Time To Move On?                                                                   23 June 2023

Last week, ending 16 June, produced mega results with 3,625 real estate and properties transactions totalling US$ 3.41 billion, but this week was even better. The 4,048 real estate and properties transactions totalled US$ 4.25 billion, during the week, ending 23 June 2023. The sum of transactions was 278 plots, sold for US$ 474 million, and 2,965 apartments and villas, selling for US$ 2.00 billion. The top three transactions were all for plots of land, one in Wadi Al Safa 3, sold for US$ 24 million, the second in Madinat Dubai Almelaheyah for US$ 20 million, and the third in Palm Jumeirah for US$ 19 million. Al Hebiah Fifth recorded the most transactions, with eighty-two sales, worth US$ 58 million, followed by thirty-one sales in Madinat Hind 4 for US$ 11 million, and twenty-seven sales in Jabal Ali First, valued at US$ 27 million. The top three transfers for apartments and villas were all for apartments – the first in Al Goze First, valued at US$ 60 million, another in Al Nahda First, for US$ 27 million, and an apartment in Palm Jumeirah for US$ 27 million. The mortgaged properties for the week reached US$ 1.53 billion, whilst one hundred and thirty-nine properties were granted between first-degree relatives worth US$ 254 million. Latest DLD statistics indicate that in the first five months of the year, 29k primary sales occurred – soaring 41% on the year – totalling US$ 18.46 billion.

According to EG Hermes, Dubai’s May off-plan sales surged more than 100% annually to 5.5k units, valued at US$ 3.8 billion. Dubai Harbour and Dubailand areas posted May sales figures of US$ 817 million, compared to US$ 37 million a year earlier, and US$ 313 million, (May 2022 – US$ 75 million). Off-plan market activity reached its highest level in a decade, with other areas, such as MBR City, Downtown Dubai and The Palm Jumeirah, recording strong sales. Total property transactions in Dubai – including land, apartments, villas and offices – rose 94% to US$ 12.26 billion, annually in May; total residential market transactions during the month were up 134% at US$ 8.91 billion.

This week, the Al Habtoor Group announced that units in the upcoming Al Habtoor Tower are now on sale and that it is seeing “massive interest”. The eighty-two-storey tower – slated to be the largest residential tower in the world – will house 1,619 apartments and 22 sky villas, (with prices for the 1 B/R, 2 B/R and 3 B/R units starting at US$ 572k, US$ 954k and US$ 1.28 million), with the sky villas yet to be priced. The developer has refused to disclose the height of the world’s largest residential tower. The company has even noted that there are some investors interested in buying the whole project, estimated to be worth over US$ 1 billion, but it has refused such offers. It seems that the tower would be a vertical city within Al Habtoor City, and will comprise “numerous retail and dining options, with multiple swimming pools on various levels, full-service spa, quiet spaces, kids’ areas, libraries and network rooms, among others.”

MAG has announced that its Q1 sales reached US$ 817 million; during the period, its luxury residential development, Keturah Reserve, located in Mohammed Bin Rashid City, District 7 in Meydan, recorded the sale of all available ninety-three townhouses, with 70% of the project’s units having already been sold. Furthermore, the ‘The Ritz-Carlton Residences, Dubai, Creekside,’ project recorded sales of the penthouses, with 360-views of the Dubai skyline, the two-bedroom Sky apartments, and two mansions out of the available twelve. MBL Royal Residences, a mixed-use luxury tower in JLT, was completely sold out within seventy-five days of its launch, as have 60% of 2B/R – 3 B/R townhouses. Earlier in February, MAG also launched MAG 22, a residential development offering two and three-bedroom townhouses at MBR City, and already 60% of its units have been sold.

A 4-B/R penthouse has been sold for US$ 22 million on Bluewaters Island, becoming the most expensive penthouse to be snapped up on the Island; the property encompasses 9.3k sq ft.

The latest report by Julius Baer indicates that the Europe, Middle East and Africa region is the world’s most affordable for the super-rich to live a luxury lifestyle, noting that over the previous twelve months, the price of all goods and services in its 2023 Global Wealth and Lifestyle index, increased on average by 13% in local currencies and by 6% in US dollars. Some of the biggest price increases occurred in high-demand, premium consumables, luxury cars and hospitality services. Asia remains the most expensive region in the world for HNWIs – defined as people with a net worth of US$ 1 million or more – with Singapore, Shanghai and Hong Kong taking the top three places.  Dubai is listed as the seventh most expensive city behind London, New York and Monaco, but ahead of Taipei, Sao Paulo and Miami; last year it was placed fourteenth.

The report commented that that Dubai “remains an object lesson in the saying, ‘Build it and they will come’ and is also a testament to the power of government to create hubs using financial and other incentives,” and that “it has become the place that companies and entrepreneurs seeking a base in the Middle East turn to and is popular with expats. Most recently, it has seen the relocation of large numbers of wealthy individuals, which has affected property prices and demand.”

There are three major classifications used in relation to Dubai’s residential sector – luxury, affordable and budget. The former category encompasses areas such as Downtown Dubai, Old Town, The Palm Jumeirah, Emirates Hills and the DIFC, while the affordable segment includes Business Bay, JLT, Dubai Marina, Emirates Living, Arabian Ranches and affordable units in Downtown Dubai. The budget segment comprises the likes of International City, Discovery Gardens, Dubai Sports City, Jumeirah Village, International Media Production Zone and MotorCity. In May, Dubai’s luxury home sales more than doubled to about US$ 3.0 billion, while affordable and budget home sales also more than doubled to about US$ 3.8 billion, and US$ 2.40 billion, respectively. Dubai Harbour registered the best annual price performance, at US$ 1.08k per sq ft, up from US$ 728 per sq ft in May last year. Other top-performing areas include MBR City and The Palm, while prices dropped in Dubai Marina, Tilal Al Ghaf and luxury homes in Downtown Dubai.

Last week, this blog contained details of the inflow boom in millionaires into the emirate, with a further 4.5k forecast to be added to the portfolio this year. Pre-Covid, Dubai would average an influx of around 1k new millionaires a year, but last year, the number jumped to 5.2k HNWIs – the highest in the world – mainly because of its quick exit from lockdown and progressive government initiatives. There is a myriad of reasons why Dubai has become such an attractive destination for many looking for a better lifestyle including:

• highly diversified economy, with strong financial services, healthcare, oil/gas, real estate, technology, and travel/tourism sectors
• one of the most competitive tax rates in the world, along with the likes of Bermuda and Monaco
• a progressive and dynamic government able to initiate a series of steps to steer the country towards greater economic growth and development
• quicker and more pro-active government decision-making – “green tape” rather than red tape
• luxury hub with world-class shopping destinations and restaurants
• excellent infrastructure
• world class leisure facilities
• one of the cleanest and safest cities in the world
• best in class international travel hub
• first-class health care system
• 140 international schools, with a mix of English National Curriculum / British schools/ International Baccalaureate and American schools
• top-end apartments and luxurious villas that are available
• Dubai came in at a relatively low 31^st in a 2022 Mercer survey ranking the cities with the highest cost of living in the world
• the country’s aim to develop and transform into a “comprehensive hub in all sectors and establish its status as an ideal destination for talents and investors”
• the Dubai Economic Agenda’s goal to double the size of the economy in the next decade and establish it as one of the top three global cities

To show how Dubai eateries have improved over recent years is borne out by the fact that two Dubai restaurants were included in the World’s 50 Best Restaurants 2023 at an event in Valencia, Spain. Dubai’s Tresind Studio (No 11) was named Best Restaurant in ME and Africa, ahead of Orfali Bros Bistro (No 46). Lima’s Central won the award for World’s Best Restaurant, as well as Best Restaurant in South America, followed by Disfrutar in Barcelona and Diverxo in Madrid. Last March, the Dubai Michelin awards were made, with Tresind Studio, located at Nakheel Mall on Palm Jumeirah, one of three restaurants to receive the coveted Michelin two-star accolade – the others being Il Ristorante – Niko Romito and Stay by Yannick Alleno.

All Emirates Airline employees are in line for a pay rise – just weeks after receiving a bonus payment equivalent to twenty-four weeks’ salary. Applicable to all employees, in Dubai and around the world, the payment includes a 5% pay rise on basic salary, increases in accommodation and transport allowances and a 10% increase in the education support allowance from September. Major global airlines have renegotiated wages and paid bonuses, driven by surging inflation pushing up food and energy bills for employees, and reflecting the intense competition for aviation workers, post pandemic, during which time the aviation sector was forced to slash jobs during lockdown when air travel came to a standstill. Last year, BA, Lufthansa and Air France all agreed to salary increases ranging from 2.5% to 8.0%.

It will be a hectic holiday period for Dubai International, as the world’s busiest international airport expects to welcome 3.5 million passengers over the fourteen-day period between 20 June and 03 July. The average total daily traffic will reach 252k and tomorrow, 24 June will see 100k passengers leaving DXB, whilst on 02 July the daily traffic numbers, at 305k, will break all records. As of 2022, the aviation sector in the UAE contributed, directly or indirectly, to about 14% of GDP, compared to 2-3% in major emerging markets and advanced economies.

DP World has signed an agreement with Indonesia’s Belawan New Container Terminal to manage the terminal and begin a major expansion. The venture will create Indonesia’s most direct link with the Malacca Strait, one of the world’s busiest shipping routes. Two of the main targets will be to more than double the port’s capacity from 600k TEUs to 1.4k TEUs and to enhance the port so that it will attract more direct calls, reducing North Sumatra’s reliance on regional hub ports to access regional and global markets. The Dubai-based port operator is also looking at working to connect and enhance other terminals and small ports on the Island of Sumatra.

Located at the DIFC Innovation One premises, the Dubai ‘AI and Web 3.0 campus” is to be established and will become home to state-of-the-art hardware, R&D facilities, accelerator programmes and collaborative workspaces. It will also be the largest cluster of Artificial Intelligence and tech companies in the MENA region and will host a myriad of visionary entrepreneurs, disruptors and engineers. By 2028, the campus will encompass an area of 100k sq ft, with this project becoming a major contributor to the local AI sector which is expected to account for 14% of the emirate’s GDP by 2030. The Governor of DIFC, Essa Kazim, commented that the campus “will significantly contribute to this growth as a global nexus for R&D, investment, and innovation by attracting over US$ 300 million in collective funds, 500+ global AI and Web 3.0 start-ups, and create 3k+ jobs by 2028.”

As Dubai strives to become the global destination of choice for digital entrepreneurs, it is reported that Dubai start-ups raised double the 2021 total to US$ 2 billion collectively last year. It is estimated that more than 30% of funding in the Mena finds its way to Dubai-based start-ups. The report by Dubai Chamber of Digital Economy also shows that 87% of all funding rounds for UAE-based companies are for start-ups based in the emirate, and according to Omar Al Olama, Minister of State for Digital Economy, AI and Remote Working System, one of the main causes is “the country’s proactive vision in developing legislation and initiatives in the digital field creates a favourable environment for start-ups and fast-growing companies”. In Q1, the Dubai Chamber of Digital Economy attracted thirty digital start-ups, with Dubai now home to more than 40% of all scale-ups, (totalling 306 and having raised more than US$ 11.7 billion in the twelve years to 2022), in the Mena region and 90% of all scale-ups in the UAE.

HH Sheikh Mohammed bin Rashid Al Maktoum has inaugurated the 900 MW fifth phase of the Mohammed bin Rashid Al Maktoum Solar Park that will provide clean energy to 270k Dubai residences in Dubai, whilst reducing 1.18 million tonnes of carbon emissions annually. This is probably the biggest project that will help achieve “the Dubai Clean Energy Strategy 2050 and the Dubai Net Zero Carbon Emissions Strategy to provide 100% of Dubai’s total power capacity from clean energy sources by 2050”. The US$ 545 million project – a 60:40 partnership between DEWA and Acwa Power – encompasses 10 sq km and, when completed in 2030, will have a capacity of 5k MW.

In its latest forecast, CBUAE maintained its growth forecast unchanged at 4.3% for next year, whilst stating that the UAE economy continued to grow at a solid pace in Q1 2023, “reflecting a strong performance of the non-oil sector, partially offset by a moderation in the oil segment of the economy”, and that the 2023 growth forecast has been revised down by 0.6% to 3.3%. The non-oil sector is expected to continue to support aggregate output, albeit at a more modest pace compared to 2022. Last year, oil GDP grew at 9.5%, with an average production of 3.1 million bpd, but has slowed to an estimated 3.1%, year on year, in Q1. However, with quota cuts of 144k bpd starting last month, the country will only pump 2.950 million bpd which will result in a downward revision of the expected GDP growth for 2023 to -0.3%;, it  is expected to rebound to 3.5% in 2024. The usual caveats – including “the evolution of the conflict in Ukraine, a faster than expected deceleration in global growth, further OPEC+ cuts or increases in oil production, and subdued production of other OPEC+ members” – apply.

 As at 30 April 2023, the value of gold reserves of the Central Bank of the UAE reached US$ 4.82 billion – 41.0% higher on the year and up 9.1% YTD. Over recent years, the central bank has significantly increased its gold balance which stood at only US$ 309 million, at the end of 2018, rising to US$ 1.20 billion a year later and to US$ 3.05 billion by the end of 2020.

This week, Sheikh Hamdan bin Mohammed bin Rashid visited the headquarters of Digital Dubai, where he was briefed on the progress of its various initiatives, the work done by various teams in preparation for upcoming stages of Dubai’s Digital Strategy and the latest projects Digital Dubai is developing in collaboration with government entities. To date, the Crown Prince noted that Dubai has completed three outstanding phases in its digital journey, starting with the launch of the region’s first e-government in 2001, followed by a smart government initiative in 2013, and then the government-wide digital transformation which culminated in fully eliminating paper transactions by the end of 2021.”

The city’s new Digital Strategy is based on a vision to digitalise all aspects of life in Dubai and establish a reliable, robust digital system that enhances the digital economy and empowers a digitally driven society. The Strategy is centred on seven key pillars, namely, the digital city, digital economy, data and statistics, digital talent, digital infrastructure, cybersecurity, and digital competitiveness. The Strategy aims to enhance the outputs of the digital economy, increase the positive impact of Digital Wellbeing by 90%, achieve top rankings in the United Nations’ Local Online Service Index, and launch fifty digital city experiences that are seamless, interconnected, proactive, predictable, and high impact. The strategy also aims to equip over 50k professionals with advanced digital qualifications.

The strategy, launched by Sheikh Hamdan, represents an advanced stage and a new milestone in Dubai’s digital transformation journey. The digitisation rate of government services is now at 99.5%, while the paperless government objective has been achieved 100% and digital transactions account for 87% of total government service transactions. Moreover, over one hundred and twenty government smartphone applications have been developed, while government entities have recorded a compliance rate of over 80% with cybersecurity indicators and 100% compliance with the Dubai Data Law.

Two DIFC-based firms have been fined by the Dubai Financial Services Authority for regulatory breaches, with Alessandro Faro Trading Ltd. fined US$ 25k, (for dealing in precious metals and stones without registering as a Designated Non-Financial Business or Profession) and, Fius Capital Limited US$ 11k for failing to submit a number of regulatory returns, despite several reminders. Both cases created serious risks of money laundering, but the DFSA decided that neither firm engaged in money laundering, and that the penalties would have been much higher had the two firms not agreed to settle the matter with the authority.

The Central Bank of the UAE’s April balance sheet grew by 6.3% on a monthly basis to reach US$ 167.2 billion, marking the largest level ever in its history; it also expanded 24.0% over the past twelve months and 13.8% YTD. On the asset side, the central bank held US$ 72.6 billion for cash and bank balances, along with reserved investments to the tune of US$ 55.6 billion; deposits stood at US$ 35.1 billion, loans and advances at US$ 1.1 billion and other assets at US$ 7.7 billion. As for liability and capital, CBUAE’s current and deposit accounts were at US$ 74.0 billion, monetary bills and Islamic certificates of deposit at US$ 55.1 billion, currency notes and coins issued at US$ 36.3 billion, and capital/reserves at US$ 3.9 billion. The bank’s other liabilities were at US$ 2.7 billion.

The latest US$ 500 million Sukuk by Arada saw the total listing on Nasdaq Dubai top US$ 77 billion, further enhanced the bourse’s position as one of the largest Sukuk listing venues globally. The Sukuk is the first issuance by UAE’s fastest-growing master developer on the region’s international financial exchange, following its Sukuk listing last year on the London Stock Exchange. Last year, Moody’s and Fitch assigned Arada first-time credit ratings of B1 and B+, respectively, both with a stable outlook, making Arada the youngest private company in the UAE to secure credit ratings in 2022. The six-year-old company has projects, valued at over US$ 10 billion, under development in Sharjah and Dubai, and has already completed over 7k homes.

The DFM announced that three companies – Gulf General Investments, Arabtec Holding and  Mara – are no longer listed with the bourse. The first delisting is in accordance with Article 1.13 (a) (iii) of the DFM listing rules and related laws, which empowers the market to delist any security that has been suspended from trading for a duration of six months or more. The delisting of the other two companies is in accordance with article 2.7 (d) (i) of the DFM listing rules and related laws, which empowers the market to delist the shares of any local company if a decision is taken to dissolve or liquidated the local company, or if it is dissolved or liquidated in any other way.

To celebrate the feast of Eid Al Adha, The Securities and Commodities Authority has announced that financial markets will close from 27 June until 30 June, with the DFM reopening on Monday 03 July.

The DFM opened on Monday, 19 June 2023, 338 points (10.1%) higher the previous three weeks, gained 7 points (0.2%) to close the week on 3,793, by 23 June 2023. Emaar Properties, up US$ 0.28 the previous three weeks, dropped US$ 0.08 to close on US$ 1.80 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.71, US$ 4.05, US$ 1.50, and US$ 0.40 and closed on US$ 0.72, US$ 4.06, US$ 1.49 and US$ 0.41. On 23 June, trading was at 411 million shares, with a value of US$ 116 million, compared to 539 million shares, with a value of US$ 207 million, on 16 June 2023.

By Friday, 23 June 2023, Brent, US$ 1.23 higher (1.7%) the previous week, shed US$ 1.98 (2.6%) to close on US$ 76.30.  Gold, US$ 3 (0.1%) lower the previous week, lost US$ 41 (2.1%) to US$ 1,971 on 23 June 2023.  

Oil prices extended their decline following the surprise BoE rate hike – an indicator that further monetary tightening is still on the cards which in turn will have a negative impact on economic growth and crude demand. Yesterday, Brent lost US$ 3.86 in trading to US$ 74.14 and closed the week on US$ 77.77. There is every chance that there are more rate rises on the cards from Threadneedle Street, and that being the case, Brent could easily move to under US$ 70 a barrel.

After Blackrock, the world’s largest asset manager, applied to US authorities to start exchange-traded funds, on 15 June, bitcoin has traded 21% higher, as the index of the largest one hundred virtual coins over the same period was up 13%. Other firms have followed suit with the likes of Invesco, WisdomTree and Bitwise submitting similar plans. To date, the SEC has resisted allowing such funds, citing risks such as fraud and manipulation in the token’s spot market but this entrée by Blackrock may see a change of heart by the authorities. Bitcoin ended the week on a healthy US$ 30,686, dragging smaller tokens such as Ether, Cardano and Solana, with it.

Last week, Airbus, to meet the increased soaring demand, and to replace aged planes, posted that it had raised its twenty-year forecast by 3.4% to 40.9k, of which 58% were expected for fleet growth and the balance for replacement. This week, it seems to be Boeing’s turn, noting a resurgence in international traffic and domestic air travel back to pre-pandemic levels, projecting global demand for 42.6k new commercial jets by 2042, valued at US$ 8 trillion. The plane maker expects the global fleet to grow at an annual rate of 3.5%, to nearly 48.6k jets, with airlines replacing about half of the global fleet with new, more fuel-efficient models. Boeing expects “further evolution of passenger traffic tied to global growth of the middle class, investments in sustainability, continued growth for low-cost carriers, and air cargo demand to serve evolving supply chains and express cargo delivery.” It also expects that Asia-Pacific markets will account for 40% of global demand, (with half of that total in China, and India accounting for 90% of the region’s traffic). North America and Europe each will account for about 20% of global demand, whilst low-cost carriers will operate more than 40% of the single-aisle fleet in 2042.

On Wednesday, Airbus confirmed that it had already recruited more than 7k people out of the 13k positions it seeks to fill in 2023, and this despite a global industry labour shortage, as plane makers ramp up production to meet higher demand. Most of the vacancies are in manufacturing, especially in engineering, digital and cyber. A further breakdown on numbers sees that 29% of the total are under the age of 28, 26% are women, and 33% of its total staff recruitment will be allocated to recent graduates. The European plane maker commented that “we are focused on attracting, training and developing the best diverse talents in our company to help us shape the future of sustainable aerospace.” Airbus currently employs more than 134k people globally, with Canadian aviation training company CAE estimating that the aviation industry will need to hire 1.3 million, by 2032, to keep pace with the expected growth of the commercial and private travel markets, and that it will need to recruit and train an estimated 1.18 million workers to fill vacancies arising from retirement, attrition and the expansion of the aviation industry.

At the start of this year’s Paris Air Show, Indian budget carrier IndiGo has placed a five hundred A-320 order with Airbus which is probably the most jets ever bought by a single airline – this comes after Air India purchased 470 jets, earlier in the year, in a multi-billion-dollar deal. It is expected that delivery will occur between 2030-2035 – indicators that plane makers continue to struggle to keep up with supply, and airlines could be over-ordering jets in pursuit of the same passengers. IndiGo, which accounts for nearly 60% of the Indian domestic market, has yet to decide which engine supplier to use for the latest order.

The Italian government has blocked a move by Sinochem, a Chinese state-owned company, that has a 37% stake in tyre maker Pirelli, to take over the 151-year-old Italian company. Last Sunday, Pirelli posted that the Italian government had ruled that only Camfin – a company controlled by Pirelli’s boss Marco Tronchetti Provera – could nominate candidates to be its chief executive, and that the government had decided that any changes to the company’s corporate governance should be subject to official scrutiny. In March, the major shareholder had advised authorities that it planned to renew and update an existing shareholder pact. Following close examination by the Giorga Meloni’s administration, and under the so-called “Golden Power Procedure” rules, which are aimed at protecting businesses that are viewed as strategically important to the nation, the decision to block the move was made.

It is reported that an anti-money laundering investigation has been initiated by French authorities into the activities of the world’s largest cryptocurrency exchange, Binance. The firm, which had earlier announced that it would be departing the Netherlands, after it failed to obtain a licence from that country’s central bank, confirmed that French authorities visited its offices last week and that they would comply accordingly. It is also facing challenges in the US, as well as Europe, as regulators around the world have looked to ramp up pressure on crypto exchanges in a bid to make them more transparent. In the UK, the company’s subsidiary, Binance Markets Limited, closed its doors last month leaving it with no authorised entities in the UK.

Intel will invest US$ 25 billion in a factory in Israel – making it that country’s biggest ever single international investment. Currently, Israel’s largest privately held employer and exporter, estimates that operations at the new plant will commence in 2027 and will create employment opportunities for thousands of people. As part of the agreement, Intel will pay a tax rate of 7.5%, an increase from the current 5.0%.

This week, Intel confirmed that it plans to invest US$ 4.6 billion, in Poland, to build a semiconductor assembly and test unit that, “will help meet critical demand for assembly and test capacity that Intel anticipates by 2027.” The project will result in 2k jobs being created, along with thousands of other indirect supplier and temporary construction jobs. Chief executive, Pat Gelsinger, added that Poland “is very cost-competitive with other manufacturing locations globally and offers a great talent base that we are excited to help to grow.” Not only will it assist Intel to expand its operations globally, but it will also boost Poland’s role in the global semiconductor supply chain. In May, the UK government unveiled a US$ 1.24 billion, twenty-year investment strategy into semiconductors, aimed at diversifying the supply chain in an attempt to enhance security. The global semiconductor market was valued at US$ 429.5 billion in 2021 and is expected to expand 8.8% annually to top US$ 712.4 billion within five years.

May saw Lebanon’s inflation rate soar to an unbelievable 260%, (and 5.4% on the month), not helped by a political impasse over the election of a president persisting, thwarting the enactment of reforms deemed necessary for the country to emerge from its worst economic crisis. As hyperinflation recorded its thirty-fifth consecutive month, its currency has already lost 90% in value over the past five months. The official exchange rate changed to 15k pounds to the US dollar, compared with the peg in place since 1997 of 1,507.50 to the greenback. According to the World Bank, Lebanon is in the midst of one of the worst economic crises in modern history because it could obtain a US$ 3 billion IMF rescue package, as well as billions from other international donors, if it could implement several reforms, including electing a President, with the country’s parliament failing to do so for the twelfth time, and other political reforms. In the recent past, Lebanon’s economy has contacted by 53%, between 2019 -2021, to US$ 21.8 billion, (at the time the largest fall on a list of 193 countries). Last year, it dipped 2.6% and the 2023 decline is forecast at 0.5%.

Although its inflation rate has been sliding lower, since hitting an 85.5% high last October, it has more than halved to under 40% by last month, but even at this figure it is still one of the highest in the world. The Turkish currency has been under severe pressure since President Erdogan began to enforce unorthodox economic monetary policies in 2018 that flew in the face of traditional economic theory, so that when global central banks have been pushing rates higher to try and dampen surging inflation, Turkey’s interest rates headed south. All changed on Thursday, when the Central Bank of Turkey nearly doubled its benchmark interest rate from 8.5% to 15.0% – the bank’s first increase in two years, but well below the median 20% estimate in a Bloomberg survey. Since the size of the rate hike disappointed the market, Turkey’s lira dropped 2.6% to a record low of 24.20 against the greenback. The fact that “the committee decided to begin the monetary tightening process in order to establish the disinflation course as soon as possible, to anchor inflation expectations and to control the deterioration in pricing behaviour” is an indicator that the country is trying to rectify previous economic errors. Maybe a case of too little too late, but there is hope, especially with support from Saudi Arabia and the UAE, with the former depositing US$ 5 billion with the Central Bank of Turkey through the Saudi Fund for Development and, in 2021, the UAE forming a US$ 10 billion fund to support investments in the country. The central bank said it would closely monitor inflation indicators and underlying trends, as well as “continue to decisively use all the tools at its disposal” to restore price stability.

The 123-year-old Perth Mint is to face yet another enquiry following concerns over regulatory compliance and gold sales to China with lower purity; between 2018 and 2021, the mint sold gold to China that met broader industry purity standards for 99.99% pure gold but not stricter standards at the Shanghai Gold Exchange for silver content. The entity accepted that this was “damaging and unacceptable”, with the WA premier pointing to remediation work already underway. There then followed a probe by the London Bullion Market Association which ended with it permitting the mint to remain on a list of approved refiners. Another investigation by the ABC’s Four Corners questioned how a notorious former bikie was able to purchase US$ 18k worth of gold by only showing his driver’s license. It also found that Perth Mint could have breached commodities law in over twenty US states since the turn of the century. Its latest investigation will see Perth Mint facing a federal parliamentary inquiry, over the level of compliance with anti-money laundering and counter-terrorism financing laws. It will also probe the saga’s impact on Australia’s reputation with precious metals.

In recent weeks, this blog has carried details of the Australian accounting scandal involving a major audit firm leaking confidential government details to other staff members so as to benefit the firm, using that information, to solicit business. There is something wrong when a country with a population of twenty-six million – and ranks number fifty-five in the world by the number of inhabitants – has a consultancy sector that is the fourth biggest in the world, behind the US, UK and Germany. The sector was dominated by the Big Four – PwC, Deloitte, EY and KPMG – and their influence on government policy cannot be underestimated. It would be hard to believe that the leak by Peter-John Collins, who was advising the Australian government on new tax legislation to stop multinational companies avoiding tax, was an isolated incident. He had leaked information in 2016 to many of his colleagues, with internal memos showing how new business had been won on the back of guidance he had provided, with plans to win even more as part of the project ‘North America’. One has to agree with Senator Deborah O’Neill that this was only “the tip of the iceberg”, who also highlighted issues such as a “revolving door” between government departments such as the Australian Tax Office and Big Four consultants.

As expected, the BoE voted on Thursday for a hike in interest rates – what was not expected, and surprised the market, was that it was a 50bp increase to 5.0% – its thirteenth consecutive rate increase, as it continues to try to get to grips with persistently high inflation. Strangely, the pound is the best-performing currency among major economies this year, and last week rose over 2% against the greenback to U$S 1.282. Last Thursday, the Fed paused any rate hike until at least next month, whilst the ECB pushed rates higher to 3.5% – its highest level since 2001 – with another expected in July. The absence of any specific guidance from the ECB President, Christine Lagarde, has boosted confidence in the strength of the pound, as the BoE addresses inflation concerns – she has not. There is every likelihood that the BoE will raise rates by another 50 bp before the end of Q3.

In the UK, the Office for National Statistics has noted that public sector net debt, at the end of May, was US$ 3,265.6 billion, equating to 100.1% of GDP – a pointer that the country’s debt is now greater than its GDP – the first time since 1961 that this has happened. The ONS said government borrowing last month was US$ 25.54 billion, US$ 12.8 billion more than in May 2022, and the second-highest May borrowing since monthly records began in 1993.

Unusually good weather in May proved a fillip for the flagging UK economy, as the sun and shoppers came out which boosted sales overall, with the Office for National Statistics confirming that sales volumes came in 0.3% higher; online retailers and garden centres did particularly well. May saw consumers spending less on food, down by 0.5% lower, but fuel sales moving higher. Even though the inflation level is heading lower at a snail’s pace, (from 10.1% to 8.7% YTD), prices are still rising. Even though interest rates have been rising since December 2021 it does not yet seem to be having a big impact on consumer spending. Yesterday’s 50bp rate hike may change that and, if not, then more rate rises will eventually make an impact.

According to the Resolution Foundation, rising interest rates mean people looking to mortgage their homes will pay an average US$ 3.7k a year more from next year: the think tank has forecast that the average two-year fixed rate deal will hit 6.25% by the end of this year. It is bad news for many including the 800k expected to remortgage in 2024. The Bank of England’s base rate is currently at 5.0%, but the Resolution Foundation says this is expected to peak at nearly 6% in mid-2024, and, more worryingly, does not expect the average two-year mortgage deal to fall below 4.5% until the end of 2027.  It also estimated that repayments are on track to be US$ 20.26 billion a year higher by 2026, compared with prior to when the Bank started its rate-raising cycle in December 2021. It also reported that about 60% of the increase in annual mortgage payments was yet to be passed on to households, as borrowers move off existing fixed-rate deals and on to new ones. Late last week, Moneyfacts said the average two-year fixed-rate loan for homeowners stood at 5.98%, compared with 3.14% a year earlier. Worryingly, the report also predicted that this year’s rate rises would increase the cost of a typical mortgage by 3% of a typical household income, outstripping the 2.4% increase noted in 1989, when rates were at 15.0%.

Some more worrying news for many UK mortgage holders came in a report by the Institute of Financial Studies, citing that rising rates could see 1.4 million mortgage holders having their disposable incomes fall by more than 20%.  Furthermore, the think tank, warning that 690k of the total hardest hit would be under forty years of age, posted that high borrowing costs was “unquestionably going to cause serious difficulty for many families”. Compared to March 2022, mortgage holders would pay on average US$ 357 more each month, and, if mortgage rates remained at around 6%, people aged between 30 and 39 would typically pay about US$ 463 more. 8.5 million adults, (60% of those with a mortgage) are set to spend more than 20% of their incomes on mortgage payments – fifteen months ago, that figure was only 36%. In recent weeks, lenders have been pulling deals and putting up rates at short notice in expectation of interest rates being hiked again, and by Wednesday, ahead of yesterday’s rate hike, the average rate on a two-year fixed deal had risen to 6.15% – in March 2022 it was 2.65%.

Official figures seem to indicate that flying abroad, buying second-hand cars and going to live music events are some of the main reasons why May UK inflation has remained flat, and unchanged, at 8.7%; this, despite analysts forecasting that rates would start falling in Q2. The end result is that the BoE had no other option but to raise rates again by 0.50% to 5.0%, as in the words of Chancellor Jeremy Hunt that he would “not hesitate” in its resolve to support the Bank, which is an independent institution, as it “seeks to squeeze inflation out of our economy”. Prices for food and non-alcoholic drinks rose in May – but by less than in May 2022 – whilst “core” inflation – which strips out energy and food costs – is at the highest rate since 1992, and a rising cause for concern; service sector wages is a major driver. Prime Minister Rishi Sunak has pledged to halve inflation this year. There is no doubt that he is partly responsible for the debacle that is now the UK economy, but the main blame must rest on the vacillating Monetary Committee.

