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Times of Trouble!                                                                         28 April 2023

The 2,049 real estate and properties transactions totalled US$ 2.94 billion, during the week, ending 28 April 2023. The sum of transactions was 172 plots, sold for US$ 430 million, and 1,877 apartments and villas, selling for US$ 1.15 billion. The top three transactions were for plots of land, one in Burj Khalifa sold for US$ 50 million, and the second in World Islands for US$ 46 million and the third in Madinat Dubai Almelaheyah for US$ 10 million. Al Hebiah Fifth recorded the most transactions, with fifty-four sales, worth US$ 47 million, followed by twenty-five sales in Madinat Hind 4 for US$ 10 million and twenty-one sales in Al Hebiah Third, valued at US$ 25 million. The top three transfers for apartments and villas were all  for apartments, two located in Palm Jumeirah, valued at US$ 16 million and US$ 15 million, and the third in Al Ras for US$ 14 million. The mortgaged properties for the week reached US$ 1.35 billion, whilst eighty-two properties were granted between first-degree relatives worth US$ 36 million.

This week, Knight Frank posted that it was involved in the sale of a 24.5k sq ft plot of land in Jumeirah Bay for US$ 34 million – becoming the most expensive plot of land sold in the country, easily surpassing the previous record of US$ 25 million. The plot of sand sold for US$ 1,390 per sq ft and was bought by an overseas buyer who is expected to build a custom-built mansion on the plot; the previous owner was Umar Kamani, the 35-year-old founder of UK-based fashion retailer PrettyLittleThing.

In Q1, eighty-eight luxury homes, (classed as any sale of more than US$ 10 million), were sold for a cumulative US$ 1.63 billion; the three main locations for luxury homes continue to be Palm Jumeirah, Emirates Hills and Jumeirah Bay Island, accounting for 64% of the total; average transaction prices topped US$ 2.40k per sq ft. Little wonder then that Dubai has been ranked  number four in the world in this housing sector, behind New York, Los Angeles and London, with every chance of improving its global position this year.

Danube Properties has launched its sixty-five floor, ultra-luxury tower Fashionz in partnership with FashionTV. Located in Jumeirah Village Triangle, and that location’s largest tower to date, the project encompasses over seven hundred apartments, with prices starting at US$ 232k. This is the Dubai-based developer’s second foray into the burgeoning branded residential sector, having allied with Aston Martin for its Viewz project in February. (It is reported that Dubai now is the global leader for branded residences). Last year, Danube launched five projects last year – Pearlz, Gemz, Opalz, Petalz, and Elitz – with 2k residential units and a development value of US$ 559 million, all of them having been sold out. Its latest development brings its total portfolio to include twenty-two projects and 10.7k units.

The latest launch this week is Mykonos Signature from Samaan Developers – a Greek-inspired and cruise ship-styled residential project, located in Dubai’s Arjan district. The US$ 82 million, 276-unit building is targeting the mid-luxury section of Dubai’s burgeoning property market and seen to be a cheaper alternative to staying in hotels; it will also house twenty-four retail units. Completion is expected to be in Q3 2025.This is the Dubai developer’s third project of the year, with another nine to be launched before the end of 2023.

Next week sees the opening of the four-day Arabian Travel Market 2023, featuring over eighty of the world’s top travel technology companies. Taking place at the Dubai World Trade Centre, and opening on 01 May, there will be more than 2k sq mt, of exhibition space, (a 54.7% increase in space compared to last year), dedicated to the technology sector. ATM 2023 will also include a brand-new Sustainability Hub, highlighting the latest environmentally responsible travel trends and innovations. The event, whose theme is ‘Working Towards Net Zero’, will explore the future of sustainable travel and will feature over twenty innovation-focused sessions and events, including the Tech Stage.

This week, DMCC hosted a successful China Business Day at Almas Tower, attended by over two hundred prominent figures from the Dubai-based Chinese business community. The event included a panel discussion, “Building business success in Dubai and the UAE”, with experiences from leading Chinese companies including representatives from China State Construction Engineering Corporation, Bank of China, China Mobile International Middle East & Africa, Dahua Technology, and Yingke & Shayan Legal Consulting. Mohammad Ali Rashed Lootah, President and CEO of Dubai Chambers, expressed his support for the event, stating that the UAE represents one of the strongest economies in the region and has emerged as a prominent global gateway for Chinese businesses. DMCC is home to more than seven hundred and fifty Chinese companies, accounting for over 12% of all Chinese businesses registered in the country.

A landmark this week sees the Dubai Metro carrying its two billionth passenger since it was opened in September 2009; over that period, the Red Line has transported 1.342 billion commuters and the Green Line a further 674 million. Its punctuality record – of 99.7% – is second to none, surpassing international safety standards and demonstrating exceptional operational efficiency. On a daily basis, its average 2022   daily ridership surpassed 616k riders in 2022.

Launched by the federal Ministry of Finance, a US$ 300 million Sukuk has been launched, represented by the Ministry of Finance (MoF) as the issuer in collaboration with the Central Bank of the UAE (CBUAE) as the issuing and paying agent. Mohamed bin Hadi Al Hussaini, Minister of State for Financial Affairs, noted that ”the T-Sukuk are Sharia-compliant financial certificates, and they will be traded to reflect the local return on investment, support economic diversification and financial inclusion, and contribute to achieving comprehensive and sustainable economic and social development goals,” The T-Sukuk will be issued initially in 2/3/5-year tenures, followed by a ten-year sukuk later, and will be denominated in UAE dirhams to develop the local bonds debt market and help develop the mid-term yield curve.

This week saw a further amendment to the upcoming Corporate Tax legislation, with the Ministry of Finance announcing that public benefit organisations, that contribute to the welfare of society, will be eligible for exemptions. These will include entities that focus on activities such as philanthropy, community services and corporate social responsibility. The Ministry added that “this implementing decision is designed to reflect these entities’ important role in the UAE, which often includes religious, charitable, scientific, educational, or cultural value”. The federal corporate tax, with a standard 9% rate on companies reporting a profit of US$ 102k+, will come into effect for businesses whose financial year starts on or after 01 June 2023. Existing free-zone entities are currently exempt from corporate tax.

In a bid to raise the awareness of their tremendous contribution to the global economy, the United Nations General Assembly has designated 27 June as the day of ‘Micro-, Small, and Medium-sized Enterprises’. The world body estimates that MSMEs account for 90% of businesses, 60-70% of employment and 50% of global GDP.  The number of such entities in the UAE is thought to be around the 557k mark, with aims to top one million by 2030.

In Q1, DP World posted a 1.4% hike in handling 19.5 million TEUs (twenty-foot equivalent units) across its global portfolio of container terminals, with gross container volumes increasing by 1.4%, year-on-year on a reported basis, and up 3.7% on a like-for-like basis; since the total global market was down 6.35%, this was an impressive return. A slight weakness in the European and American markets was offset by a strong return in Asia Pacific and India. In the quarter, Jebel Ali handled 3.5 million TEUs – up 2.3% year-on-year. On consolidation, its terminals handled 11.4 million TEUs in Q2 – up 0.7% year-on-year on a reported basis but down 1.3% on a like-for-like basis.

By the end of January, the gross assets of UAE banks amounted to US$ 996.7 million – 11.5% higher on the year. The gross assets of conventional banks operating in the country jumped 12.8% to US$ 830 million, accounting for 83.1% of the total, with Islamic banks, 5.6% higher, making up the balance. The total credit of conventional banks was 4.5% higher at US$ 402.5 while deposits and investments in conventional banks increasing by 15.2% to US$ 490.1 trillion and 12.9% to US$ 117.2 trillion respectively. For Islamic banks the figures showed increases of 3.1% to US$ 118.3 trillion and by 20.1% to US$ 46.6 trillion.

Q1 was a stellar quarter for Dubai’s largest bank – Emirates NBD, posting a record US$ 2.72 billion quarterly return and a doubling of profit to US$ 1.63 billion. The main drivers behind these impressive results included rising interest rates, higher margins, growing non-funded income and a lower cost of risk on significant recoveries, with impairment charges 66% lower. The profit was the highest ever quarterly one delivered by a local bank and the period saw the bank deliver its strongest ever quarter for retail lending with over 144k new credit cards issued and over US$ 2.18 billion of retail loan disbursements. Deposits grew by US$ 9.54 billion, including a US$ 5.18 billion increase in Current and Savings Account balances.

Dubai’s third biggest lender did not disappoint either, posting a 163.1% climb in Q1 profit to US$ 439 million, driven by lower impairments, down 58% on the year to US$ 26 million, and higher interest income, as Islamic financing more than doubled to US$ 474 million; fee and commission income rose about 64% to US$ 159 million. Mashreq saw its total assets grow more than 10% to US$ 54.77 billion, and loans and advances rise about 6% annually to US$ 24.82 billion, whilst customer deposits climbed 15% on the year to over US$ 32.70 billion.

The DFM opened on Monday, 24 April 2023, having shed 21 points (0.6%) the previous week, gained 53 points (1.5%) to close the week on 3,545, by 28 April. Emaar Properties, US$ 0.05 lower the previous week, shed US$ 3 to close the week on US$ 1.62. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.65, US$ 3.60, US$ 1.45, and US$ 0.41 and closed on US$ 0.68, US$ 3.84, US$ 1.51 and US$ 0.41. On 28 April, trading was at 161 million shares, with a value of US$ 113 million, compared to 183 million shares with a value of US$ 113 million on 19 April.

The bourse had opened the year on 3,438 and, having closed on 28 April on 3,545 was 138 points (3.1%) higher. Emaar started the year with a 01 January 2023 opening figure of US$ 1.60, to close the quarter at US$ 1.62. 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 the quarter at US$ 0.68, US$ 3.84, US$ 1.51 and US$ 0.41.   On 28 April, trading was at 161 million shares, with a value of US$ 113 million, compared to 66 million shares, with a value of US$ 18 million, on 31 December 2022.

By Friday, 28 April 2023, Brent, US$ 4.87 lower (5.6%) the previous week, shed a further US$ 6.38 (7.3%) to close on US$ 80.25.  Gold, US$ 63 (2.3%) lower the previous fortnight, gained US$ 5 (0.2%) to US$ 1,999 on 28 April 2023.

Brent started the year on US$ 85.91 and shed US$ 5.97 (6.6%), to close 28 April on US$ 80.25. Meanwhile, the yellow metal opened 2023 trading at US$ 1,830 and gained US$ 169 (7.7%) to close on US$ 1,999.

Oil giant ExxonMobil posted a doubling of Q1 profits, to a record US$ 11.4 billion, on the back of the increased demand for oil and gas, and the positive impact of its cost-cutting measures. It said shareholders would receive US$ 8.1 billion, including dividends and US$ 375 million in share buybacks. The US energy giant also confirmed that it had been the beneficiary of a US$ 3.4 billion after-tax reduction to exit Russia and that it was pursuing a case against the EU to try to stop the bloc imposing a new windfall tax.  

Chevron did not do as well, only posting a 5% upward movement in Q1 profit to US$ 6.6 billion, noting that it had been subject to a US$ 130 million “energy profits levy”, or windfall tax, in the UK.  Next week Shell and BP are both set to report their latest results next week.

Although it accounts for over 90% of all its EV sales, General Motors is to end production of its Chevrolet Bolt electric vehicle later this year, with its emphasis moving to its shifts zero-emission production to trucks and SUVs built on a new battery platform. Last year, the largest US automaker sold 38.1k Bolt EVs in 2022, up 53.5% on the previous year’s production level; in Q1, the figure topped 19.7k. Prices for the vehicle start at US$ 26.5k which qualifies it for a US$ 7.5k federal tax credit. Last year, GM announced that it would invest US$ 4 billion in its Orion Township Assembly plant to produce Chevrolet Silverado EV and electric GMC Sierra using its next-generation Ultium EV platform. By 2024, it will see employment numbers triple and will produce – with its Detroit-Hamtramck and Orion plants – more than 600k electric trucks a year by late 2024, and one million EVs by 2025.

Boeing has managed to cut its Q1 loss to US$ 425 million from a massive US$ 1.20 billion a year earlier, attributable to a marked increase in aircraft deliveries; the plane maker had previously posted seven consecutive quarterly losses mainly because of quality control issues. Over Q1, revenue came in 28.0% higher at US$ 17.9 billion, on the quarter, but still down on pre-pandemic Q1 2019 levels. Boeing has a backlog totalling US$ 411 billion, including more than 4.5k commercial planes valued at $334 billion. In the first three months of 2023, it handed over 130 commercial jets (cf 95 a year earlier), as its commercial planes unit recorded a 60% increase to US$ 6.7 billion down to  higher 737 and 787 deliveries. During 2023, it plans to deliver 400-450 of its 737, though “near-term deliveries and production will be impacted as the programme performs necessary inspections and rework”.

The US$ 68.7 billion deal that would see Microsoft acquire the US gaming firm Activision has been blocked by the UK regulator, the Competition and Markets Authority, in a move that saw a disgruntled Brad Smith attack the move being “bad for Britain” and marked Microsoft’s “darkest day” in its four decades of working in the country. Although the EU and US authorities had yet to make a call on the deal, it is now dead in the water because of the UK’s move, with the CMA noting that “Activision is intertwined through different markets – it can’t be separated for the UK. So this decision blocks the deal from happening globally.” The CMA said Microsoft already had a 60-70% share of the cloud gaming market and combining with Activision would “really reinforce… [its] strong position”. If the deal had gone through, it would have been the industry’s biggest ever takeover, and would have seen Microsoft owning popular games titles such as Call of Duty, Candy Crush and World of Warcraft. Microsoft has already indicated that the decision may have an impact on its future UK investment.

Following Bob Iger’s February’s announcement of a US$ 5.5 billion cost-cutting drive, Walt Disney announced that it had begun a second round of layoffs as part of an earlier announced restructuring expected to result in 7k job losses, (equating to 3% of the company’s 220k workforce). This comes at a time when the entertainment giant is struggling with slumps in both its traditional television and film business revenue figures, with its streaming unit continuing to post big losses. Its sports channel ESPN and film studios will bear the brunt of the job cuts, as Iger goes to work on streamlining its business.

