29 February at 4,308, was 245 points (6.0%) higher. Emaar started the year with a 01 January 2024 opening figure of US$ 2.16, to close the month at US$ 2.21. 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$ 0.66, US$ 4.99, US$ 1.75 and US$ 0.36.  On 29 February, trading was at 220 million shares, with a value of US$ 151 million, compared to 138 million shares, with a value of US$ 58 million, on 31 December 2023.

By Friday, 01 March 2024, Brent, US$ 1.76 lower (2.1%) the previous week, shed US$ 2.19 (2.7%) to close on US$ 83.90. Gold, US$ 12 (0.5%) higher the previous week, gained US$ 32 (1.6%) to trade at US$ 2,083 on 01 March.

Brent started the year on US$ 77.23 and gained US$ 4.37(5.7%), to close 29 February 2024 on US$ 81.60. Meanwhile, the yellow metal opened 2024 trading at US$ 2,074 and shed US$ 26 (1.3%) to close YTD on US$ 2,048.  

Both Boeing and the Federal Aviation Administration (FAA) said it would also review the findings of a new report for the US government which concluded that there were serious concerns about Boeing’s safety management systems, and that there was a “disconnect” between senior management and regular staff. The embattled plane-maker has had a turbulent recent history including two fatal crashes in 2018 and 2019, as well as the recent Air Alaska incident which saw a section of a plane being blown off mid-air.  The report noted that Boeing staff were hesitant to report problems and worried about retaliation because of how the reporting process was set up, as well as not having a clear system for reporting problems and tracking how those concerns were resolved. All these matters will end up with Boeing having to delay deliveries of new planes much to the dismay and chagrin of many of its customers including Ryanair.

Ryanair has posted that air fares could be 10% higher this summer as the budget carrier has to manage the shortage of planes because of the delay in the Boeing production line, leading to ordered Boeing planes arriving late; delayed delivery will constrain capacity for passengers. Michael O’Leary has indicated that “delivery of fifty-seven Boeing 737 Max 820’s was due by March, but the firm thinks only 40-45 may arrive in time for the summer season,” whilst noting that “if capacity was growing, I think fares would be falling.” He has also commented that costs saved through hedging on fuel would mean that Ryanair’s fare increase would not be as steep as the 17% rise seen in 2023, and that there would be a “higher fare environment across Europe” this summer. The airline’s original forecast for the year to the end of March 2025 was that it would carry 205 million passengers, up from 183.5 million in the twelve months before, but now its supremo notes that “with less aircraft, maybe we’ll have to bring that 205 million down towards 200 million passengers.”

To increase its market share in China, in an ongoing price war with local producers such as BYD, Tesla has resorted to new incentives, including insurance subsidies; Model 3 sedans and Model Y SUVs will now be entitled to a maximum of US$ 4.8k worth of incentives comprising US$ 1.1k discount in insurance products, US$ 1.4k discount, if the buyer chooses a change of paint, and US$ 2.3k if buyers take up a limited-time preferential financing plans  for purchases of Model Y. Earlier in the year, the US EV manufacturer cut prices on some Model 3 and Y cars – and last month offered cash discounts for some Model Ys. Today, 01 March, BYD lowered the starting price of a new version of its Song Pro hybrid SUV by 15.4%. Let the price battle commence.   .    .   . again!

To help drive its transition to EVs at its Luton plant, Stellantis, the parent company of Vauxhall, has turned to the UK government for further financial investment The company has confirmed it will produce “limited” volumes of electric vans for five of its group brands – including Vauxhall Vivaro Electric, Peugeot E-Expert and Fiat Professional E-Scudo in both right and left-hand drive versions – from 2025. Last year, two other major carmakers, Nissan and Jaguar Land Rover, confirmed plans for further investment in the UK. The Japanese company will invest US$ 1.5 billion to build two electric car models at its Sunderland plant, whilst the Tata-owned car maker revealed plans for a US$ 5.1 billion EV battery plant in Somerset. Stellantis’ Ellesmere Port plant, which produces small vans, was the first in the country to go fully electric last year, with the group posting that from 2028, all the group’s vehicles will be electric-only.

There were stories a decade ago that Apple was considering entering the EV market but current reports put that rumour to bed. The tech giant has never publicly acknowledged the project, reportedly known as the Special Projects Group, which involves around 2k people. There were reports that billions of dollars on R&D were spent and that the final product would be a fully autonomous vehicle without a steering wheel and pedals. There is no doubt that the market has slowed somewhat over the past twelve months, with the likes of Ford and General Motors postponing plans to expand EV production, as well as Tesla warning that 2024 revenue will be lower on the year. Only last week, electric truck maker Rivian said it would cut its workforce by 10% and forecast no growth this year in its production.

In a bid to retain its employees, Marks & Spencer has announced staff pay rises, increasing minimum pay outside the capital to US$ 15.14 and in London to US$ 16.59. About 40k staff, across the food and clothing units, will get a raise, with the retailer announcing it would be making “substantial improvements” to its maternity, paternity and adoption policies. It joins competitors such as Aldi, Lidl and Sainsbury’s in increasing its minimum pay for staff outside of London to US$ 16.59 per hour. M&S indicated that the increases since March 2022, it had invested more than US$ 184 million in its overall retail pay package. Furthermore, maternity leave and paternity leave will be increased to twenty-six weeks and six weeks.

Five years ago, Ocado signed a deal with M&S to sell the retailer’s food on the internet and paid an upfront payment of US$ 707 million and is due to pay a further US$ 241 million, based on certain targets being met. Now, there appears to be an impasse with one company stating that “we have a very solid case to get full payment, we know that M&S may not entirely share that view ”, and the other saying that “the financial performance of Ocado Retail means the criteria for the performance payment was not met.” The 50:50 JV was signed in early 2019 and went live the following year in September so it seems the biggest winner will be the lawyers.

As it tries to save up to US$ 1.26 billion over the next three years, Sainsbury’s is planning to cut around 1.5k jobs, subject to consultation, with roles being lost at its contact centre in Cheshire, in-store bakeries, and some local fulfilment centres. The retailer said it had reassured colleagues that it would find alternative roles for them where possible, as it would “for any colleague affected by changes proposed”. The savings will be invested back into the business, the retailer added. It will invest more money in technology and innovation, resulting in the need for fewer local fulfilment centres – and hence fewer jobs.

Announcing that it was to cut costs, Sony will close its PlayStation’s London Studio and retrench 900 staff members, equating to about 8% of its workforce in the US and Japan. Supremo Jim Ryan commented that “the leadership team and I made the incredibly difficult decision to restructure operations, which regrettably includes a reduction in our workforce impacting very talented individuals who have contributed to our success.” In January, rival Microsoft revealed plans to lay off 1.9k people in its gaming division, which included those at recently acquired Activision-Blizzard. PlayStation 5 has sold more than fifty million units worldwide, more than double that of Microsoft’s Xbox Series X/S sales, whilst Nintendo’s Switch console has seen sales of over 140k units. Last month, Nintendo posted that although its revenue was 16% higher on the year, its net income slumped by more than 25%.

Elliott’s second bid of US$ 957 million – following an earlier  one of US$ 885 million – has been rejected by Currys because it was”significantly undervalued”. The US firm is up against Chinese rival JD.com which has shown interest in buying the embattled retailer, with more than eight hundred stores. Under UK takeover rules, Elliott, which bought UK book shop chain Waterstones in 2018, has until 16 March to make a final offer. Currys has been struggling with falling sales, as consumer spending power dipped including a 3% fall over the usual business Christmas period.; it is also facing pressure from online traders such as Amazon. On 16 February, the day before Elliott made their first bid, Currys’ shares were trading at US$ 0.59 and by Tuesday 27 February, they had risen to US$ 0.84.

In Hong Kong, Ever Credit Ltd, a unit of Kingboard Holdings, a laminates maker and property investor, has filed a claim against China’s biggest private property developer Country Garden for non-payment of a loan worth US$ 205 million, and is now facing a liquidation petition. In January, China Evergrande, with more than US$ 300 billion of debt, was ordered to liquidate by a Hong Kong court. Shares in Country Garden fell more than 10% in early Hong Kong trade yesterday following the announcement. Since the property market accounts for about 33% of China’s economy, the Chinese government has to tread warily ensuring that the thousands of people, who have already paid for their currently incomplete apartments, can move eventually move in. The current crisis started since 2021, when authorities introduced measures to curb the amount big real estate companies could borrow, which has led to several large property developers having defaulted on their debts in the last few years.

