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Pulling Rabbits Out Of A Hat!                                      10 November 2023

The week’s 1,782 real estate and properties transactions totalled US$ 2.02 billion, during the week ending 10 November 2023. The sum of transactions was 396 plots, sold for US$ 1.09 billion, and 1,386 apartments and villas, selling for US$ 929 million. The top three transactions were all for plots of land, the first in Me’aisem Second for US$ 34 million, Al Safouh Second for US$ 26 million and in Wadi Al Safa 2 for US$ 24 million. Wadi Al Safa 2 recorded the most transactions, with seventy-nine sales, worth US$ 146 million, followed by seventy-three sales, in Palm Jabal Ali, for US$ 441 million, and sixty-one sales in Me’aisem Second valued at US$ 202 million. The top three transfers for apartments and villas were for a villa in Dubai Marina for US$ 98 million, another in Palm Jumeirah, sold for US$ 14 million, and an apartment in Me’aisem First for US$ 12 million. The mortgaged properties for the week reached US$ 507 million; one hundred and forty-two properties were granted between first-degree relatives worth US$ 272 million.

Knight Frank’s latest report points to a 5% property price rise in Dubai’s prime market, (including The Palm Jumeirah, Emirates Hills and Jumeirah Bay Island), next year, driven by supply limitations and resurgence in demand from key source markets such as China and India; prices in other segments of the residential market are projected to grow at 3.5%. To this observer, it seems far too conservative and will only occur if regional troubles escalate. Dubai’s prime markets are responsible for 4.8% of transactions by the total value in the first nine months of 2023. In Q3, average residential property prices expanded 19% on an annual basis and 5% on the quarter, with villa and apartment annual prices up 18% and 19%; since Q1 2020, the cumulative increase has hit 30%.

In the six months to 30 September, the ready homes market and off plan sales almost ran in tandem – 51.2:48.8 – (US$ 28.58 billion:US$ 27.25 billion). In Q3, segment-wise, Jumeirah Islands posted a 73% annual price hike at US$ 730 per sq ft – the strongest growth for villas. Meanwhile, for apartments, Dubai South led the field with growth of 73% followed by Jumeirah Lakes Towers (67%) and Umm Suqeim Third, (37%); on a quarterly basis, prices were up 33% in Dubai South.

The study also noted that currently, there were 77.9k homes (excluding branded residences) under construction, scheduled for delivery by the end of 2028, with an annual average of approximately 13k homes over the next six years, considerably below historical completion rates. However, this figure will be supplemented by a raft of new launches, with many of them handed over within a thirty-month period. Previous blogs have indicated that by the end of 2023, Dubai will have a portfolio of some 800k housing units and an expected population of some 3.65 million – an increase of around 100k this year; the ratio of apartments to villas is in the region of 85:15. A quick estimate would see the approximate household size being 4.56 people per household, with recent trends showing that this ratio is declining. That being the case, and assuming the size drops to 4.35 and the population grows at a conservative 3% over the next decade, to 4.9 million, the number of units in 2033 should be 1.126 million; this equates to an extra 326k units or 32.6k a year. However, the population growth estimate could be on the low side, bearing in mind that pre-Covid, Dubai’s population was growing at annual double-digit rates.

Official data reports that residential transactions in Dubai, in the ten months to 31 October, reached 93.6k and has already surpassed 2022’s record total transactions of 92.2k for the twelve months. The month of October saw a 23.6% decline in the number of transactions tom 6.4k; although secondary market transactions grew 29.5%, off-plan deals fell by 57.2%.

Meanwhile Valustrat posted that its Q3 property index, (VPI), reached its highest quarterly capital gains in a decade; it grew a record 6.1%, on the quarter, and 15.1% higher on the year, to reach 96.6 points. Villa valuations surpassed peaks seen in 2014 by 2.6%, with villa prices increasing over the twelve months, by 19.8% and 7.6% on the quarter to reach 123.6 VPI points. The leading four performers were Palm Jumeirah (9.5%), Jumeirah Islands (9.5%), Dubai Hills Estate (9.3%), and Mudon (9.0%). The VPI for apartments also posted record capital gains, up 4.8% on the quarter, and 11.0% on the year, to reach 79.7 points – 29.2% below peaks of 2014. The highest quarterly performers were Discovery Gardens (7.5%), The Greens (7.3%), Palm Jumeirah (6.7%), and Dubailand Residence Complex (6.6%).

Dubai’s average residential prices increased by 19.1%in the year to October 2023, marginally down from the 19.6% rate of growth registered a month earlier. Over the same period, average apartment and villa prices rose by 18.7% and 21.4%, respectively. In October 2023, average apartment prices stood at US$ 372 per sq ft, and average villa prices stood at US$ 449 per sq ft. Although the average apartment sales rates per sq ft still sit at 8.3% below the 2014 high, a number of communities have already topped their 2014 levels. On the other hand, the average villa sales rates have surpassed their 2014 figures by 14.1%. In the apartment segment of the market, Downtown Dubai recorded the highest sales rate at US$ 681 per sq ft, whereas, in the villa segment of the market, Palm Jumeirah recorded the highest sales rate at US$ 1,396 per sq ft.

In line with recent months there has been a slowdown in growth rates exemplified by October’s annual rise of 19.7% compared to 20.6% a month earlier. Over this period, average apartment rents rose by 19.9%, and average villa rents grew by 18.0%. As at October 2023, the average yearly apartment and villa asking rents stood at US$ 30.0k and US$ 88.0k respectively. The highest yearly apartment and villa rents were respectively found in Palm Jumeirah, with average rents at US$ 69.8k, and in Al Barari, where average rents reached US$ 298.9k.

There is no doubt that Dubai residential property prices have a long way to go before they catch up with other major global cities. Q3 was the eleventh consecutive quarter of growth in the sector and there are many analysts that see no immediate end to this trend; the fact that supply is still lagging behind demand is another reason for price growth to continue. Knight Frank has calculated that US$ 1 million will buy the following sq mt pf prime property:

•                                                                                                                                                                     Monaco                    17 sq mt                                            
• New York                    33 sq mt
• Singapore                    34 sq mt
• London                        34 sq mt
• Sydney                        44 sq mt
• Shanghai                     44 sq mt
• Tokyo                          60 sq mt
• Berlin                          70 sq mt
• Dubai                          105 sq mt

The 64-storey, 302 mt, Wasl Tower, set to be completed by Q3 2024, will be one of the world’s tallest buildings to use ceramic fins as a renewable means to achieve energy efficiency. As a matter of coincidence, 2023 is UAE’s Year of Sustainability and the upcoming global climate summit COP 28 will be held in Dubai later in the month. Noting that the construction sector drives over 33% of global annual greenhouse gas emissions, Wasl Tower’s CEO commented that the building “represents our continuous efforts to innovate and create smarter, more sustainable developments that meet the evolving needs of people and the UAE’s climate goals.” The new building further enhances Dubai’s credentials as a global leader in adopting state-of-the-art sustainability solutions in the construction sector. The building will fulfil contemporary requirements for safety, sustainability and energy efficiency, with the ceramic fins providing shade, boost wind-induced cooling and indirectly channel daylight deep into the building’s interior. The massive mixed-use project, spanning a built-up area of around 167.8k sq mt, will feature apartments, offices, restaurants, a luxurious 259-key Mandarin Oriental hotel and a swimming pool.

Vincitore Realty unveiled Vincitore Aqua Dimore —its sixth project in Dubai – with a US$ 327 million development value which it hopes to redefine affordable luxury and help attract more buyers and investors to the market. The project offers the luxury of aqua resort living in one’s own branded residence – that buyers can avail with an affordable price. It will encompass branded designer apartments, ranging from Palatial Studio, 1 BR, 2 BR and 3 BR, with designer private pool; completion is slated for Q4 2026. Prices of apartments start from US$ 189k for a studio, with a 1% monthly payment plan available; the developer also offers an 8.0% guaranteed net return on investment for the first three years.

The fact that the six GCC states have unanimously approved a regional unified tourism visa will add another positive driver for Dubai’s hospitality sector which will greatly benefit from this initiative; it is expected to become operational by 2025. The decision is expected to streamline travel logistics and underpins the “continuous communication and co-ordination” between the GCC states and will obviously facilitate the movement of residents and tourists around the bloc. It will also provide a boost to the tourism sector. At the same meeting, it was agreed to introduce the electronic linking of traffic offences between GCC states and to prepare a comprehensive strategy to combat illegal drugs.

October’s seasonally adjusted S&P Global PMI shows that business activity in Dubai’s non-oil private sector economy improved further, rising 1.3 to 57.4, as business optimism soared, and sales hit a four-year high. New business intakes increased at their quickest rate in over four years, encompassing most key sectors, specifically among wholesale and retail companies, as well as travel and tourism service providers. Economic activity was driven by surging market demand and growing confidence, as there was a faster increase in new business volumes, with businesses surveyed reporting new clients and an improvement in market demand. New order inflows will continue to grow and drive activity expansion, as companies also increased their inventories build-up, whilst there was only a slight rise in October employment.

HH Sheikh Mohammed has approved both Dubai’s budgets, for 2024 – 2026, and also Law No 20 of 2023 for the general budget for the fiscal year 2024; the emirate’s three-year budget sees expenditure totalling US$ 67.19 billion and for next year US$ 21.55 billion. It plans to raise public revenue of US$ 24.69 billion in 2024, of which US$ 23.19 billion has been allocated to the budget and US$ 1.50 billion to the general reserve. The budget indicates Dubai’s aim to stimulate the macroeconomy and support the objectives of the Dubai Strategic Plan 2030 development project, as well as the Dubai Economic Agenda D33. The Media Office also noted that the three-year budget has several targets including “to boost entrepreneurship, attract more foreign investment, promote social welfare, support fields like space research, digitisation and artificial intelligence, and consolidate the emirate’s position as a “land of opportunity and innovation”. The Crown Prince, Sheikh Hamdan bin Mohammed, commented that “the financial sustainability, competitiveness and transparency embedded in this budget will make Dubai even more appealing to investors and businesses from across the world seeking new opportunities.”

Budget expenditure has been allocated:

• 42% – infrastructure, (including roads, tunnels, bridges, transport, sewage stations, parks, renewable energy sources and waste treatment facilities)
• 34% – social development, (including health, education, scientific research, housing, care for needy families and women and children, reading, translation and programming initiatives, development of youth and sports, care for senior citizens and retirees, and care for people of determination)
• 19% – the security, justice and safety sector
• 5% – supporting the public services sector, government excellence, creativity, innovation and scientific research to develop performance and foster a culture of excellence, innovation and creativity

It is hoped that the establishment of a general reserve from annual revenues will top US$ 5.60 billion for the three years 2024-2026, with an expectation that the operating surplus would equate to 3.3% of Dubai’s GDP, during the three-year financial plan.

The UAE’s Vice President and Ruler of Dubai has unveiled a ten-point document with an ambitious plan to develop the country’s economy making it the best in the world. The guiding principles of the ‘Economic Principles of UAE’, are to present the country as an integrated economy backed by a fully developed digital infrastructure, secure systems and adaptable legislation. The ten principles cover:

• Globally open free-market economy
• Attracting top talent
• Digital economy
• Nurturing the youth
• Sustainable and balanced economy
• Strong and stable financial system
• Strong and fair legislative environment
• Transparency and laws
• Strong banking sector
• Transport and logistics infrastructure

Following directives from Dubai’s Crown Prince, Sheikh Hamdan bin Mohammed, the DFF and the Dubai Centre for Artificial Intelligence have been tasked to organise the Global Prompt Engineering Championship in May 2024. The two-day event, to be held at the Museum of the Future, will be the largest challenge of its kind to leverage the power of Generative AI, and will feature a prize pool of US$ 272k (AED 1 million); it will include three main categories – literature, art and coding. It is expected that such an event will enhance Dubai as a destination for Generative AI talent and for entrepreneurs, as well as a centre for developing a new generation of innovations associated with prompt engineering. The Crown Prince reiterated the emirate’s commitment to nurture an exceptional programming community which will include attracting top talent and experts to drive innovation.

At yesterday’s Executive Council meeting, its chairman, Sheikh Hamdan bin Mohammed approved several transformative initiatives to stimulate the emirate’s economy, including incentives targeted at doubling the contribution of industrial and agricultural technology sectors to Dubai’s economy by 2033, as well as plans to progressively phase out single-use plastics by 2026. He reiterated the pivotal role of a diversified economy in achieving the ambitious objectives outlined in the Dubai Economic Agenda D33, which seeks to propel Dubai into the ranks of the world’s top three cities by 2033. He commented that “these steps represent significant measures to expand the contribution of agriculture to Dubai’s diverse economy by doubling the size of the sector. We call on investors, experts and innovators to join our global platform for research, development and innovation.”

Next week sees Dubai World Trade Centre once again being the location for the twenty-fifth Water, Energy, Technology and Environment exhibition, and Dubai Solar Show, organised by DEWA under the directives of HH Sheikh Mohammed. WETEX and DSS 2023, running from 15 – 17 November, will host twenty-four international pavilions from sixteen countries, as well as seventy-five sponsors and thirty-seven partners and supporting associations.

UAE authorities have issued guidelines relating to the importance of complying with anti-money laundering regulations and the need to combat the use of unlicensed virtual asset service providers. The main targets will not only be the financial institutions but also the general public being told why compliance is so important when it comes to AML and the negative impact it can have on both the local and global economies. Not only will VASPs, operating without a licence, face civil and criminal penalties but also all parties dealing with them. The guidelines were drawn up by the National Anti-Money Laundering and Combatting Financing of Terrorism and Financing of Illegal Organisations Committee (NAMLCFTC).

Following increased demand, the Mohammed Bin Rashid Aerospace Hub announced the expansion of three new facilities:

aerospace supply chain           includes a 22k sq mt expansion for use by engine shops, component and landing gear MROs and workshop solutions for SMEs

suppliers complex                   a second landslide facility to the first vertical aerospace complex in the region will add 13k sq mt of light industrial space to enable aerospace companies, mainly SMEs and start-ups to set up their facilities easily and quickly

line maintenance units           the second phase will feature an airside plot which supports airside operators, including FBOs, to have direct access to clients; it will feature nine units that offer one-stop-optimal aviation-related solutions, such as maintenance warehouse facilities, tooling and engineering

All the above facilities are slated for completion starting in Q4 2024, with 70% of the area pre-leased by global companies attracted by MBRAH from abroad.

According to the travel analysis company ForwardKeys, the UAE ranked eighth among the top ten tourism destinations globally that have seen the strongest growth in international visitors in 2023, as compared to pre-pandemic 2019.  From the list, it can be seen that the “sun and sea” destinations were favoured – the Dominican Republic, Colombia, Mexico and Greece. The report confirmed that international tourism continues to recover after the pandemic, but data indicated that globally, tourist arrivals showed “significant differences” between regions, with Africa and the ME being the only worldwide switching from recovery to growth in Q4; YTD, international tourist arrivals were 14% below pre-pandemic levels, but are set to grow 2% this quarter. With Saudi Arabia fifth, UAE eighth and Egypt tenth on the list, the region was well represented. The UAE posted YTD international tourist arrivals 14% below pre-pandemic levels, which are expected to grow 2% in Q4. On a global scale, numbers are 27% shy on 2019 but are expected to be nearer 13% below pre-pandemic returns by the end of this year – with one caveat, that the current crisis involving Israel does not spill over.

The Emirates Group has posted its best ever six-month financial results for fiscal H1 ending 30 September, with net profit 138% higher, at US$ 2.75 billion, driven by a 20% hike in revenue to US$ 18.34 billion, attributable to strong demand for air transport across the world, since the last pandemic travel restrictions were lifted. It also reported an EBITDA of US$ 5.61 billion, a significant 34.6% uptick compared to H1 2022. Its cash position stood US$ 11.63 billion, marginally higher than the 31 March balance, whilst it has repaid US$ 2.50 billion of its Covid-related loans, as well as a 2022-23 dividend payment US$ 1.23 billion, (AED 4.5 billion), to its owner. Its payroll has increased by 6.0% to 109k, with both Emirates and dnata have ongoing recruitment drives to support their future requirements. The carrier’s chairman, Sheikh Ahmed bin Saeed, posted that “this is a tremendous achievement that speaks to the talent and commitment within the organisation, the strength of our business model, and power of Dubai’s vision and policies that has enabled the creation of a strong, resilient, and progressive aviation sector.” He also noted that “for the second half of 2023-24, we expect customer demand across our business divisions to remain healthy and we will stay agile in how we deploy our resources in this dynamic marketplace. At the same time, we are keeping a close watch on headwinds such as rising fuel prices, the strengthening US dollar, inflationary costs, and geo-politics.”

The airline profit rose 135% to a new record of US$ 2.56 billion, as revenue, including other operating income, of US$ 16.21 billion was up 18.8% on the year. Passenger numbers were 31.0% higher at 26.1 million, compared to H1 2022. Despite an overall softening in the global cargo market, Emirates Skycargo uplifted 1.35 million tonnes in H1 – 11.0% higher than a year earlier.

The government has announced that its fifth auction of Islamic Treasury Sukuks was 5.2 times oversubscribed, with bids received for the US$ 409 million, (AED 1.5 billion) issue, totalling US$ 1.57 billion, (AED 5.77 billion). As with the previous four auctions this year, there were two tranches – two-year and three-year – with a spread of 4 to 11 bps over US Treasuries with similar maturities.

An unnamed money exchange operating in the UAE has been fined US$ 1.30 million over its “weak compliance framework” to prevent money laundering and the financing of terrorism. Evidently it failed to have the “required risk analysis” and due diligence policies and procedures in place. The Central Bank of the UAE imposed the financial sanction as per the federal law.

DEWA reported an 8.0% increase in Q3 net profit, to US$ 910 million, driven by an increase in demand for the utility’s electricity, water and cooling services, and despite its finance costs doubling to US$ 134 million; revenue rose more than 10% to US$ 2.57 billion. In the nine-month period, profit fell by 4% to about US$ 1.63 billion, while revenue gained more than 7%. The public utility is expected to pay out its US$ 845 million H2 dividend next April. MD, Saeed Al Tayer, commented that “DEWA’s shareholder strategy is focused on delivering consistent returns, upholding [the] highest environmental, social, and governance (ESG) standards and delivering sustainable growth.” In Q3, total power generation was up 9.3% to nearly 19 terawatt-hours, and water desalination, at 38.7 billion imperial gallons, was 5% higher; by the end of September, it served more than 1.2 million customers.

Emaar Properties posted a 42% hike in nine-month net profit to US$ 2.23 billion, as revenue dipped 3.0% to US$ 5.01 billion, whilst group property sales posted a 16.0% increase to US$ 8.47 billion. By the end of the period, Emaar’s revenue backlog topped nearly US$ 19.0 billion. In June, its long-term issuer credit rating was upgraded one notch to ‘BBB’ by S&P Global Rating.

Meanwhile, its majority-owned subsidiary, Emaar Development, posted property sales of US$ 7.87 billion – 25% higher on the year; the unit, which specialises in build-to-sell property development business, recorded revenue figures of US$ 2.01 billion, with EBITDA 36% higher at US$ 1.23 billion. Its shopping mall, retail, and commercial leasing operations posted a revenue of US$ 1.17 billion, with its mall assets recording an average 97% occupancy rate. Recurring revenue from malls, hospitality, leisure, entertainment, and commercial leasing rose 26% annually to US$ 1.85 billion. Emaar’s hospitality, leisure, and entertainment divisions generated a 22% rise in revenue to US$ 681 million, attributable to a steady recovery in the tourism sector and strong domestic spending. Emaar’s UAE hotels, including those under management, reported an average 70% occupancy in the period. Emaar’s international real estate operations, which represent more than 11% of Emaar’s total revenue, recorded property sales of US$ 599 illion with revenue totalling US$ 572 million during the period, mainly driven by operations in Egypt and India.

Al Ansari Financial Services announced a US$ 106 million profit for the first nine months of 2023, with the Group operating income 1.5% higher at US$ 235 million, helped by a 10% increase in demand across all other products and services. As indicated last week, a US$ 82 million, (AED 300 million), dividend was approved, in line with the commitment posted in its IPO earlier in the year which equates to a 7.0% dividend yield. A further similar amount will be paid in April. Group CEO, Rashed A Al Ansari noted that “we take great pride in outperforming the market across all our products and offerings, as well as in our unwavering commitment to achieving our growth targets.”

Aramex posted Q3 declines in both revenue and net profit by 5.6% to US$ 368 million and by 76.0% to short of US$ 3 million respectively, largely attributable to soaring interest rates, (accounting for almost 50% of the decline in net income), forex fluctuations and a slowing global economy. Operating profit was 12.0% lower at US$ 12 million. For the first nine months of the year saw revenue falling 5.0% to US$ 1.13 billion and net profit 60.0% lower at US$ 14 million. Aramex’s international express business posted a 4.0% annual rise in revenue to US$ 140 million, despite a 5.0% decline in shipment volumes due to the slowdown in retail activity; gross profit came in 20.0% higher to US$ 50 million.

The DFM opened on Monday, 06 November 2023, 143 points higher the previous week, gained 212 points (4.8%) to close the trading week on 3,969, by Friday 10 November 2023. Emaar Properties, US$ 0.14 higher the previous week, gained US$ 0.01 to close on US$ 1.87 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.65, US$ 4.80, US$ 1.48, and US$ 0.37 and closed on US$ 0.65, US$ 4.81, US$ 1.51 and US$ 0.37. On 10 November, trading was at 111 million shares, with a value of US$ 96 million, compared to 112 million shares, with a value of US$ 69 million, on 03 November 2023.

By Friday, 10 November 2023, Brent, US$ 7.08 lower (7.7%) the previous fortnight, shed US$ 3.85 (4.6%) to close on US$ 81.30. Gold, US$ 16 (0.8%) lower the previous week, shed US$ 57 (2.9%) to trade at US$ 1,943 by 10 November 2023.

With an order backlog approaching 8k commercial planes at the end of Q3, Airbus posted a 12% rise in revenue to US$ 15.89 billion, with Q3 profit 21% higher at US$ 862 million, on the back of increased demand and a hike in jet deliveries; adjusted profit before interest and tax rose 21% on an annual basis to US$ 1.08 billion. For the first nine months of the year, although revenue was 12% higher, at US$ 45.41 billion, net profit dipped 9% to US$ 2.49 billion, with its gross commercial aircraft orders totalling 1.28k, 49.5% higher compared to the same period in 2022. It delivered 488 commercial aircraft during the period, up 11.6%, comprising 41 A220s, 391 A320 Family, 20 A330s and 36 A350s. Airbus Helicopters posted a 22.4% decline in net orders to 191 units, with defence and space division’s order value climbing 6.2% to US$ 9.07 billion. Guillaume Faury, chief executive of Airbus, commented that “we continue to make progress on our operational plan in a global environment that has become increasingly complex,” and that “we expect the supply chain to remain challenging as we progress on the production ramp-up.”

Ryanair posted a near 60% hike in H1 profits to US$ 2.18 billion, driven by an 11% rise in passenger numbers, to 105.4 million, and a 24% hike in average fares, to US$ 58. The no-frills carrier’s chief executive, Michael O’Leary, noted that this was “due to a very strong Easter and record summer traffic”, despite higher fuel costs. The airline sees fares rising by “mid-teens percentage” during Q4 and prior to Christmas. It expects full year profits to hover around US$ 2.0 billion – an indicator that many airlines tend to lose money over the winter period.

Last January, Greenpeace managed to board a Shell production vessel near the Canary Islands to protest oil drilling and travelled on it as far as Norway. This week, the tech giant filed a US$ 2.1 million claim in damages in what it said was boarding a moving vessel at sea was “unlawful and extremely dangerous.” Shell is seeking damages that include costs related to shipping delays and expenses for extra security, as well as legal costs. There are reports that Shell offered to reduce its damage claim to US$ 1.4 million if Greenpeace’s activists agree not to protest again at any of Shell’s oil and gas infrastructure at sea or in port.

If British Steel’s plans to close its Scunthorpe blast furnaces go through, there is the possibility that up to 2k will lose their jobs; China’s Jingye Group wants to introduce two electric furnaces, (one at Scunthorpe and the other in Teesside), to transform the company into a “green and sustainable company”. A US$ 620 million, (GBP 500), taxpayer rescue package – similar to the one availed to Tata – may save jobs. However, blast furnace plants are not economic – reportedly losing US$ 1.24 million a day – and are not “green” and could be unsustainable on both financial and environmental grounds. Electric arc furnaces are mostly used to melt down and repurpose scrap steel, and the finished product is not the same grade of steel as that produced in blast furnaces and is not suitable for all industrial uses. Its main advantage appears to be that they run at lower temperatures and can use electricity generated by renewables.

Alleging tax evasion, an Italian judge has ordered the seizure of US$ 840 million from Airbnb, over tax evasion, with claims that the short-term rental firm failed to collect tax from landlords of around US$ 3.95 billion of rental income; landlords in Italy are required to pay a 21% tax on their earnings. It is also reported that three former managers, who held managerial roles at Airbnb from 2017 to 2021, were also under investigation. The US  giant, which has operated in the country for the past fifteen years, commented that it had been trying since June to resolve the issue and that “we are confident that we have acted in full compliance with the law and intend to exercise our rights with respect to this issue.” In recent years, Italian authorities have increased scrutiny of the tax practices of major companies like Airbnb and have also launched tax-related inquiries against Netflix and Meta. It is estimated that if authorities could collect the “missing tax” from landlords, it could add US$ 1.09 billion to public funds.

In 2016, the EC decided Apple had received unfair preferential treatment from the Irish government, allowing it to pay a much lower rate of tax than other companies, commenting that this constituted illegal aid given to the tech giant by the Irish state; the figure that Apple is claiming not to pay is estimated at US$ 13.88 billion.  This was overturned on appeal. Three years ago, a ruling which found Apple had been given illegal tax breaks by the Irish government was overturned, but a year later, the lower court, known as the General Court, ruled that the EC’s decision that Apple should pay back taxes was legally flawed and should be set aside, but that ruling itself could now be overturned after the latest twist. This week, Advocate General Giovanni Pitruzzella, at the Court of Justice, said the case should be reviewed again. The argument was that a series of legal errors had been made and the ruling in Apple’s favour had failed “to assess correctly the substance and consequences of certain methodological errors that, according to the Commission decision, vitiated the tax rulings”. The Irish government had argued that Apple should not have to repay the back taxes, deeming that its loss was worth it to make the country an attractive home for large companies – the country is Apple’s base for the EMEA. The battle goes on.

San Francisco is the location of a court battle between the maker of the popular video game Fortnite and Google which is accused of acting as a monophyly by charging 30% commission on in-app purchases on Google Play store. The tech giant refutes such claims, saying that it competes with Apple, and that there was an abundance of ways to download apps on Android phones. Epic argued that Google has “eliminated competition in the distribution of Android apps using myriad contractual and technical barriers.” On the other side of the country, in Washington, the US Justice Department is accusing Google of holding an illegal monopoly over search. In 2020, Fortnite was pulled from Google Play and the App Store on the grounds that they considered charges to be “taxes” on developers.

Data by CoinGecko has indicated that global assets invested in exchange-traded funds, tied to the spot price of bitcoin, now total US$ 4.16 billion, of which seven spot bitcoin ETFs, that had been launched in Canada since 2021, account for US$ 2.0 billion of the total; the largest of the ETFs, at US$ 819 million, is Canada’s Purpose Bitcoin ETF. There is some reticence among US legislators about ETFs and to date only those tied to future contracts, are allowed; the largest is ProShares Bitcoin Strategy which has about US$ 1.2 billion in assets. The SEC has so far denied all spot bitcoin ETF applications, saying applicants have not shown they can protect investors from market manipulation. Germany started the ball rolling in Europe in June 2020, with ETC Group Physical Bitcoin, now the second d largest ever launched with a value of US$ 802 million. Europe has seven other ETFs, mostly incorporated in tax havens such as Jersey, the Cayman Islands and Liechtenstein, with much smaller products traded in Brazil and Australia.

The so-called “King of Crypto”, 31-year-old Sam Bankman-Fried, who once ran one of the world’s biggest cryptocurrency exchanges, has been found guilty of seven counts of fraud and money laundering by a New York court and now faces decades of incarceration. He was arrested late last year, after his cryptocurrency exchange FTX went bankrupt, with a reported US$ 8.0 billion worth of customers’ funds missing. FTX was once valued at US$ 32.0 billion. The jury found him guilty of lying to investors and lenders and stealing billions of dollars from FTX, helping to precipitate its collapse. The prosecution presented evidence that Bankman-Fried’s crypto trading firm Alameda Research received deposits on behalf of FTX customers from the early days of the exchange, when traditional banks were unwilling to let it open an account. Instead of safeguarding those funds, as Bankman-Fried repeatedly pledged to do in public, he used the money to repay Alameda lenders, buy property and make investments and political donations.

On Wednesday, some ten million Australians, 40% of the population, could not use smartphones, broadband internet or landlines for much of the day. The problem was an outage at Optus that started at 4.00 am, with services only being restored at 5.30 pm, during which time payment, transport and health systems were thrown into chaos. Communications Minister Michelle Rowland commented that no cause of the failure was given but “it has occurred deep within the network (and) it has wide ramifications across mobile, fixed, and broadband services for Optus customers”, and added that “customers are clearly frustrated about it and Optus should respond to that accordingly.” Optus, owned by Singapore Telecommunications, reported one of the country’s biggest cyber breaches fourteen months ago, and with this latest incident questions are being asked about the fragility of the country’s core infrastructure. After this debacle, the Albanese government will have to look closely to ensure that if this sort of outage occurs again, the infrastructure across multiple private companies can cope.

There will not be too many tears shed for the ex-boss of NatWest, Dame Alison Rose, will lose out on a US$ 9.3 million payout after she had not been given “good leaver” status after she had  admitted to discussing the closure of Nigel Farage’s bank account. If she had, Dame Alison would have been entitled to receive the entire amount which, after including her yearly salary, would have exceeded US$ 12 million; she will receive her US$ 3 million fixed pay package, but will not benefit from share awards and bonuses she had previously been entitled to. The UK government used to be a majority shareholder in the bank but since 2022 now has a 38% stake. Paying out huge sums for not doing your job properly will impact the UK taxpayer, with NatWest agreeing to a maximum US$ 482k towards her legal costs.

In the UK, the number of people falling behind on their mortgage payments in Q3 increased 18% to 88.0k, compared to the same period in 2022, with the number among landlords almost doubling. The number of homeowners in arrears was up 7% in Q3 on the year. It is obvious that soaring interest rates are the main reason behind these figures. Surprisingly, it is reported that the number where payments have fallen behind still represent just 1% of the 8.8 million outstanding mortgages; it seems that those in distress tend to pay their mortgages ahead of other liabilities or expenses. However, with an estimated 1.6 million mortgage payers expected to be paying more in 2023, after their fixed rates become variable, there will be more arrears.

Latest UK GDP figures indicated that September’s GDP was 0.2% higher, but over Q3, growth was at zero. In September, the services sector was the largest upward contributor to the economy, nudging up 0.2%, with consumer-facing services down 0.2% in September and 0.7% lower in August, with declines noted in health, management consultancy and commercial property rentals; these were offset by growth in engineering, car sales and machinery leasing. According to the BoE, which correctly forecast (for a change) stagflation in the period, is now expecting much of the same in Q4. Such figures may see no further interest rate hikes, but there is a slight possibility of recession – if not, then the country will be in a state of stagflation well into 2024. There is no doubt that the country is in disarray, (as is the Sunak government), and  later in the month, Jeremy Hunt, the Chancellor will deliver his Autumn Statement and, on 22  November, in a last ditch move to save the economy, he will have to be seen more than Pulling Rabbits Out Of A Hat!

Looking Down The Barrel Of A Gun!                                      03 November 2023

The 1,655 real estate and properties transactions totalled US$ 3.19 billion, during the week ending 03 November 2023. The sum of transactions was 277 plots, sold for US$ 1.40 billion, and 1,378 apartments and villas, selling for US$ 981 million. The top three transactions were all for plots of land, the first two in Madinat Dubai Almelaheyah, sold for US$ 138 million and for US$ 95 million, and the third in Burj Khalifa for US$ 49 million. Palm Jumeirah recorded the most transactions, with ninety-two sales, worth US$ 586 million, followed by forty-six sales, in Madinat Hind 4, for US$ 22 million, and thirty-one sales in Zaabeel First valued at US$ 45 million. The top three transfers for apartments and villas were all for apartments, the first in Palm Jumeirah, sold for US$ 31 million, and two apartments in Zaabeel First for US$ 29 million and US$ 28 million. The mortgaged properties for the week reached US$ 638 million, with the highest being for land in Business Bay for US$ 102 million; one hundred and twenty-eight properties were granted between first-degree relatives worth US$ 170 million.

Abu Dhabi’s biggest developer has successfully launched onto the Dubai property sector and phase 1 of Haven by Aldar, comprising 468 units, was sold out. It has subsequently launched phase 2 and has already sold 786 villas, generating US$ 845 million in sales. The final phase of Haven, which includes further villas, townhouses, and apartments, will launch for sale in Q1 2024. Handover will commence in Q3 2027. Aldar Properties posted that UAE nationals accounted for 23% of all sales, with expat residents and overseas buyers accounting for the balance; 499% of buyers were over the age of forty-five. The Abu Dhabi interloper has agreed a JV with Dubai Holding to build three new residential communities to be developed in the emirate.

For the first nine months of the year, DLD posted that there had been significant 33.8% and 36.7% hikes in both transactions and values at 116.1k and US$ 117.08 billion compared to the same period in 2022. Some of the factors involved in these results include the emirate’s rising global profile, exceptional infrastructure and progressive government initiatives. There was also a 50.3% growth in value and a 33.3% upward movement in the number of investments to US$ 75.94 billion and 81.7k.

In the period, Al Barsha South Fourth was number one in the list of top locations based on transactions with 10.4k, followed by Dubai Marina (9.1k), Business Bay (7.4k), Wadi Al Safa 5 (5.6k), Al Mirkadh (5.5k), Al Thanyah 5 (5.4k), Burj Khalifa (5.2k), Al Khiran First (4.6k), Hadaeq Mohammed bin Rashid (4.2k), and Jebel Ali First (3.7k).

The top ten areas in terms of transactional value were Dubai Marina, (US$ 10.0 billion), Palm Jumeirah (US$ 7.77 billion), Jebel Ali Industrial First (US$ 7.61 billion), Wadi Al Safa 3 (US$ 6.90 billion), Business Bay (US$ 5.47 billion), Burj Khalifa (US$ 4.87 billion), El Merkadh (US$ 3.96 billion), Al Khairan First (US$ 3.76 billion), Hadaeq Mohammed bin Rashid (US$ 3.71 billion), and Jebel Ali First (US$ 3.52 billion).

When it comes to mortgages the top ten were Dubai Marina (1,186), Al Thanyah Fifth (879), Al Barsha South Fourth (879), Burj Khalifa (874), Jebel Ali First (789), Al Awir First (743), Hadaeq Mohammed bin Rashid (665), Business Bay (652), Wadi Al Safa 5 (629), and Palm Jumeirah (526).Value-wise, the top locations, in terms of the value of the mortgages, were Jebel Ali First (US$ 7.57 billion), Wadi Al Safa 3 (US$ 4.08 billion), Jebel Ali First (US$ 1.90 billion), Palm Jumeirah (US$ 1.90 billion), Dubai Marina (US$ 1.37 billion), Business Bay (US$ 1.12 billion), El Merkadh (US$ 940 million), Al Khairan (US$ 828 million), Al Barsha South Fourth (US$ 657 million) and Burj Khalifa.

Valustrat’s Q3 report noted that Dubai’s residential rents climbed 27.2%, on the year, and 2.1% on the month, with villa rentals 38.7% higher on the year. Villa rentals rose 38.7% annually but witnessed an insignificant change when compared to the previous quarter. Average annual rents for three-bedroom villas stood at US$ 85k, 4 B/R at US$ 104k, and 5 B/R villas at US$ 134k. Apartment rentals grew at the slower pace of 19.1% on the year and 3.6% on the quarter, with average rentals for studio, 1, 2 and 3 B/R apartments at US$ 14k, US$ 20k, US$ 30k and US$ 46k. It estimated that Q3 residential occupancy stood at 88.9%.

These figures were in contrast with CBRE which posted that, in the past twelve months, average Dubai residential prices were 19.6% higher, with average apartment and villa prices up by 19.7% and 18.9%. Along with a slowdown in selling prices, rentals also weakened with September posting a 20.6% return, down 1.1% on the month; (this is in line with an Allsopp & Allsopp report posting those rents had declined to 21.0% in Q3). The consultancy noted that in the first nine months of 2023, 27.1k units were delivered and that a further 34.7k were expected to be handed over by the end of the year. It was reported that Meydan One, Downtown Dubai and Business Bay accounted for 46.4% of all units already handed over this year. The Dubai Land Department posted that, in Q3, real estate transactions had grown 22.0% to 31.2k with a staggering 40.0% rise in value to US$ 26.58 billion.

