Tired of Waiting For You! 19 January 2024
The real estate and properties transactions were valued at US$ 3.54 billion in total during the week ending 19 January 2024. The sum of transactions was 209 plots, sold for US$ 597 million, and 2,100 apartments and villas, selling for US$ 1.32 billion. The top three transactions were all for plots of land, the first in Al Wasl for US$ 46 million, the second in Madinat Dubai Almelaheyah for US$ 33 million and in Bukadra for US$ 22 million. Madinat Hind 4 recorded the most transactions, with forty-four sales, worth US$ 25 million, followed by twenty-six sales, in Al Hebiah Fifth for US$ 26 million, and eighteen sales, in Hadaeq Sheikh Mohammed Bin Rashid, valued at US$ 76 million. The top three transfers for apartments and villas were two villas, one in Palm Jumeirah for US$ 35 million, and the other in World Islands for US$ 22 million and an apartment Palm Jumeirah for US$ 21 million. The mortgaged properties for the week reached US$ 621 million, with the highest being land in Nadd Hessa, mortgaged for US$ 223 million. One hundred properties were granted between first-degree relatives, worth US$ 210 million.
According to December’s ValuStrat Price Index, Dubai apartment prices rose 15.4% last year – the highest annual capital growth for apartments in a decade. The residential market witnessed a slowing in overall price gains in December, with off plan sales markedly lower, as secondary ready-home deals picked up the slack. Capital values of Dubai’s apartments and villas increased at lower monthly rates during the final month of 2023. The monthly ValuStrat Price Index hit 103.1 points, up 19.9% annually, with a slower December increase of 2.0%, compared to 100 points set in January 2014 and 112.9 points at the market’s peak in the same year; apartments were at 84.3 points, and villas at 133.1 points. For villas, the top annual performers were Jumeirah Islands (32.2%), Palm Jumeirah (31.9%), Dubai Hills Estate (30.6%), and Mudon (27.2%); on the year, villa prices were 24.9% higher, and up 2.3%, on the month. December’s ValuStrat Price Index, Dubai apartment prices rose 15.4% last year – the highest annual capital growth for apartments in a decade. The top locations were Discovery Gardens (26.4%), mainly driven by Route 2020 Metro extension, Palm Jumeirah (25.4%), The Greens (24.3%), Motor City (20.7%) and Town Square (19.5%).
Off-plan Oqood registrations fell sharply by 63.7% monthly and 70.3% on the year equating to an overall share of 28.2% of overall monthly residential unit sales. Top off-plan locations, transacted this month, included projects located in Dubai Maritime City (7.5%), Business Bay (7.0%), Jumeirah Village Circle (6.4%), and Dubai Harbour (5.2%). Ready homes transaction volume was 37.5% higher than in 2022. The top four developers – Emaar, (17.3%), Damac (8.9%), Falcon City of Wonders (8.2%) and Nakheel (5.9%) – accounted for 38.1% of sales. Location-wise, the top four – Dubai Maritime City (7.5%), Business Bay (7.0%) Jumeirah Village Circle (6.4%) and Dubai Harbour (5.2%) – accounted for 26.1% of the total transactions. The top four locations transacted this month – Dubai Maritime City (7.5%), Business Bay (7.0%), Jumeirah Village Circle (6.4%) and Dubai Harbour (5.2%) – accounted for 21.1% of the total off plan sales. For ready homes, the top four – Jumeirah Village Circle (8.9%), Falcon City of Wonders (8.2%), Business Bay (7.9%), and Dubai Hills Estate (5.8%) – accounted for 30.8% of all sales.
Last year, Dubai’s luxury home market, (residences selling for more than US$ 10 million), reached record levels nearly doubling to US$ 7.6 billion and outstripping global rivals London and New York. Knight Frank posted that sales rose 91%, including four hundred and thirty-one transactions in Q4. Furthermore, properties listed in the super-prime market, (residences selling at a minimum US$ 25 million), doubled last year, with fifty-six deals worth US$ 2.3 billion. Global annual sales have yet to be released but over the first nine months of 2023, Dubai, with US$ 5.8 billion of sales, of three hundred and twenty-three units, was well ahead of second place, London’s US$ 3.2 billion; New York registered one hundred and fifty-nine transactions. The top buyers in Dubai’s prime market during the first nine months were from the UK (16%), China (14%), the UAE (12%) and India (7%).