Late last week, the Australian federal court convicted and sentencedwaste management companies Bingo Industries, and Aussie Skips Bin Services and Aussie Skips Recycling for criminal cartel offences, under sections 45AF and 45AG of the Competition and Consumer Act, relating to a price fixing arrangement for demolition waste services in Sydney. Both former MDs, Daniel Tartak, and Aussie Skips’ Emmanuel Roussakis, were also convicted and sentenced.The former was fined US$ 66k and sentenced for two criminal cartel offences to two terms of imprisonment of eighteen months each, with the latter fined US$ 50k and sentenced to eighteen months’ imprisonment for one criminal cartel offence.  Both were barred from managing corporations for five years. Bingo was fined US$ 20 million and Aussie Skips over US$ 2 million, after each company pleaded guilty to having fixed and increased prices with the other for the supply of skip bins and the provision of waste processing services for building and demolition waste in the city. The cartel only operated for less than four months – from May to August 2019. Cartel conduct harms consumers, businesses, and the economy, and is likely to increase prices, reduce choice and distort innovation processes.

Wayne LaPierre, the former CEO of the National Rifle Association, has been found guilty of misspending millions of dollars of the organisation’s money which he used for trips on private planes, superyachts and travelling overseas. Last Friday, the 74-year-old, who had been at the helm for thirty-three years, was ordered to repay US$ 4.4 million, whilst the organisation’s retired finance chief, Wilson Phillips, had to pay back the group US$ 2 million.  LaPierre announced his resignation the night before the trial. He had billed the NRA more than US$ 11 million for private jet flights and spent more than US$ 500k on eight trips to the Bahamas over a three-year span. He also authorised US$ 135 million in NRA contracts for a vendor whose owners showered him with free trips to the Bahamas, Greece, Dubai and India, as well as access to a 33-metre yacht. Mr LaPierre claimed he had not realised the travel tickets, hotel stays, meals, yacht access and other luxury perks counted as gifts, and that the private jet flights were necessary for his safety. Furthermore, jurors found that the NRA omitted or misrepresented information in its tax filings and violated New York law by failing to adopt a whistle-blower policy. The court case outcome is a further blow to the powerful group, which has been beset by financial troubles and dwindling membership in recent years.

In Q4, India posted an 8.4% jump in Q4 economic growth and is expected to soon become the world’s third largest economy, surpassing Japan and Germany; the main driver was the manufacturing sector which jumped 11.6% in the period, whilst private consumption, which accounts for over 65% of the country’s GDP, rose by 3.5%. Over recent times, Prime Minister Modi has raised government spending on infrastructure and offered incentives to boost the manufacturing of phones, electronics, drones and semiconductors to help India compete on the international stage. Yesterday, his government agreed to a US$ 5.2 billion investment to construct three semiconductor plants. The IMF expects India’s economy to expand by 6.5% this year as compared to 4.6% for China.

Lebanon appears to live through one crisis to another, with the latest being faced with damages, estimated at US$ 2.5 billion, due to ongoing conflict on its southern border with Israel. Amin Salam, the country’s Economy Minister, and who was in Abu Dhabi for the WTO’s thirteenth Ministerial Conference, is seeking international funding to “rehabilitate” the farmlands, impacted by the war, including the Beka Valley “that became toxic due to the specific weapons they’re using.” It has also hit the tourism sector, (which last summer season added up to US$ 7 billion from tourists and Lebanese diaspora), and caused extensive damage to buildings, infrastructure and private property, heaping more costs on an already struggling economy.

Rishi Sunak has revealed how some of the money from abandoning the HS2 northern leg will be reallocated, with Northern England receiving US$ 3.20 billion and the Midlands US$ 2.75 billion. The cash will go to a “local transport fund” to help towns, rural areas and smaller cities, with councils and local authorities deciding how to spend the money, (that seems to be a recipe for disaster). However, it seems that MPs and ministers must “hold local authorities to account” over how the new money is spent. The prime minister said it would empower local leaders “to invest in the transport projects that matter most in their communities – this is levelling-up in action”.

Twelve months after initiating an investigation into UK housing, the Competition and Markets Authority has now launched a probe whether eight major house builders – Barratt, Bellway, Berkeley, Bloor Homes, Persimmon, Redrow, Taylor Wimpey and Vistry – have been sharing information which could influence house prices. It also said “significant intervention” in the market was needed to ensure enough homes were built to meet demand. The CMA said that its investigation had uncovered evidence suggesting “information sharing”, which “could be influencing the build-out of sites and the prices of new homes” but confirmed that it had not yet reached any conclusions as to whether or not competition law has been broken. The watchdog also raised concerns over the quality of new homes, indicating there were “persistent shortfalls” in the number of homes being built. In its 2019 manifesto, the Conservative Party promised to build 300k homes by mid-2020s and to make the planning system “simpler”. Not surprisingly, it has failed to deliver on two counts – only 250k were built last year and the CMA indicating the planning system was one of the key factors slowing down construction of new homes, describing it as “complex and unpredictable”.

Despite UK housing activity remaining weak – in an environment of interest rates not falling as much as expected and even nudging slightly higher in some cases – latest BoE data shows

January approvals for house purchases rising 7.2% on the month to 55.2k, its highest level since October 2022. Property sales were slightly up compared with December, but 12% lower than January 2023. Credit card borrowing also moved higher to US$ 2.4 billion, as people spent more on the likes of car finance and other loans than they repaid in the month. As the new fixed deal mortgage rates gained traction towards the end of 2023, lenders have been shifting the interest rates charged on home loans at a quicker rate since the start of 2024.  This started with some significant cuts to the cost of new fixed-rate deals, which have recently crept back up, and there are many who are awaiting further BoE rate cuts in the coming months. Recent figures show homeowners actually repaid more money on mortgages than they took out in new lending in the year to January – the first time this has happened since comparable records began thirty years ago.

For the first time in twelve months, UK property prices headed upwards, at US$ 330k, but still 3% lower than their summer 2022 peak. Nationwide saw February prices 0.7% higher on the month but noted that the outlook was still “highly uncertain, in part due to ongoing uncertainty about the future path of interest rates.” It also noted that the decline in borrowing costs around the turn of the year appears to have prompted an uptick in the housing market.”

The Institute for Fiscal Studies has warned the Sunak government that it should not cut taxes in this month’s Budget, unless it can spell out how it will afford them, saying the case for tax cuts was “weak”. The Chancellor is on record that he was looking at trimming public spending, as a way to deliver tax cuts, but the IFS noted that any tax cuts “should wait” until he was able to carry out a detailed spending review. It also commented that taxes were heading to record-high levels when measured against the size of the overall economy, and that government debt was also high and moving higher, and “barely on course” to be falling in five years’ time – one of the government’s self-imposed rules. The IFS suggested that it may be more beneficial for the economy if the Chancellor reformed stamp duty on purchasing properties or shares, rather than going ahead with minor tax cuts, such as reducing income tax or a further cut to National Insurance rates. The current betting seems to be on maintaining fuel diesel at current levels and cutting NI by 1%, which would cost US$ 5.7 billion. The IFS estimated that for the Chancellor to keep real-terms spending per person at current levels for unprotected services  – including justice and local government – alongside “plausible” settlements for the NHS, childcare and other commitments, which are ring-fenced; would cost over US$ 31 billion. Other bodies – including the IMF and the Office for Budget Responsibility – are proffering advice basically ruling out immediate tax cuts.

Today saw Australia’s ASX 200 close on a fresh record high, at 7,726, after Wall Street’s S&P 500 and Nasdaq ended overnight at record highs, of 5,096 and 16,091 respectively. Not to be outdone, Japan’s Nikkei also posted a record high of 39,910. The reason for the bourses’ optimism was that a key US inflation reading was in line with expectations. However, the confidence was not felt in many Asian markets because of the uncertainty facing China’s economy, not helped by renewed turbulence in the property sector; this resulted in MSCI’s broadest index of Asia-Pacific shares, outside Japan, however, dipping 0.1%.

Several analysts are worried about the state of the Australian economy, with the distinct possibility of a recession on the horizon. There are various economic theories being thrown around, but some point to the fact that because demand for lipstick and recreational activities has picked up, this often precedes a major economic downturn. There are renewed warnings Australia’s economy could be heading for recession as shoppers tighten their purse strings. Even Treasurer, Jim Chalmers, was in sombre mood, noting that “we understand that the inevitable consequence of higher interest rates, persistent inflation and global uncertainty means that we are expecting quite weak growth in our economy.” He also added that “if we’re talking about 0.2% [economic growth] for this quarter’s growth and we’re talking the same sort of numbers in the next quarters for March and June, you don’t need very much to go wrong to suddenly produce a [recession].” As Paul Zahra, who now runs the Australian Retailers Association, noted that “when we’re seeing a downturn in sales — because I’ve been in this game for a little longer than I’d like to admit — we see that women particularly will go and actually spend money on a new lipstick to update their look, versus buying a new dress”. Maybe Jim Chalmers will judge when Australia is in recession when he sees Lipstick On Your Collar!