ValuStrat also noted that Dubai office space grew 25.5%, with its VPI 7.3% higher on the quarter to 103 points, compared with a 100-point base in Q1 2015. The weighted average price for an office in Dubai was US$ 3,877 per sq mt, with double-digit annual growth in five major central business districts in Dubai – Jumeirah Lake Towers (37.2%), DIFC (33.7%), Business Bay (22.2%), Downtown Dubai (16.8%), and Barsha Heights (14.8%). The report also noted that valuations for shell and core Grade A office space grew 33.3% on the year, while the same classified Grade B growing 19.2%. Q3 returns saw office transitions, at 631, 9.0% higher on the year but 4.7% lower, on the quarter, with the median transacted price at US$ 3,035 per sq mt, up 28.4% annually and 9.1% on a quarterly basis.

According to proptech platform, Realiste AI, the five Dubai locations likely to show the highest price appreciation in Q4 are Bukadra Part 2, Sobha Hartland, Al Warsan First, Dubai Harbour and Al Kheeran with quarterly increases of 8.12%, 8.05%, 6.99%, 6.18% and 5.88%. The platform sees Bukadra Part 2 prices for a 1 B/R apartment rising to US$ 6,628 per sq mt.

Last week saw the start of Dubai’s new cruise season, as the liner Mein Schiff 2 was the emirate’s first arrival, with over one hundred and fifty cruise ships expected to call in Dubai at Mina Rashid and Dubai Harbour, over the next five months. Dubai will also host the Resilient Lady Ship, operated by Virgin Voyages, for the first time, with the vessel set to embark on two routes from the city this season. Last year, Dubai Harbour Cruise Terminal welcomed 300k passengers, and numbers are expected to jump 28% this season. Dubai is a member of the Cruise Arabia alliance, comprising three other key ports in the region, including Abu Dhabi, Bahrain and Oman, with the aim to promote the region as a cruise ship destination globally. Major cruise companies MSC Cruises, TUI Cruises, Aida Cruises, Costa Cruises and Ponant Cruises will operate cruises from Dubai, while cruise lines such as Cunard, P&O Cruises, Princess Cruises, Royal Caribbean Cruise Lines, Celebrity Cruises, Norwegian Cruises, Silversea Cruises, and Cordelia Cruises will also operate routes via the emirate. Dubai Harbour Cruise Terminal has twin terminals on a 910 mt pier and is capable of processing more than 3.2k passengers an hour. Mina Rashid can handle seven mega-cruise vessels or 25k passengers at once. The port’s Hamdan bin Mohammed Cruise Terminal, the world’s largest single covered cruise terminal facility, is capable of handling 14k passengers a day.

The eighteenth edition of the Dubai Air show is fast approaching – 13-17 November – which is expected to bring in a record number of 1.4k exhibitors, (including four hundred first timers and eighty plus start-ups), other global players and visitors. Despite the name, the event also represents the space and defence sectors. The regional airlines are fast recovering from the pandemic, with recent global figures standing at 96% of pre-Covid levels, whilst ME airlines posted a 27.3% increase in August traffic compared to a year earlier. Furthermore, Dubai Airports also posted a 49.0% increase in H1 passenger traffic at 41.6 million guests, with a 43% surge in Q1 passenger traffic.

On Wednesday, the Dubai Integrated Economic Zones Authority announced the launch of a venture capital fund worth US$ 136 million. Launched under the patronage of HH Sheikh Mohammed bin Rashid, and in the presence of his son, Sheikh Ahmed bin Mohammed, Second Deputy Ruler of Dubai, the fund is designed to finance technology start-ups and to support the economic objectives outlined in the Dubai Economic Agenda, D33. The fund is the first investment programme launched under the name of Oraseya Capital, the venture capital arm of DIEZ specialising in venture investment operations in start-ups.

Driven by strong non-oil sector growth, the country’s economy expanded by 3.7% in H1, according to the Minister of Economy Abdulla bin Touq, who added that although the figures were not as impressive as seen in H1 2022, it was still “robust growth against the backdrop of global and regional uncertainty”. Accounting for 71% of UAE’s GDP, the non-oil sector posted a “staggering” 5.9% H1 growth; Q1 saw a 4.5% rise to US$ 84.9 billion. The Minister also commented that, “the UAE’s economic growth is a testament to our resilience, diversification and commitment to openness and international co-operation.” He seems to be confident that the upward trend will continue into H1, with the UAE’s GDP estimated to expand by 3.6% for the year. Interestingly, he noted that “the policymakers are not facing a dilemma anymore – the classic trade-off between growth and inflation. What they’re facing is a ‘trilemma’ as they also have to worry about financial stability.” (The Trilemma theory posits that countries have three options for managing international monetary policy, but only one is achievable at a given time). There is no doubt that a range of government initiatives has allowed the UAE economy to spring back quicker than most global economies, all of which have been impacted by inflation, slowing global growth, geopolitical uncertainties, and rising interest rates.

A study by US News & World Reports notes that the UAE rates as the world’s second most stable country economically on the back of entrepreneurship opportunities, easy access to capital, availability of skilled labour force, agility to adapt, competitiveness and strong trade among.  It is only behind Switzerland and ahead of the likes of Canada, Germany, Japan, Sweden, Australia, Netherlands, Norway and Denmark. Apart from being the most competitive economy in the Arab world, its per capita GDP, at US$ 87.7k, is on par with top European countries; its total GDP stands at US$ 508.0 billion, with a 2030 target of US$ 817.4, (AED 3 .0 trillion). The country also has some of the world’s largest sovereign wealth funds such as Abu Dhabi Investment Authority, Mubadala, Investment Corporation of Dubai, Dubai World, ADQ and others, holding trillions of dollars’ worth of assets to provide cushion against economic volatility around the world.

With the US Federal Reserve Board announcing that there would be no change to its 5.40% Base Rate, applicable to the Overnight Deposit Facility, the Central Bank of the UAE has followed suit leaving its Base Rate applicable to the Overnight Deposit Facility, unchanged at the same rate. The local central bank also left the rate, applicable to borrowing short-term liquidity through all standing credit facilities, unchanged at 50bp above the Base Rate.

After rises over the past three months, the UAE Fuel Price Committee decreased all retail fuel prices. 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, as November retail prices all head south:

• Super 98: US$ 0.826 – down by 11.9% on the month and up 4.2% YTD from US$ 0.793  
• Special 95: US$ 0.796 – down by 12.3% on the month and up 9.5% YTD from US$ 0.727
• Diesel: US$ 0.932 – down 4.2% on the month and up 4.0% YTD from US$ 0.896
• E-plus 91: US$ 0.777 – down by 12.5% on the month and up 10.1% YTD from US$ 0.706

A novel initiative, Dubai Programme for Gaming 2033, introduced by Dubai’s Crown Prince, Sheikh Hamdan bin Mohammed, aims to enhance Dubai’s global position in the gaming industry world, with plans to make it one of the top ten cities in the sector and to generate 30k jobs over the next decade. By 2033, it is hoped that it will contribute up to US$ 1.0 billion to Dubai’s GDP. To help the process progress, it will offer support to developers, designers and programmers, as well as entrepreneurs and start-ups in creative industries, as well as to “establish an incubating environment for developers”. The country, along with Saudi Arabia, are in the forefront of the ME gaming industry which, according to the Future of Trade 2023 is projected to hit US$ 6.0 billion by 2027, compared to under US$ 3.0 billion in 2021, about double the figure from 2021. Overseen by the Dubai Future Foundation, the emirate’s new gaming programme will focus on three main areas – talent, content and technology. Yesterday, Sheikh Hamdan also approved the launch of another three new initiatives – the Metaverse Alliance, Metaverse Guidelines and Metaverse Pioneers as part of the Dubai Metaverse Strategy, which was launched in July 2022; it was hoping that this would create 40k new jobs and would add US$ 4.0 billion to the DDP by 2026. 

Because it failed to ensure that its systems were able to contain market abuse, FFA Private Bank was fined US$ 374k by the Dubai Financial Services Authority, DIFC’s regulator. The lender, which provides services across private wealth management, online trading and capital markets, was penalised because it had “inadequate systems and controls to identify, assess and report suspicious and potential market abuse between February 2018 and March 2021″.

National Bonds posted a 40k increase in its customer base and recorded significant growth in its investment portfolio by 9.0% to reach US$ 3.81 billion during H1. The country’s savings and investment company, which has seen the entity grow at an annual growth of 12.0%, offers a wide range of savings and investment solutions, that can help support their future financial goals, including building emergency funds and securing their children’s education. It also contributes to individual, corporate, and national growth, by offering diverse and inclusive regular savings solutions catering to both individual and corporate needs, such as “Tejouri Al Emarateyat”, a solution for Emirati Women, “Global Savings Club”, and “Golden Pension Plan” which caters to corporates, and “Second Salary” designed for individuals, all with the goal of fulfilling the retirement aspirations of both UAE Nationals and Expats.

Dubai Islamic Bank posted a H3 profit, almost 20% on the year, at almost US$ 449 million, helped by the growing local economy, with the country’s biggest Sharia-compliant lender reporting a 45.0% hike in revenue to US$ 1.23 billion. Its quarterly income from properties for development and sales more than doubled to US$ 218 million, with commissions, fees and foreign exchange income increasing by 16% to US$ 105 million. Over the first nine months of the year, total income and net profit both rose by 47% to US$ 3.96 billion and 16.0% to US$ 1.28 billion; operating expenses came in 13.0% high at US$ 615 million. By the end of September, the bank’s total customer deposits climbed 11 .0% to US$ 6.02 billion, with assets 8.7% higher at US$ 85.39 billion. In September, DIB confirmed it was acquiring a 20% stake in Turkey’s TOM Group of Companies.

Al Ansari Financial Services PJSC announced that it would pay an interim dividend payment of US$ 82 million equivalent to US$ 0.0109 per share, with a similar pay-out slated for April 2024. The latest cash distribution is in line with the group’s previously announced dividend policy. Rashed Ali Al Ansari, group chief executive officer of Al Ansari Financial Services, commented: “We are pleased to announce the distribution of our first proposed interim dividend payment of Dh300 million, in accordance with the vision of our Board of Directors and the subsequent approval of our shareholders. We believe that this approval reflects our commitment to ensuring consistent returns and long-term value for our shareholders.”

Emirates Central Cooling Systems Corporation PJSC posted its latest financials for Q3 showing an EBITDA of US$ 292 million on total revenue of US$ 619 million. For the first nine months of the year, both EBITDA and revenue posted improved results – by 7.5% and 9.0%. For the twelve months to 30 September, the figures were US$ 395 million and US$ 744 million – both up 9.5%. Last month, Empower paid out a US$ 116 million H1 cash dividend, in line with an IPO pledge that it would pay out US$ 232 million for the first two years of its DFM debut. Empower holds more than 80% of Dubai’s district cooling market, and in Q3, it added over ten new buildings to its portfolio with 70% of these being residential buildings, 20% commercial, and 10% mixed-use buildings.

e& announced its consolidated financial results for Q3 2023 reporting consolidated revenues of US$ 3.65 billion with a 3.3% year on year, increase while consolidated net profit was US$ 817 million. 

Emirates Integrated Telecommunications Company PJSC, the company known as du, posted a 57.7% hike in Q3 profits to US$ 148 million, with revenue nudging 3.7% higher at US$ 897 million; the main contributors were mobile services and fixed services both heading north – by 5.7% to US$ 416 million and by 5.3% to US$ 256 million. Partly due to lower hubbing and handset sales, other revenues dipped 1.5% to US$ 225 million. In Q3, the telecom’s 5G network reached a 98.5% coverage and over the period, it added 85.7k mobile customers, 32.2k post-paid and 53.5k prepaid, and 13.8k fixed customers. Double digit growth was seen in its major profitability KPIs – 13.8% on EBITDA, 65.1% of Operating Cash Flow and 57.7% on Net Profit.

Dubai Financial Market announced that its net profit increased by 109% to US$ 51 million in Q3. There was a notable increase in the number of trades, overall trade value, and an influx of new investors. YTD to September, DFM’s total consolidated revenue increased by 48% to US$ 96 million – US$ 58 million in operating income and US$ 38 million in investment returns and other income. Meanwhile, total expenses jumped 11.3% to US$ 45 million. The total number of trades increased to 1.43 million trades in the first nine months of 2023, representing a notable 37% increase in trading activity over the same period last year. Total trading value rose to US$ 21 billion, recording an increase of 13% over the same period last year. The DFM General Index also rose by 25% during this period, closing at 4,136.58. DFM’s market capitalisation rose to US$ 189.9 billion. In the nine months, there were 35.4k new investors to bring the total number to over one million, with institutional investors accounting for 56% of the trading value, with net purchases of US$ 420 million.

The DFM opened on Monday, 30 October 2023, 591 points lower the previous fortnight, gained 143 points (13.6%) to close the trading week on 3,787, by Friday 03 November 2023. Emaar Properties, US$ 0.47 lower the previous four weeks, gained US$ 0.14 to close on US$ 1.86 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.64, US$ 4.48, US$ 1.42, and US$ 0.35 and closed on US$ 0.65, US$ 4.80, US$ 1.48 and US$ 0.37. On 03 November, trading was at 112 million shares, with a value of US$ 69 million, compared to 158 million shares, with a value of US$ 76 million, on 27 October 2023.

The bourse had opened the year on 3,438 and, having closed on 31 October at 3,877, was 449 points (12.8%) higher. Emaar started the year with a 01 January 2023 opening figure of US$ 1.60, to close the first ten months at US$ 1.82. Four other bellwether stocks, DEWA, Emirates NBD, DIB and DFM started the year on US$ 0.59, US$ 3.54, US$ 1.55 and US$ 0.41 and closed YTD at US$ 0.65, US$ 4.62, US$ 1.47 and US$ 0.36.   On 31 October, trading was at 157 million shares, with a value of US$ 100 million, compared to 66 million shares, with a value of US$ 18 million, on 31 December 2022. 85.15 2,000

By Friday, 03 November 2023, Brent, US$ 2.17 lower (2.4%) the previous week, shed US$ 4.91 (5.5%) to close on US$ 85.15. Gold, US$ 139 (6.2%) higher the previous fortnight, shed US$ 16 (0.8%) to US$ 2,000 by 03 November 2023.

Brent started the year on US$ 85.91 and shed US$ 0.55 (0.6%), to close 31 October 2023 on US$ 85.36. Meanwhile, the yellow metal opened 2023 trading at US$ 1,830 and gained US$ 157 (7.9%) to close YTD on US$ 1,987. 

Oil prices, which breached the $95 mark in September, have since pared some gains amid concerns over the global economy and rising crude supply from countries such as Iran and Venezuela. Despite the US sanctions, initiated in 2018, Iran has managed to push its daily production levels to 3.4 million bpd, and according to the country’s oil minister, Javad Owji, this could rise even further with higher investment in onshore and offshore oilfields. Opec, of which Iran is a member, noted that oil production rose 21.6% on the year to 3.1 million bpd by September 2023. But with its possible involvement in Hamas’s October attack on Israel, there is every chance that the Biden administration may enforce stronger sanctions on Tehran’s crude exports. If that were to happen and Iran’s crude exports are cut by say 600k bpd, the impact on an already undersupplied market will inevitably push prices well into the triple digit arena. If the unthinkable happened – and there is a blockade of the Gulf – then oil prices will escalate to unknown highs and the negative effect on the global economy would be immense.

In Q3, Maersk’s pre-tax profits fell to US$ 691 million, compared to US$ 9.1 billion on the year, as sales tanked 46.7% to US$ 12.1 billion. Because of lower freight rates and dipping demand, AP Moiler-Maersk is planning to cut 3.5k jobs with this coming after 6.5k were retrenched earlier in the year; this will result in the payroll dipping to below 100k. It expects the exercise will save US$ 745 million. The shipping company had seen recent quarterly profits down by 92% and commented that “worsening” prices for shipping by sea required further job cuts. AP Moiler-Maersk, one of the world’s biggest shipping firms, transports goods for major retailers such as Nike. The Danish company’s chief executive noted that “since the summer, we have seen overcapacity across most regions triggering price drops and no noticeable uptick in ship recycling or idling.” Many consider Maersk a bellwether for the global economy – if going well, there will always be strong demand, but the opposite applies when the economy is heading in the other direction.

Helped by rising energy prices, Shell posted impressive Q3 figures but they were lower on the quarter; reported earnings came in on US$ 6.2 billion, compared to US$ 9.4 billion a year earlier, but 23.0% higher on the quarter. The energy company also announced that it would return US$ 3.5 billion to shareholders through a share buyback programme, bringing the total payback for the year to US$ 23.0 billion. To some critics, it seems that Shell seem to be ploughing money into dividends, share buybacks, and new fossil fuel projects, and not enough to its employees, (with new plans to slash its employee numbers by 15%), and new fossil fuel projects.

Meanwhile BP reported lower than expected profits despite global oil prices on the move higher, with the US$ 3.3 billion Q3 profit well short of analyst’ expectations of some US$ 4.0 billion – and much lower than the US$ 8.1 billion return over the same period in 2022; however, it was US$ 0.7 billion higher on the quarter. The energy giant noted that although oil production was strong, gas trading had been weak in recent months. It did warn that the recent higher oil refining margins, seen recently across the oil and gas industry, would be “significantly lower” towards the end of 2023. The profit was also impacted by BP taking a US$ 540 million charge on three wind farm projects off the coast of New York. The UK’s government windfall tax policy has cost a further US$ 620 million, in the first nine months of 2023, bringing its total tax bill to US$ 1.35 billion, compared to US$ 700 million and US$ 2.2 billion.

In Q3, HSBC posted an impressive 93% hike in non-interest income to US$ 6.90 billion, mainly due to the non-recurrence of the impairment relating to the sale of its retail banking operations in France. Operating expenses climbed 2.0% on the year to US$ 800 million, attributable mainly to higher technology costs, the impact of rising inflation and an increase in performance-related pay accrual. Impairment charges included a US$ 500 million charge relating to the commercial property sector in mainland China. During the period, it attracted an additional US$ 34.0 billion of net new invested assets – a 12.0% increase on the year. Customer lending was flat at US$ 936 million, with customer deposits also largely unchanged at US$ 1.56 billion. With its third US$ 0.10 dividend, it has brought the total for the year to US$ 0.30 per share, as well as three share backs totalling US$ 7.0 billion.

The UK’s second biggest supermarket chain has claimed that some of its customers are returning to shop at Sainsbury’s after ditching the chain to shop with its cheaper rivals, Aldi and Lidl. It posted that grocery sales were up 10% in the six months to mid-September; (some of that increase must have emanated from inflation which pushed grocery prices as high as 15% during the year). However, Sainsbury’s profit before tax declined 27% to US$ 335 million, not helped by demand for clothing sales being hit by a cooler summer and a warm early autumn. Sainsbury’s said it had not gained more of an overall share of the market, but it did claim that it was the only big supermarket to be winning back customers and gaining spend from Aldi and Lidl. Whether its strategy to run an “Aldi price match” campaign has worked remains to be seen but full marks to the German rival retorting with “Shoppers know that the only place to get Aldi prices is at Aldi”. The Office for National Statistics posted that October food price inflation remained high at 12.2% on an annual basis but had been easing.

Apple has introduced two new computers, MacBook Pro and iMac, and the M3, M3 Pro and M3 Max chips to power them. At the launch event, for professional users, it demonstrated its new secure screen sharing feature that would let professional users work on their machines from remote locations. The tech giant noted that the M3 Max chip was aimed at AI developers, who need huge amounts of memory to develop chatbots and other models, and that the new chips would be the first for laptops and desktops that use three nanometre manufacturing technology, which will give the chips better performance for each watt of electricity used. The chipmaker remains unknown, but it probably is the Taiwan Semiconductor Manufacturing which uses the same technology to make chips for the top-end iPhone 15 models.

With winter approaching, it does seem that not only the weather but also the UK housing market is beginning to cool, as signalled by a further decline (4.6%) in September mortgage approvals to 43.3k – its lowest level in nine months. September net approvals for re-mortgaging fell 18.0% to 20.6k – its lowest level since January 1999. In September, the “effective” interest rate, the actual interest paid to lenders, on newly drawn mortgages rose by 1.9% to 5.01%. In the twenty-one months from December 2021 to August 2023, the Monetary Policy Committee has been responsible for rates to climb from just 0.1% to 5.25%; since then, they have not moved, with another month of no movement following yesterday’s BoE decision. It does seem that months of higher mortgage rates have finally had the desired effect, and if that is indeed the case, then the era of rising rates has ended – but the current high rates will remain in situ well into 2024.

Yesterday, the BoE  left rates on hold for the second time in a row at 5.25%, the highest level in fifteen years. Its governor, Andrew Bailey, warned that the economy was likely to see zero growth until 2025, while interest rates will remain high for longer or rise further; on the flip side, he did expect that inflation would fall sharply in the coming months. (Note the man has been wrong before). Latest  figures posted inflation at 6.7% in September, with expectations that it would dip to around 3.0% by mid 2024 before achieving its 2.0% target in 2025.

A sign that the US economy is slowing is that employers added just 150k jobs in October, attributable to the weight of strikes and high interest rates; the unemployment rate rose 0.1% to 3.9%, and it seems that the long streak of stronger-than-expected job gains may be over. Despite soaring interest rates, the main aims of which were to cool the economy and stabilise prices, the dilemma is that the job market continued to remain far more robust than expected with an average 250k monthly addition – with average hourly earnings 4.1% higher during the same period. One result of the October figure was that that it reduced the possibility of any further Fed rate hike this year.

With reports circulating that WeWork could file for bankruptcy within days, its shares tanked by over 50% on Wednesday. The troubled office-sharing firm was once seen as the answer to the future of the office but was impacted badly by the pandemic, as more people started working from home; earlier, it did itself no favour by self-inflicted problems including a disastrous 2019 attempt to sell shares to the public due to concerns about its debts, losses and management, and the ungainly exit of its co-founder. It has agreed with creditors to temporarily postpone payments for some of its debt. What was once a great ground shaking idea probably grew too quickly and was badly managed, taking on too much debt and opening too many sites at once. Lately, it has been a victim of rising interest rates, pushing up already bloated costs.  The firm, once valued at US$ 47 billion in early 2019, has now lost 98% of its stock market valuation over the past twelve months and is now Looking Down The Barrel Of  A Gun!

Toothless People!                                                                          27 October 2023

The 1,761 real estate and properties transactions totalled US$ 6.37 billion, during the week ending 27 October 2023. The sum of transactions was 265 plots, sold for US$ 774 million, and 1,496 apartments and villas, selling for US$ 1.01 billion. The top three transactions were all for plots of land, one in Al Yufrah 1, sold for US$ 20 million, the second in Al Hebiah Fourth for US$ 18 million and the third in Al Goze Second for US$ 17 million. Al Hebiah Fifth recorded the most transactions, with fifty-six sales, worth US$ 76 million, followed by fifty-one sales, in Madinat Hind 4, for US$ 28 million, and thirty-eight sales in Palm Jabal Ali, valued at US$ 244 million. The top three transfers for apartments and villas were for a villa in Marsa Dubai, sold for US$ 36 million, and two apartments in Palm Jumeirah for US$ 22 million and US$ 15 million. The mortgaged properties for the week reached US$ 4.43 billion, with the highest being for land in Jabal Ali Industrial First for US$ 3.76 billion; one hundred and four properties were granted between first-degree relatives worth US$ 154 million.

Another record for the Dubai real estate sector which posted its highest quarterly capital gains in a decade, attributable to ongoing higher property demand. The Q3 ValuStrat Price Index rose 6.1% in the quarter, with villas, once again, rising faster than apartments with returns of 7.6% and 4.8%; on an annual basis, the VPI was up 15.1% with villa and apartment prices up by 19.8% and 11.0%. In the villa segment, in the quarter, Palm Jumeirah, Jumeirah Islands, Dubai Hills Estate and Mudon recorded the highest capital gains, whilst Discovery Gardens, The Greens, The Palm and Dubailand Residence Complex led the field for apartments. Prime property valuations rose by 16.5% annually and 6.6% on the quarter. The VPI for prime villas reached a new ten-year high, with capital gains of 20.2%, year on year, and 8.5% quarterly, as prime apartments rose by 13.6% and 5.2%.

In Q3, transactions were 17.7% higher, compared to a year earlier, at 11.3k, with a value of US$ 7.19 billion, with the average ticket size of ready-to-move-in properties dipping 1.4% to US$ 639k, while 41.5% of all ready home sales were priced less than US$ 272k. ValuStrat also noted that there were fifty-two homes sold for more than US$ 8.17 million, (AED 30 million); this was down on the sixty seven units sold in Q3 2022 – a sign perhaps of a supply shortage. In Q3, the average transacted price for ready units was US$ 3,836 per sq mt (US$ 356 per sq ft), 7.8% higher on the year. Jumeirah Village, Dubai Marina, Business Bay, Downtown Dubai and International City were the top five locations. The average ticket size for off-plan homes rose by 13.0% annually to US$ 681k, with average the transacted price for off-plan properties was at US$ 5,459 per sq mt. Most transactions of ready units took place in Jumeirah Village, Dubai Marina, Business Bay, Downtown Dubai and International City. Off-plan registrations rose 19.1% annually, equating to just over US$ 1 billion.

There will be no surprise to see that Q3 rentals continued to skyrocket – 27.2% higher on the year, with villa and apartment rents increasing by 38.7% and 19.1% on an annual basis. Total project completion in the nine months to 30 September was 21.5k apartments and 2.1k villas, well down on an earlier figure, based on developer completion schedule, of 53.7k for the whole year.

Office sales transactions grew by 9%, year on year, to 631. The median transacted price stood at US$ 3,035 a sq mt, up 28.4% annually, according to the report. Volume-wise, Business Bay and Jumeirah Lakes Tower accounted for 77.5% of sales volume at 44.5% and 33.0% respectively.

It is reported that this week, a penthouse on the Dubai Water Canal has been sold for US$ 50 million to a family office of a European billionaire. The penthouse is part of the ultra-luxury residential building One Canal, which has a development value of US$ 450 million. The 30k plus sq ft penthouse stands as a sky mansion, merging four rooftop units. The Fendi-branded project includes amenities like a dedicated gym, steam room, sauna, an exclusive rooftop garden accompanied by a pool, two additional private pools, high ceilings, and dual parking spaces. Interior design was carried out by Hirsch Bedner Associates, with the architecture executed by Shaun Killa, who had previously worked on the stunning Museum of the Future.

Azizi Developments has announced that its Pearl development, launched last February and completely sold out, is now 50% complete. Located in Al Furjan, Pearl will encompass one hundred and ninety-two studios and fifty-four 1 B/R apartments. Handover is slated for Q1 2024. Azizi currently has around 40k units under construction, located in several Dubai areas, that are projected to be delivered by 2027.

A report by Savills ranks Dubai seventh of fifty-two markets monitored when it comes to warehousing costs – an indicator that the emirate is increasing its importance and presence on the global logistics industry. Driven by strong demand for warehousing, amid limited supply, costs have skyrocketed so, that by 30 June, Dubai’s prime warehousing rents stood at US$ 20.48 per sq ft. Savills noted that growth in this sector benefits the Dubai economy by attracting investment, generating employment, and enhancing and diversifying its economic and international standing. In 2022, average, warehouse lease rates continued to escalate across Dubai, specifically Grade A rents in Al Quoz which increased by 57% during 2022, with all industrial submarkets in Dubai showing strong rent rises last year. Across the markets monitored, total costs­ – comprising rents, service charges, and taxes – for prime warehousing space grew 10.1% in the twelve months to June 2023. An earlier report noted that the demand for industrial and logistical space in Dubai saw its strongest-ever performance on record. The top six in this report were London (at US$ 42 per sq ft), LA (US$ 27), Sydney, Hong Kong, Northern New Jersey, and Tokyo.

Ahead of next year’s Arabian Travel Market, latest figures from Statista estimates that revenue in the global travel and tourism market will touch US$ 854.7 billion and, with a 4.42% CAGR, should top US$ 1.0 trillion by 2027. The 31st edition of ATM will take place at Dubai World Trade Centre, from 06 to 09 May 2024. Meanwhile, Allied Market Research valued the global business travel market at US$ 689.7 billion in 2021, predicting the segment to grow to US$ 2.1 trillion by 2031, with the global luxury travel market on course to pass US$ 440 billion by the end of this decade. The latest Economic Impact Assessment Annual Report also analysed the MICE segment which continues to benefit GCC countries such as the UAE; it did estimate that the DWTC’ generated a total economic output – across sixty-three large-scale events – exceeded US$ 3.5 billion last year.

International Container Logistics, a US$ 10 million, 49:51 JV between DP World and Russia’s nuclear agency Rosatom, is intended to develop container shipping through the Arctic, as part of an initiative heavily promoted by President Vladimir Putin, for what is known as the Northern Sea Route. He appears keen to progress with the Arctic corridor partly because of international sanctions cutting off trade links to the west. Thanks to global warming, and the subsequent melting of Arctic Sea, a route has opened up between Murmansk, near Russia’s border with Norway, to the Bering Strait near Alaska. The main aim of the project is to develop an additional trade route for maritime container transportation through the Northern Sea Route, starting with the design of infrastructure facilities and specifying the volume of investment needed.

A thirty-year concession agreement with the Tanzania Ports Authority sees DP World operating and modernising the multi-purpose Dar es Salaam Port and enhancing Tanzania’s connectivity with a much wider regional/global market. Its main aim is to optimise the Port’s operations by improving transport and logistics services throughout the country and its hinterland. The first phase of a multi-phase investment plan will see the Dubai port operator investing over US$ 250 million to upgrade the port, with the total spend eventually being around the US$ 1.0 billion mark. The initial benefits from this investment will see more Tanzanians having jobs and increased access to products and services. The Port will connect to the hinterland of sub-Saharan Africa through a network of roads, highways, railways and dedicated freight corridors and ports. Other investments will result in modernising the Port, and the introduction of temperature-controlled storage, (to enhance Tanzania’s agricultural sector), as well as greater connections to rail-linked logistics. Increased investment and enhanced efficiency will allow faster cargo clearing and improved cargo planning – strengthening Dar es Salaam’s critical role as the maritime gateway for green energy metals from the copper belt in Southern-Central Africa.

In order to avoid any harm to their reputation or financial position while a dispute is being considered, as well as to ensure the continuity of family businesses, a special committee has been established in Dubai. Sheikh Maktoum bin Mohammed bin Rashid has issued a resolution for the formation of a ‘Family Business and Family Ownership Disputes Settlement Committee’, which will also have financial experts, sitting with judges, to provide specialised judicial expertise. The Dubai government is keen to maintain the role of family businesses, as partners in the emirate’s economy, and to ensure that family disputes are speedily settled, whilst finding a balance between prompt justice and the preservation of the economic interests of these companies.

At last week’s GITEX Global, the Federal Tax Authority launched a new app – Tourist Refund – that makes claiming VAT refunds a lot easier, with all transactions now done digitally. Zahra Al Dahmani, director of the Taxpayer Services Department at FTA, commented that “tourists can download the app through FTA services provider firm Planet. When a tourist buys any item from the UAE store, the merchant scans the invoice and it will be recorded in the app. The newly launched application will have information on each transaction that was bought as well the amount of VAT the tourist can claim upon exiting the country.” On leaving, at the airport, the tourist will only have to show the invoices in the app to claim a refund by cash or credit card transfer. This will be welcome news for many of Dubai’s international visitors, of which there were 8.55 million in H1, and should add a boost for the emirate’s retail sector.

In data released by Abdulla bin Touq Al Marri, UAE’s Minister of Economy, 88% of the UAE’s imports come from and 94% of its non-oil exports go to Belt and Road countries. The H1 non-oil trade between the UAE and other partnering countries of China’s Belt and Road Initiative  totalled US$ 305 billion, accounting for 90% of the UAE’s non-oil trade during this period – a growth rate of 13%. In 2022, the trade volume between the UAE and Asia, Africa, and Europe amounted to about US$ 560 billion – 20% higher on the year. The Minister noted that China, India, Saudi Arabia, Iraq, Turkey, Japan, Oman, Kuwait, and Hong Kong are among the UAE’s top 10 trading partners. He also stressed that the country has been an active partner in BRI, since its 2013 launch, and has invested US$ 10 billion in the China-UAE investment fund to support the initiative’s projects in East Africa; it has also signed thirteen MoUs with China in 2018 to invest in various sectors in the UAE. According to the Minister there are “more than 4k Chinese companies operating in key sectors such as trade, logistics services, transport, financial and insurance activities, real estate, energy, and renewable energy.”

According to Kearney’s Global Cities Index, Dubai, ranking twenty-third, continues to hold its top spot in the MENA region. The GCI measures the capacity of a city to draw in, maintain, and produce global streams of capital, individuals, and ideas. The evaluation is based on five essential factors – Human Capital, Information Exchange, Cultural Experience, Political Engagement and Business Activity.

Dubai Silicon Oasis has received four awards from Financial Times’ fDi Magazine Global Free Zones of the Year Awards – Global Free Zone of the Year for SMEs, the Middle East Free Zone of the Year for SMEs, ranked fifth in the Top 10 Global Free Zones of the Year 2023, and an honourable mention for Catalysing R&D. The first accolade is an indicator of the free zone’s efforts to support and enable the success of its business community, with its Director-General noting that “this notable acknowledgement speaks volumes of our consistent efforts to build a thriving ecosystem for start-ups, SMEs, and multinational companies.”

The Central Bank posted that, in August, investments of banks operating in the UAE hit an all-time high, topping US$ 158.04 billion, as investments increased by 19.5% on the year from  US$ 133.46 billion in August 2022.  Bonds held until maturity accounted for the largest share of investments at 47% reaching US$ 75.20 billion, up 3.4% compared to July 2023. Banks’ investments in debt bonds accounted for 42.1%, totalling US$ 67.17 billion at the end of July 2023.

Mashreq posted a massive 89.3% hike in Q3 net profit to US$ 612 million, attributable to higher net interest income, which rose 60.0% on the year to US$ 545 million, and fees, commission and income from Islamic financing. Its nine-month net profit climbed 122%, year-on-year, to US$ 1.58 billion, as net interest income and income from Islamic financing rose 82% to more than US$ 1.52 billion; operating expenses rose 15% to US$ 627 million. Customer deposits during the nine-month period surged 21.4% on the year to US$ 36.18 billion, while loans and advances grew 8.7% to US$ 27.03 billion. The total assets of the bank increased 16.4% to US$ 59.48 billion. Dubai’s third largest bank is not the only financial institution to benefit, as the country’s banking sector continues to be well capitalised, with more than adequate liquidity buffers, along with UAE’s robust economy. Lenders in the UAE are also beneficiaries of higher interest rates amid relatively lower inflation in the region.

Emirates NBD posted a 38% rise in Q3 net profit, (attributable to equity holders), to US$ 1.42 billion, as net income 25% higher at US$ 1.74 billion, helped by a 48% boost in Islamic financing and investment products to US$ 354 million. Profit was further enhanced by a 59.6% decline in impairments to US$ 151 million. Dubai’s biggest bank by assets posted a nine-month profit increase of 92%, at US$ 4.77 billion, with impairments falling 54% to US$ 409 million. YTD, the bank saw gross loans 8.0% higher at US$ 134.60 billion, with both total assets and customer deposits heading north, rising by 16.0% to US$ 227.79 billion and US$ 155.31 billion respectively. As part of its strategy to increase its digital services through FinTech companies, it made an equity investment in Geneva-based digital trade finance platform Komgo.

Emirates Islamic posted its highest ever nine-month profit – up 56% to US$ 45 million – driven by higher funded and non-funded income. Q3 income grew 46% on the year to US$ 327 million which helped drive profit 23% higher to US$ 119 million reflecting the buoyant regional economy. Total assets increased to US$ 23.43 billion, with customer deposits 7.0% higher at US$ 16.62 billion, increasing 7.0% on the year. Q3 expenses increased 35%, year on year, as the bank invested for future growth.

DEWA announced a US4 845 million H1 dividend, equating to US$ 0.017 per share that was paid out yesterday via Dubai CSD. Saeed Mohammed Al Tayer, MD and CEO of DEWA, noted that, “we intend to continue to deliver on our growth trajectory, delivering robust cash generation, a strong balance sheet and exceptional returns to shareholders. “For our shareholders, this means that DEWA’s strategy is focused on ensuring consistency of returns, durability of growth, and compounding our growth value over time”.

The DFM opened on Monday, 23 October 2023, 413 points lower the previous fortnight, lost a further 178 points (4.5%) to close the trading week on 3,787, by Friday 27 October 2023. Emaar Properties, US$ 0.45 lower the previous three weeks, shed US$ 0.02 to close on US$ 1.72 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.65, US$ 4.51, US$ 1.44, and US$ 0.35 and closed on US$ 0.64, US$ 4.48, US$ 1.42 and US$ 0.35. On 27 October, trading was at 158 million shares, with a value of US$ 76 million, compared to 160 million shares, with a value of US$ 126 million, on 20 October 2023.

By Friday, 27 October 2023, Brent, US$ 7.78 higher (7.7%) the previous fortnight, shed US$ 2.17 (2.4%) to close on US$ 90.06. Gold, US$ 114 (6.2%) higher the previous week, gained US$ 25 (1.3%) to US$ 2,016 by 27 October 2023.  