The Department of Justice (DOJ) and the Treasury Department’s Office of Foreign Assets Control has ordered a subsidiary of British American Tobacco to pay US$ 635 million, plus interest, after it admitted selling cigarettes to North Korea in violation of sanctions., between 2007 – 2017. The DOJ said BAT had also conspired to defraud financial institutions in order to get them to process transactions on behalf of North Korean entities, as Jack Bowles, the head of one of the UK’s biggest companies said, “we deeply regret the misconduct”.

Driven by factors such as the recent turmoil in the banking sector, a stabilisation of risk assets, as the US Federal Reserve almost ends its interest rate-hiking cycle, and improved profitability of crypto mining, Standard Chartered has opined that Bitcoin could top US$ 100k by the end of next year. In the first four months of 2023, the crypto currency has topped US$ 30k for the first time in ten months. The currency could benefit from its status as a “branded safe haven, a perceived relative store of value and a means of remittance,” and the fact that the EU is introducing its first set of rules to regulate crypto asset markets. Banks have got their forecasting wrong before – for example, in November 2020, a Citi analyst said that Bitcoin could climb as high as US$ 318k, but by the end of 2022, it closed 65% lower at only US$ 16.5k.

Trading in shares of First Republic Band was halted this morning, (28 April), after the stock collapsed 50%, with its share price now 97% lower YTD.  A CNBC report, claiming that the lender was probably headed for receivership, under the US Federal Deposit Insurance Corporation, did not help matters. Reuters also posted that that the triumvirate of the FDIC, the Treasury Department and the Federal Reserve had commenced meetings with financial companies about a lifeline for the bank. The obvious concern is that of contagion and that a worsening of the situation of FRB could lead to a meltdown in the US banking industry, still breathing an air of relief after the collapse, as it recovers from the earlier demise of Silicon Valley Bank and Signature Bank.

First Republic had experienced “unprecedented deposit outflows,” as customers pulled more than US$ 100 billion – equating to 40% of deposits – from their accounts in Q1, rattled by worries about the health of the global banking system. The bank announced that to strengthen its much-weakened balance sheet, it plans to cut costs by slashing payroll numbers by 25% whilst reducing short-term borrowing. In March, a group of major US banks, led by JP Morgan and Citigroup, injected US$ 30 billion into First Republic to avoid any risk of it failing, with a possible contagion impact on the banking sector.  There was no surprise to see its share value slump by 20% on the announcement.

In Q1, embattled Credit Suisse posted that it faced outflows of US$ 69.0 billion before it was forced to merge with its main Swiss competitor UBS. The country’s second biggest lender noted that deposit outflows represented 57% of its wealth management unit and Swiss Bank net asset outflows in the three-month period and commented that the outflows “have moderated but have not yet reversed” as of 24 April 23.

Credit Suisse, which had already lost about US$ 123.8 billion of assets in Q4, said net income attributable to shareholders was US$ 13.98 billion in Q1, compared to a US$ 307 million net loss in the same period a year earlier and a net loss of US$ 1.56 billion in Q4 2022. Because of the ongoing impact of the merger, “Credit Suisse would also expect the investment bank and the group to report a substantial loss before taxes in Q2 2023”.  At the time of the merger, the Swiss National Bank agreed to lend UBS up to US$ 112.45 billion to help it take over Credit Suisse, while Swiss regulator Finma erased US$ 19.12 billion worth of Credit Suisse’s bonds and scrapped the need for shareholders to vote on the agreement.

Following a year of disappointing revenue figures, tanking by up to 50% in Q1, and numerous failed turnaround plans, major US retailer, Bed Bath & Beyond has filed for bankruptcy protection, confirming that its three hundred and sixty stores and one hundred and twenty Buy Buy Baby stores, along with its websites, will remain open. Having failed to secure further financing, additional to the US$ 240 million from Sixth Street Specialty Lending Inc, the company made the filing “to implement an orderly wind down of its businesses while conducting a limited marketing process to solicit interest in one or more sales of some or all of its assets. It listed estimated assets and liabilities in the range of US$ 1 billion and US$ 10 billion. Only last month, it had notified the Securities and Exchange Commission filing in late March that it planned to sell $300 million worth of shares to avoid bankruptcy filing. Founded in 1971, Bed Bath & Beyond has seen its share value slump from around US$ 17.00 to US$ 0.30 over the past twelve months.

Prezzo has announced that it will close forty-six, (about a third), of its restaurants because of the impact of higher inflated prices for pizza and pasta ingredients and a doubling of energy prices in the past year. The closure of these loss-making stores could result in over eight hundred redundancies. The Italian restaurant chain confirmed that it plans to keep open its restaurants in busier shopping areas, such as retail parks and tourist destinations. Covid had forced Prezzo to go into administration in late 2020, to be bought out by private equity firm Cain International. Other restaurant chains have also been impacted by the cost of living crises, including “double-digit wage inflation”, and have previously announced store closures, including Frankie and Benny’s and Chiquito closing thirty-five restaurants last month.

Better late than never, the CBI, UK’s biggest business group, with 190k member firms, has confirmed that it failed to act, allowing a “very small minority” of staff to believe they could get away with harassment or violence against women; it has now dismissed a number of people. Even worse, it also admitted that it hired “culturally toxic” staff and failed to fire people who sexually harassed female colleagues. Furthermore, it said there was a collective “sense of shame” at “so badly having let down the…people who came to work at the CBI”. To make matters worse, and after receiving a report by law firm, the disgraced body wrote, “our collective failure to completely protect vulnerable employees… and to put in place proper mechanisms to rapidly escalate incidents of this nature to senior leadership…. these failings most of all drive the shame.” It also admitted to its members:

• It “tried to find resolution in sexual harassment cases when we should have removed those offenders from our business”
• The failure to sack offenders had led to a reluctance among women to formalise complaints
• This also allowed a “very small minority of staff with regressive – and, in some cases, abhorrent – attitudes towards their female colleagues to feel more assured in their behaviour, and more confident of not being detected”
• It failed to filter out culturally toxic people during the hiring process
• It promoted some managers too quickly “without the necessary prior and ongoing training to protect our cultural values, and to properly react when those values were violated”
• It paid “more attention to competence than to behaviour”
• It failed to properly integrate new staff

Even its former director-general, Tony Danker, who earned US$ 476k a year, acknowledged he had made some staff feel “very uncomfortable”, and had been the recipient of complaints of workplace misconduct but later apologised. There is no doubt that the CBI has lost the confidence of many of its members and the sooner it closes down, the better for all concerned.

Despite massive losses as a result of Western sanctions, it is reported that the one hundred and ten Russian billionaires added US$ 138.9 billion to their wealth over the past year, driven by high prices for natural resources. According to the Forbes Russian edition, there are twenty-two new additions this year, including oil and metals companies, with new additions having made their fortune in snacks, supermarkets building and pharmaceuticals. Over the year, their combined wealth topped US$ 505 billion, up 40.6% on the year, but US$ 101 billion lower than the 2021 figures.  Andrei Melnichenko, who made a fortune in fertilisers, was listed as Russia’s richest man, with an estimated worth of US$ 37.65 billion, more than double what he was estimated to be worth last year. Over the year, Russia has ‘lost’ five billionaires – DST Global founder Yuri Milner, Revolut founder Nikolay Storonsky, Freedom Finance founder Timur Turlov, and JetBrains co-founders Sergei Dmitriev and Valentin Kipyatkov – with all five having renounced their Russian citizenship.

The US Commerce Department posted that the country’s Q1 growth slowed to 1.1% – a possible indicator that the economy may be slipping into a mild recession, and a surprise to many analysts who were expecting more like a 2.0% expansion; in Q4, growth came in at 2.6%. It was noted that the GDP figure “reflected increases in consumer spending, exports, federal government spending,” along with some forms of investment. These figures do not yet show the impact of the recent collapses of three medium-sized financial institutions including Silicon Valley Bank and Signature Bank – both of which provide finance to the technology sector.

Initial data from the HCOB Flash Eurozone PMI survey points to a 0.7 April rise to 54.4 – reaching an eleven-month high – and an indicator that the economy is heading in the right direction, with the caveat that growth in the bloc is very unevenly spread. For example, there has been a marked widening of the gap between the partly booming services sector, (and this despite the rampant inflation), and the weakening manufacturing sector. Since the beginning of the year, inflation has fallen from almost double-digit levels to 6.9% last month, but still way short of the ECB’s 2.0% target. Interestingly, although the IMF has forecast a “sharp slowdown” in economic growth this year. Germany is the only euro area country it now forecasts will enter recession this year, mainly down to the ongoing economic impact of the war in Ukraine.

Meanwhile, UBS expects the greenback to remain under pressure for the rest of 2023, attributable to several factors including a cooling labour market, (with last month’s US labour report showing a 236k increase in non-farm payrolls – the smallest since December 2020), slowing inflation, at 5.0%, the lowest in two years, and the possibility of rate cuts in H2, after another 25bp hike in May. At the same time the Swiss bank favoured the Australian dollar and Japanese yen to perform well this year, as well as predicting that gold could move 10% to around US$ 2.2k. It noted that the US dollar index is now only slightly higher than its recent one-year low and that it had lost 11% in value since September 2022.

Despite taxpayer massive handouts relating to energy bills and seeing borrowing costs rise, in line with rate hikes last year, the UK government was still able to borrow less than expected, (US$ 189.2 billion), in 2022; the total borrowing – the difference between spending and tax income – came in at US$ 173.3 billion, equating to 5.5% of the value of the UK economy and the highest percentage since 2014. Despite the Chancellor of Exchequer, Jeremy Hunt, noting that borrowing was at “eye-watering sums”, some analysts see that this improvement will give “wiggle room” for possible future tax cuts.

Instead of admitting that taking earlier remedial action would have helped to dampen rising inflation, which had ballooned past the BoE’s 2.0% target early last year, Huw Pill , its leading economist, has come out to preach  that people in the UK need to accept that they are poorer; otherwise prices will continue to rise, and that there was a “reluctance to accept that, yes, we’re all worse off”. Now because of this reluctance, the UK March inflation rate is still in double digit territory at 10.1%. Belatedly rates have gone from almost zero to near 5% which has made the cost of borrowing higher; this, allied with higher food bills and surging energy prices, has seen real wages slumping and businesses charging more, culminating in many workers asking for pay rises to help ease the pressure on budgets.  It is slightly galling to hear these mandarins pontificating to the masses when “earning “US$ 237k plus” – more than seven times the average man in the street’s remuneration of US$ 33k.

The UK has not got a good track record when it comes to helping its citizens in troubled times overseas, and the current situation in Sudan is becoming a good illustration. Stories of their complete mishandling of the Afghan invasion in August 2021, and the Iraqi invasion of Kuwait  in August 1991, spring to mind. At the first sign of trouble, last weekend, the Sunak government rescued twenty-four diplomats, and their families, in a “complex and rapid” operation. These were the first to be airlifted out of the country and, at the time, the number of UK citizens needed to be flown out of Sudan was at around 4k, but this figure was at the lower end of the spectrum. With a four-day ceasefire in place, it seemed that the remaining UK nationals could easily be flown out over the next seventy-two hours. By Wednesday, and according to the Foreign, Commonwealth and Development Office, a total of 536 people had been evacuated from Sudan on six UK flights, according to the Foreign, Commonwealth and Development Office; this number had reached 1.6k by today. Maybe, the UK should have followed the German example, with its Foreign Minister noting that, “it was important to us that the [German] evacuation, unlike other countries, didn’t just involve our diplomatic personnel but all Germans on the ground and their partners.” What has happened this week is just a warning to all UK expats worldwide that they should not rely on the assistance of the UK government in Times of Trouble!

Reasons to be Cheerful!                                                 21 April 2022

By any benchmark, Dubai real estate sector posted stunning Q1 figures with its total transaction value of US$ 42.77 billion, 80.5% higher than the same period in 2022; volume wise, the number of transactions, totalling 26k, was up 40.9% on the year. In 2022, Dubai’s real estate sector registered a 76.5% increase, to US$ 143.87 billion, worth of transactions and a 44.7% increase in volume. The number of new investors entering the real estate market, in Q1 2023, rose to 13.3k, up 25.0%, and a 12% growth, year on year. Non-resident investors accounted for 45% of total acquisitions. Speaking at a meeting of Dubai Economic Agenda D33, Dubai’s Deputy Ruler, Sheikh Maktoum bin Mohammed, noted that “as one of the most important pillars of the economy, the sector is a vital contributor to the emirate’s efforts to achieve the goals of the Dubai Economic Agenda D33. We remain committed to further raising the investment attractiveness of Dubai’s real estate sector and its emergence as one of the world’s pre-eminent real estate investment destinations.”

Some of Dubai’s new projects have noticed a buyer nationality change in that Russians and other Europeans, (including French, German and Swiss), are taking a larger share of the market than they had in the past; two of the main drivers behind this trend are the ongoing war in Ukraine and the fact that the cost-of-living crisis has had a seemingly smaller impact in Dubai than in parts of Europe. The traditional market drivers – Indians, Pakistanis, British and GCC nationals – are still present but to a lesser extent, as the “property cake” grows larger. Furthermore, latest statistics confirm that the bullish local market is a lot more attractive than overseas ones when it comes to capital appreciation and rental returns, averaging 8% in some locations. On top of that, there are other considerations, including a low tax regime, attractive lifestyle, and a cheaper entrée into the sector, as well as political and economic stability and safety.

A CBRE study concludes that residential properties, located close to Dubai Metro stations, have seen their properties returning higher returns and increased rentals than the wider real estate market.  The global real estate consultancy analysed the development of average prices and rents per sq ft for over three hundred residential or mixed-use properties since the 2009 inauguration of the Dubai Metro. It found that on average, over the thirteen years to December 2022, those properties within a fifteen-minute walk of a Red Line metro station recorded price increases of 26.7%, compared to Dubai’s 24.1% average increase; rental increases of 5.7% easily outperformed the minus 4.1% sector’s average.