Get Away With It?                                                                        23 February 2024

For the second consecutive week, there are no weekly property statistics readily available for the week ending 23 February.

Interesting figures from Australia’s CoreLogic show the price gap between apartments and standalone houses has widened by 45%, (equating to US$ 193k), since March 2020 and January 2024, driven by soaring land values, scarcity of houses available for purchase and a desire for more space are keeping prices substantially higher compared to units. The report also noted that in the almost four-year period, house prices in the capital cities increased by US$ 157k, compared to apartments’ US$ 43k. The trend is still apparent in the shorter term, with houses rising US$ 61k (11.0%) but units only by US$ 27k (6.9%). All capital cities show similar rises, but it was more marked in Sydney where pre-pandemic prices of houses showed a 33% premium which has since risen to its current 68% level. Dubai realty paints a similar landscape.

Binghatti Holding has announced that it is to launch a three-year US$ 500 million Sharia-compliant bond, as it strives to diversify its funding base. The Dubai-based property developer is set to build the world’s tallest residential tower – Binghatti Burj – in a partnership between Binghatti and Jacob & Co. On Tuesday, the firm announced that it was preparing for a “significant financial milestone” in the coming days, subject to market conditions. Last year, two other leading developers raised money via sukuks – in October, Damac Properties raised US$ 300 million and last May, Aldar Investment Properties, the real estate management unit of the emirate’s largest listed developer, Aldar Properties raised US$ 500 million through its debut green sukuk.

Edgnex Data Centres by Damac and Vodafone are investing US$ 100 million to take advantage of Turkiye’s burgeoning digital transformation sector. The partnership is to construct a new data centre project in Izmir and will have a capacity of six megawatts and is expected to be completed by 2025. It will offer “end-to-end services” and be positioned as a “one-stop-shop”, connecting to Europe through terrestrial and submarine cables. The government’s Digital Transformation Office noted that it was introducing a broad digital transformation strategy, and is “exerting all efforts” to help the country “not only consume technology, but also produce technology by using its resources effectively”. Statista reckons that Izmir already has seven data centres, tied with the capital Ankara and Bursa, while Istanbul has forty, and estimates that revenue in the country will grow at CAGR of 5.8% to move from its current value of US$ 1.62 billion to reach US$ 2.0 billion by 2028.

As expected, DXB, posting an annual record 31.7% hike in passenger numbers to 87.0 million, surpassed its previous record of 86.4 million that was recorded in pre-pandemic 2019. Flight movements also hit a record 416k flights, 21.3% higher compared to 2022. The forecast for this year is an expected 88.2 million, which is still 1.1 million shy of the airport’s record number of 89.1 million recorded in 2018. DXB is currently connected to two hundred and sixty-two destinations across one hundred and four countries, via one hundred and two international carriers. The leading countries, with the most traffic, are India, Saudi Arabia, UK, Pakistan, the US, Russia and Germany, with 11.9 million passengers, 6.7 million, 5.9 million, 4.2 million, 3.6 million, 2.5 million and 2.5 million. London retained its position as the top city destination with 3.7 million passengers, followed by Riyadh, with 2.6 million, and Mumbai’s 2.5 million. Last year, the airport handled cargo – down 4.5% – to 1,806k million tonnes.

Its seems that some of India’s top airlines could take note of the success seen at DXB where last year, the airport processed a record seventy-seven million bags, with a success rate reaching 99.8% in handling operations. This week, India’s Bureau of Civil Aviation Security directed seven airlines including carriers like Air India, Vistara and IndiGo, to implement necessary measures to ensure timely delivery of baggage, noting that passengers’ luggage should be delivered to them within thirty minutes after landing, with a 26 February deadline to comply with the order. Late baggage delivery has been a persistent problem across airports and whether this directive has any impact remains to be seen.

Flydubai posted its largest-ever annual profit, jumping 75% to US$ 572 million, driven by a record number of passengers, amid booming demand for air travel – and despite high fuel prices, (accounting for 32% of total costs), and supply-chain disruption. Revenue increased by 23.0%, to US$ 3.05 billion, as passenger numbers increased by 31% to 13.8 million, bringing the total carried to 108 million, since its 2009 debut flight. By the end of 2023, flydubai added thirteen new Boeing 737 aircraft to its fleet, increasing its capacity by 27% to 40,292 million available seat km, and ending the year with eighty-four aircraft – twenty-nine 737-800s, fifty-two 737 Max 8s and three 737 Max 9 jets; three 737-800 planes were returned to the lessors at the end of their lease agreement. Because of its well-publicised problems, Boeing has had to cut its production levels; so as to meet the surge in travel demand and add capacity during peak travel periods and has been unable to supply all planes ordered by the Dubai carrier; accordingly, flydubai has had to sign an agreement with Smartwings for six wet-leased aircraft. This year, it expects to receive a further twelve new Boeing 737s. During 2023, it also expanded its route network with seventeen destinations, ending the year with a network of one hundred and twenty-two destinations in fifty-two countries. Last year, the carrier added a further 1k to its payroll, (of which 73% were pilots, cabin crew and engineers), to bring its total workforce to over 5.5k.

With this week’s announcement that it had secured a multi-year partnership with Wimbledon, Emirates is now the Official Airline Partner for all four tennis Grand Slam tournaments, including the US Open, Roland Garros and the Australian Open. As the Official Airline Partner of The Championships, Wimbledon, Emirates will take the world of tennis to new heights, with exciting activations on-ground. The Championships is set to take place from 01 – 14 July at the All England Lawn Tennis Club. Through the partnership, Emirates will enjoy a wide-range of benefits including on-court branding in Centre Court and No.1 Court, on-site activations to engage with tennis fans, marketing, digital, and social media rights, as well as hospitality tickets. Deborah Jevans, Chair of the All-England Club, posted that “Wimbledon is joining forces with a premium brand and one of the world’s leading sponsors of tennis, and sport more generally.” Emirates has been the Official Airline of the ATP Tour since 2013 and Premier Partner since 2016. The airline’s portfolio includes some of the most high-profile events on the ATP and WTA tours. EK also supports sixty other tennis tournaments, as well as having supported the Dubai Duty Free Tennis Championships since its 1993 inception.

Emirates Flight Catering has fully acquired Bustanica, the world’s largest indoor vertical farm, which is located adjacent to Al Maktoum International Airport at Dubai World Central. The facility, encompassing 330k sq ft, has the capacity to grow more than one million kg of exceptional quality leafy greens a year, while using 95% less water than conventional agriculture. Bustanica’s produce, such as lettuce, spinach, parsley, and kale, is grown without pesticides or herbicides, and is 100% clean, fresh, and nutrient-rich. Produce from this innovative agriculture venture is used on all EK flights, and other airlines, and is available across the country’s major retailers including Spinney’s, Waitrose, Carrefour, and Choithrams. Furthermore, Bustanica will also help enhance the country’s food and water security.

The Roads and Transport Authority announced that transportation in Dubai increased by 13.0% on the year to 702 million passengers in 2023. Public transportation in Dubai, managed and controlled by the RTA includes Dubai Metro, Dubai Tram, taxis, smart rental vehicles public transportation buses, and marine transportation (abras, water taxis, water buses, and ferries).The authority is continuing to expand and develop the mass transit system, which will include the start of implementation of the  thirty km, fourteen station, Dubai Metro Blue Line project.

On Monday, HH Sheikh Mohammed bin Rashid toured the twenty-ninth edition of Gulfood – the largest global annual global food and beverage sourcing event, drawing 5.5k exhibitors and visitors from one hundred and ninety countries. Dubai’s Ruler noted that the five-day event serves as a major platform for accelerating global collaboration in the food sector, and that such events are aligned with the goals of the Dubai Economic Agenda D33, to double the emirate’s GDP, and establish it as one of the world’s top three urban economies. He also added that the emirate was well positioned to play a key role in enhancing global food security due to its position as a hub for technology and innovation, and its high-quality infrastructure and connectivity. He was also briefed on technological advancements in the F&B industry, primarily targeted at enhancing efficiency, reducing food waste, reducing expenditure and tightening supply chains. Gulfood 2024 started on Monday at the Dubai World Trade Centre, with it expected to be the biggest yet, with 49% of the 5.5k+ confirmed exhibitors participating for the first time. Under the theme ‘Real Food, Real Business’, Gulfood 2024 will bring together global brands as well as thousands of new exhibitors to showcase authentic food products, ingredients, and culinary practices, that could result in excess of US$ 12 billion in commercial deals.