After raising rates by 50bp, the BoE Governor commented that if it did not raise rates now, “it could be worse later”, and denied that it was trying to create an economic slump after it put up interest rates to slow soaring prices. He added that “many people with mortgages or loans will be understandably worried about what this means for them… but inflation is still too high and we’ve got to deal with it,” and to get inflation lower, wage rises “cannot continue” at the rate they have been. It is hard not to agree with Karen Ward, (a member of chancellor Jeremy Hunt’s economic advisory council), who commented that the BoE had “been too hesitant” in its interest rate rises so far. In fact, the nine-member Monetary Committee should have acted more than fifteen months ago, when Inflation started soaring high above its 2.0% target and, indicating that this would be “transitory”, did nothing. Maybe the problems are the fact that the average age of the committee is fifty-nine and that they all sing from the ‘same hymn sheet’. How can nine people come up with the same wrong answer month after month? Maybe it is time to have younger and more dynamic economists on board – and for some members Time To Move On?

One of Us Cannot Be Wrong!                                                   16 June 2023

The 3,625 real estate and properties transactions totalled US$ 3.41 billion, during the week, ending 16 June 2023. The sum of transactions was 189 plots, sold for US$ 621 million, and 2,753 apartments and villas, selling for US$ 1.91 billion. The top three transactions were all for plots of land, one in Palm Deira, sold for US$ 46 million, the second in in Business Bay for US$ 37 million, and the third in Al Thanya First for US$ 34 million. Al Hebiah Fifth recorded the most transactions, with thirty-four sales, worth US$ 24 million, followed by twenty-eight sales in Wadi Al Safa 3, for US$ 149 million, and twenty-four sales in Madinat Hind 4, valued at US$ 8 million. The top three transfers for apartments and villas were all for apartments – the first in Island 2, valued at US$ 31 million, another in Palm Jumeirah, for US$ 23 million, and an apartment in Marsa Dubai for US$ 22 million. The mortgaged properties for the week reached US$ 785 million, with the highest being for a plot of land in Al Wasl, mortgaged for US$ 207 million, whilst one hundred and fourteen properties were granted between first-degree relatives worth US$ 113 million. Latest DLD statistics indicate that in the first five months of the year, 29k primary sales occurred – soaring 41% on the year – totalling US$ 18.46 billion.

On Wednesday, Emaar Properties launched a massive US$ 20 billion waterfront project – The Oasis by Emaar – which will encompass more than one hundred million sq ft and provide 7k residential units, focusing on large mansions and villas with spacious plots. It will provide residents with views of water canals, lakes, and parks and will also feature 1.5 million sq ft of retail space. 25% of the land will be dedicated to lakes, water canals, parks, jogging tracks, green spaces, and various luxury amenities.  Its actual location and other details will be released later, but the teaser points to a massive boost for the luxury real estate sector and that the Dubai developer is filling a void in that sector. Emaar’s founder, Mohamed Alabbar noted that “our primary objective is to design one-of-a-kind destinations that complement our clients’ opulent way of life while providing unmatched comfort and luxury. Our most recent integrated project, The Oasis by Emaar, is poised to complement the urban landscape of Dubai and redefine the future of luxurious living amidst nature and water, blending harmonious architecture and exceptional amenities.”

Sobha Reality has posted that its aim for this year is to double its sales to US$ 4.9 billion, driven by strong demand from Russian, Indian, UK, Chinese and Iranian investors; the announcement was made by Ravi Menon, co-chairman of Sobha Realty, after he unveiled the mixed-use US$ 4.6 billion mega project, Sobha Hartland II project. Last year, its chairman indicated that 2022 sales would reach US$ 2.45 billion, attributable to an increase in population and the UAE’s status as the safest country.

The latest property on the market in Dubai is valued at US$ 204 million, being a Versailles-like mansion located in Emirates Hills. According to the property agents, Luxhabitat, it is the most expensive property being sold in the region. Called The Marble Palace, the twelve-year-old palace encompasses 70k sq ft, with an additional 60k sq ft of built-up space that includes a coral reef aquarium, two fourteen mt domes and one hundred and sixty marble columns. The villa’s facade is made of hand-worked marble cladding imported from around the world, and the property also has a pond, a panic room, an indoor pool room and a 24-carat gold Jacuzzi, among other amenities. The property also has a 360 sq mt master bedroom, as well as a large mini-master bedroom, together with three other bedrooms and the potential to add eight more rooms, with a bathroom to bedroom ratio of four to one. Furthermore, there is a 200 sq mt gym on the first floor and a 16-car garage in the basement.

Fifth Solutions notes that Dubai has nearly reached its pre-pandemic size, at an estimated 98% of its pre-Covid level, attributable to a strong bounce back, starting in early 2021.With the way the economy is growing in 2023, it is all but certain that Dubai’s real GDP growth will reach that level by the end of the year. However, with oil prices forecast to slow in the coming months, the economy may decelerate to 3.4% this year – but still ahead of the 2015-2019 average 3.1%. Future growth will be above this level as the wholesale and retail sectors, (which account for 26% of total GDP), will pick up, helped by a growing population, (now at 3.597 million – 4.75% higher than the 3.434 million two years ago) and the sustained influx of tourists, especially those with elevated purchasing power. There is no doubt that the 55% 2022 tourism growth was a catch-up figure last year, but in the first four months of 2023, the growth is at 6.020 million, up 18% on the year – slightly below pre-pandemic level by 4.0%.

It is estimated that more than 743k residential units are completed in Dubai and that probably a further 45k will be added by the end of the year; in 2022, 29.4k apartments and villas were handed over to tenants in Dubai. With the number of launches already known and new projects on the horizon, it is easy to see that the total number of housing units in Dubai could top one million before the end of this decade, driven by pent-up demand, as the economy continues to return to pre-Covid levels and the city’s population growth regaining momentum. At the same time, with the population growing at a very conservative 1.5%, the question is how many units are required. In six years’ time, the population could be 4.82 million and by June 2029, this blog estimates that the minimum number of residential units would be at 996k –  or an extra 42k a year.

Dubai has secured third place among prominent global cities, behind Miami and Singapore but ahead of New York, London, Tokyo, Sydney, Johannesburg, Paris and San Francisco. One of the main reasons behind this success are the ambitious targets set by the Dubai Economic Agenda (D33), which has supported Dubai in its goal to become one of the world’s leading urban economies. The index is based on four categories—population, economic growth, office vacancies and house prices—over the past three years. Dubai has seen its population grow by 5.8%. It also noted that “in most cities, the twin blows of Covid and geopolitical tension have proved more of a problem… Cities in bits of the world that did not go overboard with restrictions, such as Dubai and Miami, benefited—sometimes at the expense of those that did, like San Francisco.” It also added that “Dubai and Singapore offer year-round warm weather (important when people can work remotely) and lenient regulation (helpful for those annoyed with Western red tape)”, and “Dubai has introduced social reforms, decriminalising alcohol and the cohabitation of unmarried couples.”

A new report by Henley & Partners, has forecast that this year the country will attract 4.5k new millionaires, making it the second most popular in the world behind Australia which is expected to welcome 5.2k; third, fourth and fifth places went to Singapore, US and Switzerland with numbers of 3.2k, 2.1k and 1.8k. The country is currently home to 109.9 millionaires, with US$ 1 million-plus wealth, 298 centi-millionaires, with US$ 100 million-plus assets, and twenty billionaires. The firm, which tracks private wealth and global investment migration trends, focuses on persons with a net worth of at least US$ 1 million. Interestingly, it sees migration trends reverting to their pre-pandemic patterns – Australia regaining its top position, as it held for five successive years prior to the pandemic and China seeing the biggest net outflows as it has each year for the past decade. On the flip side, the four countries recording the biggest outflows are China, India, UK and Russia losing 13.5k, 6.5k, 3.2k and 3k HNWIs; for obvious reasons to the casual observer, UK posted a doubling in outflows from a year earlier, but pre-Brexit consistently recorded net positive inflows. The US still has a net inflow of 2.5k but this is a far cry from the 2019 level figure of 10.8k, largely attributable to  the threat of higher taxes.

According to the Department of Economy and Tourism’s Dubai FDI Monitor report, based on data from the Financial Times’ ‘fDi Markets, the emirate has managed to attract a record-breaking 451 projects – a 107.7% increase on the year. This saw Dubai achieve the top global ranking in attracting Foreign Direct Investment projects in the cultural and creative industries in 2022. Dubai’s total FDI capital flows in the cultural and creative industries surged to US$ 2.0 billion in 2022, ranking the city first in the MENA region and twelfth globally (up from fourteenth in 2021). By generating 12.4k jobs, Dubai has been placed first in the MENA region and sixth globally in job creation in FDI.  US, India, UK, France and Switzerland were the leading FD investors in Dubai’s cultural and creative industries in terms of FDI projects, while the US, India, Switzerland, France and UK topped the list in terms of FDI capital inflows.

It is reported that Worldpay is expanding its global presence in the UAE so that it will be able to expand its payment processing capabilities into the region. The leading payments technology company will now be able to extend its top-notch payment services to domestic merchants in the UAE, allowing them to enhance their offerings both locally and internationally. Additionally, this expansion welcomes international merchants with global aspirations and rapidly growing enterprises seeking to establish a presence in the UAE market. There is no doubt that the platform has entered a growing local e-commerce market which is forecast to top an impressive US$ 43 billion by 2026, with credit cards playing a significant role in driving this growth.

Emirates and Kenya Airways have signed an interline partnership that will see the local carrier being able to fly to twenty-eight destinations on the Kenya Airways network, using Nairobi as the gateway. Furthermore, Emirates passengers travelling via Dubai can also book a single ticket itinerary from or to Mombasa. Passengers on the African airline, travelling from Nairobi and Mombasa, will now be able to access the Emirates’ network and seamlessly connect through Dubai to twenty-three various locations in the ME and Asia. The agreement will provide customers with increased travel options as well as seamless baggage check-in to their final destination.

The Dubai Chamber of Digital Economy will launch an initiative in September, offering a set of packages for digital start-ups, in partnership with a number of private sector and government entities. The aim of this exercise appears to ensure that Dubai is the most appealing and most attractive environment for new digital companies setting up, and also expanding, in the region. At a signing last Monday, the likes of Telr, Dubai CommerCity, e& and Safepay joined the launch as partners. Only last year, the UAE announced its Digital Economy Strategy, aimed at doubling the contribution of the tech sector to its GDP over the next decade.

The Roads and Transport Authority and Al Futtaim Automotive have signed a three-year partnership agreement to deploy three hundred and sixty vehicles, including electric and hybrid variants, for use in Dubai’s key conferences and events. The deal will see the Dubai company supplying ten electric buses, two hundred and fifty electric, one hundred hybrid vehicles; it will also provide ten electric charging units, capable of both direct and alternating current. The Volvo buses will be powered by smart technologies and among its many modern features includes a monitoring system to track the driver’s condition and detect fatigue.

Following the May 2022 UAE-India Comprehensive Economic Partnership Agreement, bilateral non-oil trade has boomed posting a healthy 5.8%, to US$ 51 billion, in the first twelve months – a 5.8% increase. CEPA, the country’s first-ever bilateral trade deal and a cornerstone of its new foreign trade agenda, has eliminated or reduced tariffs on more than 80% of product lines, created new platforms for SME collaboration and promoted mutual investment flows, particularly into priority sectors. Over the next seven years, the UAE is hoping to double trade with India.

The Central Bank of the UAE, as part of its commitment to promoting economic and financial stability and growth, has released the United Arab Emirates Monetary, Banking, and Financial Markets Developments Report for Q1 2023. The report provides insights into the monetary and banking activities, as well as the developments in the UAE financial markets, during the quarter. It can be split into five groupings – Monetary Developments, Banking Sector Development, Bank Assets/Loans/Deposits, Capital/Reserves and Foreign Assets. Money Supply M1, Money Supply M2 and Money Supply M3.

All three sub-divisions, Money Supply M1, Money Supply M2 and Money Supply M3.  headed north in the quarter – M1, (which comprises Currency in Circulation outside Banks and Monetary Deposits), up by 3.0%, over the three months, to US$ 206.9 billion, M2 (which includes M1 plus Quasi Monetary Deposits), by 5.0%, to US$ 487.3 billion and M3, (including M2 plus government deposits), by 4.5%, to US$ 598.3 billion. The second sector reported that there were twenty-two locally incorporated banks, with 494 branches; there were forty-seven electronic banking service units, with Cash Offices remaining constant at twenty-one. In Q1, there were increases in all five sectors of banks’ assets – total assets were 2.6% higher at US$ 1,025.8 billion, gross credit 0.9% to US$ 516.6 billion, customer deposits 3.8% to US$ US$ 628.3 billion, resident deposits 4.1% at US$ 570.2 billion, and non-resident deposits 0.4% to US$ 58.1 billion. The fourth sector noted that the aggregate capital and reserves of banks increased by 0.5% to US$ 117.4 billion and that the Total Capital Adequacy Ratio stood at 17.8%, well above the prescribed requirements. The Central Bank’s foreign assets increased by 8.8% to US$ 117.4 billion, whilst the report highlighted that the ADGM dipped 6.7%, whilst the DFM headed in the other direction – 1.6% higher on the quarter.  

As it concludes a series of roadshows in Shanghai, Guangzhou and Chongqing, the DMCC posted that it has seen a 24% hike in the number of Chinese companies, to 770, joining the free zone over the past twelve months; bilateral trade outside of oil last year grew to over US$ 72 billion. DMCC executives met and briefed over six hundred business leaders across various sectors on the benefits of doing business in Dubai through DMCC. As part of the roadshow, DMCC signed a strategic Memorandum of Understanding with the Lin-gang Special Area of China (Shanghai) Pilot Free Trade Zone, that will boost cooperation in areas such as innovation, commerce, logistics and trade. It will also allow both parties to establish and explore dedicated services for companies in Dubai and Shanghai, streamlining the requirements and processes for companies looking to set up in both regions.

In line with the decision of the US Federal Reserve Board to hold interest rates, the Central Bank of the UAE has decided to maintain the Base Rate applicable to the Overnight Deposit Facility unchanged at 5.15%; (this was the first time the Fed opted against a rise in over a year).The central bank also decided to maintain the rate applicable to borrowing short-term liquidity from the CBUAE through all standing credit facilities at 50 bp above the Base Rate. However, it seems likely that the Fed will raise rates in July, that will normally impact UAE rates.

In its latest strategy, Emirates NBD hopes to achieve gender equality and empower all females and has joined a pledge to accelerate the achievement of the UN Sustainable Development Goal 5. Dubai’s largest bank is one of eight leading local and multinational companies in the UAE to sign the SDG 5 Pledge which is aligned to the UAE government’s focus on increasing female equity and representation across public and private sector workplaces. To achieve its aims, it will work closely with the UAE Gender Balance Council, with SDG stating that the target is to “raise awareness on the importance of ensuring women’s full and effective participation and equal opportunities at all levels of decision-making.” Key actions to achieve gender balance include ensuring equal pay/fair compensation practices, promoting gender equitable recruitment/promotion, and being transparent about progress through annual reporting to the to the UAE GBC.

Forbes ME’s top one hundred listed companies for 2023 sees four UAE’s making the top ten – International Holding Company jumping from twelfth place to fifth spot this year, with First Abu Dhabi Bank, Emirates NBD and Taqa coming in eighth, ninth and tenth. Aramco, Saudi Basic (Sabic), Qatar’s QNB Group and Saudi National Bank maintained their places in the leading four entities.

There is no doubt that listed companies in the UAE have had a very successful Q1, with recent Kamco Invest data showing that listed companies in Dubai and Abu Dhabi recorded profit surges of 51.2% and 51.8%; these returns outperformed their GCC peers, where quarterly profits headed south because of a fall in energy and commodity prices. Dubai net profits reached US$ 4.8 billion, mainly driven by earnings growth in the banking, real estate and capital goods sectors, whilst Abu Dhabi listed companies’ profits reached US$ 11.1 billion. In Dubai, the banking sector was the biggest contributor to the impressive returns, with quarterly profit figures 84.2% higher at US$ 2.8 billion, largely helped by Emirate NBD’s 114.7% profit surge to US$ 1.6 billion. The emirate’s real estate sector saw a 31.4% hike in net profits to US$ 1.2 billion, mainly attributable to Emaar contributing 72.7% of the total’s US$ 872.9 billion. The utilities sector posted a 0.5% dip to US$ 248.0 million. Across the GCC, aggregate net profit for listed companies showed a decline of 9.1% to US$ 61.5 billion.

The DFM opened on Monday, 12 June 2023, 154 points (4.4%) higher the previous fortnight, gained 184 points (5.1%) to close the week on 3,786, by 16 June 2023. Emaar Properties, up US$ 0.06 the previous fortnight, climbed US$ 0.22 to close on US$ 1.88 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.70, US$ 3.86, US$ 1.46, and US$ 0.40 and closed on US$ 0.71, US$ 4.05, US$ 1.50 and US$ 0.40. On 16 June, trading was at 539 million shares, with a value of US$ 207 million, compared to 263 million shares, with a value of US$ 117 million, on 09 June 2023.

By Friday, 16 June 2023, Brent, US$ 2.19 lower (2.8%) the previous fortnight, gained US$ 1.23 (1.7%) to close on US$ 76.30.  Gold, US$ 30 (0.9%) higher the previous fortnight, shed US$ 3 (0.3%) to US$ 1,971 on 16 June 2023.  

Opec has again raised its 2023 oil demand, which is projected to grow by 2.3 million bpd to 101.9 million barrels, as it seems China’s growth momentum has decelerated in recent months following a robust initial rebound. The world’s largest crude importer saw its exports dip 7.5% annually last month, its biggest fall since January, with some estimating that the recent economic slowdown may persist into Q3. The forecast for the thirty-eight member nations of OECD is for a 200k barrel increase, driven mostly by the US and the Asia-Pacific region offset by ‘weak’ European demand, still struggling with an ongoing sluggish economy and continuing supply chain bottlenecks.

So as to address “significant” global supply disruption, cause mainly by the Ukrainian crisis, the US Department of Energy confirmed the addition of 6.1 million barrels of oil to its stockpiles. Three million billion barrels, added to the US Strategic Petroleum Reserve, were purchased for an average price of US$ 73, lower than the average of about $95 per barrel that SPR crude was sold for in 2022. The DoE also announced a new notice of solicitation for a further 3.1 million barrels will be added to the SPR in September. When oil prices touched US$ 130 in March 2022, Washington made the largest sale yet from the SPR of 180 million barrels.  It is estimated that this strategy shaved up to US$ 0.40 off gasoline prices, compared to what they would have been if not for these drawdowns.

Following Toyota announcing the launch of a complete range of EVs, by “next generation” batteries, starting in 2026, its shares climbed 5.0%; the development and manufacture of these vehicles will be carried out by a newly established unit called BEV Factory. The Japanese carmaker also confirmed that it is aiming for an unheard of 1k km driving range and that it would be actively working on developing a method for mass producing all-solid-state batteries for its electric vehicles, by 2027. Toyota has set ambitious goals for its electric EV sales, aiming to achieve 1.5 million all-electric vehicle sales per year by 2026 and increase the annual number to 3.5 million by 2030.

Months after a mission failure, and the May closure of Virgin Orbit, Sir Richard Branson’s space tourism company Virgin Galactic says it will launch its first commercial flight, Galactic 1, sometime between 27 June – 30 June. This first flight will be a scientific research mission, carrying three crew members from the Italian Air Force and the National Research Council of Italy, to conduct microgravity research, whilst its second commercial spaceflight launch will be in early August, and thereafter monthly spaceflights will take place; to date, 800 tickets have been sold at the individual price of US$ 450k.

Google has been formally notified by the European Commission that a preliminary finding has found it has violated EU antitrust regulations, and harmed competitors, by favouring its own online display advertising technology (ad tech) services. There is no doubt that Google is the dominant player in the market, with its ad tech tools – DoubleClick for Publishers (DFP), Google Ads and ‘DV360’ (its ad-buying tools). It seems that Article 102 of the Treaty on the Functioning of the EU, which prohibits the abuse of a dominant market position, is the basis of the alleged misconduct. Earlier in the year, Google’s ad tech business faced scrutiny in the US with the Department of Justice asserting that Google’s anti-competitive practices “forced key competitors to abandon the market for ad tech tools, dissuaded potential competitors from joining the market, and left Google’s few remaining competitors marginalised and unfairly disadvantaged”.

To meet the increased soaring demand, and to replace aged planes, Airbus has raised its twenty-year forecast by 3.4% to 40.9k; it is estimated that of this total, 58% are expected for fleet growth and the balance for replacement. Of the new deliveries, 80% will be narrow-bodies, with the remaining 8.2k being wide-bodies and the bulk of these will be delivered to the ME to airlines such as Emirates and Qatar Airways. Airbus said the world’s fleet would more than double to 46.6k aircraft in 2042, from 22.9k at the beginning of pre-pandemic 2020. The plane maker forecasts that passenger air traffic will grow annually by 3.6% over the next twenty years.

George Soros has handed over the running of his US$ 25 billion financial and charitable empire to his son Alex, the second youngest of his five children. The history graduate already sits on the investment committee for Soros Fund Management and is also in charge of his father’s “super PAC”, a US mechanism to direct funds to political parties. The 92-year-old billionaire philanthropist, who is also one of the largest donors to the US Democratic Party.  said his son had “earned it”. Since the 1990s, the family’s wealth has been directed to support democracy-building in dozens of countries. While father and son broadly share the same political views, he is “more political” than his father and has confirmed that he would campaign against Donald Trump’s attempt to run for a second term as US president.

The recent witch-hunt by the US Securities and Exchange Commission, bringing legal actions against cryptocurrency exchanges, such as Binance, its US affiliate, Binance.US and Coinbase, has resulted in both a mini run on blockchain analytics companies Nansen and Glassnode, and price declines of several crypto assets listed on these exchanges. The SEC opines that some crypto assets listed on these exchanges should be classified as securities rather than digital assets. Last week, over the four trading days to Thursday, outflows by blockchain analytics companies Nansen and Glassnode. Binance, Binance.US, and Coinbase witnessed a net outflow of US$ 3.1 billion through the Ethereum network, along with US$ 838 million for 31.9k bitcoin.

Tesco has noted that there are “encouraging early signs” that price rises are easing, with the retail giant reporting higher sales, whilst, at the same time, taking umbrage from criticism that the supermarket was profiteering, as latest showed food inflation hit 19.1% in the year to April. The rate at which food prices is rising has been pointed out as one reason why the inflation rate for all consumer goods is not falling as quickly as expected, with prices still 8.7% higher than a year ago. Earlier in. the week, the Governor of the BoE noted that inflation was taking “a lot longer than expected” to come down, and that this was due to food price inflation being slower to drop than global commodity prices, despite past reassurances from the Bank’s contacts in the retail industry that prices would fall.

The UK economy should benefit from the announced US$ 19 billion, 51:49 Vodafone/Hutchison merger of their British mobile operations that would drive competition and investment in the country. The deal still has to be cleared by the anti-trust regulator into whether an operator, with twenty-seven million customers, could lead to higher mobile prices. The two partners have already agreed to invest over US$ 14 billion to create “one of Europe’s most advanced standalone 5G networks” that will enhance innovation, increase employment opportunities and drive economic growth.  Vodafone, UK’s third-biggest mobile operator, will have an option to buy-out the Hong Kong-based conglomerate three years after completion, if it agrees. Already, Unite, one of Britain’s biggest trade unions, said it would lead to higher mobile phone bills and job cuts, and questioned whether a company, with close ties to China, should have such a prominent place in UK telecoms infrastructure.

The US Federal Trade Commission has requested a US judge to block Microsoft from completing its US$ 69 billion purchase of Call of Duty publisher Activision Blizzard, claiming that the deal could “substantially lessen competition” in the sector; the trial, involving the largest sale in the history of the video games industry, is slated for August. The move comes after the UK blocked the deal over concerns it would hurt competition, offer reduced innovation and less choice for gamers, whilst the EU approved it. A condition for Microsoft’s proposed takeover of Activision is that it requires approval from all three regulatory bodies in the UK, the EU and the US.

Blaming high interest rates and weak demand, Instant Brands has filed for bankruptcy protection. The maker of Pyrex glassware and Instant Pot multicookers, with 2.4k employees and liabilities in excess of US$ 1.0 billion, intends to keep operations going as it strives to revive the stalling business; current financing is from existing lenders. Although business boomed during the pandemic, it has since fallen off, as consumers started to spend less on goods for their homes. The company commented that “tightening of credit terms and higher interest rates impacted our liquidity levels and made our capital structure unsustainable”. Q1 saw revenue 22% lower on the year and in January, the Illinois-based company had to pay a fine and change its marketing practices to settle US Federal Trade Commission claims that it falsely advertised Pyrex glass measuring cups as “Made in USA” while importing some of them from China. In April, Tupperware warned that it could go bust unless it could quickly raise new financing.

Having been the top selling beer in the US for the previous five months, Bud Light lost its top spot to Modelo Especial after some drinkers in the US stopped buying Bud Light after transgender influencer Dylan Mulvaney showed off a personalised can of the beer; it is reported that sales are now 25% lower after several conservative pundits, politicians and celebrities spoke out about the promotion, with the likes of Musician Kid Rock, NFL player Trae Waynes and model Bri Teresi  all sharing videos of themselves shooting Bud Light cans.

A World Bank report expects 2023 remittance flows to poor and middle-income countries to rise by 1.4% to US$ 656 billion, as the sluggish global economy continues to weaken, with source countries seeing economic activity soften, resulting in limited employment and wage gains. Last year, remittances were 8.0% higher, compared to 2021, at US$ 647 billion. The five leading recipient countries were India, Mexico, China, the Philippines and Pakistan with totals of US$ 111 billion, US$ 61 billion, US$ 51 billion, US$ 38 billion and US$ 30 billion. Economies, where remittance inflows account for a large share of GDP, include Tajikistan (51% of GDP), Tonga (44%), Lebanon (36%), Samoa (34%) and the Kyrgyz Republic (31%).

Finance Minister Ishaq Dar announced that Pakistan’s government will target a 6.54% budget deficit this coming fiscal year starting on 01 July; this is marginally down on the current year’s revised estimate of 7.0%.  (A source had said earlier in the day the budget was seen targeting a deficit of 7.7% of GDP for next year). One of the aims of this year’s budget is to satisfy the IMF to secure the release of stuck bailout money of at least US$ 2.5 billion of a US$ 6.5 billion programme arranged in 2019; this is subject to certain conditions, ahead of a probable November general election, although the minister stressed that the government had prepared “a responsible budget, not an election budget”. Inflation for the next fiscal year is expected to come in at 21% – well down on last month’s 38.0%.

This week, the country paid for its first government-to-government import of discounted Russian crude oil in Chinese currency – a welcome fillip to Pakistan’s foreign exchange reserves which are scarcely enough to cover a month of controlled imports. This import is the first to be offloaded, following a deal arranged earlier in the year; commercial details of the deal, including pricing and discounting are unknown. It is obvious that the Russians are using both the Pakistani and Chinese markets to make up the shortfall caused by sanctions closing western markets. Earlier in the month, it also outlined plans to open barter trade with Russia, Afghanistan and Iran – another sign of Pakistan seeking avenues to buy and sell commodities without trading in dollars. Last year, the country imported 154k bpd of oil, with energy imports making up the majority of the Pakistan’s external payments; it is reported that “we’re looking to target one-third of our total oil imports at the Russian crude.”

Fitch Ratings has downgraded Tunisia’s rating from CCC+ to CCC-, deeper into junk territory, and seven levels below investment grade, with the main reason being concerns that it is struggling to meet IMF conditions to clinch a financing deal. The ratings agency ranks the country’s financing risk as ‘high’, based on several factors including high debt, deteriorating finances, surging energy/commodity prices, and “uncertainty around Tunisia’s ability to mobilise sufficient funding to meet its large financing requirement”. It also forecast “that government financing needs will be high, at around 16% of GDP in 2023, (equivalent to US$ 7.7 billion) and 14% of GDP in 2024 (U$$ 7.4 billion), well above the 2015-2019 average of 9%”. Fitch reckons that there are also “increased signs that a default is probable, because of the inability to obtain funding from the IMF and unlock associated official creditor financing”. Last October, Tunisia reached a staff-level agreement with the IMF for a new US$ 1.9 billion four-year Extended Fund Facility, conditional on certain government actions, including a reform of fuel subsidies, freezing of wages and cutting energy and food subsidies. Since these were not met, funding has yet to be approved.

Although Egyptian inflation cooled in April, to 30.7%, its annual headline annual inflation accelerated faster than anticipated in May, to 32.7%, driven by higher food and beverage prices, which soared 60.0% on the year. On a monthly basis, inflation rose to 2.7% from 1.7% in April, with problems exacerbating since the onset of the war in the Ukraine last February. Because of that crisis, the country has seen tourist numbers falling and food prices surging more so because it is a net food importer. In March, the country’s annual urban inflation peaked to its highest level in six years, with the latest annual inflation narrowly below the July 2017 all-time high of 32.95%, less than a year after Egypt devalued its currency by 50%, as part of a US$ 12 billion IMF support package. Since March 2022, the US$ dollar rate has gone from US$ 0.64 to US$ 0.32, as the Sisi administration tries to meet IMF conditions so as to qualify for a package. Fitch Ratings has revised Egypt’s outlook to negative and gave the country its first downgrade since 2013, (with its long-term foreign currency issuer default rating being revised to ‘B’ from ‘B+’, which is five levels below investment grade), citing the lack of economic reforms to its fiscal system. It expects the country’s economy to continue to be beset by inflation, which is forecast to be at 24% this year and decline to 18% in 2024, foreign currency shortages, fiscal policy tightening and heightened economic uncertainty.

As the past two quarters have posted contraction, New Zealand is now in a recession as in Q4 and Q1, the country saw the economy slowing by 0.7% and 0.1%. Other indicators point to the negative returns could continue until at least the end of Q3. It is highly likely that growth thereafter may not be higher than 0.2% until Q3 2024. The IMF posted that “New Zealand’s economy is in the midst of a necessary, policy-induced slowdown following the strong post-pandemic recovery,” and “New Zealand is likely to continue slowing in the near term as monetary tightening takes hold.” Since September 2021, the country’s cash rate has risen from 0.25% to 5.5%, with its population facing increasing inflation since then. The IMF has warned inflation was declining “but will remain high” for some time. 

Only weeks ago, a June rate hike was a shoo-in, but with US rate of inflation slowing last month, the Fed took a breather, after ten consecutive increases, and this week kept rates at the same level; the CPI nudged 0.1% higher in May, compared to a 0.4% rise a month earlier, as May prices rose 4.0%, down on the month from 4.9%; core inflation, which excludes food and energy, were 0.4% higher. There are signs that inflation is slowly being tamed, after topping 9.0% last August, and that the belated Fed rate hikes have had a positive impact.

The UK Chancellor has noted that it had “no alternative” but to hike interest rates in a bid to tackle rising prices, with Jeremy Hunt reiterating that inflation was the “number one challenge we face”, and that the government would be “unstinting in our support” for the Bank of England “to do what it takes” to slow inflation. This comes despite the economy growing by 0.2% in April, and high rates/mortgage costs seeing housebuilders and estate agents having a “poor month”. The BoE was late coming to party and only started to take action in December 2021, (with the CPI at 7.0%), when rates started moving from almost zero to its current level of 4.5%.; latest figure sees inflation still at a very high 8.7%, well ahead of the BoE’s long-standing 2.0% target. The Chancellor added that “in the end there is no alternative to bringing down inflation, if we want to see consumers spending, if we want to see businesses investing, if we want to see long-term growth and prosperity.”

It does seem that UK lenders are getting cold feet when it comes to mortgages, as concerns grow that rates will continue heading northwards, as turbulence returns to the economic landscape. London & Country said lenders had been withdrawing deals and raising rates at a “relentless pace” and this week would “bring more of the same”. Over the past thirty days, mortgage rates have gone up about 0.5%, now nearing an average fixed deal of 6% and this week, Santander became the latest big lender to temporarily withdraw new deals due to “market conditions”, in line with HSBC a week earlier. It is estimated that about 1.5 million households are set to come off fixed mortgage deals in 2023 and face a sharp rise in their monthly repayments. Moneyfacts have posted that the average two-year fixed-rate mortgage deal is 5.86%, while a five-year deal has hit 5.51%, compared to 3.03% and 3.17% a year earlier in May 2022. The end result has a double whammy on the UK economy – a reduction in consumer spending, because more money is being paid on mortgage repayments, with the negative impact on economic growth prospects, and a further reduction in the availability of rental properties.