Palm Jumeirah was the most popular for prime sales, accounting for 38.5% of all homes, with one hundred and sixty-six deals, and 39.2% for super-prime properties, with twenty-two transactions. ValuStrat posted that villa prices on The Palm grew 3% in December, on the month, and up 31.9% year-on-year. Interestingly, it noted that Palm Jumeirah has two hundred units under construction, accounting for just 0.3% of the 78k homes being built across the city, and 1.44k apartments in the “launched phase” planned for The Palm, which represents 3.4% of all such units in Dubai. Furthermore, he added “The Palm Jumeirah … had 9.5% fewer homes for sale last year than in 2022, reflecting the buy-to-stay and buy-to-hold attitude of the bulk of purchasers”. Jumeirah Bay Island posted forty-seven “prime” sales, followed by Palm Jebel Ali’s thirty-six transactions.
Danube Properties has launched its twenty-eighth, and biggest, project – Bayz101, with one hundred and one levels – making it the fourth tower, along with the Burj Khalifa, Marina 101 and Princess Tower, in Dubai, with more than one hundred floors. Located in Business Bay – and close to the Burj Khalifa – it will have a built-up area of 2.1 million sq ft and house 1.34k units, ranging from studios to 4 B/R apartments, along with retail space; completion date is slated for 2028. Prices will start at US$ 327k, with a project value of US$ 817 million. This project will bring Danube’s property portfolio to 16.23k units, with a combined development value exceeding US$ 4.90 billion.
According to the latest IMF report, UAE property prices, in 2023, recorded the highest increase among all other countries, at 10.4%; it also noted that the country is ranked fifth in the world to record the largest increases since pre pandemic, with prices 14.2% higher. (It does seem strange that these figures are a poor reflection of what has actually happened in the UAE where double digit increases have been the norm over the past two years).
| Country | Change (%) |
| UAE | 10.39 |
| Mexico | 4.72 |
| Israel | 3.1 |
| Portugal | 2.42 |
| Thailand | 1.54 |
| Japan | 0.62 |
| Malaysia | 0.27 |
Countries recording highest property price increase pre-pandemic included:
| Country | Change (%) |
| Israel | 23.7 |
| Portugal | 22.29 |
| US | 19.15 |
| Japan | 15.29 |
| Netherlands | 14.4 |
| UAE | 14.15 |
| Australia | 9.24 |
| Mexico | 8.44 |
| Hungary | 7.71 |
| New Zealand | 7.68 |
Source: IMF
The Dubai Land Department has decided to rename some twenty-eight major roads, with the most eye-catching, (and most talked about) – being the Dubai stretch of Sheikh Zayed Road changing its name to Burj Khalifa.
In the first eleven months of 2023, Dubai hosted 15.37 million visitors – around 20% higher on the year and up 2.5% compared to pre-pandemic 2019. It helps tourism numbers when the emirate is ranked the most popular global destination for holidaymakers in TripAdvisor’s 2023 Travellers’ Choice Awards for the second year in a row. Consequently, Dubai International Airport expects 2023 visitor traffic to reach 86.8 million – 0.4 million higher than in 2019.
Over the eleven-month period, Western Europe was Dubai’s top source market, accounting for 2.9 million travellers (19% of the total number of international visitors), followed by South Asia (2.75 million – 18%), GCC (2.43 million – 16%), Russia, the Commonwealth of Independent States and Eastern Europe(2.0 million – 13%), the Mena region (12%), North and South-East Asia (9%),the Americas (7%), Africa (4%) and Australasia (2%).
Dubai hotels performed well in the first eleven months of 2023, with average occupancy 4.6% higher on the year to 77.2% – and 2.3% higher than the pre-pandemic 74.9%. Revenue per available room came in on US$ 107 – 4.0% higher on the year and an impressive 30% up on pre pandemic returns. Hotel guests at 3.8 nights, were similar to 2022 but 0.4 days longer than the corresponding period in 2019.
This year, Emirates is planning to hire a further 5k staff ahead of the delivery of its new fleet of A350s this summer and Boeing 777Xs in 2025; this will add a further one hundred and ten planes to EK’s portfolio. The world’s biggest long-haul carrier will host open days and assessments in more than four hundred and sixty cities across six continents and noted that “the recruitment drive is designed primarily for those who will soon or have recently stepped into the world of work.” This new hiring comes after Emirates added a further 8k to its payroll last year, as it ramped up services to meet a boom in travel after the Covid-19 pandemic; its current number of crew members is currently at 21.5k.