As Dubai’s hospitality sector continues to be one of the leading global destinations, the bounce back sees hotel occupancy rates in January and February rising 4.4% to 84.4% on the year and now higher than the 84.0% 2019 comparison. Emirates NBD noted that although the average daily rate declined by 0.3 night to 4.0 nights, (2.0%), to US$ 170, average revenue per available room, (RevPAR), jumped 6.0%, year on year, to US$ 140 and 19.0% higher on 2019 returns. Following a 7.0% 2022 growth, the number of total available rooms grew to 148.45k, with five stars accounting for 34% of the total, four star – 29%, and three star – 20%. The sector is expected to add a further 8k keys this year, with the 5.4% increase bringing the total portfolio to over 155k.

In 2022, Dubai welcomed 674k medical tourists, (7.0% higher than a year earlier), with the three main source markets accounting for 82% of the total, being Asia, Europe and the Commonwealth of Independent States, equating to 39%, 22% and 21% respectively; it is estimated that medical tourists spent US$ 270 million during their stay in the emirate. According to the DHA report, dermatology, dentistry and gynaecology, received the highest number of patients. Those from Asia accounted for 35%, 29% and 54% of the dermatology, dentistry and gynaecology totals, from Europe, 26%, 19% and 18%, and from the CIS 20%, 37% and 13%. There is no doubt that Dubai has become a leading hub in this sector, being ranked by the Medical Tourism Index as the number one Arab destination for medical tourism and was sixth on a global scale of forty-six medical tourism countries.

According to the Ministry of Human Resources and Emiratisation, “more than 10.5k Emiratis joined the private sector in Q1, bringing the total number of Emirati employees in the sector to over 66k.” Over the first quarter, there was a 14.3% hike in private sector firms hiring Emiratis, bringing the number of such companies to 16k. The main growth sectors were construction (14%), commerce and repair services (13%), manufacturing (10%), business (10%) and financial brokerage (4%). Under the Nafis programme, private sector firms, with at least 50 employees, must ensure Emiratis form 2% of their workforce.

In Washington, and on the coattails of the recent 2023 Spring Meetings of the IMF and the World, Bank, the UAE was represented by Mohamed Hadi Al Hussaini, Minister of State for Financial Affairs. The MoF participated in the meeting of finance ministers, central bank governors, and heads of regional financial institutions in the ME, N Africa, Afghanistan and Pakistan (MENAP) region. At the meeting, the Minister confirmed that the UAE outlook for this year sees growth reaching 3.9% and inflation declining by a third to 3.2% by December 2023, driven by prices becoming more stable and the receding effects of imported inflation globally.

In the latest Nation Brand Value index, the UAE maintained its first place globally; it was also ranked tenth globally in the Nation Brand Strength index, and first in the Mena in Nation Brand Value index, worth US$ 957 billion. The index surveyed more than 100k from 121 nations. Some of the factors behind this success include its strategic location as a hub and a destination, a strong economy, and its ongoing and successful strategy in implementing economic diversification policies.

After investors had brought a case against KPMG Lower Gulf, claiming that they had lost money, because of the poor quality of its Abraaj Group’s audit, on an infrastructure fund they had invested in, a Dubai court has ordered the firm to pay them US$ 231 million. The court decided that KPMG had broken international auditing regulations by approving financial records of the fund it had been auditing, and that it was “confident that the auditing company had committed many violations when it audited the financial statements of the investment fund.” The firm is to appeal the decision in the Court of Cassation. Only last year, the DFSA had fined the audit firm and its principal partner, US$ 1.5 million and US$ 500k, for failing to follow international standards during audits of Abraaj Capital Limited (ACLD) for a number of years up to October 2017. The DFSA noted that “senior management of Abraaj intentionally sought to mislead or deceive KPMG, the regulator, and investors over a period of years”. The Abraaj Group was managing some US$ 14 billion of assets, at its peak, but was forced into liquidation in 2018 after investors, including the Bill and Melinda Gates Foundation, commissioned an audit to investigate alleged mismanagement of money in its US$ 1 billion healthcare fund.

The Board of Directors of Dubai Aerospace Enterprise has authorised an additional US$ 300 million for bond repurchases which will obviously build on its current US$ 1.13 billion portfolio; currently, DAE has US$ 370 million of available authority to repurchase bonds, having already repurchased approximately US$ 1.13 billion of principal amount of its publicly traded bonds under the previous authorisations of US$ 1.2 billion. As of now, DAE, which serves 170 airline clients in over sixty-five countries, has approximately US$ 3.5 billion of publicly traded bonds outstanding in the capital markets.

Following a restructuring plan, approved by both its creditors, (who account for 67% of the company’s total debt), and shareholders, Drake & Scull International is planning to write off 90% of its debts and convert the remaining 10% balance into mandatory convertible sukuk; the plan still needs regulatory approval and by the Court of Cessation. The expert, appointed by the court, confirmed that the company was in a position to carry on business, after completing the procedures that were submitted to the Financial Reorganisation Committee. In 2022, the embattled Dubai-based company posted a 4.6% increase in accumulated losses to US$ 1.39 billion, whilst revenue was 46.0% lower at US$ 22 million; its order backlog stands at US$ 124 million, driven by continuing operations in the UAE and overseas.

In 2008, the Dubai construction and engineering firm attracted US$ 33.8 billion in an IPO that was 101 times oversubscribed and attracted 45.k investors, with the company using the proceeds to expand in the region and acquire companies. DSI is still accusing its previous management of falsely inflating asset prices ahead of that IPO and has. filed a case in Dubai Courts to reclaim US$ 226 million from them. In 2017, a capital restructuring took place that resulted in US$ 463 million worth of shares being cancelled to expunge historic losses, with private equity firm Tabarak Investment committing US$ 136 million for a stake in the company.

At Tuesday’s Emaar’s Properties’ shareholders’ meeting, it was agreed that dividends, equating to 25% of the share capital, would be distributed; last year, the company posted a net profit of US$ 1.85 billion driven by a revenue stream of US$ 6.78 billion. In 2022, its real estate sales totalled a record US$ 9.56 billion, with a sales backlog of a mouth-watering US$ 14.50 billion. In addition, Emaar reported a sizable sales backlog of over Dh 53.2 billion. It noted that the dividend distribution “demonstrates Emaar’s commitment to maximising shareholder value”, with its founder, Mohamed Alabbar, saying the group sees 2023 as a promising year, “and it is dedicated to improving its operations, increasing its return on investment, and satisfying its clientele.” There is no doubt that 2023 will be another boom year for Emaar, and other major developers, who are in a unique position of “filling their boots” because in a cyclical industry, this “purple patch” cannot go on forever.

Amanat Holdings,’ shareholders have approved a 5% share buyback programme of the company’s outstanding shares as well as a US$ 27 million 2022 dividend distribution, representing 88% of profit and equating to US$ 0.011 per share. The leading healthcare and education listed investment company posted that its “shares are attractively priced and offer a compelling investment opportunity, highlighting our confidence in our business model and growth trajectory.”

Dubai Islamic Bank posted a 12.0% hike in net profit of US$ 410 million, on the year, as its total income jumped 46.9% to US$ 1.21 billion. Net operating revenues were 12.0% higher, at US$ 751 million, with net operating profit, 13.7% higher, at US$ 548 million. The largest Islamic bank in the UAE also registered a 1.0% rise in net financing and Sukuk investments to US$ 65.4 billion, with a Q1 40% increase, to US$ 5.7 billion, in new underwriting. Over the three-month period, the bank’s balance sheet expanded by 1.3% to US$ 79.6 billion, while customer deposits, that account for about 40% of the bank’s deposit base, stood at almost US$ 54.0 billion.  

The DFM opened on Monday, 17 April 2023, having gained 143 points (4.1%) the previous three weeks, lost 21 points (0.6%) to close the shortened week, (because of the Eid Al Fitr holiday), on 3,492 by Wednesday 19 April. Emaar Properties, US$ 0.24 higher the previous four weeks, shed US$ 5 to close the week on US$ 1.63. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.68, US$ 3.54, US$ 1.46, and US$ 0.39 and closed on US$ 0.65, US$ 3.60, US$ 1.45 and US$ 0.41. On 19 April, trading was at 183 million shares, with a value of US$ 113 million, compared to 144 million shares with a value of US$ 77 million on 14 April.

By Friday, 21 April 2023, Brent, US$ 17.96 higher (26.1%) the previous four weeks, shed US$ 4.87 (5.6%) to close on US$ 86.63.  Gold, US$ 39 (2.3%) lower the previous week, dipped a further US$ 24 (1.2%) to US$ 1,994 on 21 April 2023. Earlier, the IEA announced that global oil demand will rise by 2 million bpd this year to a record 101.9 million bpd, with non-OECD countries accounting for 90% of the total, as the big economies have been experiencing weak industrial activity which has seen OECD Q1 demand dip by 390k bpd. This year, global oil production growth will slow by 1.2 million bpd. When news filtered out of further potential interest rate increases, despite tight crude supply prospects, oil prices quickly headed south on Wednesday, with Brent down US$ 2.09 to US$ 83.00. 8

Q1 saw JP Morgan Chase’s profit climb 52.0%, to US$ 12.62 billion, driven by higher interest rates boosting its consumer business; revenue, at its consumer and community banking unit, rose by 80% to US$ 5.2 billion, whilst its net interest income came in 49.0% higher on US$ 20.8 billion. On the flip side, the investment banking business posted a 24.0% decline in revenue, with equity trading revenue down 12.0%, but despite this, the market liked the news with its shares trading 5.0% higher on the day. Chief executive, Jamie Dimon noted that although the US consumer and economy remained healthy “the storm clouds that we have been monitoring for the past year remain on the horizon, and the banking industry turmoil adds to these risks.”

Another US iconic stock saw its share value dip more than 6%, after Boeing disclosed a manufacturing issue affecting its much-troubled 737 Max planes. The US plane maker confirmed that a supplier had revealed that the installation of fittings on the rear of the planes did not follow standards. Although this was not an “immediate safety of flight issue”, it could lead to delivery delays. Boeing said a “significant number” of undelivered 737 Max jets, and some already flying, would be affected by the new issue. Only last February, it was forced to halt deliveries of its widebody 787 Dreamliner due to a problem with its data analysis.

Japan’s Sega Sammy Holdings is paying US$ 773 million for Finland-based Rovio Entertainment, the maker of Angry Birds. The founder of Sonic the Hedgehog character is seeking to tap into Rovio’s experience in mobile gaming, since its iconic game became the first mobile game to be downloaded one billion times; it has also established eight global game studios and has claimed that its stable of games have been downloaded five billion times. The Japanese firm has estimated that the global market will reach US$ 263 billion, over the next three years, with the percentage of mobile gaming expected to increase to 56%, and it has seen the need to “strengthen its position”. Although Rovio’s revenues increased by 11.7% to US$ 347million, in 2022, its operating profit fell by 32.7% to US$ 31 million, compared to a year earlier. There was no surprise to see Its Friday closing stock market valuation of US$ 707 million jump 17% when the bourses reopened on Monday.

Nokia blamed slower consumer spending, and a volatile global economy for a 17.8%  decline in Q1 net profit, to US$ 375 million, with revenue, some 9.0% higher, at US$ 6.42 billion, on a constant currency basis. The Finnish company, one of the world’s largest manufacturers of telecoms equipment and electronics, was slightly bullish on future business, posting “looking forward, we are starting to see some signs of the economic environment impacting customer spending.” It expects that 2023 annual net sales will come in between US$ 26.95 billion to US$ 28.70 billion – indicating a possible increase of between 2% to 8%; Nokia has forecast margin of between 11.5% and 14.0% this year, against latest actuals of 10.9% and 8.2% in 2022 and 2021. Its share value on Helsinki’s Nasdaq Nordic Exchange dipped 3.0% when the news broke; over the past twelve months, shares have lost 12.0% and are flat YTD.

IBM posted a 26.0% hike Q1 profits to US$ 927 million, on the year, despite revenue only nudging up 0.4% to US$ 14.3 billion, as both its software and consulting divisions came in with impressive returns. About 50% of Revenue, equating to US$ 7.2 billion, was generated from the Americas region and the balance from EMEA (US$ 4.3 billion) and Asia Pacific (US$ 2.8 billion). Section-wise, the main contributors were its software business, consulting arm, infrastructure and financing – generating US$ 5.9 billion, US$ 5.0 billion, US$ 3.1 billion and US$ 0.2 billion respectively; t expects that this year, Revenue could be up to 5.0% higher. Its share value was 2.0% higher on the news in afterhours trading.

Those US clients, with an Apple Card, can now open a savings account and earn interest through an Apple savings account, by growing their Daily Cash rewards with a Goldman Sachs savings account, offering APY of a very generous 4.15%; this account requires no fees, no minimum deposits and balance requirements, and can be set up and managed directly from Apple Card. All future Daily Cash earned by the user will be automatically deposited into the account, and there is no limit on how much Daily Cash users can earn.

It is reported that, yet another tech company is slashing its payroll. This time, and in a bid to cut costs, online media outlet BuzzFeed is planning to terminate 180 employees – 15% of staff members – and closing its news unit which had been losing about US$ 10 million a year. This is the second round of layoffs – the first being last December, when the company posted that it was to cut its workforce by about 12%. The New York-based company, founded in 2006, advised the US Securities and Exchange Commission that “the reduction in workforce plan is part of a broader strategic reprioritisation across the company in order to accelerate revenue growth and improve upon profitability and cash flow.” Chief Revenue Officer, Edgar Hernandez, and Chief Operating officer, Christian Baesler, both exited the company. On news of the announcement, the shares of BuzzFeed were down nearly 23%, having already tanked more than 85% over the past twelve months.