As regular pay, excluding bonuses, increased by 7.2% in the quarter to April, (at their fastest rate in twenty years, excluding the pandemic), it was still way short of the inflation rate, but an indicator that the BoE will soon be lifting rates again. The ONS noted that pay, when adjusted for inflation, fell by 1.3% in the three months to April. Since 2021, it has put up interest rates twelve times to try to slow down price rises, as the BoE has warned big pay rises are contributing to the UK’s still-high rates of inflation. The current economic climate has spooked lenders who have been lifting rates and pulling hundreds of deals, causing uncertainty for borrowers. On Tuesday, the government’s borrowing costs – which directly impact mortgage rates – rose to their highest rate since last year’s disastrous mini-budget.

This week, Jack Dorsey indicated that the Indian government had threatened to close down Twitter unless it complied with orders to restrict accounts, with authorities dismissing the accusation as an “outright lie”.  The platform’s co-founder posted that India threatened the company with a shutdown and raids on employees if it did not comply with government requests to take down posts and restrict accounts that were critical of the government over protests by farmers in 2020 and 2021. Narendra Modi’s government has always engaged in online censorship, with Deputy Minister for Information Technology, Rajeev Chandrashekhar, stating that “no one went to jail nor was Twitter ‘shut down’. Dorsey’s Twitter regime had a problem accepting the sovereignty of Indian law.” The Indian government says it only aims to restrict misinformation and posts that curb peace and security. One of Us Cannot Be Wrong!

If I Could Turn Back The Hands Of Time!                                  09 June 2023

The 3,397 real estate and properties transactions totalled US$ 2.45 billion, during the week, ending 09 June 2023. The sum of transactions was 204 plots, sold for US$ 414 million, and 2,562 apartments and villas, selling for US$ 1.55 billion. The top three transactions were all for plots of land, one in Wadi Al Safa 3, sold for US$ 25 million, and the second in in Hadaeq Sheikh Mohammed bin Rashid for US$ 22 million, and the third in Wadi Al Safa 3 for US$ 21 million. Al Hebiah Fifth recorded the most transactions, with thirty-one sales, worth US$ 26 million, followed by twenty-eight sales in Wadi Al Safa 3, for US$ 127 million, and twenty-five sales in Madinat Hind 4, valued at US$ 9 million. The top three transfers for apartments and villas were for a villa in Al Thanayah Fourth, valued at US$ 22 million, another in Palm Jumeirah, for US$ 15 million, and an apartment in Zabeel Fourth for US$ 14 million. The mortgaged properties for the week reached US$ 414 million, with the highest being for a plot of land in Nadd Hess, mortgaged for US$ 33 million, whilst one hundred and thirty-four properties were granted between first-degree relatives worth US$ 93 million.

Research from proptech firm Realiste indicates that the Dubai Q2 real estate sector will experience a 4.1% growth, along with a 46% surge in real estate transactions, compared to 2022; the main drivers continue to include a strong 7.6% GDP growth last year and favourable amenities and infrastructure. Dubai property prices grew by 20-40% over the past twelve months, with some areas, like Palm Jumeirah and Trade Centre First, growing by 59% and 210% respectively. Other growth areas include JBR, Jumeirah Golf Estate Part 4 and Wadi Al Safa 2 Part 1, all with price rises in the region of 7.0%.

Tiger Properties has launched Altai Tower, a twenty-six-storey tower, located in Jumeirah Village Triangle. The project will house 244 residential units, comprising forty-eight studios, 146 1 B/R apartments, and fifty 2 B/R apartments, along with four parking floors, and a retail floor. It will also include an outdoor swimming pool, a kids’ playing area, a running/walking track and a gym. Prices will start at US$ 163k, with a flexible payment plan of 0% interest, along with a five-year payment plan option.  Delivery is expected by 2026.

Imtiaz has announced the launch of a US$ 42 million development in Jumeirah Village Circle. The sixteen-storey Pearl House comprises 190 studio and 1 B/R apartments, with starting prices at US$ 139k. The development will have all the usual accoutrements, including an electric vehicle charging station, fully furnished apartments, with custom-made furniture, built-in office space for remote work, a fully equipped gym, a courtyard, a rooftop pool, extra visitors parking and a kids’ playground.

Dubai South Properties has appointed Ginco General Contracting as its major developer for a US$ 272 million contract for the initial phases of South Bay, the master development located in the heart of The Residential District, within Dubai South. This development, slated for completion by Q1 2026, will include over eight hundred spacious villas and townhouses, more than two hundred luxurious waterfront mansions, a 1 km crystal lagoon, 3 km of a waterfront promenade, multiple beaches, a clubhouse, fitness centres and lush parks. The townhouses will range from 2.9k sq ft to 5.5k sq ft and be a mix of 3 – 5 B/R units, whilst the mansions will encompass a built-up area of between 9k – 14.5k sq ft

DMCC has appointed Mace as the building operations management firm, for its recently built 340 mt Uptown Tower, to deliver industry-leading building services across the board, including facilities management services with a central focus on residents, commercial office tenants and visitors. The tower, with eighty-one floors, features a 188-key 5-star luxury hotel, ‘SO/ Uptown Dubai’, SO/ branded residences, twenty-two floors of premium Grade A commercial office spaces, and exclusive F&B offerings in The Atrium.

The latest Mercer’s 2023 Cost of Living Survey shows that Dubai has moved thirteen places higher to eighteenth on its global list of the world’s 227 most expensive cities for international employees. Rent increases, averaging 25%, were the primary reason for the shift upwards; only Singapore, with a mouth-watering 50% average rise in housing costs, saw higher rents last year. Other price hikes noted in the survey were the cost of food in supermarkets, sports/leisure and transportation, rising by 11%, 5% and 4% respectively. The survey found that to compensate employees, surveyed companies have provided an average of a 4.2% annual merit increase in 2023, with 40% of surveyed companies having lifted their housing allowances by up to 10%. Overall, Hong Kong remained the most expensive city for expatriates, followed by Singapore.

At a recent federal cabinet meeting, HH Sheikh Mohammed bin Rashid Al Maktoum approved the National Sports Strategy 2031, with Sheikh Ahmed bin Mohammed bin Rashid, Second Deputy Ruler of Dubai and President of the UAE National Olympic Committee, noting the growth of the sports sector and its role in advancing the nation’s prosperity and welfare. The aims of the strategy are to implement seventeen initiatives, including developing sports professionals, discovering talented athletes in schools, upgrading the sports education methodology, enhancing regulations governing the sector, and raising the proportion of people practising diverse sports to 71% of the population.

On Tuesday, the World Bank revised UAE’s economic growth upwards by 1.1% to 3.4% over the next two years, driven by higher oil output, reform initiatives and fresh investments, and it will be the fastest-growing economy during 2024 and 2025. However, it did revise UAE’s GDP growth downwards for 2023, by 1.3% to 2.8%, attributable to constrained oil production, (with Opec+ members having already announced production cuts twice this year – once in April and then this month) and tightening financial conditions. For both the GCC and the Mena region, it cut its 2023 forecasts by 1.3% to 2.4% and by 1.3% to 2.2% and increased 2024’s forecasts by 0.8% to 3.2% and 0.6% to 3.3%.

Emirates is planning a new wide-body aircraft order of a range of Airbus A350s, Boeing 777-9s and “possibly” the smaller Boeing 787 Dreamliners, according to Tim Clark, its president, commenting that “we are in the market for [the purpose of] buying quite a few more aircraft”; the size and timing of any order were not indicated. The world’s biggest long-haul line is in the middle of a US$ 2 billion programme to retrofit more than one hundred of its Airbus A380 jets and Boeing 777s as it awaits the delivery of fifty A350s in summer of 2024, as well as thirty Boeing 787-9s and the long-delayed one hundred and seventeen 777Xs, expected to start in 2025. The A380s are scheduled to start exiting operations between by 2033, but there are plans to extend that timeframe. On the side-lines of the annual IATA meeting in Istanbul, he commented, in relation to whether Emirates would move to Al Maktoum International, (DWC), that the government was “fairly close to making a decision on that”, and “if we have our way, it would be built by 2032-2033.”

Last week, Drydocks World celebrated two anniversaries – forty years since its 1983 launch and the completion of its 20,000th project. Since then, it has become a leading provider of maritime services and has been responsible for a host of global projects for marine and energy customers. Over its life span, it has carried out 10k ship repairs, maintenance and upgrade projects, 9k global offshore and onshore service projects, and other work on conversion, fabrication, drilling, rig, reactivation, life-extension and refit projects. Drydocks World continues to enhance its facilities in Dubai, with the new South Yard development providing dedicated fabrication facilities, as well as expanding its global presence in Mumbai and in the Mediterranean.

Last year, Dubai Electricity and Water Authority invested US$ 975 million to extend main water transmission pipelines, by 64 km, with diameters of 600, 900 and 1,200 mm in several areas in Dubai. DEWA is committed to meeting the current and future needs of its 1.15 million customers and in providing world class services according to the highest standards of availability, reliability and efficiency, as well as meeting increasing water reserves. DEWA’s total production capacity of desalinated water has reached 490 million imperial gallons per day. The utility has achieved one of the lowest percentages of water network losses worldwide, recorded at 4.5%, compared to around 15% in North America.

Q1 saw Dubai Chamber of Commerce recording a massive 48.7% hike in new registered companies, totalling 15,.4k. Over that period, total exports and re-exports reported by the Chamber were 17.35 higher at US$ 19.54 billion. It also issued 182.3k Certificates of Origin – a year-on-year 2.0% growth as well as issuing and receiving 1.5k ATA Carnets, worth US$ 300 million. In Q1, it also achieved its goal of establishing more than one hundred Business Groups, representing various sectors and economic activities. Dubai Chamber of Commerce is one of the three chambers operating under Dubai Chambers.

In partnership with Bybit, DMCC will provide US$ 136 million of financial support to assist new companies to set up in the Dubai Free Zone’s Crypto Centre. The global crypto giant will provide dedicated support for crypto firms looking to list digital assets in the free zone and will become the listing partner for the crypto centre. With its HQ in Dubai, Bybit, which is the world’s third most visited crypto exchange, with over fifteen million users, will also participate in the DMCC Crypto Centre’s educational initiatives, by delivering webinars and educational courses. As DMCC looks to further enhance the support available to members of the crypto centre, the DMCC Crypto Centre is home to over five hundred and fifty businesses, operating in the Web3 and blockchain space.

Last month, Dubai saw a slight softening of 1.4, in its seasonally adjusted S&P Global PMI, to 55.3, with the economy improving at a “robust pace”, mainly attributable to stronger output and employment numbers rising for the thirteenth month in a row in the fastest pace of job creation since January 2018; (50 is the threshold between expansion and contraction). The degree of business confidence was the strongest recorded since pre-pandemic March 2020 – and the subsequent global lockdown. New business growth slowed in the month, from April’s eight-month high, but was still in positive territory, whilst surveyed businesses registered the fastest expansion in activity levels for a fifth consecutive month. Other positive indicators include lead times shortening, at their fastest pace since August 2019, and a sharp rise in new order intakes.

With this week’s signing of a Comprehensive Economic Partnership Agreement, non-oil trade between the UAE and Cambodia is expected to more than double to US$ 1.0 billion, over the next seven years. Last year, bilateral trade reached US$ 407 million which in turn was 33% higher compared to 2021.The CEPA will eliminate or reduce customs duties, remove trade barriers, facilitate investments, open market access to services exports, and create more opportunities for businesses to forge new partnerships. Currently, the UAE is the top regional trading partner with the Asian nation, accounting for 70% of its total trade. The signing of this accord offers a wide range of opportunities for investment in tourism, logistics, infrastructure and renewable energy as well as guaranteeing improved access for UAE products to the Cambodian market, covering 92% of customs tariff lines and over 93% of the value of non-oil trade.

With its main aim of assisting government entities in deploying future technologies across key sectors, Sheikh Hamdan bin Mohammed announced the launch of the Dubai Centre for Artificial Intelligence.  The Crown Prince noted that Dubai wants to be a global leader in preparing for emerging opportunities and challenges, as well as shaping the future, and that the emirate is fast adopting new artificial intelligence and future technologies in step with the evolution of global technology innovation. He also commented that “Dubai’s government will be the best in the world in deploying artificial intelligence within its various entities. This new centre is the first step in achieving this goal”, as he encouraged employees across all Dubai’s government entities to apply generative AI tools to enhance productivity and optimise government services. The new centre will train 1k government employees, from over thirty government entities, on the uses of generative artificial intelligence.

Having made on offer of USS$ 5.03 per share, including a 69.5% share premium, Brookfield Business Partners acquired the UAE’s payments-processing company, Network International, for US$ 2.76 billion.  Ron Kalifa, chairman of Network International, noted that “the strength of Network’s people and technology platform has enabled it to build on its position as a leading payment solution provider across the Middle East and Africa”. Earlier, it had received a bid from a consortium of private equity firms, CVC Capital and Francisco Partners, valuing the company at about US$ 2.64 billion. Little wonder that its shares were 5% higher on the news, with its value up more than 25% YTD. Brookfield, already with a 60% share in FAB’s payments business Magnati, commented that there was “strategic and industrial logic” in combining Magnati and Network International. Data from Statista indicates that, in 2023, the total transaction value in the digital payments segment could top US$ 28.74 billion in the UAE and US$ 106.30 billion in the GCC; on a global stage, this year’s value, at US$ 8.26 trillion, will be 87.7% higher than in 2020.

The March balance sheet of the Central Bank of the UAE saw assets grow by 5.4% on the month, to US$ 161.9 billion, marking the largest level ever in its history; on the year, it has expanded by 15.2% (US$ 15.0 billion) and by 7.05% YTD. Its assets of cash/bank balances, reserved investments, deposits, loans/other investments and other assets totalled US$ 71.2 billion, US$ 53.6 billion, US$ 29,.4 billion, US$ 0.9 billion and US$ 6.7 billion. On the liability and equity side of the balance sheet, the balances included current/deposit, certificates of deposit/monetary bills, currency notes & coins issued, for capital/reserves and for other liabilities equating to US$ 67.3 billion, US$ 53.2 billion, US$ 35.2 billion, US$ 3.9 billion and US$ 2.1 billion.

“In accordance with the applicable insurance brokers’ regulation,” the UAE Central Bank has struck off Seagull Insurance Services Co. and Al Shorafa Insurance Services from the broker registry; no further details were readily available. One of the objects of the CBUAE is to ensure that all insurance companies and brokers comply with the regulations to safeguard the transparency and integrity of the UAE financial system.

The Central Bank confirmed that the number of transactions rose 49%to 38,715 during the period, with the busiest month being March, with a total value of cleared cheques standing at. US$ 30.44 billion. Cash deposits reached US$ 9.64 billion, including US$ 10.73 billion in notes, against cash withdrawals of AED 46.32 billion, including US$ 12.62 billion in notes.

The UAE Central Bank has announced that Emiratis now represent 33.2% of the total number of bank employees in the country, with further growth expected. It was noted that the 2026 target is to reach 45% of total employees and 30% for senior executives. Last year, the regulator backed the creation of 5k jobs for UAE citizens, in the banking and insurance sectors, under its Emiratisation programme. At the same meeting, it reinforced “the importance of sustainability, Emiratisation and consumer protection, and underlines our commitment to achieving our ambitious digitalisation, financial technology and innovation targets.”

With its recent 5% acquisition of shares in the National Bonds Company, Taaleem Holding has become its major shareholder, with a 22% stake in the Sharia-compliant saving and investment company; Taaleem, which listed on the DFM last November, was founded in 2006 by the NBC, and other investors, and is now one of the region’s biggest education groups. It boasts twenty-six schools, attended by 27k students and supported by 1.7k faculty members and 3k support staff. This latest move is part of National Bonds’ continuous effort to strengthen its presence in the education sector and aligns with its strategy to invest in vital educational services.

The DFM opened on Monday, 05 June 2023, 62 points (1.7%) higher the previous week, gained 92 points (1.7%) to close the week on 3,603, by 09 June 2023. Emaar Properties, up US$ 0.06 the previous week, was flat to remain on US$ 1.66 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.68, US$ 3.76, US$ 1.44, and US$ 0.39 and closed on US$ 0.70, US$ 3.86, US$ 1.46 and US$ 0.40. On 09 June, trading was at 263 million shares, with a value of US$ 117 million, compared to 369 million shares, with a value of US$ 221 million, on 02 June 2023.

By Friday, 09 June 2023, Brent, US$ 0.96 lower (1.2%) the previous week, shed US$ 1.23 (1.6%) to close on US$ 74.99.  Gold, US$ 18 (0.9%) higher the previous week, gained US$ 12 (0.6%) to US$ 1,976 on 09 June 2023.   

Opec+ members have agreed to extend their voluntary oil production cuts until the end of 2024, as economic growth concerns weigh on the outlook for crude demand, with Saudi Arabia, the world’s largest crude exporter, making an additional voluntary output cut of one million barrels per day in July, whilst the UAE will keep its voluntary cut of 144k bpd in place until the end of December 2024. Russia will also extend its voluntary output cut of 500k bpd until the end of next year which will see its production drop to some 7.9 million bpd if they do adhere to its output curbs. The bloc also agreed to establish a new production target of 40.46 million bpd for 2024, noting that the decision was taken “in light of the continued commitment … to achieve and sustain a stable oil market, and to provide long-term guidance for the market, and in line with the successful approach of being precautious, proactive, and pre-emptive”. With China’s economy recovering so slowly, the fact that it is recovering will probably boost global crude demand to record levels later this year, despite the fact that latest manufacturing PMI figures dipped 0.4 in May to 48.8 – any figure under 50 signals contraction.

Troubles seem to have bedevilled Boeing lately, with the most recent being this week’s announcement that it could be forced to again delay delivery of its 787 Dreamliner. After a new flaw, (that does does not impact flight safety), had been found, the plane maker has been forced to inspect all ninety of the planes. The problem, involving the fitting for the 787’s horizontal stabiliser, comes after Boeing was forced in March to stop production for a month to solve another problem. Last Friday, it stopped approving for delivery all 787s, suspected to have the flaw, and although the issue does not immediately affect in-service 787s, it could not say how far back the issue stretches or whether Dreamliners currently operated by airlines will need a fix.

All eyes were on Apple last Tuesday and the tech company did not disappoint with the launch of its mixed-reality headset at its annual Worldwide Developers Conference in California. As it was the firm’s most significant product release since 2015, it was no surprise that it came with a headset offering both virtual- and augmented- reality experiences. Pre-launch price estimates of US$ 3k were on the low side, as the headset, with a two-hour battery life, will cost US$ 3,499. At this price, it may prove a hard sell in a slow market, considering that last year, the headset market posted a 54% dive in global sales, and that, last week, Meta announced its Quest 3 would cost US$ 499. Apple Vision Pro looks different to similar headsets on the market – and is more reminiscent of a pair of ski goggles than a virtual reality headset. Apple chief executive, Tim Cook, commented that the new headset “seamlessly blends the real world and the virtual world”.

The southern Indian state of Karnataka has announced that Apple’s biggest supplier Foxconn will start manufacturing iPhones in the state next year; it has been making older versions of iPhones in the neighbouring state of Tamil Nadu since 2017. There are reports that the US supplier will invest US$ 700 million, on a new factory, with the local government claiming that the project was valued at US$ 1.59 billion; the project will create around 50k jobs. It is estimated that the new facility will manufacture twenty million iPhones a year. The move comes at a time when trade relations between the global superpowers, China and the US, have deteriorated., leading to Apple’s decision to diversify its supply chains away from China, where it currently makes most of their iPhones. However, the company has so far struggled to compete in the Indian market which is dominated by the much cheaper South Korean and Chinese smartphones.

As it plans to shave US$ 1.03 billion off its expenses, Standard Chartered announced  selective lay-offs of some one hundred employees, mainly in Singapore, London and Hong Kong. Several middle office positions, such as human resources and digital transformation in Asia, have already been cut, as have a few managing directors in financial markets in London, and some junior staff. The move by the bank has been mirrored by other financial institutions who all have been impacted by a tough economic and muted deal-making environment. Last week, Goldman Sachs released plans for more job cuts, as it hunkers down in the face of what president, John Waldron, called an extraordinarily challenging economic backdrop.  Morgan Stanley co-president Andy Saperstein has also given a similar gloomy forecast.

In the US, the Securities and Exchange Commission has charged Binance with breaking the country’s investment laws, and has accused the crypto giant of engaging in a “web of deception”, including erecting “sham controls” so that it could continue operating in the US. Its founder, noting that it had yet to receive details of the charges, confirmed that it was “standing by” to ensure that the platform’s systems remained stable. Changpeng Zhao confirmed that it would respond once it had received further details. Earlier in the year, the firm faced charges from another US financial regulator, the Commodity Futures Trading Commission.

Furthermore, the SEC has also brought charges against Coinbase with operating illegally, alleging that the country’s biggest crypto trading platform had acted as a broker, exchange and clearing agency for investments that are subject to SEC rules, without properly registering. The firm has indicated that the rules and regulations, covering crypto are not clear, with its chief legal officer saying that “the solution is legislation that allows fair rules for the road to be developed transparently and applied equally, not litigation. In the meantime, we’ll continue to operate our business as usual.” It seems that authorities are beginning a robust crackdown on the sector, brought about by the collapse last year of FTX, which had left many customers unable to access their funds.

Although not one of the major global tech giants – but still an important player in the sector – Reddit is the latest to announce staff redundancies, as it lays off 5%, (ninety employees); it will also scale back on future hiring. Like other companies, Reddit hired substantial numbers during the pandemic and had probably become too bloated, as business slowed. Reddit, which separated from magazine conglomerate Conde Nast in 2011, has seen its popularity rise in recent times attracting retail investors engaged in stock speculation. Its message boards had gained significant attention during the meme stock frenzy, from day traders.

This week, the billionaire Winklevoss twins, who founded the cryptocurrency exchange Gemini in 2014, are on record stating they believe Bitcoin could surge to a value of US$ 500k. Bitcoin had been created by Satoshi Nakamoto in 2008 and the brothers got involved in 2012, when the currency was trading at just US$ 10. Their earlier claim to fame was in 2004, when they sued Facebook chief executive Mark Zuckerberg, who they had employed to build their social networking site, HarvardConnection, alleging that he stole their idea to create the social media platform. The case was settled four years later, with a pay-out of US$ 65 million in cash and Facebook shares.

In an effort to cut food waste,Marks & Spencer has become the latest UK retailer to scrap use-by dates on milk by replacing it by best-before dates instead; M&S follow in the footsteps of the likes of Morrisons in changing milk labelling, advising shoppers to use their judgement on whether the milk is safe to use. It is estimated that, in the UK, 490 million bottles of milk are thrown away every year, with the “main reason being not drinking before the use-by date”. The retailer noted better shelf-life and improvements in milk quality meant consumers could use “their judgement on what’s still good to eat” without having to rely on labels. Supermarkets have also been ditching use-by dates on fruit and vegetables to help reduce food waste.

The Royal Mint confirmed that there is almost GBP 9 billion, (US$ 11.19 billion), in old bank notes that have not been cashed in across the UK, even though paper £20 and £50 stopped being legal tender last October. Furthermore, there are also GBP 87 million, (US$ 108.16 million) of old £1 coins that have not been returned. The Bank of England said 445 million paper banknotes remained in circulation:

• 111 million £5 notes
• 65 million £10 notes
• 198 million £20 notes
• 70 million £50 notes

despite the £5 notes being withdrawn in May 2017 and the paper £10 notes in March 2018. While the paper notes are no longer legal tender, a BoE spokeswoman said “all genuine” banknotes, that have been withdrawn from circulation, retain their face value. Surprisingly, cash still accounted for 15% of all payments in 2022, making it the second most-popular payment platform after debit cards.

At the start of the annual IATA meeting, it was revealed that global airlines are owed more than US$ 2.3 billion by world governments – 47% higher on the year. The aviation body claims that these debts deprive the aviation industry of much-needed cash, risk reduced air connectivity and damage investors’ perceptions of these economies. The biggest offender remains Nigeria, followed by Bangladesh, Algeria, Pakistan and Lebanon reportedly owing US$ 812 million, US$ 214 million, US$ 196 million, US$ 188 million and US$ 141 million – accounting for over 67% of the total debt. This problem has been on-going for years but was exacerbated by the pandemic, which left airlines strapped for cash.

The International Air Transport Association announced continued strong passenger traffic demand in April, which rose, on the year, by 45.8%, with global traffic now at 90.5% of pre-Covid levels. Domestic traffic was up 42.6%, compared to April 2022, and has now fully recovered from the pandemic, posting a 2.9% increase over the April 2019 results. International traffic climbed 48.0%, with all markets recording healthy growth, with carriers in the Asia-Pacific region continuing to lead the recovery, with international RPKs touching 83.6% of April 2019 levels. The world body attributed the improvement to several factors including the easing of inflation, rising consumer confidence in most OECD countries and declining jet fuel prices. It expects that this upward trend will continue, and that strong air travel demand is sustainable, aided by slowing cost pressures. (Next year’s annual meeting will be held in Dubai).

IATA expect that 2023 industry profits will more than double to US$ 9.8 billion, from US$ 4.7 billion last year, with a 1.2% net margin; airline industry operating profits are forecast to reach US$ 22.4 billion – well up on last year’s US$ 10.1 billion. Total revenues, at US$ 803 billion, are forecast to be 9.7% higher, as operating expenses will rise at a slower rate of 8.1% to US$ 781 billion; jet fuel costs at US$ 215 billion, are expected to average US$ 98.50/barrel in 2023 – a marked improvement on 2022’s US$ 135.60. Passenger numbers, at 4.35 billion, will almost reach pre-Covid levels of 4.54 billion. There has been a marked slowdown in cargo volumes, expected to reach 57.8 million tonnes, compared to 2019’s 61.5 million tonnes, with revenues slipping to US$ 142.3 billion, compared to US$ 207 billion posted last year. The positive news is that industry financials are improving in all regions from the COVID-related figures of 2020, although not all regions are expected to deliver a profit this year, as it is noted that airlines are just making an average US$ 2.25 per passenger.

Data by Eurostat, on the occasion of World Bicycle Day, posted that the EU saw exports of bicycles, in 2022, 24.0% higher at US$ 1.18 billion, with imports up 32.0% at US$ 2.68 billion. The overall increase in the trade value of bicycles can be attributed to an increase in the trade of electric bicycles, which are typically more expensive. Last year, the EU imported 5.2 million non-electric bicycles, (down 9.0% on the year), and exported one million – 31.0% lower compared to 2021. For electric units, EU imports were 16.0% higher at 1.2 million, with exports also 16.0% higher for 365k electric bicycles. The three main markets for EU exports of non-electric bicycles were Switzerland, UK and the US with 25%, 23% and 7%; for non- electric bicycles, the main markets were the same three – at 38%, 27%, 13% – followed by Norway’s 9%. The five main markets for EU imports of electric bicycles were Cambodia, Taiwan, China, Bangladesh and Türkiye with 30%, 23%, 11%, 10% and 6%; for electric bicycles, the main markets were Taiwan, Vietnam, Switzerland, China and Türkiye – at 56%, 14%, 13%, 8% and 5%.

For a second consecutive quarter, the eurozone posted a 0.1% of economic contraction – a sign that the bloc has entered a technical recession. However, the are some analysts who take a broader look at the economy, including unemployment figures; the latest unemployment figure of 6.5% shows that this is the lowest ever return since the bloc was created in 1999. Whether the eurozone is in recession is debateable but what is for sure is that many are suffering from rising prices, rising mortgage rates and an ongoing cost of living crisis. Because of these factors, and others, it is obvious that consumer spending is heading south which could see the economy continuing to contract.

There was a big, and surprising, development in the sporting world this week, with the announcement that the PGA Tour, European Tour and Saudi-backed LIV Golf circuit, (which was only formed in October 2021 and fronted by Greg Norman), had agreed to end their long-running standoff and to merge and form a commercial entity to unify golf. As part of the deal, the sides agreed to drop all lawsuits  involving LIV Golf against each other effective immediately. The agreement also sees PIF, Saudi’s sovereign wealth fund, making capital investment into the combined entity. The wealth fund will initially be the exclusive investor in the new entity and have the right of first refusal on any capital to be invested. The tours also said in their announcement that players, who were suspended by the PGA Tour or the DP World Tour for playing in LIV Golf events, could return as the entities “will work cooperatively and in good faith to establish a fair and objective process for any players who desire to re-apply for membership”. There is no doubt that LIV introduced a breath of fresh air to a game that was becoming staid and in urgent need of change. The Saudi-backed tour lured top PGA Tour talent – such as Phil Mickelson, Dustin Johnson, Brooks Koepka and Cameron Smith – with record US$ 25 million purses and money guarantees; the PGA responded by banning LIV players from their tour and fining some of them, including Lee Westwood, Sergio Garcia, Ian Poulter and Henrik Stenson.

Until recently, the Dubai weather has been exceptionally kind to most residents and as we approach the June Solstice, the emirate will experience its longest day of the year. On that day, dawn will be at 5.03 am, with the sun rising at 5.29 am, and setting at 7.11 pm, and dusk occurring twenty-six minutes later at 7.37pm. The period of civil twilight is some fourteen hours and thirty-four minutes. It would be interesting to see a cost/benefit analysis on, whether over a period of between four and six summer months, the viability of Dubai clocks being put forward an hour, so that the emirate’s longest day is still fourteen hours and thirty-four minutes long but is between 6.03am and 8.37pm. Will the economy benefit more from having an extra one hour at the end of the day whilst losing that hour of sunlight at day break? If I Could Turn Back The Hands Of Time!

A Change Is Gonna Come!                                                       02 June 2023

No statistics were readily available for real estate and properties transactions for the week ending 02 June 2023.

This week witnessed the most expensive sale of a penthouse on Palm Jumeriah with Luxhabitat Sotheby’s International Realty orchestrating a US$ 60 million sale for a shell-and-core mega penthouse at AVA on Palm Jumeirah, Dorchester Collection. The penthouse has a built-up area of 33.0k sq ft and occupies four floors, featuring a 360-degree infinity lap pool, (with views of Palm Jumeirah, Burj Al Arab, and Ain Dubai), a four-floor 200 mt indoor garden, a private panoramic elevator and private lobby, with a roof terrace. The actual AVA development comprises only seventeen residences, with direct access to private terraces with a pool, floor-to-ceiling windows, and a stunning 270-degree floor-to-ceiling view private beach and all the five-star amenities of the Dorchester collection.

Property Finder reports that May real estate transactions were 77.6% higher on the year, at 11.7k, driven by robust economic growth; last month, the aggregate value of property deals rose 28.3% to US$ 9.26 billion. Off plan sales continue to rise as a percentage of the total sales – accounting 49% of the total sales transaction volume and 43% of the value. The value of off-plan properties, rose 135.8% to more than US$ 3.95 billion, whilst the volume of off-plan property sales surged 109.9% to more than 5’7k transactions. Dubai’s property market trend in May follows a 53% surge in the value of deals and a 45% rise in the volume of transaction in April.

With construction starting twenty-one years ago, Palm Jebel Ali started well and by 2006, it already had a 17 km breakwater, 200 mt wide. Ten million tonnes of rock were brought in from Ras Al Khaimah to be dumped into the sea to form the barrier; a further two hundred sq mt of cap rock, sand, calcarenite and limestone came from the Jebel Ali Entrance Channel dredging works.  By 2008, offshore work had begun on the six km “trunk” and the seventeen fronds, and all was on track for the project – twice the size of The Palm Jumeirah, with a projected population of 250k – to go ahead. That year, the GFC changed everything and Dubai – in line with the rest of the world – was impacted and it was no surprise then to see the mega project suspended. For more than a decade, Jebel Ali Palm lay dormant. In 2018, Nakheel’s then chief executive, Sanjay Manchanda, confirmed the project was still in long-term development but that there were no current plans to resume work. In 2022, it was announced that the project was to relaunch and be rebranded.