What seems to be a surprise, it is reported that Akbar Al Baker, the long-standing Qatar Airways CEO is to step down effective 05 November. The announcement made by the airline’s Chairman Saad al Kaabi also confirmed that Badr Al Meer will be the company’s new CEO; his current position is as COO of Doha’s Hamad international airport. Al Baker, who became CEO in 1997, also lost his position as Qatar’s top tourism official; no reason was given for the decision.

Although revenue moved 13.0% higher, Q3 saw Boeing posting a US$ 1.6 billion net loss, driven by  higher costs at its defence unit, fewer deliveries of its best-selling 737 aircraft, due to supplier problems, and  a US$ 482 million loss on its Air Force One programme; this was an improvement on its US$ 3.3 billion deficit reported in Q3 2022 but it was Boeing’s  ninth consecutive money-losing quarter. However, it was still confident of its goal of US$ 3 billion to US$ 5 billion in free cash flow this year. Because of production quality problems at its biggest supplier Spirit AeroSystems, which makes fuselages for the highly sought narrow-body jets, it had to cut its 737 delivery target for this year, and now expects to deliver up to four hundred 737s by the end of 2023 – down from its initial estimate of four hundred and fifty; within two years, it hopes to push production levels up to just under sixty a month. By the end of this year, it expects to deliver up to eighty of its 787 Dreamliner. In Q3, it delivered one hundred and five planes – only seven lower compared to the same period a year earlier – whilst revenue rose 25% to US$ 7.9 billion, driven by higher 787 deliveries. The plane maker confirmed that it secured three hundred and ninety-eight net orders during the quarter, including one hundred and fifty 737 Max-10 planes for Ryanair, fifty 787 aircraft for United Airlines, and thirty-nine 787s for Saudia; its 5.1k plane backlog is valued at US$ 392 billion.

International Airline Group posted a record Q3 operating profit of US$ 1.79 billion, (and up 43% on the year), courtesy of a bumper summer of travel on its BA, Air Lingus and Iberian networks; the three of which saw revenue hikes of 20%, 16% and 19%. After tax profit came in on US$ 1.30 billion – 44% higher compared to Q3 2022. Over the period, IAG saw a 12.2% decrease in its gross debt to US$ 4.69 billion. There are some concerns that future demand may dip, as the rising cost of borrowing and continuing high interest rates may start to impact consumer spending on the likes of air travel.

Amazon posted that its Q3 net income increased by over 341% to US$ 9.9 billion, or US$ 0.94 a share, compared with US$ 2.9 billion, or US$ 0.28 a share; the figure was boosted by a pre-tax valuation gain of US$ 1.2 billion included in non-operating income from the common stock investment in electric vehicle maker Rivian Automotive. Revenue was 13% higher at US$ 143.1 billion – the twelfth consecutive quarter with more than US$ 100 billion in sales. Operating income more than quadrupled from US$ 2.5 billion to US$ 11.2 billion. Segment-wise, North America and ‘international’ contributed US$ 87.8 billion and US$ 32.1 billion, with increases of 11.4% and 16.0%.

Although its head of toymaker, Ynon Kreiz, has been calling for Mattel to invest in films and television shows – as a way to re-ignite growth which has been lacklustre across the industry – it is only now that the company can see what its first foray into films has done to its profits.

In Q3, Barbie billings jumped 16% on the year, driven by the success of the first ever film starring the doll, with Mattel indicating it had made inroads against its competitors and improving its profit margins; it expects that the net result of the film will have added US$ 125 million to its coffers. Despite the film’s box office success, with ticket sales in excess of US$ 1.4 billion – and its positive impact on profits – the company expects Q4 sales to be hit by reduced consumer spending and the waning impact of Barbie.

Arguing that although its hybrid cars produce far less pollution that petrol cars, it does not receive commensurate policy treatment, Toyota is lobbying the Modi government to cut taxes on such vehicles by as much as 20%. The problem for the world’s largest car maker is that the Indian administration seems hell bent on pushing sales of electric vehicles, offering companies millions of dollars in incentives to build EVs and batteries. It also taxes EVs at 5% while the levy on hybrids is as high as 43%, just below the 48% imposed on petrol cars; the Japanese company commented that the 5% differential does not truly reflect the reduced emissions and better fuel consumption hybrids offer. It argues that the tax differential over petrol cars should be as much as 11% for hybrids, to 37%, and 14%, to 34%, for flex-hybrids.

Alphabet, Google’s parent company, posted a 7.0% hike in Q3 net profit, to US$ 19.7 billion, driven by an increase in Search, YouTube and advertising divisions, as revenue climbed 11.0% to an impressive US$ 75.9 billion. Total revenue from the cloud business grew an annual 22.4% to over US$ 8.4 billion. Region-wise, the US and EMEA accounted for 76%, (US$ 59.0 billion), of the total revenue. YouTube added more than US$ 7.9 billion to Alphabet’s revenue – 12.4% higher on the year. However, the markets were none too happy, with its share value declining up to 6.0% in Monday’s after-hours trading to US$ 131 – investors were disappointed by the relatively weak performance at its Google cloud platform, with operating income of US$ 266 million.

Dozens of US states have taken Meta to court accusing the parent company of Facebook and Instagram of misleading the public. The company has been accused of using addictive features to “ensnare” users, while concealing the “substantial dangers” of its platforms, and that it had broken consumer protection laws by engaging in “deceptive” conduct. The New York Attorney General Letitia James, one of thirty-three attorneys general who signed the lawsuit, noted that “social media companies, including Meta, have contributed to a national youth mental health crisis and they must be held accountable,” Meta, and other social media companies, already face hundreds of lawsuits in the US filed by families, young people and school districts over the impact on mental health. Whilst some studies do suggest that Facebook’s growth is not linked to psychological harm, there are others that have found spending long periods of time on social media can have a detrimental impact on young peoples’ mental health. The states are seeking financial damages and a halt to Meta’s alleged harmful practices.

There are reports that Chinese authorities have initiated an investigation into Taiwan-based iPhone-maker Foxconn, (the biggest maker of iPhones), in two provinces – Henan and Hubei. Foxconn’s founder Terry Gou is running as an independent candidate in Taiwan’s January 2024 presidential election which is expected to have a significant influence on Taiwan’s relationship with China, given tensions between them have ratcheted up in the past year. The jury is out, with some analysts opining that Foxconn is being investigated because Mr Gou is running for the presidency, whilst China’s Global Times, unsurprisingly, said the investigation “is normal and legitimate, as any company goes through tax inspections”. Although he has positioned himself, as an alternative to the incumbent Democratic Progressive Party, which is seen as hostile to Beijing, he has resigned his seat on the Foxconn last month, but still retains a 12.5% stake in the company.

This week, Turkey’s central bank raised interest rates by a further 5.0% to 35.0% in what could be a belated bid to try and curb inflation that is fast approaching 70%, from its current 62% level; in June, interest rates stood at 8.5%. The Monetary Policy Committee stated that “monetary tightening will be further strengthened as much as needed in a timely and gradual manner until a significant improvement in inflation outlook is achieved”; it also pointed to that its monetary transmission mechanism would be strengthened through “additional steps to increase the share of Turkish lira deposits”.

With UK interest rates currently at 5.25%, their highest rate in fifteen years, with the subsequent rise in mortgage rates – for example, an average two-year fixed rate is 6.24% – that impacted many of 70% of home-owners, who have mortgages. Over the past twelve months, house prices have started to decline with Halifax forecasting a 4.7% annual fall this year, and by 2.4% in 2024, before moving higher in 2025. Despite the falling prices, they are still US$ 48.5k higher than at the peak of the pandemic. According to the UK House Price Index, the average UK property price, based on completed transactions, is almost the same as in August 2022, at US$ 353k.

There was a marked 0.9% decline in September’s euro area annual inflation rate to 4.3% – more than a half less than the 9.9% posted this time last year. The EU annual inflation fared even better down 1.0% on the month and 6.0% lower on the year to 4.9%. The lowest annual rates were registered in the Netherlands (-0.3%), Denmark (0.6%) and Belgium (0.7%), with the highest seen in Hungary (12.2%), Romania (9.2%) and Slovakia (9.0%). On the month, September annual inflation fell in twenty-one Member States, remained stable in one and rose in five. The highest contribution to the annual euro area inflation rate came from services (+2.05%), followed by food, alcohol & tobacco (+1.78%), non-energy industrial goods (+1.06%) and energy.

Noting that some of the world’s mega-wealthy are paying little or no tax, the EU Tax Observatory has posted that billionaires should face a minimum tax rate, suggested at a minimum 2%, which would raise US$ 250 billion every year. Some of 2.5k global billionaires, with a combined wealth of US$ 13.0 trillion, use complex business structures for avoidance.

The report noted that the automatic sharing of the wealthy’s account information across more than one hundred countries had significantly reduced offshore tax evasion, but how billionaires were able to get away with paying tax rates equal to 0% or 0.5% of their wealth “due to the frequent use of shell companies to avoid income taxation”. The report commended a 2021 agreement between one hundred and forty countries to ensure companies pay at least 15% in corporation tax but noted the plan had been “dramatically weakened” since then by a “growing list of loopholes”. An example of the unfairness – and perhaps stupidity – was Warren Buffet commenting that after a series of tax changes in 2013, he conceded that even though his tax rate had risen he was still paying a lower percentage than his secretary. Elon Musk, owner of X, formerly Twitter and co-founder and leader of Tesla and SpaceX, is currently the world’s richest man, according to Forbes, with a fortune of US$ 225 billion.

On an official four-day visit to the US, Australian Prime Minister, Anthony Albanese has not only met President Joe Biden but also Microsoft supremo, Brad Smith. Whilst in Washington, he announced a mega US$ 3.2 billion investment by the tech giant which will work with Australia’s online security agency on the cyber-shield project. The plan involves work with the Australian Signals Directorate — the national agency responsible for cybersecurity and online warfare — to build the cyber shield, dubbed MACS; it will involve expanding infrastructure and skills, with a focus on cloud technology and AI. Microsoft said it would have a focus on “defending against sophisticated nation-state cyber threats”, with Albanese noting that the plan was “aimed at strengthening Australia”, and it would make it “the world’s most cyber-secure nation” by 2030. Microsoft will also build nine new data centre sites – to add to the existing twenty – in Sydney, Canberra and Melbourne, as it prepares for demand for cloud services to almost double by 2026. The company has also promised a new “Datacentre Academy” with TAFE NSW to train two hundred people by the end of 2025 and to support other programs to deliver digital skills training to three hundred thousand Australians. In Q4, the US tech giant posted 8.3% and 20.0% increases in revenue and profit to US$ 56.19 billion and US$ 20.08 billion – perhaps a gentle reminder to Australians that Microsoft is a successful business and there is no such thing as a free lunch!

First introduced in 2014, when the UK was part of the EU, the cap on bankers’ bonuses will be lifted as from 31 October. It had been designed to curb excessive risk-taking in the financial services industry in the wake of the 2008 GFC, by limiting how much extra variable pay employees of banks, building societies and investment firms could receive: the maximum was twice their basic salary. Since its introduction, banks have compensated for lower bonuses by increasing basic salaries, to make sure they could still compete with other financial centres, such as New York and Singapore, in attracting the top talent. After a four-month consultation between the Prudential Regulation Authority and the Financial Conduct Authority noted that the policy had had “unintended consequences”, and there was also less room to vary employee pay due to “material poor performance or misconduct”. The new regulations will be able to claw back any bonuses when bankers have been found to have taken undue risk.

Having seen many recent global bank profits skyrocket this year, there are many analysts that would say that much of the “icing on the cake” comes from them posting higher profits due to rising interest rates, as customers pay more to borrow cash for mortgages, loans and credit cards. It seems that, in many cases, banks are raising borrowing rates much faster than they are its savings rates, particularly for easy access accounts, now paying an average 3.21%. To some, it looks a case of banks are “filling their boots” for their staff bonuses and shareholders’ dividends at the expense of their customers. In July, the UK Financial Conduct Authority introduced new measures warned that banks would face “robust action” for offering unjustifiably low savings rates to customers at a time when borrowing rates hasd risen sharply. To date, it seems that the banking watchdog has yet to bear its teeth.. Toothless People!

Let’s Twist Again!                                                                              20 October 2023

The 1,524 real estate and properties transactions totalled US$ 2.23 billion, during the week ending 20 October 2023. The sum of transactions was 232 plots, sold for US$ 700 million, and 1,292 apartments and villas, selling for US$ 839 million. The top three transactions were all for plots of land, one in Al Hebiah Fourth sold for US$ 18 million, the second in Al Thanayah Fourth for US$ 15 million and the third in Al Yufrah 4 for US$ 14 million. Palm Jabal Ali recorded the most transactions, with fifty-one sales, worth US$ 324 million, followed by twenty-four sales, in Al Hebiah Fifth, for US$ 25 million, and twenty-one sales in Madinat Hind 4, valued at US$ 8 million. The top three transfers for apartments and villas were for a villa in Business Bay, sold for US$ 36 million, another in Rega Al Buteen for US$ 22 million, and a third in Mankhool selling for US$ 19 million. The mortgaged properties for the week reached US$ 553 million, with the highest being for land in Business Bay for US$ 215 million; 133 properties were granted between first-degree relatives worth US$ 153 million.

Omniyat is hoping to expand its property portfolio by 50%, to US$ 15.0 billion over the next two years, attributable to new projects and acquiring assets; it will comprise “a mix of residential, hospitality and commercial property.” Chief executive, Mahdi Amjad, commented that the Dubai-based developer has already seen it double to US$ 10.0 billion since 2021. The company, founded in 2005, is developing a number of luxury projects at Palm Jumeirah and Business Bay, including The Lana, Dorchester Collection, Ava and Dorchester Collection at the Palm. It has also recently acquired a new waterfront development called Marasi Bay Marina, from Dubai Holding, as it continues to boost its portfolio. A recent launch was the twenty-duplex residences Orla Infinity, part of the US$ 2 billion Orla collection, at Palm Jumeirah, with another planned in Downtown Dubai by the end of the year. The company has always funded projects through a mix of debt and equity, and has a “a very clear philosophy on making sure the project is 100% funded as we start the construction process so that there is zero interruption regardless of sales cycles.” Omniyat posted almost a 70% growth in sales in the first nine months of the year, but value of these sales was not made available.

On Wednesday London Gate’s Maya V was launched and sold out within an hour. The development, comprising one hundred and two units, comprising one-to-three-bedroom apartments, and located in Jumeirah Village Triangle, is slated for completion by the end of 2024. The developer also revealed plans for its flagship ventures, including Marina 106 and Nadine I & II which will be situated in coveted Dubai locations. The former, situated in Dubai Marina, will soar 434 mt high, with six hundred and forty-nine units including one to four-bedroom apartments and deluxe duplexes. Nadine I & II, inspired by the architectural wonders of Venice and Rome, will create a vibrant community in Al Furjan. Eman Taha, CEO of London Gate, commented that “our developments will cover Dubai’s prominent hotspots and will deliver one of the tallest buildings overlooking the Dubai Marina, one-of-its-kind branded residences, along with extraordinary residential spaces across Dubai land and Jumeirah Village.”

Henley & Partners has ranked Dubai sixth in its top ten global cities where centi-millionaires – people who hold US$ 100 million in investable assets – own their second home. With more than five hundred centi-millionaires, it is below the likes of New York, Los Angeles and London, with numbers swelling at peak times from 775 to 1.2k, 504 to 950 and 388 to 800.

On Monday, HH Sheikh Mohammed bin Rashid opened the 43rd edition of the world’s largest tech show, GITEX Global. The five-day event, hosting 6k exhibitors and 180k tech executives from one hundred and eighty countries, took place at the Dubai World Trade Centre. The Dubai Ruler noted that, “for over four decades, the UAE has brought together the brightest minds and innovators from across the globe uniting them in a shared pursuit of shaping the future of technology. This dialogue has fostered strategies, insights and partnerships that have contributed significantly to the advancement of technology, ultimately enhancing the quality of human life.” At the event, it was announced that Dubai’s GITEX brand will hold its European debut in Berlin from 21 -23 May 2025. This will be the second overseas venture for the tech show, following the successful launch of GITEX Africa in Marrakech last year.

Monday also saw the start of the four-day Expand North Star, the world’s largest gathering for start-ups, organised by Dubai Chamber of Digital Economy, one of the three chambers operating under Dubai Chambers. More than 1.8k start-ups, from over one hundred countries, participated and it is estimated that more than 1k investors, (with a combined total of over US$ 1 trillion under management), have been in Dubai, which is rapidly emerging as the heart of the world’s digital economy. This year’s event introduced Launchpad Dubai, a new platform aimed at accelerating the growth and expansion of global tech companies in Dubai including fast-growing start-ups and billionaire unicorns. Last year, the event led to the launch of around one hundred and fifty start-ups in the UAE, as a direct result of deals signed during the exhibition. GITEX Global and Expand North Star covered a combined area of 2.7 million sq ft – a 40% increase over the previous year – showcasing the latest innovations and trends in AI, the cloud, Web 3.0, cyber security, climate technology and more.

The UAE had an overall index score of 62.5 in Mercer’s Global Pension Index. The index uses a weighted average of the sub-indices of adequacy, sustainability and integrity, and on a global scale, the Netherlands had the highest overall index value at 85, followed by Iceland at 83.5 and Denmark at 81.3; at the other end pf the scale, Argentina had the lowest index value of 42.3, according to Mercer. The UAE scored well, at 72.2, when it came to generous retirement benefits, ensuring a continued income to sustain a good quality of life, with a suitable minimum pension relative to earnings, and scored 70.8 in integrity, owing to the strong governance structure around the pension system. The index is a study of global pension systems that account for 64% of the world’s population, bench marking retirement income systems around the world. For each sub-index, the pension systems with the highest values were Portugal, in terms of adequacy (86.7), Iceland for sustainability (83.8), and Finland, in terms of integrity (90.9).

The UAE’s retirement income system comprises a minimum means-tested state pension and an earnings-related national employment-based scheme. Emiratis are eligible for a pension, (and other retirement benefits), after twenty years’ service or having reached the age of forty-nine. All benefits are guaranteed by the government, with employees contributing 5% of their salary and employers between 12.5% – 15.0%. Most non-Emirati employees are currently covered by the government’s gratuity programme which provides for end-of-service entitlements. The emirate’s government has also launched a savings retirement initiative for non-Emirati employees working in Dubai’s government and public sector. Foreign employees working in Dubai’s public sector will be enrolled in the savings programme by default and employers will contribute the total gratuity to the plan from the date of joining, without including the financial dues for previous years of service.

Negotiations have concluded that have resulted in a UAE-Korea CEPA, paving the way for a new chapter of bilateral economic cooperation. This comes after the two nations signed a number of memoranda of understanding, last January, including the ROK-UAE Trade and Investment Promotion Framework to pursue optimal trade collaboration strategies, covering areas such as supply chains, digital trade, logistics, business environment and technical barriers to trade, and US$ 30 billion plans to invest in strategic sectors of the Korean economy. It is hoped that a UAE-Korea CEPA will reinforce East-West supply chains, facilitate two-way FDI flows, and enhance joint research and knowledge exchange across a range of sectors, including energy, advanced manufacturing, technology, food security and healthcare. The UAE is Korea’s second-largest Arab trade partner, while Korea is the UAE’s eleventh-largest trading partner, among non-Arab Asian countries.

Gulf Navigation Holding posted a mega increase in profit for the first nine month from US$ 0.5 million to US$ 9.5 million, with revenue at US$ 22.6 million; Q3 revenue was 62% higher at US$ 1.9 million. The DFM listed maritime and shipping company’s CEO, Ahmad Kilani, said that “these results reflect our commitment to continuing to achieve growth and increase profitability by implementing the company’s strategy of improving financial performance, enhancing the efficiency of operational operations, and diversifying sources of income”.

The DFM opened on Monday, 16 October 2023, 200 points lower the previous week, lost 213 points (5.4%) to close the trading week on 3,965, by Friday 20 October 2023. Emaar Properties, US$ 0.21 lower the previous fortnight, shed US$ 0.24 to close on US$ 1.74 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.68, US$ 4.82, US$ 1.50, and US$ 0.41 and closed on US$ 0.65, US$ 4.51, US$ 1.44 and US$ 0.35. On 20 October, trading was at 160 million shares, with a value of US$ 126 million, compared to 372 million shares, with a value of US$ 204 million, on 13 October 2023.

By Friday, 20 October 2023, Brent, US$ 6.49 higher (7.7%) the previous week, gained US$ 1.29 (1.4%) to close on US$ 92.23. Gold, US$ 114 (6.2%) higher the previous week, gained US$ 45 (2.3%) to US$ 1,991 by 20 October 2023.  

An estimate by the International Energy Agency indicates that the world must add or revamp eighty million kilometres of power grids by 2024, (equating to all grids globally today), to meet national climate targets and support energy security. It reckons that annual investment in grids needs to double to more than US$ 600 billion a year by 2030, and that existing grids had not been keeping pace with the rapid growth of key clean energy technologies such as solar, wind, electric cars and heat pumps.

Magnitt’s Mena reported a 32% hike in MENA venture funding in Q3, attributable to a marked jump in early-stage investments; the actual number of deals remained flat at seventy-eight. Nine-month total regional venture funding, at US$ 1.4 billion, was 44.0% lower on the year, with total transactions 46% lower at two hundred and eighty six, (compared to around seven hundred deals over the same periods in 2021 and 2022); global venture funding declined 42.0% over the same period. 44.1% of early-stage investments were in the under US$ 1 million bracket, compared to around 80% in 2019 and 44% in 2022. The two main contributors remained Saudi Arabia, (US$ 536 million) and the UAE (US$ 371 million) – both down on the year by 41.0% and 57.0%. Other countries include Egypt, Qatar and Jordan attracting investments of US$ 334 million, US$ 45 million and US$ 23 million – all declining on the year by 13%, 63% and 40%. With the current political unrest – both regionally and globally – it seems unlikely that no quick fix is on the horizon.

Following requests from their client base, Ferrari has decided to accept payment in cryptocurrency for its luxury sports cars in the US and will extend the scheme to Europe. Other major companies may have flirted with the idea of using this means of payment, but some like Tesla which in 2021 began to accept payment in bitcoin, before halting it because of environmental concerns. Others have not taken the path because of crypto’s volatility and patchy regulation. In H1, Ferrari shipped more than 1.8k cars to its Americas region, which includes the US, with its order book full until 2025. The luxury carmaker does not know how many vehicles will be paid for by cryptocurrency.

With slowing demand for its products, and falling margins, Nokia is looking at cutting up to 14k jobs, from its current global 86k workforce; since 2015, it has slashed thousands of jobs. The Finnish telecoms giant, once the world’s biggest handset manufacturer, has just reported a 20% decline in Q3 revenue, blaming slowing demand for 5G equipment. Apple iPhones and Samsung’s Galaxy have since overtaken Nokia’s predominant market position, as it failed to anticipate the popularity of internet-enabled touchscreen phones. After divesting its handset business to Microsoft, which the software giant later wrote off, the tech firm focussed on telecoms equipment., and saw a resurgence in 2020 when it became the largest equipment provider to BT, after China’s Huawei was formally blocked from the UK’s 5G networks. However, in recent times 5G equipment makers have been impacted, with US and EU operators cutting investment in the sector.

All US chip stocks, including Advanced Micro Devices and Intel, declined on Tuesday following the Biden administration confirming new restrictions on exports of advanced chips to China, including two made-for-China chips from Nvidia. It was October 2022, that the US announced that it would ban the export of chips in a bid to close loopholes that became apparent to prevent China’s military from importing advanced semiconductors or equipment. The US chipmaker said that the new export restrictions will block sales of two high-end AI chips it created for the Chinese market – A800 and H800. It is a massive blow to any company that sees 25% of its revenue cut because of political pressure. The Semiconductor Industry Association, which represents 99% of the US semiconductor industry by revenue, said that the new measures are “overly broad” and “risk harming the US semiconductor ecosystem without advancing national security as they encourage overseas customers to look elsewhere”. The Chinese said it “firmly opposes” the new restrictions, which also targeted Iran and Russia and go into effect in thirty days. Besides the US, both Japan and the Netherlands – which is home to key chip equipment maker ASML – have also imposed chip technology export restrictions on China.

There are reports that Nvidia and iPhone maker Foxconn are joining forces to build so-called “AI factories”, a new kind of data centre that uses Nvidia chips to power a “wide range” of applications. They include training autonomous vehicles, robotics platforms and large language models. Nvidia’s chief executive, Jensen Huang, noted that “a new type of manufacturing has emerged – the production of intelligence and the data centres that produce it are AI factories,” adding that Foxconn had the expertise and scale to build these factories globally. The world’s most valuable chip company has seen its share value rise above US$ 1 trillion, as its shares have more than tripled in value this year – making it the fifth publicly traded US company to join the so-called “trillion-dollar club”, along with Apple, Microsoft, Alphabet and Amazon.

As expected – and because of a “planned downtime” and subsequent dip in vehicle deliveries – Tesla reported a 44% drop in Q3 net income to US$ 1.8 billion, driven by a dip in vehicle deliveries, down 6.7% to 435.1k, as production, 10.3% lower to 430.5k; this was Tesla’s seventeenth consecutive profitable quarter, but the first time in eight quarters, it did not hit the US$ 2 billion mark. Total revenue – at US$ 24.1 billion – was slightly down on market expectations. The company’s operating income decreased by 52% on the year to US$ 1.7 billion while operating expenses surged 43% to US$ 2.4 billion. On Wednesday, its shares dipped 4.8% in the day’s trading – and a further 4.0% during after-hours – giving it a US$ 760.4 billion market value. It also confirmed that it hopes to start production of its cyber trucks at its Texas Gigafactory, and that, “our cost of goods sold per vehicle decreased to US$ 37,500 in third quarter”. At the beginning of the month, the EV maker cut prices for the seventh time this year.

Chinese EV maker, BYD, (Build Your Dreams) posted a doubling of its Q3 profits on the year. The company is now ahead of Tesla when it comes to production but still second to the US giant in terms of sales. The strength of the Chinese vehicle market can be seen from the fact that it overtook Japan this year to become the world’s biggest vehicle exporter. BYD had an advantage from the start, as it was a battery company that later started to make cars in contrast to car makers who expanded to build electric models. Its founder, Wang Chuanfu, started the company in 1995, as manufacturers of rechargeable batteries – used in smartphones, laptops and other electronics – that competed with pricier Japanese imports. Seven years later it became a publicly traded company, and soon after diversified and acquired a struggling state-owned car manufacturer, Qinchuan Automobile Company. In 2008, US billionaire investor Warren Buffet bought a 10% stake in BYD Auto, saying that it would one day become “the largest player in a global automobile market that was inevitably going electric”. He was proved right as China dominates global EV production largely because of BYD, and will continue to do so as, last June, the Chinese government offered EVs US$ 72.3 billion worth of tax breaks over four years. The fact that BYD manufactures its own batteries, unlike its peers who rely on third-party manufacturers for supplies of one of the most expensive part of an EV, gives it a unique – and profitable – selling point.

US prosecutors have accused three high-profile cryptocurrency firms – Gemini, a crypto exchange, Genesis, a crypto lender, and its parent company Digital Currency Group – of defrauding investors of more than US$ 1.0 billion. It is claimed that Gemini had lied to customers about the risks of an investment account it offered, which paid high interest rates on crypto. The scheme was halted last November, cutting off customer access to funds. The three companies had worked together on Gemini Earn, which was launched in 2021 and allowed users to lend crypto to Genesis in exchange for interest rates of more than 7%; prosecutors claim that Gemini was aware that Genesis had shaky financials from the start of the programme, and risks were exacerbated when Genesis was hit by more than US$ 1 billion in losses from the collapse of another crypto firm. To make matters worse, it is alleged that Genesis and DCG tried to hide the situation with financial manoeuvring and false reports, including to Gemini, while claiming publicly that its balance sheet was strong. It is thought that up to 232k investors have been victims of the alleged fraud.

No wonder that James Gorman, chairman and chief executive of Morgan Stanley, has already announced his intention to step down, as Morgan Stanley posted disappointing Q3 results – with net income 8.5% lower at US$ 2.4 billion, despite a 2.2% hike in revenue to US$ 13.3 billion; its share value dropped by more than 8.0% when the news was released on Wednesday. The bank’s institutional securities division reported a revenue of US$ 5.7 billion, down US$ 0.1 billion compared to the same period last year, whilst the investment banking revenues dropped 27% on the year to US$ 938 million, driven by a slump in advisory revenues due to fewer completed merger and acquisition transactions. The bank, one of the biggest in the US, expects a surge in its earnings in the upcoming quarters. Last May, the bank announced that it would be cutting its global payroll by 3.0k to cut expenses ahead of a possible recession.

With Netflix posting a 20% increase in Q3 net income, to US$ 1.7 billion, with its operating income and revenue 7.7% higher at US$ 8.5 billion, its share value surged over 12% in after-hours trading to US$ 388, as earnings per share rose 20.3% on a yearly basis to $3.73. YTD its share value is 17.0% to the good. The number of paid subscribers jumped 10.8% on the year to 247 million in Q3, adding nearly 8.8 million new subscribers – its fastest quarterly increase since Q1 2022.

The planned merger between Vodafone and Three still needs approval by the UK regulator, the Competition and Markets Authority. With the two telecoms telling MPs, that their planned merger would not increase prices, despite it reducing the number of competitors in the mobile market, from four to three, with the other two being EE (which is part of BT), and Virgin Media O2. Unions, against the merger, argue that the merger would be bad for consumers, and “we’re going to see price rises, we’re going to see profits go up.” If the merger were to go ahead, both firms say will lead to US$ 7.3 billion of investment in its first five years, and US$ 13.4 billion in total. Vodafone reckons that with the merger, monthly bills could be US$ 18 lower, and that the new company would be able to invest more in the UK and drive down the price of internet access.

Another week and another high-profile Chinese executive has been arrested – this time, it is Liu Liange, the former chairman of the Bank of China. Having resigned his position, after four years at the top, the sixty-two-year-old has been arrested over suspicions of bribery and giving illegal loans, and will be facing corruption charges. The regulator accused Mr Liu of a range of illicit activities which led to significant financial risks, including accusations of illegally granting loans, bringing banned publications into the country and using his position in the bank to accept bribes and other perks such as invitations to private clubs and ski resorts. The Chinese administration seem to be ramping up their efforts to erase corruption from the country’s US$ 60 trillion financial sector and has warned that the crackdown was far from over. Last week, the ex-chairman of the Bank of China was expelled from China’s ruling Communist Party following accusations of wrongdoing by the country’s top anti-graft watchdog China’s Central Commission for Discipline Inspection.

At the beginning of the week, Mojang Studios revealed it had now sold more than three hundred million copies worldwide of Minecraft, the best-selling video game in the world, and far surpassing the one hundred and eight-five million copies of its closest rival, Grand Theft Auto V. However, Super Mario is way ahead as the best-selling franchise; having sold more than eight hundred million games across its entire multi-game series, with Tetris a distant second, with four hundred and twenty-five million sold on mobile devices. According to Google, YouTube videos related to Minecraft have been viewed more than one trillion times.

Many Australians will be dismayed by the news that one of its more famous names in the food business has gone into voluntary administration. Sara Lee, a company well-known for its frozen desserts, such as cheesecakes, pies and ice cream, was actually founded in the US, with an Australia factory set up in Lisarow, NSW, fifty-two years ago. Before it was acquired by New Zealand private equity firm South Island Office in 2021, it had been owned by McCain Foods — a Canadian company known primarily for their frozen chips.  The administrators confirmed that the company still employed two hundred, and that “we are working with Sara Lee’s management team and staff to continue operations while we secure the future of the business,” and that “we are immediately commencing a process to sell or restructure the business and continue its long history of manufacturing in Australia.” (A US baker called Charles Lubinnamed the company after his dughter, Sara Lee, in 1949 before selling out seven years later to  Consolidated Foods Inc in 1956. The brand became well known and provided the US bicentennial birthday cake, which reportedly weighed more than 22 tonnes, “approximately four stories tall and filled the Freedom Hall in Philadelphia” in 1976).

With the tax leak scandal still impacting on the Australian financial platform, consulting giant PwC seem to have scored another own goal, having been accused of misleading the Senate for planning to sell its consultancy business at the same time it told a 2019 inquiry that separating its auditing and consulting divisions would make it impossible to operate. Late last week, PwC’s current and former CEOs appeared in front of a Senate inquiry, examining the management and integrity of consulting firms in Australia, established in the wake of PwC’s tax leak scandal. Its newly installed Australia boss Kevin Burrowes has blamed former PwC bosses for “a failure of leadership” that led to the tax leak scandal. The inquiry was established in March after PwC’s former head of international tax, Peter-John Collins, shared confidential tax information from Treasury and the Australian Tax Office in 2014 to reverse-engineer a scheme to help big multinational companies avoid paying their fair share of tax in Australia.

At the hearing on Thursday former PwC CEO Luke Sayers, who ran the firm from 2012 to 2020, faced questions from the inquiry about his involvement in the tax leak scandal. He was also interrogated about an earlier plan to sell PwC’s consulting business, which he himself devised. At the end of his questioning, a 2019 submission from PwC was reproduced to a Senate inquiry at the time that was examining audits and consulting firms. In the document, PwC pushed back on the idea of “structurally separating” auditing and consulting businesses because it would negatively impact their operations — but the Senate heard on Thursday that PwC was actively planning to separate its auditing and consulting businesses when it made that submission. This led to one of the Senators involved in the enquiry addressing the ex-CEO. “Mr Sayers, that makes me very much question the interactions of PwC with the Senate under your leadership, that this was going on in one part of the business, and the public documentation to the Senate was a denial that such a thing should ever occur, because it would make the business unable to basically operate,” and  “that makes me question everything that you’ve been telling me today, because those two things are completely at odds.”

The enquiry also addressed a damning internal review of PwC, conducted by former Telstra CEO Ziggy Switkowski, highlighting significant cultural problems within the firm. It noted “Switkowski’s main finding is that the PwC scandal arose because of the firm’s pursuit of revenue at any cost, a ‘whatever-it-takes’ culture, and a system in relation to revenue putting profit above ethics,” and “while a small number of bad apples have been sacrificed or suffered a penalty of some form, the system persists.” Even the firm’s new head of human resources, Catherine Walsh confirmed the firm’s problems were not isolated to a few “bad apples” behaving badly, and that “we do need to hold ourselves to account … but it goes to leadership, it goes to culture. We do need to change the whole firm, not just a few bad apples.” The inquiry’s final report examining the management and integrity of consulting services is set to be delivered by 30 November and will prove interesting reading. To date, not one person has been in any Australian court for what some may think to be corruption.

Peter John Collins, the former PwC Australia partner, at the heart of the controversial tax leaks scandal. has been banned from providing financial services for eight years. Today, the Australian Securities and Investments Commission said he was “not a fit and proper person to provide financial services”. It found that the disgraced financier disclosed confidential information he obtained in his roles as a tax advisor to the Commonwealth Treasury and the Australian Board of Taxation.

People, moaning about high inflation rates, should spare a thought for Argentinians where latest figures for September see prices 12.7% higher on the month and 138.0% on an annual basis. Unsurprisingly, the central bank lifted rates by a further 14% to 133%, with many analysts expecting to see this figure topping an incredulous 180% by year-end. The inflation rate has worsened since the 18% devaluation of the peso in August. Since then, the currency has spiralled downwards, with the official rate around 350 pesos to the greenback. However, on the black market the rate is over 1k pesos, as there is a rush to buy dollars ahead of presidential elections next week. Voters will be choosing who to succeed outgoing leftist President Alberto Fernandez, with Javier Milei an early favourite; the radical libertarian is seeking to shut the central bank and dollarise the economy to tame inflation. It is estimated that 40% of the population now live below the poverty line.

In the US, mortgage rates have gone through the roof as they touch twenty-year highs, with the typical thirty-year, fixed rate home loan jumping to over 8% for the first time since 2000. Borrowing costs have risen over the past fortnight, with rates 50bp higher. The housing market had already been impacted by the rise in mortgage rates, which hovered around 3% just two years ago. In August, sales of existing homes were down 15% on the year, as buyers dropped out of the market as many homeowners, enjoying low rates, preferred to stay put rather than move on. Strangely, house prices have yet to fall, up nearly 4% in the month, as demand outpaces supply. The Federal Reserve’s target for its key rate – which helps set borrowing costs for mortgages – now stands at a range of 5.25%-5.5%, up from near zero in March 2022. It is unlikely to see the central bank raise interest rates much higher, pointing to price increases that have slowed significantly since last year.

It does seem that some of the cash required to finance the increase in retail spending has to be sourced from either household savings and/or credit cards. If the latest retail sales report, which reflects the sixth consecutive monthly gain is anything, it shows that the average US consumer is going ahead with their spending, and it is consumer spending that drives the US economy. It is this spending that shows that rates hikes have failed to cool spending and hiring, and points to a possible rate hike this year. There are some who think that consumers will eventually buckle under the regime of high rates and cut back on their spending. Healthy consumer spending is expected to lift the economy’s growth rate to about 3.5% or possibly even higher in Q3. September’s strong sales also suggests the economy may not slow as much in Q4, as previously expected. It also appears that businesses across the US economy ramped up hiring in September, defying surging interest rates.