May will see the twenty-third Airport Show take place in Dubai – the world’s largest annual event dedicated to the airport industry. The B2B event, taking place at the Dubai World Trade Centre, will have more than one hundred and fifty exhibitors from more than twenty countries and 7.5k visitors from over thirty countries. The Airport Show will have co-located events – ATC Forum, Airport Security Middle East, and the 11th edition of the Global Airport Leaders Forum). HH Sheikh Ahmed bin Saeed noted that the “Airport Show will remain the best venue to select and source the cutting-edge technologies and newest innovative products to better the airport operations.”

With an estimated US$ 350 million investment, FedEx Express confirmed that it would be building a new Middle East, Indian Subcontinent and Africa (MEISA) hub at Dubai World Central Airport in Dubai South. The facility was officially inaugurated by Sheikh Ahmed bin Saeed, President of the Dubai Civil Aviation Authority, Chairman of Dubai Airports and Chairman and Chief Executive of Emirates Airline and Group. The 57k sq mt structure will have advanced technologies that include automated sort systems that enhance the efficiency, accuracy, and speed of package processing and distribution from the facility. The hub also boasts two automated high-speed x-ray machines, equipped with AI to efficiently scan goods and enhance security. Additionally, a 170 sq mt cold storage area caters to a wide range of temperature-sensitive shipments.

Despite a decline in the international movement of goods and services, the country’s non-oil foreign trade topped a record US$ 953 billion (AED 3.5 trillion) last year, bolstered by its economic diversification plans; the split between goods and services was 74.3./25.7. The UAE’S trade, with its leading ten partners, expanded 26% in 2023, with his HH Sheikh Mohammed bin Rashid noting that “we indicated at the beginning of 2023 that it will be a record year for the economy … and the UAE has cemented new bridges of co-operation through comprehensive partnership agreements in 2023,” and that .“the UAE today is at the heart of the global trade flow and its economic commitments with everyone continue. Our motto will always be that we say what we do and do what we say.” There is no doubt that the UAE is well on course” to achieve its non-oil trade target of AED 4 trillion, (US$ 1.09 trillion) by 2031. Non-oil exports of goods now make up 17.1% of the country’s total non-oil foreign trade, compared with 13.0% in 2018.

With an initial target of stimulating more than US$ 327 million in new international trade, DP World, in partnership with Adroit Overseas Canada and Al Amir Foods, is to construct a 200k metric tonnes facility, spanning a quayside area of nearly 100k sq mt; it is also expected to enhance bulk handling by about 750k MT.  The project – over two phases – will also comprise processing and packaging units, and, according to DP World’s Sultan bin Sulayem, “will add world-class infrastructure to our flagship port, support national efforts to strengthen food security and significantly expand our flourishing agricultural trade ecosystem in Dubai”. Jebel Ali Port currently handles about 73% of the UAE’s food and beverage trade by value. The National Food Security Strategy 2051 aims to put the UAE at the top of the Global Food Security Index by then. In addition, the country is set to introduce measures, over the next five years, to boost the contribution of food and agriculture to its economy by US$ 10 billion and create 20k jobs.

The UAE has ordered building material providers to revert to previous prices or face hefty fines of up to US$ 272k that will be handed out for non-compliance. In order to maintain fair pricing across markets, the Ministry will implement measures to curb unjustifiable price hikes for materials, particularly construction items. It also added that it aims to promote fair competition, prevent monopolistic practices, and ensure consumer-friendly markets in collaboration with all industry stakeholders.

The good news of the week is that, after two years on the Financial Action Task Force’s “grey list”, the country may be taken off it, after addressing shortcomings in its anti-money laundering and counter-terrorist financing measures. Some investors will shun investing in countries on the “grey List” and will only invest in jurisdictions with strong AML and CTF frameworks to reduce risks associated with financial crimes This move will prove a boon to the country’s economy, as it will boost international investor confidence and attract more foreign direct investment. It will attract more asset managers who will see the UAE as a safer and more stable environment, following the delisting and evens the playing field more in the country’s favour on the international stage. FATF acknowledged that the UAE made progress in areas such as facilitating money-laundering investigations, imposing sanctions on non-compliance at financial institutions, and increasing prosecutions.

China continues to be the UAE’s leading trading partner, followed by India, Saudi Arabia, Turkey, Iraq, Switzerland, Hong Kong, Japan and Oman. Following the implementation of Cepa, Turkey’s trade figures have more than doubled to account for 5.1% of total non-oil trade, while trade with Hong Kong grew 47.9% and India by 3.9%; trade with the US  and China rose 20.1% and 4.2%.The value of non-oil exports increased by 16.7%, to US$ 120.16 billion, with gold, aluminium, oils, cigarettes, jewellery, copper wire and ethylene polymers topping the list of the country’s most important exports of goods. Last year, there were also increases in reexports and imports – up 6.9%, to US$ 188.01 billion, and by 14.2%, to US$ 381.47 billion; the top goods imported were gold, telephones, petroleum oils, cars and diamonds. The country’s services trade surplus grew to US$ 56.40 billion in 2023, driven by the travel and tourism industry, with tourist numbers 19.4% higher on the year at 17.15 million. Trade in services reached US$ 263.49 billion, of which US$ 159.95 billion was in services exports, including in ICT, professional/financial services, education, medical tourism, Islamic financial services, logistics and creatives.

Dr Ahmed Habib a climate expert from the National Centre of Meteorology confirmed, “we conducted twenty-seven cloud seeding operations between 11 – 15 February, targeting clouds with favourable conditions, characterised by strong updrafts and high humidity. These missions aimed to enhance rainfall in the country.” According to authorities from the country’s meteorological department, the recorded rainfall from last week is equivalent to the rain received by the UAE three decades ago, noting that “the eastern part of the country received 317 mm of rainfall in 1988,” adding that this year, the Umm Al Ghaf station recorded a maximum of 224.1 mm of rainfall. This comes after a drier December, compared to previous years during the same month.

e& posted a 2023 record consolidated net profit of US$ 2.81 billion – 3.0% higher on the year; revenue grew 8.3% to US$ 14.66 billion, driven by the Group’s successful business transformation, expanding business verticals and diversifying revenue streams. Ebitda rose 3.7% to US$ 7.11 billion – a margin of 49%. Subscriber numbers rose 3.0% to over fourteen million, whilst its total aggregate base, rose 4%, to 169 million. The Board proposed a dividend of US$ 0.109 per share for H2 2023, representing a total dividend of US$ 0.218 per share. It also recommended a new progressive dividend policy with an increment of US$ 0.008 every year starting from 2024, bringing the dividend-per-share to US$ 0.242 by 2026, subject to shareholders’ approval.

The DFM opened the week on Monday 19 February, 30 points (0.7%) higher the previous week, shed 33 points (0.8%) to close the trading week on 4,226 by Friday 23 February 2024. Emaar Properties, US$ 0.19 higher the previous fortnight, shed US$ 0.04, closing on US$ 2.19 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.68, US$ 4.96, US$ 1.78, and US$ 0.37 and closed on US$ 0.65, US$ 4.81, US$ 1.74 and US$ 0.36. On 23 February, trading was at 100 million shares, with a value of US$ 79 million, compared to 214 million shares, with a value of US$ 90 million, on 16 February 2024.

By Friday, 23 February 2024, Brent, US$ 11.26 higher (6.4%) the previous fortnight, shed US$ 1.76 (2.1%) to close on US$ 81.71. Gold, US$ 29 (1.4%) lower the previous fortnight, gained US$ 12 (0.5%) to trade at US$ 2,051 on 16 February.

As air travel quickly recovers from the impact of the pandemic, the civil aviation industry is readying for an air travel boom which will necessitate massive capex for expansions and redevelopments. The ME sector is worth an estimated US$ 60.0 billion and will see continuing high growth – air connectivity in the region. had seen a 26% growth in the three years to 2022, (which does include the Covid period which saw air travel slump). It is estimated that the one hundred and  two ME airports will handle 1.1 billion passengers by 2020, more than double 2019’s return of four hundred and five million; to cater for this capacity increase, total investment is predicted to be around US$ 151.0 billion. According to a CAPA report:

• four hundred and twenty-five major construction projects were at existing airports worldwide, with US$ 450 billion in investments
• two hundred and twenty-five new airport projects, of which more than 70% of the investment was in Asia Pacific
• 1.07k airport investors, of which 258 were airport operators, groups or consortiums
• about 68% of all projects were based on terminals – either expansions or new developments

A recent report has disclosed that the global airport construction market grew to $1.14 trillion in 2023 and would reach $1.80 trillion by 2030.