On Wednesday, the Dubai Ruler did not disappoint announcing the updated Palm Jebel Ali project, destined to be twice the size of the already iconic Palm Jumeirah, and how he sees this new destination as part of an ambitious plan to make the emirate “the most beautiful city in the world”. It will span an area of 13.4 sq km and have beaches that will spread for over 110 km and that “its marine, green pastures will provide housing, (estimated to house 35k families), with the highest quality of life.” HH Sheikh Mohammed added that “we announced our goal to double Dubai’s economy by 2033 .   .   .   and every day we add a new brick in building the most beautiful city in the world.” More than eighty hotels and resorts will be built on the island, expected to draw in tourists and families from around the world.

Indians have lost their long-standing number one position in Dubai’s luxury residential property sector; prior to the onset of Covid, the top three property investors were Indians, Emiratis and Saudis. According to a report by Knight Frank, the top two positions now belong to the Chinese and British, with Indians now trailing in third place. The state of the UK economy – and indeed the country – has seen UK investors looking for safe havens to invest and, at the moment, Dubai ticks all the right boxes because of its booming economy, progressive government initiatives and high returns on property investment. Latest figures from Betterhomes point to the fact that, in Q1, there had been a 60%, year on year, hike in the number of UK investors, making them Dubai’s biggest source market so far this year.

In the first four months of 2023, the number of visitors to Dubai rose by over 18% to more than six million – and if this trend continues for the rest of the year, Dubai will be one of the three best cities in the world, economically, in accordance with the “D33” Economic Agenda. Over the past twelve months, the number of hotel rooms has increased by 6.1% to 148.9k, as the number of hotels rose 5.8% to 814. The source location markets – Western Europe, South Asia, Russia, CIS and Eastern Europe, GCC and MENA – remained the same, with total percentages of 22%, 16%, 15%, 14% and 13%. The top four source countries were India, Russia, UK and Saudi Arabia, with totals of 806k, 474k, 391k and 352k, with the first three countries recording visitor increases of 46%, 101% and 6%. YTD to 30 April, Dubai recorded an average occupancy rate of 80%, with the average duration of hotel guests’ stay about four nights, and the number of reserved rooms reaching 14.09 million overnight stays, compared to 12.65 million overnight stays in the comparative 2022 figures.

An initiative by Dubai’s Department of Economy and Tourism has made it mandatory for owners of holiday homes to display a QR code on the main entrances of their properties. The twin aims of the exercise are to improve transparency and increase confidence among investors and visitors in this real estate sector. It will also help facilitate DET’s inspections and ensure strict compliance with procedures. In a booming market, this sector witnessed an increase of 6.6k units (45.5%) to 21.1k, with room growth of 9.5k to 32.8k rooms. In Q1, these properties hosted 137.1k guests.

Flydubai is expected to recruit at least 1k more staff this year, as it continues to ramp up operations to over 110 destinations. The appointments will be needed across all the airline’s divisions, including pilots, cabin crew, engineers and support. Pilots, requiring 2.5k hours flying time on modern (EFIS), multi-crew, multi-engine aircraft and five hundred hours on B737-300 to 900 (NG/EFIS) type aircraft, will have remuneration including US$ 8.7k basic salary + housing allowance + transportation allowance, with variable flying pay of US$ 3.1k. Cabin crew will be on a  US$ 2.0k basic salary + housing allowance + transportation allowance, with variable flying pay of US$ 1.0k (monthly average).

Virgin Atlantic will restart flights from London to Dubai in October, with bookings opening next week; the airline will run four Boeing 787-9 flights a week between October and March, with the plane having thirty-one upper class seats, thirty-five premium seats and 192 seats in economy. The service will also allow Dubai travellers to connect, via London, to Virgin Atlantic and Delta destinations in North America. The airline had discontinued its daily Dubai service in March 2019, after twelve years, citing economic reasons.

A report by Arthur D Little sees demand for EVs continuing to head northwards, with the UAE market expected to expand at a 30% compound annual rate over the next six years. The Minister of Energy, HE Suhail Al Mazrouei, noted that electric vehicle sales are “rapidly” increasing in the UAE, with EVs making up more than 1% of the overall car market in the country, as options for those who are going to own an EV have increased significantly with aggressive competition from Europe, the US and also from … China, [South] Korea, Japan and others.” The report also ranked the UAE eighth globally in terms of electric mobility readiness. Since 2020, the country has increased the number of charging stations across the country by about 60% to eight hundred, with DEWA stating that it is aiming for 1k public charging stations in Dubai by 2025, an increase from 620 at the end of 2022. On a global stage, electric car sales this year are expected to grow by 40% to fourteen million, driven by government subsidies and the tightening of carbon dioxide emissions standards, with EV market share jumping 4% to 18%.

The Ministry of Energy, as usual, adjusts fuel prices in the UAE on the first day of every month. According to the government, the UAE liberalised fuel prices, introduced in August 2015, help to rationalise consumption and encourage the use of public transport in the long run and incentivise the use of alternatives. The UAE Fuel Price Committee decreased all June retail petrol prices:

• Super 98: US$ 0.804 – down by 6.65% on the month and up US$ 0.63 (6.21%) YTD from US$ 0.757  
• Special 95: US$ 0.774 – down by 6.89% on the month and up 6.46% YTD from US$ 0.727
• Diesel: US$ 0.730 – down 7.79% on the month and down 18.53% YTD from US$ 0.896
• E-plus 91: US$ 0.752 – down by 7.08.% on the month and up 6.52% YTD from US$ 0.706

The Ministry of Finance waited until yesterday to announce two major decisions relating to the new corporate tax legislation. Cabinet Decision No 55 of 2023 detailed the scope of Qualifying Income, being income from transactions with other free zone entities, as well as domestic and foreign-sourced income derived from conducting any of the qualifying activities. Ministerial Decision No. 139 of 2023 addressed qualifying activities and excluded activities covered qualifying activities and excluded activities. Excluded activities are transactions with natural persons, regulated banking/insurance/financing/certain leasing activities, ownership or use of intellectual property assets and ownership or use of UAE immovable property. Earning income from excluded activities, or earning any other income that is not a qualifying income, will result in the free zone company being disqualified from the corporate tax regime, subject to “de minimis requirements”; this allows a qualifying free zone person to earn up to 5% of their non-qualifying revenue, or US$ 1.36 million (AED 5.0 million), without being disqualified from the free zone corporate tax regime. As expected, the legislation clarified that a qualifying free zone company must maintain “adequate substance” in the country. Businesses can contact their free zone authority to confirm whether their free zone is eligible for the zero rate.

The Ministry listed nearly a dozen qualifying activities which include:

• the manufacturing of goods or material
• the processing of goods or material
• reinsurance services; holding of shares and other securities
• ownership, management and operation of ships
• fund management services
• wealth and investment management services
• headquarter services to related parties
• treasury and financing services to related parties
• financing and leasing of aircraft including engines
• distribution of goods or materials in or from a designated zone
• logistics services
• any ancillary activities to the activities listed above.

In Q1 and following an inspection of eight hundred and forty companies, for failing to comply with the anti-money laundering and combating the financing of terrorism legislation, the Ministry of Economy imposed fines worth US$ 18 million on 137 companies operating in the UAE’s designated non-financial business or professions sector. The investigations are part of the Ministry of Economy’s remit to monitor the operations of designated non-financial business or professions sector companies that are subject to its supervision, which include real estate agents and brokers, precious metals and gemstone dealers, auditors and corporate service providers. The law stipulates that such companies have to ensure the sector’s full compliance with the provisions stipulated by Federal Decree-Law No. 20 of 2018, with adherence to the law is necessary to ensure the country’s full compliance with the international standards issued by the Financial Action Task Force. Companies were found to have failed to establish internal policies and procedures to check customer databases and transactions against names mentioned on the terrorism list.

With a strategy of targeting the “adoption of crypto globally across twenty countries”, Gemini, founded by cryptocurrency pioneers and identical twins Cameron and Tyler Winklevoss, will “soon” start the process of buying a crypto licence to operate in the UAE. It seems that the Gemini management has been having discussions with regional stakeholders to learn more about local regulatory requirements. No timetable has been released.

The Investment Corporation of Dubai posted impressive 2022 financial returns, with record consolidated revenue 58.0% higher at US$ 72.86 billion and a record five-fold surge in profit to US$ 9.84 billion; the Net Profit attributable to the equity holder was US$ 8.12 billion. ICD’s portfolio also includes Emirates, Emirates NBD, Commercial Bank of Dubai, Dubai Islamic Bank, National Bonds Corporation, Enoc, dnata, flydubai and DAE. Margins also improved because overall revenues grew faster than operational costs. Assets grew 6.9%, reaching a record US$ 320.65 billion, and liabilities totalled US$ 247.44 billion, and with borrowings and lease liabilities declining 9.0%, the Group’s share of Equity rose 13.6% to US$ 58.99 billion.

In 2022, the Dubai World Trade Centre hosted sixty-three major events that generated US$ 3.54 billion in economic output, with US$ 2.02 billion (56.9%) being retained in the local economy; these events welcomed nearly 1.2 million attendees, with 405k being from overseas. The knock-on effect on Dubai’s economy was seen in various sectors – including entertainment, accommodation, restaurants, retail, transport, and government services – and a support for 48k jobs. The main sectors – healthcare, medical/scientific and IT – accounted for 57%, (US$ 1.17 billion), of the gross value added to the emirate’s economy.

In a press release that would bring a smile to Scrabble players, CBUAE (Central Bank of the UAE) has issued new guidance on AML/CFT, (anti-money laundering and combatting the financing of terrorism), for LFIs (Licensed Financial Institutions); its main aim is to assist such entities’ understanding of their legal obligations – it will also take FATF ( (Financial Action Task Force) standards into account. It will come into effect within one month. Among the discussion items are the risks of dealing with VA (virtual assets) and VASP (virtual asset service providers). The guidance outlines CDD (customer due diligence) and EDD (enhanced due diligence) for LFIs towards potential VASP customers and counterparties.

With its main aim of boosting the country’s manufacturing sector, the government has announced thirty innovative industrial projects worth over US$ 1.63 billion. The announcement, made at the beginning of the second Make it in the Emirates Forum, included a 9.1% increase of procurement opportunities in the domestic industrial sector, taking the total value of products targeted for localisation to US$ 32.70 billion. Furthermore, ADNOC will also allocate US$ 5.45 billion for the purchase of structures and metal products from national companies. It was also announced the provision of 5k sustainable job opportunities for UAE nationals in the industrial sector as FAB and Mashreq banks making available competitive financing solutions to the value of US$ 1.36 billion and US$ 272 million.

In DMCC’s latest Future of Trade 2023 report, it predicts that gaming revenue in the MENA will double to top US$ 6.0 billion over the next five years; it is estimated that the region now represents 15% of the global player base. The four main pillars behind the surge include high levels of digital connectivity, sufficient government support, the presence of a young and digital-savvy population, and high levels of digital connectivity. The DMCC is in the throes of enhancing Dubai’s position as “a global trade and economic hub, efficiently activating opportunities within the gaming sector will prove essential.” By 2025, there will be more than 318 million e-sports enthusiasts worldwide – 47.8% higher than the 2020 figure, with the global gaming market to reach US$ 304 billion, (a 71.4% increase) over the next four years. It is expected that the UAE and Saudi Arabia will continue to lead the region, supported by “high income levels, strong digital engagement, and public investment initiatives”.

The latest Alvarez & Marsal report notes that the combined Q1 net profit of the country’s ten largest banks rose by 35% on the quarter, driven by cost efficiencies, relatively low inflation rates, rising interest rates and lower impairment charges; their aggregate net income nudged 0.4% higher to US$ 5.0 billion, with a 12.5% rise in non-core income. The cumulative loans and advances (L&A) of the UAE’s top banks increased by 2% in Q1 over the same period last year, while deposits were up 6.2% on a quarterly basis, The consultancy expects that the UAE banking sector will maintain the gains of the first quarter, as the UAE’s economy is expected to grow 3.9% and 4.3% in 2023 and 2024, after expanding 7.6% last year – its highest rate since 2011. The UAE’s ten largest listed banks covered in A&M’s survey are First Abu Dhabi Bank, Emirates NBD, Abu Dhabi Commercial Bank, Dubai Islamic Bank, Mashreq Bank, Abu Dhabi Islamic Bank, Commercial Bank of Dubai, National Bank of Fujairah, National Bank of Ras Al Khaimah and Sharjah Islamic Bank.

Brokerage companies at the Dubai Financial Market added 22.7k new investor accounts YTD to 31 May – well up on comparative 2022 returns of 15.4k accounts. The two months, with most activity, were March and May with 6.6k and 5.3k new accounts.

The DFM opened on Monday, 29 May 2023, 42 points (1.2%) lower the previous three weeks, gained 62 points (1.7%) to close the week on 3,603, by 02 June 2023. Emaar Properties, US$ 0.07 lower the previous week, gained US$ 0.06 to close the week on US$ 1.66. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.67, US$ 3.72, US$ 1.41, and US$ 0.39 and closed on US$ 0.68, US$ 3.76, US$ 1.44 and US$ 0.39. On 02 June, trading was at 369 million shares, with a value of US$ 221 million, compared to 142 million shares, with a value of US$ 96 million, on 26 May 2023.

The bourse had opened the year on 3,438 and, having closed on 31 May on 3,577 was 139 points (3.1%) higher. Emaar started the year with a 01 January 2023 opening figure of US$ 1.60, to close the first five months at US$ 1.68. 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$ 0.68, US$ 3.72, US$ 1.48 and US$ 0.40.   On 31 May, trading was at 264 million shares, with a value of US$ 262 million, compared to 66 million shares, with a value of US$ 18 million, on 31 December 2022.

By Friday, 02 June 2023, Brent, US$ 3.04 higher (4.1%) the previous three weeks, shed US$ 0.96 (1.2%) to close on US$ 76.22.  Gold, US$ 69 (3.9%) lower the previous three weeks, gained US$ 18 (0.9%) to US$ 1,964 on 02 June 2023.

Brent started the year on US$ 85.91 and shed US$ 13.33 (15.50%), to close 31 May on US$ 72.58. Meanwhile, the yellow metal opened 2023 trading at US$ 1,830 and gained US$ 132 (7.2%) to close on US$ 1,962.

Latest figures indicate that Singapore’s state investor, Temasek Holdings, had investment in failed FTX cryptocurrency exchange accounting for 0.09% of its net portfolio value of US$ 304 billion and that it has had to write off US$ 275 million. Accordingly, it has announced that it has reduced compensation for the team responsible for recommending this investment, as well as its senior management team. Although it did not disclose the specific amount of the compensation cut, it did confirm that it currently held no direct exposure to cryptocurrencies, and that “there was no misconduct by the investment team in reaching their investment recommendation.

Last Saturday, 27 May, Arabsat launched Badr-8 from the Cape Canaveral Space Force Station, Florida, as SpaceX’s Falcon 9 rocket lifted off with Arabsat’s communications satellite. It is estimated that the Badr 8 project, comprising the spacecraft manufacturing contract with Airbus, the launch agreement with SpaceX, insurance, and ground infrastructure, has cost US$ 300 million. The 4.5 metric ton communications satellite will provide television broadcast services, video relay, and data services across the Mena, Europe and Central Asia.

In relation to its prior exposure with disgraced financier Jeffrey Epstein, JP Morgan have been the recipient of two suits brought by two groups – one representing Epstein’s victims and another on behalf of the government of the US Virgin Islands, where he owned a private island. The bank had a fifteen-year relationship with Epstein from 1998 – 2013, during which time, in 2008, the disgraced financier had pleaded guilty to soliciting a minor for prostitution. Both its CEO, Jamie Dimon, and the bank have denied any wrongdoing and liability, with prosecutors alleging that the bank ignored warning signs about their lucrative client and continued profiting off him. Epstein, who reportedly committed suicide in 2019, kept hundreds of millions of dollars in more than fifty accounts at the bank until he was dropped as a client. Not surprisingly, it was alleged that Epstein had a high degree of familiarity with, and easy access to, JP Morgan executives, with the bank laying the blame on its former executive, Jes Staley, an Epstein ally, and Mary Erdoes, who, at the time, headed up the bank’s asset and wealth management division. Despite being aware of his conduct and his ongoing legal troubles, with a reported forty-eight employees flagging their suspicions about Epstein’s transactions, it is claimed that JP Morgan kept him on as a customer. Only recently, Deutsche Bank, who took Epstein on as a client, after JP Morgan cut ties with him, settled for US$ 75 million with Epstein accusers; to date, the Epstein estate has paid over US$ 150 million in settlements to more than one hundred victims.

By settling for a US$ 6.0 billion payment fine, Purdue Pharma has received full protection from future lawsuits relating to the massive US opioid crisis. The family-owned company, which filed for bankruptcy in 2019, when it was facing thousands of lawsuits, has finally got what it wanted – the Sackler family was awarded full immunity from civil suits. The US$ 6.0 billion will be used to address opioid addiction, with the money going to local and state governments, individuals who sued the company, as well as funding rehabilitation programmes and other addiction treatments. While the ruling protects the family from any future civil cases, they could still face potential criminal charges. Latest research points to the fact that there were more than 75k opioid overdose fatalities in 2021 and that Purdue Pharma promoted opioids as non-addictive painkillers.

The Australia-based aviation safety and product rating agency, in its latest survey, has ranked Air New Zealand the airline of the year, followed by Qatar Airways, Etihad, Korean and Singapore; Emirates came in at number ten, (but it did pick up awards for being the best-in-flight entertainment and best premium economy). The Qatari carrier, which had been number one in 2022, won the Best Business Class, Best Catering and Excellence in Long Haul Travel – Middle East awards. Singapore won the Best First Class award. The survey noted that 2022 was a year of recovery, after two years of reduced air travel, as most airlines suffered declines in passenger approvals as the industry struggled to get into the air. The study takes into account twelve key criteria that include fleet age, passenger reviews, profitability, investment rating, product offerings, and staff relations.

Air New Zealand has announced that it will be weighing passengers before they board international flights, as part of a survey to determine average passenger weight, pointing to the fact that, it would improve fuel efficiency in the future. The weight will be anonymously recorded in a database but not be visible to airline staff or other passengers. The carrier also noted that knowing the weight of everything that goes on its aircraft is a “regulatory requirement”. The survey, which started on Monday and will end on 02 July, will involve 10k passengers.

Despite Twitter having pulled out of the EU’s voluntary code to fight disinformation, the tech giant has been warned that the new laws would require compliance from all players and that Twitter will be legally required to fight disinformation in the EU from 25 August. Dozens of tech firms, including   have already signed up to the EU’s disinformation code including Meta – which owns Facebook and Instagram – TikTok, Google, Microsoft and Twitch. The main aims of the code, introduced in June 2022, are to prevent profiteering from disinformation and fake news, as well as increasing transparency and curbing the spread of bots and fake accounts. Alongside the voluntary code, the EU has also brought in a Digital Services Act – a law which obliges firms to do more to tackle illegal online content; as from 25 August, compliance is compulsory for any platform, with more than forty-five million users in the bloc, with all having to comply legally with the new law.

Australian mining giant BHP has confirmed that it has underpaid 28.5k current and former employees indicating that they had received less holiday pay over a period of thirteen years; four hundred workers did not get additional allowances “due to an error with the employment entity.” The company has reported the incident to the authorities and confirmed that the errors will cost US$ 182 million before taxes. It appears that some affected employees had their leave incorrectly deducted on Australian public holidays, and they were owed a total of six days of leave on average. The world’s biggest miner has apologised for this embarrassing error and has commissioned a review of its payroll systems.

The RBA has confirmed that extremely high population growth is resulting in higher rents and that Australia needs to build more housing units. Since this cannot be carried out in the short-term, and the country facing rental vacancies at near record lows in most areas, there is no immediate fix to the problem, but that one short-term solution is for people to consider economising on their housing, (as many are forced to do), as rents and mortgage rates head higher. With this price mechanism at work, more people on average have to live in each dwelling, so that young adults moving back with their parents and co-sharing is becoming more prevalent. Meanwhile, the RBA had recently warned that the outlook for rent inflation has strengthened, and that higher rates were unfortunately driving rents higher, and that was feeding inflation in other areas of the economy; it expects that rents will be 10% higher by the end of the year which will cause even more problems especially because rents were the single largest component of the consumer price index (CPI); an ANZ study noted that low income earners are now paying more than 50% of their pay on housing. Simple economics show that if the Australian population is to grow 2.0% this year, at least 2.0% more housing units are needed – and, even more, bearing in mind the current shortage of stock. Until some sort of equilibrium reaches the market, higher rents will become a fact of everyday Australian life.

In Australia, the independent Fair Work Commission approved a 5.75% pay rise for workers on awards, with wages linked to movement in the minimum wage. With a technical reclassification for the national minimum wage, 0.7% of the country’s workforce will get an8.6% pay hike. The actual award will impact more than two million workers. Some analysts are concerned with this pay increment because it could be a catalyst to push inflation levels higher again, along with rising interest rates that could move 0.5% northwards before the end of July. The Australian Chamber of Commerce and Industry has estimated that this initiative would add an estimated US$ 8.34 billion in costs for businesses.

Iraq’s Development Road has launched a US$ 17.0 billion project to link its Grand Faw Port, in Iraq’s oil-rich south, north to Turkey, with a modern rail and road system, with the aims of transforming the country’s economy, (after decades of war and political/economic crises), and turning the country into a transit hub by shortening travel time between Asia and Europe. The project will see passenger and goods trains travelling at speeds up to 300 kph, new oil and gas pipelines to link the oil fields of the south to north of the country, and initiate links with other parts of Iraq and other countries. The country’s transport system is aged and inefficient, with a handful of lines and slow oil freight engines, and a single overnight passenger train that trundles from Baghdad to Basra, taking ten to twelve hours to cover five hundred km. Many of the country’s roads, rails and bridges are in a state of disarray. If all goes to plan, the project would be completed in 2029.

On the side-lines of last week’s Asia-Pacific Economic Cooperation conference in Detroit, China and South Korea agreed to strengthen dialogue and cooperation on semiconductor industry supply chains. China agreed to work with South Korea to deepen trade ties and investment cooperation at a time when there is an ongoing trade war between the world’s two superpowers – US and China – with concerns over chip supplies, sanctions and national security. South Korea requested China to stabilise the supply of key raw materials, (over all sectors and not just semiconductors), and asked for a predictable business environment for South Korean companies in China. About 40% of South Korea’s chip exports go to China, whilst US technology and equipment are necessary for South Korean chipmakers Samsung Electronics and SK Hynix.

The Commercial Aircraft Corporation of China launched its maiden commercial flight, MU9191 – Shanghai to Beijing – with the first ever “made in China” commercial plane. It has taken the manufacturer fourteen years to reach this milestone, having first started developing the narrow-body airliner in 2008, with production following three years later. However, it took another eleven years before the C919 received official certification to fly. China Eastern Airlines is the C919’s launch customer, with an order for five planes. It has taken the Chinese sector decades to start to compete with the two global leaders – Boeing and Airbus – in commercial jetliner manufacturing; both companies have a full order book going forward to 2030 so that any carrier, including Chinese customers, wanting narrow-body jets sooner, will have to seek an alternative. Comac has received more than 1k orders for the C919, though the majority are not confirmed, and many are from Chinese aircraft lessors yet to place the jet with an airline. The C919 – priced at US$ 99 million – remains certified only to fly within China, with the European certification process under way. Whether the manufacturer is in a position to fulfil orders remains a question, because of its reliance on overseas products from major suppliers such as GE, Honeywell International and, for the engines, CFM International – a venture between GE and France’s Safran.

A day after Recep Tayyip Erdogan won the run-off election against Kemal Kilicdaroglu, the Turkish lira slumped to a record low on Monday, trading at 20.20 to the greenback. Despite ongoing interventions by the Central Bank, including limiting the value of dollars that could be bought, the currency has struggled in 2023. In his victory speech, Erdogan acknowledged that inflation was the most urgent issue for the country, but the president noted that it would fall in line with the policy rate which stands at 8.5% and has fallen from 19.0% over the past two years. However, a main area of concern is the marked decline in the country’s foreign exchange reserves which will soon reach levels that could have a negative impact on the lire. However, it seems that the country is recovering from February’s earthquake which has reportedly cost the economy US$ 104 billion. There is no doubt that the president has tried to rewrite basic Economics – and has failed. Whilst the rest of the world has been raising interest rates to combat surging inflation, Turkey has headed in the other direction – reducing rates quicker than other nations were raising them. This policy has seen rampant inflation and the country’s foreign exchange drying up which, if it continues, may see a necessary but reluctant U-turn with belated hikes in interest rates. His current policy has limited the country’s access to sourcing international loans. The country has posted healthy growth figures of 11.4% in 2021, 5.6% last year and 3.0% in Q1 but there will be an inevitable slowdown for the rest of 2023, attributable to several factors including not only sinking foreign reserves but also a currency continuing to dive to record lows and a Q1 current account deficit of more than 6.0%.

There is no doubt that the Irish economy has benefitted greatly from the influx of major international tech and pharmaceutical companies drawn to Dublin because of its favourable taxable regime. New research indicates that just three companies accounted for 33% of all corporation tax collected in the Republic between 2017 – 2021; the Irish Fiscal Advisory Council confirmed that the three, including Apple which is reportedly the largest taxpayer in the country, contributed US$ 5.55 billion to the exchequer. In 2022, US$ 24.9 billion was collected in corporation tax collections – up over US$ 8.82 billion in the past five years. Little wonder that Ireland is oner of the few western countries with a budget surplus, but how longer this windfall will continue remains to be seen.

With a 63-36 vote for, the US Senate passed legislation lifting the government’s ceiling debt from US$ 31.4 trillion and averting a first-ever debt default. Earlier, the Treasury Department warned that it would be unable to pay all the government bills after 05 June. With this legislation, the statutory limit on federal borrowing will be suspended until 01 January  2025.

May’s US robust job creation numbers of 339k new positions continued to confuse analysts, who were expecting a much lower figure, as rising prices and marked increases in borrowing costs continue to cause concern and surprise to economists; the unemployment rate nudged 0.3% higher, on the month, to 3.7%. – its highest rate in seven months. However, inflation at 4.9% is more than double the Fed’s 2.0% target. To the casual observer, it seems that if the labour market continues to move higher, inflation will move in the same direction and rate increases are all but inevitable – with the next one maybe not this month but in July.

The overall rate of May inflation at UK grocers reached a new high of 9%, mainly attributable to raised prices of coffee, cocoa, chocolate and non-food goods. To try and alleviate the economic pain, the Sunak government is discussing the possibility of asking supermarkets to cap prices on food items to help limit the cost of basic foods such as bread and milk. But talks are likely to end in stalemate because the British Retail Consortium is opposed to “recreating 1970s-style price controls” and suggested that the authorities try to cut the red tape so resources could be “directed to keeping prices as low as possible”. The latest survey sees overall food inflation 0.3% lower, on the month, at 15.4%, whilst the pace of price rises for non-food goods grew from 0.3% in the year to 5.8% in May, with fresh produce slowing 0.6% to 17.8%. Despite supermarkets cutting milk prices by US$ 0.062 last month, they are still almost double that of pre-Covid 2020 prices. Although April inflation figures – at 8.7% – fell from double digit territory for the first time in ten months, it was still a lot less than what the market was expecting – and still more than quadruple the BoE’s 2.0% target, despite the fact that rates have been raised twelve consecutive times, now standing at 4.5%. Because of this, there is a school of thought which says that the rate may go up a further 100 bp to 5.5% by year end. There will be a lot more mortgage holders running for cover if that were to happen!

The latest Nationwide report indicated that UK May house prices edged 0.1% lower, with the average property price at US$ 326.8k – 4.0% lower than its August 2022 peak. Despite house prices being lower, the higher mortgage charges are making it more difficult for many first home buyers to get on the housing ladder. The BoE posted that the amount of mortgage debt in April was at its lowest level on record, with borrowers repaying US$ 1.74 billion more on their mortgages than banks lent out, and that net mortgage approvals for house purchases fell 5.4% to 48.7k on the month. Figures indicate that the current average interest rate on a two-year fixed-rate mortgage is now 5.49% – up from 3.25% from a year earlier. Official data sees nearly 10% of UK mortgages taken off the market last week and that the number of April transactions 25% down on the year to 82.1k. It does not take much imagination to see that mortgage rates will continue to head higher as official inflation data sees rates dipping to 8.7% – at a much slower rate than the market expected; currently at 4.5%, it will be at least 5.0% by Q4. The end result is that the UK property market is in trouble.

A report by the International Labour Organisation shows concern that soaring debt levels, compounded by high inflation and rising interest rates, have impacted on jobseekers’ hopes in developing countries. In its Monitor on the World of Work report, the ILO noted that only 8.2% of workers in high income countries willing to work are jobless, whilst this figure climbs to 21.0% in low-income countries; the figure is even higher in low-income countries in debt distress where the figure is more than 25%. The survey noted that this year, the global unemployment rate – at 5.3% or 191 million people – will be lower than pre-Covid figures. The 2023 global jobs gap, which refers to those who want to work but do not have a job, is projected to rise to 453 million people, with women 1.5 times more affected than men. The global labour situation is becoming worse, as time goes on, and it is highly unlikely that A Change Is Gonna Come!

The 3,321 real estate and properties transactions totalled US$ 3.02 billion, during the week, ending 26 May 2023. The sum of transactions was 220 plots, sold for US$ 692 million, and 2,398 apartments and villas, selling for US$ 1.59 billion. The top three transactions were all for plots of land, one in Madinat Al Mataar, sold for US$ 37 million, and the second in Business Bay for US$ 14 million, and the third in Hadaeq Sheikh Mohammed bin Rashid also for US$ 14 million. Wadi Al Safa 3 recorded the most transactions, with sixty-one sales, worth US$ 198 million, followed by forty-one sales in Al Hebiah Fifth, for US$ 14 million, and eighteen sales in Jabal Ali First, valued at US$ 19 million. The top three transfers for apartments and villas were all for villas in Al Safouh First, valued at US$ 20 million, followed by two villa sales in World Islands, for US$ 19 million and the other for US$ 17 million. The mortgaged properties for the week reached US$ 490 million, with the highest being for a plot of land in Al Thanayah Fourth mortgaged for US$ 39 million, whilst one hundred and fifty-four properties were granted between first-degree relatives worth US$ 254 million.

On Wednesday, Bugatti Residences was launched, marking the first ever global residential project by the iconic French luxury carmaker, in partnership with local developer, Binghatti. Located in Business Bay, the 43-floor tower will house 171 mansions and eleven sky mansion penthouses, with each sky mansion penthouse occupying an entire floor; prices will start at US$ 5.2 million (AED 19.09 million, with 1909 being the year that Bugatti cars first hit the market). The development will boast a Riviera-inspired beach, private pool, jacuzzi spa, fitness club, chef’s table, private valet, private members club and two garage-to-penthouse car lifts. One unique feature sees residents being able to drive into the lift and then straight to their floor as each unit will have a dedicated parking space – with the highest penthouse having twenty slots for parking. The project is slated for completion by the end of December 2026. It is reported that Dubai is the top location for branded residences globally, based on the supply of completed and pipeline schemes.

Because of very high demand, allied with a very limited supply chain, there is no doubt that Dubai’s ultra-luxury properties is set to continue to grow strongly at least until the end of 2024.  Another record-breaking deal was recorded this week when a buyer paid US$ 114 million for a penthouse in Marsa Al Arab; this equated to US$ 4,632 per sq ft. This beat the previous record set in February – US$ 112 million in Bvlgari Lighthouse, Jumeirah Bay Island. The penthouse is situated on the highest floor at the Marsa Al Arab Hotel, (which will feature 386 rooms/suites, four penthouses and eighty-three luxury hotel apartment suites, spanning an impressive 24,628 sq ft).

Khansaheb has been appointed as the main contractor, by Palma Development, for its Serenia Living project, a luxury beachfront development located on the first plot of the west crescent of Palm Jumeirah. The luxury beachfront development will consist of 226 exclusive apartments and penthouses, including one of the most exclusive Sky Mansions in Dubai valued at over US$ 54 million. Serenia Living is the developer’s second project with Khansaheb, following the successful completion of Serenia Residences The Palm in 2018. Completion date is slated for Q4 2025, with handover happening in Q1 2026.