What has been claimed to be the world’s ‘purest ice’, harvested from glaciers that formed over 100k years ago in Greenland, has arrived in Dubai after a nine-week journey. The glacier ice, that weighed twenty-two tonnes, will be shaped into ice cubes for exclusive use in select up-market restaurants/hotels and homes of high-net-worth individuals. The product is being stored with the Natural Ice Company in Al Quoz and the supplier Arctic Ice has finalised the packaging, with deliveries set to commence in a month. It noted that “we have received pre-orders for the ice. We will do our due diligence and then proceed further. The ice will not be sold to everybody” and that “our exclusive product and the venue must match.” Since glacier ice melts slower than normal ice, it will last longer than “normal” ice, with the added benefits of “not been polluted in any way by modern industry” and has no little or no taste so it will not alter the flavour of beverages as it melts. The company has a rare licence to export ice by the Government of Greenland, and “complies with all legal and environmental requirements, so we ensure a sustainable use of Greenland’s resources.” Depending on sales and orders, the company is eyeing the next shipment in a couple of months.
The UAE has again participated in the fifty-fourth edition of the World Economic Forum 2024, held in Davos-Klosters, Switzerland, with the five-day event concluding today. The country was represented by more than one hundred delegates, including heads of national companies and corporate leaders, leading private sector firms, government officials, and senior business leaders, with 80% from major national companies and the private sector. The UAE’s presence is in line with the directives of Sheikh Mohammed, Vice President, Prime Minister of the UAE and Ruler of Dubai, in solidifying the global economic key role and competitiveness of the UAE and exchanging expertise for a sustainable national and global economy. UAEs Pavilion has again the tag line “Impossible is Possible”.
Over the past two years, the UAE has signed CEPAs with several countries and trading partners such as India, Indonesia and Turkey to double non-oil foreign trade to US$ 1.09 trillion, (AED 4 trillion) by 2031. Having signed the first Comprehensive Economic Partnership Agreement two years ago, with India, the UAE has made similar agreements with several countries including Cambodia, Columbia, Congo-Brazzaville, Georgia, Indonesia, Israel, Mauritius, South Korea and Turkiye. CEPA negotiations are ongoing with at least ten other nations, including Australia which has commenced the Comprehensive Economic Partnership Agreement talks.
This week, Australia’s Foreign Minister, Penny Wong, visited the UAE and as she left for her ME trip said “my visit to the UAE will reaffirm our close friendship and welcome the commencement of negotiations on a Comprehensive Economic Partnership Agreement. The UAE is an important partner that plays a key role in regional security.” Non-oil trade between the UAE and Australia reached US$ 4.5 billion in 2022, 28% higher on the year, and almost double that of the 2020 figure. In 2022, the UAE was Australia’s leading trade partner in the ME and its nineteenth-largest export destination globally. There are at least three hundred businesses operating in the UAE in key areas, including building, construction, financial services, agricultural supplies and training services. Although its embassy is located in Abu Dhabi, there is a consulate and a business group (Australian Business Council in Dubai) here in Dubai.
DP World will be the conduit for the Dubai government and the state-run Pakistan Railways and Port Qasim Authority after an agreement, between both governments, was signed to strengthen their relations in the marine and logistics sectors. The Dedicated Freight Corridor is planned to run from Karachi Port, on the Arabian Sea, passing through Karachi, to the Pipri Marshalling Yard, nearly forty-five km away. This will improve efficiency, transport times, and reduce the overall cost of logistics. A framework agreement was signed with Pakistan’s Ministry of Maritime Affairs to dredge the navigation channel, with DP World responsible for the capital dredging. Another agreement sees the development of an economic zone at Port Qasim, which aims to attract more than US$ 3 billion of FDI, again under DP World’s tutelage.
The RTA has confirmed that two new tollgates – Business Bay Crossing and Al Safa South Toll Gate on Burj Khalifa (formerly known as SZR) – will be introduced by November, in line with the completion of the Al Khail Road Improvement Project. A single tariff will be required when crossing these two new toll gates within a space of one hour. Two of the main aims of this exercise is to implement policies aimed at encouraging public transport usage and reducing dependence on private vehicles and to streamline traffic flows on the emirate’s roads. The existing eight gates have contributed to reducing the total traffic time by an annual six million hours by decreasing traffic volumes on both bridges – Al Maktoum and Al Garhoud – by 26% and reducing travel times by 24% on SZR and Al Ittihad Street, whilst increasing the number of mass transit users by an annual nine million.