With surging revenue, Rolls Royce’s 2023 underlying profits more than doubled to US$ 2.0 billion, with expectations that this will rise by at least 6% this year, attributable to a surge in demand from the aviation sector, an improvement in the company’s power business and rising defence orders. Its chief executive, Tufan Erginbilgic, noted that “our transformation has delivered a record performance in 2023, driven by commercial optimisation, cost efficiencies and progress on our strategic initiatives.”

In the US, theSecurities and Exchange Commission has alleged that the husband of a BP employee, Tyler Loudon, made US$ 1.76 million in illegal profits. The watch dog claimed that he had heard some of his wife’s telecons, about BP’s takeover of TravelCenters, leading him to buy 46.5k shares in the firm. His wife,  an M&A manager at the energy firm, was working on the acquisition. When the deal went through, TravelCenters share price rose nearly 71% and Mr Loudon allegedly immediately sold all of his newly bought shares for a profit. The SEC said, “we allege that Mr Loudon took advantage of his remote working conditions and his wife’s trust to profit from information he knew was confidential.” Mr Loudon confessed to his wife about buying the TravelCenters shares after the Financial Industry Regulatory Authority began asking questions about the BP deal and who was “in the know”. She then reported the insider trading episode to her supervisor, and despite BP finding no evidence that she knowingly leaked the information about the deal to her husband, or knew he had bought the shares, her employment was terminated. Three months later in June 2022, she initiated divorce proceedings.

Late last week, there were reports that the owner of Waterstoneswas plotting to invest US$ 882 million in a bid to acquire Currys, the listed electrical goods retailer, with its current market value at US$ 662 million; its share value has dropped by about a third over the past twelve months. Elliott Advisors, best-known for its activist sieges against the boards of some of the world’s largest companies, then made a formal proposal to the board, but the proposal “significantly undervalued” the company. Like other major UK retailers, Currys has been impacted by high inflation and soaring cost of living expenses, as witnessed by a dip in like-for-like sales during the crucial Christmas trading period. The company, founded in 1884, was first listed in 1927 and in 2021 was rebranded under its current name, having absorbed shops operating under brands including PC World, Dixons and Carphone Warehouse. Currys, which employs more than 15k people in the UK, trades from about three hundred stores, and also in eight countries, including Denmark, Finland and Sweden under the Elkjop brand. In total, it employs 28k people and operates more than eight hundred stores.

To help with production of its “next generation” of sports cars, including its luxury DBX707 SUV, Aston Martin is planning to recruit four hundred additional employees at its two UK factories. The firm said demand for the SUV, and the introduction of other models, led to the move and that recruitment had already started.

Embattled retailer, The Body Shop, (which went into administration last week), has confirmed that it plans to close half of its two hundred stores in the UK – including seven on the day of the announcement, Tuesday 20 February; it will also cut 40% of roles, (roughly three hundred staff), at its London-based head office. The seven now closed are Surrey Quays, Oxford Street Bond Street, Canary Wharf, Cheapside, Nuneaton, Ashford Town Centre and Bristol Queens Road. Following the closures, “more than half” of the remaining one hundred and ninety-eight outlets will remain open. Administrators said that the brand’s current portfolio is “no longer viable” after “years of unprofitability” and that, as part of the restructuring, there will be a “renewed focus” on products, online sales channels and wholesale. The brand’s global franchise partners are not impacted with this portion of the business said to be “central” to The Body Shop’s long-term international strategy.

These are halcyon days for the banking sector, including Europe’s biggest bank, HSBC which registered an 80% surge in 2023 pre-tax profits to a staggering US$ 30.30 billion. (What term does the industry use for price gouging?). Chief executive, Noel Quinn, noted that “our record profit performance in 2023 enabled us to reward our shareholders with our highest full-year dividend since 2008.” HSBC makes most of its profits in Asia, especially China and Hong Kong.

Earlier, NatWest Group posted its highest yearly profit, at US$ 7.84 billion, since just before the GFC in 2007; it also announced a US$ 379 million share buyback. The UK government still owns 35% of the bank since it bailed it out to the tune of US$ 58.14 billion fifteen years ago during the financial crisis. Many UK taxpayers will not be too pleased that it also announced a US$ 450 million staff bonus but a little happier to see the back of the bank’s chairman, Sir Howard Davies. He has been roundly criticised for claiming that it was not “that difficult” for first-time buyers to get on the property ladder and that “you have to save, and that is the way it always used to be.” He is also the same person who declared that NatWest’s board had “full confidence” in CEO Alison Rose after she discussed the closure of Nigel Farage’s account with a journalist at the BBC – next day, it was announced that she was to step down. She will not be paid US$ 6.4 million in share awards and also a bonus of US$ 3.5 million, but will receive US$ 3.5 million in pay, pension contributions and benefits.

Last month, the Financial Conduct Authority commended a probe whether people had been paying too much for car finances, arranged by brokers who earned commission on the interest rates that they set for customers. Consequently, Lloyds Bank, which also owns the Halifax, Bank of Scotland and Scottish Widows brands, has set aside US$ 570 million to cover the potential cost of an investigation into car finance deals. The FCA will be investigating whether people, who believe they were charged too much for car loans, were owed compensation. Under what were called discretionary commission arrangements, some lenders had allowed car dealers to adjust interest rates on loans, which would improve the commission they received – the higher the interest rate, the higher their commission; such commissions were banned by the FCA in 2021. The bank is likely to be the most exposed of all financial institutions because it owns Black Horse, one of the UK’s largest motor finance providers. It is estimated the Financial Ombudsman has received 17k complaints to date about motor finance commission. To add to its woes, the bank was being investigated by the financial watchdog, relating to its money-laundering rules and regulations. Almost as an aside, the bank posted a 57% surge in 2023 pre-tax profits to US$ 9.50 billion, with an underlying net interest income – the difference between the money it charges for loans and pays out for savings – 5.0% higher at US$ 17.74 billion.

Nvidia posted an unbelievable 265% surge in revenue, for the quarter ending 28 January, to US$ 22.0 billion, with revenue more than doubling to US$ 60.9 billion. Furthermore, the world’s most valuable chip maker also forecast a 233% jump in its revenues for the current quarter, beating analysts’ estimates. In addition to its AI chips, sales at the firm’s data centres have grown fivefold over the past twelve months. Gross profit for the final three months of its financial year rose by 338% to US$ 16.8 billion, and annual gross profit by 188% to US$ 44.3 billion. Its stock market value has soared by 225% over the last year, with its share price jumping by more than 9% in extended New York trading on Wednesday.

Yesterday, the Nikkei 225 reached a record 39,099 – finally surpassing its previous record set in December 1989. In line with other global bourses, Japan’s main stock exchange was boosted by Nvidia’s strong earnings driven by demand for its AI processors, and the weakness of the yen, but despite the country falling into a technical recession. Three years ago, the benchmark index tanked, losing almost 60% in value, and since then, the economy has been struggling with deflation.

As shipping around the Cape of Good Hope surged last week, the Suez Canal cargo traffic more than halved, with the impact of the Houthi attacks in the Red Sea gaining traction. For the week, ending 13 February, Suez Canal shipping volumes sank by 55% on the year while volumes around the Cape of Good Hope rose nearly 75%, as many other shipping companies decided to take the safer but longer/more expensive route. The total number of ships passing through the waterway last month fell 36.8%, on the year, to 1,362 vessels.  Not only is the country suffering from reduced revenue but it has also been affected by reduced tourism numbers, record inflation now slightly declining to 29.8%, and a massive US$ 164.5 billion external debt burden. According to the IMF, its talks with Egypt “continue to make excellent progress” for a comprehensive support package, and that “the IMF team and the Egyptian authorities have agreed on the main elements of a programme, and the authorities have expressed a strong commitment to it.”

Official Chinese data indicated that there was a welcome 47% hike in domestic tourism, over the Lunar New Year to US$ 87.96 billion Two of the main drivers behind these figures were the holiday, which finished last Sunday, 18 February 2024, was a day longer than usual and came after years of pandemic lockdowns and restrictions, which were lifted in early 2023. There were 474 million domestic trips over the eight-day celebration – 34% higher on the year and up 19% on pre-Covid 2019 figures, however, it seems that average spend per trip was 9.5% lower compared to 2019. There is some hope that the Year of the Dragon will see more growth in China’s economy that had been rattled in the previous Year of the Rabbit by issues such as another property market crisis, weak exports, concerns about falling consumer prices, and foreign direct investment by foreign business falling to its lowest level in thirty years.