This week, Nakheel announced the launch of Nakheel Marinas Dubai Islands, that can accommodate a total of thirteen superyachts; located on the northern coastline at Dubai Islands; the marina itself will accommodate 248 wet berths for vessels of up to 47 mt and forty dry berths for trailers of up to 20 mt. The project will feature dock assistance, club car transfer, utilities, waste collection, pump-out services and Wi-Fi, and will be in walking distance of the marina. In August 2022, the developer unveiled a master plan for Dubai Islands, the project formerly known as Deira Islands, in tandem with the Dubai 2040 Urban Master Plan. The development includes five islands spread over an area of 17 sq mt., with each island having its own offerings, with cultural centres, recreational beaches and beach clubs. The islands will be home to more than eighty resorts and hotels.

HH Sheikh Mohammed bin Rashid Al Maktoum approved the ‘Dubai Master Plan for Public Beaches‘ that aims to increase the total length of public beaches in the emirate by 400%. The new scheme, part of the Dubai 2040 Urban Master Plan, will see the opening of new beaches and the development of existing ones, with advanced facilities. The Dubai Ruler also noted that the emirate is committed to ensuring the highest standards of excellence in urban development and that the government places the utmost priority on improving the quality of life and ensuring the happiness of citizens, residents and visitors. By 2040, it is expected that the total length of Dubai’s public beaches will increase from 21 km to 105 km, and that public beaches spanning 84 km will be added to cater to the growth in the emirate’s population and the influx of tourists. Sheikh Mohammed was briefed on Phase I of the Master Plan spanning 54 km of public beaches, which includes the development of the Jebel Ali Public Beach in collaboration with Nakheel. A direct public bus route will be launched to link Jebel Ali Metro Station to the new Jebel Ali Public Beach.

According to the latest report by the World Travel and Tourism Council, the travel and tourism sector is expected to contribute US$ 49.2 billion – equating to 10% of the country’s GDP; the latest figure is now only 1.6% lower than record pre-Covid levels. The WTCC noted that “the sector is recovering at a rapid pace, proving the UAE continues to grow in popularity amongst international travellers,” and that the sector will top pre-Covid numbers this year, and that the 758k jobs will include 7k new positions; last year, the sector added 89k jobs. Over the next decade, the industry expects to contribute US$ 64.2 billion, (representing 10.2% of the country’s GDP) and employ 872k, (about 12.0% of the country’s workforce). Interestingly, last year domestic spend in this sector surged by 36% to US$ 12.8 billion, (up 19% on 2019 pre-Covid levels), whilst international visitors contributed US$ 32.0 billion to the economy – a 65.3% year-on-year growth, but still down 19.0% from 2019 levels. The DDTCM is confident that international visitor numbers will top the pre-Covid number by the end of this year.

Dubai Festivals and Retail Establishment has announced the return of its biggest shopping weekend, starting today, 26 May. The 3 Day Super Sale will see up to 90% off on brands in outlets and malls across the city, with deals on fashion, beauty, lifestyle, furniture, electronics and more. Brands include KIKO Milano, Sephora, Bath & Body Works, 1915 by Ahmed Seddiqi, Rivoli, Homes R Us, Ikea, Jashanmal, Marks & Spencer, Lacoste, Better Life, Sharaf DG, Aldo and Al Jaber Optical, among others. Participating shopping centres and destinations include Mall of the Emirates, City Centre Mirdif, City Centre Deira, City Centre Me’aisem & City Centre Al Shindagha, Dubai Festival City Mall, Dubai Festival Plaza, Nakheel Mall, Ibn Battuta, Circle Mall, Mercato, Town Centre, The Beach, Bluewaters, City Walk and The Outlet Village.

Emirates has announced that it will be offering free Wi-Fi to all passengers on its flights, as a new enhancement to the carrier’s inflight connectivity means that all its passengers in every class of travel can enjoy some form of free connectivity once they sign up to Emirates Skywards.  To date, Emirates has invested US$ 300 million to improve inflight connectivity and, with recent enhancements, an average of 450k passengers use the service. Any Skyward member – in whatever category – and in any class, can make use of free app messaging. Platinum Skywards members have complimentary internet access in all classes, whilst first class passengers will have unlimited free internet if they are Skywards members, as will Silver, Gold and Platinum Skywards members travelling in Business Class. The airline also announced that it will offer new high-speed, inflight broadband powered by Inmarsat’s GX Aviation, onboard fifty new Airbus A350 aircraft – scheduled to enter service next year.

Prior to a major international auction in New York early next month, the Dubai Diamond Exchange has hosted the unveiling of two extraordinary gemstones – Estrala de FURA and the Eternal Pink. The former will be the largest, (at 55.22 carat), ever to appear at an auction and is slated to sell for more than US$ 30 million at its Dubai Diamond Exchange (DDE). Meanwhile, the Eternal Pink, the most vivid pink diamond to come to market, is expected to sell at north of US$ 35 million. It is estimated that, last year, the country posted a 17.0% growth, on the year, in the value of diamonds traded at a combined total of US$ 37.4 billion for rough and polished diamonds. – up by 7.0% and 42.0% respectively. Not satisfied to be a leading global hub in rough and polished diamonds, the DDE is working on adding further value to the coloured gemstone industry and has recently hosted tenders with leading coloured gemstone companies. The DDE currently has over 1.2k member companies.

With corporate tax starting on 01 June 2023, the federal Ministry of Finance announced on Monday further clarifications on private pensions, social security and participation, and accountancy methods. The first covered further conditions for private regulated pension funds and social security funds in the UAE to be exempt from the tax and is in tandem with international tax practices, so that UAE private pension or social security funds exempt status is also recognised when investing internationally, and double tax treaty benefits can be obtained. The second decision of the day confirmed that International Financial Reporting Standards are the applicable accounting standards in the UAE and must be used by larger businesses that have revenues of more than US$ 13.6 million (AED 50 million). Businesses with revenue under that threshold, can apply IFRS, whilst those whose revenue fall below US$ 817k (AED 3 million) can use the cash basis for their accounts. The decision on Participation Exemption provides for Corporate Tax exemptions on dividends, profit distributions, and capital gains from a Participating Interest, which is defined as a 5% or greater ownership interest in another entity’s shares or capital, held for at least twelve months.

S&P Global Ratings expects that Dubai government’s debt burden, as part of its GDP, will decline this year, driven by a continued improvement in the local economy, despite an apparent slowdown in global economic growth. It forecasts that the emirate’s gross general government debt will fall from its cyclical high of 78% of GDP in 2020 to 51% this year – and could be even better if “the government’s debt stock could fall even faster if the reduction in nominal debt, which occurred in 2021 and to a more significant extent in 2022, continues over the coming years.” Over the past three years to March 2023, the government has repaid US$ 2.9 billion in bonds and has reduced its loan balance with Emirates NBD by 30% over that period; loans from this bank account for 44% of the government’s gross debt, with loans from Abu Dhabi and the Central Bank accounting for 30% of the total. Despite a declining government debt burden, its public sector debt is at 100% of GDP.

Yesterday, it was announced that Micky Jagtiani, the founder of the retailer Landmark Group, had passed away at the age of seventy. He set up the company fifty years ago in Bahrain and was responsible for turning it into one of the largest retail and hospitality conglomerates in the MENA and India. The Group operates more than 2.2k outlets, encompassing more than 2.7 million sq mt, across twenty-two countries and employs 50k staff. The company’s brands, include Centrepoint, Babyshop, Splash, Lifestyle, Home Centre, Shoemart and Emax, and includes a total warehouse space of more than 9.3 million sq ft. He was the third-richest businessman in the UAE and was ranked the 511th wealthiest person in the world on the latest Forbes’ 37th magazine’s annual world’s billionaires list.

Latest data from the Central Bank indicates that the assets of UAE-based Sharia-compliant banks grew 6.5%, on the year, in February to US$ 165.6 billion – and 1.7% (US$ 2.9 billion) on the month. There were also improvements in deposits, credit and total Islamic bank investments, with annual increases of 3.9% to US$ 119.9 billion, 3.0% to US$ 108.1 billion, and 20.7% to US$ 29.8 billion respectively.

This week, the UAE Central Bank has used its powers to remove the Board of an unnamed insurance company, because of regulatory violations, replacing them by a temporary committee of experts for six months. The sanction was in line with Article 41 of Federal Law No (6) of 2007 on the Regulation of Insurance Operations, with the regulator noting that “the committee will carry out business and dispositions on behalf of the company in accordance with its mandate.” Last December, it issued new guidelines for licensed financial institutions operating in the insurance sector, including discussions on money-laundering and financing of terrorism risks relevant to life insurance and other investment-related insurance products, and how insurance operators can identify, assess, manage and mitigate them.

Fitch Ratings confirmed that Islamic banking grew at a faster rate last year than conventional, driven by growing investor demand for Islamic products and deep distribution networks; whilst “other” banks grew 3.0% in 2022, Islamic banking roared in 8.0% higher. The report also noted that much of the same will happen this year, as high oil prices and solid economic conditions will continue to support UAE Islamic banks’ credit fundamentals. Another selling point is that Islamic banks have a product offering, almost on par with conventional banks, but on top of that they can offer Islamic banking to those who require Sharia-compliant products. Furthermore, Islamic banks have a higher financing/deposits ratio, at 91%, and have more of their total funding, at 86%, from customers’ deposits. Meanwhile S&P expects a similar 10% 2023 growth in the global Islamic finance industry, mainly led by GCC countries, with Moody’s adding that demand for Sharia-compliant financing is set to outpace conventional funding, driven by strong regional growth and higher energy prices.

This week witnessed the opening of ‘The House’, the new permanent hub for HBS alumni worldwide. The Harvard Business School Club of the Gulf Cooperation Council (GCC) was officially inaugurated by HE Abdullah bin Touq Al Marri, Minister of Economy. “The House” will serve as a hub for over 400k Harvard Business School alumni worldwide, including the 1.4k alumni in the region.

This week saw Majid Al Futtaim Holding raise US$ 500 million, via a green Sukuk – its fourth such issue over the past four years as one of Dubai’s biggest private sector companies, like others, continues to diversify its funding base. The ten-year Sharia-compliant issuance is part of MAF’s US$ 2 billion financing programme, in line with the UAE Net Zero by 2050 strategic initiative. The money raised will be used to refinance an old US$ 800 million bond. Its chief executive, Ahmed Ismail, noted that “the issuance of today’s green Sukuk is a testament of the global investment community’s continued confidence and robust support in our company, the sustainability   of our debt portfolio and the inherent strength of our long-term strategic focus.” One of the reasons why companies are favouring green financing is to be in a better position to meet their net-zero commitments. The company remains on track to meet its target of having a positive water and energy footprint by 2040 and eliminating single-use plastic in all its operations by 2025.

DP World announced it has completed its US$ 260 million Centerm Expansion Project in Vancouver, Canada’s global gateway to over one hundred and seventy trading economies that seeks a 60% increase throughput, and position British Columbia as a leader in sustainable trade. This latest expansion sees the terminal being able to handle 1.5 million TEUs – an increase of 66.7%. DP World Vancouver handles an impressive third of the country’s trade in goods outside of North America, equating to a value of US$ 305 billion in goods, whilst generating US$ 11.9 billion of Canada’s GDP and 115.3k jobs.

Emirates Central Cooling Systems Corporation has extended its already impressive portfolio by adding the right to operate a further five district cooling units of Dubai International Airport, following a US$ 300 million agreement. Empower confirmed the acquisition, with a total of 110k refrigeration tonnes, from Dubai Aviation City Corporation, in a notification to DFM last Friday. Its impressive portfolio includes the DIFC, DWTC, Dubai Healthcare City, Meydan City, Dubai Studio City, Dubai Maritime City, Dubai Land, Palm Jumeirah, JBR, Bluewaters Island and Business Bay. The twenty-year old company, a JV between DEWA and Emirates Power Investment of Dubai Holding, serves more than 110k corporate and individual customers in more than 1.4k buildings, with a connected capacity of about 1.4 million refrigeration tonnes and a contracted capacity of 1.5 million refrigeration tonnes; last November, it sold two billion shares (equating to 20% of its share capital), through an IPO on the DFM.

The DFM opened on Monday, 22 May 2023, 38 points (1.1%) lower the previous fortnight, shed 4 points (0.1%) to close the week on 3,541, by 26 May. Emaar Properties, US$ 0.05 higher the previous three weeks, lost US$ 0.07 to close the week on US$ 1.60. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.68, US$ 3.77, US$ 1.46, and US$ 0.39 and closed on US$ 0.67, US$ 3.72, US$ 1.41 and US$ 0.39. On 26 May, trading was at 142 million shares, with a value of US$ 96 million, compared to 89 million shares, with a value of US$ 47 million, on 19 May 2023.

By Friday, 26 May 2023, Brent, US$ 1.62 higher (2.2%) the previous week, gained US$ 1.42 (1.9%) to close on US$ 77.18.  Gold, US$ 35 (2.2%) lower the previous fortnight, shed US$ 34 (1.7%) to US$ 1,946 on 26 May 2023.

Oil prices fell yesterday on the back of increased concerns the US debt ceiling impasse and as Russia played down the chances of further Opec+ production cuts. The benchmark for 67% of the world’s oil, Brent, was trading at US$ 76.95 in late Thursday afternoon trading. The US is five days away from a potential debt default and the ramifications of this happening would see the US economy in freefall, whilst shockwaves will be felt across the world. Brent has lost about 10% of its value YTD amid demand concerns and a regional banking crisis in the US, which spooked financial markets. Last week, US stockpile fell by 12.5 million barrels, whilst total petroleum stocks dipped by 2.1 million barrels.

Bernard Arnault has probably had better Tuesdays because his LVMH shares fell by over 5.0% and his personal wealth dipped to US$ 191.6 billion on the day. With mounting concerns on the state of the weakening US economy – and the subsequent slowing demand for luxury goods –US$ 30.0 billion was erased from the market value of European luxury shares. However, the founder of LVMH, renowned for its prestigious brands such as Louis Vuitton, Moet & Chandon and Christian Dior, had witnessed his wealth surge throughout 2023 as share prices of European luxury companies soared – and prior to Tuesday’s slump, he had accrued an additional US$ 29.5 billion this year alone, as its share value jumped 23.0%. However, he still remains the richest person – still US$ 11.4 billion ahead of Tesla Inc.’s Elon Musk, the world’s second-richest person.

Two years after it lost its bid to Elon Musk’s SpaceX, NASA has awarded Jeff Bezos’ Blue Origin US$ 3.4 billion to build a spacecraft to fly astronauts to and from the moon’s surface; it beat a rival bid from defence contractor Dynetics, including Northrop Grumman Corp. The 16 mt Blue Moon lander will be built, with help from Lockheed Martin Corp, Boeing Co, software firm Draper and robotics firm Astrobotic. Blue Origin confirmed that it will be investing “well north” of the US$ 3.4 billion figure to develop the spacecraft, with NASA indicating that it selected Blue Origin’s proposal for its lower price, extra lander capabilities and a plan to execute two test landing missions on the moon in 2024 and 2025, at the company’s expense.

Last year, Virgin Orbit was worth US$ 3.7 billion when it debuted on Nasdaq New York. This week, the rocket company, founded by British billionaire Richard Branson,  permanently ceased operations, just months after a major mission failure, and having sold its assets for a paltry US$ 36 million. Rival firm Rocket Lab acquired Virgin Orbit’s headquarters rocket factory and equipment for US$ 16.1 million, aerospace firm Stratolaunch paid US$ 17 million for its converted Boeing 747, whilst space company, Launcher Inc, bought Virgin Orbit’s launch site and lease in the Mojave Desert for US$ 2.7 million. The California-based firm filed for Chapter 11 bankruptcy protection in the US in early April, just weeks after the company paused operations after running short of finances. In January, Virgin Orbit failed in its  attempt to be the first ever satellite mission launched from UK soil which ended any hope of the UK becoming a global player in space exploration, including  manufacturing satellites to building rockets and creating new spaceports.

Ireland’s Data Protection Commissioner has fined Meta a massive US$ 1.3 billion for continuing to transfer data beyond a 2020 EU court ruling that invalidated an EU-US data transfer pact. The record fine – which surpassed the US$ 820 million 2020 penalty handed out by Luxembourg on Amazon – highlighted Meta’s handling of user information; it was also given five months to stop transferring users’ data to the United States. The DPC recently noted that EU and US officials hoped that the new data protection framework – agreed by Brussels and Washington in March 2022 – may be ready by July. The Irish regulator, which has now fined Meta a total of US$ 2.8 billion for breaches under the bloc’s General Data Protection Regulations, introduced in 2018, also commented that it did not consider fining Meta in this case, but with four other EU supervising authorities disagreeing, the record fine was added after a ruling by the European Data Protection Board.

In 2020, Meta acquired animated-gif search engine Giphy in a US$ 400 million deal – now it has been forced to sell the company to Shutterstock for US$ 53 million. Last year, the UK’s Competition and Markets Authority reissued an order to sell Giphy on competition grounds, especially in the social media and advertising fields, after originally ordering the sale in November 2021. Giphy is the main supplier of animated gifs to social networks such as Snapchat, TikTok and Twitter, and part of the deal will still allow Meta platforms Facebook, Instagram and WhatsApp access to Giphy’s content. It is estimated that every day, it receives more than 1.3 billion search queries and sees various bits of its content shown a total of fifteen billion times.

Ryanair has announced its first profit, at US$ 1.55 billion – since Covid decimated air travel -driven by a marked rebound in ticket prices, (with average prices 50% higher to US$ 45), and passenger numbers – up 74% to 168.6 million. The immediate future is bullish but with a caveat that fuel prices are set to rise, reducing future margins. This summer, the carrier will operate 3k flights every day, with CEO Michael O’Leary commenting that despite the high fuel costs, he was “cautiously optimistic” that this would be covered by higher revenues, delivering a “modest year-on-year profit increase”, and that this summer, demand is “robust and peak summer 2023 fares are trending ahead of last year”. Meanwhile, EasyJet came out with a H1 loss to March of US$ 510 million, but that the business was entering the summer “with confidence”, having flown more than thirty-three million customers – up 41% compared with a year earlier; over that period average ticket prices rose 24% to US$ 76.

This week, China has announced that products made by US memory chip giant Micron Technology are a national security risk and has meant that firm’s products will be banned from key infrastructure projects in China. With tensions between the two super-powers deteriorating by the day, it seems that the row over technology crucial to economies around the world is ramping up tensions, with this latest episode being China’s first major move against a US chip maker. The Biden administration has imposed a series of measures against Beijing’s chip making industry and has invested billions of dollars to boost America’s semiconductor sector. Now the Cyberspace Administration of China has posted that “the review found that Micron’s products have serious network security risks, which pose significant security risks to China’s critical information infrastructure supply chain, affecting China’s national security.” China is a key market for Micron and generated around 10% of its full-year sales. In 2022, Micron reported total revenue of US$ 30.7 billion, of which US$ 3.3 billion came from mainland China. It also has manufacturing facilities in the country. Last week, the company said it would invest around US$3.6 billion to develop technology in Japan.

A multi-billion-dollar agreement between Apple and Broadcom will see both US companies using more locally made ,parts when developing components for 5G devices that will be designed and manufactured in the US. This is part of Apple’s strategy, launched in 2021, to invest US$ 430 billion in the local economy, and comes at a time when a tech industry trade row is blowing up between the world’s two superpowers – the US and China. The Biden government has introduced several measures against the Chinese chip-making industry, as well as well as investing billions of dollars to boost its  semiconductor sector. In recent times, it has been seen that Apple – and other tech companies – have been moving some of its supply chains from China to the likes of India and Vietnam, as well as sourcing semiconductors from a factory being built in the Arizona by Taiwanese chipmaking giant TSMC. Last year, Apple also announced plans to make the iPhone 14 in India, in an attempt to diversify manufacturing outside of China.

The Hiroshima G7 leaders’ meeting, which ended last Saturday, a new initiative to counter economic coercion was agreed, with the meeting also pledging action to ensure that actors attempting to weaponise economic dependence would fail and face consequences. Having noted “the world has encountered a disturbing rise in incidents of economic coercion that seek to exploit economic vulnerabilities,” it also affirmed the Coordination Platform on Economic Coercion initiative. In the past, certain countries have used its economic power in political disputes, with the most notable being two years ago when Australia started asking China about its human rights record and its Covid protocol. China retaliated by banning or increasing duty on several Australian products, including coal, timber lobsters, wine and barley.  The leaders also agreed to deepen cooperation on hardening supply chains and enhance cooperation in information sharing to establish new standards for next-generation technologies, including AI.

After only acquiring failed US lender First Republic Bank last month, JP Morgan Chase is cutting around 1k jobs, equating to 15% of its workforce. The Wall Street giant confirmed that the affected employees will receive pay and benefits for sixty days, along with a package which includes a lump sum payment and other benefits. Earlier in the month, the buyer confirmed that it would be paying US$ 10.6 billion to take over the troubled bank – the fourteenth biggest lender in the country – valued at US$ 20.0 billion at the beginning of April; during that month there was a run on the bank that saw customers, increasingly worried about the state of the US banking sector, and the collapse of several banks earlier in the year, withdraw more than US$ 100 billion in deposits, This bank failure, the second largest in US history, reopened for business in eight states as branches of JP Morgan Chase Bank.

Also this week, First Citizens, which bought the US unit of Silicon Valley Bank, announced five hundred job cuts, equating to 3% of the workforce. All seventeen former SVB branches opened under the First Citizens brand. Thought to be the country’s biggest family-controlled family bank, SVB’s UK operations were bought, for a nominal US$ 1, by HSBC in a deal led by the UK government and the BoE. Earlier in May, HSBC confirmed its profits had got a US$ 1.5 billion boost from the takeover!

It seems that recent remarks by Federal Reserve Chairman, Jerome Powell point to a pause in rate hikes in June, despite some officials opining the opposite view. He commented that “we’ve come a long way in policy tightening and the stance of policy is restrictive and we face uncertainty about the lagged effects of our tightening so far and about the extent of credit tightening from recent banking stresses,” and “having come this far, we can afford to look at the data and the evolving outlook to make careful assessments.” Even though the Fed has raised rates by 5.0% in a little over a year, inflation seems yet to be beaten and with prices not cooling as fast as many would hope, rate hikes should continue.

Australia is reeling from the fact that PwC has used confidential government information to help its global clients avoid tax.   It would be naïve to think that this has not occurred before either in Australia or any other country where it is common for governments to pay leading accounting firms to help establish new tax laws. It is alleged that PwC collected information from the government when the firm was advising it on developing international tax avoidance laws – to help global clients avoid tax. It does seem a little sanctimonious to see rival firm KPMG sending an email to its staff reminding its partners and staff to act “ethically and in the public interest”.  (This is the same firm that was involved in a cheating scandal where more than 1.1k staff were accused of sharing test answers from 2016-2020 in a scheme involving people “at all levels of the firm”: the tests were designed to ensure partners and staff act with integrity!)  On Wednesday, Treasury called in the federal police to investigate the leaking of confidential tax briefings by PwC and particularly its former head of international tax Peter Collins. The government is alleging that this former employee “improperly used confidential Commonwealth information”, with emails tabled in parliament by the Tax Practitioners Board highlighting “the significant extent of the unauthorised disclosure of confidential Commonwealth information and the wide range of individuals within PwC who were directly and indirectly privy to the confidential information”. There is no doubt that the PwC tax leak is a serious abuse of confidence and trust with the federal government, with an estimated fifty-three current and former PwC partners and staff having received emails revealing confidential tax information. PwC could do little else but to agree with the government’s request to “stand down” any staff who knew about Treasury tax leaks from working on any existing or future government contracts.

It is reported that PwC collects at least US$ 215 million for government consulting work carried out in Canberra and that the scandal first came to light in January. It appears that PwC did not report on the seriousness of the problem and did not advise government that the breach was broader than what was being publicly reported until 02 May. Currently, only one person, Peter Collins, is being prosecuted in this case and the only sanction could well be that PwC will only have to conduct more training for its partners and staff.

New evidence has been released about how interest rates were rigged during the 2008 GFC, and that UK and US regulators were told of a state-led drive to “rig” interest rates but covered it up. Documents suggest lenders sharply dropped their interest-rate estimates after pressure from central banks. It seems that the UK government and the BoE were involved in the manipulation of lowering interest rates but that it was part of a broader, international drive not just by the BoE but by the likes of the Banque de France, the ECB, Banca d’Italia, Banco de Espana and the Federal Reserve Bank intervening on a large scale in the setting of Libor and Euribor. The aim of the exercise was to keep rates low as this was meant to lead to investor confidence – and the higher the rate, the more doubts the market had about the viability of that bank. It seems that, in November 2010, the FBI and the UK financial regulator were made aware of these illegal developments but decided to remain mum.

Latest data sees Germany slipping into recession in Q1, not helped by persistent inflation, still hovering around the 7.2% mark, (well above the euro area’s average), and the impact of Russian gas supplies drying up. Europe’s largest economy contracted by 0.3% last quarter, and with a 0.5% fall in Q4 2022 GDP, the country goes into technical recession. Household spending was 1.2% lower last quarter, driven by higher prices and falling consumer spend, whilst industry has suffered because if the higher energy prices. What saved the country from even worse economic news were a mild European winter and the reopening of China’s economy. More of the same is on the horizon with the IMF predicting that Germany will be the weakest of the world’s advanced economies, contracting by 0.1% this year.

The IMF has again shown that it could be the world’s worst forecaster especially when it comes to the UK economy. Only last month, it expected that the economy would contract by 0.3% and has changed its tack by saying that the economy will now grow 0.4% in 2023. It indicated that growth would be helped by “resilient demand”, improved financial stability and falling energy prices, but noted that inflation “remains stubbornly high” and that higher interest rates will need to remain in place if it is to be brought down. The IMF report noted that the risks for the UK economy were “considerable”, with the biggest danger coming from “greater-than-anticipated persistence in price- and wage-setting”, which would keep inflation higher for longer, but congratulated the Sunak government for taking “decisive and responsible steps in recent months”. There was another note of caution that the outlook for growth “remains subdued”, with growth rates of 1%, 2% and 2% for the years 2024-2026, and that the BoE’s 2% inflation target will not be met for at least another two years. With global supply chain problems apparently easing, sticky inflation, and especially food price inflation, is an ongoing problem for the BoE, who eighteen months ago were doing very little to tackle the growing inflation level by saying it was only ‘transient’ and would soon go away. The vibes coming out of the UK are not good and, with a procrastinating BoE and a weak government, it seems that tough times are still ahead for the population. The people expect positive action and are growing Tired of Waiting!  

Let’s Get Together and Feel All Right – One Love

The 3,105 real estate and properties transactions totalled US$ 2.48 billion, during the week, ending 19 May 2023. The sum of transactions was 191 plots, sold for US$ 311 million, and 2,284 apartments and villas, selling for US$ 1.64 billion. The top three transactions were for plots of land, one in Island 2, sold for US$ 37 million, and the second in Business Bay for US$ 14 million, and the third in Hadaeq Sheikh Mohammed bin Rashid also for US$ 14 million. Al Hebiah Fifth recorded the most transactions, with fifty-four sales, worth US$ 50 million, followed by thirty-four sales in Madinat Hind 4, for US$ 14 million, and fourteen sales in Al Hebiah Third, valued at US$ 15 million. The top three transfers for apartments and villas were for an apartment in Island 2, valued at US$ 33 million, followed by a US$ 29 million apartment sale in Palm Jumeirah, and for a villa in World Islands for US$ 20 million. The mortgaged properties for the week reached US$ 458 million, with the highest being for a plot of land in Business Bay mortgaged for US$ 95 million, whilst seventy-seven properties were granted between first-degree relatives worth US$ 72 million.

Dubai property owners should not be too concerned when they see reports that Dubai real estate sales, in April, had fallen for the first time this year. It is true that, on the month, sales transactions fell 33%, allied with an 18.3% decrease in sales value. But this is an annual trend that occurs during the main holiday season, which is in line with Eid, which goes back every year by up to ten-twelve days. Apart from the usual factors, such as reduced work hours, Ramadan and Eid, this year saw the Christian feast of Easter fall in the same month. This resulted in fewer new properties coming to the market, followed by a drop in property sales viewings and less new sales transactions by the Dubai Land Department. The situation has returned to normalcy, as seen in early May data.

April total property transactions – at 7,615 – were 16.2% higher on the year, bringing the four months’ YTD figure to 36,946 – 43.2% higher, compared to 2022, and a record four-month total. The main driver behind this surge was the off-plan market, up 42.5% in sales, whilst the secondary market witnessed a 2.4% dip in activity. Last year, the value of property deals – at US$ 143.9 billion – reached a new high – and was up 76.5% annually, with the number of transactions rising 44.7% to 122,658.

According to CBRE’s latest report, Dubai property prices increased by an average of 14.5% annually in April – with apartment prices 14.5% higher, at US$ 342 per sq ft, and villa prices up 14.9% to US$ 404 per sq ft; on the month, apartment and villa prices rose by 1.8% and 2.0%. It is estimated that average apartment prices are sill 15.6% lower than they were in 2014, whilst villa prices are 2.7% higher; it is noted that apartment prices in several neighbourhoods have already surpassed 2014 levels. Jumeirah is still the most expensive area to buy an apartment at US$ 645 per sq ft – but this is down 3.1% on the month, and no surprise to see Palm Jumeirah heading the villa segment at US$ 1,263 per sq ft, and 4.0% higher on the month. Downtown Dubai, Palm Jumeirah, Dubai Hills Estate and The Old Town make up the five most expensive areas for apartments, while Jumeirah, Emirates Hills, District One and Jumeirah Islands are the highest for villas.

The latest Knight Frank report noted that Dubai is projected to be the leading location in the luxury global residential market sector in 2023, with an expected growth of 13.5%, driven by a resurgent local economy, the government’s positive and successful response to the impact of the pandemic, and a demand/supply imbalance in the sector that sees demand easily outstripping supply. It also noted that the city’s appeal is its relative “affordability”, with prime homes selling for around US$ 800 per sq ft, “making Dubai one of the most ‘affordable’ luxury residential markets in the world.” In Q1, the sector witnessed eighty-eight sales of luxury homes, (at US$ 10 million or above), valued at US$ 1.63 billion.  Over this period, the main markets – Palm Jumeirah, Emirates Hills and Jumeirah Bay Island – accounted for 64% of total sales, with average transaction prices nearing US$ 2.4k per sq ft.

In the rental market, average rents in 2023 have risen by 25.7% and 26.1% through to April with average rentals for apartments and villas at US$ 28.0k and US$ 84.1k. Palm Jumeirah has the highest average annual apartment rents, at US$ 71.9k, and Al Barari’s US$ 274.7k for villas. Two of the main drivers behind the surge in rents are the introduction of a new visa programme and an influx into Dubai of high-net-worth individuals. There are signs that rentals may be tapering off but still moving higher at a slower pace.

The tenants of The Pointe on Dubai’s Palm Jumeirah have been served eviction notices, with restaurants and other outlets being given a twelve-month period by Nakheel to vacate their businesses on The Pointe, as the developer wishes to redevelop the whole area.  The developer noted that “it remains committed to ensuring the smoothest transition possible for its tenants during this time.” As part of this redevelopment, The Fountain at The Pointe already closed on 15 May.

Dubai Holdings Entertainment, owner of Global Village, Ain Dubai, Coca-Cola Arena, Dubai Parks and Resorts, The Green Planet, Roxy Cinemas and others, has indicated its attention to focus on “enhancing” its existing attractions, as Dubai ramps up to welcome increased visitors as numbers slowly edge to pre-Covid levels. Last year, it closed Bollywood Parks Dubai, which had opened in 2016, but the company has a “master plan” for Dubai Parks and Resorts for the next few years. Its Chief Executive, Fernando Eiroa, has commented that all of the company’s venues were performing “much better” than pre-pandemic levels in terms of revenue, and that the company was “open” to acquisitions if there were any good opportunities. He also added that “the number of attractions we have here are second to none in terms of quality and size, so I believe that we have a lot of room for improvement.”

This week, flydubai and Air Canada signed a new partnership agreement that will give passengers flying between Canada, the ME, East Africa, Indian Subcontinent and Southern Asia more convenient travel options, which will include nine of the local carrier’s routes – including Bahrain, Colombo, Dammam, Jeddah, Karachi, Madinah and Muscat. Pending final regulatory approval, Air Canada’s marketing code will be placed on nine routes operated from Dubai by flydubai, as well via an interline arrangement, from which customers will be able to seamlessly connect in Dubai to all of flydubai destinations. Of these destinations, more than thirty are unique to flydubai and not flown by other partners of Air Canada. Both airlines are keen to improve the connection process in Dubai and hope to expand features and benefits for one another’s loyalty programme members in the near future.