For the first time in two years, average pay, at 7.8%, grew at a faster rate than the UK inflation rate of 6.7% – although more than triple the BoE target of 2.0% and a possible indicator that the squeeze on living costs may be starting to ease; this inflation figure for August was higher than the three month average The average pay rises for private sector employees, at 8.0%, was higher than the 6.8% recorded for the public sector, which, in turn, was the biggest increase since comparable records began in 2001. In the private sector, the biggest increases were seen in finance and business services, followed by those in the manufacturing sector. Chancellor Jeremy Hunt, said: “It’s good news that inflation is falling, and real wages are growing, so people have more money in their pockets.” It seems likely that rates will now remain the same for the rest of 2023 and though inflation will continue to dip and wage growth slow, the BoE will probably maintain the current rate of 5.25% well into the new year.

In Q3, the number of UK job vacancies continued to dip by 43k to 988k – this number is still 187k higher than posted in pre-Covid Q1 2020.  The sector worst hit was real estate where vacancies were 30% lower on the quarter. In an era of relatively high interest rates, it is expected that wage rises to slow. The Office for National Statistics has noted that while some sectors had seen average pay growth rise sharply, at 5.7%, others, such as construction did not fare as well. Furthermore, the Institute for Fiscal Studies has warned that by 2028, with pay packets being depleted by personal allowances being pared back and higher tax brackets, will see a cumulative US$ 60.8 billion tax rise over that period.

UK September retail sales dipped 0.9%, following a 0.4% rise a month earlier – an indicator that a combination of cost-of-living pressures and fourteen consecutive months of interest rate rises had finally taken their toll on the UK consumer. The retail sector blamed the unseasonal warm weather, (which stalled the start of autumn clothing sales), and the ongoing cost of living crisis for the disappointing sales. In non-store retailing, which is mostly online, sales volumes fell by 2.2%, following a drop of 0.9% in August. There is no doubt that spending on discretionary items, non-food categories and big-ticket items like furniture and jewellery – all down – were drivers behind dipping September sales. There is concern that retail sales may continue to fall in the “golden quarter” because consumer spending will be badly hit by the cost-of-living crisis and that may weigh heavily on sales during a period that includes Black Friday, Christmas and End of Year Sales. One thing is certain – if inflation remains in an economic quagmire, remaining stuck around the 7.0% level, then consumer confidence, (which declined by nine to minus thirty, according to research company, GfK), will be dented and there will be decreases in monthly retail sales.

Although still relatively high, UK government borrowing was lower than market expectations, (which ranged from US$ 22.2 billion to US$ 24.9 billion), in September at US$ 17.4 billion – it was US$ 1.9 billion lower compared to September 2022 but the sixth highest September return since records stated in 1993.  With a general election due before January 2025, there are some analysts who see this a good opportunity for Chancellor Jeremy Hunt to introduce some tax cuts in next month’s Autumn Statement. This is highly unlikely since it would appear that a short-term gain would almost guarantee long-term pain particularly if interest rates remain high, as many now expect. It has to be remembered that the country’s national debt stands at nearly US$ 31.6 trillion – up by almost 2.0% on the year – and every time that gets higher, the interest payment heads in the same direction. The government has not helped itself in as much that most of its debt is index linked and goes up in tandem with inflation.

Comments made by Federal Reserve Chairman seem to indicate that the central bank may well put further rate rises on hold unless policymakers see further signs of resilient economic growth; rates were also unchanged at the Fed’s last meeting, remaining in the range of 5.25% – 5.50%. The Fed chief also said a recent run-up in long-term Treasury yields, if it persists, could lessen the need for further rate increases “at the margin”. It seems that he expects the economy to cool down in Q4, helped by recent declines in yields on two-year Treasury bonds, and ten-year bonds falling back before hitting the 5.0% level; two-year Treasury yields rose to a seventeen-year high on Tuesday, while ten-year notes are near their peak for the year. The Fed chief said there were signs the labour market was cooling, although he repeated that a “sustainable” return to 2.0% inflation would probably “require a period of below-trend growth and some further softening in labour market conditions”.

In the US, September sales continued their upward trajectory, and despite continuing high interest rates and inflation, Americans kept spending online, (1.1% higher), at restaurants, (up 0,9%), and other outlets.  Retail sales jumped 0.7% – almost double that of market expectations – and 0.1% lower than the revised 0.8% August return which had been inflated more by a spike in energy prices. There was a 0.6% rise in a category of retail sales that excludes auto dealers, gas stations and building materials. The fact that prices remained almost flat in September points to the increased spending is not caused by higher prices but increased consumer demand. The figures show the conundrum facing the Federal Reserve that had assumed higher rates would dampen retail demand which has patently not happened. Do they hold rates or do they go Let’s Twist Again!

Only A Pawn In Their Game!                                               13 October 2023

The 1,659 real estate and properties transactions totalled US$ 2.59 billion, during the week ending 13 October 2023. The sum of transactions was 297 plots, sold for US$ 1.38 billion, and 1,362 apartments and villas, selling for US$ 1.25 billion. The top three transactions were all for plots of land, one in Palm Jumeirah sold for US$ 163 million, the second in Palm Deira for US$ 163 million and the third in Al Thanyah Fifth for US$ 33 million. Madinat Hind 4 recorded the most transactions, with fifty-five sales, worth US$ 25 million, followed by forty-nine sales in Palm Jabal Ali for US$ 316 million, and thirty-eight sales in Al Hebiah Fifth, valued at US$ 31 million. The top three transfers for apartments and villas were for a villa in Al Safouh Second, another in Palm Jumeirah for US$ 10 million, with an apartment in Palm Jumeirah selling for US$ 7 million. The mortgaged properties for the week reached US$ 646 million and 117 properties were granted between first-degree relatives worth US$ 245 million.

Mashriq Elite Developments has launched a new project Floareá Residence, located in Arjan, and comprising two hundred and six studio, 1 B/R – 2 B/R apartments, with prices ranging from US$ 140k – US$ 375k. Construction, which has already started, is expected to be completed by Q1 2025. The project will feature a five-metre high and thirty-metre-wide waterfall falling from the first floor to the ground floor. Among its amenities will include a state-of-the-art clubhouse, yoga studio, barbecue courtyard, gymnasium, children’s indoor and outdoor play areas, steam and sauna facilities, surrounded by lush landscapes.

Its latest report sees Betterhomes noting that the outlook for Dubai’s off-plan market is promising, having witnessed a notable surge in interest from investors and end-users. The property market plan estimated that the off-plan market is booming by a 40% – 60% increase in the number of foreign and local property buyers, indicating a favourable environment for real estate investment in the emirate. Most consultancies also issue caveats – and this was no exception – commenting that “that various factors can influence the real estate market, and trends may shift over time.” The off-plan property market has experienced a remarkable 35% surge in demand over Q3 on the year, with off-plan transactions accounting for a marked 61% share of Dubai’s overall real estate market. Betterhomes’ report said with Dubai’s ongoing development and the steady rise in population, off-plan properties hold significant potential for appreciation in value by the time they are completed.

Latest CBRE September data shows that there was an 8.3% softening for Dubai’s realty sector to 7.5k, with off-plan transactions falling 41.5% as secondary increased by 30.5%; however, YTD sales topped 87.1k – a record number and 35.4% higher on the year. There is every chance that annual sales by the end of 2023 will top 100k. One of the causes for the monthly fall was because of limited supply of new inventory which is in the throes of ramping up.

This week, Expo City Dubai unveiled its latest launch, the Yasmina Villas at the Expo Valley, A limited number of properties will feature spacious and private 4 B/R – 5 B/R semi-detached homes, across three levels, with an average plot area of around 4k sq ft. Prices will start at US$ 1.66 million. Each bedroom will be en suite, and each house will have a maid’s room. Expo Valley is a gated community within Expo City, combining lush greenery, a lake and a 1 km wadi, running between the residential units of the neighbourhood with sceneries and terrain, including a water body and rugged topography, where people can hike within the neighbourhood which will also feature car-free lanes and dedicated tracks for cycles and e-scooters, with the entire road network being underground.

According to the MoE, the country hosted more than sixteen million guests – a 15.0% increase – in the first seven months of 2023. This equated to fifty-six million, while the occupancy rate increased by an annual 5.0% to 75.0% over the period. The Minister of Economy, Abdulla bin Touq, who is also head of the Emirates Tourism Council,  noted that the UAE had over 1.2k hotels and that YTD July, revenue was 24.0% higher, on the year, at US$ 7.1 billion. With the We The UAE 2031 vision, he is confident that the tourism sector’s contribution to GDP to top US$ 122.6 billion over the next decade; this year, the contribution of US$ 49.2 billion equates to almost 10% of UAE’s GDP, 1.8% lower than the 2019 pre-pandemic level of US$ 50.0 billion. For the first time, Dubai H1 visitors – at 8.55 million – exceeded pre-pandemic numbers of 8.36 million.

With Global Village reopening, for its twenty-eighth season, on 18 October, the RTA is set to restart the operation of four bus routes, with a fare for a single trip at US$ 2.72. It also confirmed that it “will also recommence the operation of tourist trips on electric Abras at the Global Village for the 2023-2024 season by deploying two electric Abras to cater to Global Village visitors during this season.”

This week, Dubai’s newly launched private carrier, Beond showcased its first aircraft, an Airbus A319, seating forty-four passengers in a luxurious all lay-flat configuration. Flights will depart the Al Maktoum International airport at Dubai World Central. The all-business class carrier has announced flights to Riyadh, Munich, and Zurich between 09 – 17 October, with Milan added to the schedule in March 2024 The plan sees Beond having thirty-two planes flying to sixty destinations, including to Maldives from Europe, the ME, and Asia-Pacific, by the end of 2028. One-way fares will start at US$ 1.63k.

Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum has reiterated the emirate’s strategy to reinforce its stature as a global hub for technology innovation. At the two-day Dubai Assembly for Generative AI, which closed yesterday, the Crown Prince noted the emirate’s growing prominence on the global technology landscape. The assembly, hosted by Dubai Future Foundation, brought together 2.2k attendees, in addition to global tech powerhouses and consultancies including Microsoft, Meta, IBM, PwC, Deloitte, SAP, Nokia and McKinsey. During the assembly, DFF launched the Dubai Generative AI Alliance, a new alliance of global tech companies to help Dubai accelerate the adoption of emerging technologies and build one of the world’s most advanced and effective tech-enabled governments.

On Monday, the UAE Cabinet, chaired by HH Sheikh Mohammed bin Rashid, approved the 2024 federal budget allocating total estimated expenses amounting to US$ 17.40 billion, with an expected total revenue of US$ 17.91 billion, together with the country’s US$ 52.32 billion three-year federal budget for 2024 to 2026. Dubai’s Ruler commented that “this reflects the UAE’s steadfast commitment towards sustainable development and investing in the welfare of its people,” and that “we are working to implement plans and projects that put the people of the union at the top of their priorities, because the UAE is a country of leadership, and its people deserve the best.” The revenue estimates for 2024 are 3.3% higher, while estimated expenses are up 1.6% on last year. The main sectorial beneficiaries, accounting for 81.3% of the budgeted expenditure, will be social development/social benefits and government affairs receiving US$ 7.28 billion and US$ 6.87 billion. Within the former segment, public/university education programmes, health care/community protection, pensions, social affairs, and public services will receive US$ 2.78 billion, US$ 1.42 billion, US$ 1.66 billion US$ 981 million, and US$ 409 million. Within the government affairs sector, US$ 6.87 billion will be utilised by the government and US$ 708 million on federal investment projects. US$ 1.96 billion will be expended for other federal expenses. The country aims to double the size of its economy to US$ 817 billion by 2031, with a focus on boosting non-oil exports and the tourism sector.

This week, HH Sheikh Mohammed, in his role as Dubai Ruler, issued Decision No. (18) of 2023 pertaining to the new Board of Directors of the Economic Security Center of Dubai. The new board will be chaired by Talal Humaid Belhoul Al Falasi, with Awad Hader Al Muhairi serving as Vice Chairman. Other board members include Tamim Mohammed Al Muhairi, Dr Riyadh Mohammed Belhoul, Saif Obaid Al Mansouri Faisal Mohammed Al Awadhi, and in addition the Executive Director of the ESCD to be appointed. The body was set up in 2016 to augment the legislations of economic security, and to counter corruption and economic crimes and has the authority to engage external expert services as deemed necessary.

Dr Thani Al Zeyoudi, the Minister of State for Foreign Trade, commented that the latest comprehensive economic partnership agreement with Georgia was “going to be opening huge market access to our exports; the minimum is at least US$ 1.3 billion for our exports to Georgia in five years,” and is “expected to add at least US$ 4 billion to the Gulf country’s GDP by 2031”. This latest Cepa will come into force in Q1 2024. The minister also noted that 2022 bi-lateral non-oil trade topped US$ 481 million, 115% higher on the year, and US$ 225 million in H1 – up 28.0%. As with other Cepas, the trade agreement will result in the elimination, or a significantly reduction, of tariffs, removal of non-tariff barriers and increasing trade promotion in goods, services and investment. The UAE now accounts for more than 63% of the total volume of Georgia’s trade with Arab countries and is responsible for about 5% of its total FDI.

As another indicator of Dubai’s standing in the global MICE market, Monday saw the start of the five-day Campden Global Owners and Family Office Congress, the world’s biggest and most significant family business conference. The event will bring together more than three hundred representatives from multi-generational wealth-owning families from around the world and will feature immersive networking opportunities and closed-door sessions to exchange knowledge and experiences. The event has attracted global participants from family businesses and offices from the ME, who were expected to account for around 18% of participants, with 26% travelling from Europe, 22% from North America, 16% from India, and 15% from the Asia Pacific region. The leading sector was real estate followed by venture capital, financial services, and energy, and others included technology, fintech, blockchain, construction, infrastructure, healthcare, food/beverages, and mining/minerals.

Last month, the latest seasonally adjusted S&P Global PMI rose 1.1 to 56.1, on the month, driven by sales growth reaching its highest in more than four years amid improving demand. The monthly survey, covering three sectors – construction, travel/tourism and wholesale/retail, and travel/tourism – all witnessed “faster upturns”, with the latter showing a “particularly rapid acceleration of growth”. Furthermore, business confidence moved northwards to its highest level since the start of the 2020 pandemic – an indicator that companies’ near-term growth expectations has improved, with the emirate’s economy surging on the back of strong trade and tourism, by 2.8%, in Q1; its accommodation and food services sector grew 5.6% over the same period. Although the rate of job creation was mild, and the weakest in seven months, employment numbers were higher, whilst the September pace of inventory accumulation also slowed and was “only modest”, with these two slowdowns not helped by “a solid and faster rise in average input costs in September.” Price increases were noted as the pace of inflation was the strongest in just over a year, driven by higher raw material costs, which increased despite another sharp improvement in supplier delivery times.

DP World has announced that its latest ten-year Islamic bond, with a 5.5% yield, which raised US$ 1.5 billion, was 2.3 times amid “strong demand” from global investors; the green sukuk will be listed on the Nasdaq Dubai and London Stock Exchange. It was priced at a spread of 119.8bp above US treasuries. Proceeds from the issuance will be utilised on eligible green projects that include electrification, renewable energy, clean transportation and energy efficiency. In 2021, DP World pledged to become a carbon neutral enterprise by 2040 and achieve net zero carbon by 2050, with a short-term aim of a 28% reduction in its carbon footprint by 2030. The port operator also confirmed that it was to invest up to US$ 500 million to cut carbon emissions from its operations over the next five years.

The Dubai Financial Services Authority has fined a former finance executive in Dubai, US$ 33k, for his involvement in account breaches and making misleading statements for a publicly listed company. Remi Ishak had worked for Equitativa and Emirates REIT, a public fund and Nasdaq Dubai-listed entity whose portfolio of properties was composed of commercial, retail, and educational assets. Two years ago, the firm was penalised for making misleading statements in relation to the Emirates REIT, not preparing financial statements in accordance with International Financial Reporting Standards and failing to take reasonable steps to ensure that relevant information was reported to its auditors.

Sheikh Mansoor bin Mohammed bin Rashid, Chairman of the Dubai Border Security Council, has launched a new digital platform, part of the Economic Security Centre of Dubai, for the public to report economic crimes. This latest initiative will further enhance Dubai’s aim to reduce the number of economic crimes, including money laundering, terror funding, bribery, forgery and embezzlement that could potentially impact its economy or its resources. Sheikh Mansoor stressed the importance of increased community involvement in protecting the national economy and also Dubai’s commitment to remove all potential disruptions to growth and development.

The UAE and India have entered an agreement that will see the development of the Emirates’ domestic card programme, based on India’s existing RuPay card, of which there are more than 750 million in circulation, equating to 60% of all cards issued in the country. It is hoped to be operational by the end of Q2 2024, according to Piyush Goyal, India’s Minister of Commerce and Industry. RuPay is a global card payment network, with wide acceptance at shops, ATMs and online platforms, with debit, credit and prepaid options. The UAE’s national domestic card programme will be developed by the UAE Central Bank’s Al Etihad Payments company, along with the National Payments Corporation of India’s subsidiary NPCI International Payments.  Both countries have also agreed to allow the usage of the card in India and the RuPay card in the UAE.

The UAE Central Bank and the Reserve Bank of India have also agreed to work together to use the India Stack, a set of digital infrastructure components that allows governments, businesses and individuals to conduct transactions electronically. The UAE is India’s second largest source of India’s annual US$ 90.0 billion annual inward remittances’ flow. This new initiative would bring down the exchange costs of transactions between the two countries which has been recently enhanced by the rupee-dirham bridge which will also bring down the exchange costs of transactions between the two countries. Since the two countries signed a comprehensive economic partnership agreement in May 2022, economic ties have been boosted, that saw bilateral trade 5.8% higher in the first twelve months to US$ 50.5 billion. Last Thursday, the two countries also signed a preliminary agreement to co-operate more closely in sustainable industrial development, in line with Cepa. The deal will focus on seven key areas – supply chain resilience, renewable energy and energy efficiency, health and life sciences, space systems, artificial intelligence, Industry 4.0 and advanced technology, as well as standardisation and metrology.

According to Financial Times “fDi Markets” data, in H1, Dubai continued to be the top global destination for attracting Greenfield Foreign Direct Investment (FDI) projects, attracting five hundred and eleven Greenfield projects; Dubai attracted 6.58%, (up from 3.83%), of the global market, well ahead of second place Singapore’s three hundred and twenty-five. This is in line with the city’s ten-year Dubai Economic Agenda D33, which aims to double the size of the emirate’s economy over the next decade. Dubai’s Crown Prince, Sheikh Hamdan bin Mohammed, commented that “the emirate has intensified its drive to accelerate economic diversification and innovation”, and “we continue to work to create an investment environment that not only wins the trust of investors from all over the world but also encourages them to contribute to Dubai’s transformation.”

Over the same period, the report also showed Dubai rose from ninth to fourth place globally in employment creation from FDI projects because of a 43.3% surge in job creation on the year. The top six sectors contributing to estimated job creation by FDI were Business Services at 5.2k jobs (21.5% share), Software and IT – 3.5k jobs (14.5%), Food & Beverages at 3.1k jobs (12.7%), Financial Services at 1.8k jobs (7.5%), Consumer Products at 2.1k jobs (8.3%) and Real Estate at 0.9k jobs (3.8%). Meanwhile, Dubai, climbing from eighth to sixth also saw a year-on-year rise in global Greenfield FDI capital attraction, reaching US$ 5.69 billion. It also ranked first globally in the attraction of HQ FDI projects, by attracting thirty-three HQ projects, ahead of London and Singapore.

The Dubai FDI Monitor showed that five sectors accounted for 82% of total FDI capital inflow and 705 of total FDI projects. Leading sectors by FDI projects include Business Services (22.4%), Software & IT (17.8%), F&B (12.2%), Financial Services (9.0%) and Consumer Products (8.3%). It also stated the emirate continued to attract medium-to-high-technology and low-technology FDI projects in H1 2023, with rates of 63% and 37% respectively, unchanged from last year.

The DFM opened on Monday, 09 October 2023, 1 point higher the previous week lost 200 points (4.8%) to close the trading week on 3,965, by Friday 13 October 2023. Emaar Properties, US$ 0.07 lower the previous week, shed US$ 0.14 to close on US$ 1.98 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.70, US$ 4.92, US$ 1.58, and US$ 0.45 and closed on US$ 0.68, US$ 4.82, US$ 1.50 and US$ 0.41. On 13 October, trading was at 372 million shares, with a value of US$ 204 million, compared to 108 million shares, with a value of US$ 79 million, on 06 October 2023.

In line with other regional bourses, the DFM has been impacted by the outrageous escalation in the conflict between Palestine militants and Israel and, to a lesser extent, the dovish shift in tone from the US Federal Reserve, pointing to no more rate hikes on the horizon.

By Friday, 13 October 2023, Brent, US$ 10.98 lower (11.5%) the previous week, gained US$ 6.49 (7.7%) to close on US$ 90.94. Gold, US$ 156 (7.8%) lower the previous four weeks, gained US$ 114 (6.2%) to US$ 1,946 by 13 October 2023.  Both commodities were reacting to increased uncertainty circling the global economy and threats to world peace.

After a 5% knee-jerk reaction to the crisis on Monday, oil prices rose today to record a weekly gain as supply risks from the Israel-Gaza war offset a large build-up in US crude stocks. Six days after the crisis began, there has been no impact to current global oil production which is expected to continue into the near future. However, the caveats would be that production could be cut by Saudi Arabia and the US could tighten Iranian sanctions; both would see supply tauten in the short-term and the subsequent increase in prices. Yesterday, the International Energy Agency slashed its 2024 oil demand growth forecast, by 100k bpd to 900k bpd. citing a “deteriorating economic climate” but raised its 2023 demand forecast by 100k bpd to 2.3 million bpd, citing “buoyant” demand growth in China, India and Brazil. However, Opec sees 2023 and 2024 demand rising by 2.44 million bpd and 2.25 million bpd.

There are two major EV start-ups in the US – Lucid Group and Rivian – with varying results. Lucid, which hopes to have manufactured 10k vehicles in 2023, has seen its stock valuation down 25% YTD. Some see further depletion in its market value as it struggles to actually reach its latest 10k unit forecast. Astonishingly, there are reports that the company burns US$ 338k for every vehicle it produces. Analysts’ average 2023 sales estimate for the firm has sunk nearly 50% over the past six months. Meanwhile, Rivian, its truck-making peer, with its share value almost flat this year, is estimated to be losing US$ 110k per vehicle, and its 52k units forecast figure has risen by some 5% on earlier expectations. With such disastrous figures for both entities, the only reason that they are both still in business are that their backers are Saudi Arabia’s Public Investment Fund for Lucid and Amazon for Rivian. Both entered the market in 2021, a good time for such companies with the nascent EV sector being flavour of the month for investors. The honeymoon period was not to last long and, within twelve months, such companies were seen as far too risky for many investors. The end result is that Lucid is down 91% from its peak, while Rivian has lost 89%. Where they go from here remains to be seen but the outlook is not promising.

In the UK,the Serious Fraud Office (SFO) said it was investigating a suspected fraud at the funeral plan provider Safe Hands, and its parent, SHP Capital Holdings Ltd. This follows the collapse of the company, after more than 46k people had paid into a fund towards future funeral costs. Its collapse meant prepaid funerals may not be honoured and some people had paid in instalments up to US$ 5k. Prior to last July, providers did not require approval to operate from the Financial Conduct Authority, but Safe Hands withdrew its application for FCA, then subsequently collapsed and went into administration in March last year; administrators were then  indicating that the company faced a “combination of factors, some of which are understood to be linked to the Covid pandemic”. They have since confirmed that creditors are owed US$ 87 million and although they are selling off the company’s assets, it has warned that there will be a shortfall – meaning that there will not be enough to meet the company’s funeral obligations.

Embattled Metro Bank has managed to raise nearly US$ 400 millionin new funding, as well as refinancing US$ 735 million of debt. Metro Bank also said it was still in discussions about raising cash by selling up to US$ 3.65 billion of its residential mortgages. Its chief executive, Daniel Frumkin, said the deal marked “a new chapter” for the troubled bank after its shares had tanked last week but rebounded on Monday following news of the deal. This will see Colombian billionaire, Jaime Gilinski Bacal, becoming its biggest shareholder with a 53% stake, with his company, Spaldy Investments, investing US$ 125 million into the bank. Metro Bank’s shares rose by about 10% on Monday, taking its share price to about US$ 0.61 – close to the level it had been last week before reports on the bank’s financial situation emerged. Its share price is still down nearly 60% YTD and well below the peak of over US$ 49.0 it reached in 2018. Whether this new investment will keep Metro a viable concern in the future is open to question but with a very high-cost base – and its penchant of focusing on physical High Street branches – it will continue to struggle. The best it can hope for is some sort of merger with a larger financial institution.

In Q3, PepsiCo posted a 7.0% hike in revenue figures to US$ 23.4 billion, and this despite a 2.5% decline in sales volume and a further hike in prices, of 11%, attributable to the higher cost of ingredients like cooking oil; the price increase was the seventh consecutive double-digit rise. Pepsi’s net income rose 14% to US$ 3.1 billion, or $2.24 per share. Some of the improvement was the introduction of new items such as Doritos Spicy Pineapple Jalapeno chips, and advertising, which is lifting brands like Gatorade. Although sales volume was flat in Europe, it dipped 6% and 5% in North America and Latin America.

Following the Internal Revenue Service’s audit of Microsoft 2004 – 2013 accounts, and how the firm allocated profits among countries and jurisdictions, the tech firm has a request to pay an additional US$28.9 billion in back taxes. Microsoft has indicated that it will contest the tax authority’s request and commented that “the issues raised by the IRS are relevant to the past but not to our current practices”. Although there has concerns that such mega tech companies do not pay enough tax in developed countries, the company said it had “always followed the IRS’s rules and paid the taxes we owe in the US and around the world”. Microsoft seem to think that any taxes owed after the audit would be reduced by up to US$ 10 billion based on tax laws passed by former President Donald Trump. The tech giant has also been chased by other US authorities, including the Federal Trade Commission – in June, it agreed to pay the authority US$ 20 million after it had been found to have illegally collected data on children who had started Xbox accounts.

Having initially blocked Microsoft’s US$ 69.0 billion deal to acquire Activision Blizzard, the UK’s Competition and Markets Authority has now reversed its earlier decision. This has been one of the largest ever tech takeovers, which the UK watchdog had qualms about Microsoft gaining too much control of the surging cloud gaming sector. However, fears were allayed when, In August, the US tech giant agreed to transfer the rights to stream Activision games from the cloud to French gaming company Ubisoft Entertainment for fifteen years outside the European Economic Area. Activision Blizzard is the company behind Call of Duty, Overwatch, and World of Warcraft. It is estimated that by 2027, the video gaming industry will earn revenues of US$ 334 billion in 2023, and by then, there will be 3.1 billion gamers worldwide.

Airbus is spinning off its commercial aircraft unit into a stand-alone entity, with its chief executive Christian Scherer, formerly the chief of sales for Airbus, to oversee a team of eight executives. Establishing a separate commercial aircraft business will allow Airbus chief executive Guillaume Faury to focus on the company’s broader strategy, its other units and its sustainability agenda after four years of doubling up as the boss of the core plane making unit. He will lead a team including the chief of Airbus Helicopters, the head of Special Industrial Projects, the chief sustainability officer and communications, the chief technology officer, as well as M Scherer as head of commercial aircraft. H1 net profit fell 20% year on year to US$ 1.57 billion, despite revenue coming in 11% higher at US$ 29.1 billion, from delivering three hundred and sixteen commercial aircraft.

There are reports that Boeing and Spirit AeroSystems have extended the range of their inspections to address a manufacturing flaw that affects 737 Max 8 jets. Reports indicate that they have expanded the scope of their reviews of the “aft pressure bulkhead structure on the 737 Max 8” and are examining hand-drilled fasteners. With this latest development, including newly expanded X-ray inspections and rework, there are concerns that both the recovery progress and the pace of overall production will slow, causing more delivery delays. In August, Boeing said a production glitch, found recently in some of its 737 Max jets, was not a safety risk. Boeing is still recovering from a long history of problems for the 737 Max, which was grounded for twenty months after fatal crashes in Indonesia and Ethiopia in 2018 and 2019.

The fall-out from the Qantas debacle continues with news that Richard Goyder is planning to step down before the airline’s next AGM later in 2024; this comes after he had reiterated that he had the board’s, and shareholders’, confidence despite being under increasing pressure to resign, following the premature departure of controversial former chief executive Alan Joyce last month. Perhaps he, and several board members, should have walked at the same time as Mr Joyce. The embattled board, saying it was time for board renewal, indicated that “in recognition of the reputational issues facing the group,” and “as a board, we acknowledge the significant reputation and customer service issues facing the group and recognise that accountability is required to restore trust.” Since the Joyce departure, the High Court found that Qantas had acted illegally when it sacked 1.7k ground crew staff members during the pandemic in 2020 and that the competition watchdog is also suing the carrier for allegedly selling tickets to thousands of flights that had already been cancelled in 2022. If no other board resignations are forthcoming, and no positive changes occur, it seems that Qantas is just carrying out an exercise to rearrange the deckchairs.

Unity has seen the immediate resignation of its chief executive, John Riccitiello; last month, he introduced a controversial pricing charge which angered gamers and developers alike. The firm wanted to charge studios every time a person installed a game using Unity’s code which powers thousands of modern video games, including Pokémon Go, Genshin Impact and Beat Saber, even though big developers already pay a licensing fee to use Unity in their games. The firm has since rolled back most of its plans and apologised. Riccitiello had taken Unity public in September 2020, valuing the company at US$ 13.6 billion; its share price peaked at nearly US$ 200 in 2021 but has since fallen to be trading now at just under US$ 30.0. However, despite its latest quarterly revenue rising to US$ 553 million, it is still returning losses, with the latest at US$ 189 million.

German sandal maker Birkenstock has been valued at US$ 8.0 billion, (with a US$ 46 share value), as indicated by its IPO value on the New York Stock Exchange; this figure sees the German sandal-maker at doubling its market value over the past three years. Last year, it sold over thirty million pairs of footwear, as its popularity moves inexorably higher; its appearance in this year’s Barbie movie, in which the main character’s journey of liberation was winkingly summed up by her adoption of a pink pair of the company’s classic two-strap sandals, sent demand surging threefold. Time will tell whether the company can maintain that momentum – and what impact opening the firm up to the pressure of public markets, for the first time in its two-hundred-and-fifty-year history, will have on business. There are mixed results on similar companies going public – sneaker brand Allbirds and boot company Dr Martens, which both went public in 2021 have seen their fortunes tumble, whilst the likes of Crocs, which listed in 2006, sells more than one hundred million pairs of shoes a year, and is worth about US$ 5.2 billion, more than six times what it was at the start.

Having missed not paying on two-dollar bonds last month, it seems highly likely that Chinese developer, Country Garden Holdings, is lining up for its first ever debt default and a long-needed restructuring. With grace periods for payment interest payment expiring later this month, it has US$ 11 billion of offshore bonds outstanding. On Tuesday, in a filing to the Hong Kong bourse, the company said that it “expects that it will not be able to meet all of its offshore payment obligations when due or within the relevant grace periods, including but not limited to those under the US dollar notes issued by the company”, and that “such non-payment may lead to relevant creditors of the group demanding acceleration of payment of the relevant indebtedness owed to them or pursuing enforcement action.” Country Garden, once the biggest developer in the country, has Yang Huiyan as its chairman and the majority shareholder, commented that it had not made a due payment of US$ 60 million “under certain of its indebtedness”. The developer has 3k projects in smaller cities and about 70k employees but the most worrying of factors is that it has four times the number of projects than the Evergrande Group which brought the sector to its economic knees back in 2021. Apart from having liabilities, totalling US$ 187 billion, Country Garden posted that September contracted sales plunged 81% from a year earlier; with such figures, the developer will have trouble trying to trade out of its financial problems.

The RBA, noting that China’s property market is facing a “sharp deterioration”, which could lead to financial stress domestically, has warned that it could ultimately affect its trade with Australia. That is one of the key risks, identified by the Reserve Bank of Australia in its latest financial stability review, in a chapter specifically about the “vulnerabilities in China’s financial system”. The RBA warned that problems stemming from the “sharp deterioration” in China’s property sector — which accounts for about 30% of that nation’s economic growth — could lead to a global slowdown, weaker commodity prices and “reduced Chinese imports of Australian goods and services”. There is no doubt that big questions are being asked whether the Chinese economy can weather the current economic storm, but if matters worsen, the RBA noted that the “direct links between mainland China’s financial system and advanced economy banking systems are limited”, but Australia would not be immune from the fallout. It also noted that “widespread financial stress in China would therefore affect advanced economy financial systems mostly via its impact on Chinese trade and a general increase in risk aversion in global financial markets.” However, as Chinese economic woes will not disappear overnight, the main problems facing Australia will be from slowing global economic activity, lower global commodity prices and reduced Chinese imports of Australian goods and services; last year, it exported US$ 118.4 billion worth of goods and services to China, with iron ore accounting for 56% of that total, followed by natural gas and crude minerals with 10% and 6%. Furthermore, China’s property downturn may also have unintended consequences for Australia’s housing market and housing affordability, with an increase of both Chinese migration and property investors pushing already high prices even more unaffordable.

The latest RBA report noted that Australian homes and businesses are vulnerable to financial stability risks as rising inflation and interest rates continue to pressure the global economy, but that the country’s financial system is well-placed to deal with global economic shocks. Despite rising rates, the vast majority of households are servicing their debts, although the share of households falling behind on their mortgage payments has picked up a little. Its Financial Stability Review points to the share of owner-occupiers, with variable-rate mortgages, whose essential expenses and mortgage costs exceeded their income in July 2023, is estimated to be around 5%, up from around 1% in April 2022. In a hypothetical situation where interest rates were to rise 0.5% to 4.6%%, the share of owner-occupiers with variable-rate mortgages whose essential expenses and mortgage costs exceeded their income would rise from 5% to 7%. It notes these households are likely to have little capacity to cut back on spending, and 30% of them are at risk of depleting their cash buffers within six months – and so are at higher risk of falling into arrears on their housing loan. Currently, the banks are comfortable with the state of affairs, as only a “very small share of borrowers” are in negative equity (where the value of a loan exceeds the value of a property), and that the vast majority of households continue to service their debts. There was some concern that if inflation and interest rates remain high for an extended period, it could lead to a significant deterioration in credit quality that “could lead to lenders cutting back on the provision of credit”, and that “disorderly declines in asset prices” could disrupt the functioning of the financial system.

The review also looked overseas and pointed to China as a major global risk particularly because of the perilous state of its property sector, with major developers carrying massive deficits and stock – either unfinished or unsellable. The major area of concern is the distinct possibility of contagion spreading to other sectors of China’s economy that could then spread onto the global stage. Banking systems in the US and Switzerland were listed as potential flashpoints where global financial risks remain “elevated”, despite intervention by governments to provide support. Other risks to upset the natural order include malicious cyber-attacks on banking systems, increases in bad debts resulting from rising unemployment, rising geopolitical tensions not only in Ukraine, but elsewhere, and the effects of climate change on the global economy.

Spain, the world’s largest producer of olives and olive oil, is facing a raft of organised crime, with gangs taking advantage of rising prices, attributable to a reduction in production because of severe droughts earlier in the year. Last week, Spanish police seized seventy-four tonnes of stolen olives in the southern province of Seville, with twelve people being arrested in the town of Pilas for their suspected involvement in the theft and trading of the olives. Some 6k litres of extra virgin olive oil were stolen in late September from olive oil producer Terraverne, which operates in Teba, a small village in Malaga province; the olive oil had already been bottled for dispatch to customers.

Better later than never, Sri Lanka has finally confirmed that it has managed to reach a deal to restructure US$ 4.2 billion of debt. The deal with China will enable the island state to unlock the next tranche of a bailout which will allow it to keep accessing funds from a US$ 3 billion bailout programme with the IMF. Having reached a deal with its creditors, the country will be able to access the next tranche of US$ 330 million, which had been on hold since last month, after Sri Lanka and the IMF failed to agree on the terms for its disbursement. Sri Lanka, which defaulted on its foreign debt in May 2022, has a total foreign debt of US$ 46.9 billion, 52% of which is owed to China. However, there is concern that China managed to negotiate special terms with regards to the loans, which would have a negative impact on other creditors who would have to bear the burden.