This week saw the seventeenth three-day Light + Intelligent Building Middle East, the region’s largest show for lighting technology, at Dubai World Trade Centre, featuring over 1k brands; these included Technical Lighting, Electric Lamps & Components, Decorative Lighting, Architectural Lighting, Electrical Lighting and Smart Home & Building Automation. Spanning three halls, it attracted over four hundred international exhibitors – 75% higher than last year – from over thirty countries.
Government deposits increased by 3.8% (US$ 4.50 billion) to US$ 123.49 billion. The Central Bank posted that, in November 2023, cash deposits grew 8.6% (US$ 14.71 billion), to US$ 185.9 billion. Over the period, cash deposits were 7.4% higher (US$ 12.72 billion) to US$ 173.19 billion, whilst quasi-cash deposits rose about 20.0% (US$ 51.16 billion) to US$ 310.09 billion. Quasi-cash deposits include terms deposits and savings deposits for residents in dirham, as well as deposits for residents in foreign currency. Government deposits increased by 3.8% (US$ 4.50 billion) to US$ 123.49 billion. There was a 10.4% hike in currency issued to US$ 36.46 billion. It appears that a 5.0% GDP growth in 2024 will be enough to boost business confidence.
January’s United Nations Conference on Trade and Development Investment Trends Monitor posted that the UAE foreign direct investment climbed to the second highest in the world after the US. The country’s greenfield announcements were 28.0% higher on the year. FDI flow into the UAE recorded a 10.0% growth to a record high $22.73 billion in 2022, compared to a year earlier. Last year, global FDI flows in 2023 grew 3.0%, at an estimated $1.37 trillion, driven by recession fears, that had been overrated, financial markets performing better than expected, and higher values in a few European conduit economies; EU FDI rose from negative US$ 150 billion in 2022 to positive $141 billion because of large swings in Luxembourg and the Netherlands. Excluding these conduits, global FDI flows were 18% lower.
The Cyber Security Council of the UAE government warned residents of the dangers of fraud in cryptocurrencies, as they constitute a cross-border threat that requires vigilance from dealers. It advises people to be watchful and take steps to avoid fraud. Dr Mohammed Hamad Al Kuwaiti, Chairman of the Cybersecurity Council, stressed the continuation of efforts to strengthen the pillars of cybersecurity in a way that contributes to mitigating these risks and protecting the financial system from modern-day digital threats. He also warned cryptocurrency investors to be cautious, when offered exaggerated benefits, as well as reiterating the common fraudulent methods – including phishing through fake emails or text messages, aimed at deceiving users into entering sensitive personal or financial information, in addition to stealing cryptocurrency wallets, through hacking applications or websites or social engineering.
The DFM opened the week, on Monday 15 January, 153 points (3.9%) higher the previous four weeks, shed 37 points (0.9%) to close the trading week on 4,067 by Friday 19 January 2024. Emaar Properties, US$ 0.02 higher the previous week, lost US$ 0.08, closing on US$ 2.04 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.68, US$ 4.75, US$ 1.59, and US$ 0.38 and closed on US$ 0.69, US$ 4.75, US$ 1.58 and US$ 0.38. On 19 January, trading was at 138 million shares, with a value of US$ 127 million, compared to 138 million shares, with a value of US$ 58 million, on 12 January 2024.
By Friday, 19 January 2024, Brent, US$ 0.61 lower (0.8%) the previous fortnight, shed US$ 0.34 (0.4%) to close on US$ 78.56. Gold, US$ 0.8 (0.4%) higher the previous week, shed US$ 22 higher (1.1%) to trade at US$ 2,032 on 19 January 2024.
An indicator that the troubles in the Red Sea has had a negative impact on shipping, has now spread to manufacturing in Europe. Tesla, (which will suspend production at its Berlin factory from 29 January to 11 February), and Volvo have confirmed they were suspending some production in Europe due to a shortage of components. Porsche is also concerned about potential delays, although there has been no impact on production so far. Last week, container shipping rates jumped further, as concerns grew that vessels carrying everything from clothes to phones and car batteries will have to avoid the Suez Canal, (which accounts for over 12% of global traffic), for longer than expected. To add to global shipping woes, low water levels due to drought have reduced crossings of the Panama Canal. There are real concerns that supply chains may be impacted, (again), along with a knock-on effect on inflation moving higher.
Porsche has seen MEAI regional deliveries rising – up 11% to 9.1k vehicles on the year and 47% higher since 2020. Although the Cayenne, (with a new model launched), was its best-selling model, the Taycan posted an 80% jump. The brand is currently working towards its goal of having 80% of its cars being all-electric by 2030 and noted that the UAE is one of the more advanced in terms of electric vehicle infrastructure; Porsche already has three hundred and twenty-six destination chargers in the country.