It is reported that Dubai continues to lead the world when it comes to attracting Greenfield FDI projects, with capital inflows 89.5% higher on the year at US$ 12.8 billion – equating to 4.0% of the global total. Dubai’s Crown Prince, Sheikh Hamdan bin Mohammed, tweeted that “these exceptional achievements support the strategic vision outlined by the Dubai Economic Agenda D33” and raises the commitment “to further raise Dubai’s status as a leading global business and investment destination”.

Dubai has been ranked ninth globally in a Brand Finance City index, with the top three locations being London, New York and Paris. The emirate was first for future growth potential, second in strong and stable economy, and third behind only New York and London as a city of global significance. In a wide-ranging survey, respondents were asked about the general reputation and their personal consideration of each city as a place to live, work locally, work remotely, study, retire, visit, or invest in. Other regional locations were included in the survey with Abu Dhabi, Doha, Jeddah and Riyadh being placed 28^th, 65^th, 77^th and 78^th respectively.

This week, the federal Ministry of Finance posted that business owners will be subject to the new corporate tax only if their income is above the US$ 272k (AED 1 million) threshold, and also confirmed that personal income, notably from employment, investments and real estate (without licensing requirements) will not be liable for tax, being out of scope.

Eight unnamed banks, operating in the country, have been hit with sanctions for violating Central Bank regulations. It appears that they have been penalised for failing to comply with guidelines on not granting loans or credit facilities to certain beneficiaries. The decision is based on Article 137 of the Decretal Federal Law No. (14) of 2018 relating to the Central Bank & Organisation of Financial Institutions and Activities and the Central Bank notices regarding the beneficiaries of the Nationals Defaulted Debts Settlement Fund (NDDSF) facilities. The Central Bank noted that “the administrative sanctions take into account the banks’ failures to comply with the CBUAE’s instructions not to grant any loans or credit facilities to the beneficiaries of loans granted by the NDDSF, including credit cards.”

With the latest listing – a US$ 272 million (AED 1.01 billion) Islamic Treasury Sukuk – Nasdaq Dubai enhanced its position as one of the leading global centres for Sukuk listings, with a total of US$ 77.7 billion. This T-Sukuk listing was the launch of a series of issuances, by the Ministry of Finance, in collaboration with the Central Bank, in order to attract a new category of investors and support the sustainability of economic growth. It was positively received by the market, being 7.6 times oversubscribed, with the final allocation seeing US$ 136 million (AED 550 million) for both the two year and three-year tranches. Further issues will include other tranches, with various tenures of up to five years initially, followed by a ten-year Sukuk at a later date.

The DFM opened on Monday, 15 May 2023, 24 points (0.7%) lower the previous week, shed 14 points (0.4%) to close the week on 3,545, by 19 May. Emaar Properties, US$ 0.02 higher the previous fortnight, gained US$ 0.03 higher to close the week on US$ 1.67. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.68, US$ 3.81, US$ 1.47, and US$ 0.40 and closed on US$ 0.68, US$ 3.77, US$ 1.46 and US$ 0.39. On 19 May, trading was at 89 million shares, with a value of US$ 47 million, compared to 255 million shares, with a value of US$ 106 million, on 12 May 2023.

By Friday, 19 May 2023, Brent, US$ 17.36 lower (19.2%) the previous four weeks, finally gained US$ 1.62 (2.2%) to close on US$ 75.76.  Gold, US$ 9 (0.4%) lower the previous week, shed US$ 26 (1.8%) to US$ 1,980 on 19 May 2023.

Having previously rejected any allegations, former Audi boss Rupert Stadler accepted his role in committing fraud by negligence in the diesel emissions scandal. He had been on trial since 2020, after parent group Volkswagen and Audi admitted in 2015 to having used illegal software to cheat on millions of emissions tests. Earlier in May, the judge in the case indicated that Stadler would face a suspended prison sentence of up to two years, and a fine of US$ 1.2 million, if he were to confess to a charge of fraud by negligence – lesser mortals would probably have been facing prison sentences for contempt of court and also a more severe charge than ‘fraud by negligence’! He had been on trial since 2020, after parent group Volkswagen and Audi admitted in 2015 to having used illegal software to cheat on millions.

Vodafone, founded by Gerry Whent and Ernest Harrison in 1991, has announced a massive 11% cut, (over the next three years) in its current workforce of some 100k – the biggest job reduction in the company’s history. The twin aims of the strategy, as outlined buy their new CEO, Margherita Della Vale, are to simplify the telecoms group and regain its competitive edge, as it forecast a US$ 1.6 billion drop in free cash flow this year. She also noted that Germany, Vodafone’s biggest market, was underperforming, while Spain, which has suffered cut-throat competition in recent years, was under strategic review. On the news this week, Vodafone shares traded 4.5% lower – and at their lowest level since January.

Another tech giant in the throes of tightening costs has announced 55k job cuts over the next decade. BT, currently employing 130k staff and contractors, said most of the job losses would be in the UK of which some 11k will come in customer services, as staff are replaced by technologies including AI, which would account for about 10k of the total retrenchments. BT, the UK’s largest broadband and mobile provider, is currently continuing to expand its fibre network as it moves away from copper and said that once the work was completed it would need about less than 15k staff to build and maintain its networks; an additional bonus is that the maintenance of new networks would require 10k fewer people.

The Legend of Zelda: Tears of the Kingdom had become the fastest-selling Zelda game so far, having already sold ten million in just three days; this compares to its highest rated game, The Legend of Zelda: Ocarina of Time, only selling 7.4 million copies over its entire run. It seems that its record 2017 Breath of the Wild, selling thirty million units,  will soon be superseded. Tears of the Kingdom has turned over US$ 600 million gross sales to date and is this year’s biggest physical video game launch, selling twice as many physical copies as Hogwarts Legacy. However, it is still some way off Grand Theft Auto V which posted US$ US$ 1.0 billion in sales in its first three days.

Strike has taken over rival embattled troubled online estate agent Purplebricks, founded in 2012, for the token sum of GBP 1, which in its heyday was valued at US$ 1.0 billion. As part of the deal, Strike will take over its US$ 42 million in liabilities. The company’s aim was to create a lower-cost, more flexible estate agent by charging house sellers a flat rate; its customers had to pay the fee regardless of whether the property sold. After initial success, it has seen its share value slump 98% over the past five years. In February, the business had posted that it expected to lose up to US$ 25 million this year, with reports that the company is burning cash to the tune of US$ 3 million on monthly costs, including staff, hosting and marketing. Over the past twelve months, it has been reducing its payroll which now stands at around 750.

Late last week, the founder of Autonomy was finally extradited to the US to face criminal charges over the US$ 11.1 billion sale of his firm to Hewlett-Packard. Mike Lynch is accused of overinflating the value of his software firm when he sold it to HP. At the time of the 2011 sale, Autonomy was the UK’s biggest software company but, within a year of the sale, HP had written off US$ 8.8 billion in the value of Autonomy, claiming it had been duped into overpaying for the company. The man, once described as “Britain’s Bill Gates”, will stand trial on charges including fraud, which he denies, and has been ordered to pay bail of US$ 100 million.

The owner of Vice and Motherboard, Vice Media Group, has filed for Chapter 11 bankruptcy protection and could be acquired by a group of lenders for US$ 225 million – a massive fall from grace when it had been valued at US$ 5.7 billion in 2017. Its investors include Fortress Investment Group, Monroe Capital and Soros Fund Management, and the youth-focused digital publisher said it will continue to operate during the bankruptcy process, and “expects to emerge as a financially healthy and stronger company in two to three months”. The twenty-nine-year-old company, which at the time was part of vanguard of companies set to disrupt the traditional media landscape with edgy, youth-focused content spanning print, events, music, online, TV and feature films. Their portfolio includes My Journey Inside the Islamic State, in which a Vice journalist filmed alongside the terror group in Syria, basketball star Dennis Rodman and the Harlem Globetrotters on a “sports diplomacy” trip to North Korea, and a film about Ukraine’s president, Volodymyr Zelenskiy, by actor Sean Penn. Despite their best efforts, it appears that most of the sector’s advertising spend ended up in the pockets of Google, Meta and other tech giants. It is not the only disruptor in the industry to fall on bad times – BuzzFeed, recently announced the closure of its news division and the laying off of 15% of its workforce, amid serious financial challenges and a slump in advertising revenue.

Following the demise of troubled Swiss lender, Credit Suisse and its apparently enforced takeover by UBS, expects to have to pay an impairment charge of US$ 13 billion and up to US$ 4 billion in potential litigation and regulatory costs stemming from outflows. The bank also estimated that it would take a one-off gain stemming from the so-called US$ 34.8 billion “negative goodwill”, as it acquired the bank at a fraction of its book value. It has been reported that it was rushed into buying Credit Suisse, (given less than four days for due diligence), in a deal it did not want.

Another victim from the Jeffrey Epstein’s alleged sex trafficking ring, Deutsche Bank has agreed to pay US$ 75 million to settle a lawsuit claiming that it had enabled the international paedophiliac. Filed by an unnamed woman, who alleged that the banking giant continued to do business with Epstein, despite knowing that his accounts were used to facilitate the abuses, and that she herself had been trafficked by Epstein, the class action was on her behalf and other women who had allegedly been abused by the late American financier. The German bank has previously sought to have the lawsuit dismissed, and, although declining to comment on the actual settlement, did add that the bank had invested more than US$ 4.3 billion to improve its controls, training and operational processes, and grown its team dedicated to fighting financial crime.

Despite RBA governor Philip Lowe repeatedly saying that Australia is walking a “narrow path” to lower inflation without a recession, an internal September 2022 report estimated that Australia’s risk of recession over this year and next could be as high as 80%; it also indicated that more aggressive efforts to bring inflation down, through faster rate rises, would see unemployment rise more quickly. The report concluded that “if a recession does occur, it is most likely sometime over the next four quarters”. There are indicators that the RBA is unlikely to raise rates much further, as the latest Statement on Monetary Policy does not expect inflation to fall within its target until June 2025 and the unemployment rate only reaching 4.5% by then.

China reckons that, in Q1, it surpassed Japan as the world’s biggest exporter of cars, at 1.07 million vehicles – 58.0% higher than in the same period a year earlier – 11.2% higher compared to Japan’s 954k. Only last year, China beat Germany to second place on the world chart with 3.2 million vehicles to 2.6 million. China’s exports were boosted by demand for electric cars and sales to Russia. Last, year, Chinese carmakers – including Geely, Chery and Great Wall – saw their market share in Russia jump, after rivals, including Volkswagen and Toyota, quit the country following the invasion of Ukraine. China’s Q1 exports of new energy vehicles, which includes electric cars, rose, on the year, by more than 90%. Among the country’s top brands are Tesla’s China arm, SAIC – the owner of the MG brand – and BYD, which is backed by veteran US investor Warren Buffett, with Tesla’s huge newly-opened Shanghai manufacturing plant capable of producing 1.25 million vehicles.

Having already committed to making EVs in the UK, Stellantis, owner of Vauxhall, Peugeot, Citroen and Fiat is concerned that it could change its mind because of the threat of having to pay tariffs of 10% on exports to the EU due to rules on where parts are sourced from. Stellantis warned that if the cost of EV manufacturing in the UK “becomes uncompetitive and unsustainable, operations will close”. In 2021, the world’s fourth biggest car maker had pledged that the future of its Ellesmere Port and Luton plants was secure. Because it was “now unable to meet these rules of origin”, (as 55% of the value of an electric car should originate in the UK or EU to qualify for trade without tariffs), due to the recent surge in raw material and energy costs, this has become impossible. The UK government’s standard response continues to be that it was “determined” UK car making would remain competitive.

The other major problem facing UK carmakers concerns the lack of electric car battery plants in the UK, when compared with the US, China and EU which are pouring subsidies into the sector. Recently, former Nissan executive and battery start-up businessman Andy Palmer said the UK was “running out of time” to develop its own battery manufacturing industry. Whilst Whitehall fiddles it seems that the French opportunist, President Emmanuel Macron, has this week met with Tesla’s Elon Musk, to discuss the possibility of investing in a battery plant – or gigafactory – in France. The Spanish government is currently trying to woo the UK’s biggest car manufacturer, Jaguar Land Rover, into building a gigafactory in Spain. If there is no production in the UK by 2027, then there is every chance, with a tightening of regulations, UK exporters will find it impossible to sell cars overseas tariff free.

One possible bright light is that Tata Jaguar Land Rover is looking at building a multi-billion-dollar electric car battery factory in Somerset; if this were to happen, 9k jobs would be created. Any investment would be reliant on government support in the way of subsidies and incentives, because several European countries would pay such grants to entice this level of investment. The Sunak government is facing pressure from the MV sector to increase the capacity of battery production in the country, amid fears car making plants may leave the UK.

Latest data shows that global debt – at US$ 305 trillion – is US$ 45 trillion higher than its pre-Covid level and is expected to continue to head north in the future; Q1 saw a US$ 8.3 trillion hike. the Institute of International Finance said in its latest Global Debt Monitor report was concerned over leverage in the financial system as the debt balance nudges to record highs. In Q2 and Q3 2022, there were marked falls in a period of almost global monetary policy by national banks; in Q4, the global debt pile started moving higher again, as central banks started to slow the pace of rate rises because of fragile market sentiment. The latest quarterly increase was mainly attributable to government borrowing remaining high over a potential credit crunch following the recent turmoil in the US and Swiss banking sectors.

On Saturday, the three-day meeting of the G7 finance leaders ended with a warning of heightening global economic uncertainty, overshadowed by a US debt ceiling stalemate, recent US bank failures, a slowdown in China’s economy and the ongoing war in Ukraine. The G7 central bank chiefs also discussed ways to fight stubbornly high inflation. One of the main topics on the agenda related to supply chains, with host nation Japan spearheading efforts to diversify supply chains and reduce their heavy reliance on China; it was decided to set a year-end deadline for launching a new scheme to diversify global supply chains. The meeting also reiterated its condemnation of Russia’s invasion of Ukraine and pledged to strengthen monitoring of cross-border transactions between Russia and other countries. It is about time that the G7 unite, (not only in words but also by action) and agree to Let’s Get Together and Feel All Right – One Love!

More Than You Deserve!                                                                       12 May 2023

The 3,112 real estate and properties transactions totalled US$ 2.56 billion, during the week, ending 12 May 2023. The sum of transactions was 170 plots, sold for US$ 515 million, and 2,261 apartments and villas, selling for US$ 1.46 billion. The top three transactions were for plots of land, one in Al Sufouh 2, sold for US$ 82 million, and the second in Saih Suhaib 4 for US$ 40 million, and the third in Jumeirah Island 2 for US$ 35 million. Al Hebiah Fifth recorded the most transactions, with fifty-seven sales, worth US$ 38 million, followed by twenty-three sales in Madinat Hind 4, for US$ 8 million, and thirteen sales in Al Hebiah Third, valued at US$ 15 million. The top three transfers for apartments and villas were all for apartments, the first in Burj Khalifa, valued at US$ 41 million, followed by a US$ 16 million sale in Palm Jumeirah, and the third in Umm Suqeim 2 for US$ 14 million. The mortgaged properties for the week reached US$ 515 million, with the highest being for a plot of land in Al Karama, mortgaged for US$ 64 million, whilst one hundred and forty-four properties were granted between first-degree relatives worth US$ 74 million.

Nakheel has launched a seventy-one floor, 300 mt residential tower on Palm Jumeirah. Como Residences will only have seventy-six residences starting with 2–7 B/R apartments, encompassing from 10k sq ft of indoor and outdoor living space; it will also house a spacious duplex penthouse. Each floor will be occupied by only one or two homes – served by access-controlled elevators leading to individual private lobbies –  that will have their own private sandy beach, a 25m lap pool, and a rooftop infinity pool. It will also feature multiple swimming pools, padel courts, squash courts, and a gymnasium, as well as a spa and wellness centre.

Having already been delayed for several years for a variety of reasons, including from the impact of Covid, the Kleindienst Group, announced that the first phase of its ‘The Heart of Europe’ will be completed by the end of this year, when forty-eight floating “seahorse villas” will be handed over. This is part of the developer’s US$ 5 billion project, which includes palaces, with private beaches, hundreds of smaller villas and apartments, sixteen hotels, as well as floating “seahorse” villas on the six-island cluster. Located four km off the Dubai coast, completion is expected by 2026. The first property on the project, the Cote d’Azur Monaco Hotel, opened to the public at the start of the year; a further seventy properties are currently under construction.

MAG, one of the leading real estate developers in the UAE, has announced the launch of sales for residential homes at The Ritz-Carlton Residences, Dubai, Creekside, part of the Keturah Resort. The launch follows the successful sales of over 54% of units, including four penthouses at the Butterfly buildings and 16 units at the L-shaped buildings. Keturah Resort by MAG is located on Dubai Creek, facing Dubai’s wildlife sanctuary in Ras Al Khor.

The Founding Chairman of the Al Habtoor Group, Khalaf Al Habtoor, announced the launch of the world’s largest residential building – Habtoor Tower Dubai. Located on the banks of the Dubai Water Canal the 81-floor project will comprise 1,701 keys, with a built-up area of 3.517k sq ft. The Group is in the final stages of selecting the main contractor for the project and expects completion within three years, with the Chairman adding “this new project befits our country’s vision to always be at the forefront of innovation, responsible development and preserving our world for the next generations”.

It appears that Emirates has almost fully recovered from the impact of Covid as it posted a record US$ 2.9 billion profit, (following a US$ 1.1 billion loss the previous year), as revenue came in 81.0% higher, on the year, to US$ 29.3 billion. The group said it will pay the Investment Corporation of Dubai a dividend of US$ 1.23 billion for the fiscal year and will also prematurely repay US$ 817 million of debt raised during the Covid-19 pandemic. The world’s largest long-haul airline carried 43.6 million passengers – 123% higher, year on year – as it ramped up its flight schedules. Currently, the carrier is operating its full fleet of Boeing 777s and eighty-six of its 116 Airbus A380s and expects to return to its full pre-pandemic network over the next twelve months; it also saw its seat capacity jump from 58.6%, to 79.5%, with passenger yields coming in 7.0% higher. The carrier also announced a generous profit-sharing plan for employees, which works out to twenty-four weeks’ worth of salary. Nobody can argue that this was not deserved.

Dnata, its cargo and ground handling, catering and retail, and travel services businesses, tripled its annual profit to US$ 90 million, as revenue was 74.0% higher, at US$ 4.06 billion, with new investments during the year at US$ 127 million. It was inevitable that air freight was unlikely to replicate the exceptional performance post Covid, reporting a 21.0% revenue decline to US$ 4.69 billion – equating to 16.0% of the Group’s total revenue. Workforce numbers for the Group rose 20.0% to 102.4k. Chairman and chief executive, Sheikh Ahmed bin Saeed, commented that “this reflects the strength of our proven business model, our careful forward planning, the hard work of all our employees, and our solid partnerships across the aviation and travel ecosystem.”

With traffic numbers touching 95.6% of pre-Covid 2019 levels, Dubai International (DXB) posted 21.26 million passengers in Q1 – 55.8% higher, compared to the same period in 2022; last year, it had retained its title as the world’s busiest airport, for the ninth consecutive year, with 66.0 million passengers. March saw the highest monthly traffic – at 7.83 million – since January 2020’s 7.8 million. The forecast for 2023 is 83.6 million passengers, almost reaching 2019 levels. The airport is connected to 234 destinations across ninety-nine countries via eighty-nine scheduled international carriers. The top five destination countries continue to be India, Saudi Arabia, UK and Pakistan – with three million passenger traffic, 1.6 million, 1.4 million and 1.0 million respectively – and the top four cities being London, Mumbai, Jeddah and Riyadh, (890k, 645k, 641k and 604k). Whilst cargo handled dropped by 23.0% to 400k tonnes in Q1, total flight numbers headed skywards to 100.9k – 23.0% higher on the year and 1.6% up on pre-Covid 2019 returns.

Good news for the Dubai economy came via April’s S&P Global PMI, with the results indicating that, driven by impressive the travel/tourism sector, business conditions improved at one of the fastest rates since mid-2019, reaching an eight-month high in April. The index reading, at 56.4, was 0.9 higher on the month, driven by a marked increase in sales, (mainly because of new clients, lower prices/increased market activity, and new orders, as demand growth quickened. There were improvements noted in the supply chain, as average lead times on inputs shortened for the fourth straight month, along with sustained efforts by companies “to build inventories in the light of a promising demand outlook, as well as recruiting staff to support higher workloads”. The rate of job creation remained high but had slowed from March’s five year high, as companies added to their workforce in the light of higher output requirements. The rate of charge discounting was “the quickest recorded in three and a half years”, whilst the average prices paid for inputs were broadly unchanged from the previous survey period.

The UAE’s first auction of 2023 dirham denominated Sukuk, worth US$ 300 million, was oversubscribed 7.6 times, as bids worth US$ 2.26 billion were received, with the federal government continuing to diversify its funding resources and supports the growth of the Islamic economy. Two months ago, it raised the same amount from the sale of treasury bonds. Deputy Prime Minister and Minister of Finance, Sheikh Maktoum bin Mohammed, commented that the oversubscription reflected the “UAE’s prudent strategic investment policies and objectives, as the country continues to solidify its position as a global investment destination and one of the most competitive and advanced economies in the world”.

According to UAE’s Central Bank, the country’s GDP climbed 7.6% last year, attributable to significant activity across all sectors, at a time when most international markets reported a slowdown in economic growth due to increases in interest rates and geopolitical tensions. As a bonus, the country’s inflation rate was well below the 4.8% international inflation average in 2022, as was classed as one of the world’s best-performing economies. Some of the factors behind these impressive results were down to the decisions and directives of the wise leadership, as well as its undertaking of proactive measures and the reopening of the economy following the Covid-19 pandemic.

In a move to confront various cyber-attacks by vital sectors, the UAE Cybersecurity Council has appealed to everyone in the public and private sector entities to be on the lookout for cyber-attacks that may target “national digital infrastructure and assets”. In the event that any entity becomes aware of a cyber-attack, it should exercise caution and share data with the competent authorities in order to prevent possible malicious attacks. According to the government’s head of cybersecurity, Mohammed Hamad Al Kuwaiti, it prevents more than 50k cyberattacks each day.

United Properties continued along its recovery path in Q1 announcing a net profit of over US$ 3 million, (compared to a US$ 3 million deficit in 2022), with revenue 18.0% higher at US$ 33 million, driven by Dubai’s robust real estate sector and its subsidiaries returning impressive results. Over the period, as admin expenses dipped 21.0% to under US$ 5 million operating profit skyrocketed by 335% to over US$ 5 million. As at 31 March, its book value was flat at US$ 0.125 per share.

Dubai Investments has posted a 55.2% jump in Q1 2023, year on year, net profit to US$ 86 million, as total income was 34.7% higher at US$ 278 million. Although total Shareholder Equity rose 7.2% to US$ 3.59 billion, Total Assets remained flat at US$ 5.71 billion. The figures were helped by “the response to Danah Bay, our premium beachfront development in the emirate of Ras Al Khaimah, has exceeded all expectations and we are looking forward to launching the next phase”. The Dubai-listed company is bullish on its future growth because of the local economy experiencing robust growth and the current boom in the real estate sector.

Deyaar posted a mega 125.6% increase in Q1 net profit to over US$ 15 million, mainly due to the current boom in the local realty sector, with revenue up 93.0% to US$ 85 million. Over the past few months, the developer has seen successful sales of its recent launches – Regalia at Business Bay, Tria in Dubai Silicon Oasis and Mar Casa at Dubai Maritime City, whilst it has seen its revenue “growing significantly” over the past few months due to construction progress at Regalia and the “exceptional performance” of its developments such as Noor and Mesk in Dubai Production City. The Dubai-based company is majority owned by Dubai Islamic Bank and last June carried out a US$ 510 million capital restructuring programme by writing off accumulated losses from previous years. It also received a payment of US$ 54 million arising from a land dispute with master developer Limitless.

In Q1, Salik posted its highest level of quarterly revenue-generating trips and toll usage revenue in its sixteen-year history, at 113.6 million trips and US$ 124 million, respectively, with toll usage revenue, accounting for 87% of the total increasing by 7.9%; driven by a complete lifting of Covid restrictions, and the marked upturn in the local economy, the Dubai toll operator posted a net profit of US$ 75 million.

Although revenue slipped 5.1% to US$ 1.63 billion, Emaar Properties posted a 42.9% surge in Q1 net profits to US$ 871 million; by the end of March, its backlog stood at US$ 15.18 billion. EBITDA rose 25.0% to US$ 1.09.   Last week, Dubai’s largest listed developer confirmed it will open eight new hotels in the UAE, Saudi Arabia and Egypt, in H2 or in 2024. Late in 2022, Emaar increased its share capital by 8% to US$ 2.40 billion and also increased the foreign ownership limit of its shares to 100%, from 49%, to capitalise on high interest from international investors.

The company’s build-to-sell property development business, majority-owned by Emaar Properties, posted flat Q1 profit, at US$ 271 million, with its revenue stream down 33.0% to US$ 649 million, as EBITDA slipped 9.0% lower to US$ 311 million. Mainly because of business in Egypt, Emaar International, the group’s overseas arm, posted revenue of US$ 114 million revenue – equating to about 7.0% of total revenue – on the back of property sales of US$ 171 million. Emaar’s shopping mall, retail and commercial leasing operations posted a 7.0% hike in Q1 revenue of US$ 171 million. The company’s hospitality, leisure and entertainment businesses posted a 17.0% hike in year-on-year revenue, hitting US$ 241 million, attributable to the boom in Dubai’s tourism sector and high domestic spending. Its hotels in the country attained 75% occupancy rates in Q1.

In Q1, Emaar Development saw a 25.7% hike in property sales to US$ 2.34 billion and a net profit of US$ 288 million, with EBITDA at US$ 311 million. The UAE build-to-sell property development business, majority owned by Emaar Properties, has a sales backlog of US$ 12.45 billion – to be recognised as revenue in the coming years. During the quarter, it successfully launched seven projects – Elora in The Valley, Elvira in Dubai Hills Estate, Palace Residence North, Cedar and Savanna in Dubai Creek Harbour, Anya and Anya 2 in Arabian Ranches III. In Q1, the company, delivered about 1.6k residential units in prime locations such as Dubai Hills Estate, Dubai Creek Harbour, Downtown Dubai, Emaar Beachfront, Arabian Ranches, and Emaar South. To date, it has delivered 59.5k residential units, with over 28.5k currently under development in the UAE.

The DFM opened on Monday, 08 May 2023, 91 points (2.6%) higher the previous fortnight, shed 24 points (0.7%) to close the week on 3,559, by 12 May. Emaar Properties, US$ 0.01 higher the previous week, nudged US$ 0.01 higher to close the week on US$ 1.64. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.68, US$ 3.83, US$ 1.52, and US$ 0.42 and closed on US$ 0.68, US$ 3.81, US$ 1.47 and US$ 0.40. On 12 May, trading was at 255 million shares, with a value of US$ 106 million, compared to 266 million shares with a value of US$ 113 million on 05 May 2023.

By Friday, 12 May 2023, Brent, US$ 16.24 lower (17.7%) the previous three weeks, shed a further US$ 1.12 (1.5%) to close on US$ 74.14.  Gold, US$ 31 (0.2%) higher the previous fortnight, shed US$ 9 (0.4%) to US$ 2,016 on 12 May 2023.

Saudi Aramco posted an 18% fall in Q1 profit to US$ 32.0 billion, mainly down to lower crude prices in the quarter, as revenue dipped 10.6% to US$ 111.3 billion on an annual basis. Aramco’s annual capital expenditure rose 18% annually to about US$ 38 billion last year from 2021, due to continuing crude oil increments and other development projects, with 2023 capex estimated at between US$ 45.0 billion – US$ 55.0 billion. Cash flow, at US$ 39.6 billion, was nearly 4.0% higher in Q1, compared to the same period in 2022, with free cash flow remaining steady at US$ 30.9 billion. The world’s largest oil-producing company plans to pay a US$ 19.5 billion dividend in the current quarter, indicating that it plans to introduce performance-linked dividends, (based on between 50% – 70% of its annual free cash), in addition to the base dividend that it currently distributes.

Ryanair has announced a massive US$ 40 billion deal with Boeing for the purchase of three hundred new planes – half of which will be the 737-MAX-10s and the remainder to be decided later; phased deliveries will occur between 2027-2033. The updated 737 will have 21% more seats – 228 – burn 20% less fuel and will be 50% quieter. Chief executive, Michael 0’Leary is expecting the airline to grow by 80% over the next decade, with traffic numbers topping three hundred million and payroll numbers 10k higher. He also commented that “we are committed to delivering for Ryanair and helping Europe’s largest airline group achieve its goals by offering its customers the lowest fares in Europe”. The deal is still subject to shareholders’ agreement.

LinkedIn becomes the latest tech giant, following in the footsteps of Amazon, LinkedIn’s parent Microsoft, and Alphabet, to announce a culling of its payroll, with its 20k workforce being reduced by 3.5%; at the same time, it is planning to phase out its local jobs app in China, (with its only remaining app being phased out by this August), in a move to streamline its global operations.  In 2021, it mostly withdrew from China, after seven years in the country, where it had been the only major Western social-media platform operating in China; it indicated that it had been operating in a “challenging environment”.

Following the latest Reserve Bank of Australia’s report, it seems that the country’s economy is much weaker, and households are suffering much more, since its February forecast; on the flip side, it appears that inflation is declining at a faster rate than posted three months ago – this was driven by a fall in real household incomes and consumer spending. Three months ago, the central bank forecast fiscal 2023 (year ending 30 June 2023) growth at 2.2% – this has been slashed to just 1.7% – and for the calendar year ending 31 December 2023 from 1.6% to 1.2%. There is no surprise to see household spending remaining stagnant after the 3.0% slump recorded in 2022. Over this year, the RBA had estimated wage growth at 4.7% – now it has been pared back to 2.5%. With any wage growth falling well behind inflation levels, it is obvious that any consumer spending will have to come out of savings or an increase in debt, which has been for some time at one of the highest levels in the world. It is estimated that the 7.0% inflation level seen at the beginning of 2023 will decline to around 4.0% by 31 December which will still be above the RBA’s 2-3% target range. In other words, many analysts are of the opinion that the RBA prime short-term aim is to get the inflation level moving lower on a quicker timescale.  Its governor, Philip Lowe, says Australia remains on its “narrow path” to avoid a recession, at a time when living costs are the highest, they have been on record, and, having risen by between 7.1% to 9.6%, are higher than the current 7.1% rate of inflation. Food, housing and mortgage interest charges were the biggest contributors to the cost-of-living increases, with employee households recording a 78.9% increase in mortgage interest charges in the past 12 months.

The recent Ai survey only reiterated what most analysts already knew – Australian business has hit the buffers, having contracted every month since April 2022 – the same time the RBA started hiking rates. The report by the Australian business group posted that its Industry Index had fallen by 14 points to -20.1 points – an indicator of deeply contractionary conditions – with activity and sales down -18.9 points in March and exports slumping by -24.1 points. There is no doubt the Australian business is caught in a web of supply constraints and falling demand, caused by price pressures and shortages for supply chains and labour. Any further rates hikes, by the RBA, will only make matters worse, with its Governor, Philip Lowe noting that rising  “interest rates, while necessary to contain inflation, will add more pain to businesses facing a worsening economic outlook.”

A lot can happen in two years as illustrated by the current state of the US economy, which has come down from boom status, with economic growth at 5.9%, to a marked slowdown, and a probable recession on the near horizon. In H1, the economy struggled to attain 1.1% growth mainly because of the Fed finally deciding to tweak rates higher so as to hit the brakes to cool the economy. Over the past fourteen months, the central bank has raised rates by 5.0% which has brought the economy to a shuddering stop. The economy is in trouble, with big banks – including Silicon Valley Bank, Signature Bank and First Republic – failing and having to be bailed out to prevent a banking meltdown, whilst big companies, (including Amazon, Disney, Ford and Tyson Foods), that were posting record profits just two years ago, have been slashing their workforces in a bid to preserve margins, as demand declines and other costs move higher. One major casualty of the interest rate hikes is the housing sector, which accounts for 15% of the country’s GDP, which saw a 20% slump in the number of homes sold, with hundreds of mortgage bankers losing their jobs. Other sectors, such as tech, finance and crypto, that boomed in an era of low interest rates, are now struggling, and will suffer even further in a slowdown.