Ireland’s latest budget sees plans to have its sovereign wealth fund with assets of more than US$ 100 billion over the next decade; the basis of the fund will besome of the corporation tax windfall that Ireland has previously received from major global companies, with some of the monies being used in tax cuts and an increase in public spending. The Republic of Ireland raised US$ 24.0 billion in corporation tax in 2022. They include extrasupport with childcare costs, a reduction in college fees and credits to help with energy bills. The SWF, to be known as the Future of Ireland Fund, will be used to “protect living standards and public services”, and will include a US$ 14.9 billion sum to protect infrastructure spending during economic downturns and invest in climate change measures. The “main” fund will start with a US$ 4.0 billion injection from the existing budget reserve, and thereafter by an annual “top-up” equivalent to 0.8% of GDP until 2035 – the 2024 ‘‘contribution” is expected to be in the region of US$ 4.6 billion. Many US and other overseas companies have parked their money in Dublin and paid their tax on their global profits, (at a much lower rate), in the Republic. This has seen corporation tax receipts in Ireland balloon from just over US$ 4.2 billion to more than US$ 23.4 billion over the past decade since 2014.

The International Monetary Fund has revised down the UAE’s 2023 growth forecast – by 0.2% to 3.4% – but upgraded it 0.1% to 4.0% for the next year. Last week, the World Bank revised up the country’s 2023 and 2024 GDP growth forecast, by 0.6% to 3.4% and 0.3% to 3.7%, on the back of strong growth in oil and non-oil sectors.  By 2028, the UAE will be the fastest GCC economy with a figure of 4.5%, compared to Saudi Arabia (3.1%), Oman (3.1%), Bahrain (2.7%) and Kuwait (2.4%). The world body also noted that the global economy continued to recover slowly from the blows of the pandemic, the conflict in Ukraine, and the cost-of-living crisis. It also commented that “growth remains slow and uneven, with growing global divergences”. Its two-year forecasts were changed by 0.5% to 3.0% and 0.1% to 2.9%. Latest data sems to point to a ‘soft landing’ scenario for the global economy, bringing inflation down without a major downturn in activity. For advanced economies, the expected 2022-2024 slowdown is from 2.6% in 2022 to 1.5% to 1.4% amid stronger-than-expected US momentum but weaker-than-expected growth in the euro area. It sees the US economy growing at 2.1% this year and 1.5% in 2024. Meanwhile, emerging markets and developing economies are projected to have growth declining each year by 0.1% to 4.0% and 3.9% in 2024. India is expected to show impressive growth levels of 6.3% over the next two years.

US September inflation remained flat on the month at 3.7%, mainly attributable to higher housing and energy costs. Although it has fallen markedly from its 9.0% level late last year, it is still almost double of the Federal Reserve’s long-standing 2.0% target. The central bank, which has already raised borrowing costs sharply and its key interest rate now stands at more than 5.25% – up from near-zero in March 2022 – still has to decide whether to move rates higher to stabilise price growth. Increases in housing and petrol prices were offset by declines in used cars, clothing and grocery items. However, there is one fact to bear in mind – rates will remain relatively high for some time, partly because job growth and spending has held up far better than expected. Earlier forecasts were looking at rates dropping at a much quicker rate.

In the likely event that the Labour Party win the UK election in 2024, then UK expats in Dubai will not be too happy as Kier Starmer and his entourage are planning to increase the surcharge on property purchases for foreign buyers in an effort to fund increased building of homes; the Labour Party will raise the stamp duty surcharge on overseas buyers to get Britain building. An extra surcharge of 2% for foreign buyers was introduced in April 2021 and is applied regardless of the type of non-resident buyer, be they individual or business, and this is on top of the existing 3% stamp duty surcharge on purchases of second homes or buy-to-let properties and the existing stamp duty rates for UK home buyers, which is an increasing scale that begins after US$ 305k. It also seems that a new Labour administration could amend the non-dom tax status actually cancelling it which would then put an end to a tax benefit from which some enjoy foreign earnings free of tax for up to fifteen years; some estimate that this move could reap US$ 3.9 billion for the exchequer.

One just has to watch what happened earlier in the week to see that the world is becoming a less safe place. Thousands have been killed in Israel and Gaza after an unprecedented attack by Palestinian militant group Hamas and the inevitable retaliation by Israel. There is no doubt that the global economy is still reeling from the impact of Russia’s invasion of Ukraine which dragged the global economy into a downward spin resulting in energy/food prices, global trade, soaring inflation and higher interest rates. However, this latest episode in the ME may have far more damaging consequences that will not only affect the global economy but will stretch geopolitical relationships to the limit. What has happened to a world that does nothing but sit back and watch the two protagonists fighting it out, using innocent civilians as battle fodder?  This problem has festered for far too long and will continue indefinitely until positive action is taken – by who remains to be seen. Prime Ministers, Presidents and other world leaders have tried and failed – as have global bodies such as the toothless United Nations. Lobby groups, the world’s media and politicians, with their own self-centred motives, continue to play their parts in adding more fuel to the fire. Peace will only come when the people realise – and take positive action – that they are no longer Only A Pawn In Their Game!

Train Wreck!                                                                                  06 October 2023

The 1,445 real estate and properties transactions totalled US$ 2.59 billion, during the week, ending 06 October 2023. The sum of transactions was 248 plots, sold for US$ 477 million, and 1,197 apartments and villas, selling for US$ 866 million. The top three transactions were all for plots of land, one in Jumeirah Second sold for US$ 28 million, the second and third in Al Hebiah Fourth for US$ 27 million and for US$ 19 million. Al Hebiah Fifth recorded the most transactions, with seventy-eight sales, worth US$ 87 million, followed by sixty sales in Madinat Hind 4 for US$ 27 million, and eighteen sales in Madinat Al Mataar, valued at US$ 35 million. The top three transfers for apartments and villas were for a villa in Palm Jumeirah, valued at US$ 60 million, another in Zabeel First and US$ 55 million, with an apartment in Al Thanayah Fourth selling for US$ 26 million. The mortgaged properties for the week reached US$ 1.14 billion and 110 properties were granted between first-degree relatives worth US$ 107 million.

Casa, Damac’s latest launch, located in Al Sufouh, next to Dubai Media City, has been inspired by holiday living, whilst its design is an inspiration from the lotus flower. At its heart is the “Flying Island,” an oasis enveloped by water and all units feature circular outdoor terraces, capturing 270-degree water views. The tower will offer 1, 2, 3, 4 and 5-bedroom apartments, with each having its own private lift, and oasis-vibe pool. Damac is set to introduce one of Dubai’s first scuba simulators, offering diverse virtual reality experiences, from the Red Sea to the Indian Ocean or even the wonders of space. The pools will be surrounded by palm gardens. Prices will start at US$ 681k.

The RSG Group has launched its latest project – Fairmont Residences Dubai Skyline – slated for handover by the end of Q1 2025. It has already invested US$ 409 million in the building, which is 65% completed. Located on SZR, there will be one hundred and twenty-two fully furnished 2 B/R and 3 B/R apartments, as well as the Sky Mansion and Sky Palace residences. The Dubai-based real estate developer has also earmarked US$ 1.36 billion for developments over the next five years.

In the nine months to 30 September, sales of US$ 10 million plus residences in Dubai topped two hundred and seventy-seven. In Q3, the number of such homes sales was 40.7% higher on the year, with sales totalling US$ 1.59 billion for eighty-eight transactions. Knight Frank noted that “demand for luxury homes in Dubai remains resilient and supply continues to stubbornly lag demand.” The most popular areas were Palm Jumeirah, Emirates Hills, Umm Suqeim, MBC City and Jumeirah Bay Island, with sales values of US$ 825 million, US$ 190 million, US$ 142 million, US$ 125 million and US$ 118 million. The average transacted price for homes was US$ 1,785 per sq ft In May, the consultancy had forecast that global high net worth individuals plan to spend US$ 2.5 billion in the Dubai property market in 2023.

Latest figures from CBRE show that Dubai apartment rates have reached their highest level since January 2017, whilst villa rents are at their highest ever; although there are no signs of either falling, rates have started to slow. Overall, in the year to 31 July 2023, average rents have increased by 22%, with apartments at US 26.02 per sq ft, (US$ 26.08 in 2017) and villas at US$ 24.88 per sq ft. This latest bull run started two years ago and followed a bear run of over six years from mid 2015. DLD figures indicate that there had been a 43.5% hike in the number of tenancy contracts to 325.8k, compared with the same period in 2019. The consultancy noted that long gone have the days of a rent-free month, added to a 12-month contract, discounts and payment with four to six cheques, when supply had outpaced demand. Interestingly, in July, the average premium for new apartment rental contracts compared to renewed contracts stood at 20.1%, and that the total number of new contracts registered dropped by 12.6%, while renewed registrations grew by 29%.

Resonance’s World’s Best Cities Report ranks Dubai sixth globally behind London, Paris, New York, Tokyo and Singapore but rated a better city in which to live, work and prosper than San Francisco, Barcelona, Amsterdam and Seoul. Among the regional cities, Abu Dhabi is ranked second in the Arab world and 25th globally, followed by Riyadh (28), Doha (36), Kuwait (58) and Muscat (89). Under the key indexes of liveability, lovability and prosperity, the sub-index covers the city’s walkability, sights and landmarks, park and recreation, airport connectivity, museums, nightlife, restaurants, shopping, attractions, educational attainment, human capital, Fortune 500 Global Companies, number of start-ups and others.

Flydubai received high praise by becoming the first ever recipient of the prestigious Four-Star Major Airlines award by the Airline Passenger Experience Association. The award is based on a number of criteria including third party passenger feedback and insights gathered through APEX’s partnership with TripIt from Concur, the world’s highest-rated travel-organising app. The rating recognises flydubai’s strong business model in making travel accessible to new and previously underserved markets which has enabled its continued growth. The fourteen-year-old carrier, with a fleet of seventy-eight 737 planes, operating to one hundred and twenty destinations, has always been committed to enabling free flows in trade and tourism and opening up underserved markets. It will open five new routes over the next five months – Cairo, Poznan in Poland, Mombasa and Langkawi, as well as Penang, APEX CEO Dr Joe Leader commented, “in a league of their own, flydubai has impressively secured the 2024 APEX Four Star Major Airline rating. This distinction, influenced by over one million passengers spanning nearly six hundred airlines, highlights flydubai’s dedication to continuously enhancing the passenger journey”. He concluded, “on behalf of APEX, I salute flydubai for their consistent strides in elevating the best value in airline experience in every class of service.”

This week, HH Sheikh Ahmed bin Saeed Al Maktoum chaired the twenty-fourth meeting of the Dubai Fee Zones Council that discussed regulating the free zone-licensed establishments’ mainland activities, provided that legal procedures are followed. These activities include:

• obtaining a permit from the respective licensing authority
• coordinating with the relevant free zone authority
• opening a branch in the emirate to do business activities from the same location

He also hinted to a series of measures that the emirate’s free zones are working on, with concerned authorities, to enable companies to choose their preferred free zones in the emirate, build their capabilities, and expand globally. The Council members agreed on the importance of highlighting opportunities for Emirati talent at free zone-based companies and introducing them to companies searching for new talent. The Council was briefed on the digitalization and data management project for the outcomes of the Dubai Demand Side Management Strategy 2030, which will save 30% in electricity and water consumption, supporting the achievement of sustainability by 2030.

Because it is Dubai, it stands to reason that the next Dubai Shopping Festival will be bigger and better than any of the previous ones and this year’s announcement did not disappoint. Dubai Festivals and Retail Establishment, the organiser of the festival, posted that the twenty-ninth edition of the DSF will start on 08 December and close thirty-eight days later on 14 January 2024. The festival features live music performances from international as well as regional musicians and speakers, basketball competitions, talks, exclusive shopping and a variety of art installations, with Sole DXB joining the opening celebrations from 08 to 10 December in Dubai Design District.

In an effort to offer investors more security and adopt international standards, the DIFC is to introduce new regulations on digital assets, aiming to ensure that its laws keep pace with the rapid developments in international trade and financial markets arising from technological developments. The new regulations will ensure that the legislation will ensure more investor security and be in line with international standards. DIFC’s new proposed digital assets law sets out the legal characteristics of a digital asset, its proprietary nature, how it may be controlled, transferred, and dealt with by interested parties. The on secured transactions, and it has been adapted to take account of specific factors relating to the DIFC. The DIFC recorded a 35.4% H1 increase in FinTech and innovation companies to eight hundred and eleven and, in total, has 1.44k financial and innovation related companies – a 15% year-on-year growth.

September’s UAE PMI indicates a marked uptick in new non-oil business volume, (up 1.7 to 56.7), with growth seen in new business volumes and new client onboarding, as competitive pricing and robust underlying economic conditions boosted demand. The New Orders index has now jumped 7.0 to its highest level since pre-pandemic June 2019. Although expansions in both inventories and employment softened, output rose quicker and business confidence jumped, while stronger input buying growth drove cost pressures higher. Because of previous months’ growth in hiring and inventory levels, capacity had already been boosted resulting in the weakest rise in backlogs of work in over two years; job creation also slowed in September. Demand strength reportedly arose from both domestic and external markets, with new orders from foreign clients rising at their quickest rate in over four years. Overall, selling prices dipped slightly but some firms did cut prices for more sales revenue, although others headed in the other direction in order to cover rising costs. Because of ongoing inflationary pressures and stronger input demand, there were increases in raw material prices, and consequently, purchasing (and overall) costs rose solidly and at the quickest pace for more than a year. Businesses enjoyed a further improvement in supply chains, as delivery times shortened to the greatest extent since July 2019. Another improvement in business confidence saw it rise to its highest level since March 2020.

This week HH Sheikh Mohammed bin Rashid Al Maktoum issued Decree No. (40) of 2023 pertaining to the formation of the Board of Directors of the Investment Corporation of Dubai, chaired by Sheikh Hamdan bin Mohammed, Crown Prince of Dubai. His brother, HH Sheikh Maktoum bin Mohammed, First Deputy Ruler of Dubai, will serve as Vice Chairman, with other Board members including HH Sheikh Ahmed bin Saeed Al Maktoum; Mohamed Hadi Al Hussaini, Reem bint Ibrahim Al Hashemy; Sultan bin Saeed Al Mansouri, Mohammed Ibrahim Al Shaibani, (who will also serve as its MD), Abdulrahman Saleh Al Saleh and Helal Saeed Al Marri.

A report by Fitch Ratings indicates that UAE banks are the GCC leaders when it comes to profitability and this trend is expected to continue on the back of a strong operating environment.  All GCC banks benefitted from higher oil prices and soaring interest rates. UAE lenders have made the most from rising rates, with average net interest margins (NIMs) 100 bp higher in H1, compared with 2020; Qatar’s banks’ NIMs were only 11 bp higher, with Saudi remaining flat. Moody’s Investors Services has recently posted that profits of the four largest banks in the UAE – First Abu Dhabi Bank, Emirates NBD, Abu Dhabi Commercial Bank and Dubai Islamic Bank – grew sharply in H1. S&P Global Ratings were also bullish on UAE’s banks noting that they are expected to record stronger profitability in 2023, on the back of higher NIMs and lower-cost business models, amid booming non-oil economic growth in the region.

After price rises over the past three months, the UAE Fuel Price Committee again increased all October retail petrol prices:

• Super 98: US$ 0.937 – up by 0.6% on the month and up 18.2% YTD from US$ 0.793  
• Special 95: US$ 0.907 – up by 0.6% on the month and up 24.8% YTD from US$ 0.727
• Diesel: US$ 0.973 – up 2.8% on the month and up 8.6% YTD from US$ 0.896
• E-plus 91: US$ 0.888 – up by 0.9% on the month and up 25.8% YTD from US$ 0.706

There are reports that e& has submitted an offer to increase its stake in Vodafone to 20%, having originally taking a 9.9% stake for US$ 4.4 billion in May 2022, which had grown to 14.61% by April 2023. The UAE operator’s cooperation with Vodafone is awaiting regulatory approvals in countries where the British company operates, which “include an agreement to regulate relations between the two companies, and also the possibility of increasing our stake to 20%.”

The DFM opened on Monday, 02 October 2023, 5 points (0.1%) lower the previous week gained 1 point to close the trading week on 4,165, by Friday 06 October 2023. Emaar Properties, US$ 0.28 higher the previous three weeks, shed US$ 0.07 to close on US$ 2.12 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.70, US$ 4.85, US$ 1.59, and US$ 0.43 and closed on US$ 0.70, US$ 4.92, US$ 1.58 and US$ 0.45. On 06 October, trading was at 108 million shares, with a value of US$ 79 million, compared to 150 million shares, with a value of US$ 151 million, on 29 September 2023.

By Friday, 06 October 2023, Brent, US$ 1.80 higher (1.8%) the previous week, shed US$ 10.98 (11.5%) to close on US$ 84.45. Gold, US$ 119 (6.2%) lower the previous three weeks, dropped US$ 37 (2.0%) to US$ 1,832 by 06 October 2023.  

Brent started the year on US$ 85.91 and gained US$ 6.22 (7.2%), to close 30 September 2023 on US$ 92.13. Meanwhile, the yellow metal opened 2023 trading at US$ 1,830 and gained US$ 35 (1.9%) to close YTD on US$ 1,865.

Although oil prices nudged slightly higher today, they still ended the day with their biggest weekly loss since March 2023, driven by demand concerns. On Thursday, Brent traded 2.03% lower at US$ 84.07 and had then tanked US$ 10.00 since the end of September. The US Energy Information Administration posted that American crude stocks, an indicator of fuel demand, fell by 2.2 million barrels in the last week of September, whilst total petroleum stocks increased by 6.5 million barrels in the same timeframe. There is every chance that the recent bull run has come to an end, with the market clearly in overbought territory. Last month, Brent was steaming to the US$ 100 level but now it will be struggling to keep its head above US$ 90 for the rest of the month.

Elon Musk is keeping to his earlier in the year promise that he would aggressively cut EV prices in 2023, with the latest being 2.7%, (to US$ 39.0k) and 4.2%, (US$ 48.5k), reductions for Tesla’s Model 3 and Model Y; last month, prices were cut on his other two – Model S and Model X cars. Since the beginning of the year, Models 3 and Y have seen 17% and 26% price reductions. The twin aims of the price slashing were to fend off competition from newcomers and legacy players, as well as to counter the effect of a slowing EV market. Earlier in the week, Q3 results indicated that Tesla missed market estimates for deliveries, after planned upgrades at its factories to roll out the newer version of the Model 3 mass-market sedan forced production halts.

In the twelve months to 30 June 2023, and with increasing regulatory oversight, the value of UAE’s cryptocurrency transactions almost reached US$ 35.0 billion, but declined 17% in the period; the country fared better than its neighbours, with Lebanon, (not surprisingly), Jordan, Oman and Qatar posting falls of 96%, 55%, 49% and 26% respectively The report, by blockchain data platform Chainalysis, reported that the Saudi market performed the best of all regional countries, with a 12% uptick. The Mena region is ranked the sixth biggest in the crypto-economy world, with almost US$ 389 billion in on-chain value received in the twelve months, equating to 7.2% of global transaction volume. Earlier in the year, the federal government established a law to regulate this sector and also set up the Virtual Assets Regulatory Authority was established. The Chainalysis report found that 67% of UAE cryptocurrency transactions year were driven by institutional investments valued at more than US$ 1 million; crypto transfers for professional investments, (US$ 10k to US$ 1 million), and retail investments (up to US$ 10k) accounted for the balance.

In a move to exit bankruptcy protection, a consortium group, including the Danish state, will invest US$ 1.175 billion in Scandinavian Airlines, with Air France-KLM spending US$ 145 million to acquire a 19.9% holding in SAS. Mainly due to the negative impact of Covid, along with a long damaging strike by its pilots, the carrier filed for Chapter 11 bankruptcy protection in the United States, in July 2022. Air France-KLM chief, Ben Smith, noted that “this cooperation will allow Air France-KLM to enhance its position in the Nordics and improve connectivity for Scandinavian and European travellers,” and that it “is determined to play an active role in the consolidation of European aviation.” The airline is also keen to buy a stake in Portugal’s TAP, which is being privatised after a government rescue.

Yesterday, Metro Bank’s shares plunged over 30%, (after hefty falls the previous month), after reports it was seeking to raise a further US$ 730 million to bolster its finances, despite the bank, trying to reassure investors, commenting that it “continues to consider how best to enhance its capital resources”. Last month, regulators had refused the bank’s request to lower the capital, or cash, requirements attached to its mortgage business. It is now considering a number of options, (including a US$ 122 million share sale, increased borrowing and a potential sale of some assets), to boost its balance sheet before some US$ 425 million worth of debt will need to be refinanced in October 2025. Metro also confirmed that its finances remain strong, and it continues to meet all regulatory requirements. As with other UK banks, customer deposits up to US$ 103k are guaranteed by the Financial Services Compensation Scheme. Metro Bank opened in 2011, following the GFC, and became the first new bank in the UK in over a century; it has over 2.7 million customers. The bank posted its first half yearly profit in H1 since an accounting scandal in 2019, when it emerged that risk attached to some of its loans had been underestimated. Despite this improvement, its share value has fallen over the past five years from US$ 4.27 billion to its current level of under US$ 120 million.

The IMF MD, Kristalina Georgieva, said global economy is resilient, but challenged by weak growth and deepening divergence, with H1 bringing “some good news, largely because of stronger-than-expected demand for services and tangible progress in the fight against inflation. This increases the chances for a soft landing for the global economy. But we can’t let our guard down.” As it has always been, global economic recovery from a recession has always been the same – slow and uneven – and the latest uptick is no exception. In this cycle, stronger momentum has been witnessed in the US, India and several other emerging economies. On the flipside, most advanced economies are slowing down, whilst Chinese economic activity is below par, as many countries struggle with weak or no growth. The current pace of global growth remains quite weak, well below the 3.8% average in the first two decades of this century prior to the pandemic.  The IMF supremo noted that “economic fragmentation, threatens to further undermine growth prospects, especially for emerging and developing economies”. The end result is that there is “divergence in economic fortunes between and within different country groups. Part of it comes from economic scarring”.

During a slowdown or recession, many things happen such as rising unemployment, falling incomes, reduced business confidence, reduced access to credit, higher interest rates etc. When a nation starts to come out of the cyclical downturn, the “economic taps” cannot just be turned on so everybody returns to work, incomes return to pre-downturn levels, confidence return immediately to businesses, credit lines return to previous levels and rates fall to pre-crisis levels. This is when “economic scarring” occurs that results in long-lasting damage to individuals’ economic situations and the economy more broadly. A recession may last a matter of months, but its impact will be felt for a much longer time.

The IMF estimates that the cumulative global output loss from successive shocks since 2020 amounts to US$ 3.7 trillion and bearing in mind the “divergence in economic fortunes”, the IMF has a strategy to help affected countries identify policy choices and pursue successful growth strategies. Three policy priorities stand out – reinforce economic/financial stability, address infrastructure gaps, as well as improvement in governance and state capacity to foster inclusive growth.

In April, the WTO had forecast a 1.7% growth in 2023 global merchandise trade, which has now been pared back to 0.8% because of the continued slump that began in Q4 2022. The latest update also expects real world GDP to grow by 2.6% at market exchange rates in 2023 and by 2.5% in 2024. Trade growth should pick up next year accompanied by slow but stable GDP growth. However, the WTO warned that “the projected slowdown in trade for 2023 is cause for concern, because of the adverse implications for the living standards of people around the world. Global economic fragmentation would only make these challenges worse, which is why WTO members must seize the opportunity to strengthen the global trading framework by avoiding protectionism and fostering a more resilient and inclusive global economy.”

This week, hit by the double trouble of increased competition, (by the likes of Shein and Fashion Nova), and declining consumer spend, as shoppers cut back on non-essentials, fast fashion firm Boohoo slashed its sales forecast by 17%; H1 sales to 31 August saw sales at US$ 888 million, down 17% on the year, with its loss rising 71.4% to US$ 32 million. The on-line retailer had identified US$ 152 million of cost savings it will make to try to get the business back on track; to date, it has started charging for return goods and sourcing goods from Europe rather than from Asia. The Manchester-based retailer has also made “substantial progress” on big targets, including the launch of a US distribution centre. Boohoo is not the only fast fashion giant to report losses and others, including Asos, in the sector have been reporting large deficits.

In 2018, the then Prime Minister Giuseppe Conte pledged to raise some US$ 19 billion from asset disposals in a failed bid to help lower the debt and reassure investors. Now, Prime Minister Giorgia Meloni is aiming to raise over US$ 22 billion, equating to almost 1% of GDP, in assets sales through to 2026. The country’s debt-to-GDP ratio stands at a worryingly high 140.2% and the aim of the exercise is to marginally lower this figure to 139.6%. Without this sale, the ratio would head north and would not help the country’s economy if it were to rise; the current debt figure is the second worst debt pile in the eurozone. It is reported that the public assets to be sold have already been approved and agreed with the EC.

In Switzerland, legislators have charged Gulnara Karimova, the daughter of Uzbekistan’s former president, with running an international crime syndicate that laundered hundreds of millions of dollars in bribes.  The case concerns the period of 2005-2013, following which she has been incarcerated in Uzbekistan since 2014, convicted of embezzlement. The Swiss courts have snatched assets worth in the region of US$ 870 million, whilst the daughter of autocratic leader Islam Karimov continues to deny all bribery charges, mostly relating to lucrative telecoms contracts. She formerly had a high profile in the ex-Soviet state, with her own jewellery line and entertainment television channel, as well as releasing pop singles under the name Googoosha. Karimova is accused of taking bribes, using a fake company known as The Office, in return for access to Uzbekistan’s telecoms sector and of laundering the money through Swiss bank accounts and an elaborate network of accounts in other countries, and was not afraid to bring in the “heavies” when needed. Her organisation also came under criminal investigation in Sweden, France, Norway, the Netherlands, the US and UK where the UK’s Serious Fraud Office (SFO) took control of three luxury properties, worth more than US$ 24 million, owned by the lady., who had been Uzbekistan’s ambassador to the United Nations in Geneva, until 2013.

The British Retail Consortium noted the first monthly decline, (of minus 0.1%), in more than two years in food prices, with one of the main factors being intense competition between supermarkets to maintain their market share. There were price falls in dairy goods, margarine, fish and vegetables – which are often own-brand lines. Although easing, grocery inflation – the annual rate at which food prices are rising – is still at historic highs of 9.9% in September, whilst overall shop price inflation – which includes non-food items – fell to 6.2%, the lowest rate for a year. The consensus is that price rises will continue to slow in the foreseeable future but could be derailed by any number of factors such as higher interest rates, climbing oil prices, global shortages of sugar, as well as the on-going supply chain disruption from the war in Ukraine. As a result of the inflation rate dipping to 6.7% in August, the BoE decided to keep rates on hold at 5.25%, after fourteen consecutive months of rises. However, its governor, Andrew Bailey, said inflation was expected to continue to fall, but there were “increasing signs” that higher rates were starting to hurt the economy.

Although UK house prices will continue to fall into 2024, declines will be at a reduced pace, with Halifax noting that September prices were 4.7% lower on the year, and 0.4% on the month. September was the sixth consecutive monthly price fall, with the cost of a typical UK residence meant the cost of a typical UK home was now US$ 339.8; this was still US$ 48.1k higher than in March 2020 when prices started to shoot up during the pandemic, but US$ 17.1k below the August 2022 peak. The country’s biggest mortgage lender also posted that high interest and mortgage rates would continue to impact the market and commenting that “homeowners inevitably become more realistic about their target selling price, reflecting what has increasingly become a buyer’s market.” About a third of all sales are by cash buyers.

According to Rightmove, the average queue of tenants requesting to view a rental property has lengthened from by five to twenty-five over the past five months, as compared to just six telephone or email requests in pre-pandemic 2019. Latest figures also show that the average advertised rent for a new let outside of London has risen to a record US$ 1.557 per month – a 10% Q3 hike on the year. Average advertised rents on new lets in London were 12.1% higher at US$ 3.2k.

There was no surprise to finally hear Rishi Sunak pull the pin on the northern leg of the HS2 high speed rail link but that up to US$ 44 billion, (the amount saved from cancelling this leg of the HS2 project), would be spent on alternative rail, road and bus schemes instead.; he blamed huge costs and long delays for the decision. He said that his plans would see “hundreds” of alternative projects funded, such as:

• Building the Midlands rail hub, connecting 50 stations
• Upgrading the A1, the A2, the A5 and the M6
• Building a Leeds tram system
• Funding the Shipley bypass, the Blyth relief road and seventy other road schemes
• Electrifying train lines in north Wales
• Resurfacing roads across the country
• Extending the US$ 2.44 (GBP 2.00) bus fare until the end of December 2024, which was due to rise by 25%

However, the prime minister dressed up this turnaround, it is plain that his government has abandoned its mission to “level up” different areas of the UK outside London; the high speed rail project was intended to link London, the Midlands and the north of England. He thinks that east-west links were “far more important” than those linking up the north and the south of England, and that changes to travel seen since the coronavirus pandemic meant that the economic case for HS2 “has been massively weakened”. For the embattled Sunak government, this is just another Train Wreck!

 Sick Man of Europe                                                     29 September 2023

Because of today’s public holiday, Dubai’s weekly real estate data is unavailable.

The latest mega property-related project, at US$ 8.17 billion, has been launched by Azizi Development. Azizi Venice, to be located in Dubai South, will be a mixed-use desert oasis community project, and house 80k residents, in 30k residential units, with one hundred mid-rise apartment complexes and more than four hundred luxury villas and mansions; it will be set entirely within one of the world’s largest crystal-blue water lagoons. Encompassing fifteen million sq ft, it will also feature a temperature-controlled pedestrian-friendly boulevard and Dubai’s second opera house. The boulevard will be open-air in the winter and glass-covered in the summer to ensure a temperature-controlled space with year-round activity. It will also have two Azizi-owned and operated five-star hotels, at the entrances of the community, as well as one boutique hotel located on an island in the middle of the lagoon. The Azizi Venice community will have multiple beaches, plus an extensive leisure, retail, and commercial space. The turquoise, desalinated, and filtered waters will be framed by beach-like shores, an 8 km-long cycling and jogging track, yoga and sports facilities, and a promenade with a variety of artisan eateries and boutiques.

In the past two months alone, there have been several other eye-watering launches, including Palm Jebel Ali, with Nakheel Properties opening phase 2 of villas this week, after selling out phase 1 within days. Recently, Emaar Properties has rolled out Nima, The Valley, and also the US$ 20 billion The Oasis by Emaar. Moreover, private developers, such as Danube Properties and Damac, have also launched multiple residential projects this year to cash in on surging demand.

With Nakheel partnering yacht brokerage Edmiston at the Monaco Yacht Show for the first time, it will introduce its waterfront developments to new audiences and showcase Nakheel’s position as a global pioneer of elevated living experiences. It will be able to showcase the likes of the ultra-luxury Como Residences on Palm Jumeirah, a seventy-six-storey residential tower with wrap-around balconies, along with the newly released Beach and Coral villas on Palm Jebel Ali. The new masterplan for Palm Jebel Ali was recently revealed, which comprises seven islands and sixteen fronds, adding a total of 91 km to Dubai’s beachfront.

A new agreement between the UAE and the Philippines sees a boost in air connectivity between the two nations and the start of Airbus A380 operations, amid growing travel demand. It will also increase the national carriers’ flights and tripling air cargo volumes to six hundred tonnes per week for each national airline. According to Saif Al Suwaidi, director-general of the GCAA, the UAE’s policies have led to “adopting an open skies policy, which has boosted its competitiveness, openness, and economic flexibility, as well as its regional and global leadership”. Currently, Emirates operates eighteen flights, using Boeing 777-300ER aircraft, to the Filipino capital city of Manila, as well as daily flights to Clark, via Cebu. This agreement comes at a time when the Asian country is seeking to increase investment from the UAE, and other Gulf countries, to boost infrastructure development and its economy. Talks are on-going relating to a Comprehensive Economic Partnership Agreement between the two countries – with the UAE ranked as the seventeenth major trading partner for the Philippines.

There was a welcome US$ 7.9 billion reduction in Dubai’s public debt last year, eighteen months since the creation of the Public Debt Management Office of the Government of Dubai’s Department of Finance and its Public Debt Sustainability Strategy. Its objectives include reducing borrowing costs, mitigating refinancing risk, and ensuring the Government’s financial stability in the medium term. In the year, the government debt portfolio has witnessed a full redemption of Sukuk certificates, worth US$ 900 million, the repayment of bilateral and syndicated facilities – totalling US$ 14.1 billion – and a partial settlement of the US$ 5.45 billion financing extended by the Abu Dhabi government and the Central Bank of the United Arab Emirates. The strategy has seen a marked reduction in the public debt-to-GDP ratio, which now stands at a safe and conservative level of 25%, compared to the 40% – 60% typical range of internationally recognised thresholds.

In an address to the 21st Arab Media Forum, DP Worlds CEO, Sultan Ahmed bin Sulayem, noted that the global port operator had spent over US$ 6.0 billion to become a leading comprehensive supply chain player. He spoke about its transformation from a traditional ports’ operator into a major player in the global supply chain, saying “in 2016, it became evident to us those factors beyond the confines of ports exerted a notable influence on the punctual delivery of cargo. Faced with this revelation, we made a resolute and forward-thinking decision. Our commitment was unwavering: to provide the most exceptional service to our cargo owners, guaranteeing both timeliness and cost-effectiveness in their operations”. The result is that, in the past seven years, it has become a global leader in smart end-to-end supply chain logistics, facilitating worldwide trade flows by acquiring several global companies in sectors such as supply chain, warehouse storage and transportation. For example, DP World is now the largest transportation company in India following the privatisation of the sector by the Indian government, even owning a major rail network to move goods across the country.

The Ministry of Energy and Infrastructure has set targets for the mining sector, including increasing its contribution to non-oil GDP to 5.0% by 2030. At the same time, the strategy includes other targets such as increasing the number of companies in mining and manufacturing industries, boosting the sector’s added value and increasing relevant exports by 2026, as well as substituting mining extraction industry imports valued at some US$ 558 million with local products by 2026.

This week, S&P forecast that the UAE economy would be 3.0% higher this year, rising to 4.0% in 2024, driven by the non-oil sector which would benefit from strong growth in tourism, government initiatives, and technological advancements. The ratings agency also expected further strong expansion within the tourism sector, helped by the country’s ability to host major international events, along with an increased room portfolio and a major push to attract even more international visitors. Furthermore, it sees both the real estate  and the banking sectors contributing to the increase; the former becoming more flexible, with stable housing prices supported by strong demand, and the latter, assisted by rising interest rates. Other contributing sectors include oil/gas, wholesale trade, industry, construction and financial services.

With a 01 October deadline fast approaching, the Ministry of Human Resources and Emiratisation noted that 5.73 million employees have subscribed to the UAE’s mandatory job loss insurance scheme; of the total 5.6 million were from the private sector and the balance employed in federal government departments. Those that have yet to join will be fined US$ 109. Excluded categories include investors (business owners who own and manage their businesses themselves), domestic workers, temporary employees, minors under the age of 18, and retirees who receive pensions and have joined a new employer. The unemployment insurance scheme is divided into two categories: The first covers those with a basic salary of US$ 4.36k and under, where the insurance premium is set at US$ 0.014 per month, with the maximum monthly compensation being US$ 2.725k. The second category includes those with a basic salary over US$ 4,360, with the insurance premium being US$ 0.027 per month and monthly compensation capped at US$ 5,450.

Dubai Islamic Bank, the country’s largest Sharia-compliant lender by assets, has acquired a 20% stake in Turkiye’s TOM Group of Companies, with an option to increase the figure to 25% within the next twelve months. One of the founding shareholders of the Istanbul company, which owns a digital bank, is Aydin Group, the operator of one of the country’s largest retail ecosystems. No financial details were made available.

There are reports that Spinneys Dubai LLC, the franchisee of the supermarket chain in the UAE and Oman, is planning an IPO in Q4 2024, and has hired Rothschild & Co as an adviser. It also seems that Albwardy Investment, the franchise’s 100% owner, has also invited banks this week to pitch for roles in the offering, expected to be up to 30% of the company.  Spinneys Dubai, with an annual US$ 1.0 billion turnover, also owns the franchise rights to UK supermarket chain Waitrose. In its portfolio, there is a hospitality portfolio that includes several Four Seasons hotels and food distribution investments that include Nestle UAE, along with industrial/engineering, commercial/insurance, agribusiness and properties. Over recent months, there has been plenty of activity in the regional food retail sector. Americana Restaurants, the Middle East and North Africa franchisee of fast food restaurants KFC and Pizza Hut, as well as a seller of frozen foods, debuted in a dual listing in Abu Dhabi and Riyadh in December. Lulu Group, a hypermarket and mall operator, expects its IPO in the first half of 2024, and has hired Moelis & Co to advise it.

On Monday, the DFM’s market cap over AED 700 billion – its highest ever figure since July 2015 – reaching US$ 191.2 billion (AED 701.6 billion).

The DFM opened on Monday, 25 September 2023, 126 points (3.1%) higher the previous weeks shed 5 points (0.1%) to close the shortened trading week on 4,164, by Thursday 28 September 2023. Emaar Properties, US$ 0.20 higher the previous fortnight, gained US$ 0.08 to close on US$ 2.19 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.70, US$ 4.94, US$ 1.61, and US$ 0.45 and closed on US$ 0.70, US$ 4.85, US$ 1.59 and US$ 0.43. On 29 September, trading was at 150 million shares, with a value of US$ 151 million, compared to 169 million shares, with a value of US$ 137 million, on 22 September 2023.