Michael O’Leary is complaining again – this time of “minor issues” around quality control – following last week’s Alaska Airlines 737 incident. Although confirming that Ryanair still remains 100% committed to Boeing, mainly due to price comparisons with Airbus, he noted examples of poor standards in new planes sent from America. Although the carrier does not operate any of the 737 MAX 9 aircraft, that are at the centre of the safety investigation, the largest airline by passenger numbers in Europe is one of Boeing’s largest customers. He said that although Boeing had made “tremendous strides” in the last two years on production quality, “they’re not there yet”. He is not happy with late deliveries of 737 MAX 8 planes and has MAX 10 variants on order, but deliveries have taken longer than anticipated and remain behind schedule. He also added “we ourselves have found minor issues on aircraft deliveries that shouldn’t be occurring in a world class manufacturer like Boeing, and I think Boeing have more to do on the quality control side,” and that those concerns extended to fuselage supplier Spirit AeroSystems. However, he concluded that “we see no indication of any passenger concern – not one passenger.”
At the beginning of the week, the US Federal Aviation Administration confirmed that all 737 MAX 9 planes would remain grounded until Boeing provides further data, posting that “for the safety of American travellers the FAA will keep the Boeing 737-9 MAX grounded until extensive inspection and maintenance is conducted and data from inspections is reviewed.” The watchdog indicated that it required additional information from Boeing before approving the manufacturer’s proposed inspection and maintenance instructions. The FAA said it was planning to increase its oversight of Boeing production and manufacturing, including auditing its 737 MAX production line and suppliers; it was also looking at using an independent third party to oversee Boeing’s inspections.
IATA posted that November global air travel demand topped 99.1% of pre-Covid 2019 levels and was 29.7% higher on the year – and up 26.4% for international travel – with all regions showing positive returns; the Asia-Pacific region continued to report the strongest year-on-year results (63.8%). Europe, ME, N America, Latin America and Africa saw traffic, capacity and load factor at 14.8%, 15.2% and minus 0.3% to 83.3% – 18.6%, 19.0% and minus 0.2% to 77.4% -14.3%, 16.3% and minus 1.4% to 80.0% – 20.0%, 17.7% and 1.7% to 84.9% – and 22.1%, 29.6 and minus 4.3% to 69.7%. However, overall, it is still 5.5% down on pre-Covid levels. Domestic traffic for the month was up 34.8% on the year, and 6.7% higher on the November 2019 returns, with China posting a 272% improvement, and the US 9.1%.
Following a disappointing Christmas trading period, Burberry has issued its second profits warning in under three months; retail revenue, over the 13 weeks to 30 December, was 7.0% lower on the year at US$ 900 million, with comparable store sales down 4%. It also warned that it expects unfavourable currency exchange rates to knock its revenues by US$ 153 million and profits by around US$ 76 million. Consequently, the retailer said it now expected full year adjusted operating profits in a range between US$ 523 million and US$ 586 million; its previous warning in November had lowered its profits forecast to between US$ 704 million and US$ 900 million. At last Friday’s opening bell, its share value fell 14% but recovered somewhat by closing only 8% lower. Over recent months, the luxury retailer has been seeking to move upmarket under a turnaround plan initiated by chief executive Jonathan Akeroyd, with the exercise patently still ongoing.
Other retailers, including M&S and Tesco, had better Christmas results, with the former rising its annual profit forecast for the year to February to US$ 350 million from an earlier US$ 331 million result. It registered a 6.8% sales hike in the six weeks to 06 January and 7.5% over the nineteen weeks also covering its third quarter. The supermarket added that its performance benefitted by price cuts on almost 2.7k products. M&S also posted a better-than-expected 8.1% rise in like-for-like sales over the thirteen weeks to 30 December, driven by strong performances in the food and womenswear units. However, it did not lift its profit expectations, warning about future economic uncertainty and higher payroll/business costs. Sainsbury’s posted strong grocery growth but a downturn in non-food sales. Lidl and Greggs reported strong demand over the period. The British Retail Consortium said sales growth lagged the rate of inflation, as many shoppers kept away from big purchases such as for furniture and high-end electronics.