Deloitte is planning to lay off 1.2k US staff – equivalent to about 1.5% of its workforce – amid growing fears of a minor recession or an economic slowdown in the world’s biggest economy. Most of the redundancies will be from its financial advisory business, which has been impacted by a marked decline in M&A activity. The global consultancy had seen payroll numbers jump 23.1% to 80k since 2021 but, in line with the likes of Ernst & Young, (3k or 5%), KPMG, (2%), McKinsey (2k jobs) and Accenture (19k jobs), it has started to unwind numbers because of declining demand and growing fears of a recession.

After culling 11k positions last November, Meta is reportedly preparing to undertake another round of mass layoffs, impacting some 10k jobs, involved in “low priority projects”; initial cuts would impact tech departments, (mainly in AI and VR), while next month’s redundancies would impact the business side. This is a continuation of the tech company’s wider restructuring referred to by CEO as the “year of efficiency”. As it moves its focus from developing games for the metaverse to marketing it to traditional gamers. Despite the billions of dollars ploughed into Horizon Worlds, its social VR platform, it has gained little traction, with only about 200k monthly active users.

Tesla reported a 24.0% fall in Q1 net profit, on the year, (and 30.0% lower on the quarter), to US$ 2.5 billion, not helped by the EV company cutting prices across all its models in the period. Total revenue, on the year, jumped 24.0% to more than US$ 23.3 billion, but was 4.0% down on a quarterly basis. The world’s biggest electric vehicle maker has made it known that there will more price reductions over the rest of 2023. During the quarter, Tesla produced more than 440k vehicles and delivered more than 422k, as vehicle production remained flat, but delivery was up by 4.2% on a quarterly basis. It plans to achieve more than 50% growth rate, and produce about 1.8 million cars, this year. A spokesman noted that “we expect ongoing cost reduction of our vehicles, including improved production efficiency at our newest factories and lower logistics costs, and remain focused on operating leverage as we scale”. Shares fell 6.0% in afterhours trading following the news but is still 67% higher YTD, valuing the company at US$ 565.87 billion.

In a recent interview, Twitter’s Elon Musk claimed that he was unaware that the US government had “full access” to users’ private direct messages on the platform, The tech billionaire, who founded the AI company, X.AI, expressed his worries that the technology has the potential to destroy civilisation. He also commented that “the degree to which government agencies effectively had full access to everything that was going on Twitter blew my mind,”

It is impossible to keep Elon Musk out of the news, with the latest being his threat to
sue Microsoft because he claims it has been using data from Twitter without permission; this comes after it was reported that it was planning to remove the app from its corporate advertising platform as from 25 April. The consequence of such action would see ad buyers unable to access their Twitter accounts through Microsoft’s social management tool, whilst others – such as Facebook, Instagram, and LinkedIn – will continue to be available.

Before entering court for a much-awaited six-week trial, Fox News agreed to pay US$ 787 million to settle with the voting machine company, Dominion, in a defamation lawsuit from its reporting of the 2020 presidential election. The Murdoch flagship Fox was accused of spreading false claims that the 2020 Presidential vote had been rigged against Donald Trump, with Dominion arguing its business was harmed by Fox spreading these false claims, whilst noting that Fox had “admitted to telling lies, causing enormous damage to my company”. Some consider this a win for Fox who were staring down the barrel of a US$ 1.6 billion pay-out, after the judge had commented, even before the case, that claims against Dominion had already been proven false, emphasising that the falsehoods were “crystal clear”. However, Fox still face another day in court, with election technology firm Smartmatic brining a US$ 2.7 billion case against the media giant. Meanwhile, Dominion still has litigation pending against two conservative news networks, OAN and Newsmax.

This week, Commonwealth Bank of Australia posted that property rentals were only moving in one direction and that is upwards. CBA said the vacancy rates are “extremely low” across most of Australia, and rental inflation is still moving higher, as a throwback from the impact of Covid. Some of the factors that have had a direct impact on the current situation, and have led to a “dislocated market”, include:

• reduction in average household size
• a massive and “rapid” increase in demand for rentals
• rising interest rates
• less building activity
• more short-term accommodation

Even if circumstances do change, renters will continue to be financially hit for the rest of 2023.

Last week, this blog touched on the global disconnect when central banks raise interest rates, with banks benefitting, at the expense of their customers. Banks tend to move the full rate hike onto their customers almost immediately but tend to offer their savers a lot less – if anything at all. Now, the Australian Competition and Consumer Commission has got into the act by launching a probe into the savings rates offered by banks. it will be looking at how banks pass on changes to their deposit rates in line with the RBA’s cash rates increases, noting that, “while banks have generally increased variable rate home loans interest rates in line with the cash rate increases, increases to the savings interest rates that banks pay their customers have often been smaller or conditional.”

March retail sales dipped by 1.0% on the month – a sure indicator that the US economy is also heading in the same direction; compared to March 2022, sales were up 2.9% at US$ 691.7 billion. This points to the benefit of the Fed belatedly starting to raise rates at the beginning of 2022 to dampen demand and so to start to rein in inflation. Food sales only declined slightly, whilst there were marked contractions in sales of motor vehicles and parts, electronics and appliances, as well as in general merchandise stores. However, the Fed still has a long way to go before rates go south and inflation is put back in its cage.

A UNESCO report indicates that a further US$ 97.0 billion is required to fund its Goal 4 of the 2030 Agenda for Sustainable Development, which aims to ensure inclusive and equitable education and promote lifelong learning opportunities for all. If the money is not forthcoming, countries would be unable to meet their targets, with those nations in sub-Saharan Africa, worst impacted, as students have the furthest distance to travel, with 20% of primary school-age children and almost 60% of upper secondary school-age youth not in school. It is estimated that a third of the required funds could be filled if donors fulfilled their aid commitments and prioritised basic education in the poorest countries. Furthermore, more teachers are required – the current number of pre-primary teachers in low-income countries needs to triple and double in lower-middle-income countries by 2030.

A recant Deloitte’s report, involving UK CFOs of large companies, noted that there were 25% more of them feeling better about the future than worse, compared to 17% more feeling the opposite three months ago – its sharpest rise since 2020. The improvement came in tandem with a dip in energy prices and an easing in the Brexit impasse. The twelve-day survey ended on 03 April and was just after the Silicon Valley Bank implosion and debacle of Credit Suisse having to merge with UBS. The study has its merits but only reflects the views of CFOs of the UK larger companies, that will not be in tandem with those employed in smaller entities, where the going is a lot harder. Interestingly, those surveyed were still feeling risk averse with many saying their priorities were cutting costs and building up cash reserves – a move that will not see much economic growth. However other studies point to an improvement in the national economy – the IMF forecast a 0.3% contraction this year, half of its January figure, whilst the EY Item Club amended its previous 0.7% contraction to 0.2% growth. Although still dismal reading, it does point to the economy turning a corner.

Data from the HCOB Flash Eurozone PMI showed that the eurozone’s April economy accelerated to an eleven-month high expanding 0.7 to 54.4 on the month; any figure above 50 indicates growth, and under 50 points to contraction. Whilst the results seemed to show overall improvement, recovery was patchy and growth was unevenly distributed around the bloc, as seen by the widening gap between the partly booming services sector, (notwithstanding inflation remaining high in the eurozone and incomes that have not kept up with rising consumer prices), compared to the weakening manufacturing sector. Year on year, although inflation has declined to 6.9%, it is still some way off the ECB’s longstanding 2.0% target and comes at a time when the IMF has warned of a “sharp downturn” in Europe’s 2023 economic growth. To the surprise of many, Germany is the only euro area country the IMF now forecasts will enter recession in 2023, (attributable to the ongoing economic impact of the war in Ukraine), whilst a sharp decline in output in France’s manufacturing sector is expected this year.

Despite most analysts predicting UK inflation rate would finally head down into single digit territory, reality took over with March figures dipping 0.3%, on the month, to 10.1%, attributable to soaring food prices – rising at their fastest in forty-five years. It is a common fallacy that falling inflation will result in falling prices but that is not the case – it is an indicator that the rate of price rises is slowing. The Office for National Statistics noted that globally food prices were falling, but that they had not yet led to price cuts. Furthermore, UK inflation remains higher than in other Western countries, including the US, Germany and France, with new figures showing eurozone inflation 1.6% lower, having eased to 6.9% last month, from 8.5% in February. The usual suspects behind UK’s inflation problem remain increased exposure to rises in wholesale gas prices, its reliance on imports of certain foods, worker shortages and wage rises.

On becoming Prime Minister, following a disastrous – and thankfully short – period when Liz Truss strutted on the world stage, Rishi Sunak made several pledges, one of which was to restore trust and integrity after the web of scandals that brought down Boris Johnson, and a bold commitment to govern with “integrity, professionalism and accountability at every level”. Since then, he has had to deal with several scandals that have left many thinking that sleaze is endemic in the corridors of power that has already seen the departure of two of his very senior staff – Nadhim Zahawi and Dominic Raab – and a near miss for his current Home Secretary, Sueella Braverman. To the outsider, it seems that, after thirteen years in power, the Conservatives have become more of an old boys’ club. Greg Hands replaced Zahawi whilst Oliver Dowden took over the Deputy PM mantle from Raab and Alex Chalk became Lord Chancellor. Five of the six went to Cambridge and one to Oxford, the same university the Prime Minister attended.

Rishi Sunak has also promised the electorate that inflation would be halved by the end of 2023, with his Chancellor, Jeremy Hunt, saying, this week, he was still confident that inflation would fall sharply by the end of the year, adding “we have a plan and if we’re going to reduce that pressure on families, it’s absolutely essential that we stick to that plan, and we see it through so that we halve inflation this year as the Prime Minister has promised.” There is more chance of success for Blackadder’s “Baldrick, I have a very, very cunning plan”. Inflation in the UK remains higher than in other Western countries, including the US, Germany, France and Italy. On Wednesday, new figures showed eurozone inflation eased to 6.9% last month, from 8.5%, whilst the UK’s inflation remains in double-digit territory.

The Office for National Statistics posted that “26% of adults experienced shortages of essential food items that were needed on a regular basis” for much of March – an increase of the 18% who reported similar problems in February. The UK has witnessed its worst year-on-year drop in living standards since 2009 – and over two years, the worst since the 1950s – as the price of food and soft drinks – the fastest such inflation since 1977.  When the minutiae of this week’s economic data have been analysed, it is all but certain the BoE will nudge interest rates 25 bp higher, for the twelfth time over the past eighteen months, to 4.50%, because it has yet to get to grips with inflation that is proving “more persistent than it expected”. The UK is in the midst of so many strikes that it is causing not only economic turmoil but a great deal of social unrest. which can only get worse under the present regime. The only problem is that a change in government will not see much improvement for the general public. Having seen the UK slowly becoming a banana republic, for many Dubai expatriates there are so many Reasons to be Cheerful!

Bridge The Gap!                                                                                        14 April 2023

The 2,709 real estate and properties transactions totalled US$ 3.16 billion, during the week, ending 14 April 2023. The sum of transactions was 226 plots, sold for US$ 1.57 billion, and 2,020 apartments and villas, selling for US$ 1.21 billion. The top three transactions were for plots of land, one in Mugatrah, sold for US$ 1.05 billion, and the other two in Al Layan 1 for US$ 172 million and in Al Barsha South for US$ 25 million. Al Hebiah Fifth recorded the most transactions, with seventy-four sales, worth US$ 15 million, followed by thirty-four sales in Madinat Hind 4 for US$ 12 million and twenty-seven sales in Al Hebiah Fourth, valued at US$ 68 million. The top two transfers for apartments and villas were for apartments located in Palm Jumeirah, valued at US$ 16 million and US$ 14 million. The mortgaged properties for the week reached US$ 357 million, whilst sixty-eight properties were granted between first-degree relatives worth US$ 39 million.

According to the latest Luxhabitat Sotheby’s report, the average price of ultra-luxury homes   rocketed by more than 27% in Q1, compared to Q4 2022. The demand for such property continued to head north on the back of a broader economic recovery and an influx of overseas buyer seeing Dubai as a refuge and safe environment in a troubled world. In Q1, Dubai’s average price of a prime property rose to US$ 6.86 billion, with the average price per sq ft of a prime property rising 21% to US$ 919. Highest quarterly growth was seen in Jumeirah Bay, Al Barari and Downtown Dubai – 220% to US$ 559 million, 168% to US$ 252 million and 49% to US$ 926 million. The Consultancy indicates more of the same in Q2. The top five sales in Q1 were:

Jumeriah Bay Island Bulgari Lighthouse        US$ 112 million       Built-up 39.0k

Palm Jumeriah XXll Carat (Club Villa US$     US$ 50 million         Built-up  12.1k

Jumeirah Bay Island Bulgari Lighthouse         US$ 44 million         Built-up  11.7k

Palm Jumeirah The Fronds Frond D              US$ 41 million         Built-up    7.0k

Palm Jumeirah The Fronds Frond F               US$ 34 million           Built-up    7.0k

The recent Knight Frank report pointed to the fact that Dubai has ranked as the fourth-most global active market in the luxury residential segment, with 219 homes, selling above US$ 10 million, and valued at US$ 3.8 billion last year. In Q1 2023, there were sales of eighty-eight units, valued at US$ 1.63 billion, with wealthy buyers snapping up these units valued at more than $10 million Four of the top ten property sales prices in Q1 were in Jumeirah Bay, where the average price of the twenty-two units sold was just under US$ 25 million, equating to US$ 2.88k per sq ft; the most expensive sold were found at Bulgari Lighthouse and Bulgari Resorts and Residences. The prices of the next two highest locations – The Palm Jumeirah and Emirates Hills – were some way behind the leader at US$ 846 and US$ 653.

In Q1, the luxury apartments segment witnessed 1,584 units being sold, valued at US$ 2.67 billion, accounting for 66% of the overall prime market. The top three locations were The Palm Jumeirah, with sales of US$ 1.01 billion, Downtown Dubai – US$ 926 million – and Jumeirah Bay – US$ 490 million. The average cost of a prime apartment jumped 35% on the quarter to US$ 7.73 million, with off-plan sales accounting for 70% of all apartments sold in Q1.  In the prime villa segment, 294 units were sold for a total of US$ 1.53 billion, with the three most popular areas being The Palm Jumeirah, Dubai Hills Estate and Al Barari. In Q1, the average cost of a prime villa rose 37%, quarter on quarter, to US$ 10 million.