The bourse had opened the year on 3,438 and, having closed on 29 September at 4,164, was 644 points (21.1%) higher. Emaar started the year with a 01 January 2023 opening figure of US$ 1.60, to close the first nine months at US$ 2.19. Four other bellwether stocks, DEWA, Emirates NBD, DIB and DFM started the year on US$ 0.59, US$ 3.54, US$ 1.55 and US$ 0.41 and closed YTD at US$ 0.70, US$ 4.85, US$ 1.59 and US$ 0.43.   On 29 September, trading was at 150 million shares, with a value of US$ 151 million, compared to 66 million shares, with a value of US$ 18 million, on 31 December 2022.

By Friday, 29 September 2023, Brent, US$ 0.65 lower (0.7%) the previous week, gained US$ 1.80 (1.8%) to close on US$ 95.43. Gold, US$ 43 (2.2%) lower the previous two weeks, dropped US$ 76 (4.0%) to US$ 1,869 by 29 September 2023.  

In a bid to introduce more fuel-efficient planes, Air France-KLM is planning to place a “major order” for fifty long-haul Airbus A350s – an order with a list price of more than US$ 16.0 billion; delivery is expected between 2026 – 2030.  The A350 consumes 25% less fuel than the previous generation of aircraft of a similar size, largely due to the use of lighter materials. The order aims to replace thirty-three older generation Boeing 777-200s and A330s from the two airlines. There is the possibility of a further forty planes could be added in the future. In H1, the aviation group posted a doubling of its net profit to US$ 662 million, with sales 13.7% higher, despite rising inflation and increasing costs, particularly fuel expenses.

Because of delays in the delivery of Boeing aircraft, Ryanair has had to cut its winter schedule but noted that its full-year traffic forecast was unaffected “as yet”. The budget airline had expected the delivery of twenty-seven planes between September and December, but production delays will see only fourteen delivered. The Irish airline said it was working to try to accelerate deliveries from January to May 2024 but that if the delays worsen, or extend into early next year, it may have to revise down its traffic forecast. Whether the Irish carrier receives its full order of fifty-seven jets by May 2024 Is highly unlikely. In May, and despite all the delivery delays and problems, Ryanair signed a  multibillion-dollar deal for as many as three hundred Boeing jets. Two months later, it trimmed its full-year passenger forecast, by 1.5 million, to 183.5 million. Flight cancellations will take effect from the end of October and will be communicated to all affected passengers by email over the coming days. It will cut three aircraft from those based at Charleroi airport in Belgium, two from Dublin and five from Italian airports, including Bergamo, Naples and Pisa. There will also be aircraft reductions at East Midlands airport, Porto and Cologne.

Nissan has announced that all its vehicles sold in Europe will be electric by 2030, and this despite the UK recently postponing its ban on the sale of new petrol and diesel cars by another five years to 2035. At the same time, the Japanese carmaker confirmed that new battery technology will help reduce both the charging time and cost of EVs. The company is to fast-track a different kind of battery technology, known as all-solid-state batteries (ASSB), which are lighter, cheaper, and quicker to charge. Concerns, raised by the industry body, SMMT, are that the postponement of the ban would see consumers delay the switch to electric vehicles. Nissan do carry a unique advantage going forward in that it is the only car company to have its own battery manufacturing capability in the UK, which is being built following a US$ 1.0 billion investment (plus a further UK government contribution of US$ 100 million). Post-Brexit trading rules, due to take effect in January, require vehicles made in the UK or EU to source 45% of their components by value from the UK or EU to avoid a 10% tariff when exported either way.

As most major supermarkets see profits heading south, Aldi, with operating profit up to US$ 217 million, almost triple the amount it made the year before, reports that its UK revenue US$ 2.43 billion higher at US$ 18.83 billion. However, it estimates that its net margin has risen to 1.2%, compared to 0.4% a year earlier, which had been impacted by markedly high Covid-related costs. The German interloper, now the fourth biggest supermarket in the UK, having overtaken Morrisons, posted that shoppers are buying more own-label products than ever before, with its own-named products making up over 50% of sales and in volume terms growing at twice the rate of branded goods. It is thought that over 66% of UK households now shop with Aldi that estimates that it has added an additional one million customers over the past twelve months. Having opened its one thousandth store in Woking last month, Aldi has set a medium-term target to bring the total to 1.5k over the next two years.

Next week, London’s High Court will be the location for a possible thirteen-week legal battle between UBS and the Mozambiquan government. The case is about Credit Suisse’s role in a US$ 2.0 billion “tuna bonds” scandal which has resulted in the African country suing for US$ 1.5 billion in damages. For obvious reasons, the Swiss bank is keen to clear all legal claims that have arisen since Credit Suisse was taken over by UBS earlier in the year. To date, it has settled some major claims. In 2013, state companies issued debts under guarantee to” fund tuna fishing and other projects”, but the loans soon fell into default because of looting of millions of dollars.  Credit Suisse failed last June to get the lawsuit struck out. Three former employees of the disgraced bank have admitted to receiving kickbacks on the debt issue.

Since its 2012 launch, initially on its website and then on to Facebook and finally to mobile, Candy Crush Saga, the matching game played by millions, has seen its total revenue top US$ 20.0 billion. Eleven years ago, it introduced the “freemium” model, in which the game is free but players can spend money to boost their performance or can watch ads to gain moves.  Over the past six years, Candy Crush has been the top-grossing franchise in US app stores. King President Tjodolf Sommestad said Candy Crush Saga, and its other titles like Farm Heroes Saga, showed that mobile games could have enduring appeal, and that “we’ve proven to ourselves and to the industry that it is possible to reignite games that are years old and keep them relevant for a decade or longer, and break records even a decade in.” King has been owned since 2016 by Activision Blizzard, the U.S. company behind “Call of Duty”.

In an attempt to compete with growing cloud rivals on AI, Amazon.com said it will initially invest US$ 1.25 billion, (moving up to a possible US$ 4 billion), in cash in the high-profile start-up Anthropic. This will allow Amazon’s employees and cloud customers to gain early access to technology from Anthropic; it also committed to rely primarily on Amazon’s cloud services, including training its future AI models on large quantities of proprietary chips it would buy from the tech giant. There were no details on Amazon’s possible stake in the start-up or Anthropic’s current valuation, last estimated in the region of US$ 4.0 billion.

Commenting that he believes that Tesla, Google and Microsoft will invest up to US$ 5 billion into Thailand, Prime Minister Srettha Thavisin indicated that the fresh foreign investment would boost Thailand’s flagging economy, which is expected to grow by 2.8% in 2023, less than previously projected, due to weaker exports. He also noted that “Tesla would be looking into an EV manufacturing facility, Microsoft and Google are looking at data centres.” Thailand, Asia’s fourth-largest automobile assembly hub, has been offering incentives to EV and battery makers, and tax cuts to local EV buyers, to remain a regional auto centre.

Last year, Apple, India’s largest exporter of mobile phones, reached a production milestone, topping US$ 7.0 billion, and is targeting an increase in production to around US$ 40.0 billion over the next four to five years. Apart from ramping up iPhone production, the tech giant is also considering manufacturing AirPods , but it noted that its immediate target was to augment the existing production levels, with the production of iPads or laptops not an immediate priority. At the same time, India is actively seeking to expand its electronics industry, targeting a US$ 300 billion industry size within three years, by increasing smartphone production and by a global push to diversify supply chains away from China. In Q1, Apple had a 59% of the market in the ultra-premium segment.

In the US, the Federal Trade Commission has sued Amazon, alleging that the internet giant is illegally maintaining monopoly power, by using “a set of interlocking anticompetitive and unfair strategies” to push up prices and stifle competition. The FTC chair, Lina Khan, has long been a critic of the tech giant and, in 2017, published a major academic article arguing the online retailer had escaped anti-competition scrutiny, and “with its missionary zeal for consumers, Amazon has marched toward monopoly,” Since she came a surprise choice for the position, she has had little success in her fight against big tech. Twice this year, she has lost major cases – In February, in an attempt to stop Meta from buying VR company Within, and in July it lost an attempt to block Microsoft from completing its deal to buy the maker of Call of Duty. It could be a case of third time lucky, with this case involving seventeen state attorneys claiming that Amazon is a “monopolist” that stops rivals and sellers from lowering prices, and that its actions “degrade quality for shoppers, overcharge sellers, stifle innovation, and prevent rivals from fairly competing against Amazon”.

Perhaps as part of the apparent Chinese administration’s ongoing purge on senior executives of conglomerates, there are reports that Evergrande’s chairman Hui Ka Yan has been put under police surveillance. Evergrande confirmed that he “has been subject to mandatory measures in accordance with the law due to suspicion of illegal crimes”, without giving any further details. In 2017, he became China’s richest man, with his fortune rising to US$ 42.5 billion which has markedly declined owing to their recent financial problems. The company he founded in 1996 became the world’s most valuable property developer, but defaulted on a 2021 loan repayment; its current debt is put at over US$ 300 billion, with much of it owed to people within China, many of whom are ordinary citizens, who have paid deposits,  whose homes have not been finished. Other creditors include companies that do business with Evergrande, including construction/design firms and materials suppliers, lining up to incur massive losses, and the most worrying, the knock-on impact on the financial system with banks and lenders picking up the pieces; the end result is a credit crunch, when companies struggle to borrow money at affordable rates.

In a blow to its efforts to cut carbon emissions, Denmark’s Lego has scrapped plans to make its bricks from recycled bottles. In 2021, the toymaker announced that it would produce bricks, without utilising crude oil and use acrylonitrile butadiene styrene, a virgin plastic made from crude oil, within two years. It started developing prototype bricks made from polyethylene terephthalate (PET) bottles, with some other chemicals added. However, last Monday, it announced that it had found that using the new material did not reduce carbon emissions but that it remains “fully committed” to making bricks from sustainable materials. Over the previous two years, it had been exploring alternative materials to plastic, as sustainability becomes more important to customers – and in Lego’s case, a material that would last for generations. Unfortunately, experiments found that using recycled PET did not reduce carbon emissions because extra steps were required in the production process, which meant it needed to use more energy. The company confirmed that “we are investing more than US$ 1.2 billion in sustainability initiatives in the four years as part of our efforts to transition”.

The public outcry against Qantas continues unabated, with the latest being pilots who are calling for its chairman Richard Goyler to stand down. Apart from allowing Alan Joyce to act in the way he did – and get away with it – the Australian and International Pilots Association stated in a letter to the new CEO Vanessa Hudson other reasons. It commented that “Richard Goyder has overseen one of the most damaging periods in Qantas history which has included the illegal sacking of 1,700 workers, allegations of illegally marketing cancelled flights, and a terribly managed return to operations after Covid-19.” It added that “the morale of Qantas pilots has never been lower. We have totally lost confidence in Goyder and his Board. Qantas desperately needs a culture reset but how can this happen with Richard Goyder as chairman? Despite overseeing the destruction of the Qantas brand, Goyder last week accepted a near US$ 67k, (AUD100k) pay rise — taking his pay to AUD 750,k — while staff are expected to accept a two-year wage freeze. This is a galling and tone-deaf decision.” There is no surprise that, last week, Mr Goyder maintained that he had the confidence of the Qantas board and major investors – and perhaps other board members may be well advised to keep their heads below the parapet until the storm dies down.

After ASIC took the National Australian Bank to court, it has been fined US$ 1.4 million for knowingly overcharging banking customers back in 2017-2018. It was accused that it had “continued to charge fees when it knew it lacked any entitlement to do so” and “omitted to tell its customers of that wrongful charging”. The bank continued to “charge these incorrect fees, which was clearly unacceptable,” and found that the central cause was NAB’s inability to manage its own computer systems.

After self-reporting to FairWork in 2020 that it had short-changed its Australian store workers, Starbucks has now handed back US$ 3.0 million in wages to them. The pay shortage impacted on some 2.5k staff, including baristas, supervisors and assistant managers who were not paid the correct award rate; the highest ‘casualties’ were underpaid by up to nearly US$ 12k, with an average underpayment of US$ 1.2k. Fifty-two outlets – in Sydney, Melbourne, Brisbane and Gold Coast – were impacted. Under law, Starbucks also has to make a US$ 100K contrition payment, and prove that it is implementing change.

Mining giant Rio Tinto has confirmed it is working with traditional owners in Western Australia’s Pilbara after a blast at one of its operations caused damage to an ancient rock shelter – this comes just three years after the mining giant attracted international condemnation when it destroyed two ancient rock shelters at another of its mines at Juukan Gorge, sixty km from Tom Price in WA; it is believed that the shelter dates back at least 50k years. It seems a large rock and a scrub tree fell from above the entrance to the cave, with Rio claiming no structural damage at the Nammuldi site, or any apparent impact on cultural materials. The blasts came despite traditional owners warning the company of the site’s significance – and only three months after the State introduced new legislation to update decades-old cultural heritage laws, under which the mining giant was able to secure approval to blast the gorge, only for Roger Cook’s government to scrap it following protests from pastoral groups and the resources industry. When will Rio ever learn?

Although August saw Australia’s inflation rate nudge 0.3% higher to 5.2%, the underlying measure of inflation still declined, when volatile prices are stripped from the data. Housing, transport, food and insurance prices were some of the biggest drivers. In monthly terms, automotive fuel prices jumped 9.1% in August, and the annual rate of growth for fuel prices jumped to 13.%. There were significant hikes in meals out/takeaway foods, (6.9%), bread/ cereal products (10.4%), and dairy/related products (10.1%), although prices for fruit/vegetables fell again last month by 8.3%, with improved weather conditions leading to increased supply. Insurance and rents both rose by 0.5% to 14.7% and by 0.2% to 7.8%. Economists forecast that this could have been a blip and seem to be confident that rates will head south, albeit at a slow rate, for the rest of 2023. There is a slight chance that this August figure may tempt the RBA to raise rate next month. However, a higher rate of inflation spells bad news for both corporate and household confidence which will lead to less spending in the economy.

Citing wider economic problems led to a drop in the valuation of businesses it had invested in, the state-owned British Business Bank posted an annual US$ 179 pre-tax loss as at 31 March 2023. It is reported that BBB, set up in 2014 to lend money to and buy stakes in smaller UK businesses to help them start up and expand, made funding agreements, totalling US$ 1.95 billion, last year. Its total funding now stands at US$ 15.1 billion to more than 90k businesses, which excludes Coronavirus loans which it administered – it is responsible for administering the government’s three Covid-19 loan schemes and its Future Fund, together responsible for delivering more than US$ 97.6 billion in finance to almost 1.7 million businesses.

Gatwick has cancelled over eighty flights this week because of short-term sickness and Covid in the air traffic control tower, as its supremo, Stewart Wingate, said he was “very frustrated” by a series of problems at Gatwick’s air traffic control, and that around 30% of air traffic control staff are not available.

Research by the Chartered Institute for Professional Development indicates that UK workers are taking more sick days, (at 7.8 days, compared to a 5.8-day pre-pandemic level), than at any point in the last decade. The body noted that the rise was a “worry” and blamed stress, Covid and the cost-of-living crisis, with these conditions having  “profound impacts on many people’s wellbeing”. The study found the most common reasons for short-term absence were:

• Minor illnesses (94%)
• Musculoskeletal injuries (45%)
• Mental ill health (39%)

Staff on long-term sick leave tended to blame mental health issues, musculoskeletal injuries or conditions such as cancer and stroke. It would be interesting to see the figures in the UAE. Switzerland and Sweden take an average of 2.2 sick days a year with Norway, Czech Republic and Germany at the top end of the scale, with 16.0, 16.3 and 18.3 days but with 22.0 days, Bulgaria is officially the Sick Man of Europe.

How Do You Fix A Broken Part?                                  22 September 2023

The 1,744 real estate and properties transactions totalled US$ 2.18 billion, during the week, ending 22 September 2023. The sum of transactions was 289 plots, sold for US$ 575 million, and 1,455 apartments and villas, selling for US$ 869 million. The top three transactions were all for plots of land, one in Wadi Al Safa sold for US$ 22 million, the second also in Wadi Al Safa for US$ 21 million and in Al Manara for US$ 19 million. Al Hebiah Fifth recorded the most transactions, with seventy-three sales, worth US$ 115 million, followed by fifty-four sales in Madinat Hind 4 for US$ 22 million, and twenty-eight sales in Madinat Al Mataar, valued at US$ 36 million. The top three transfers for apartments and villas were for a villa and an apartment in Palm Jumeirah, valued at US$ 19 million and US$ 12 million, with an apartment in Marsa Dubai selling for US$ 15 million. The mortgaged properties for the week reached US$ 621 million, with the highest being for a plot in Wadi Al Safa for US$ 104 million. 147 properties were granted between first-degree relatives worth US$ 137 million.

In August, the total volume of sales transactions increased 8.1% month-on-month, reaching a sum of 12,134 sales – the highest volume ever for the month of August. By the end of last month, there were 85,060 sales transactions – a 41.9% surge compared to the same period in 2022, and a 125.4% hike on that for 2021. There is no doubt that by the end of this year, average monthly transaction volumes will far exceed any previously recorded figures, since records began in 2009. Such data sees a marked increase in new launches and the outlook for the next two years is robust, with reports that all these strong figures are encouraging developers to launch new projects, with several reports that many have been sold out within months, and even some reporting that 30% of units are sold prior to launch, as demand for the foreseeable future looks promising.

As the property cycle moves higher, and with no apparent end in sight, it is time for some expats to come out with doom and die forecasts that “the end is nigh”. Nothing could be further from the truth, (at least for the time being). There is no doubt that this current cycle will run its course, but it seems highly likely that this will continue well into H1 2024, and although prices will continue to rise, they will be at a slower rate. It is a fact that supply has yet to catch up with demand, bearing in mind that there is an average three-year gap between launch and hand-over, so it will be at least H2 2024 before supply starts to return to some form of post-pandemic normality.

According to UBS Global Real Estate Bubble Index 2023, the housing market of Dubai is fairly valued, and this despite the recent price increases throughout the sector – both renting and buying. The bank’s Index saw Dubai posting the highest growth among all the twenty-five major cities, surveyed in the past four quarters, adding that prices will remain strong in the coming months as the “red-hot rental market” is offering strong returns to investors and landlords. Dubai property prices rose at the fastest rate in the year ending 30 June, in almost a decade, rising by nearly 17%, with rents coming in at a higher 22.6%. UBS also noted “real housing prices continued to increase at a double-digit rate. Given strong income growth and a red-hot rental market, with rental growth even surpassing owner-occupied price growth, we see the market as fairly valued,” and that “while Dubai is highly cyclical and prone to overdevelopment, price momentum should remain strong in the coming quarters.” The bank added that Toronto, Frankfurt, Munich, Hong Kong, Vancouver, Amsterdam, and Tel Aviv – formerly in the bubble risk zone – are now all in the overvalued territory, with Zurich and Tokyo remaining in the housing bubble risk category. Dubai has yet to reach either stage.

Although no timeline was made available, Nakheel has launched its first waterfront villa project on the Palm Jebel Ali – centred on four fronds of the island – which will offer two types of units, coral and beach villas, each of which will be available for sale in eight styles. The development will offer residents an “active lifestyle with wide walkable streets, allowing for pedestrians and cyclists to access the beach through pocketed parks”, and will feature floor-to-ceiling windows with private beaches. Several international and regional architectural firms will be involved in this initial project. On completion, Palm Jebel Ali will span a total area of 13.4 sq km, (twice the size of Palm Jumeirah), and will feature seven islands and sixteen fronds, adding about one hundred and ten km to Dubai’s coastline and will be home to some 35k families and eighty hotels and resorts.

The big developers are also playing their part in ramping up the number of new residences, with several announcing mega projects – an indicator that at the least up to the mid-term (up to 2026), the outlook for the sector is promising. Apart from Nakheel, there will be several other construction companies eying Palm Jebel Ali to invest billions of dollars for future development there. In June, Emaar Properties reported that it would be expending US$ 20 billion on its ‘The Oasis’, encompassing more than 100 million sq ft to house over 7k residential units, focusing on large mansions, with spacious plots. This month, Danube Properties has launched its fifth project YTD, and the tenth over the past nineteen months; the latest is Oceanz and is Danube’s largest development to date. Samana Developers has launched a number of projects and has a target to launch twelve projects by the year-end. Azizi Developments will also launch a Venetian-inspired waterfront project in Dubai South, as well as building the UAE’s second-tallest tower on SZR. International real estate developers are also getting in the act, with the likes of international real estate developer, Mered, UK’s LEOs Development and Switzerland’s Fortimo entering the Dubai market.

It is reported that a UAE resident has spent almost US$ 12 million to purchase a 23k sq ft plot of land on the tip of Palm Jebel Ali’s frond M; it seems that the High Net Worth Individual was given exclusive pre-sales access to the plots so he could select the one that suited him the best. This is still some way off the record price of US$ 34 million paid, earlier in the year, for a 24.5k sq ft sand plot on Jumeirah Bay Island. There is no doubt that demand for plots was higher than expected, with all the released villas and plots, on fronds M, N, O and P, (which will comprise between 109 – 165 villas), were sold out, with prices starting at US$ 5 million; delivery is slated in Q1 2027.

The latest EFG Hermes’ report confirmed what many already knew that there has been strong August growth in the Dubai property sector, with total sales 37% higher, on the year, at US$ 8.50 billion, boosted by rising demand for off-plan units; this also included off-plan sales doubling on a yearly basis to US$ 4.57 billion last month, with Dubailand and Business Bay posting strong figures. Overall, total August transactions in Dubai’s real estate market rose nearly 25% annually to US$ 12.17 billion. According to Knight Frank, Q2 residential real estate prices rose 17% on an annual basis – the tenth consecutive quarter of expansion, attributable to strong demand and robust economic growth. Although residential and office activity posted strong gains, land transactions recorded the least growth on a yearly basis. Average selling prices increased 20% on the year to US$ 608 per sq ft, as rates in the luxury segment posted impressive 37.7% growth figures, with average prices at US$ 1,054 per sq ft. In the affordable segment, prices rose 8.5% yearly, with average rates at US$ 495 per sq ft. Meanwhile, in the budget segment, prices dropped by 4.5% year-on-year, although they were up 4.4% on a monthly basis, averaging US$ 270 per sq ft.

On the rental side, EFG Hermes noted a mixed bag of returns in August. Whilst areas such as Motor City, Downtown Dubai (affordable) and Dubai Sports City posted strong annual growth, of 37.5%, 29.0% and 28.0%, for two-bedroom apartments, the flip side saw Downtown Dubai (luxury) rents down 17.6% year-on-year. In Emirates Living (The Greens) and International City, they rose 11.0% and about 14.0% respectively, for two-bedroom units.

With Dubai quickly recovering from the impact of the pandemic, the emirate’s hospitality sector has rebounded, as room inventory is expected to grow by 6.4% to top 154k by the end of the year. Over the year, Dubai’s reputation has been cemented further by becoming the most popular global destination, for the second year running, and posting the world’s highest occupancy levels during H1, at 78%. H1 international visits to Dubai rose 20% to 8.36 million passengers, the best first-half performance yet, surpassing the H1 2019 pre-pandemic figure of 8.36 million tourists. Growth in the country’s hospitality and tourism industry comes on the back of improved economic growth figures, boosted by its strong non-oil sector. A number of hotel operators are augmenting room numbers, as the UAE’s tourism sector continues to recover from the pandemic. They include Accor Group, (with brands such as Sofitel, Novotel, Pullman, Mercure, and Fairmont), Marriott International, IHG Hotels and Resorts, Hilton Worldwide, Radisson Hotels and Rotana Hotels planning to add 49.5k, 52.8k, 22.1k, 39.9k, 11.7k and 10.8k rooms to the country’s room portfolio; 70% of this total will be found in Dubai, of which 70% of that sub-total will be for luxury and upper upscale hotel segments.

Last year, flydubai posted a record annual profit of US$ 327 million – 43% higher than in Covid-hit 2021. On the back of a bumper summer, during which the number of passengers between June and mid-September was 30% higher, compared to the same period last year, topping four million on 32k flights – 22% more than in 2022 – to one hundred and twenty destinations in fifty-two countries. The airline also expects a “bumper” winter, as the UAE remains busy year-round with attractions and business events, including the Cop28 climate change summit hosted by Dubai in November. CEO, Ghaith al Ghaith, noted that “we expect this year to be better than last year, but it all depends on the second half of 2023, especially with regards to fuel prices because the increase is quite significant and hit us by surprise.” His concern is warranted, as fuel accounts for 25% of the carrier’s total costs. Another worry is the continuing disruptions in its supply chain since the Covid-19 pandemic, resulting in rising costs, delivery delays and production snags. The all-Boeing fleet operator, which was scheduled to take delivery of seventeen Boeing 737 Max 8 jets this year, has received just seven of these aircraft and expects further delays to the remaining handovers, with the carrier’s supremo commenting “if we get four, we will be lucky”.

YTD, flydubai has added eight hundred staff to bring its total workforce to 5.3k, with a further three hundred to be added in Q4. Because of the supply problems with Boeing, the airline has had to lease additional aircraft and it is no secret that it is in discussions with aircraft manufacturers for a new plane order to fulfil its fleet requirements for replacement and expansion. The carrier sees more “underserved” routes in Africa and joined a growing chorus of UAE airline executives in calling for an open sky agreement between the UAE and India,  with the CEO noting that with the recently announced Middle-East-Europe Economic Corridor partnership, featuring a multibillion-dollar rail and shipping link, “to create a corridor of trade, aviation should also be liberated – if that happens then the potential is endless. India has the highest potential in the world to attract more tourism.”

Emirates will be holding an online information session for pilots and their families on 04 October, and roadshows in Mexico City Panama City and Bogota, specifically for one hundred and eighty Airbus A380 pilots to join its direct entry captains’ programme. This programme is for technically skilled captains, with a minimum of 3k hours of recent command on Airbus fly-by-wire wide-body aircraft such as the Airbus A330, A340, A350 and A380, as well as a minimum of 7k hours of total flying time on multi-crew, multi-engine aircraft, in addition to meeting other eligibility criteria. Over the past few months, 172 new pilots joined Emirates’ three recruitment programmes – direct entry captains, accelerated command and first officers – bringing EK’s flight crew portfolio to 4.2k, including 1.5k pilots, about 40% of which have been with the carrier for more than a decade, including two, with thirty-four years of service. Emirates pilots receive a tax-free salary, accommodation, education allowance, and dental, medical and life insurance, with a basic US$ 12.1k, for an eighty-five hour month plus US$ 200 for each block hour above their monthly target. On top of that, they also get chauffeur-driven transport to and from work, laundry services, forty-two days of annual leave, confirmed business class flight tickets for annual leave, concessional cargo, discounted travel benefits for friends and family, and other perks.

The airline is also seeking to hire cabin crew, engineers, IT professionals and customer service agents at both Emirates airlines and dnata. With the carrier expecting to recover its full pre-pandemic network by mid-2024 – and with over 23% of its one hundred and sixteen A380s still grounded – the airline’s president, Tim Clark, in May, noted that “we need to get twenty to thirty in the air as soon as we can, but we will get there”.

Emirates and SriLankan Airlines have signed a reciprocal interline agreement to boost connectivity for passengers of both airlines. It will allow passengers to access new points on each other’s networks, via Colombo and Dubai, utilising a single ticket and the convenience of baggage transfers. For Emirates’ passengers, the interline network includes two new Indian destinations, Madurai and Tiruchirapally, in addition to Gan Island in the Maldives, as well as twelve other Asian destinations.

In a survey, compiled by the Airports Council International Asia-Pacific & Middle East, DXB was ranked the most connected airport in the region, with a 17% 2022 growth compared to pre-pandemic 2019. The study measures passengers’ ability to access the global air transport network, capturing both direct and indirect routes, while also factoring in the quality of the service of each connection, such as destination choice, service frequency, onward connectivity and price. The airport is connected to more than 255 destinations across 104 countries and more than ninety international airlines. Since 2019, ME total connectivity has climbed 26%, as compared to Asia Pacific where there has been a 38% decline over the same period.

For the fourth consecutive year, the latest Xinhua-Baltic international shipping centre development index report ranked Dubai fifth among the twenty most prominent international centres for commercial maritime shipping. Singapore, London, Shanghai and Hong Kong took the four leading places, with the only Arab city on the list ahead of the likes of Rotterdam, Hamburg, Athens/Piraeus, Ningbo/Zhoushan and New York/New Jersey. The three parameters used by the index were port inputs (20%), business services inputs (50%) and general environment inputs (30%). The report noted that Dubai’s “strategic location and business-oriented outlook” had fast-tracked the emirate to international maritime hub status.

It is expected that six more nations – Pakistan, South Korea, Thailand, Costa Rica, Chile and Vietnam – will be added to the country’s Comprehensive Economic Partnership Agreements, having already signed CEPAs with India, Israel, Türkiye, Indonesia, Cambodia and Georgia. One of the prime objectives of these agreements is to improve trade and investment flows, and that “these next-generation deals are cementing bilateral relationships with key economies, securing supply chains and promoting investments.” On Monday, the Ministry of Economy posted that it had also launched negotiations for a Cepa deal, with Serbia; the UAE is now the third-largest market for Serbian exports in the Middle East.

Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum posted that, last year, the UAE achieved exceptional consolidated fiscal performance with an annual growth rate of 31.8% in revenues, as well as a 6.1% hike in expenditure at US$ 1.16 billion. The Deputy Ruler of Dubai, Deputy Prime Minister and Minister of Finance, said the country also recorded a 94.5% growth in non-financial asset acquisition, a testament to the UAE’s push towards revenue diversification. Sheikh Maktoum also reiterated that the federal government remains steadfast in fulfilling the directives of the leadership by implementing innovative fiscal policies and executing transformative projects that create stronger fiscal buffers to mitigate the impact of global financial fluctuations.

In line with the US Federal Reserve maintaining its federal funds rate at between 5.25% – 5.50%, the UAE Central Bank kept rates unchanged. Its overnight deposit facility stayed at 5.4% as did the rate applicable to borrowing short-term liquidity from the regulator through all standing credit facilitiesat 50 bps above the base rate.

Last year, UAE inflation – driven by increasing energy prices, imported inflation and rising employment – was 4.8 % and, according to the Central Bank, it is expected to come in at 3.1% and 2.6% in 2023 and 2024, respectively, reflecting lower energy and food prices; on a global scale, the rate was at 8.7%, with the IMF forecasts for this year and 2024 being 6.8% and 5.2% – well above most central banks’ 2.0% target.

The federal government closed its first US-denominated sovereign bond offering in over a year, which was nearly five times oversubscribed, with strong demand from domestic, regional and international investors.  The Notes will be rated AA- by Fitch, and Aa2 by Moody’s. The ten-year, US$ 1.5 billion bond, issued with a yield of 4.917%, representing a spread of 60 bps over US Treasuries, and is a positive indicator that the country is becoming increasingly popular with both domestic, and international investors who see the country as one of the most competitive and highly advanced economies in the world. The bond will be listed on the London Stock Exchange and Nasdaq Dubai. On an allocation basis, investors from the ME, US, Europe, Asia, and UK accounted for 45%, 21%, 14%, 11% and 9% of the total, whilst banks/private banks, fund managers, pension funds and the insurance sector picked up 61%, 32%, 4% and 3% respectively.

Dubai Aerospace Enterprise has managed to source a US$ 1.6 billion multi-tranche financing package, around revolving credit facilities and term financing facilities, from twenty-six financiers; the funding comprised a combination of conventional and Islamic tranches. HSBC and J.P. Morgan acted as Joint Bookrunners and Joint Mandated Lead Arrangers. The demand saw the initial size of the initial funding more than doubling to make this the largest ever bank loan financing by DAE. The finance raised will be utilised to support the future financing needs of the business and to refinance a maturing credit facility.

The DFM opened on Monday, 22 September 2023, 56 points (1.4%) lower the previous three weeks, gained 126 points (3.1%) to close the week on 4,169, by 22 September 2023. Emaar Properties, US$ 0.01 higher the previous week, gained US$ 0.19 to close on US$ 2.11 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.69, US$ 4.73, US$ 1.55, and US$ 0.43 and closed on US$ 0.70, US$ 4.94, US$ 1.61 and US$ 0.45. On 22 September, trading was at 169 million shares, with a value of US$ 137 million, compared to 219 million shares, with a value of US$ 518 million, on 15 September 2023.

By Friday, 22 September 2023, Brent, US$ 9.90 higher (15.7%) the previous three weeks, shed US$ 0.65 (0.7%) to close on US$ 93.63. Gold, US$ 43 (2.2%) lower the previous two weeks, shed US$ 1 (0.1%) to US$ 1,945 by 22 September 2023.  

With a strategic move that sees it moving out of the cryptocurrency sector and focusing more on AI, Ant Group, backed by the influential entrepreneur Jack Ma, has divested itself of a US$ 100 million stake in A&T Capital. The Chinese fintech conglomerate’s exodus comes after A&T’s founder, Yu Jun, resigned several months ago amid allegations of workplace misconduct, triggering uncertainties about its future direction; it begs the question whether A&T Capital will opt for closure or embark on a quest to secure alternative funding sources. However, it comes at a time when there are declining VC investments taking place, with VC funding tanking – in June, there was a 23% monthly fall, with a total of just US$ 520 million raised across eighty-four funding rounds reported.

92-year old, Rupert Murdoch, has announced that his son, Lachlan, will take over his role as chairman of News Corp and Fox, ending a seven-decade career that built a global media empire encompassing iconic newspapers, tabloids, along with broadcast and cable TV. He steps down as one of the world’s most influential media executives, at a time when the conglomerate is facing a number of challenges, including the fallout from a defamation lawsuit that ended having it to settle a US$ 800 million after Fox News aired unfounded claims that Dominion Voting Systems equipment was used to rig the 2020 presidential election.  He is also one of the world’s wealthiest media executives, with a reported net worth of US$ 8.3 billion. David Folkenflik, author of “Murdoch’s World: The Last of the Old Media Empires”, noted that “he used the outlets in the U.K., Australia and the U.S. to achieve certain types of policy outcomes and particularly certain types of political results, earning favours from politicians whose able trade in for political advantage.”

Toshiba, founded in 1875, has announced that it will go private and leave the Nikkei 225 after a seventy-four history with the bourse. A consortium, led by private equity firm Japan Industrial Partners, has purchased 78.65% of its shares which allows it to complete a US$ 14 billion deal to take it private. Toshiba’s president and chief executive officer, Taro Shimada, posted that the company “will now take a major step toward a new future with a new shareholder.” Recent times have seen the conglomerate involved in one crisis after another, mainly caused by inadequate corporate governance and weak management. Eight years ago, it admitted to overstating its profits by more than a US$ 1 billion over six years and two years later, in 2017, reported that it had incurred major losses at its US nuclear power business, Westinghouse. A year later, it was forced to sell its memory chip business to avoid bankruptcy, and since then, it  has received several takeover offers, including one from UK private equity group CVC Capital Partners in 2021 which it rejected. That year, it was found to have colluded with the Japanese government  to suppress the interests of foreign investors. The same year, the Board announced plans to break up the company into three sectors, but within months changed its decision to then split the company into two units instead.

Having only acquired Missguided for US$ 25 million, after the online fashion retailer collapsed into administration, in May 2022, Frasers Group is planning to sell the clothing brand to online fashion giant Shein. The buyer, only founded in 2008, is now a mega player on the world stage of fast fashion. It seems likely that Frasers will retain its head office, whilst the Missguided brand and other intellectual property will be sold. Before its demise, the Manchester-based company had become one of the UK’s biggest online fashion players but was brought down by a trifecta of supply chain problems, rising freight costs and increasing competition from rivals. Frasers – which owns the Mike Ashley-founded Sports Direct chain – has expanded rapidly by buying brands that have fallen into trouble, including Game, Evans Cycles, Jack Wills and Sofa.com. Earlier in the year, Shein – which now has its headquarters in Singapore – was valued at US$ 66 billion.

Fashion giant H&M has become the latest UK retailer to charge shoppers who return items bought online; there is a US$ 2.45 levy for customers returning parcels either in store or online. Rival retailers such as Zara, Boohoo, Uniqlo and Next already charge for online returns. The surge in on-line shopping, particularly because of the “Covid factor”, has led to an explosion of merchandise being returned because they do not fit, not as expected or other nefarious reasons. There are also many that bulk buy online products and then return the majority of them, and this has been a real problem for companies, as it increases costs and bites into margins.

The EU has levied a US$ 400 million fine on Intel after a long-running legal battle. The European Commission imposed the fine after a court threw out an original US$ 1.13 billion penalty issued in 2009 over allegations that Intel had used illegal sales tactics to shut out smaller rival AMD. The US chip maker was accused of abusing its dominant position in the global market for x86 microprocessors, with a strategy to exclude rivals by using rebates and sales restrictions. Last year, the bloc’s General Court annulled the original decision on the grounds that that the analysis of the rebates offered did not meet legal standards; at the time, the court could not decide how the total fine could be divided up between the two offences, so left it to the EU watchdog to resolve the issue.