There are reports that China’s Fosun Tourism Group is in advanced negotiations to sell Thomas Cook to eSky, a Polish online travel agency, majority-owned by MCI Capital, a private equity firm focused on Central and Eastern Europe. Founded in 1841, this deal would be the second time since its infamous 2019 collapse which left thousands stranded overseas and many staff jobless. The Chinese owners, part of a conglomerate with interest in EPL’s Wolverhampton Wanderers, had a big stake in the travel agency when it was a listed company and, following its demise, acquired the brand for just US$ 14 million; it subsequently relaunched Thomas Cook as an online travel agent; whilst at the same time, selling most of its physical operations to Hays Travel.
As the initial phase of two government-commissioned probes into the broadsheet’s sale nears its conclusion, it has been announced that a Telegraph Media Group executive, Cathy Southgate, has been named acting CFO of the Telegraph’s parent company, with independent director Stephen Welch taking on responsibility for the company’s audit. It is understood that the audit and senior accounting officer functions will be overseen by Stephen Welch, one of the parent company’s independent directors. Ofcom and the Competition and Markets Authority have been instructed by Lucy Frazer, the UK Culture Secretary, to report back to her on the takeover’s implications for press freedom later this month. This comes after RedBird IMI, an Abu Dhabi-backed vehicle, agreed a deal to take ownership of the two titles – the Daily Telegraph and The Spectator. Last year, the Telegraph’s holding company was forced into receivership by Lloyds Banking Group over the repayment of a US$ 1.48 billion loan, half of which was a loan from RedBird IMI, with the remainder solely from IMI. The loans and interest were repaid earlier, after the Barclay family structured a deal with RedBird IMI, which is majority-owned by Sheikh Mansour bin Zayed Al Nahyan, the ultimate owner of Manchester City Football Club. RedBird IMI has notified the independent directors of its intention to exercise an option to convert US$ 765 million of the funding provided to Barclays from debt into equity ownership of the Telegraph, and the remainder secured against other, unspecified, Barclay-owned assets. There are concerns that handing control of the traditionally Tory-supporting broadsheets to foreign ownership could undermine media freedom.
Following a pre-Christmas profit warning, Superdry has confirmed that it had drafted in PricewaterhouseCoopers to examine further debt-raising options. Earlier last year, the London-listed clothing retailer took a number of steps to strengthen its balance sheet, including a modest equity raise and brand licensing deals in Asia pacific and India. It already has sizeable debt facilities available to it, through arrangements with Hilco and Bantry Bay Capital, worth a total of more than US$ 127 million. Superdrug is the latest retailer to report upbeat results for the all-important festive season. However, Superdry has a market capitalisation of less than US$ 38 million, and there are chances that its biggest shareholder, Julian Dunkerton, with about 25%of the share capital, may seek to take the company private. The retailer noted that own-brand sales increased as shoppers sought more affordable alternatives, with demand for cosmetics also rising by 20%.
Despite Birkenstock ramping up spending to open stores and expand production and expecting demand for its iconic sandal range demand to maintain its robust position in the shoe sector. Following strong sales in 2023, up by more than 20% to US$ 1.5 billion, and it expecting a 15% hike in revenue, its share value sank 8.0%. The results were the first since the company listed its shares in the US, with profits and margins forecast to shrink further this year. In Q3, the firm posted a loss of US$ 30 million, mainly due to a rise in administrative expenses ahead of the listing.
As widely expected, Tata Steel, UK’s largest steelworks, is to close both its coal-powered blast furnaces in Port Talbot, resulting in 3k retrenchments, country-wide, with most out of work by September; the steelworks will be transitioned to a greener electric arc furnace. The Indian-owned firm expects the transition to cost US$ 1.6 billion, (33% of which came via a government subsidy), on its move to a method of steelmaking that will cut carbon emissions and stem financial losses on its UK operations of US$ 1.3 million a day.
Apple has lost its latest battle with medical technology company Masimo, with a US appeals court siding with the latter over a patent dispute relating to its smartwatch models. Apple lost the case in October but appealed the decision in December, with Apple being allowed to sell two smartwatch models – its Series 9 and Ultra 2 models – in the US, until a final decision was made. Now it has been made with Apple the loser, but the tech giant has said it would continue selling the watches without the disputed blood oxygen feature to keep them on shelves. The medical tech Masimo, and spin-off Cercacor, have accused the iPhone maker of poaching key staff and taking other steps to steal technology it developed to measure oxygen levels in the blood. Under the court decision, the affected watches cannot be imported from 17:00 ET (22:00 GMT) yesterday. Apple is now the global leader in the smartphone market, (with over 20% of the market), taking the accolade off Samsung which had been the world leader for the past twelve years.