By early next month, and if Congress does not act to raise the US’s debt ceiling, to US$ 31.4 trillion, the consequences could be dire and that without an agreement, it could run out of money by early June. Treasury Secretary Janet Yellen, noted that the federal government might not be able to make wage, welfare and other payments and that “it’s Congress’s job to do this. If they fail to do it, we will have an economic and financial catastrophe that will be of our own making.” In April, the House of Representatives passed a bill to raise the ceiling, currently roughly equal to 120% of the country’s annual economic output but included in the bill sweeping spending cuts over the next decade, with US President Joe Biden against any conditions. This will not be the first – or last – time that negotiations have gone down to the wire which has often been the case in the seventy-eight times the debt ceiling has been raised or amended since 1960. Even with a slowdown, the IMF expects growth of 1.6% in the US this year – the fastest of the seven major advanced economies, viz., Canada, France, Germany, Italy, Japan and the UK.

Yesterday, and as widely expected, the Bank of England raised interest rates, by 25bp to 4.5%, (for the twelfth consecutive time and to their highest level in fifteen years), as it belatedly tries to stop prices rising so quickly and put a stop to surging inflation which is still hovering in double digit territory, exacerbated by food prices increasing at their fastest rates for forty-five years. The increased bank rate will impact 1.4 million on tracker and variable rate deals who will see an immediate increase in their monthly payments of some US$ 30 per month; mortgage rates started moving north in December 2021, and since then average tracker mortgage customers is paying about US$ 525 more a month, and variable rate mortgage holders about US$ 332 extra. According to the Financial Conduct Authority, an estimated 356k mortgage borrowers could face difficulties with repayments by July next year. The BoE is facing a fine balancing act, weighing up whether to move rate higher to curb inflation and dampen economic growth or cut rates with the possibility of the opposite effect.

The good news, if there is any, is that the BoE’s chief noted that the UK, helped by the fact that average energy prices are expected to drop to US$ 2.7k by the end of the year, is no longer expected to go into recession. The change in outlook for the economy contrasts sharply with the Bank’s forecast six months ago when it said the UK would enter the longest recession on record. This is the same character who said inflation would “fall sharply in April” but not as far or as fast as it previously thought. It seems to the casual observer that if the BoE were a company, the senior managers would have all been sacked for mismanagement long ago, for not keeping to their targets. In this case, the BoE’s inflation target had been 2.0% for several years and for some time hovered below that figure. In August 2021, inflation reached the magical 2.0% mark but after that, it started moving higher and by the end of that year was at 5.1%, but the bank rate was still at 0.25%! The question nobody seems to want to answer is why the BoE did nothing when it was obvious to anyone that inflation had climbed 155% to 5.1% and that increasing rates would be a formality to bring inflation down. By August 2022, inflation had nearly doubled to 9.9% but still little bank action with the rate having only moved to 1.75%. Over the next four months inflation went even higher to 10.1%, with the BoE finally taking some action – but far too little and far too late – pushing rates up to 3.50% by the end of December 2022. By March 2023, inflation was still in double digit territory whilst the interest rate had risen to 4.25%. It was some consolation to see that the BoE’s chief economist said that the UK citizens needed to accept that they are poorer, or inflation will keep rising.

The latest in the episode of claims that UK male business leaders have acted inappropriately in the presence of members of the other sex have been brought against John Allan, a former president of the now disgraced CBI, between 2018 – 2020, and chairman of Tesco for the past eight years. He has strongly denied claims in the Guardian newspaper that that he touched women’s bottoms on two separate occasions – one at last year’s Tesco AGM and the other in 2019 at a CBI event. Tesco has confirmed that it has never received any complaints and that his conduct has “never been the subject of a complaint during his tenure as chair of Tesco”. The Guardian also claims that Mr Allan commented on a CBI employee’s dress and bottom in 2021 – an incident that he said he does not recall – but admitted he had made a comment to a female CBI worker in late 2019 about a dress suiting her figure. It does seem that sordid behaviour from the past will be continued to be dug up well into the future, and that several will be caught and brought to some form of justice. Just as for the likes of Jimmy Savile, Rolf Harris, Gary Glitter and Stuart Hall, who probably thought they would be immune from any legal action, the clock is ticking, and if you get caught it is no More Than You Deserve!

Sunday Morning Coming Down!                                                         05 May 2023

The 3,050 real estate and properties transactions totalled US$ 2.83 billion, during the week, ending 05 May 2023. The sum of transactions was 189 plots, sold for US$ 325 million, and 2,239 apartments and villas, selling for US$ 1.39 billion. The top three transactions were for plots of land, one in Al Thanayah Fourth, sold for US$ 14 million, and the second in Saih Suhaib 2 for US$ 11 million, and the third in Palm Jumeirah for US$ 10 million. Al Hebiah Fifth recorded the most transactions, with sixty-three sales, worth US$ 51 million, followed by twenty-two sales in Madinat Hind 4, for US$ 8 million, and sixteen sales in Jabal Ali First, valued at US$ 16 million. The top three transfers for apartments and villas were all for apartments, the first in Al Merkadh, valued at US$ 25 million, followed by a US$ 21 million sale in Jumeirah Second, and the third in Burj Khalifa for US$ 18 million. The mortgaged properties for the week reached US$ 1.00 billion, with the highest being for a plot of land in Al Barshaa South Third, mortgaged for US$ 178 million, whilst one hundred and ten properties were granted between first-degree relatives worth US$ 135 million.

Majid Al Futtaim Properties announced that it had sold a luxury mansion at Lanai Islands, in the Tilal Al Ghaf project, for over US$ 54 million, as demand for premium property continues to surge in the emirate. Lanal Island comprises only thirteen luxury villas on a private island in a 150k sq mt recreational lagoon. South African architects Saota designed the homes, with interiors by Kelly Hoppen.

With the emirate and the country fast recovering from the impact of Covid, Azizi Developments has plans to invest US$ 16.3 billion on building fifty luxury hotels and resorts, including a seven-star hotel, in Dubai. The developer reckons that this will add 20k new keys to Dubai hotel rooms over the next five years; construction will start later in 2023. The company is keen to become a major player in Dubai’s promising future as a global hub for tourism, with the Tourism Strategy 2031 aiming to leverage PPS and seeking to attract over US$ 27.2 billion in new investment in the tourism sector. This strategy will see the tourism sector’s contribution to a GDP increase to US$ 122.6 billion by 2031. The company posted that it has one hundred ongoing projects and, last year, bought a large tract of land in Dubai South to build a mixed-use development, worth about US$ 3.27 billion, to expand its portfolio of assets.

The Ministry of Energy, as usual, adjusts fuel prices in the UAE on the first day of every month. According to the government, the UAE liberalised fuel prices, introduced in August 2015, help to rationalise consumption and encourage the use of public transport in the long run and incentivise the use of alternatives. The UAE Fuel Price Committee increased May retail petrol prices, except for diesel.:

• Super 98: US$ 0.861 – up by 5.00% on the month and up US$ 0.63 (13.74%) YTD from US$ 0.757  
• Special 95: US$ 0.790 – up by 5.19% on the month and up 14.30% YTD from US$ 0.727
• Diesel: US$ 0.793 – down 4.00% on the month and down 12.50% YTD from US$ 0.896
• E-plus 91: US$ 0.809 – up by 5.34.% on the month and up 14.58% YTD from US$ 0.706

Whilst touring this week’s ATM, HH Sheikh Mohammed bin Rashid Al Maktoum noted that tourist spending in the UAE had increased by 70% to top US$ 33.0 billion, which is the highest in the region. Dubai’s Ruler also reiterated the UAE’s 2030 target of reaching 40 million visitors and increasing the sector’s contribution to the country’s GDP to US$ 122.6 billion. He commented that “our vision is to make Dubai the preferred global destination for business and investment. We seek to build on our exceptional economic achievements to open new horizons of growth,” and stressed the importance of the tourism sector, as one of the key pillars of Dubai’s economy, and a vital driver of its growth agenda over the next decade.

According to its president, Tim Clark, Emirates will deliver a strong set of annual financial results for its fiscal year ended 31 March, when results are published later this month. He noted that “we moved quickly, and we moved first, and we have a set of results which are exceptionally good this year,” as the airline was probably the first major carrier to ramp up its operations and added capacity as demand rebounded following the pandemic. In H1, ending 30 September 2022, the world’s largest long-haul airline posted a US$ 1.09 billion profit (compared to a massive US$ 1.58 billion deficit a year earlier). The airline currently has 165 aircraft on order “and probably more coming” as it continues to grow its business over the coming years and to take advantage of the increased demand for international air traffic and growth in leisure bookings.

A sure indicator that Dubai, and its travel/tourism sector, has recovered well from the impact of Covid sees flydubai carrying 50% more passengers – 3.37 million – in Q1 than in the same period in 2022. In Q1, the carrier operated 25.8k flights and saw its fleet reach seventy-six jets – all Boeing 737s.The upcoming summer period is set to see a massive traffic growth, with the local airline ramping up capacity, by 20%, to five million, to cater for the increased demand between July and September; as it will also need additional employees, it is currently undergoing a recruitment drive. New destinations include Corfu and Cagliari, whilst summer favourites such as Bodrum, Dubrovnik, Mykonos, Santorini and Tivat will be added to the schedule; flight frequency will be added to already popular destinations such as Krabi, Milan-Bergamo, Pattaya and Pisa.

The General Civil Aviation Authority has confirmed that the number of passengers travelling through the country’s airports in Q1, increased by 56.3% on the year, to 31.87 million, indicating the success of the aviation sector in restoring pre-Covid-19 passenger traffic levels. The authority is bullish about the future, noting that the national airlines’ number of destinations reached 536, including joint destinations, and had registered 894 Organisation/Operators (professional use) and around 21.3k registered unmanned aircraft for leisure (hobby). It also noted that the aviation sector in the country contributes about 14% of the GDP, compared to only up to 3% in other global aviation sectors.

On Wednesday, the US Central Bank raised its benchmark overnight interest rate to the 5.00% – 5.25% range; this was its tenth consecutive increase since March 2022. Almost in tandem, the GCC banks followed suit with the UAE raising the Base Rate applicable to the Overnight Deposit Facility (ODF) by 25bp – from 4.90% to 5.15%, effective from Thursday, 04 May 2023. It also decided to maintain the rate applicable to borrowing short-term liquidity from the CBUAE through all standing credit facilities at 50bp above the Base Rate. The Central Bank of Saudi Arabia, the Central Bank of Bahrain and the Qatar Central Bank decided to raise interest rates by 25bp.

e& posted a Q1 consolidated profit of US$ 599 million, (with EBITDA at US$ 1.69 billion, at 48% margin), on the back of a 6.6% hike in revenue to US$ 3.54 billion. On a year-on-year basis, aggregate subscribers topped 164 million, including 13.9 million in the UAE – 6.0% higher. As one of its main aims is to become a leading global technology player, it sees expanding its digital offering and launching innovative new solutions and partnerships with leading technology companies as a means of driving growth.

TECOM Group PJSC posted a 34.0% Q1 increase in net income to US$ 69 million, as revenue climbed 6.0% to US$ 144 million, attributable to sustained occupancy levels and high retention rates. The creator of specialised business districts and communities also noted that Q1 occupancy increased by 7.0% on the year – its fifth consecutive quarter of growth – to 87.0%.   Last October it paid an interim US$ 55 million dividend, followed by a similar amount last month. Like many other entities, the company owes a lot to underlying business confidence in Dubai and the thriving business ecosystem in the emirate; it is also bullish on future prospects and sees revenue climbing on the back of increased rents and an expected expansion in occupancy levels to nearer 90%.

As it lowered its GCC region’s overall real GDP growth forecast, the Institute of International Finance commented that the upcoming new corporate income tax, that will be effective from 01 June 2023, will help boost the UAE’s non-hydrocarbon revenues over the next two years. That being the case, the fiscal break-even oil price will be US$ 65 per barrel – and this despite OPEC’s recently announced oil output cut; as from 01 May, the UAE has cut production by about 150k bpd to a daily total of 3.21 million barrels. The world body estimated that although oil will drop to an average US$ 85 and US$ 80, this year and next, non-hydrocarbon real growth in the country will remain strong at 4.8 %, as the local economy will be shielded from some of the tighter global financial conditions. The IIF estimates that inflation will be at 2.4% by the end of the year, driven by lower commodity prices and manufacturing unit value. It expects the 2023 fiscal surplus will drop from 10.7% to 6.7% of GDP; last year, revenues increased by 29%, driven by higher oil prices and a large increase in revenues from VAT, with spending 1.0% lower.

DAE Capital posted a 48.5% hike in Q1 profit to US$ 19 million, attributable to an increase in the size of its fleet, as revenue moved 5.8% higher to US$ 19 million. One of biggest plane leasing players on the global stage noted that other factors behind the improved results included “a strong operating environment for airlines, an improving collections and credit profile, and profitable divestment activity.” Following its Q4 2022 acquisition of Sky Fund l, the company’s fleet of owned, managed and committed aircraft, as well as those it has a mandate to manage, has grown to about five hundred aircraft. During the period, the company took advantage of interest rate volatility and repurchased US$ 205 million of its bonds. Because of problems with its Russian operations, DAE wrote off US$ 538 million on aircraft operating in the fleet of Russian airlines, indicating that it had “no way” to determine whether the aircraft it had leased to Russian aviation operators would be returned.

Having introduced new market procedures on Direct Deal Transactions in March, the DFM saw two major deals – valued at US$ 134 million for 525 million shares – involving Amanat Holdings PJSC. DDTs are off-market transactions executed outside the Order Book and are considered a type of block trade.

Dubai Financial Market posted a Q1 net profit of just under US$ 10 million – a 29.5% improvement compared to a year earlier – as revenue climbed 13.1% to US$ 24 million and total expenses rose 4.3% to US$ 14 million; revenue was split to just over US$ 11 million and under US$ 13 million – investment returns/other income and operating income. Over the period, trading value was 16.7% lower, at US$ 5.18 billion, whilst the DFM General Index ended the quarter 2.1% to the good, as the market cap rose 2.4% to US$ 162.4 billion. The market has proved a magnet for overseas investors, who held a 56% share of trading value in Q1, with net purchases of US$ 174 million, with ownership accounting for 19.0% of the market cap on 31 March 2023. 78% of new investors were from overseas, with the DFM having a total investor base of 1.185 million from 215 countries. During the period, DFM attracted 14.6k new investors, of which 78% were foreign investors, resulting in a total investor base of 1.18 million representing 215 nationalities.

The DFM opened on Monday, 01 May 2023, 53 points (1.5%) higher the previous week, gained a further 38 points (1.1%) to close the week on 3,583, by 05 May. Emaar Properties, US$ 0.08 lower the previous fortnight, nudged US$ 0.01 higher to close the week on US$ 1.63. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.68, US$ 3.84, US$ 1.51, and US$ 0.41 and closed on US$ 0.68, US$ 3.83, US$ 1.52 and US$ 0.42. On 05 May, trading was at 266 million shares, with a value of US$ 106 million, compared to 161 million shares with a value of US$ 113 million on 28 April.

By Friday, 05 May 2023, Brent, US$ 11.25 lower (12.3%) the previous fortnight, shed a further US$ 4.99 (5.0%) to close on US$ 75.26.  Gold, US$ 5 (0.2%) higher the previous week, gained US$ 26 (1.3%) to US$ 2,025 on 05 May 2023.

Following the Fed’s decision to raise rates again and hinting that this could be the last one in this present cycle, gold prices traded near record-high levels on Thursday, as US yields and the dollar dipped. Spot gold touched US$ 2,040 per oz, after hitting US$ 2,072, with US gold futures reaching US$ 2,050, Slightly lower increases were seen with silver, platinum and palladium rising 0.9% to US$ 25.82, 1.0% to US$ 1,060 and by 1.4% to US$ 1,411 respectively.

Despite a slide in energy prices, Shell has reported a stronger than expected Q1 profit of US$ 9.6 billion – higher than comparative figures in 2022. The energy giant announced that it would be returning US$ 4billion to shareholders, by buying back some its shares. Last year, it posted profits of US$ 39.9 billion for 2022, which was double the previous year’s total and the highest in its 115-year history, after prices spiked at the start of the war in Ukraine, touching US$ 130 a barrel but lately oil prices have dropped to around US$ 80 a barrel.

Although quarter on quarter deliveries slowed, Q1 saw Tesla reaching record highs, with 422.9k EVs hand over to customers, helped by price cuts; the numbers were 36% higher compared to a year earlier and 4% higher on the quarter. In Q1, Tesla delivered 6% more of its mainstay Model 3/Model Y vehicles on the quarter but there was a 38% slump in numbers for its higher-priced Model X/Model S vehicles slumped by 38%.

In a move that may well disrupt air travel, US authorities have confirmed that it was going ahead with its 01 July deadline for airlines to refit planes with new sensors to address possible 5G interference; the estimated cost to upgrade planes is put at US$ 638 million. The Federal Aviation Administration and aviation companies have previously raised concerns that C-Band spectrum 5G wireless could interfere with aircraft altimeters, which measure a plane’s height above the ground. Even though they have been warned that they will be unable to meet the deadline and may be forced to ground some planes, Transport Secretary Pete Buttigieg has confirmed that the 01 July deadline would remain in place and advised them to work aggressively to retrofit their planes before the deadline. Telecom firms, including Verizon and AT&T, agreed last year to delay the rollout of 5G technology until 01 July 2023 to allow airlines time to retrofit their altimeters. IATA has also indicated that the decision not to extend the deadline makes summer disruptions more likely. The UK’s Civil Aviation Authority noted that “there have been no confirmed instances where 5G interference has resulted in aircraft system malfunction or unexpected behaviour”.

Still being hampered by ongoing supply chain issues, resulting in declines in deliveries, Airbus posted a 63.9% slump in Q1 profit to US$ 516 million, on the year. The European plane maker saw its revenue dip 2.0% to US$ 13.1 billion, as it delivered one hundred and twenty-seven planes – 106 A320s, ten A220s, six A330s and five A350s. It will have to ramp up production if it wants to meet its 2023 delivery target of seven hundred and twenty. The company, which is still the world’s biggest plane maker, posted a 38.0% decline in gross commercial orders at 156, with a 7.0k order backlog. In January, it posted that it planned to hire 13k new workers.

In India, budget airline Go First, owned by conglomerate Wadia Group, has filed for bankruptcy and cancelled all of its flights for the next three days after filing for bankruptcy protection but confirmed that “a full refund will be issued” to all affected passengers. It appears that the carrier is blaming its US engine maker, as it “had to take this step due to the ever-increasing number of failing engines supplied by Pratt & Whitney,” which in turn has led to a major cash flow problem. Go First said that the problem forced it to ground twenty-five aircraft – about half of its fleet of Airbus A320neo planes – which caused about US$ 1.3 billion in lost revenue and expenses, and that the US supplier had not followed an order by an emergency arbitrator, which included supplying “at least ten serviceable spare leased engines by 27 April 2023. (Industry experts have indicated that Go First is not the only local airline affected by engine and aircraft supply chain issues, noting that over a hundred commercial aircraft are grounded in India, including sixty planes of Go First and rival Indigo that are grounded due to a lack of spare parts.

After fifteen years at the helm of Qantas, Ireland’s Alan Joyce is to step down as CEO to be replaced by the carrier’s current CFO, Vanessa Hudson, who has been with the airline since 1994. It would be no exaggeration to say that Joyce had some turbulent periods during his time at the top including record oil prices, the GGFC, record losses following Covid, a 2021 court ruling that Qantas had acted illegally outsourced 1.7k ground staff sever consumer criticism last year over cancelled flights, lost luggage and many delays. The new incumbent has promised to work “very hard” to restore the Aussie carrier to its former glory.

International Consolidated Airlines Group, the parent company of several airlines, including BA, Aer Lingus, Iberia, Level and Vueling, posted its first-ever quarterly profit, since the onset of the pandemic; in Q1, it posted a US$ 10 million profit, as revenue leapfrogged over 71%, on the year, to US$ 5.2 billion. Although fuel prices spiked 35% in the quarter, fares were only 10% higher. With its portfolio of carriers, IAG has also recovered capacity to almost pre-Covid levels.

Despite an obvious industry slowdown, Apple beat Wall Street estimates, posting a marginal 2.5% dip in US$ 94.8 billion, which included a 1.5% rise in Apple’s iPhone revenue despite estimates that the industry experienced a 13.0% slump in Q1 global smartphone shipments; it is reported that the broader consumer electronics industry is struggling, as sales of smartphones, tablets and PCs have declined, attributable to consumers and businesses starting to cut costs as they tighten spending in an era of  rising interest rates and  economic turbulence. Apple now has 975 million subscribers on its platform, which includes both Apple services and third-party apps, 4.3% higher on the quarter and 18.2% higher on the year.

The same week that Arm became the latest UK tech firm to decide to list in New York rather than in London, the Financial Conduct Authority has announced plans to shake up its rules in a bid to attract more companies to list their shares locally by simplifying regulations and making the UK “more competitive” with stock markets abroad. The FCA’s proposals include replacing two listing categories with one single one and removing the requirement for shareholders to have a vote on transactions such as acquisitions. The plans would also allow founders to hold onto controlling shares for longer. The FCA said it wanted to make the rules that companies must follow to be allowed to list their shares in the UK, “more effective, easier to understand and more competitive”. What is certain is that although London remains Europe’s biggest financial hub, listings have dropped by over 40% over the past fifteen years. Many critics opine that the New York stock exchange is “much deeper” than London’s while Brexit had harmed the UK’s image as a place to do business.

Following the government-enforced Credit Suisse merger with larger rival UBS amid fears it could collapse, it was reported that bonds, valued at US$ 17.0 billion, became worthless. This week, it seems that Asian investors have joined a series of landmark international lawsuits being filed against the Swiss government. The bank had issued several types of bonds, including AT1 bonds, also known as contingent convertibles, to raise finance. Such paper normally carries high yields but as every Economics 101 student knows, the higher the return, the greater the risk and AT1 bonds were no exception when they were written down to zero, having been wiped out in a so-called “Viability Event”.  At the time, Finma, the Swiss regulator, confirmed that “the contractual conditions” for a write down were met. However, it seems that thousands of investors are arguing about how the terms of the merger were conducted, and that bondholders are, if possible, supposed to be compensated first, after which come shareholders. In this case, it seems that shareholders were allowed to exchange their Credit Suisse shares for UBS shares, before the bondholders; although the shareholders received almost nothing, they did receive a pay-out whereas the bondholders were left with zero. Episodes like this have seen the reputation of Swiss banks in tatters.

Morgan Stanley is planning a further redundancy package involving 3k jobs, (equating to 5.0% of staff excluding financial advisers and personnel supporting them within the wealth management division). This comes just months after the bank trimmed 2% of its payroll, currently standing at 82k.The bank is battening down its hatches to cut expenses ahead of a probable recession, which would impact both its top and bottom lines. Last month, chief executive, James Gorman, noted that underwriting and merger activity had been subdued and a rebound before H2 or even 2024 was not expected. Driven by a combination of a 22% slump in its equity-underwriting business, a marked slowing in deal making and a 32% fall in merger advisory, Morgan Stanley’s profit fell from a year earlier.

Banks and energy companies are seen to be making rude profits at a time when most companies, (and individuals), are struggling with double digit inflation and rising mortgage rates. HSBC more than tripled its Q1 profit, on the year, to US$ 12.9 billion. The profit figure was boosted by a US$ 2.1 billion reversal of an impairment, relating to the planned sale of HSBC’s retail banking operations in France, net interest income increasing by 38% to nearly US$ 9 billion, and a provisional gain of US$ 1.5 billion on the acquisition of Silicon Valley Bank UK in March, after the collapse of the parent’s lender in the US. Revenue increased by 64% to US$ 20.2 billion, driven by higher net interest income in all of HSBC’s businesses because of interest rate rises. There were significant improvements in both customer lending – US$ 40.0 billion higher in Q1 – and customer accounts by US$ 34 billion. A first interim dividend of US$ 0.10 per share was approved, as were plans to carry out up to a US$ 2 billion share buyback. The bank’s share price was up 4.0% on the day and 13.0% YTD.

As investors continue to be concerned about the state of the global economy, the current banking crisis, and the collapse of First Republic, shares in several US regional banks have dropped sharply. This was the third banking collapse in the country since March. The banking sector has also had to adjust from a period of zero rates to almost 5.0%, in just over a year, that is having a major impact on the US economy, which could damage banks, as both spending and confidence for businesses and households head south. The rise in interest rates could also damage some banks more than others, as higher rates hurt the market value of some debts, issued when borrowing costs were lower. There is no doubt that the US banking system – which has more than 4k banks – could be heading for a turbulent six months, with several facing bankruptcy and others being taken over in a wave of consolidations in the industry, as the economy weakens.

The US is in the midst of a banking crisis of confidence as Investors appear to be moving their funds from the country’s smaller banks to larger financial institutions and jumping ship following the most serious string of banking failures to hit the US since the 2008 GFC.  The Silicon Valley Bank failure in March was the catalyst that resulted in shares in regional banks being battered, with the likes of California-based PacWest plunging 50%, while Western Alliance also tumbled nearly 40%. The next two banks to collapse were Signature Bank, followed a few days later by First Republic this week. These failures were the biggest in US history, except for the 2008 collapse of Washington Mutual. The US Treasury Department continues to steady the ship, confirming it was monitoring developments “closely”.

With certain financial institutions and investors making obscene amounts of money on the back of “falling” financial institutions, there is no surprise to find out that US authorities are now looking into whether big investment firms are targeting, or attacking, otherwise healthy banks to make a profit. There is no doubt that there has to be “market manipulation” behind recent volatility in banking shares, and it cannot be a coincidence that a wave of “short selling” is a prime reason in a mega slump in the share price of several US banks. Belatedly, the White House says it is closely monitoring the situation and has reiterated its intention to monitor “short-selling pressures on healthy banks”. Consumer Bankers Association president and chief executive, Lindsey Johnson, has urged policymakers to call out “unethical behaviour by activist investors” who were taking advantage of market volatility.

Despite all the turbulence in its banking sector, and the ongoing impact of rising interest rates, there was continued robust job creation in the US last month. The unemployment rate dipped to a multi-decade low, at 3.4%, with a further 253k jobs added in April. In today’s report, the Labour Department noted that hiring had been weaker, than previously estimated in the previous two months, but undoubtedly the labour market has stood up well in an environment where benchmark rates have risen from zero to over 5.0% in just over a twelve-month period, as wages came in 4.4% higher. Although the Fed’s head, Jerome Powell, has commented that the US could avoid a downturn, that would throw millions of people out of work., the majority of analysts see the country falling into recession by the end of this year.

At a White House meeting this week, tech bosses, including Google’s Sundar Pichai, Microsoft’s Satya Nadella, and OpenAI’s Sam Altmann were told they had a “moral” duty to safeguard society, and that they have to control the possible damaging impacts from Artificial Intelligence. Over the past few months, there have been many industry leaders who have been calling for improved regulation, whilst earlier in the week, the “godfather” of AI, Geoffrey Hinton, quit his job at Google highlighting his regret of his work, and noting that some of the dangers of AI chatbots were “quite scary”. Earlier in the year, a letter signed by Elon Musk and Apple founder Steve Wozniak, called for a pause to the rollout of the technology. US Vice President Kamala Harris said the new technology could pose a risk to safety, privacy and civil rights, although it also had the potential to improve lives, but that the private sector had “an ethical, moral, and legal responsibility to ensure the safety and security of their products”. There are others, like Bill Gates, who have hit back against calls for an AI “pause” saying such a move would not “solve the challenges” ahead, with some against over-regulation, that could see China take advantage and move well ahead in this field.

During its five-day national May Day holidays, China’s Ministry of Tourism confirmed that tourists made 274 million trips within the country, as its domestic tourism rebounded with latest figures over 20% higher than recorded 2019 pre-Covid figures. Official figures also show that tourists spent US$ 21 billion during the period – also higher than pre-Covid figures. Interestingly, an average of 1.2m Chinese people travelled abroad each day, which was twice last year’s figure, but airline bookings by Chinese tourists travelling abroad were still around half what they were before the pandemic.

According to Eurostat figures, 75% of the EU’s 20–64-year-old are in employment – equating to 193.5 million, the highest number since records started in 2009. Because of Covid, the percentage had dropped to 72% in 2020, with a 2% rebound a year later. Of that total, eleven nations had rates over 78%, including the leading three – Netherlands, Sweden and Estonia, 83%, 82% and 82%. The lowest rates were seen in Italy (65%), Greece (66%), and Romania (69%). Over-qualification, (the percentage of employed with a tertiary education working in a situation that does not require such a high level), seems to be an ongoing problem, with rates of 23% for women and 21% for men. By country, the five lowest returns were seen in Luxembourg (7%), Sweden, Denmark, Hungary, and Czechia (each 14%); at the other end of the scale were Spain (36%), followed by Greece and Cyprus (each 32%).

 In line with most leading global banks, and with the aim of getting on top of rampant inflation, the ECB raised its key interest rate by 0.25% to 3.25%; the twenty-country bloc has seen rates raise by 375bp since July 2022. The ECB, probably the last central bank to start raising rates, commented that “the inflation outlook continues to be too high for too long,” One of the main factors considered by the bank was data indicating the biggest drop in loan demand in over a decade, and a possible sign that previous rate rises have impacted and that policies are indeed restricting growth – nevertheless, consumer prices rose last month, after five consecutive months of decline, nudged 10bp higher to 7.0%.

Meanwhile, preliminary flash figures indicate that, in Q1, the seasonally adjusted GDP increased by 0.1% in the euro area and by 0.3% in the EU, compared to Q4, when GDP had remained stable in the euro area and had decreased by 0.1% in the EU; a year earlier, the seasonally adjusted GDP had jumped 1.3% in both the euro area and the EU. The four nations, with the highest quarter on quarter increase in Q1, were Portugal (1.6%), followed by Spain, Italy and Latvia, all with 0.5% rises. Declines were recorded in Ireland (-2.7%) and Austria (-0.3%) but on a year-to-year basis only Germany posted negative growth at minus 0.1%.

Latest March figures from Rightmove indicate that average monthly London rents now top (US$ 3.12k), and outside the capital US$ 1.37k, mainly attributable to a dearth of property available. Interestingly, the number of rental properties available is 8% higher on the year but still almost half the pre-Covid figure, not helped by no significant influx of new properties becoming available to rent. It also noted that the asking rental price for new tenants, outside London, has risen again for the thirteenth consecutive quarter.

A surprise saw UK April house prices up by 0.5% in April, (to US$ 325k), after seven consecutive months of falls, according to the Nationwide Building Society – when analysts were forecasting an eighth decline. Prices are still 2.7% lower than a year ago, with mortgage rates double the figure compared to April 2022. Nationwide is predicting a “modest recovery” in the housing market, with any improvement being “fairly pedestrian”, as mortgage rates start to come down.

The British Retail Consortium is more confident than most to forecast that the cost of wholesale food prices will start to fall after new data shows that the April cost of wholesale food prices were 15.7% higher on the year, with NielsenIQ shop price index, showing that fresh food prices had accelerated to 17.8%. With both labour costs and energy prices moving higher, it seems unlikely that widespread price falls will be slow to filter down to the supermarket shoppers. While overall food prices continued to rise in April, inflation, which is the rate at which prices rise, both food and non-food, fell marginally to 8.8% last month. However, it must be noted that the World Bank has come out, saying it expects them to drop 8% by the end of this year, and that the BRC has indicated there is a three- to nine-month lag to see a decrease in wholesale prices reflected in-store.

Banks have also warned of a large increase in fraud last year, with the focus originating online, which Barclays saying that it accounts for 77% of total scams are now happening on social media, online marketplaces and dating apps. TSB has seen a large increase in cases of impersonation, (tripling on Facebook), investment and purchase fraud – doubling on the same platform. The depth of the problem is echoed by the likes of Meta noting that fraud is “an industry-wide issue”, a spokesman of Lloyds Banking commenting that banks are facing an “epidemic of scams” and NatWest noting that three million people in the UK were victims of fraud in 2022. Whilst acknowledging the problem is getting worse, some banks appear to be putting increased pressure on the various platforms to clean up their platform to protect consumers, with Paul Davis, TSB’s director of fraud prevention, saying “it’s high time that social media and telephone companies took financial liability for the rising levels of fraud taking place on their platforms.”