Property prices continued their upward journey in March in Dubai, surpassing their 2014 peak level for villas and some apartment areas of the emirate. The latest CBRE report confirms that apartment prices overall are still 17.1% down on 2014 levels but there are certain locations where prices have breached that historic volume. For the villa segment, overall prices are now 0.7% higher over the nine-year period. Last month average prices for apartments were at US$ 336 and US$ 396 per sq ft for villas. The report also noted that over the twelve months to March 2023, apartment and villa prices posted gains of 12.4% and 14.8% respectively. Jumeirah recorded the highest sales rate per sq ft in the apartment category, reaching US$ 665, while Palm Jumeirah villas recorded the highest sales rate per sq ft of US$ 1,214. Realiste estimated that the most expensive area in Dubai is Jumeirah Bay, with an average apartment cost of US$ 5.45 million.

Latest figures from STR show that Dubai hotels ended 2022 on a strong footing, after recovering better than expected from the impact of Covid. Revenue per available room rose about 31% to US$ 186, compared to December 2019 pre-pandemic returns. Dubai’s Department of Economy and Tourism posted that in the eleven months to 30 November 2022, overnight international visitors totalled 12.82 million, equivalent to 85% of 2019 pre-Covid numbers; it was also more than double the 6.02 million people who had visited Dubai over the same period in 2021.

Dubai’s business activity in non-oil private sector economy rose 1.4, to 55.5, to hit a five-month high, driven by output expanding on stronger increases in both jobs and inventories, with growth rates reaching multiyear records; the pace of job creation came in at its fastest pace since January 2018, with construction companies posting strong growth numbers, and there was also a marked improvement in staffing levels. Stocks of inputs registered their fastest rate in nearly five years, as firms purchased greater volumes of raw materials to service new and current projects.  Furthermore, output prices fell for the eighth consecutive month, attributable to discounting by companies keen to maintain their market share, whilst supplier delivery times continued to shorten, as vendors worked to tighter customer requirements. Emirates NBD has posted that it estimates Dubai’s full-year 2022 growth at 5.0% and expects the emirate’s GDP to grow by 3.5% next year.

The UAE’s goods trade with the rest of the world hit $1.024 trillion last year, and it is expected that the emirate will see increased growth for a myriad of reasons including the reopening of the Chinese economy, the government’s progressive action in ensuring the non-oil sector diversifies and consolidates and the increase in bilateral trade deals. In 2022, UAE’s exports grew 41% to US$ 599 billion, with imports topping US$ 425 billion, accounting for 1.7% of global merchandise imports; the country was ranked 11^th globally of the top commodity-exporting countries. Trade has always been an important pillar of Dubai’s economy, with Oxford Economics noting that “we expect trade in goods and services to expand and be stimulative of economic growth”. Since Dubai is now a major economic hub, situated between Europe and Asia, it will be able to benefit from its position to service the Asian economies which are forecast to see robust growth in the coming months, even though business in Europe and US may be dismally flat. Last week, HH Sheikh Mohammed commented that the UAE’s trade is set to surge further this year, following strong growth last year. According to the WTO, the UAE accounted for 2.4% of the world’s goods exports in 2022.

Dubai’s ambitious D33 economic agenda has several objectives for the next ten years to 2033 including to;

• double the size of its economy
• double the size of its foreign trade
• add four hundred cities to its foreign trade map
• establish Dubai as the go to destination for major international companies and investments 
• ensure that Dubai becomes one of the top three global cities

It does seem that certain banks have been reluctant to pass on the benefits of rate hikes to their savers. The last increase was in March when the UAE Central Bank moved its overnight deposit facility 25bp higher to 4.9%, following the Federal Reserve’s 0.25% increase. In the not-too-distant past, any rise in the deposit interest rate for retail investors would move in tandem with the same rate.

The latest bulletin from the federal Ministry of Finance has listed out a number of entities that are not required to register for Corporate Tax. They include government and government-controlled entities, extractive businesses, and non-extractive natural resource businesses. Furthermore, a non-resident person will be exempted if they earn only UAE-sourced income and do not have a Permanent Establishment in the country.

Last year, Dubai Integrated Economic Zones Authority posted increases in both its revenue, by 29.0%, (including commercial licensing and services, 69.0%, and rentals by 9.0%), and operating profit by 42.0%. With 22k companies and over 41k employees, DIEZ contributed 5.0% to Dubai’s GDP and 11.0% to the emirate’s non-oil foreign trade in 2021.

With a US$ 400 million investment, e& has become a majority shareholder in Careem’s super app, along with all three of Careem’s co-founders, subject to regulatory approvals. This investment will allow telecoms and technology provider boost the growth of its consumer digital services, including the expansion of e& life’s fintech vertical, e& money. Careem will also benefit by having the extra finances to expand its core food, grocery and fintech services and as well as adding more partner services.

On Tuesday, e& announced that its shareholders had approved the Board of Directors’ recommendation to distribute H2 cash dividends, at a value of US$ 0.109 per share, with the total annual dividend double that figure at US$ 0.218.

Dubai Electricity and Water Authority PJSC, reported that its shareholders approved the payment of total dividends of US$ 1.30 billion; based on a share price of US$ 0.676, the dividend, to be paid next Thursday, 20 April, equates to a 6.3% dividend yield. The utility posted a total US$ 2.70 billion annual 2022l pay-out.

The DFM opened on Monday, 10 April 2023, having gained 62 points (1.8%) the previous fortnight, gained 81 points (2.4%) to close on 3,492 by Friday 14 April. Emaar Properties, US$ 0.10 higher the previous three weeks, gained US$ 14 to close the week on US$ 1.68. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.67, US$ 3.62, US$ 1.44, and US$ 0.35 and closed on US$ 0.68, US$ 3.54, US$ 1.46 and US$ 0.39. On 14 April, trading was at 144 million shares, with a value of US$ 77 million, compared to 65 million shares with a value of US$ 37 million on 07 April.

By Friday, 14 April 2023, Brent, US$ 11.27 higher (16.4%) the previous three weeks, gained a further US$ 6.69 (8.4%) to close on US$ 86.63.  Gold, US$ 46 (2.3%) higher the previous three weeks, dipped US$ 39 (0.4%) at US$ 2,018 on 14 April 2023.

This week, Bitcoin continued its bounce back to economic health, touching U$ 30k for the first time since last June and trading 80% higher YTD, but still down 50% from its November 2021 all-time high; it is also the first time that it has crossed that level since the collapse of Terra/Luna and Three Arrows Capital. The current price indicates that it has fully recovered from Celsius, FTX and the US regulatory crackdown, but the US regulators seem tb focussing a lot more time on the crypto industry which will be under even more scrutiny in the future. This week, crypto exchange Coinbase Global was cited by US Securities and Exchange Commission, confirming that it was to bring an enforcement action. Meanwhile, the US Commodity Futures Trading Commission has sued Binance founder, Changpeng Zhao, and his crypto exchange for alleged violations of derivatives regulations.

A report by the International Data Corporation has noted a 29% decline, to 56.9 million, in Q1 for global shipments of personal computers, compared to a year earlier Apple took the brunt of the fall in numbers, posting its largest ever year-over-year drop in shipments to 4.1 million, falling 40.5%; this saw Apple’s market share in the personal computer market falling 1.4% to 7.2% on the year. Of the major players, only HP saw an increase of its market share rising from 19.7% to 22.1%. The decline in shipments was attributed to weak demand, excess inventory and a worsening macroeconomic environment, with the report noting that shipment volume also declined to lower than pre-pandemic levels. The current decline in numbers is expected to continue to fall in the short-term but should pick up later in the year if the global economy improves.

According to reports, Twitter has been merged with Elon Musk’s “everything app” and is no longer considered an independent entity.  It seems that in a court filing involving Twitter and its former CEO, Jack Dorsey, one of the documents noted that “X Corp. is a privately held corporation. Its parent corporation is X Holdings Corp. No publicly traded corporation owns 10% or more of the stock of X Corp. or X Holdings Corp.” Elon Musk evidently revealed that his other company – X Corp – has absorbed Twitter Inc.  After finally acquiring Twitter, in a drawn-out US$ 44 billion deal, Musk has said that the move was eventually “an accelerant to building X,” the “everything app”.

Elon Musk is awaiting the Federal Aviation Administration’s approval to launch his Starship rocket, claimed to be the world’s most powerful rocket. The launch is scheduled for this Monday, with the tech billionaire admitting he thinks there is only a 50% chance of success. He confirmed that his company SpaceX is building multiple Starship vehicles at the South Texas site, increasing the likelihood of a successful launch. It is expected that a similar rocket will send humans to the Moon and eventually to Mars. The Starship spacecraft is also designed for everything including from interplanetary exploration to suborbital supersonic flights on Earth.

Alphabet, the parent company of Google, has been fined US$ 31 million by South Korea’s Fair Trade Commission for blocking the release of mobile video games on a competitor’s platform. It had been cited for bolstering its market dominance and impacting on local app market One Store’s revenue and value as a platform, by requiring video game makers to exclusively release their titles on Google Play in exchange for providing in-app exposure between June 2016 and April 2018. Game makers affected by Google’s action included Netmarble, Nexon and NCSOFT. Two years ago, Google had been hit by a a larger fine of US$ 151 million for blocking customised versions of its Android operating system.

Tupperware, founded in 1946 by Earl Tupper, an American chemist, has warned that it could go into liquidation if much-needed funding cannot be raised, as it has “substantial doubt about its ability to continue as a going concern”. On the news, the US maker of food storage containers saw its share value tank 50% on Monday; it had made its fortune, mainly in the sixties and seventies, by employing a direct sales force including people holding “Tupperware parties” in their homes to sell plastic containers for food storage. The company, which has failed in its strategy to reposition itself to a younger audience, still maintains a direct sales force – who earn a percentage of all the goods they sell – as well as selling goods on its website;  that number  dipped by 18% in 2022 compared to the previous year. Analysts, including GlobalData, concur that it has “failed to change with the times in terms of its products and distribution”, and that the method of selling direct to younger customers, through Tupperware parties, “was not connecting”. Because it has yet to file its annual report, Tupperware could be delisted from the New York Stock Exchange and has also warned that it had to renegotiate its loans after already amending its loan agreements three times since August 2022. It is also known that its 2021 and 2022 financial results had been “misstated” due to how the firm accounted for taxes and leases.

When there are problems, the French police have history in blaming anybody else but themselves. Now the French border police have accused the Port of Dover of failing to prepare properly for last weekend’s holiday rush, when many travellers encountered lengthy delays. Noting that the gendarmerie “had taken the necessary measures to cope with this flow,” it later posted that `’this was not enough to absorb the number of buses announced for one day, due to the structural organisation of the control queues at the port of Dover, on the British side.”

Q1 witnessed Türkiye’s budget deficit was at US$ 13.65 billion, with revenue up 30.8% on the year to US$ 42.4 billion and expenditure, 57.0% higher at US$ 55.7 billion; privatisation moves added a further US$ 169 million. The monthly March budget came in with a US$ 1.68 billion deficit, whilst the primary balance – excluding interest payments – was at minus US$ 9.1 billion) in the three-month period.

Latest February, Eurostat data indicate that there were production increases in both the EU and the euro area by 1.4% and 1.5% on the month and by 2.1% and 2.0% on the year. Over the month, the EU and the euro area saw growth in capital goods by 2.1% and 2.2%, non-durable goods by 2.4% and 1.9%, energy by 1.2% and 1.1% and intermediate goods by 0.5% and 1.1%. The highest monthly increases were registered in Belgium (6.1%), Luxembourg (4.9%) and Greece (4.8%), with the largest decreases seen in Slovenia (3.6%), Finland (2.3%) and Portugal (2.0%).

It does not take an expert to confirm that debt-ridden developing countries are in a mega economic mess, exacerbated by factors such as the global growth slowdown, high interest rates and reduced investment. However, the UN Conference on Trade and Development confirmed this fact and warned that annual growth across large parts of the global economy will be below pre-pandemic levels in 2023; it estimated that rising interest rates, allied with soaring debt levels, will cost developing countries over the coming years, at least US$ 800 billion “in foregone income”. The report noted that last year, borrowing costs increased 3.2% to 8.5% for sixty-eight emerging markets, and over the last decade that “the number of countries spending more on external public debt service than healthcare increased from thirty-four to sixty-two. The situation will get even worse as public investment in developing countries continue to suffer as countries pay more to their external creditors than they receive in new loans, as was the case in 2022, with thirty-nine countries in this bracket. More worryingly, eighty-one developing countries (excluding China) lost US$241 billion in international reserves in 2022, or 7.0% on average. It is a fact that the gap between the so-called rich nations and the poorer developing ones is getting wider by the year; it is about time that global bodies start making a concerted effort to Bridge The Gap!

Rich World, Poor World!                                                            07 April 2023

The 3,035 real estate and properties transactions totalled US$ 2.83 billion, during the week, ending 07 April 2023. The sum of transactions was 222 plots, sold for US$ 490 million, and 2,086 apartments and villas, selling for US$ 1.24 billion. The top two transactions were for plots of land, one in Business Bay, sold for US$ 124 million, and the other for a plot in Al Thanayah Fourth for US$ 41 million. Al Hebiah Fifth recorded the most transactions, with ninety-three sales, worth US$ 67 million, followed by thirty-three sales in Madinat Hind 4 for US$ 12 million and thirty sales in Al Hebiah Fourth, valued at US$ 71 million. The top three transfers for apartments and villas were all for apartments – the first in Wadi Al Safa for US$ 46 million and the other two in Island 2 – US$ 37 million and US$ 35 million. The mortgaged properties for the week reached US$ 1.08 billion, whilst seventy-six properties were granted between first-degree relatives worth US$ 19 million.