In Australia, Workplace Relations Minister Tony Burke has accused port operator DP World of acting in bad faith in its pay dispute with the Maritime Union but has ruled out using his ministerial powers to intervene in the ongoing dispute between the company and the union; on Wednesday, he had held meetings with both parties. The union is asking for a 16% pay rise for more than 1.5k workers over two years, which it says is still below the rate paid by bigger rival Patrick, and also wanted an increase to back pay of 27% over two years. DP World has claimed the dispute is costing Australia US$ 84 million in port delays, with the minister saying advice from his department did not suggest the impact was large, but he acknowledged there was a cost to consumers and that the government wanted to see an agreement reached “as quickly as possible.” The Australian Retailers Association said the ongoing industrial action had led to a two – eight-week backlog in shipments and 48k shipping containers standing idle nationwide. It does appear that the minister has forgotten that he should be the “referee” in this dispute by launching a personal attack on DP World’s Oceania vice president Nikolaj Noes, who was previously managing director of maritime company Svitzer. It brings to mind the 2022 dispute P&O Ferries had with the unions in the UK, with the then Minister of Trade, Grant Shapps, branding its supremo, Peter Hebblethwaite, a “pirate of the sea”, accusing him of “disgracefully shredding the reputation” of the company and that he should be dismissed. If ministers, like Burke and Shapps, did their jobs properly – and without any bias towards overseas entities – maybe such disputes could be settled quicker and collateral damage to economies could be avoided. Furthermore, comments such as “I have trouble believing that DP World has the interests of Australian consumers at heart when it is being run by the same person who previously . .” can easily damage bilateral relations.
Australia recorded a 65.1k fall in jobs last month – the biggest monthly decline in thirty years, outside of the pandemic period. If these figures continue into 2024, then it could be argued that high interest rates had done their job, and it was time to reduce them. One thing is certain – there will be no more rate hikes in H1, with reductions likely if there are no more major global economic slowdowns.
Data from its National Bureau of Statistics indicated that, in 2023, the Chinese economy expanded 5.2% to US$ 17.63 trillion – slightly above market expectations but well above the 3.0% global average; in Q4, the economy grew 0.3% on the quarter to 5.2%. It appears that industrial production is already moving higher, as shown by the country’s value-added industrial output 6.8% higher last month (and 6.6% in November); the improvement will be driven by a gradual increase in domestic demand and the prospect of more government stimulus measures. It is estimated that, in 2023, China contributed more than 30% of global economic growth.
In the quarter ending 30 November,UK wage growth slowed 0.7% to 6.6%, but still remains well above the 3.9% rate of inflation while unemployment is unchanged, at 4.2%. The number of job vacancies dropped, (for the eighteenth consecutive quarter), to 934k, as businesses reduced their hiring rate. It was the eighteenth consecutive period of vacancy contraction – the longest run of quarterly falls but still above pre-COVID-19 pandemic levels. Low unemployment and high job vacancies had led wages to grow at a record pace. November also had the lowest number of strike days for eighteen months due to a slowdown in health sector industrial action, as some NHS walkouts paused and consultants agreed a new pay deal. The BoE’s Andrew Bailey had been concerned about the summer wage rises which he describes as “unsustainable”. Chancellor Jeremy Hunt commented that “it has been tough for many families recently, but with inflation now falling and the economy gradually returning to growth today’s continuing rise in real wages will offer further relief”.
In the UK, the Confederation of British Industry said weak growth still continued to suggest that the UK might have slipped into recession in H2 last year, hammered by a triple whammy of headwinds in the form of subdued demand, cost pressures and ongoing difficulties finding suitable staff. It pointed to the fact that the country’s economy dipped 0.2% in the quarter ending 30 November. Future headwinds include the increasing number of socio/economic global troubles and the possibility of rising mortgage arrears, as more people roll off cheap deals. Other analysts disagree, pointing to declining interest (and mortgage) rates and the fact that inflation continues to move – albeit slowly – towards the BoE’s 2.0% target, along with November posting an unexpected 0.3% GDP rise. However, the possibility that the UK will go into a technical recession, once December figures are released, is still a possibility.
December retail sales volumes fell by 3.2% – the sharpest drop since the UK was in a Covid lockdown – with one of the main contributing factors being that people did their shopping earlier in November, taking advantage of Black Friday sales. The amount of non-food products bought dipped 3.9%, with department stores the worst hit, compared to a 2.7% increase for non-food products in November. Likewise, food demand was down 3.1% after being 1.1% higher in November. It seems that fashion was the least affected, with consumers cutting back on toys, sports equipment, watches and jewellery.