Business Secretary Kemi Badenoch has hit back at claims made by former Post Office chairman Henry Staunton that he had been sacked because she had told him: “someone’s got to take the rap.” He had been Post Office chairman since December 2022, but left the post last month after Ms Badenoch said “new leadership” was needed to tackle the scandal. He added more fuel to the flames by adding that he was also told by a senior civil servant “to stall on spend on compensation and on the replacement of Horizon, and to limp, in quotation marks – I did a file note on it – limp into the election.” To nobody’s surprise Ms Badenoch has come out fighting saying the comments were a “disgraceful misrepresentation” of their conversation. Meanwhile, there are still hundreds of sub postmasters waiting for compensation, with some still tarnished by wrongful prosecution in UK courts.

A BBC report claims that in 2015, the Cameron government were aware that the Post Office had ditched a secret investigation, that had covered the previous seventeen years, that might have helped wrongly accused postmasters prove their innocence. It appears that Ministers were told of the investigation but after postmasters began legal action, it was suddenly stopped. Although the Post Office would surely have known then that Horizon’s creator, Fujitsu, could remotely fiddle with sub-postmaster’s cash accounts, in 2017, it argued in court, that it was impossible. There is a distinct possibility that the Post Office may have broken the law – and the government did nothing to prevent it.

In a last-minute attempt to finalise a landmark financial settlement before the government publishes legislation that will establish an independent football regulator, the English Premier League has called an emergency meeting of its 20 “shareholders” (clubs). The aim is to be able to finalise a New Deal for the seventy-two English Football league teams in the three lower divisions, before 29 February. That will be the date that Lucy Frazer, the Culture Secretary, publishes the Football Governance Bill, which intends to hand a new watchdog power to impose a financial settlement on the sport. Reports indicate that this deal will cost EPL teams between US$ 1.057 billion and US$ 1.168 billion, with the final figure dependent upon the payment of an US$ 111 million sum for the current season. Discussions were on track with an imminent settlement on the cards until last December, Richard Masters, the Premier League chief executive, notified clubs that it was calling a halt to further talks with the EFL because of divisions about the scale and structure of the proposed deal. There has been significant unrest among Premier League clubs over the cost of the subsidy to the EFL, as well as the lack of certainty about the regulator’s powers and other financial reforms being driven forward by the Premier League. The EPL has also other problems to face, the most prominent being the possible fresh fight looming with Manchester City over the associated party transaction rules which most affect clubs with state, private equity or multi-club ownership structures. Then there is the problem of the US$ 5.0 billion chasm between the combined revenues of the twenty EPL clubs and those of the seventy-two EPL clubs.

The UK’s public finances posted a surplus of US$ 21.11 billion in January (the last set of public figures to be released before the Chancellor’s budget next month); this was more than double the same return in January 2023. The exchequer is bereft of funds, despite this surplus, and normally any tax cuts or government spending would not be even considered but with a general election sometime later in the year, Jeremy Hunt will try and “pull a rabbit out of the hat”. Overall, the UK’s debt has risen compared to twelve months earlier and remains at levels last seen in the early 1960s, equating to 96.5% of the size of the economy, measured by GDP.

Brad Banducci was in the news earlier in the week after he was grilled on air over alleged price-gouging tactics used by Woolworths, the country’s largest retailer and amid a spiky, tense and disastrous interview, he just walked out on the reporter. The boss of the Australian supermarket giant was in the news again later in the week after he announced his resignation. Woolworths and Coles account for some 65% of the market and there has been widespread disapproval of some of business practices at a time when the majority of Australians are facing a cost-of-living crisis, not helped by rocketing shop prices, and seeing Woolworths posting a massive US$ 608 million H1 profit, partly attributable to growing margins on its food businesses. Little wonder that it is on the end of another investigation from the nation’s competition watchdog over pricing practices. There are reports that the departing chief executive could be in line for a US$ 16 million pay-out, if both his and Woolworths’ performance targets are met in full. His leaving is the third sudden and early departure of leading Australian executives following Qantas’ Alan Joyce being forced out last September and RBA governor Philip Lowe, failing to secure an extension of his term. All three resignations came after heavy and sustained public criticism, which carried onto social media. Prime Minister Anthony Albanese says something is clearly “going wrong” with supermarket pricing, but he won’t take a hammer to the Coles and Woolworths duopoly because Australia is “not a Soviet country”. How do they Get Away With It?

Duck Before You Drown!                                                 16 February 2024

Real estate transactions for the week ending 16 February are currently unavailable.

Noting that all realty firms should always adhere to the terms and conditions stipulated for real estate advertisements, (including to provide accurate and correct information to customers by obtaining advertising licenses), the Real Estate Regulatory Agency has fined thirty firms, each US$ 13.6k, (AED 50k), for breaking the rules. The industry watchdog had previously issued circulars and warnings to emphasise the provisions and conditions of real estate advertising and ensure compliance. The general public have been advised not to deal with any real estate advertisement that does not have a permit and QR code.

On Wednesday, the Dubai Land Department gave real estate agents a three-day deadline to remove the property advertisements that are no longer up for sale or rental, advising them that they “must update the digital real estate platform portals within three working days, which should result in removing all unavailable properties for rental or sales.”

Speaking at the World Governments Summit in Dubai earlier in the week, Bill Winters, chief executive of Standard Chartered, seems to have disagreed with a recent IMF forecast that downgraded projected Mena economies by 0.5% to 2.9%.  He noted that, “Whenever I hear these IMF-type figures, it doesn’t resonate with what I see on the ground because there’s just tremendous growth [in the GCC], with obviously huge increases in population and economic activity,” and that “This is an extremely bullish environment despite the fact that there’s a war in the neighbourhood. The Gulf is a sanctuary for global capital and people – and that was clear during [and after] Covid, given the influx of business and the people coming with it.” At the conference, IMF’s MD, Kristalina Georgieva noted that the global economy, meanwhile, is set for a “soft landing” and interest rates in the world’s major economies are likely to ease by the middle of 2024 but warned that a prolonged war in Gaza could have spill over effects on the wider global economies.

In an agreement with Dubai’s Roads and Transport Authority, (and all-electric aircraft company Joby Aviation), UK-based Skyports Infrastructure aims to have air taxis operational in the emirate by 2025. The deal sees the RTA overseeing the air mobility services, with Joby given the exclusive right to operate air taxis in Dubai for six years. Skyports was granted exclusive rights to design, construct and operate an initial network of four vertiports in Dubai International Airport, the Palm Jumeirah, Downtown Dubai and Dubai Marina. It seems highly likely that Dubai will become the first location in the world with a commercial, citywide electric air taxi services The Joby Aviation S4, with a top speed of 321 kph, can accommodate a pilot and four passengers, with a maximum distance of 161 km; it is estimated that a flight from DXB to the Palm Jumeirah will take ten minutes.

A MoU between the UAE and India will see the partnership developing digital infrastructure and AI which will explore and evaluate the technical and investment potential of developing data centre projects in India. Initial capacity will be two 2 gigawatts, (supporting the deployment of a supercomputer cluster) and AI compute capacity of 8 exaflops for varied sectoral use. The MoU also seeks to promote investments in digital public infrastructure, AI, R&D, and innovation, while fostering public-private collaboration and knowledge exchange to support India’s digital growth and innovation. It is estimated that India’s data centre network could be valued as high as US$ 1 trillion by 2030. 

Sheikh Maktoum bin Mohammed bin Rashid has announced the launch of the Buna Payments Platform, an innovative platform that delivers advanced payment solutions that meet the highest global standards of compliance; it will also facilitate the clearing and settling of Arab payments. He noted that “the platform underscores the critical role of payment systems in bolstering the Arab economy’s infrastructure and is pivotal in promoting financial inclusion.”

According to the World Bank, in 2023, remittances to poor and middle-income countries grew an estimated 3.8% to reach US$ 669 billion. India was the top remittance recipient country, receiving funds worth US$ 125 billion, followed by Mexico, China, the Philippines, and Egypt, with remittances of US$ 67 billion, US$ 50 billion, US$ 40 billion and US$ 24 billion. The US continued to be the largest source of remittances.