Last month, the booming Dubai property market posted a 53% year on year growth, to US$ 9.3 billion, as transactions topped 12k – up 45% compared to March 2022. Most notably, the market saw a marked 95% annual growth in the volume of off-plan transactions, with 6.4k transactions recorded last month; these accounted for 52.8% of total March sales and 36.8% of the total value. Dubai Creek Harbour and Dubai Marina contributed 12.0% and 11.7% of off-plan sales value and 10.0% and 3.7% of sales. The three main contributors to the ongoing rise in the local property market continue to be progressive government initiatives, higher oil prices and  the increase in the number of Chinese and Russian buyers. Demand continues to outstrip supply and whilst this trend keeps up, prices) (for bath sales and rentals) will continue to edge higher. There are fears that with the increased number of new projects being launched, the “pendulum” may turn with an oversupply; however, this seems unlikely to happen until at least 2025 (when a lot of this new supply is ready for occupancy); even then, the expected population increase could more than meet this increased supply.

In March, there were both monthly and annual hikes in the value of ready property transactions by 34.0% to US$ 5.89 billion and by 13.0% to over 5.7k. According to Property Finder, 59.7% of people, who want to buy property, prefer apartments, (up 2.5% on the year), and the balance villas/townhouses. In the rental market, 80% of tenants were looking for apartments, with 29.4 % of that number preferring a studio, 33.3% – 1 B/R unit and 30.4% – a 2 B/R apartment. The top-searched areas in March, for rented apartments, were Dubai Marina, Downtown Dubai, Business Bay, Palm Jumeirah and Jumeirah Village Circle. In the villa/townhouse sector, 42% of tenants were looking for 3 B/R and 35.5% for a 2 B/R villa. Dubai Hills Estate, Palm Jumeirah, Arabian Ranches, Damac Hills and Mohammed Bin Rashid City were most preferred among those looking to own and rent villas or townhouses.

The luxury market sector continued to boom in Q1, topping US$ 1.63 billion, with eighty-eight villas, at a value of AED 10 million plus (US$ 2.72 million). This sector of the market continues to show much higher price increases than the rest of the market. Three locations – Palm Jumeirah, Emirates Hills and Jumeirah Bay – accounted for 64% of the total, with average transaction prices at US$ 2.4k per sq ft. Knight Frank posted that, in 2022, on the global stage, Dubai ranks the fourth most active market in this sector. Last year,  Dubai registered the sale of 219 homes, priced above $10 million, valued at US$ 3.8 billion; only New York (244 sales), Los Angeles (225 sales) and London (223 sales) were ranked above Dubai.  In the prime market segment, average transaction prices rose by 15.8% to US$ 1,971 per sq ft.

Dubai International Airport retained its title, for the ninth consecutive year, as the world’s busiest international airport for passengers last year; London, Amsterdam, Paris and Istanbul followed DXB in its tracks. The airport witnessed passenger traffic more than doubling over the year to 66.1 million, with this number expected to top 78 million in 2023, returning to pre-pandemic levels by the end of the year. Latest ACI data shows that 2022 global passenger traffic rose 53.5% to almost seven billion – equating to 73.8% of 2019 levels. As Dubai has no domestic traffic to count on, it is only ranked fifth in the list of the world’s top ten busiest airports behind Hartsfield-Jackson Atlanta, Dallas/Fort Worth, Denver International Airport and Chicago’s O’Hare; these US airports have significant domestic passenger traffic shares of between 75% to 90%.

With summer holidays on the horizon, the main point of conversation for most expats is the cost of air fares from the UAE. Hardest hit seems to be those travelling to the sub-continent with reports that fares may triple in the coming months, made worse because Indian national carriers have cancelled flights to some busy routes last month, and that airlines have deployed smaller aircraft on the routes which has exacerbated the situation, resulting in an increase in airfares. For example, Air India and Air India Express have started cancelling and realigning flights to different cities from the UAE including Kozhikode, Indore and Goa. Basic economics come into play – when supply is reduced, so that demand cannot be met, prices will inevitably go higher.

With new orders and employment rates, (rising at their fastest rate in seven years), on the up, March business activity in the UAE’s non-oil private sector expanded at the strongest pace in five months, up 1.6 on the month to 55.9; new orders were at their highest level in five years with employment reaching an eighty-month high. Stronger market demand and increased tourism were the main drivers behind the rate of new order growth, assisted by stronger domestic sales, with exports staying flat after three months of declines. Overall, this was the largest monthly increase since October 2021, with all five sub-components moving northwards. These figures are in line the UAE Central Bank’s forecast that the country’s economy would expand 3.9% and 4.3% over the next two years, following a 7.6% growth spurt in 2022. Non-oil GDP growth, at 6.6%, was driven by the property, construction, manufacturing and travel and tourism sectors, with that trend continuing into this year with a forecast 4.2% move upwards. In 2022, non-oil foreign trade hit a record US$ 607.1 billion which is expected to double by 2030.

Later in the week, the Dubai Court of Appeal decided that the South African government’s extradition request, concerning Atul and Rajesh Gupta, cannot be carried out. They had been accused by South African authorities in relation to two cases of money laundering, fraud, and corruption, The court found that the request did not meet the strict standards for legal documentation as outlined in the 2021 extradition agreement between the UAE and South Africa. It seems that the rejection could be on a technicality since the law stipulates that the extradition request shall be accompanied by “a copy of the arrest warrant order, whereas the submitted documents are free of the arrest warrant”. Following the decision, it appears that the South African authorities will be able to resubmit the extradition request with new and additional documentation.

The UAE Central Bank has announced that the new AED 1k banknote will come into circulation from this Monday. The new note, made of polymer, will feature advanced security features and prominent symbols in Braille, while the current AED 1k note will continue in circulation. The currency is designed to pay tribute to the UAE’s major achievements in space exploration and climate action.  

Because of sanctions risks, the UAE Central Bank has cancelled the licence of Russia’s MTS Bank in Abu Dhabi, with the bank winding down its operations “within six months from the date of the decision”, under UAECB’s supervision. It was only last year that the Russian financial institution received approval from the Central Bank to operate in the country. In February, it came under western sanctions, as part of the broader package of sanctions by the UK, the US and their allies against Russian companies, the country’s financial institutions and people in the inner circle of President Vladimir Putin following the start of the Russia-Ukraine war. MTS Bank is a FinTech unit of Russia’s largest mobile operator Mobile TeleSystems.

DMCC started the year the way it ended 2022, by posting a Q1 708 increase in member numbers – its best Q1 figures since it started in 2002, 8.4% higher year on year and an average annual increase of 13.7% since 2018. This increase was a reflection on the current state of Dubai’s booming economy, driven by strong local macroeconomic conditions and the ease of doing business. It is estimated that DMCC contributes roughly 10% to Dubai’s GDP, and with over 90% of our registered companies coming from outside the UAE, DMCC is the business district of choice for global companies setting up in the emirate, with the five leading sources being India, the UK, Germany, China, and France.

Ahead of a possible IPO, Dubai-listed Amanat Holdings is consolidating its healthcare assets in the ME into a single platform. The new company, Amanat Healthcare, will have assets across the UAE, Saudi Arabia and Bahrain, with an expected capacity of 1k beds by 2026, The parent company, listed on the DFM since 2014, with a paid up capital of US$ 681 million, posted a 14% hike in 2022 adjusted net profit, driven by higher revenue. Its current healthcare division has a mixed portfolio of assets including Cambridge Medical and Rehabilitation Centre in the UAE and Saudi Arabia, Sukoon, a provider of long-term and post-acute care services in Jeddah, Al-Malaki Specialist Hospital in Bahrain and the real estate assets of CMRC in Abu Dhabi.

The DFM opened on Monday, 03 April 2023, having gained 58 points (1.7%) the previous week, nudged 4 points higher to close on 3,411 by Friday 07 April. Emaar Properties, US$ 0.09 higher the previous fortnight gained US$ 1 to close the week on US$ 1.54. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.68, US$ 3.51, US$ 1.43, and US$ 0.34 and closed on US$ 0.67, US$ 3.62, US$ 1.44 and US$ 0.35. On 07 April, trading was at 65 million shares, with a value of US$ 37 million, compared to 92 million shares with a value of US$ 640 million.

By Friday, 07 April 2023, Brent, US$ 6.09 higher (8.2%) the previous fortnight, gained a further US$ 5.18 (6.5 %) to close on US$ 79.94.  Gold, US$ 7 (0.3%) higher the previous fortnight, closed up US$ 39 (2.0%) at US$ 2,026 on 07 April 2023. On Wednesday, gold had risen to its highest level in a year as it touched US$ 2,025, whilst silver was trading at US$ 24.86.

Last Monday, the 48th Meeting of the Joint Ministerial Monitoring Committee occurred, with it reviewing crude production for the first two months of the year and how members confirmed to their quotas made in the Declaration of Cooperation. At the online meeting, members reaffirmed their commitment for the rest of the year and were urged to keep to their commitment to maintain full conformity and adhere to the compensation mechanism. The various cuts by members, (totalling 1.66 million bpd), agreed a day earlier, were confirmed as from 01 May until 31 December 2023; they included Saudi Arabia (500k bpd), Iraq (211k bpd), United Arab Emirates (144k bpd), Kuwait (128k bpd), Kazakhstan (78k bpd), Algeria (48k bpd), Oman (40k bpd) and Gabon (8k bpd).

When Johnson & Johnson was first hit by thousands of lawsuits alleging that talc in its iconic Baby Powder, and other products, caused cancer, it initially agreed to a settlement offer of US$ 2.0 billion; this week. It agreed to settle for US$ 8.9 billion. This came after January’s court decision, that had invalidated J&J’s Texas two-step bankruptcy manoeuvre, in which it sought to offload the talc liability onto a subsidiary that immediately filed for Chapter 11. Despite settling some 60k claims, the company still maintained that its talc products were safe, claiming that its Baby Powder and other talc products do not cause cancer and do not contain asbestos. In 2018, a Reuters report claimed that J&J knew for decades about tests showing its talc sometimes contained carcinogenic asbestos but kept that information from regulators and the public. In 2020,  it said it would stop selling talc Baby Powder in the U.S. and Canada – due to what it called “misinformation” about the product – and three years later posted its intent to discontinue it globally. Despite this landmark legal decision, the company still faces further clams.

After almost twenty years in the UK, it is reported that Amazon is to close its online store Book Depository, as part of its recently announced plans to slash 18k of jobs, as it shakes up its businesses globally; it was founded in 2004 by former Amazon employee Andrew Crawford and his business partner Stuart Felton and acquired by the tech giant seven years later. It has offices in London, Gloucester, Madrid, Cape Town and Chennai – with fulfilment centres in the UK and Australia. Sales had boomed during the pandemic but have markedly slowed, with consumers cutting back spend due to the cost-of-living crisis. Other tech giants are in similar positions – all trying to cut costs to remain competitive.

Apple’s main Irish-registered company posted pre-tax profits of US$ 69.3 billion in 2022, surpassing the previous year’s return of US$ 67.7 billion; 2022 revenue came in on US$222.8 billion, with operating expenses at US$ 26.9 billion. The tech giant paid dividends totalling US$ 20.7 billion, compared to US$ 25.3 billion in 2021. There was a 4k increase in payroll numbers to 56.6k, with the prospect of a further 1.3k if plans to expand its Cork campus go ahead. Furthermore, the EC is to appeal against a tax payment of US$ 13.1 billion that it had levied on Apple but was later annulled. The company maintains a US$ 12.7 billion in an escrow account, pending the conclusion of all legal proceedings.

After price tweaks over the past six months, Tesla has marked down prices again on all its vehicle range, with its chief executive, Elon Musk confirming that the company will sacrifice its profitability to keep growing amid rising interest rates and a possible recession.  Its models 3 and Y have been discounted by US$ 1k with the more expensive Models S and X by US$ 5k; it has also added a new base version of the Model Y starting at US$ 49,990. Tesla has higher margins than many of its competitors and is in a better position to “play” with its prices. Last year, the company fell short of its target for a 50% average annual increase in vehicle deliveries, expanding by 40%, with its Q1 growth rate dipping to 36%.

Although the International Air Transport Association noted that February 2023 global air cargo markets showed that air cargo demand rose above pre-pandemic levels, ME carriers experienced an 8.1% year-on-year decrease in cargo volumes – slightly improved on January’s -11.8%; capacity increased 9.3% on the year. Global demand, measured in cargo tonne-km, dipped 7.5% over the twelve months, compared to -14.9% and 15.3% over the previous two months; it was 2.9% higher than pre-pandemic levels. The supply (capacity) side saw a 8.6% increase compared to February 2022. International belly-capacity grew by 57.0% on the year equating to 75.1% of the 2019 pre-Covid capacity. The main driver behind this increase was an improvement in China’s economic outlook, as its manufacturing PMI rose above 50 – the threshold between expansion and contraction.

Although sale prices in the Australian property market are edging lower, it seems that it is becoming more expensive for renters across the nation, as the cost-of-living crisis starts to bite. Real estate website Domain noted that “the country is experiencing the longest stretch of continuous rental price growth on record, as house rents rise for the eighth consecutive quarter and unit rents for the seventh.”  Its latest report points to the fact that house rents are at a record high across all capital cities, and unit rents are at a record high across all capital cities except Canberra and Darwin. It is reported that house rents surged by US$ 90 a week over the March quarter, and unit rents rose by US$ 93 across the combined capital cities since the pandemic low. There seems to be no early end to these hikes for renters; for example, Sydney median weekly rentals broke into the AUD 700, (US$ 466), territory for the first time. The post-Covid international travel boost added a net overseas migration gain hit of 304k in the twelve months to September 2022, and this is one of the main drivers behind the rise in rental properties, as is the fact that the “proportion of overseas migrant arrivals that were temporary visa holders is now sitting at 61%.” It is self-evident that supply is not keeping up with demand, with a recent study warning of a shortfall of 106k new dwellings by 2027, and 79k over the next decade.