Whilst in the US to attend the seventy-eighth session of the United Nations General Assembly. Turkish President Recep Tayyip Erdogan met with Tesla CEO Elon Musk asking him to establish a factory in his country. Last month, Tesla was discussing the possibility of building a factory in India to manufacture low-cost electric vehicles. The EV-maker has six global factories and is building a seventh in Mexico, with the possibility of an eighth being launched by the end of the year in a yet to be announced location. By the end of last week, Tesla shares were trading 123% higher YTD, and on Saturday produced its five millionth car.

Türkiye has decided to raise key interest rates by 5.0% to 30.0% in an attempt to turn around several years of skyrocketing inflation and a dramatically weakened currency. The Monetary Policy Committee noted that it was “determined to establish the disinflation course in 2024”, reiterating that “monetary tightening will be further strengthened as much as needed in a timely and gradual manner until a significant improvement in the inflation outlook is achieved”. There is no doubt that President Recep Tayyip Erdogan has well and truly back-tracked from his long-held beliefs that ultra-low rates could curb inflation which stands at over 60%. Further rate increases are expected in Q4 and into January, before an expected pause before local elections in March 2024. However, the lira is down 31% to the greenback YTD, (whilst losing 78% of its value over the past five years), and with 9% price rises in both July and August, inflation will inevitably top 70% by the end of 2023.

Ongoing from last week’s blog, which outlined the disappearance of several high-ranking executives in China, there are reports that several executives of embattled property developer Evergrande’s wealth management unit have been detained by police in Shenzhen, southern China. Noting that “recently, public security organs took criminal compulsory measures against Du and other suspected criminals at Evergrande Financial Wealth Management Co;” police are also encouraging whistle-blowers to report any cases of suspected fraud. Evergrande Financial Wealth Management Co, a wholly owned unit of Evergrande, was established in 2015 and it seems that the firm’s insurance arm has been taken over by a newly created state-owned Haigang Life Insurance Co Ltd.

With the state having passed the Pay Transparency Law, it was only a matter of time before New York enacted a law that employers, with four or more employees, must adhere to a new regulation, mandating the inclusion of salary information or a salary range in all job postings. Employers were provided with a 270-day grace period, counting from the law’s signing date on 21 December 21, to prepare for this significant change. The specified salary range must encompass the minimum and maximum annual salary figures or hourly rates that the employer, in good faith, deems accurate at the time of posting the job vacancy. The three main aims seem to be to furnish prospective job seekers with vital salary information from the outset of the application process, to combat systemic pay disparities and to address discriminatory wage-setting and hiring practices prevalent in the job market. The law applies to agents and recruiters but does not extend to job advertisements, posted by temporary help firms, with fines starting from US$ 1k to US$ 3k.

As expected, the Federal Reserve held interest rates steady on Wednesday but noted that another rate increase can be expected before the end of 2023, and that monetary policy would be kept significantly tighter through next year. A 0.25% hike in Q4 would see overnight interest rate rising to the 5.50%-5.75% range. Interestingly, the Fed sees rates dipping only 0.50% in 2024, against their 1.0% decrease forecast in June; the rates are expected to be 5.1% and 3.9% by the end of 2024 and 2025. Meanwhile, inflation is not expected to reach its 2.0% target until 2026, with expectations of rates at 3.3%, 2.5% and 2.2% from the end of this year through to December 2025.  2023 growth forecast was higher from the initial 0.4% to 2.1%, with the unemployment rate forecast to remain steady at around 3.8% this year and rising to just 4.1% by the end of 2024. On the news, bond yields moved higher in the face of a higher-for-longer monetary policy stance, with the two-year Treasury note rising to its highest level since 2007, with shares initially weakening but the greenback moving higher. Overall, it does seem that the Fed is more confident of a soft landing, despite keeping interest rates higher for longer but continuing sticky inflation may still upset the central bank’s strategy.

In the UK, August government borrowing – the difference between spending and tax income – was higher than economists had expected, rising US$ 14.3 billion – US$ 4.3 billion higher than in August 2022, and the fourth highest August borrowing since monthly records began in 1993. However, this figure is still US$ 16.0 billion lower than the March forecast of the Office for Budget Responsibility. YTD borrowing has now reached US$ 85.5 billion, which is US$ 23.7 billion more than the comparative 2022 return. Total net debt had reached US$ 3.19 trillion by the end of August, equating to 98.8% of the UK’s GDP – the value of all the goods and services produced in the country in a year.

A report by the OECD estimates that the UK will have the highest 2023 inflation rate, at 6.7%, (adding 0.3% on its forecast earlier in the year), than any other G7 economy this year. The OECD also reduced their 2024 economic growth forecast to 0.8% due to pressure on households and businesses from higher interest rates; it sees this year’s growth at 0.3%, the second weakest among the G7.

The 6.7% August inflation rate has seen prices now rising at their slowest rate in eighteen months, and the third consecutive month of falling prices; excluding food and energy, the rate stood at 6.2%. Although cereal prices nudged higher, those for milk, cheese and vegetables all fell last month and, allied with declining air fares and accommodation costs, the overall rate of inflation moved south. However, the UK rate remains relatively high when compared to many of its peers – Germany, France, Italy and US returning 6.4%, 5.7%, 5.5% and 2.5%. The surprise dip in inflation, announced on Wednesday, left the BoE in a dilemma, whether to “twist or stick”. Prior to the news, the odds were stacked up for a rate rise, but doubt spread and, although marginally still pointing to a rise, the Monetary Committee decided against any rate hike for September, still maintaining the 5.50% to 5.75% range. Not the best of forecasters, the OECD expects prices will rise faster in the UK than any other advanced economy this year.

The ghost of Alan Joyce must still stalk the corridors of power within Qantas, despite him leaving the embattled Australian carrier earlier in the month. It does seem that it has been left to his successor, Vanessa Hudson to clear up the mess left behind. The new CEO has had to apologise to passengers for the airline’s recent performance, saying that that it had let people down and that it had been a “humbling period” for the carrier. She has also announced a number of measures to try and “fix” the airline’s issues. Apart from the public apology for a series of scandals that have damaged the airline’s reputation, she acknowledged it has been “hard to deal with” and promised to make changes to rebuild customer trust. She also commented “I know that we have let you down in many ways and for that, I am sorry,” and that “we haven’t delivered the way we should have. And we’ve often been hard to deal with”, along with “we understand why you’re frustrated and why some of you have lost trust in us.” Ms Hudson has a Herculean job ahead and has vowed to fix issues at the airline and “get back to being the national carrier that all Australians can be proud of”. How Do You Fix A Broken Part?

Out Of Touch!                                                                 15 September 2023

The 2,329 real estate and properties transactions totalled US$ 3.46 billion, during the week, ending 15 September 2023. The sum of transactions was 549 plots, sold for US$ 1.16 billion, and 1,780 apartments and villas, selling for US$ 1.07 billion. The top three transactions were all for plots of land, one in Marsa Dubai sold for US$ 170 million, the second in Business Bay for US$ 49 million and in Marsa Dubai for US$ 41 million. Al Hebiah Fifth recorded the most transactions, with 123 sales, worth US$ 144 million, followed by 113 sales in Madinat Al Mataar for US$ 148 million, and 111 sales in Madinat Hind 4, valued at US$ 44 million. The top three transfers for apartments and villas were all for apartments, the first in Al Barsha First , valued at US$ 24 million, followed by one in Palm Jumeirah for US$ 20 million, and the other in Al Thanayah Fourth selling for US$ 18 million. The mortgaged properties for the week reached US$ 1.06 billion, with; 165 properties being granted between first-degree relatives worth US$ 183 million.

This week, Danube launched its latest project – Oceanz, valued at US$ 681 million, is  located at Dubai Maritime City, adjacent to the historic Shindagha heritage village. The building will comprise fifty-one floors, including car parking and community facilities with forty-four floors, with 1.25k residential units including studio apartments, 1-bedroom, 2-bedroom and 3-bedroom apartments along with retail stores; prices will start at US$ 300k. It will also come with more than forty community, health and lifestyle amenities including, inter alia, health club, infinity swimming pools, sports arena, tennis court, barbecue area, jogging track, doctor on call, and nanny on board. This latest development for the Dubai-based developer, to be completed by Q1 2027, is its twenty-fifth since it was founded in 2014, and tenth in the past nineteen months – an indicator of the current booming Dubai’s realty sector. Having sold out its Elitz 3 project last month, Danube expects to deliver three projects by the end of the year – Wavez, Jewelz and Olivz., with most of the projects launched in 2022 and 2023 ahead of construction and delivery schedules.

Following the success of its Kenturah concept, MAG has launched its new US$ 575 million project, Keturah Business Bay. The luxury tower development follows the positive market response to the previous two developments under the Keturah brand – Keturah Reserve and Keturah Resort. It will encompass studios, one-, and two-bedroom apartments ranging from 600 sq ft to 2.2k sq ft. Amenities at the project include an outdoor pool, a gym, restaurants, and retail spaces. Completion is slated for Q3 2027, with unit prices and payment plans being announced by the end of 2023.

ValuStrat Price Index (VPI) for August 2023 grew 1.9% on the month, and 13.8% over twelve months, to reach 94.6 points, with apartments and villas at 78.5 points and 120.4 points, compared to 100 points set in January 2014. The VPI, which measures periodic changes in both capital values and rental values, (of typical residential and commercial properties), witnessed increased sales of apartments within affordable and mid-market communities. It noted that the emirate’s apartments had a 10.0% capital gain on the year – the highest in a decade – and 1.5% on the month. The top five locations were Palm Jumeirah, The Greens, Discovery Gardens, Motor City and Jumeirah Beach Residence – with gains of 19.3%, 14.7%, 14.1%, 13.0% and 11.3% respectively.

Although villa prices performed better, with marked increases of a monthly 2.4% and an annual 18.2%, this is far below the 33.9% villa annual capital gains seen during February 2022. The top four locations were Jumeirah Island, Palm Jumeirah, Dubai Hills Estate and Emirates Hills – with gains of 24.2%, 22.1%, 22.0% and 20.6% respectively. Jumeirah Park, Arabian Ranches, and Jumeirah Islands surpassed their 2014 price peaks by up to 3.2% . Last month, apartment sales dominated, accounting for 95% of all deals – 99% in off plan registrations and 88% in ready home title deeds. Home sales grew 1.1% monthly and 5.8% annually, with off-plan Oqood (contract) registrations up 13% monthly and 40.8% annually, representing a three-year record share of 63.5% of overall monthly sales; ready homes transactions fell 14.6% monthly and 26.2% on the year.

In the first eight months of the year, the average size of a ready home sold was 1.624k square feet, priced at US$ 366 per sq ft, with the following five developers accounting for 40.7% of all August sales – Emaar (10.9%), Damac (10.5%), Sobha (8.7%), Danube (5.6%), and Nakheel (5.0%). Five locations dominated August transaction accounting for 56.0% of the total – Business Bay (15.1%), Jumeirah Village (15.0%), Arjan (10.4%), Sobha Hartland (9.0%) and Dubai Harbour (6.5%). The majority of ready homes sold were in Jumeirah Village (9.2%), Dubai Marina (8.3%), Business Bay (6.5%), International City (4.9%), and Downtown Dubai (4.8%).

Knight Frank reports that, once again, Dubai has registered the highest global number of residential sales at more than US$ 10 million. In Q2, it sold ninety-five such homes, (compared to fifty-three in Q2 2022) – well ahead of the likes of New York, London, Paris, Hong Kong, Sydney and Singapore. In the twelve locations surveyed by the consultancy, only three posted total sales of over US$ 1.0 billion – with New York and Singapore behind Dubai’s total of US$ 1.5 billion – as the cumulative total came in at US$ 7.3 billion. It was noted that sales fell to 483 in the period, as higher interest rates began to impact on sales, but in the twelve months to June 2023, 1,638 residences were sold – compared to 1,009 in the pre-pandemic year of 2019. Last year, the emirate recorded the sale of 219 homes priced above US$ 10 million, with the total value of the transactions reaching US$ 3.8 billion.

Proptech firm Realiste indicated that, by using its proprietary AI platform, the three most profitable locations in terms of average annual price growth, were Sobha Hartland, Dubai Harbour Part 1 and Bukadra Part 2. Realiste AI is an advanced algorithm that uses self-learning capabilities to evaluate the investment attractiveness of real estate properties worldwide. It considers local preferences, simulating the decision-making process of potential buyers in specific locations, “to determine the score, our algorithm analyses over 200 metrics sourced from various reliable sources. These metrics have different impacts on the evaluation. All factors can be categorised into four groups with very high, high medium and low levels of impact.” Alex Galt, founder of Realiste said, “Dubai will remain attractive to foreign buyers who are seeking to shield their assets. It will strengthen its position as the geopolitical instability and energy crisis grow. As a result, there will be a further boost in demand for local property and the market in 2023.”

It found that Sobha Harland, handily located close to both DXB and the Burj Khalifa, witnessed an average annual price growth 17.6%. It is located within a fifteen-minute drive to Burj Khalifa and the International Airport. The project has over 30% of greenery, three functioning parks, pools and gyms, and is located close to the lagoon and two top Dubai international schools. Dubai Harbour Part 1 saw prices 16.5% to the good over the year and is within a five-minute drive to the Promenade, with a wide array of retail and dining destinations, Marina & Yacht Club, and SZR. It also has a private beach with stunning views of Palm Jumeirah, Ain Dubai, Cruise Terminal, Dubai Marina and Dubai Harbour Boulevard. There was a 14.5% rise in Bukadra Part 2’s average annual price growth, which is located close to two iconic areas of Dubai: Downtown and Creek. The area features a golf course and a private beach.

November will see the opening of Banyan Tree Dubai on Bluewaters Island, as it replaces the existing Caesars Palace in a deal signed by Dubai Holding with Accor Group’s Ennismore and Banyan Tree Group to introduce a unique luxury lifestyle experience in the emirate. The hotel will introduce a phased stage of brand related upscaling improvements, including to its 179 rooms, which include thirty suites and a brand-new four-bedroom villa, along, with the signature Banyan Tree Spa; this will include its own reception, relaxation area, gym, indoor and outdoor yoga spaces, dedicated F&B space, private mini rainforests, hydrotherapy pools and treatment rooms. Banyan Tree Dubai will also include ninety-six private residences comprising one, two, three and four-bedroom units, with a dedicated lobby, outdoor swimming pool and access to the hotel’s facilities.

The General Directorate of Residency and Foreigners Affairs has confirmed that it is working on a project, at DIA, whereby a single biometric will be used for check-in, immigration and boarding the aircraft to further facilitate passenger clearance, and that it would fully deploy biometric technology to identify individuals based on their unique physical or behavioural characteristics.  It confirmed that this new technology will be rolled out “very soon”, and that “our target is to achieve 80% of people using smart gates and other technologies. We hope to achieve this target in a couple of years”. In H1, more than forty-two million passengers, including transit, used airports and immigration borders, with 37% of them were using the airport’s one hundred and twenty smart gates.

Although at a slower pace, down 0.7 to 55.0 compared to a month earlier, August saw Dubai’s non-oil private sector continue at a “robust” pace, partly due to an increase in new orders, and the pace of job creation at its highest in nearly eight years. Two other contributory factors included strong new order inflows and robust economic conditions. Business confidence improved on the month in all four sectors, covered by the survey – construction, wholesale/retail, travel and tourism –   being the second strongest in nearly two years. On top of this, the data showed that, for a welcome change, the rate of selling price discounting eased to its slowest level since last November, with several businesses pushing prices higher. Two other factors saw an increase in the headcounts -its joint-fastest rise in employment since November 2015 and the sharpest accumulation of stock levels for five months.

Reaching its highest ever level, investments of banks operating in the UAE reached US$ 158.0 billion at the end of July – a 18.8% hike on the year; on a monthly basis, investments of banks increased by 0.91%. Bonds held until maturity accounted for 46.0% of the total, reaching US$ 72.7 billion, a 1.3% increase from the previous month. Debt securities, which represent debts owed to others, made up 43.1% of the total investments, reaching US$ 68.1 billion – 0.6% higher on the month. Other investments by banks amounted to US$ 12.2 billion, or 7.7% of the total – a 12.5% increase on the year. Bank investments in stocks were at US$ 3.4 billion, (2.1%), an increase of 3.3% from the previous month,

Earlier in the week saw the launch of the ‘Dubai MIT DesignX Dubai’ accelerator programme, as the Dubai Integrated Economic Zones Authority signed a partnership agreement with MIT. Its main aim is to boost the construction of innovative projects to enable entrepreneurs in the region to create effective solutions and innovative designs to address the world’s most pressing challenges in  urban environment, such as water, climate, food security, and energy. It will also contribute to strengthening Dubai’s position as a pivotal global centre for sustainable entrepreneurship, development and design, and provide a competitive model environment that supports innovation and project launches within a comprehensive vision for leadership and shaping the future.

Opec estimates that the UAE’s Q1 economy grew by 3.8% and expects the country’s economic expansion to continue, noting that key sectors of the economy have seen significant growth; these include transportation/storage (10.9%), construction (9.2%), and accommodation/food services (7.8%). The Opec report also noted that UAE’s travel/tourism sector continued to play an important role in driving economic growth, with the number of passengers at Dubai International Airport and international visitors to the emirate exceeded pre-pandemic levels; by the end of the year, it expects passenger numbers to be 40% higher on the year and that this would be 17% higher than the pre-pandemic 2019 level.

Last year, 26% of the UAE’s financial wealth originated from ultra-high-net-worth individuals, defined as being worth more than US$100 million; in 2022, those, with a net worth of between US$ 1 million and US$ 20 million, represented 32% of the UAE’s wealth, which is expected to grow to 34% over the next four years. The Boston Consulting Group posted that the UAE’s 2022 financial wealth – at US$ 1.2 trillion – was ahead of Saudi Arabia and Qatar returns of US$ 1.1 trillion and US$ 302 billion, assisted by positive macroeconomic tailwinds, especially government-sponsored projects, high and steady oil and gas prices and the influx of millionaires. Equities and investment funds account for 58% of total personal wealth. Real assets in the UAE grew by 7.5% annually to US$ 1.9 trillion over the five years to 2022 and are projected to increase by 6.9% per annum to US$ 2.6 trillion by 2027.

The worldwide consulting group expects that there will be a 5.3% annual compound rate to bring the global financial wealth to top US$ 329 trillion by 2027. The main drivers will be macroeconomic growth, the creation of new millionaires in different countries and the continued growth of “generational money” where inherited wealth will be passed down. It also expects that financial wealth in emerging markets will continue to outperform developed markets until 2027.

Although S&P Global Rating expects GCC banks’ credit growth will be reduced, it expects performance of banks in the UAE and Saudi Arabia will be more resilient. Overall, it expects “a slight deterioration in asset quality indicators and an increase in the cost of risk, we expect GCC banks will report stronger profitability in 2023”, because of higher net interest margins and generally lower-cost business models. It also noted that, in H1, the country’s banks’ performance improved, on the back of lower credit losses and higher interest rates, and the fact that the recovery of the non-oil sector has led to higher lending growth this year. However, it noted that the global economic slowdown and higher interest rates could lead to a slight deterioration in asset quality and could face a rise in problem loans in the construction and trade sectors and in the SME segment.

Standard & Poor’s Global Ratings also expects that UAE banks will achieve strong performance in 2023, benefitting from strong non-oil GDP growth, which will mitigate the impact of rising interest rates on credit growth. It expects bank growth to be 2% higher on the year at 7%. It notes that, in H1, the performance of UAE banks improved due to the rise in interest rates, with high-interest rates expected to continue to support banks’ profitability. Importantly, it believed that the non-oil economy in the UAE is still providing sufficient support to help reduce the increase in loans that are classified as “non-productive,” and that banks’ reserve allocations over the past two years will help them withstand challenges.

The DFM opened on Monday, 11 September 2023, 32 points (0.8%) lower the previous fortnight, shed 24 points (0.6%) to close the week on 4,043, by 15 September 2023. Emaar Properties, US$ 0.02 lower the previous week, gained US$ 0.01 to close on US$ 1.92 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.71, US$ 4.69, US$ 1.57, and US$ 0.44 and closed on US$ 0.69, US$ 4.73, US$ 1.55 and US$ 0.43. On 15 September, trading was at 219 million shares, with a value of US$ 518 million, compared to 75 million shares, with a value of US$ 57 million, on 08 September 2023.

By Friday, 15 September 2023, Brent, US$ 9.90 higher (12.3%) the previous fortnight, gained US$ 3.85 (4.3%) to close on US$ 94.28. Gold, US$ 23 (1.2%) lower the previous week, shed US$ 20 (1.0%) to US$ 1,946 by 15 September 2023.  

The International Energy Agency expects global oil demand to grow by 2.2 million bpd, to 101.8 million bpd, driven by a recovery in fuel demand in China; it also expects a “substantial” crude market deficit in Q4 due to Opec+ output cuts; this month, the loss of Opec+ production, led by Saudi Arabia and Russia (which extended supply cuts of a combined 1.3 million bpd to the end of the year), will result in a significant supply shortfall. It noted that “oil stocks will be at uncomfortably low levels, increasing the risk of another surge in volatility that would be in the interest of neither producers nor consumers.” The IEA expects H2 global oil demand to rise by 1.5 million bpd, compared to H1, exceeding supply by 1.24 million bpd during that period; China’s expected to account for 75% of this demand growth. However, it expects 2024 demand to fall by one million bpd, as the post-pandemic recovery loses steam and electric vehicle adoption grows. YTD, Opec+ supply has fallen by two million bpd with most of the slack taken up by non-Opec+ supply which had risen by 1.9 million bpd to a record 50.5 million bpd by the end of last month, including “sharply higher” crude flows from Iran.

This week, Binance.US has made several major restructuring changes. The US affiliate of cryptocurrency giant Binance has revealed significant organisational changes, including the departure of its CEO, Brian Shroder, (with Norman Reed, the company’s General Counsel stepping in), and a 33% cut in its current 300 workforce. In June, the US Securities and Exchange Commission filed a civil case against its founder, Changpeng Zhao, and the company, citing that Binance.US was part of a “web of deception”, designed to evade US securities laws. Both Binance and Binance.US have consistently maintained that they operate as separate entities. Prior to this latest move, there had been several executive departures including this month’s resignation of Mayur Kamat, its Global Head of Product, and the departure of its Chief Strategy Officer, Patrick Hillmann, in July.

With its shares priced at US$ 51 each, UK-based chip designer Arm Holdings has secured a US$ 54.5 billion valuation, as it made its highly anticipated return to the stock market. Arm shares started their first day of trading on New York’s Nasdaq yesterday and jumped 10% right as trading began and over 20% within the first thirty minutes; it closed trading at US$ 63.59 – 24.7% higher on the day, ending it with a market cap of over US$ 67.9 billion. This IPO raised US$ 4.87 billion for its Japanese owner SoftBank Group which bought the company for US$ 32 billion seven years ago. Many had expected that Arm would also trade in London but, in a blow to Rishi Sunak, Arm decided to list the company solely in the US because it was “the best path forward”. Arm estimates that 70% of the world’s population uses products that rely on its chips, including nearly all of the world’s smartphones.

The EU has levied a US$ 370 million fine on TikTok for breaching privacy laws regarding the processing of children’s personal data. Ireland’s Data Protection Commissioner, the lead regulator in the EU, noted that the Chinese-owned short-video platform had breached a number of EU privacy laws between 31 July 2020 and 31 December 2020.  No surprise to see TikTok disagreeing with the verdict and the size of the fine, arguing that most of the criticisms were no longer relevant, as a result of measures it introduced before the DPC’s probe began last September. The DPC gave TikTok three months to bring all its processing into compliance where infringements were found. At the end of 2022, the DPC had twenty-two inquiries open into multinationals based in Ireland at the end of 2022.

As from next month, it appears that Robolox, which has a reported sixty million players a day, will be available on Sony’s PlayStation consoles; currently, it can only be played on computers and mobile devices, and on Microsoft’s Xbox One console.There are concerns about poor moderation of its content, and only last year the NSPCC and Childline tld the BBC, that since the pandemic, the number of children calling their helpline, with concerns about Roblox, had increased five-fold. In 2020, the company reckoned that 67% of all US children, between the ages of nine and twelve, played the game compared to just 23% who said they played Minecraft, which is the best-selling video game of all time. The game’s popularity stems from its emphasis on creation – that is, rather than being a traditional game, it allows players to make their own games within it.

Lidl has announced a full-year pre-tax loss of US$ 94 million, compared to a 2022 US$ 51 million profit, indicating that the two main drivers were its expansion plans, including opening fifty shops, and costs rising “across the board”, as it had “held firm on its promise” of lower prices for shoppers. Sales were 18.8% higher at US$ 11.5 billion. Earlier in the month, the privately-owned German retailer opened its largest-ever US$ 372 million global warehouse, creating 1.5k jobs. Ryan McDonnell, CEO at Lidl GB,  said there was “no ceiling” to the company’s ambitions, adding he saw potential for hundreds more Lidl supermarkets across the country.

Today, about 13k US workers, working for three Detroit carmakers – GM, Ford and `Stellantis – went on strike because contract talks had failed, with both parties unable to agree on terms and conditions. It was the first time in the United Auto Workers union’s eight-year history that its members had walked out on all three companies simultaneously, as four-year contracts with the companies expired at 11.59pm local time on Thursday. If the strikes last a long time, they could cause dealers to run short of vehicles and prices could rise. The walkout could even be a factor in next year’s presidential election by testing Joe Biden’s proud claim to be the most union-friendly president in American history. The UAW focused on a handful of factories to prod company negotiators to raise their offers, which were far lower than union demands of 36% wage increases over four years, compared to the employers’ 17.5% – 20.0% range.

JM Smucker, famous for its fruit preserves and Jif peanut butter, has acquired Hostess Brands for a reported US$ 5.6 billion, as it expands its operations by adding an iconic sweet snacking platform with iconic US brands such as Twinkies, Donettes and Ho Hos. Smucker beat other potential buyers, including PepsiCo, Oreo maker Mondelez International and Cheerios maker General Mills. In 2013, Hostess was saved from bankruptcy by investment firms Apollo Global Management and Metropoulos & Co. Ohio-headquartered Smucker, has a stock market valuation of around US$ 14 billion. The US food manufacturing sector has seen several consolidation deals recently. Hostess Brands shares ended the New York trading day up by more than 19%, with Smucker shares closing 7% lower.

Monday saw Tesla shares jump 6% on news that Morgan Stanley posted that its Dojo supercomputer  could power a near US$ 600 billion surge in its market value by helping speed up its entry  into robotaxis and software services; the investment bank raised its revenue estimate for Tesla’s network services business to $335 billion in 2040. In July, the EV manufacturer commenced production of its supercomputer to train AI models for self-driving cars and plans to spend more than US$ 1 billion on Dojo over the next fifteen months. The Wall Street broker upgraded Tesla’s stock to “overweight” from “equal-weight” and replaced Ferrari’s US-listed shares with it as “top pick”. It also raised its twelve-eighteen-month target on Tesla’s shares by 60% to $400 – giving it  a market cap of about US$ 1.39 trillion – 78% higher than its closing value of US$ 789 billion on 08 September.

BMW has announced plans to invest over US$ 750 million to ready its Mini factory near Oxford to build a new generation of electric cars, with production of two new electric Mini models due to begin in 2026. BMW has two facilities in the UK – with the other in Swindon -which employ 4k; it also plans to build additional logistics facilities at Cowley and at the Swindon factory which makes body panels for new vehicles. The UK government is expected to invest a further US$ 94 million, in a move that the UK industry body, the Society of Motor Manufacturers and Traders, called a “vote of confidence” in the country’s automotive manufacturing industry, and that “not only does it secure the long-term future of the home of one of the world’s most iconic brands, it also demonstrates once again our capabilities in electric vehicle production.”

Other carmakers continue to invest in the UK. In July, Jaguar Land Rover’s owner, the Indian group Tata, said it would build a giant “gigafactory” to produce batteries in Somerset, a project expected to benefit from hundreds of millions of pounds in taxpayer support. Stellantis has just begun production of electric vans at its Ellesmere Port factory in Cheshire; Nissan is expanding output of EVs at its Sunderland factory, while its partner Envision AESC is building a gigafactory close by. Meanwhile, Ford is investing heavily in its Halewood plant, preparing it to build electric motors.

Another problem hatched by its former CEO is that the High Court of Australia has rejected a bid by Qantas to overturn a ruling that it illegally outsourced 1.7k jobs during the pandemic, with the court deciding that carrier had unlawfully laid off staff at ten airports in November 2020; it found the embattled carrier had breached Australia’s Fair Work Act, which protects employee rights.

It is estimated that Alan Joyce has made an eye-watering US$ 80 million during a twenty-three-year association with Qantas – the last fifteen as CEO. There is no doubt that he did well for the airline in some aspects, but left it two months earlier than expected, as the carrier tries to restore some of its former glory. He was set to retire in November after fifteen years at the helm, to be replaced by the current CFO, Vanessa Hilton; however, he has “decided” to retire this week instead.  He has had some success in delivering his last annual profit of a record US$ 1.6 billion, (maybe by taking advantage, and at the expense of passengers and employees) but will leave behind a legacy of a much-tarnished brand plus a battered reputation, a class action, a lawsuit by the ACCC, his role in “Qatargate” and bowing to public pressure by scrapping the expiry dates on more than US$ 323 million worth of flight credits. Unfortunately, no happy ending for Mr Joyce, except that he could leave with a “golden handshake” retirement package of more than US$ 15 million. The two questions are whether he should receive this bounty of a substantial amount of money in the bank and Qantas shares in his portfolio after leaving the carrier in such a state of disarray and whether some of the board should step down for allowing all this to happen.

As CEO, he was entitled to receive a base salary of about US$ 1.4 million a year, on top of annual bonuses issued as Qantas shares, depending on his (and the airline’s) performance; this year he was in line for a short-term cash bonus of US$ 2.8 million as at  30 June; he is also owed about 3.1 million shares, including 1.4 million from previous bonuses – deferred during the pandemic at Joyce’s request – which were cashed earlier this month with a value of US$ 6.4 million. The 1.7 million outstanding shares, valued at around US$ 3.65 million, have yet to be issued. In June, the Qantas supremo reportedly sold most of his US$ 11 million worth of his shares.

Alan Joyce is not the only chief executive having an eventful week and has been joined by BP chief executive Bernard Looney, who, on Tuesday, resigned immediately accepting that he was not “fully transparent” in his disclosures about past relationships with colleagues. He joined the petro giant in 1991 and replaced Bob Dudley in 2020 to take over the top spot In May 2022, the company had received information and allegations about his conduct in respect of personal relationships with company colleagues. During that review, Mr Looney disclosed a small number of historical relationships with colleagues prior to becoming CEO but found no breach of the company’s code of conduct. At the time, “the board sought and was given assurances by Mr Looney regarding disclosure of past personal relationships, as well as his future behaviour”. Subsequently, further allegations were made recently, and internal investigations started and with the process ongoing with him informing the company “that he now accepts that he was not fully transparent in his previous disclosures”, and “he did not provide details of all relationships and accepts he was obligated to make more complete disclosure”. It also noted that “no decisions have yet been made in respect of any remuneration payments to be made to Mr Looney”.

The company has been kind to him, noting that he had sold BP shares worth almost US$ 10 million in February and April 2019. His 2022 pay packet more than doubled to around US$ 15 million on the back of bumper profits amid spiralling energy prices, while BP’s emissions were broadly unchanged. Looney’s base salary of US$ 1.6 million was supplemented by retirement benefits and performance-related elements including an annual bonus and shares to US$ 12 million, more than double what he was awarded in 2021. To be fair to the departing Irishman, he is not the only one with an embarrassingly high pay packet – Shell’s CEO took home over US$ 12 million last financial year.

One country where the corporate life of an executive is not all roses is China, where it seems that, maybe too often, high-profile bosses go missing and are only seen again in court – in absentia or in person – or never. The latest is the former chairman of China Life Insurance, Wang Bin, who has just been sentenced to death, with a two-year reprieve, and after two years, with the sentence being commuted to life in prison without parole. The crackdown by President Xi Jinping’s administration has been ongoing for almost three years, and in April, a warning was given that this repression was far from over. Mr Wang was found guilty of taking US$ 45 million in kickbacks, and he was also found guilty of hiding over US$ 7 million in overseas deposits. Other bosses, mainly in the country’s US$ 60 trillion financial sector, have been ensnared. In 2021, Lai Xiaomin, the former chairman of Huarong – one of the biggest state-controlled asset management companies – was executed after being found guilty of corruption and bigamy. That year, China Development Bank chairman Hu Huaibang was sentenced to life in prison in a US$ 12 million bribery case.

2023 has already witnessed seen several such “incidents”. Bao Fan, one of the country’s most high-profile billionaire bankers and the chief executive of China Renaissance Holdings, has been “co-operating in an investigation being carried out by certain authorities” since his disappearance in February this year. An investigation into Bank of China’s party chief Liu Liange, suspected of “serious violations of discipline and law,” was launched in March. A month later, authorities said they were investigating Li Xiaopeng, the former chairman of state-owned asset management firm China Everbright Group. In June, Fan Yifei, a deputy governor of the country’s central bank, was arrested for suspected bribery and is facing a criminal investigation. He has also been expelled from the Communist Party.

The billionaire owner of HMV, Doug Putman, had hoped to keep up to three hundred Wilko shops open, but his bid failed, as rising costs complicated the deal. It looks inevitable that the Wilko name will disappear from the country’s High Street, with all of its four hundred stores across the UK closing by early October, along with 12.5k staff losing their jobs. It seems no bidders are interested in running shops under the Wilko name, although some parties are interested in rebranding their stores.  For example, there are reports that B&M has said it will take on up to fifty-one of Wilko’s shops, in a deal worth US$ 16 million, with Poundland understood to be interested in buying up to seventy stores as a way of boosting its own portfolio. The Wilko brand is also still up for grabs, with retailers including The Range proposing bids for the name specifically. The company has struggled with strong competition from rival chains like B&M, Poundland, The Range and Home Bargains, as the high cost of living has pushed shoppers to seek out bargains. Closures have already started this week.

In a recent study, the Arab Monetary Fund noted that 2022 credit card losses, incurred by financial institutions and individuals, were 13.8% higher than the 2021 total of US$ 32.3 billion.  These losses have speeded up financial institutions and decision-makers to explore innovative approaches leveraging modern technologies, to detect and analyse fraudulent transactions. There is no doubt that AI is playing an increasingly important role in tightening credit card fraud detection, with machine learning algorithms significantly contributing to achieving a predictive accuracy surpassing 94%. Furthermore, the report recommends the widespread adoption of AI and ML for scrutinising credit card fraud operations within Arab countries, as well as calling for intensified innovation and collaboration with leading financial technology firms to develop new, machine learning-based fraud detection systems. The report urges financial institutions to foster cooperation by sharing data and pooling resources in their fraud detection efforts.

Last month, most global food prices headed south, amid weakening global import demand and abundant offers from major exporters, as the UN’s Food and Agriculture Organisation’s Food Price Index dipped 2.1% to 121.4 points – 24.0% lower from its recent March 2022 peak. Decreases were noted as sunflower seeds, vegetable oil, meat, wheat, coarse grain and cereal prices declined 8.0%, 3.1%, 3.0%, 3.8%, 3.4% and 0.7%. Maize prices fell for the seventh straight month to hit their lowest value since September 2020, while sorghum prices declined as well, with the dairy price index down 4.0% – its eighth monthly decline in a row, and up to 22.4% on the year. One major exception was rice, with the index soaring 9.8%, to a fifteen-year high, due to “trade disruptions in the aftermath of a ban on white rice exports by India, the world’s largest rice exporter”. In April, a World Bank report noted that double-digit food inflation in the Mena region would impact poorer households and intensify long-term food insecurity for about 20% of those living in developing countries in the Mena region, while almost eight million children under the age of five will be hungry.

Speaking at the end of the two-day G20 summit in New Delhi, the Russian Foreign Minister Sergei Lavrov said that his country will return to the Black Sea grain deal ‘the same day’ as Moscow’s conditions for export of its own grain and fertilisers to the global markets are met. In July 2022, a deal was brokered by the UN and Turkey, the ‘Black Sea initiative'”, which allowed ships to safely export grain, other foodstuffs and fertilisers, including ammonia, from Ukraine via a maritime humanitarian corridor. At the summit, a declaration called for ‘full, timely and effective implementation to ensure the immediate and unimpeded deliveries of grain, foodstuffs, and fertilisers/inputs’ from Russia and Ukraine to meet demand in developing countries.

After a 0.1% dip in July, China’s Consumer Price Index turned positive last month, rising by 0.1% on the year, mainly attributable to a 3.0%b hike in pork prices, with air tickets, tourism products and hotels, all posting double-digit price growth. Meanwhile core CPI, which excludes food and energy prices, rose by 0.8% year-on-year. Analysts see a higher increase during the rest of 2023 – an indicator that domestic demand is steadily rising and that the deflationary concerns are mainly unfounded. In line with July, the August Producer Price Index, mainly monitoring factory prices, fell by 3.0% over twelve months, compared to 1.4% a month earlier. Overall, the economic prognosis points to an economy that is on the recovery track and that the deflationary concerns are overblown.