Following approval by the Central Bank of the UAE, it seems that money exchanges houses will gradually increase charges in certain remittance corridors probably starting in Q2; this is the first time since 2019 that charges, via an introduction of an optional fee adjustment, have been increased. The chairman of the Foreign Exchange and Remittance Group, Mohammad Al Ansari noted that “it will be implemented after studying each corridor and could happen in the second quarter of this year. On Monday, the Ferg said exchange houses could opt for a minimum fee increase of 15%, which would typically equate to US$ 0.68 (AED 2.50), with the decision to increase fees dependent on individual exchange companies and their operational costs. The fee increase is expected to be applicable for remittance services through physical branches, while remittances offered through mobile apps of exchange houses will most likely remain unchanged or even reduced to maintain competitiveness. Despite the increase, it is anticipated the average remittance cost of sending US$ 200 will remain at less than 3.5% in the UAE – well down on the global 6.2% average.

Although Al Ansari Financial Services posted a 16.8% decline in 2023 net profit to US$ 135 million and a marginal 1.9% dip in operating income, the firm had a relatively good year. A statement noted that “headwinds in major remittance markets (such as India, Egypt, Pakistan) caused an 8.0% drop in remittance operating income. However, strong diversification drove an overall 9.0% increase in non-remittance operating income, largely mitigating the decline. Notably, transactions across all services grew,” The news in the paragraph above will undoubtedly help offset these costs and strengthen financial performance in the future. A US$ 163 million (AED 600 million) dividend, equating to US$ 0.0218 (AED 8 dirhams), was announced, half of which had already been paid out; this results in a dividend yield of 7.74%.. Al Ansari Exchange’s has two hundred and fifty-six physical branches and is currently in negotiations to integrate with Oman Exchange in Kuwait, with synergies to be realised Q2.

 Dubai International Financial Centre posted a 23% hike in 2023 revenue to US$ 352 million, with net profit surging 45% to US$ 203 million. Last year, there was a 26% hike in active companies, to 5.5k, employing more than 41.5k people, with the total number of new company registrations surging 34% to reach 1. 45k.The number of financial companies grew 22% to reach nearly 1.7k, while non-financial companies rose 28% to over 3.8k. Last year, the number of FinTech companies almost trebled to nine hundred and two, with the DIFC the base for three hundred and fifty wealth and asset management firms. DIFC also posted that it is ahead of schedule to achieve its target of doubling its gross domestic product contribution by 2030, aiming “to achieve the objectives outlined in Dubai’s Economic Agenda (D33), positioning Dubai among the top four global financial centres.” 

Amanat Holdings released impressive 2023 figures this week. The region’s leading healthcare and education investment company posted a 38.9% surge in net profit to US$ 42 million and a 40.0% hike in revenue to US$ 196 million; earnings per share rose 25% to US$ 0.0136. The revenue increases was down to “by almost two-fold growth at the education platform and the growth at the healthcare platform through the consolidation of Sukoon as well as the continued expansion of our long-term care offering in Saudi Arabia.” Total assets were 7.4% higher at US$ 1.14 billion.

Emirates Integrated Telecommunications Company posted a 33% hike in its 2023 net profit, to US$ 449 million, on the back of record revenue, up 7.0% to US$ 3.72 billion amid the introduction of generative AI in its operations, along with “sustained demand for mobile services, and strong growth in post-paid and fixed services”. Revenue from Du’s mobile services segment rose by 6.2% annually to US$ 1.66 billion, while fixed services revenue grew by 8.6% to US$ 1.03 billion, with other revenue increasing by 6.4% to US$ 1.03 billion. Ebitda rose 12.8% to US$ 1.58 billion, reflecting “top-line growth combined with margin expansion and disciplined cost management”. Q4 revenue and net profit both headed north by 7.3% to US$ US$ 970 million and by 38.5% to US$ 108 million. Before its earnings release on Tuesday, Du’s shares were trading at US$ 1.58.

The DFM opened the week on Monday 12 February, 45 points (1.1%) lower the previous week, gained 30 points (0.7%) to close the trading week on 4,259 by Friday 16 February 2024. Emaar Properties, US$ 0.06 higher the previous week, gained US$ 0.13, closing on US$ 2.23 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.66, US$ 4.71, US$ 1.74, and US$ 0.36 and closed on US$ 0.68, US$ 4.96, US$ 1.78 and US$ 0.37. On 16 February, trading was at 214 million shares, with a value of US$ 90 million, compared to 87 million shares, with a value of US$ 71 million, on 09 February 2024.

By Friday, 16 February 2024, Brent, US$ 4.99 higher (6.4%) the previous week, gained US$ 6.27 (8.1%) to close on US$ 83.47. Gold, US$ 16 (0.8%) lower the previous week, shed US$ 13 (0.6%) to trade at US$ 2,039 on 16 February.

A survey by Hays ME reckons that, with the job market growing, 39% of professionals working in the GCC are planning to change companies this year, with the main reason being a lack of career development opportunities. What seems to be on the high side is that 78% of employers in the Gulf region expect an increase in salaries in their organisation. Interestingly, 41% of employers said there were more candidates applying for jobs than in the past – a possible indicator of a shortage of skilled professionals. The GCC Salary Guide, which covered 2.3k employers and working professionals – and eleven professions in nearly four hundred roles – also posted that 67% of employers were wanting to grow their organisation’s headcount this year.

It seems that the El Niño weather phenomenon is the main driver behind global cocoa prices hitting fresh record highs, as dry weather hurts crops in West Africa, (which produces the bulk of global supply), especially the world’s two biggest producers of cocoa, Ghana and Côte d’Ivoire. Late last week, cocoa prices topped US$ 5.87k a ton, which has roughly doubled since the start of 2022. The soaring cocoa prices have already impacted on major chocolate makers’ margins and higher prices for consumers. Hershey has warned: “historic cocoa prices are expected to limit earnings growth this year.”, with the major player not ruling out putting up prices for customers. Recently, Which? noted that the price of some festive chocolate box sets had risen by at least 50% in a year. Although the overall inflation for UK supermarket food and drink eased in November to 8.3%, the rise in the chocolate prices was significantly higher at 15.3%.

This week, the global leading crypto currency headed above the US$ 50k level, driven by renewed interest in high-risk assets, as the US Fed starts to prepare to lower interest rates, and enhanced consumer confidence following the US Securities and Exchange Commission’s approval for Bitcoin ETFs. Crypto trading platform Bitget noted that on 01 January, when Bitcoin was approved, Bitcoin trading volumes were at US$ 16 billion and by 10 January, they had grown to US$ 50 billion. Bitcoin rose by about 12% in the second week of February 2024. The total crypto market capitalisation has risen to US$ 1.87 trillion with Bitcoin crossing US$ 50k for the first time in two years, but still some way off its 2021 high of US$ 67.5k.

Airbus posted a 13.2% decline in its Q4 net profit to US$ 1.56 billion, as revenue came in 11.0% higher on US$ 24.52 billion; full year net profit fell 11.0% to US$ 4.09 billion, not helped by charges related to its space business. The world’s biggest plane-maker expects to deliver eight hundred, jets, as it steps up production of its top-selling A320 family of narrow-body aircraft – an 8.8% increase on 2023 figures, subject to no further disruptions in the global economy, air traffic, the supply chain, the company’s internal operations and its ability to deliver products. Airbus confirmed that it was “on track” to be producing seventy-five A320s Neos a month by 2025. If it meets its 2024 target, that would mean that it would be pulling ahead of Boeing which has been barred by the US Federal Aviation Administration from increasing the existing 737 Max production rate, pending improvements in quality control. This gives the French company an added advantage in a market that pits the A320s against Boeing’s 737 Max. However, Airbus has its own problems including supply chain bottlenecks, fewer skilled workers and an ongoing problem with its Pratt and Whitney engines that has led to hundreds of A320 Neo jets being grounded for inspection. Having hired an extra 13k people last year, the plane-maker is planning to add “roughly half” that number this year.

Following Sainsbury’s recently warning about the availability of black tea, Tetley Tea has confirmed it is monitoring tea supplies on a daily basis as imports reach a “critical period”. The country’s second biggest tea brand said supplies were “much tighter” than it would like, amid disruption in the Red Sea, and noting that its current production levels were not changing, the amount it was able to hold in stock as a buffer would drop “but we’re pretty confident we can maintain supply levels”.

2k jobs are at risk with news that The Body Shop’s UK business had entered administration, but its two hundred retail outlets, and several franchises, will remain open as usual, while efforts are made to try to save the UK firm. Restructuring firm FRP said it would now consider all options to find a way forward for the business and noted that creating “a more nimble and financially stable UK business” was an important step in it becoming a modern beauty brand “relevant to customers and able to compete for the long term”. Part of the process will inevitably see costs, including on property and rents, being slashed and job cuts. Aurelius, the European private equity firm, became Body Shop’s third buyer since 2006; its funder Anita Roddick died in 2007. It bought the brand for US$ 261 million last November and took the drastic decision to place it into administration after poor sales during the key Christmas trading period. Rather like the demise of Wilko last year, three of the reasons for its current problems were that it failed to keep up with competitors on pricing, the boom in online trading and the cost-of-living crisis which saw customers’ spending squeezed.