Pakistani consumer price inflation rose to a record 35.37% on the year, and 3.87% higher on the month, as food, beverage, and transport prices surged up to 50% over the past twelve months. Last month, annual food inflation was at 47.1% and 50.2% for urban and rural areas, respectively, whilst core inflation, which strips out food and energy, stood at 18.6% in urban areas and 23.1%% in rural areas. It is expected that these elevated inflation rates will continue well into this year. The country has been in economic turmoil for months, with an acute balance of payments crisis, whilst its foreign exchange reserves have fallen to cover barely four weeks of imports. The country had agreed bailout terms with the IMF in 2019, subject to certain conditions; talks to secure a much-needed US$ 1.1 billion in funding as part of the US$ 6.5 billion still continue.

Latest figures from the US Labor Department, indicate that the recent jobs boom has slowed, with March figures showing that employers added 236k new jobs in the month, (326k jobs in February); it is estimated that the economy only needs 100k jobs a month to keep up with growth in the working-age population. These figures are an indicator that the national economy is still resilient despite interest rate hikes and the cost-of-living crisis. The jobless rate remained at near historic lows – 3.5%. Because of the continuing tightness in the labour market, it is all but inevitable that a Fed rate hike is on the cards this month. Like other central banks, such as the BoE and the ECB, the Fed were negligently slow in raising rates after consumer prices started to move higher two years ago, then advising people not to worry because inflation was only temporary.  Now its number one target is to tame inflation which obviously would not be such a major problem if action had been taken a lot earlier.

In March, there was a marked slowdown in Eurozone’s economy, down on the month by 1.6% to 6.9%, whilst US witnessed an easing in the ongoing price increases, with annual personal consumption expenditures price index down 0.3% to 5.0% – a possible indicator that a light has appeared at the end of the tunnel. This presents a conundrum for central banks that have to balance whether to continue to hike rates to curtail inflation, (which nudged 0.1%, on the month, to 5.7%), or not to rise them that could be a forerunner for a deflationary cycle. The two central banks will one day explain why they failed to act quicker when it became apparent that inflation was speeding away from their respective 2.0% targets. Undoubtedly, the coming weeks will see both central banks increasing rates again, as the Fed Reserve considers its tenth rate, and probably not the last, hike since March 2022.

Last year, there was a massive US$ 470 billion deficit in the EU trade in goods balance – its lowest level ever since records started in 2002.  According to Eurostat, the main driver was down to a steep rise in the value of energy imports, which started towards the end of 2021 and continued through most of 2022. Last year also witnessed increasing prices in extra-EU imports and exports by 41% and 18% respectively. The highest share of intra-EU imports was recorded in Luxembourg (90% of its total imports), while the highest share for intra-EU exports was recorded in Czechia (82% of its total exports) – on the flip side were Ireland (35%) and Cyprus (26%), the former because its main trading partner is the UK. Netherlands imported 61% of its goods from outside the EU but exported 71% of that total within the EU.

Major European economies reported welcome slowing in inflation last month with the likes of Germany, France and Spain posting monthly declines of 1.3%, 0.7% and 3.3% to 7.4%, 5.6% and 3.3%. Among the twenty euro countries, Luxembourg had the lowest inflation rate in February at 3.0%. Additionally, the unemployment rate in the eurozone remained stable in February at 6.6%.

With China opening up, growth in developing East Asia and the Pacific is forecast to jump 1.6% to 5.1% this year. China is expecting the economy to expand by 2.1% to 5.1% in 2023 but, elsewhere in the region, most will see slower growth at 4.9%, compared to 5.8% in 2022. The World Bank warns that growth could be slightly derailed by the negative impacts of a slowing global growth, high commodity prices, and tightening financial conditions in response to persistent inflation. It is expected that Indonesia, the Philippines, and Vietnam, will have more modest growth in 2023, compared to last year, whilst most Pacific Island countries are forecast to grow faster this year. Although this century has seen countries in the region performing better than most in other regions, it is perhaps significant to note that productivity growth and the pace of structural reforms have slowed.

Most countries in the EAP region have seen two decades of higher and more stable growth than economies in other regions. The result has been a striking decline in poverty and, in the last decade, also a decline in inequality. However, the catch-up to the per capita income levels of advanced economies has stalled in recent years as productivity growth and the pace of structural reforms has slowed. Addressing the significant “reform gap,” especially in services, could magnify the impact of the digital revolution and boost productivity in sectors from retail and finance to education and health. The World Bank has noted that “de-globalisation, aging, and climate change are casting a shadow over the growth prospects of a region that has thrived through trade and is growing old fast. However, promoting trade, addressing population dynamics, and enhancing climate resilience could strengthen growth.”

Undoubtedly, the Ukraine war and the cost-of-living crisis have had a bigger impact on the world’s poorer people, as most of their dependence is on food and energy – the two sectors hit the worst. Consequently, the World Bank is rightly concerned that this will deteriorate, resulting in a first-ever increase in the global extreme poverty rate – people getting by on less than US$ 1.90 per day, which, because of the pandemic, has risen 0.9% to 9.3% from 8.4% to 9.3%.

Once again, the Chinese “invasion” of Africa rears its ugly head, with David Malpass noting his concern of loans being made to developing economies in Africa. The president of the World Bank mentioned the likes of Ghana, Tanzania and Zambia, which are all struggling to repay their debts to Beijing. Such nations are being hit by the double whammy of rising interest rates on existing debts and consolidating their forex reserves needed to bankroll more expensive imports, requiring even more funding. A recent study indicated that globally China lent US$ 185 billion in bailouts to twenty-two countries between 2016 and 2021. It does seem that China is learning much from the US$ shenanigans in South America and Indonesia, more than fifty years ago, when it used one-sided loans in a most unethical fashion. This week, US Vice-President Kamala Harris was in Africa with offers of major commitments of financial support initially in Tanzania and Ghana. To the cynical observer, the growing rivalry between the two leading global economies will only result in these two nations exploiting and profiting, whilst the “beneficiaries” will become increasingly poorer. Rich World, Poor World!

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Knocking on Heaven’s Door                                                  31 March 2023

The 3,035 real estate and properties transactions totalled US$ 2.92 billion, during the week, ending 31 March 2023. The sum of transactions was 158 plots, sold for US$ 346 million, and 2,261 apartments and villas, selling for US$ 1.39 billion. The top three transactions were for plots of land, the first in Al Khairan First sold for US$ 428 million, followed by a plot in Island 2 for US$ 18 million, along with land in The World Islands selling for US$ 16 million. Al Hebiah Fifth recorded the most transactions, with fifty-two sales worth US$ 45 million, followed by twenty-one sales in Madinat Hind 4 for US$ 7 million and fourteen sales in Jabal Ali First, valued at US$ 16 million. The top three transfers for apartments and villas all took place in Palm Jumeirah – the first two for apartments at US$ 22 million and US$ 16 million, followed by a villa for US$ 15 million. The mortgaged properties for the week reached US$ 1.04 billion, whilst 123 properties were granted between first-degree relatives worth US$ 163 million.

Last year, Dubai property sales came in over 80% higher on the year, at US$ 56.6 billion, (and 86k sales transactions), with every indicator pointing to more of the same in 2023. Undoubtedly, Dubai is seen as a very attractive destination for many, with the country striving to enhance its position as a leading global financial hub. Because of progressive government initiatives, including the easing of visa requirements and increased public capex, Dubai has witnessed the easing of “doing business” in a safe and secure environment. Furthermore, the Ukraine crisis has resulted in many Russian companies moving to the region, followed by an influx of Russian entrepreneurs. All play a part in enhancing the emirate’s appeal and pushing up the domestic real estate prices – both for sales and rentals. It does seem that with a slowdown in the launch of new projects, since the onset of Covid, demand may now be stronger than supply. Since it will take at least two years for the recent increase in launches to have an impact on supply, there will be upward pressure on prices which may see some being priced out of the market or moving to smaller-size units.

In late May, Dubai will host the three-day The Hotel Show which will be attended by some 13k industry-related professionals from investors and owners, F&B specialists, procurement decision-makers, designers and specifiers. Attendance will be boosted from its co-location with The Leisure Show, the dynamic fitness exhibition. This comes at the same time that the local hospitality sector is booming, with billions of dollars being invested in new developments which are expected to see a 25% expansion by 2030 that will add 48k rooms to the sector’s portfolio.

United Airlines launched its first non-stop service between New York-Newark and Dubai since 2016 and is confident that it will have load factors in the “upper 80s”, during the busy summer travel season; its first flight last Sunday was “100% full”. Emirates has also benefitted because some passengers used the carrier for onward travel to locations such as Seychelles, Kenya and India. Last year, the two carriers signed a codeshare agreement. Dubai Economy and Tourism has also noted that YTD, US visitation to Dubai is already 5% above pre-Covid 2019 levels.

At a recent meeting of the Council of the International Civil Aviation Organisation in Montreal, the UAE unanimously won the right to host the third edition of the ICAO Conference on Aviation and Alternative Fuels in 2023; this conference only takes place every seven years.

This week, Mohamed Al Khaja, the UAE’s ambassador to Israel, said “to further strengthen people-to-people ties between Israel and the UAE, we now have increased the number of daily flights to better connect our people and economies.”  The number of flights between the two locations is now at forty-nine, with the addition of an additional daily EK flight. There is no doubt that these additional flights will strengthen the ties between the two countries which witnessed bi-lateral trade jumping 76.5%, to almost US$ 540 million, during the first two months of 2023.

As part of its strategy to have emission-free public transport by 2050, the Dubai Taxi Corporation has started the trial of Skywell electric vehicles in its limo service; testing will use various models and several companies on Dubai roads, over the three-month trial period. Eco-friendly vehicles already make up 70% of the DTC fleet and plans to add seventy eco-friendly vehicles to its fleet each year.

A recent EY report has estimated that Expo 2020 Dubai and its legacy are expected to contribute US$ 42.2 billion of gross value added (GVA) to the UAE’s economy from 2013 to 2042. The three sectors with the most contribution to this figure are organisation and business services (US$ 20.6 billion), construction (US$ 8.7 billion), and restaurants and hotels (US$ 6.3 billion). Over the thirty year period, the pre-event phase, 2013-2021 contributed around 25% of GVA, the event itself – 13%, with  62% post Dubai Expo to 2043. Over the six-month event, the event welcomed 24.1 million visitors. Dimitri S. Kerkentzes, Secretary-General of the Bureau International des Expositions noted that “the 182-day surpassed all expectations as an extraordinary experience for visitors and participants, and its legacy is set to continue creating new opportunities for growth in the years to come.” Expo City Dubai has repurposed more than 80% of the infrastructure built for the six-month event.

The Ministry of Energy, as usual, adjusted fuel prices in the UAE on the first day of every month. According to the government, the UAE liberalised fuel prices 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 April retail petrol prices:

• Super 98: US$ 0.820 – down by 2.59% on the month and up US$ 0.63 (8.32%) YTD from US$ 0.757  
• Special 95: US$ 0.790 – down by 2.35% on the month and up 8.67% YTD from US$ 0.727
• Diesel: US$ 0.921 – down 3.50% on the month and up 2.79% YTD from US$ 0.896
• E-plus 91: US$ 0.768 – down by 2.76.% on the month and up 8.78% YTD from US$ 0.706

According to Boston Consulting Group’s latest report, over the next three years, the UAE will witness more than US$ 20 billion in digital technology spending in areas such as emerging tech (AI, IoT, blockchain and robotics), as well as the more “traditional” IT and telecoms. It alludes to the fact that over the past ten years, digital technology has accounted for over 67% of productivity growth and going forward will account for up to 30% of global GDP over the next decade. BCG noted that the UAE could well witness a doubling of its digital economy to GDP to 19.4%. Meanwhile, the Dubai Chamber of Digital Economy estimates that the country’s digital economy cloud grow to more than US$ 140 billion by 2031, from its current level of US$ 38 billion. The government recently launched its Dubai Economic Agenda (D33) plan, which is a step in the right direction on the path to make the emirate the global capital of the digital economy.

The latest foreign direct investment data points to the fact that DP World, having invested over US$ 10.0 billion in the past decade, is a global fifth, by total value of direct investments allocated to the overseas logistics services. US giant Amazon and Denmark’s AP Moller Maersk are the two leading firms, whilst DPW is the only company located out of US and Europe. DP World’s investments over the past year totalled $320 million despite demand for logistics services stalling as the global economy slowed. 2023 forecasts expect single-digit demand growth in the industry.

Al Ansari Financial Services confirmed that it had received nearly US$ 3.5 billion in bids for its IPO that ended on 27 March 2023; the offering, raising US$ 211 million, was 22 times oversubscribed, with the UAE retail offer, which was increased from 5.0% to 7.5% of the total offering size, oversubscribed by roughly 44 times. The exchange sold 750 million shares and set the final share price at US$ 0.281, the higher end of its offer range implying a market capitalisation of US$ 2.11 billion at listing. National Bonds Corporation – owned by the Investment Corporation of Dubai – committed to a cornerstone investment in the IPO and Emirates Investment Authority is entitled to subscribe to up to 5.0% of the offering.  The company expects to declare a minimum US$ 163 million dividend for the 2023 fiscal year, equating to an 8.0% pay-out at the listing price.

The Dubai Financial Market has launched the Omnibus Accounts structure for holding securities as a gateway to accessing investment opportunities for eligible investors for the benefit of more than one beneficiary owner. It has been sanctioned by the Securities and Commodities Authority. New Omnibus Account rules have been released and a registration process for interested eligible investors has already been introduced. This addition will benefit and boost the local bourse, giving easier access to international investors and the likes of asset management companies, as it enables them to achieve operational and cost efficiencies.

Empower shareholders are in line to receive a US$ 116 million H2 cash dividend, equating to US$ 0.012 per share and representing an equivalent to 42.5% of the company’s paid-up capital. Emirates Central Cooling Systems Corporation, established in 2003 to provide energy through its plants to Dubai’s property and the largest provider of eco-friendly district cooling services, started trading on the DFM last November. Last month, it posted a 13.4% hike in revenue to US$ 762 million, with profit up 6.9% to US$ 272 million. The utility’s main shareholders are DEWA and Emirates Power Investment, with 56% and 24% holdings.