Staggering figures in the UK – which could well be replicated in other countries – sees fraud becoming the most common crime in the country, with one in fifteen people falling victim. The government is taking action and is set to ban calls selling financial products as part of a national crackdown on scams; it is hoped that such action could stop fraudsters selling sham insurance products or cryptocurrency schemes. According to media watchdog, Ofcom, forty-one million people were targeted by suspicious calls and texts in 2022. It will also establish a new five hundred-staff fraud squad to control and monitor fraudulent activity, with data showing that most fraud now has an online element. The government is hoping that “anyone who receives a call trying to sell them products such as cryptocurrency schemes or insurance will know it’s a scam”. Furthermore, the government said:

• so-called “Sim Farms”, where people use a large number of Sim cards to send text messages in bulk, will be banned
• intelligence services and police will work with overseas partners to shut down call centres engaged in fraud
• advertising campaigns will warn people about the risk of scam calls
• there will be new measures to tackle phone number “spoofing”, where scammers alter Caller ID information to make calls look genuine.

The Centre for Retail Research estimates that this weekend’s coronation celebrations could add more than US$ 1.75 billion to the UK economy, with more than US$ 265 million being spent on food and drink, and US$ 310 million on Coronation coins, tokens and medallions, celebratory teapots, mugs, cups and other crockery. Furthermore, extended pub opening hours are expected to add a further US$ 130 million to the hospitality sector.  Additional foreign tourists could bring in as much as US$ 405 million, with much of it spent on accommodation, restaurants and shopping in London. Supermarkets are cashing in, with Tesco forecasting that they will sell 675k pork pies, 600k scones and 300k pots of clotted cream, with Aldi selling quiches, the King’s chosen Coronation dish, at the rate of more than thirty every minute and reporting expected scone sales to be 150% higher. On the alcohol side, Tesco anticipate sales of 180k bottles of Pimms and Asda beer sales are expected to be 25% higher. Even if the Coronation were to add a little to the GDP, it would be short-sighted to think that Saturday will change the economy. Sunday will not only see many hang-overs but also the economy returning to its current normalcy – high inflation, on-going strikes, a weak government and high mortgage rates. Sunday Morning Coming Down!

Sunday Morning Coming Down!                                                         05 May 2023

The 3,050 real estate and properties transactions totalled US$ 2.83 billion, during the week, ending 05 May 2023. The sum of transactions was 189 plots, sold for US$ 325 million, and 2,239 apartments and villas, selling for US$ 1.39 billion. The top three transactions were for plots of land, one in Al Thanayah Fourth, sold for US$ 14 million, and the second in Saih Suhaib 2 for US$ 11 million, and the third in Palm Jumeirah for US$ 10 million. Al Hebiah Fifth recorded the most transactions, with sixty-three sales, worth US$ 51 million, followed by twenty-two sales in Madinat Hind 4, for US$ 8 million, and sixteen sales in Jabal Ali First, valued at US$ 16 million. The top three transfers for apartments and villas were all for apartments, the first in Al Merkadh, valued at US$ 25 million, followed by a US$ 21 million sale in Jumeirah Second, and the third in Burj Khalifa for US$ 18 million. The mortgaged properties for the week reached US$ 1.00 billion, with the highest being for a plot of land in Al Barshaa South Third, mortgaged for US$ 178 million, whilst one hundred and ten properties were granted between first-degree relatives worth US$ 135 million.

Majid Al Futtaim Properties announced that it had sold a luxury mansion at Lanai Islands, in the Tilal Al Ghaf project, for over US$ 54 million, as demand for premium property continues to surge in the emirate. Lanal Island comprises only thirteen luxury villas on a private island in a 150k sq mt recreational lagoon. South African architects Saota designed the homes, with interiors by Kelly Hoppen.

With the emirate and the country fast recovering from the impact of Covid, Azizi Developments has plans to invest US$ 16.3 billion on building fifty luxury hotels and resorts, including a seven-star hotel, in Dubai. The developer reckons that this will add 20k new keys to Dubai hotel rooms over the next five years; construction will start later in 2023. The company is keen to become a major player in Dubai’s promising future as a global hub for tourism, with the Tourism Strategy 2031 aiming to leverage PPS and seeking to attract over US$ 27.2 billion in new investment in the tourism sector. This strategy will see the tourism sector’s contribution to a GDP increase to US$ 122.6 billion by 2031. The company posted that it has one hundred ongoing projects and, last year, bought a large tract of land in Dubai South to build a mixed-use development, worth about US$ 3.27 billion, to expand its portfolio of assets.

The Ministry of Energy, as usual, adjusts fuel prices in the UAE on the first day of every month. According to the government, the UAE liberalised fuel prices, introduced in August 2015, help to rationalise consumption and encourage the use of public transport in the long run and incentivise the use of alternatives. The UAE Fuel Price Committee increased May retail petrol prices, except for diesel.:

• Super 98: US$ 0.861 – up by 5.00% on the month and up US$ 0.63 (13.74%) YTD from US$ 0.757  
• Special 95: US$ 0.790 – up by 5.19% on the month and up 14.30% YTD from US$ 0.727
• Diesel: US$ 0.793 – down 4.00% on the month and down 12.50% YTD from US$ 0.896
• E-plus 91: US$ 0.809 – up by 5.34.% on the month and up 14.58% YTD from US$ 0.706

Whilst touring this week’s ATM, HH Sheikh Mohammed bin Rashid Al Maktoum noted that tourist spending in the UAE had increased by 70% to top US$ 33.0 billion, which is the highest in the region. Dubai’s Ruler also reiterated the UAE’s 2030 target of reaching 40 million visitors and increasing the sector’s contribution to the country’s GDP to US$ 122.6 billion. He commented that “our vision is to make Dubai the preferred global destination for business and investment. We seek to build on our exceptional economic achievements to open new horizons of growth,” and stressed the importance of the tourism sector, as one of the key pillars of Dubai’s economy, and a vital driver of its growth agenda over the next decade.

According to its president, Tim Clark, Emirates will deliver a strong set of annual financial results for its fiscal year ended 31 March, when results are published later this month. He noted that “we moved quickly, and we moved first, and we have a set of results which are exceptionally good this year,” as the airline was probably the first major carrier to ramp up its operations and added capacity as demand rebounded following the pandemic. In H1, ending 30 September 2022, the world’s largest long-haul airline posted a US$ 1.09 billion profit (compared to a massive US$ 1.58 billion deficit a year earlier). The airline currently has 165 aircraft on order “and probably more coming” as it continues to grow its business over the coming years and to take advantage of the increased demand for international air traffic and growth in leisure bookings.

A sure indicator that Dubai, and its travel/tourism sector, has recovered well from the impact of Covid sees flydubai carrying 50% more passengers – 3.37 million – in Q1 than in the same period in 2022. In Q1, the carrier operated 25.8k flights and saw its fleet reach seventy-six jets – all Boeing 737s.The upcoming summer period is set to see a massive traffic growth, with the local airline ramping up capacity, by 20%, to five million, to cater for the increased demand between July and September; as it will also need additional employees, it is currently undergoing a recruitment drive. New destinations include Corfu and Cagliari, whilst summer favourites such as Bodrum, Dubrovnik, Mykonos, Santorini and Tivat will be added to the schedule; flight frequency will be added to already popular destinations such as Krabi, Milan-Bergamo, Pattaya and Pisa.

The General Civil Aviation Authority has confirmed that the number of passengers travelling through the country’s airports in Q1, increased by 56.3% on the year, to 31.87 million, indicating the success of the aviation sector in restoring pre-Covid-19 passenger traffic levels. The authority is bullish about the future, noting that the national airlines’ number of destinations reached 536, including joint destinations, and had registered 894 Organisation/Operators (professional use) and around 21.3k registered unmanned aircraft for leisure (hobby). It also noted that the aviation sector in the country contributes about 14% of the GDP, compared to only up to 3% in other global aviation sectors.

On Wednesday, the US Central Bank raised its benchmark overnight interest rate to the 5.00% – 5.25% range; this was its tenth consecutive increase since March 2022. Almost in tandem, the GCC banks followed suit with the UAE raising the Base Rate applicable to the Overnight Deposit Facility (ODF) by 25bp – from 4.90% to 5.15%, effective from Thursday, 04 May 2023. It also decided to maintain the rate applicable to borrowing short-term liquidity from the CBUAE through all standing credit facilities at 50bp above the Base Rate. The Central Bank of Saudi Arabia, the Central Bank of Bahrain and the Qatar Central Bank decided to raise interest rates by 25bp.

e& posted a Q1 consolidated profit of US$ 599 million, (with EBITDA at US$ 1.69 billion, at 48% margin), on the back of a 6.6% hike in revenue to US$ 3.54 billion. On a year-on-year basis, aggregate subscribers topped 164 million, including 13.9 million in the UAE – 6.0% higher. As one of its main aims is to become a leading global technology player, it sees expanding its digital offering and launching innovative new solutions and partnerships with leading technology companies as a means of driving growth.

TECOM Group PJSC posted a 34.0% Q1 increase in net income to US$ 69 million, as revenue climbed 6.0% to US$ 144 million, attributable to sustained occupancy levels and high retention rates. The creator of specialised business districts and communities also noted that Q1 occupancy increased by 7.0% on the year – its fifth consecutive quarter of growth – to 87.0%.   Last October it paid an interim US$ 55 million dividend, followed by a similar amount last month. Like many other entities, the company owes a lot to underlying business confidence in Dubai and the thriving business ecosystem in the emirate; it is also bullish on future prospects and sees revenue climbing on the back of increased rents and an expected expansion in occupancy levels to nearer 90%.

As it lowered its GCC region’s overall real GDP growth forecast, the Institute of International Finance commented that the upcoming new corporate income tax, that will be effective from 01 June 2023, will help boost the UAE’s non-hydrocarbon revenues over the next two years. That being the case, the fiscal break-even oil price will be US$ 65 per barrel – and this despite OPEC’s recently announced oil output cut; as from 01 May, the UAE has cut production by about 150k bpd to a daily total of 3.21 million barrels. The world body estimated that although oil will drop to an average US$ 85 and US$ 80, this year and next, non-hydrocarbon real growth in the country will remain strong at 4.8 %, as the local economy will be shielded from some of the tighter global financial conditions. The IIF estimates that inflation will be at 2.4% by the end of the year, driven by lower commodity prices and manufacturing unit value. It expects the 2023 fiscal surplus will drop from 10.7% to 6.7% of GDP; last year, revenues increased by 29%, driven by higher oil prices and a large increase in revenues from VAT, with spending 1.0% lower.

DAE Capital posted a 48.5% hike in Q1 profit to US$ 19 million, attributable to an increase in the size of its fleet, as revenue moved 5.8% higher to US$ 19 million. One of biggest plane leasing players on the global stage noted that other factors behind the improved results included “a strong operating environment for airlines, an improving collections and credit profile, and profitable divestment activity.” Following its Q4 2022 acquisition of Sky Fund l, the company’s fleet of owned, managed and committed aircraft, as well as those it has a mandate to manage, has grown to about five hundred aircraft. During the period, the company took advantage of interest rate volatility and repurchased US$ 205 million of its bonds. Because of problems with its Russian operations, DAE wrote off US$ 538 million on aircraft operating in the fleet of Russian airlines, indicating that it had “no way” to determine whether the aircraft it had leased to Russian aviation operators would be returned.

Having introduced new market procedures on Direct Deal Transactions in March, the DFM saw two major deals – valued at US$ 134 million for 525 million shares – involving Amanat Holdings PJSC. DDTs are off-market transactions executed outside the Order Book and are considered a type of block trade.

Dubai Financial Market posted a Q1 net profit of just under US$ 10 million – a 29.5% improvement compared to a year earlier – as revenue climbed 13.1% to US$ 24 million and total expenses rose 4.3% to US$ 14 million; revenue was split to just over US$ 11 million and under US$ 13 million – investment returns/other income and operating income. Over the period, trading value was 16.7% lower, at US$ 5.18 billion, whilst the DFM General Index ended the quarter 2.1% to the good, as the market cap rose 2.4% to US$ 162.4 billion. The market has proved a magnet for overseas investors, who held a 56% share of trading value in Q1, with net purchases of US$ 174 million, with ownership accounting for 19.0% of the market cap on 31 March 2023. 78% of new investors were from overseas, with the DFM having a total investor base of 1.185 million from 215 countries. During the period, DFM attracted 14.6k new investors, of which 78% were foreign investors, resulting in a total investor base of 1.18 million representing 215 nationalities.

The DFM opened on Monday, 01 May 2023, 53 points (1.5%) higher the previous week, gained a further 38 points (1.1%) to close the week on 3,583, by 05 May. Emaar Properties, US$ 0.08 lower the previous fortnight, nudged US$ 0.01 higher to close the week on US$ 1.63. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.68, US$ 3.84, US$ 1.51, and US$ 0.41 and closed on US$ 0.68, US$ 3.83, US$ 1.52 and US$ 0.42. On 05 May, trading was at 266 million shares, with a value of US$ 106 million, compared to 161 million shares with a value of US$ 113 million on 28 April.

By Friday, 05 May 2023, Brent, US$ 11.25 lower (12.3%) the previous fortnight, shed a further US$ 4.99 (5.0%) to close on US$ 75.26.  Gold, US$ 5 (0.2%) higher the previous week, gained US$ 26 (1.3%) to US$ 2,025 on 05 May 2023.

Following the Fed’s decision to raise rates again and hinting that this could be the last one in this present cycle, gold prices traded near record-high levels on Thursday, as US yields and the dollar dipped. Spot gold touched US$ 2,040 per oz, after hitting US$ 2,072, with US gold futures reaching US$ 2,050, Slightly lower increases were seen with silver, platinum and palladium rising 0.9% to US$ 25.82, 1.0% to US$ 1,060 and by 1.4% to US$ 1,411 respectively.

Despite a slide in energy prices, Shell has reported a stronger than expected Q1 profit of US$ 9.6 billion – higher than comparative figures in 2022. The energy giant announced that it would be returning US$ 4billion to shareholders, by buying back some its shares. Last year, it posted profits of US$ 39.9 billion for 2022, which was double the previous year’s total and the highest in its 115-year history, after prices spiked at the start of the war in Ukraine, touching US$ 130 a barrel but lately oil prices have dropped to around US$ 80 a barrel.

Although quarter on quarter deliveries slowed, Q1 saw Tesla reaching record highs, with 422.9k EVs hand over to customers, helped by price cuts; the numbers were 36% higher compared to a year earlier and 4% higher on the quarter. In Q1, Tesla delivered 6% more of its mainstay Model 3/Model Y vehicles on the quarter but there was a 38% slump in numbers for its higher-priced Model X/Model S vehicles slumped by 38%.

In a move that may well disrupt air travel, US authorities have confirmed that it was going ahead with its 01 July deadline for airlines to refit planes with new sensors to address possible 5G interference; the estimated cost to upgrade planes is put at US$ 638 million. The Federal Aviation Administration and aviation companies have previously raised concerns that C-Band spectrum 5G wireless could interfere with aircraft altimeters, which measure a plane’s height above the ground. Even though they have been warned that they will be unable to meet the deadline and may be forced to ground some planes, Transport Secretary Pete Buttigieg has confirmed that the 01 July deadline would remain in place and advised them to work aggressively to retrofit their planes before the deadline. Telecom firms, including Verizon and AT&T, agreed last year to delay the rollout of 5G technology until 01 July 2023 to allow airlines time to retrofit their altimeters. IATA has also indicated that the decision not to extend the deadline makes summer disruptions more likely. The UK’s Civil Aviation Authority noted that “there have been no confirmed instances where 5G interference has resulted in aircraft system malfunction or unexpected behaviour”.

Still being hampered by ongoing supply chain issues, resulting in declines in deliveries, Airbus posted a 63.9% slump in Q1 profit to US$ 516 million, on the year. The European plane maker saw its revenue dip 2.0% to US$ 13.1 billion, as it delivered one hundred and twenty-seven planes – 106 A320s, ten A220s, six A330s and five A350s. It will have to ramp up production if it wants to meet its 2023 delivery target of seven hundred and twenty. The company, which is still the world’s biggest plane maker, posted a 38.0% decline in gross commercial orders at 156, with a 7.0k order backlog. In January, it posted that it planned to hire 13k new workers.

In India, budget airline Go First, owned by conglomerate Wadia Group, has filed for bankruptcy and cancelled all of its flights for the next three days after filing for bankruptcy protection but confirmed that “a full refund will be issued” to all affected passengers. It appears that the carrier is blaming its US engine maker, as it “had to take this step due to the ever-increasing number of failing engines supplied by Pratt & Whitney,” which in turn has led to a major cash flow problem. Go First said that because of the problem. it was forced to ground twenty-five aircraft – about half of its fleet of Airbus A320neo planes. It also claimed that the US supplier had not followed an order by an emergency arbitrator, which included supplying “at least ten serviceable spare leased engines by 27 April 2023”. (Industry experts have indicated that Go First is not the only local airline affected by engine and aircraft supply chain issues, noting that over a hundred commercial aircraft are grounded in India, including sixty planes of Go First and rival Indigo that are grounded due to a lack of spare parts.

After fifteen years at the helm of Qantas, Ireland’s Alan Joyce is to step down as CEO to be replaced by the carrier’s current CFO, Vanessa Hudson, who has been with the airline since 1994. It would be no exaggeration to say that Joyce had some turbulent periods during his time at the top including record oil prices, the GGFC, record losses following Covid, a 2021 court ruling that Qantas had acted illegally outsourced 1.7k ground staff sever consumer criticism last year over cancelled flights, lost luggage and many delays. The new incumbent has promised to work “very hard” to restore the Aussie carrier to its former glory.

International Consolidated Airlines Group, the parent company of several airlines, including BA, Aer Lingus, Iberia, Level and Vueling, posted its first-ever quarterly profit, since the onset of the pandemic; in Q1, it posted a US$ 10 million profit, as revenue leapfrogged over 71%, on the year, to US$ 5.2 billion. Although fuel prices spiked 35% in the quarter, fares were only 10% higher. With its portfolio of carriers, IAG has also recovered capacity to almost pre-Covid levels.

Despite an obvious industry slowdown, Apple beat Wall Street estimates, posting a marginal 2.5% dip in US$ 94.8 billion, which included a 1.5% rise in Apple’s iPhone revenue despite estimates that the industry experienced a 13.0% slump in Q1 global smartphone shipments; it is reported that the broader consumer electronics industry is struggling, as sales of smartphones, tablets and PCs have declined, attributable to consumers and businesses starting to cut costs as they tighten spending in an era of  rising interest rates and  economic turbulence. Apple now has 975 million subscribers on its platform, which includes both Apple services and third-party apps, 4.3% higher on the quarter and 18.2% higher on the year.

The same week that Arm became the latest UK tech firm to decide to list in New York rather than in London, the Financial Conduct Authority has announced plans to shake up its rules in a bid to attract more companies to list their shares locally by simplifying regulations and making the UK “more competitive” with stock markets abroad. The FCA’s proposals include replacing two listing categories with one single one and removing the requirement for shareholders to have a vote on transactions such as acquisitions. The plans would also allow founders to hold onto controlling shares for longer. The FCA said it wanted to make the rules that companies must follow to be allowed to list their shares in the UK, “more effective, easier to understand and more competitive”. What is certain is that although London remains Europe’s biggest financial hub, listings have dropped by over 40% over the past fifteen years. Many critics opine that the New York stock exchange is “much deeper” than London’s while Brexit had harmed the UK’s image as a place to do business.

Following the government-enforced Credit Suisse merger with larger rival UBS amid fears it could collapse, it was reported that bonds, valued at US$ 17.0 billion, became worthless. This week, it seems that Asian investors have joined a series of landmark international lawsuits being filed against the Swiss government. The bank had issued several types of bonds, including AT1 bonds, also known as contingent convertibles, to raise finance. Such paper normally carries high yields but as every Economics 101 student knows, the higher the return, the greater the risk and AT1 bonds were no exception when they were written down to zero, having been wiped out in a so-called “Viability Event”.  At the time, Finma, the Swiss regulator, confirmed that “the contractual conditions” for a write down were met. However, it seems that thousands of investors are arguing about how the terms of the merger were conducted, and that bondholders are, if possible, supposed to be compensated first, after which come shareholders. In this case, it seems that shareholders were allowed to exchange their Credit Suisse shares for UBS shares, before the bondholders; although the shareholders received almost nothing, they did receive a pay-out whereas the bondholders were left with zero. Episodes like this have seen the reputation of Swiss banks in tatters.

Morgan Stanley is planning a further redundancy package involving 3k jobs, (equating to 5.0% of staff excluding financial advisers and personnel supporting them within the wealth management division). This comes just months after the bank trimmed 2% of its payroll, currently standing at 82k.The bank is battening down its hatches to cut expenses ahead of a probable recession, which would impact both its top and bottom lines. Last month, chief executive, James Gorman, noted that underwriting and merger activity had been subdued and a rebound before H2 or even 2024 was not expected. Driven by a combination of a 22% slump in its equity-underwriting business, a marked slowing in deal making and a 32% fall in merger advisory, Morgan Stanley’s profit fell from a year earlier.

Banks and energy companies are seen to be making rude profits at a time when most companies, (and individuals), are struggling with double digit inflation and rising mortgage rates. HSBC more than tripled its Q1 profit, on the year, to US$ 12.9 billion. The profit figure was boosted by a US$ 2.1 billion reversal of an impairment, relating to the planned sale of HSBC’s retail banking operations in France, net interest income increasing by 38% to nearly US$ 9 billion, and a provisional gain of US$ 1.5 billion on the acquisition of Silicon Valley Bank UK in March, after the collapse of the parent’s lender in the US. Revenue increased by 64% to US$ 20.2 billion, driven by higher net interest income in all of HSBC’s businesses because of interest rate rises. There were significant improvements in both customer lending – US$ 40.0 billion higher in Q1 – and customer accounts by US$ 34 billion. A first interim dividend of US$ 0.10 per share was approved, as were plans to carry out up to a US$ 2 billion share buyback. The bank’s share price was up 4.0% on the day and 13.0% YTD.

As investors continue to be concerned about the state of the global economy, the current banking crisis, and the collapse of First Republic, shares in several US regional banks have dropped sharply. This was the third banking collapse in the country since March. The banking sector has also had to adjust from a period of zero rates to almost 5.0%, in just over a year, that is having a major impact on the US economy, which could damage banks, as both spending and confidence for businesses and households head south. The rise in interest rates could also damage some banks more than others, as higher rates hurt the market value of some debts, issued when borrowing costs were lower. There is no doubt that the US banking system – which has more than 4k banks – could be heading for a turbulent six months, with several facing bankruptcy and others being taken over in a wave of consolidations in the industry, as the economy weakens.

The US is in the midst of a banking crisis of confidence as Investors appear to be moving their funds from the country’s smaller banks to larger financial institutions and jumping ship following the most serious string of banking failures to hit the US since the 2008 GFC.  The Silicon Valley Bank failure in March was the catalyst that resulted in shares in regional banks being battered, with the likes of California-based PacWest plunging 50%, while Western Alliance also tumbled nearly 40%. The next two banks to collapse were Signature Bank, followed a few days later by First Republic this week. These failures were the biggest in US history, except for the 2008 collapse of Washington Mutual. The US Treasury Department continues to steady the ship, confirming it was monitoring developments “closely”.

With certain financial institutions and investors making obscene amounts of money on the back of “falling” financial institutions, there is no surprise to find out that US authorities are now looking into whether big investment firms are targeting, or attacking, otherwise healthy banks to make a profit. There is no doubt that there has to be “market manipulation” behind recent volatility in banking shares, and it cannot be a coincidence that a wave of “short selling” is a prime reason in a mega slump in the share price of several US banks. Belatedly, the White House says it is closely monitoring the situation and has reiterated its intention to monitor “short-selling pressures on healthy banks”. Consumer Bankers Association president and chief executive, Lindsey Johnson, has urged policymakers to call out “unethical behaviour by activist investors” who were taking advantage of market volatility.

Despite all the turbulence in its banking sector, and the ongoing impact of rising interest rates, there was continued robust job creation in the US last month. The unemployment rate dipped to a multi-decade low, at 3.4%, with a further 253k jobs added in April. In today’s report, the Labour Department noted that hiring had been weaker, than previously estimated in the previous two months, but undoubtedly the labour market has stood up well in an environment where benchmark rates have risen from zero to over 5.0% in just over a twelve-month period, as wages came in 4.4% higher. Although the Fed’s head, Jerome Powell, has commented that the US could avoid a downturn, that would throw millions of people out of work., the majority of analysts see the country falling into recession by the end of this year.

At a White House meeting this week, tech bosses, including Google’s Sundar Pichai, Microsoft’s Satya Nadella, and OpenAI’s Sam Altmann were told they had a “moral” duty to safeguard society, and that they have to control the possible damaging impacts from Artificial Intelligence. Over the past few months, there have been many industry leaders who have been calling for improved regulation, whilst earlier in the week, the “godfather” of AI, Geoffrey Hinton, quit his job at Google highlighting his regret of his work, and noting that some of the dangers of AI chatbots were “quite scary”. Earlier in the year, a letter signed by Elon Musk and Apple founder Steve Wozniak, called for a pause to the rollout of the technology. US Vice President Kamala Harris said the new technology could pose a risk to safety, privacy and civil rights, although it also had the potential to improve lives, but that the private sector had “an ethical, moral, and legal responsibility to ensure the safety and security of their products”. There are others, like Bill Gates, who have hit back against calls for an AI “pause” saying such a move would not “solve the challenges” ahead, with some against over-regulation, that could see China take advantage and move well ahead in this field.

During its five-day national May Day holidays, China’s Ministry of Tourism confirmed that tourists made 274 million trips within the country, as its domestic tourism rebounded with latest figures over 20% higher than recorded 2019 pre-Covid figures. Official figures also show that tourists spent US$ 21 billion during the period – also higher than pre-Covid figures. Interestingly, an average of 1.2m Chinese people travelled abroad each day, which was twice last year’s figure, but airline bookings by Chinese tourists travelling abroad were still around half what they were before the pandemic.

According to Eurostat figures, 75% of the EU’s 20–64-year-old are in employment – equating to 193.5 million, the highest number since records started in 2009. Because of Covid, the percentage had dropped to 72% in 2020, with a 2% rebound a year later. Of that total, eleven nations had rates over 78%, including the leading three – Netherlands, Sweden and Estonia, 83%, 82% and 82%. The lowest rates were seen in Italy (65%), Greece (66%), and Romania (69%). Over-qualification, (the percentage of employed with a tertiary education working in a situation that does not require such a high level), seems to be an ongoing problem, with rates of 23% for women and 21% for men. By country, the five lowest returns were seen in Luxembourg (7%), Sweden, Denmark, Hungary, and Czechia (each 14%); at the other end of the scale were Spain (36%), followed by Greece and Cyprus (each 32%).

 In line with most leading global banks, and with the aim of getting on top of rampant inflation, the ECB raised its key interest rate by 0.25% to 3.25%; the twenty-country bloc has seen rates raise by 375bp since July 2022. The ECB, probably the last central bank to start raising rates, commented that “the inflation outlook continues to be too high for too long,” One of the main factors considered by the bank was data indicating the biggest drop in loan demand in over a decade, and a possible sign that previous rate rises have impacted and that policies are indeed restricting growth – nevertheless, consumer prices rose last month, after five consecutive months of decline, nudged 10bp higher to 7.0%.

Meanwhile, preliminary flash figures indicate that, in Q1, the seasonally adjusted GDP increased by 0.1% in the euro area and by 0.3% in the EU, compared to Q4, when GDP had remained stable in the euro area and had decreased by 0.1% in the EU; a year earlier, the seasonally adjusted GDP had jumped 1.3% in both the euro area and the EU. The four nations, with the highest quarter on quarter increase in Q1, were Portugal (1.6%), followed by Spain, Italy and Latvia, all with 0.5% rises. Declines were recorded in Ireland (-2.7%) and Austria (-0.3%) but on a year-to-year basis only Germany posted negative growth at minus 0.1%.

Latest March figures from Rightmove indicate that average monthly London rents now top (US$ 3.12k), and outside the capital US$ 1.37k, mainly attributable to a dearth of property available. Interestingly, the number of rental properties available is 8% higher on the year but still almost half the pre-Covid figure, not helped by no significant influx of new properties becoming available to rent. It also noted that the asking rental price for new tenants, outside London, has risen again for the thirteenth consecutive quarter.

A surprise saw UK April house prices up by 0.5% in April, (to US$ 325k), after seven consecutive months of falls, according to the Nationwide Building Society – when analysts were forecasting an eighth decline. Prices are still 2.7% lower than a year ago, with mortgage rates double the figure compared to April 2022. Nationwide is predicting a “modest recovery” in the housing market, with any improvement being “fairly pedestrian”, as mortgage rates start to come down.

The British Retail Consortium is more confident than most to forecast that the cost of wholesale food prices will start to fall after new data shows that the April cost of wholesale food prices were 15.7% higher on the year, with NielsenIQ shop price index, showing that fresh food prices had accelerated to 17.8%. With both labour costs and energy prices moving higher, it seems unlikely that widespread price falls will be slow to filter down to the supermarket shoppers. While overall food prices continued to rise in April, inflation, which is the rate at which prices rise, both food and non-food, fell marginally to 8.8% last month. However, it must be noted that the World Bank has come out, saying it expects them to drop 8% by the end of this year, and that the BRC has indicated there is a three- to nine-month lag to see a decrease in wholesale prices reflected in-store.

Banks have also warned of a large increase in fraud last year, with the focus originating online, which Barclays saying that it accounts for 77% of total scams are now happening on social media, online marketplaces and dating apps. TSB has seen a large increase in cases of impersonation, (tripling on Facebook), investment and purchase fraud – doubling on the same platform. The depth of the problem is echoed by the likes of Meta noting that fraud is “an industry-wide issue”, a spokesman of Lloyds Banking commenting that banks are facing an “epidemic of scams” and NatWest noting that three million people in the UK were victims of fraud in 2022. Whilst acknowledging the problem is getting worse, some banks appear to be putting increased pressure on the various platforms to clean up their platform to protect consumers, with Paul Davis, TSB’s director of fraud prevention, saying “it’s high time that social media and telephone companies took financial liability for the rising levels of fraud taking place on their platforms.”

Staggering figures in the UK – which could well be replicated in other countries – sees fraud becoming the most common crime in the country, with one in fifteen people falling victim. The government is taking action and is set to ban calls selling financial products as part of a national crackdown on scams; it is hoped that such action could stop fraudsters selling sham insurance products or cryptocurrency schemes. According to media watchdog, Ofcom, forty-one million people were targeted by suspicious calls and texts in 2022. It will also establish a new five hundred-staff fraud squad to control and monitor fraudulent activity, with data showing that most fraud now has an online element. The government is hoping that “anyone who receives a call trying to sell them products such as cryptocurrency schemes or insurance will know it’s a scam”. Furthermore, the government said:

• so-called “Sim Farms”, where people use a large number of Sim cards to send text messages in bulk, will be banned
• intelligence services and police will work with overseas partners to shut down call centres engaged in fraud
• advertising campaigns will warn people about the risk of scam calls
• there will be new measures to tackle phone number “spoofing”, where scammers alter Caller ID information to make calls look genuine.

The Centre for Retail Research estimates that this weekend’s coronation celebrations could add more than US$ 1.75 billion to the UK economy, with more than US$ 265 million being spent on food and drink, and US$ 310 million on Coronation coins, tokens and medallions, celebratory teapots, mugs, cups and other crockery. Furthermore, extended pub opening hours are expected to add a further US$ 130 million to the hospitality sector.  Additional foreign tourists could bring in as much as US$ 405 million, with much of it spent on accommodation, restaurants and shopping in London. Supermarkets are cashing in, with Tesco forecasting that they will sell 675k pork pies, 600k scones and 300k pots of clotted cream, with Aldi selling quiches, the King’s chosen Coronation dish, at the rate of more than thirty every minute and reporting expected scone sales to be 150% higher. On the alcohol side, Tesco anticipate sales of 180k bottles of Pimms and Asda beer sales are expected to be 25% higher. Even if the Coronation were to add a little to the GDP, it would be short-sighted to think that Saturday will change the economy. Sunday will not only see many hang-overs but also the economy quickly returning to reality – high inflation, on-going strikes, a weak government and high mortgage rates. Sunday Morning Coming Down!