Since announcing its annual financial results on 07 February, by Tuesday (13 February) this week, UK chip designer Arm Holdings, (whose chips power almost every smartphone in the world), had posted a 98% surge in its share value, over a period of five working days; it noted then that a demand in its AI-related technology had boosted its sales. Arm’s technology is not directly used for AI work, but chip makers like Nvidia are choosing it for central processing units that complement their AI-specific chips. The Cambridge-based firm, founded in 1990, and taken private by Japan’s SoftBank in 2016 in a US$ 32 billion deal, only returned to the stock market last September. Before then, plans to sell the firm to Nvidia, which started in 2020 were shelved in April 2022, after global regulators objected to the deal. Indeed, Nvidia, which has seen its share value more than triple in value over the last year on soaring demand for its AI chips, has seen its market cap currently valued at US$ 1.8 trillion. Even though it has been badly impacted by the declining valuations of some of its investments, including struggling office space firm WeWork, Softbank, which still holds a roughly 90% stake in Arm, has seen its own shares gain almost 30% in the past week.

Claiming the main reason being regulator Ofgem allowing it to recover losses of US$ 629 million it racked up in the aftermath of Russia’s invasion of Ukraine, British Gas, which has 7.5 million customers, posted a tenfold increase in 2023 profits to US$ 944 million, compared to just US$ 91 million a year earlier. However, with firms making record profits when energy prices spiked, suppliers that took on the customers of bust retailers made hefty losses. Centrica, British Gas’s parent company, said its profits fell by 17% to US$ 3.52 billion. This comes at a time when millions of UK households have been hit by higher electricity and gas bills, with energy being the main driver in the rising cost of living in the UK. This came about because Ofgem allowed energy providers to take a bigger slice of profits in H1 2023, to make up from losses arising from customers not being able to pay their energy accounts and honouring existing contracts when dozens of small energy providers went bust in 2021.

It is reported that Nike will reduce its payroll by 2%, (1.6k jobs) starting today and until the end of next month. It seems that those employed in stores and distribution centres, as well as those in its innovation team will not be impacted. Last December, the company slashed its annual revenue forecast and laid out a US$ 2 billion cost-saving plan, blaming cautious consumer spending. Nike is to use its resources to increase investment in categories like running, women’s apparel and the Jordan brand. The sportswear giant has yet to make any comment. These retrenchments will cost the company about US$ 400 million to US$ 450 million in employee severance costs this quarter.

Late last month, Jeff Bezos announced plans that he would be selling up to fifty million shares and, true to his word, on Tuesday, he confirmed that he would divest twenty-four million Amazon shares, worth more than twenty-four million dollars. This is the first time that he has sold any of his stock since 2021. One reason why he has done this, is that last November, he posted that he was moving to Miami, from the Seattle region, adopting a so-called 10b5-1 plan, after Washington state instituted a 7.0% capital gains tax in 2022 – which is not applicable in Florida. It is estimated that this move could have saved the billionaire US$ 288 million so far.

Another high-tech mover is Eon Musk’s decision to shift his rocket company SpaceX from the US state of Delaware to Texas, in line with a similar move two weeks ago for Tesla. This follows a January court ruling in the state of Delaware that annulled his US$ 55.8 billion Tesla pay package from electric car maker Tesla following which the billionaire entrepreneur advised “if your company is still incorporated in Delaware, I recommend moving to another state as soon as possible”.; this despite many big companies, including Amazon, being registered in the state, known for having light taxation.

With Q4 results showing its GDP had dipped by a worse than expected 0.4%, (with analysts actually expecting a positive 1.0%), Japan entered into a technical recession after it had posted a 3.3% contraction in Q3. (A technical recession is called after two consecutive quarterly GDP deficits). Another highlight of Q4 returns is that it seems that Japan may have lost its position as the world’s third-largest economy to Germany. The IMF will only declare a change in its rankings, once both countries have published the final versions of their economic growth figures, but latest figures indicate that Germany’s economy at US$ 4.4 trillion is now US$ 0.2. trillion higher than that of Japan, mainly driven by the yen’s weakness to the greenback, having fallen by about 9.0% last year.

With only 500 jobs created in the month, Australia’s January unemployment rate rose by 22k to 4.1% – the first time in two years that the unemployment rate had been above the 4.0% level; furthermore, hours worked fell by 2.5%, with the underemployment rate ticking up 0.1% to 6.6%. This would seem to indicate that the country’s labour market is cooling down partly as a result of the RBA’s rapid rate rises over the past two years, along with higher inflation, and economic uncertainty. The January figures could have also been skewed by the fact that many Australians were still on holidays when the survey was conducted, as well as other seasonal factors. Treasury secretary Steven Kennedy has said the economy remains on track to beat inflation without a large spike in unemployment, noting that consumer spending is at a fifteen-year low driven by the double whammy of high inflation and high interest rates. He also noted that although households are saving less and consuming less than at any time since the GFC, the level of unemployment remains low by historical standards, which he expects to peak at 4.5% next year. In contrast, the situation around ten years ago was that unemployment settled between 5% – 6 % because of the overzealous use of interest rates maintaining too-low inflation, and it can only be hoped that the RBA does not repeat that mistake again.

Although US price increases softened again last month by 0.3% to 3.1%, it was less than expected, as higher housing and food costs offset a decline in petrol prices. On the news earlier in the week, financial markets opened lower as it appeared that authorities have not got inflation fully under control and thus reducing the chances of any Fed rate cuts in the short term. In June 2022, US inflation peaked at 9.1% and even though progress has been made, it is still over the Federal Reserve’s target of 2.0%. February core inflation remained unchanged over the past two months at 3.9%, as some costs were higher on the year, including housing (6.0%), car insurance (20.5%) and personal care (5.3%).

There was some surprise when UK January inflation figures were relayed, indicating that it had remained flat at 4.0%, 0.2% lower than market expectations, but still double the BoE’s 2.0% target. However, although food prices fell for the first time since September 2021, they are still 7.0% higher than a year ago, with gas/electricity prices climbing at a faster rate than in January 2023; food prices were 0.4% lower attributable to price falls in bread cereals, cream crackers and chocolate biscuits.

The Office for National Statistics posted that by the end of Q4 2023, UK wage growth slowed again, (by 0.4% to 6.2%), but is still outpacing price rises. The number of vacancies fell for the nineteenth consecutive time, down 26k to 932k, in the quarter to January, as the unemployment rate dipped 0.1% to 3.8%. However, there were some signs that the downward trend in job vacancies could be slowing, but the statistics watchdog has said it could not guarantee the reliability of jobs market data, and that it is currently updating how it gathers information about employment, but this will not be fully in place until September. BoE’s Andrew Bailey has said that the ONS figures are the Bank’s only way to gauge unemployment, so their current unreliability is “posing challenges” as policymakers weigh up what to do about interest rates in the coming months. The Bank’s Monetary Policy Committee, which sets interest rates, always closely watch wage growth data and will only cut rates further when they can see more evidence of a tougher jobs market in order to avoid making cuts it may need to backtrack on later.

Just like Japan, the UK went into technical recession at the back end of 2023, after the economy contracted 0.3% in Q4 2023, following Q3’s minus 0.1%. The Office for National Statistics voiced that “all the main sectors fell on the quarter, with manufacturing, construction and wholesale being the biggest drags on growth, partially offset by increases in hotels and rentals of vehicles and machinery,” Excluding the Covid year of 2020, last year’s meagre 0.1% growth was the worst quarterly performance since 2009, when the economy was still reeling from the GFC, and follows a positive 4.3% expansion in 2022. Three drivers behind the disappointing Q4 results were the doctors’ strikes, a fall in school attendance and shoppers spending less in the December run up to Christmas. These figures will not be much help for Chancellor, who will have to cut public spending even more sharply if he wants to deliver promised tax reductions in his 06 March budget, more so because in recent weeks as interest costs on UK government borrowing have increased. Questions are being raised whether Rishi Sunak can meet his pledge made last January to grow the economy. Lord Rose, chairman of Asda, commented that “it looks like a duck, it quacks like a duck, it walks like a duck, it is a duck – it is a recession.” Maybe the message to both the embattled Prime Minister and the befuddled Chancellor of the Exchequer is Duck Before You Drown!