Oxfam International estimates that the five richest persons on the planet have more than doubled their cumulative wealth – from US$ 405 billion to US$ 869 billion – since 2020; over the same period, almost five billion, equating to 60% of the global population, have become poorer. Even more statistics see that, at the current rate, it would take two hundred and thirty years to end poverty and that if each of the five wealthiest people in the world were to spend US$ 1 million every day, it would take four hundred and seventy-six years for them to have nothing left. Its Annual Inc report, released ahead of the World Economic Forum, comments that “we are living through what appears to be the start of a decade of division: in just three years, we have experienced a global pandemic, war, a cost-of-living crisis and climate breakdown”, and “each crisis has widened the gulf – not so much between the rich and people living in poverty, but between an oligarchic few and the vast majority.” In 2023, there were 7.1% more billionaires to 2.54k, with their collective wealth one billion dollars higher at US$ 12.0 trillion. The world’s richest 1% own 43% of all global financial assets, but it would take one thousand, two hundred years for a female worker, in the health and social sector, to earn what a chief executive in the biggest Fortune 100 companies earns, on average, in one year. It is not only individuals who are taking the lion’s share of worldwide wealth, it seems that global corporations are in on the act, seeing their average profits surge 89% in 2021 and 2022, with 2023 expected to be even more lucrative for the fat cats. It is reported that seven out of ten of the world’s biggest and publicly listed corporates have either a billionaire chief executive or a billionaire as their principal shareholder, but that just 0.4% of more than 1.6k of the world’s largest and most influential companies are publicly committed to paying their workers a living wage. Globally, seven hundred and ninety-one million workers have seen their wages fail to keep up with inflation and, as a result, have lost US$ 1.5 trillion over the past two years. Scary figures indeed!
Top five richest people in the world
- Elon Musk US$206 billion
- Jeff Bezos US$ 179 billion
- Bernard Arnault US$ 162 billion
- Bill Gates US$ 149 billion
- Mark Zuckerberg US$135 billion
Source: Bloomberg Billionaire’s Index
Artificial Intelligence is here to stay and according to the IMF, it will impact nearly 40% of all jobs, with its MD, Kristalina Georgieva, noting that “in most scenarios, AI will likely worsen overall inequality”; she added that policymakers should address the “troubling trend” to “prevent the technology from further stoking social tensions”. It is estimated that advanced economies could see up to 60% of jobs being impacted, of which half can expect to benefit from the integration of AI, which will enhance their productivity. The other side of the coin sees the other 40% witnessing their jobs being affected, as AI will perform key tasks that are currently executed by humans, which will inevitably lower demand for labour, affecting wages and even eradicating jobs. However, it did estimate that only 26% of jobs in low-income countries will be impacted, with the bloc’s MD saying that “many of these countries don’t have the infrastructure or skilled workforces to harness the benefits of AI, raising the risk that over time the technology could worsen inequality among nations”. The study also sees lower- income and older workers falling behind, whilst there could be disproportionate wage increases in their wages for higher-income and younger workers after adopting AI.
At a parliamentary meeting, Nick Read, the Post Office’s chief executive, admitted it is a possibility the money taken from branch managers could have been part of “hefty numeration packages for executives”, and in typical bureaucratic and dilatory fashion, and nearly twenty-five years after its introduction of the accounting system, noted that the company has still “not got to the bottom of” what happened to the cash paid by sub-postmasters and mistresses in a bid to cover the false financial black holes created by the Horizon software. Paul Patterson, director of Europe’s Fujitsu Services Limited, apologised “for our part in this appalling miscarriage of justice,” and accepted that the Japanese firm would have to pay into the redress scheme, having been involved “from the very start”. He said the company gave evidence that was used to send innocent people to prison, and while he did not know exactly when bosses first knew of issues related to Horizon, it had bugs at a “very early stage”. Not surprisingly, MPs at times appeared frustrated at the lack of answers from the two executives about who knew what and when – with the chief executive unable to say when the Post Office knew that remote access to the Horizon software was possible. Between 1999 and 2015, more than seven hundred Post Office branch managers were handed criminal convictions for theft and false accounting after discrepancies in Fujitsu’s Horizon system made it appear as though money was missing at their stores. Some went to jail, as many were financially ruined, and there have been at least four suicides linked to the scandal. The message to the bosses at the Post Office and Fujitsu is that all those you have cheated in this disgraceful and fraudulent episode are waiting for official apologies and to see you being dragged through UK courts and that we are Tired of Waiting For You!
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