This week, French authorities has ordered Apple to stop selling the iPhone 12 on the grounds of it emitting too much electromagnetic radiation and ordered the tech giant to fix existing phones; if this cannot be done, then the ANFR has ordered that every iPhone 12 ever sold in the country should be recalled. This could be seen to be in contrast with the WHO which has advised that there is no evidence to conclude that exposure to low level electromagnetic fields is harmful to humans. No surprise to see that Apple will be appealing this typically French decision and had already provided the regulator with lab results from the tech giant itself and third parties which show the device is compliant with all the relevant rules. It does seem that this model has been recognised as being compliant with regulations on radiation levels worldwide.  Evidently, there are two tests to see whether they are within set guidelines. The ‘membre’ (limb) check for when a phone is in close contact with a person’s body, such as when it is held or placed in a trouser pocket. The SAR, (Specific Absorption Rate), limit for this is four watts per kilogram, with the Apple phone recording 5.74 per kg. The other check showed that the iPhone 12’s SAR measure came in under this threshold.

Provisional 2022 data by Eurostat indicated that the EU exported services, valued at US$ 1,395 billion, to countries outside of the bloc – a 21.8% hike compared to a year earlier, with imports up 19.2% to US$ 1,208 billion. Consequently, the EU trade surplus for services hit US$ 188 billion last year, the highest value in the past ten years, and well up on the under US$ 10 billion surplus recorded in 2020.

Signalling that this could have been the last rate hike for the time being, the ECB raised its key rate for the tenth time in a row, by 0.25% to 4.0% citing that inflation was “expected to remain too high for too long”. The latest increase came after forecasts predicted inflation would be at an average 5.6% in 2023. It added that it expected inflation in the twenty-nation bloc to fall to around 2.9% next year and 2.2% in 2025. There is no doubt that the eurozone has been badly impacted by soaring food and energy prices that have squeezed household budgets. (UK interest rates are currently higher than in the eurozone at 5.25%, but UK inflation is also higher at 6.8%, and the Bank of England is expected to raise rates again next week). Many analysts are bearish on the EU economic prospects and have lowered their economic growth projections for the bloc “significantly” due to the impact of higher rates. Revised data from Germany – Europe’s largest economy – shows that the country is in recession.

August US consumer prices rose 0.5% to 3.7%, on the month – more than expected, driven by higher costs for rent and fuel. Although inflation has declined significantly from last year’s highs, it is still almost double that of the Fed’s longstanding 2.0% target – and any move upwards will inevitably cause concerns with the authorities and global markets because the overriding problem has not yet been fully resolved. Stripping out food and fuel, where price swings are common, prices still rose by 0.3% – more than expected. The central bank is due to meet on 20 September to consider whether further increases will be necessary; it has already raised its benchmark interest rate to its highest level, of between 5.25% and 5.50%, since 2021. It is unlikely that the Fed will make a move this month, with one of the main reasons being that rises have had little influence over fuel prices, which were the biggest contributor to the rise of inflation in August. However, it is likely that rates will rise again before year end. Only last month, Fed Chair Jerome noted “we are prepared to raise rates further, if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective”.

The UK state pension is likely to rise by 8.5% next April after data crucial to the so-called triple lock was published which sees the increase in the state pension based on the highest of average earnings, (total pay including bonuses), inflation or 2.5%. This will mean a US$ 16.60 weekly rise, equating to an annual increase of US$ 863, and the new annual basic state pension of US$ 11k. The triple lock is designed to ensure pensioners, especially if they rely solely on the state pension, will be able to afford rising prices, or to keep pace with the increases in the working population’s wages – it is thought that 20% of single pensioners and 13% of all pensioners rely solely on the state pension and benefits.

The Australian Securities and Investments Commission is to sue AustralianSuper, for failing to address multiple superannuation accounts, alleging that it did not address complaints from multiple superannuation account holders. It seems that ASIC is taking this action against the country’s largest superannuation fund because it failed to consolidate the superannuation accounts of 90k members, over a decade, costing its customers US$ 44 million in fees. Even though it self-reported the issue in 2021, AustralianSuper first detected the problem three years earlier. ASIC deputy chair Sarah Court says the superannuation fund clearly did not act in the best interest of its members, and it will have a long-term impact on their superannuation balances.

Philip Lowe has conceded he made some mistakes, in his seven-year tenure, and warned of the changing nature of inflation in his final speech as the RBA governor. He spoke about the three main economic challenges during his time as governor – the drawn-out period of inflation being below target, in his first few years, the global pandemic and the highest inflation rate in more than thirty years, in the aftermath of the pandemic. He claimed that one of his successes was, that despite everything, inflation still averaged 2.7% over this term as governor, which is within the bank’s 2% to 3% target range; some would argue that would be bending the truth somewhat bearing in mind that inflation hit 7.8% in December 2022 – its highest level in thirty years. He has argued that we could fight inflation better if we rethought our existing policy architecture, floating the idea of giving an independent institution limited powers over new fiscal instruments so it could help to manage inflation alongside the RBA. Another “success” was that the unemployment rate, at around 3.5%, is the lowest it has been in nearly fifty years.

However, he was involved in some controversial issues and confirmed he did post that, “including a promise that interest rates would not go up until 2024; everybody needs to get a flatmate; people need to work more hours to make ends meet; and young adults should stay at home because of the rental crisis;” he also said interest rates would not rise from 0.1% “until 2024 at the earliest” – a sure sign that, like a lot of high-level bureaucrats, he was out of touch with the “real world”. He did also finally realise that the central bank provided too much support for the economy during the initial lockdowns and post-pandemic. In line with many other G20 Central bank governors, he was also slow off the mark to raise interest rates when signs of inflation first emerged. Surely, someone Out Of Touch!

That’s What Friends Are For!                                                                        08 September 2023

The 1,892 real estate and properties transactions totalled US$ 1.63 billion, during the week, ending 08 September 2023. The sum of transactions was 152 plots, sold for US$ 230 million, and 1,740 apartments and villas, selling for US$ 1.10 billion. The top three transactions were all for plots of land, one in Al Thanayah, sold for US$ 16 million, Al Satwa for US$ 16 million and in Wadi Al Safa for US$ 11 million. Al Hebiah Fifth recorded the most transactions, with forty-eight sales, worth US$ 42 million, followed by twenty sales in Madinat Al Mataar for US$ 18 million, and fourteen sales in Madinat Hind 4 valued at US$ 5 million. The top three transfers for apartments and villas were two residences in Palm Jumeirah, valued at US$ 55 million and US$ 28 million, and the other in Business Bay selling for US$ 36 million. The mortgaged properties for the week reached US$ 261 million, with the highest being for land in Al Safouh Second for US$ 54 million; seventy-nine properties were granted between first-degree relatives worth US$ 52 million.

Latest data from DXB Interact shows that August property sale transactions were 23.7% higher on the year at 12,035 – of which 9.0k were for apartments and 2.1k for villas, with sales values of US$ 4.93 billion and US$ 2.34 billion respectively. The balance was made up of Commercial, 309 transactions, worth US$ 133 million, and 601 plots of land, valued at US$ 1.77 billion.  Prices, on the year, in the first three sectors, all headed north by 16.7% to US$ 354k, by 46.3% to US$ 817k and 23.6% to US$ 272k; land plots fell 17.2% to US$ 954k. Total Sales for the month were 38.8% higher at US$ 9.18 billion. Based on property demand, the top five locations were Business Bay, JBC, Al Merkadh, Dubai Marina and Al Barshaa South Third. By price range, 32% of sales value were in the under US$ 272k (AED 1.0 million) range, with 32%, 19% , 10% and 6% in the US$  272k – US$ 545k (AED 1 million – AED 2 million) range, in the US$  545k – US$ 817k (AED 2 million – AED 3 million), in the US$  817k – US$ 1.36 million (AED 3 million – AED 5 million) and over US$ 1.36 million (AED 5 million). Mortgage transactions were also higher in August with 3,229 transactions, valued at US$ 2.86 billion – by 58.8% and 10.0%. The five most expensive apartments were sold in Palm Jumeirah, Marsa Al Arab, One Za’Abeel Tower, The Address Residences Dubai Opera and Seapoint Tower Dubai Marina with values of US$ 31 Million, US$ 18 million, US$ 16 million, US$ 16 million and US$ 15 million. The most expensive villas sold last month were in Emirates Living, Tilal Al Graf, The World, Palm Jumeirah and MBR City with values of US$ 57 million, US$ 25 million, US$ 22 million, US$ 21 million and US$ 21 million.

Rents also headed north with apartments, villas and Commercial up 16.3%, 25.9% and 23.5% at US$ 16k, US$ 46k and US$ 29k. By category 54% of sales value were for apartments and 26%, 19% and 1% for villas, Commercial and land plots.

The chairman of Damac Properties remains bullish on Dubai’s property sector and expects the market will continue to offer double-digit returns to investors; Hussain Sajwani noted that “we are focusing on Dubai because the city will continue to grow tremendously”. Damac has recently launched three new projects – Damac Coral Reef in Dubai Maritime City and Morocco 1 and Morocco 2 at its third and upcoming master development Lagoons. Sajwani also indicated that “a lot of Europeans also want to come to Dubai and make the emirate their home because of taxes, economic situation and war in the region,” He also expects the UAE will see strong economic growth in the coming years, thanks to its strong leadership, US$ 1 trillion-plus worth of sovereign wealth assets, stable currency and well-diversified economy. The Damac supremo expects that Chinese investors will pile into Dubai now that the country appears to be fully open after three years of pandemic restrictions.

According to Kabir Lumba, chief executive of Landmark Retail, the Group is expected to open hundreds of stores in the years ahead, and it will depend on internal funding for expansion with no listing plans any time soon. He posted “we continue to open one hundred and fifty stores a year, so on an average, we will probably end up opening two hundred to two hundred and fifty stores [globally] every year for the next three years.”  He also commented that e-commerce now accounts for about 20% of turnover. The company, one of the largest retail and hospitality conglomerates in the ME and India, operates more than 2.2k outlets, covering more than 2.7 million sq mt in twenty-one countries. It has more than 50k employees across brands including Centrepoint, Babyshop, Splash, Lifestyle, Max, Home Centre, Shoemart and Emax.

A study by Alpen notes that the GCC retail sector grew by 15.7% to top US$ 298.6 billion and that it expects retail sales in the six-nation bloc to grow at a compound annual growth rate of 5.7% between 2022 and 2026 to reach US$ 370 billion. It also estimates that Saudi Arabia and the UAE will continue to lead the sector regionally, cumulatively accounting for 78.5% of total sales by 2026.

As part of its strategy to expand its global reach, Emirates has signed yet another codeshare partnership – this time with “United”, to include nine destinations in Mexico, in addition to Mexico City, which the airline also serves. At the same time, the agreement also provides more flexibility on flight timings, giving Emirates customers flying to Mexico City more options when choosing flights, and now includes one hundred and thirty-four destinations. Passengers can now plan their entire trip on a single-ticket and take advantage of hassle-free flight benefits, including the airline’s baggage allowance, in addition to convenient bag check-through to the final destination and can utilise Emirates’ Skywards.

Thani bin Ahmed Al Zeyoudi, Minister of State for Foreign Trade, reported that non-oil trade between the UAE and the G20 countries, accounting for 55% of the country’s total non-oil trade, topped US$ 341 billion last year – 21% higher on the year and up 56% and 34% on the previous two years. There was a 14.4% hike in H1 to US$ 181.9 billion.  The minister, in India on the side-lines of the 2023 G20 New Delhi Summit, added that the total balance of direct Emirati investments in these countries reached more than US$ 215 billion by the end of 2021, which represents 92.5% of all Emirati investments worldwide. The total investment balance of G20 countries in the UAE reached US$ 74.2 billion, accounting for 43.3% of all foreign direct investment.

DP World announced a US$ 26 million investment in the logistics and warehousing sector in the state of Telangana. The global ports operator will spend US$ 20 million on its inland container depot operation in Hyderabad, and the balance to set up a cold storage warehouse, with a capacity of 5k pallets in the Medchal area. Part of the company’s strategy is to expand operations in India, and only last month, it announced a US$ 510 million investment to develop and operate a new mega-container terminal in the Indian state of Gujarat.

At this week’s federal Cabinet meeting, a law was passed to ban heavy vehicles, weighing over 65 tonnes, from UAE roads, effective next year, as part of a federal law that regulates the weight of vehicles. HH Sheikh Mohammed bin Rashid posted that the aim is to “preserve our advanced infrastructure” and enhance road safety. A smart electronic gate system will be installed to measure and monitor the weights and dimensions of heavy vehicles.

DMCC has welcomed thirty-one businesses to its newly opened Uptown Tower’s twenty-two floors of Grade A commercial office space, equating to 495k sq ft. This is the first wave of commercial tenants, with others moving in over the next few months. A wide range of retail and F&B outlets, including allday and Jones the Grocer, are already in situ. Uptown Tower is the first tower to be built within DMCC’s Uptown Dubai district, which will eventually be home for one more super tower, reportedly taller than the current tower, along with seven mid-rise buildings. Once complete, it will redefine mixed-use developments in the region, boasting diverse retail and F&B offerings, luxury hotels, experiential living and a sustainable community. Following 3.0k new companies joining last year, and a further 1.5k in H1, DMCC houses more than 23k member companies.

As it continues to connect global business communities, by organising exhibitions, conferences etc, Dubai World Trade Centre has announced its Q4 list of events, with over one hundred business and consumer events spanning vital sectors including, inter alia, technology, sustainability, food and beverage, healthcare, green economy. Before then, September will witness the likes of Plastics Recycling Show ME, Sleep Expo, ME Foam & Polyurethane Expo, Adhesives Sealants, and Bonding Expo ME, Gulf Bride Show, Frozen Musical Celebrations, Sign and Graphic Imaging ME Exhibition, Connecting Trade Worldwide, the Annual Dermatology Conference and Exhibition MEIDAM and the Forex Exhibition. The three-day ArabLab+ will take place between from 19 September and is set to host more than 10k delegates and 850 exhibitors. All these contribute to enhancing Dubai’s profile in the global arena and to adding to the emirate’s growth, as a business tourism destination, in line with Dubai’s Economic Agenda (D33).

Some of the major events in October include:

• Automechanika Dubai   with exhibitors from fifty-five countries                 02-04 Oct
• Agra ME                      the region’s largest agricultural trade show             09-10 Oct
• AccessAbilities                                                                                                09-11 Oct
• GITEX Global              the 43^rd edition of DWTC-owned flagship show        16-20 Oct
• HR Summit & Expo                                                                                        24-25 Oct
• Beautyworld ME         the region’s largest international trade fair                30 Oct–01N
• GESS                           Global Educational Supplies and Solutions                  30 Oct–01N

Major events in November will include Gulfood Manufacturing, the World Radiocommunication Conference, WETEX and Dubai Solar Show, Gulf Traffic, Paper World ME, Dubai Muscle Show, World Tobacco ME, International Apparel & Textile Fair, Brands of India. December will witness the holding of the Big 5 Global, while the premium international trade show for the plastics, petrochemicals, packaging and rubber industries, ArabPlast, will take place between 13-15 December.

In a bid to enhance its current investment portfolio, Dubai-based Alkhair Capital has launched a US$ 100 million fund to invest in healthcare technology ventures, targeting companies that are “harnessing cutting-edge artificial intelligence to bolster healthcare providers”. The Sharia-compliant asset management and investment banking company noted that the new investment vehicle will play “a pivotal role in addressing liquidity challenges that are “hampering the profitability and expansion of medical facilities”. The open-ended fund aims to provide liquidity to target companies to boost their growth, at a time when “the healthcare sector is experiencing remarkable growth, propelled by the region’s expanding senior citizen population, rising life expectancy and a surge in lifestyle diseases;” and “this surge has led to significant challenges, including insufficient infrastructure, higher medical claim settlements and liquidity constraints due to extended working capital cycles.” Alkhair Capital has partnered with Klaim Technologies, a FinTech, that provides AI-powered solutions for assessing insurance claims, as part of its proactive investment management approach to meet the objectives of the new fund.

The DFM opened on Monday, 04 September 2023, 9 points (0.2%) lower the previous week, shed 23 points (0.6%) to close the week on 4,067, by 08 September 2023. Emaar Properties, US$ 0.08 higher the previous fortnight, shed US$ 0.02 to close on US$ 1.91 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.70, US$ 4.55, US$ 1.54, and US$ 0.44 and closed on US$ 0.71, US$ 4.69, US$ 1.57 and US$ 0.44. On 08 September, trading was at 75 million shares, with a value of US$ 57 million, compared to 88 million shares, with a value of US$ 52 million, on 01 September 2023.

By Friday, 08 September 2023, Brent, US$ 4.19 higher (4.9%) the previous week, gained US$ 5.71 (6.7%) to close on US$ 90.43. Gold, US$ 24 (1.2%) higher the previous week, shed US$ 23 (1.2%) to US$ 1,966 by 08 September 2023.  

After employees at Chevron’s Gorgon and Wheatstone plants in Western Australia went on strike, in a row over pay and conditions, natural gas prices have soared; these two plants account for more than 5% of global LNG capacity. The immediate consequence was a 10% hike in UK wholesale gas prices – but worse is to come because there is still supply available and then when that is used up, prices will skyrocket. While wholesale energy costs have fallen, since Russia’s invasion of Ukraine last year, pressure on prices remains. Oil prices rose this week, with Brent crude trading at about $90 a barrel, after Saudi Arabia and Russia extended their cuts to supplies to the end of the year. Two weeks ago, the 25 August blog ‘Life For Rent’ covered the possibility of this happening and the consequences if strike action was taken.

The man, who started his working life selling fizzy drinks on the streets of Alexandria only to become one of the most successful businessmen that Egypt has ever seen has died. His first major break was when he married Samira Khashoggi, the sister of Saudi millionaire arms dealer Adnan Khashoggi – who employed him in his Saudi Arabian import business. From these humble beginnings, he managed to forge new connections in Egypt and launched his own shipping business before building a business empire in the ME; in 1966, he became an adviser to one of the world’s richest men, the Sultan of Brunei. He moved to the UK in 1974 and, over the next decade, he acquired the Ritz Hotel in Paris, with his brother Ali, for US$ 25 million.  In the mid-1908s, he paid US$ 775 million for Harrods, and in 1997, he purchased the freehold of Craven Cottage and became a major shareholder in Fulham Football Club. Three months later, he lost his son, Dodi in the Paris crash that claimed the life of Dianna, Princess of Wales on 31 August. Mohamed Al Fayed, who never realised his ambition to gain a UK passport, died in London one day short of twenty-six years after Dodi died; his net worth was estimated at US$ 2.0 billion.

IATA announced that July global passenger traffic rebounded to 95.6% of its pre-pandemic levels, with Asia-Pacific carriers posting the fastest growth; globally, total passenger traffic increased by 26.2% on the year, whilst international passenger traffic climbed 29.6%, and reached 88.7% of July 2019 levels, with all markets recording strong growth, and demand for domestic travel came in 21.5% higher, driven by increasing numbers of Chinese passengers. ME airlines posted a 22.6% year-on-year surge in July traffic, while European carriers’ passenger traffic rose 13.8%, and North American airlines were up 17.7%.

Moody’s Investors Service estimate a 10% decline in global sukuk issuance, with Saudi Arabia posting the largest decline in the GCC, with volumes falling 41% to US$ 15 billion in H1. Issuance activity in the UAE rose 82% to US$ 4.3 billion, mainly due to higher volumes on the corporate and banking side. The decline is attributable to lower volumes from major sovereign issuers, including the GCC and SE Asia, as their fiscal positions continued to improve on higher energy prices and sustained economic growth. Other factors included muted activity in Saudi Arabia, Indonesia and Turkey, amid robust commodity prices. The total gross short and long-term sukuk issuance is expected to fall between US$ 150 billion and US$ 160 billion this year, from US$ 178 billion in 2022. H1 issuance activity was at US$ 66 billion, down 28.3% compared to last year’s return. The consultancy expects a slight bounce back in H2 to between US$ 80 billion to US$ 90 billion, driven by a partial rebound in SE Asia and Turkey. Not surprisingly, Moody’s sees a bright future for green sukuk because of increased support, by both the private and public sectors, as sustainability becomes a “key theme in public policy agendas, as well as investors’ strategies”. This week, Abu Dhabi Commercial Bank PJSC priced a US$ 650 million green bond, the proceeds of which will be used to finance eligible green assets as outlined in ADCB’s Green Bond Framework; this is its second in a year, following an inaugural US$ 500 million green bond in September 2022.

This week, Lidl opened its largest warehouse in the world, near Luton, at a cost of US$ 375 million. Encompassing 1.2 million sq ft, the facility will service one hundred and fifty of the German supermarket’s UK stores and will create 1.5k new jobs. Bowing to sustainability issues, the building will include solar panels, whilst all its delivery vehicles will be fuelled by biogas made from food waste. So large is the warehouse, it could “fit three of Lidl’s existing warehouses inside” and is expected to move more than 9.4k pallets of goods each day. Lidl is part of the Schwarz retail group and operates about 12.2k stores in thirty-one countries.

With press reports indicating that Manchester United will remain with the Glazer family, its share value lost 18% in New York trading on Tuesday – its biggest ever one day fall, having wiped around US$ 700 million off Manchester United’s stock market valuation. It is now valued at about US$ 3.2 billion – still a healthy profit considering the US buyers acquired the club for US$ 709 million in 2007. Since the takeover the club has spent more than US$ 1.25 billion on interest and loan payments, plus share dividends – the majority of which have gone to the Glazer family. There are indicators that they may try again next year to sell MU when they hope to attract more bidders. It seems that the brothers, Joel and Avram, now want US$ 10.0 billion for any sale and that the two prospective bidders, Qatar’s Sheikh Jassim and UK billionaire Sir Jim Ratcliffe had not come close to offering that amount. Ten months ago, the family had announced that it was considering selling the Premier League club as they explored “strategic alternatives.

After news that Chinese authorities had banned government workers from using iPhones filtered through to the markets, Apple’s share value lost almost US$ 190 billion in forty-eight hours, (6.4%). China – accounting for 18% of the tech giant’s 2022 revenue – is Apple’s third biggest market and is also where its products are manufactured.

Seagate has been fined US$ 300 million by US authorities for allegedly violating export controls of hard disk drives to China’s Huawei; the tech firm had shipped more than US$ 1.1 billion worth of goods to Huawei, comprising 7.4 million drives, after export controls were introduced in 2020. The Commerce Department noted that it continued to do so “even after Huawei was placed on the Entity List for conduct inimical to our national security” – with US authorities alleging that such equipment may be used by China’s military. It also confirmed that the other two main hard drive suppliers had stopped exports to the Chinese firm, in accordance with the new rule.

It is reported that an agreement between Hyundai and LG will see an additional US$ 2.0 billion being invested in a battery plant, based in Georgia, USA. The move will result in a significant boost for the US motor sector and is expected to produce sixty gigawatt hours of car batteries per year, and to generate 2.6k jobs. With battery demand booming, this additional capacity will help reduce the massive battery shortage being faced by the electric vehicle production industry.

News reports indicate that Elon Musk took out a US$ 1 billion loan from SpaceX, prior to acquiring social media giant Twitter, which he later rebranded X. The space company he founded received some of Musk’s SpaceX shares as collateral with the company approving the arrangement last October. He repaid the entire loan, inclusive of interest, in the span of just one month, and at the same time he bought Twitter on 27 October. Reports show that he owns 42% of SpaceX’s shares but has 80% voting rights.

SHIB’s community recently introduced a new Layer-2 solution, Shibarium, marking a significant technological development in the Shiba Inu ecosystem, which has rapidly expanded its presence in the market and has managed to reach over one million wallets. Shibarium’s primary objective was to build an ecosystem that could comfortably tread on Ethereum’s network, while reducing costs significantly and providing a significant boost to its real-world utility. Having overcome these problems, and although its price has been under pressure recently, SHIB is optimistic that it can provide a significant boost to its real-world utility, drawing more extensive global acceptance and creating a potential for long-term value appreciation.

Although the UK-based Arm decided to have its IPO in New York, despite strong lobbying from the Sunak government, it will keep its material intellectual property, headquarters and operations in the UK. The UK-based chip designer is seeking to raise US$ 5 billion in this listing which would give Arm a market value of more than US$ 50 billion in its first sale of shares to the public since 2016. The company, owned by Japan’s SoftBank after a 2016 acquisition, was then valued at US$ 32 billion. In a regulatory filing Arm said it was selling 95.5 million shares in the deal at a price expected to be between US$ 47 and US$ 51 per share and that it had already lined up the likes of Apple, Google and Nvidia, as investors, who have committed to buying about US$ 735 million worth. Arm Holdings estimates that 70% of the world’s population uses products that rely on its chips, including nearly all of the world’s smartphones.

In August, Australian property prices rose 0.8% on the month for the sixth consecutive month – an indicator that the country’s housing market is well into recovery mode, driven by slowing inflation, signs that mortgage rates may have plateaued and a tight supply chain. In the month, Brisbane saw the highest increase in home values, followed by Sydney and Adelaide. Since February, average property prices have jumped 4.9%, by US$ 22.2k. August’s growth rate follows the previous three months’ hikes of 0.7%, 1.1% and 1.2%.  CoreLogic pointed to Brisbane posting a 6.2% increase since March, whilst Hobart remained flat, with the ACT only nudging 1.0% higher. It appears that house values are recovering at a faster rate – 6.3% – whilst units are showing rises of 4.9%. Despite the RBA not touching rates this month, there is every chance that property prices will dip over the next twelve months, more so if stock levels rise.  However, mortgage stress will continue well into 2024, as rates will not start heading south until fiscal Q1, but there is every likelihood that the percentage of borrowers, falling behind on their repayments, will continue to move higher throughout the rest 2023 and into next year.

A new report by PropTrack concludes that Australian housing affordability is now at its worst level, in at least three decades, and that it is likely property prices will continue to increase over the next six to twelve months. Real estate analysts noted that servicing a mortgage is “close to as hard as it has ever been”, where a household earning an average income “would need to spend a third of their income on mortgage repayments to buy a median-priced home”. The obvious two factors behind this scenario are the sharp rise in mortgage rates and increasing home prices. The study posted that those trying to buy a house in New South Wales, Victoria or Tasmania will have a tough time finding something they can afford with the situation particularly dire in Tasmania where a typical-income household could only afford 5% of homes sold in Tasmania in the past year — the lowest in the country. For Tasmanian families in particular, mortgage repayments account for 35% of household income — a record high.  First-time home buyers – and lower income families – are taking it on the chin, with the double whammy of repaying mortgages at the current high rates and the difficulty of saving a 20% deposit; the average Australian household would need to save 20% of their income for more than five and a half years to buy a median-priced home. 

In August, there was a 1.5% increase in the national rental index, and although it was the smallest monthly rise since November 2020, it was the thirty-sixth straight month of gain. There is an on-going concern around the lack of rental inventory, as the vacancy rate tightened in capital cities and regionally declined to 1.1% and 1.4% respectively. Gross rental yields – the difference between the amount of income landlords make in a month and their investment costs – have been dipping since April, and this is an indicator that housing values are edging up at a higher rate than rental rates.

Despite what Qantas’s Alan Joyce told the parliamentary committee last week, it seems that the Australian Competition and Consumer Commission think differently. It believes that permitting Qatar Airways to add more weekly flights at Australian airports would have made fares cheaper, as pressure mounts on the government to reconsider its decision to block the airline’s request to add twenty-one more weekly flights to the country. The Albanese administration said its action was in the “national interest”, saying that national carrier Qantas must remain viable and reducing airfares could threaten it in the medium- and long-term. The head of the ACCC, Gina Cass-Gottlieb, has agreed with her predecessors that allowing Qatar’s expansion would have reduced prices, which she would have “welcomed”. She added it was hard to predict by how much it could have cut prices, but quoted Virgin Australia’s estimate of 40%. Now aviation groups, and the opposition, have weighed into the argument that the government should reconsider their decision.

Alan Joyce was set to retire in November after fifteen years at the helm, to be replaced by the current CFO, Vanessa Hilton; however, he has “decided” to retire this week instead.  He has had some success in delivering his last annual profit of a record US$ 1.6 billion, (maybe by taking advantage, and at the expense, of passengers and employees) but will leave behind a legacy of a much-tarnished brand plus a battered reputation, a class action, a lawsuit by the ACCC, his role in “Qatargate” and bowing to public pressure by scrapping the expiry dates on more than US$ 323 million worth of flight credits. Unfortunately, no happy ending for Mr Joyce.

In WA, there is no doubt that the lithium sector is booming, as Albermarle is offering US$ 4.3 billion for WA miner Liontown Resources which is developing the US$ 580 million Kathleen Valley project, due to come into production next year. The US chemical giant has now made a non-binding offer of US$ 1.94 a share – up from US$ 1.62, US$ 1.52 and US$ 1.29 on 27 March, 03 March and 20 October 2022. The board has confirmed that “should Albemarle make a binding proposal at AUD 3 per share, subject to agreement of a mutually acceptable binding scheme implementation agreement, the intention of the Liontown board is to unanimously recommend shareholders vote in favour of the proposal, in the absence of a superior proposal.” Last month, Perth-based Azure Minerals revealed it had rejected a US$ 647 million takeover offer, at US$ 1.50 a share, from Sociedad Quimica y Minera de Chile. Earlier in the year, the Chilean mining giant paid US$ 130 million for a 19% stake in Azure, and since then its share value has surged by over 1k%, on the back of its Andover lithium discovery, in WA’s Pilbara. It is also building a lithium refinery at Kwinana, with Wesfarmers, and the Mt Holland lithium mine near Southern Cross.

Embattled Chinese property developer, Country Garden, that recently posted an H1 US$ 6.7 billion loss, was due to make a US$ 540 million onshore private bond repayment last Saturday. It seems that a deal was thrashed out which enabled the firm to avoid defaulting on the debt, after Chinese creditors agreed to allow it to make the instalment payments over the next three years. Despite Monday seeing its share value 15% higher on the news, it is still 60% down YTD. It also paid a US$ 613 million payment on a Malaysian ringgit denominated bond. On Wednesday, it is due to make a US$ 22 million payment on two US dollar bonds it missed in August.

China’s property sector accounts for almost 25% of the country’s economy which is having a marked drag on the nation’s GDP. Late last week, the Central Bank initiated measures to pave the way for further cuts in lending rates, as the sector is still recovering from rules, introduced in 2020, that restricted the amount of money big real estate firms could borrow. The main casualty was Evergrande, then the country’s largest developer, which managed to rack up over US$ 300 billion in debt because of expanding far too quickly. The knock-on impact has been felt not only by the property industry but the whole economy, with many developers defaulting on their debts and leaving building projects unfinished across the country. Evergrande shares have lost more than 99% of their value in the past three years. The country’s economy has not only been battered by this but is also facing problems on a myriad of fronts such as weak economic growth, ballooning local government debt and record-high youth unemployment.

August was another bleak month for China’s trade – with exports and imports both down on the year – falling 8.8% and 7.3% – not helped by several post-pandemic challenges, including a property crisis, the on-going trade dispute with the US and weak consumer spending, both domestically and on the international stage. Indeed, this week, the US Census Bureau noted that China’s share of US goods imports fell to its lowest level, 14.8%, since 2006, and well below the 21.8% reported in the year ended March 2018. These figures came at the same time when China’s real estate market continues its slump, with many major developers  trading in negative territory. It can only be a matter of time before Beijing introduces a large stimulus programme to boost the sagging economy.

With India increasingly reliant on hydroelectric power to meet its growing energy needs, the last thing it needed was a dry spell and a 12% reduction in the expected monsoon rain. This impacted on energy output, resulting in the need for the country to increase its coal imports to ensure the consistent functioning of power plants and to prevent power outages. With this, the world’s second-largest coal importer is having to shift to coal-fired power plants, leading to an increase in demand for fossil fuel. Currently, the country has imported 247 million tonnes. This import surge has had the knock-on effect because of the country’s commitment to mitigate climate change and to reduce its carbon emissions, with this higher coal consumption conflicting with its strategy. There is no doubt that the high consumption is probably the main reason for several Indian cities having poor air quality levels – and this situation may worsen with amplified coal burning.

Last Friday, India’s Enforcement Directorate arrested Naresh Goyal, and questioned him in relation to a US$ 65 million money laundering case linked to Canara Bank. The founder of Jet Airways was questioned extensively by ED officials in Mumbai and was accused of non-cooperation. The ED probe stems from a CBI case filed at Canara Bank’s complaint, naming Goyal, his wife, Anita, and a former airline director for “causing wrongful loss” to the lender and alleging diversion and siphoning of funds from loans taken for airline operations. Once India’s biggest private airline, Jet ran out of cash in April 2019 and filed for bankruptcy. Currently, talks are in deadlock, and it still has to settle with its many creditors to lift the airline out of bankruptcy.

Although employers added 17k more jobs than expected in August, at 187k, the latest Labor Department’s report shows a sign of a softening in the labour market and a possible indicator that the Fed may hold off pushing rates higher this month. There were also marked revisions downwards for both July and June returns – down 30k to 157k and 80k to 105k. The unemployment rate nudged 0.3% higher to a still historically low of 3.8%, whilst wage growth rose 0.2% on the month – its lowest gain since last year – as layoffs still hover near a historic bottom. Vacancies fell to a two-year low point of 8.8 million in July, with the quit rate staying moderately flat. It seems that the market is betting against Fed Chair, Jerome Powell, who has been warning that rates may yet have to rise again, whilst many analysts believe that rates will remain unaltered until year end.

The World Bank estimates that up to 12% of the global labour market operate in the ‘gig’ economy, with demand surging more so for women and youth in developing countries; on the flip side, social protections for those in this segment is lagging well behind. Two good examples are that in Sub-Saharan Africa, job postings on the largest digital platform grew by 130% while the growth rate in North America was just 14%, and almost 60% of firms surveyed in poorer countries reported increased outsourcing to gig workers, but only 30% in wealthier countries. The WB study noted that together, low- and middle-income countries account for 40% of traffic to gig platforms. It concludes that “online gig work could provide people in low- and middle-income countries an additional path out of poverty,” and “it can help address youth unemployment and it can support increased labour market participation for women”.

Following the flight chaos during the August bank holiday weekend, when UK’s air traffic control system was brought down in a “one in 15 million” event, the boss of Ryanair has slammed a report on the flights chaos seen over the bank holiday as “rubbish”. Consequently, hundreds of flights were delayed or cancelled as a result on 28 August, with Michael O’Leary claiming the findings “downplay the impact on the aviation industry” and said the report was “full of excuses”. Industry group Airlines UK argued that carriers incurred huge costs in providing accommodation and putting on more flights for customers who were stuck overseas and should be able to claim compensation that could be around US$ 25 million. O’Leary said that “there won’t be any issues” for customers claiming costs, but demanded that Nats, which controls the UK’s air traffic services, “accepts responsibility for its incompetence”. EasyJet boss Johan Lundgren also said that “many questions are still left unanswered”, and that “an incident on this scale should not have happened and must not happen again.”

It is readily apparent that today’s auction for seven UK offshore wind projects would flop and would be lucky to get any bid interest – and this has now happened. Offshore wind developers have been moaning that the price set by the Sunak government for the electricity they will generate would be too low to make projects viable. Energy firm SSE and Swedish firm Vattenfall had already ruled themselves out of the bidding, saying that the government had failed to allow for sharp rises in the cost of steel and labour when setting the electricity price. Under its wind power auctions, the government had set an electricity price which bidders compete to come in at or below. This arrangement is called a Contract for Difference (CFD). If electricity prices in the future rise above that level, the companies pay the excess back to the Treasury, if they fall below it the Treasury pays the company the difference. The US$ 55 (GBP 44) per megawatt hour price floor set for this auction failed to take account of development costs, according to industry insiders. They had been warning for some time that steel prices and wage rises had pushed their costs up by between 20% and 40% since the last auction was held at a similar price target.  The fact that no new offshore wind project contracts have been bought by developers, at this key government auction, has dealt a hammer blow to the UK’s renewable power strategy, which was the “jewel in the UK’s renewable energy crown”.  Although there were no bids for new offshore wind farms, the Department for Energy Security and Net Zero said “significant numbers” of solar power, onshore wind, tidal energy schemes, and for the first time, geothermal projects, which use heat from the ground to generate power, had been awarded funding.

No wonder then that Rishi had took the opportunity to replace the incumbent, Grant Shapps (Mr Bumble), before the news came out, with Claire Coutinho as Energy Secretary. With no experience to speak of, he was appointed Defence Secretary, noting that “Defence is in my DNA because Britain gave my family our freedom”. In a little over the year, the then Secretary of State for Transport, last July, announced his campaign for leadership of the Conservative Party, (but soon pulled out and endorsed Rishi Sunak), became Home Secretary in October under Liz Truss, then Home Secretary in the same month and Business Secretary by the newly arrived Rishi Sunak; in February, he was appointed Secretary of State for Energy Security. As his government runs from one crisis to another, it seems that the Prime Minister is running out of allies and had reached the state that he has to put incompetent supporters in key roles. Although he has history of dubious behaviour within – and outside – government, he has been appointed to one of the most important posts in the land – not on merit but on expedience. Rishi has to be careful on this choice with both men wrongly thinking that That’s What Friends Are For!