The DFM opened on Monday, 27 March 2023, flat on the previous week, gained 58 points (1.7%) to close on 3,407 by Friday 31 March. Emaar Properties, US$ 0.04 higher the previous week, gained US$ 5 to close the week on US$ 1.53. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.68, US$ 3.51, US$ 1.43, and US$ 0.34 and closed on US$ 0.68, US$ 3.58, US$ 1.42 and US$ 0.35. On 31 March, trading was at 92 million shares, with a value of US$ 640 million, compared to 95 million shares with a value of US$ 54 million.

The bourse had opened the year on 3,438 and, having closed the quarter on 3,407 was 31 points (1.0%) lower. Emaar started the year with a 01 January 2023 opening figure of US$ 1.60, to close the quarter at US$ 1.53. 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 the quarter at US$ 0.68, US$ 3.58, US$ 1.42 and US$ 0.35.   On 31 March, trading was at 92 million shares, with a value of US$ 640 million, compared to 66 million shares, with a value of US$ 18 million, on 31 December 2022.

By Friday, 31 March 2023, Brent, US$ 1.13 higher (1.5%) the previous week, gained a further US$ 4.96 (6.6%) to close on US$ 79.94 on 31 March.  Gold, US$ 1 higher the previous week, closed on 31 March, US$ 6 (0.3%) higher at US$ 1,987. There is every chance that the yellow metal will break through the US$ 2k level in April.

Brent started the year on US$ 85.91 and shed US$ 5.97 (7.0%), to close 31 March on US$ 79.94. Meanwhile, the yellow metal opened 2023 trading at US$ 1,830 and gained US$ 157 (8.6%) during the quarter, to close on US$ 1,987.

This week, Next posted that it would hike up prices at a slower pace than initially expected – at 7.0% in the spring and summer season, and 3.0% in the autumn and winter – slightly less than the 8.0% and 6.0% increases it warned of in January – citing that shipping costs were falling, and suppliers were charging better rates. The retailer, with about five hundred stores and trades online, declared a 5.7% increase in profit to US$ 1.1 billion for the twelve months to 31 January. However, it did warn that “2023 will be bumpy, with sales and profits falling, as energy and wage costs remained high”.

Next has paid just over US$ 10 million for floral fashion brand Cath Kidston from administrators, with the retailer just acquiring the name and intellectual profit – and not its four shops. There is no doubt that Next is in the market to grab struggling retailers, having bought Made.com and fashion chain Joules last year.

There are reports that US regulators are planning to ban Binance, the world’s largest crypto trading platform, in a lawsuit from the Commodity Futures Trading Commission. It is alleged that the firm has been operating in the country illegally and has failed to lodge proper documents; it has also been accused of breaking numerous US financial laws, including rules intended to thwart money laundering. Since its formation in 2017 – and led by Chinese-born Canadian billionaire, Changpeng Zhao – Binance has more than one hundred million users.

Alibaba Group announced that it plans to restructure its six commercial groups with the possibility of five of them going public in the future. One of the main reasons behind this latest strategy is to make the Chinese conglomerate “nimble” to boost future operations. The six business groups will be: Cloud Intelligence, Taobao Tmall Commerce, Local Services, Cainiao Smart Logistics, Global Digital Commerce and Digital Media and Entertainment. The company posted that “the transformation will empower all our businesses to become more agile, enhance decision-making and enable faster responses to market changes”. Each of the six business groups will be managed by its own chief executive and board of directors. Daniel Zhang will continue to serve as chairman and chief executive of Alibaba and will also serve as the chief executive of the Cloud Intelligence Group, which will house all cloud, artificial intelligence activities and businesses like DingTalk. Latest annual figures for 2022 saw revenue 2.0% higher, to almost US$ 36 billion, whilst net profit came in a staggering 138% higher at US$ 6.6 billion. Its US-listed shares have fallen by almost 70% since 2020, on concerns over Beijing’s crackdown on the tech sector, but gained 14% in New York trading last Tuesday.

US officials have charged Sam Bankman-Fried, founder of failed crypto firm FTX,  for authorising a bribe of “at least US$ 40 million” to try to gain access to trading accounts frozen by Chinese authorities. This is yet one more charge that the entrepreneur will face, in addition to those listed in the fraud case filed late last year. The latest charge accuses him of authorising the bribe, after Chinese authorities froze accounts holding roughly US$ 1.0 billion worth of cryptocurrency that belonged to his trading firm, Alameda Research; needless to add that the funds were subsequently released. Three of his closest colleagues have pleaded guilty and are cooperating with investigators, whilst he faces more than one hundred years in prison, if convicted.

Four bankers – three Russian and one Swiss – working for Russia’s Gazprombank in Zurich have been handed fines totalling US$ 812k for assisting cellist Sergei Roldugin, pay into his account around US$ 30 million between 2014 and 2016; the musician gave no credible explanation of where the money had come from. The bankers were found guilty of lacking due diligence, to allow the person, known as “Putin’s wallet “, to continually make deposits into his account. The Zurich court could not prove the four had doubts when the client, who is also godfather to President Putin’s eldest daughter Maria, turned up with millions of dollars. But the verdict says they should have and failed to act. Under Swiss law, banks are required to reject or close accounts if they have doubts about the account holder or the source of the money.  Not a good week for the Swiss bank industry with this indictment, allied with the apparent end of the UBS debacle.

Unable to source new investment funding, Virgin Orbit is to cut staff numbers by 85%, (675), and will stop operations for the foreseeable future. The UK rocket company, founded by Richard Branson, started the year badly when one of its rockets failed to complete the first ever satellite launch from UK soil. It is reported that Branson’s Virgin Investments has injected US$ 11 million into Virgin Orbit “to fund severance and other costs related to the workforce reduction”. Shares dropped 44% on the news in after-hours trading in New York on Thursday.

The firm, (which was founded in 2017, and has never made a profit), was meant to have developed rockets to carry small satellites.

In an open letter issued and citing potential risks to society, over one thousand tech experts and leaders, including the likes of Elon Musk and Steve Wozniak, have urged developers to pause the development of powerful new AI systems more potent than GPT-4. Their concern is that the safety protocols should be developed by independent overseers to guide the future of AI systems and that further development should only proceed once their positive effects are certain and risks are manageable. The letter from the Future of Life Institute shows concerns that new AI tools are becoming too powerful and cannot be reliably controlled and worries that in future they could outperform workers and make jobs obsolete.

It appears that Turkish President Tayyip Erdogan has contacted Russia’s Vladimir Putin to thank him for his “positive attitude”, in extending the Black Sea grain deal and commented that he understood “the Russian side’s principled position to achieve the full implementation of the second part of the agreement, removing barriers for Russia’s agricultural products.” The deal, allowing the safe Black Sea export of Ukrainian grain, was renewed on 18 March for at least sixty days – but reliant on the removal of Western sanctions.

February was a terror month for Lebanon, as its inflation rate continued its inevitable rise to 200%, touching 192% last month. Consequently, the IMF has called on Lebanon’s political elite, yet again, to close ranks and take some positive action, (including to form a new government and appoint a president), to release billions of dollars of funding from the world body. Again, driven by soaring energy, food, communication, (rising fivefold), health, (four times higher), restaurant and hotel prices, inflation topped 190% last month – the 32^nd consecutive month of hyperinflation which continues to cripple the national economy; on an annual basis, the CPI was 26% higher. In the two years to 2021, its GDP contracted from US$ 52.0 billion to US$ 21.8 billion, with its tax revenue almost halving and the currency continuing to lose value on the parallel market, and on the official exchange rate, since a 90% devaluation at the start of February. The IMF noted that the mis-valuation of customs, excises and VAT at the border caused a loss of revenue, worth 4.8% of Lebanon’s GDP last year. The World Bank has described the country’s crisis as one of the worst in modern history, ranking it among the world’s worst financial crises since the mid-19th century.

A new World Bank report sees the average potential global economic growth slumping to a three-decade low of 2.2% per annum over the next seven years, attributable to the rate of “the global economy’s “speed limit”. This will see the GDP rate at the same level it was at the beginning of the century. The report stressed “the urgency to boost productivity and the labour supply, ramp up investment and trade, and harness the potential of the services sector.” It does conclude that potential GDP growth can be boosted by as much as 0.7% – if countries adopt sustainable, growth-oriented policies This in itself would change an expected slowdown, and a lost decade, into an acceleration of global potential GDP growth.

Last month, UK mortgage rates fell to its lowest level since 2016, excluding the pandemic, whilst the number of mortgages approved by lenders rose slightly – an indicator that the slowdown may be stabilising. According to the BoE, homeowners borrowed 65% less on the month at US$ 861 million – its lowest level since April 2016, apart from the Covid crisis. One of the main drivers behind this slump is higher borrowing costs that has made buying property less affordable. However, mortgage approvals were 9.8% higher on the month at 43.5k – a sign that the housing market may have already hit its recent nadir, as mortgage rates have stabilised from the Liz Truss September mini-budget when they did spike.

In March, UK house prices, house prices fell at their fastest annual pace, at 3.1%, for fourteen years. Nationwide noted that since that UK mini budget, when the housing market reached a “turning point”, “activity has remained subdued.” Two leading drivers in the dip in house prices have been a continuing weakness in consumer confidence and the cost-of-living crisis that has left household spending still under pressure. Nationwide also indicated that prices have been dropping for the previous seven months and that prices are 4.6% shy of their 2022 high. Earlier in the month, the Office of Budget Responsibility predicted that house prices will drop by 10% between their 2022 peak and the middle of next year.

Despite all the hoo-ha surrounding the UK joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, it is estimated that this UK-Asia trade deal will boost the UK economy by just a paltry 0.08%. The UK becomes the twelfth member of the trade bloc, which includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, with a combined population of over five hundred million. The UK already has free trade deals with all of the members, except Brunei and Malaysia. Perhaps Rishi Sunak tried hard to keep a straight face when he said the UK’s “biggest trade deal since Brexit”, demonstrated the “real economic benefits of our post-Brexit freedoms”. As part of the CPTPP, the UK is now in a prime position in the global economy to seize opportunities for new jobs, growth and innovation.”

Governor Andrew Bailey warned MPs on the Treasury Committee that the BoE is on “heightened” alert for further turmoil in the banking sector, and that it would “go on being vigilant”. He also commented that “we were in a period of very heightened, frankly, tension and alertness”, but that the recent problems facing lenders had not caused stress in the UK banking system. He told MPs he did not think the UK was in a position similar to the 2008 GFC when banks stopped lending to each other, plunging the world into a deep recession.

TheUS Inflation Reduction Act, causing concern for the UK government, sees the US potentially cornering markets for once-in-a-generation investments which will transform the geography of manufacturing across the world.  The Biden administration will basically be offering billions of dollars in subsidies and tax credits to US businesses producing greener technologies, including electric vehicles, renewable electricity and sustainable aviation fuel. It seems the EU is following suit, with the probable introduction of its Net Zero Industry Act. The UK Chancellor, Jeremy Hunt, has reiterated that the UK would not engage in a trade war on green subsidies, even though to make any progress, the UK has to play the same game; he said that the UK’s approach to attract investment would be “better” – some hope! It is all but inevitable that car firms would leave the UK without a huge subsidy package, similar to the billions in support the US is providing – and probably the same from the EU. There is no doubt that time is running out for the government to boost the sector and jobs in the move to electric vehicles, by investing public money in line with competitors across the Atlantic and the Channel.

In January, the number of cars made in the UK sank to its lowest level since 1956. It is evident that that the government should be investing more money into the sector as the global industry is seeing a massive transformation from the traditional petrol/diesel combustion vehicles   to the era of electric ones. The Sunak government has indicated sales of new petrol and diesel cars will be banned by 2030 but are well short in investing in the new technology. The Society of Motor Manufacturers and Traders noted the country had a “firm foundation” for expanding the production of electric vehicles but warned “we must not squander these advantages”. The UK’s car sector could disappear unless the government follows the US and EU in helping, by huge subsidy packages, with the switch to electric – if not, it will soon be Knocking on Heaven’s Door.

Beds Are Burning! 24 March 2023

The real estate and properties transactions totalled US$ 2.34 billion, during the week, ending 24 March 2023. The sum of transactions was 218 plots, sold for US$ 518 million, and 2,177 apartments and villas, selling for US$ 1.29 billion. The top three transactions were for two plots of land sold in Palm Jumeirah for US$ 150 million and US$ 20 million, along with land in Al Thanyah Fourth, selling for US$ 19 million. Al Hebiah Fifth recorded the most transactions, with 94 sales worth US$ 89 million, followed by twenty-five sales in Hebiah Fifth for US$ 68 million and twenty-four sales in Jabal Ali First, valued at US$ 18 million. The top three transfers for apartments and villas were all apartments – a US$ 17 million villa in Mankhool, followed by one in Palm Jumeirah for US$ 15 million and the other in Marsa Dubai for US$ 14 million. The mortgaged properties for the week reached US$ 420 million, whilst 349 properties were granted between first-degree relatives worth US$ 142 million.

Meraas, the developer of City Walk and Bluewaters Island, has unveiled the first residential community within Dubai Design District – Design Quarter at d3. The Dubai developer’s project encompasses three towers, housing 558 units, with construction starting in H2 and completion slated for Q2 2027. Dubai Holding Real Estate is an amalgam of Dubai Properties and Meraas, along with two other entities — North25 and Ejadah. The project will be a combination of 1 B/R, 2B/R and 3 B/R lofts, duplexes and penthouses, along with the usual amenities, including a double-level infinity pool, gym, gardens with jogging tracks, tennis courts and basketball courts; it will have views of Burj Khalifa and Dubai Water Canal.

Deyaar has launched a US$ 300 million residential project, the fifty-two floor Mar Casa, in Dubai Maritime City. It will comprise 1 B/R, 2 B/R and 3 B/R apartments, duplexes and luxury penthouses, with 1 B/R prices starting at US$ 350k; all will have floor-to-ceiling windows and balconies offering panoramic views of both the ocean and Dubai’s skyline. Along with the usual accoutrements, the project will have an indoor and outdoor residents’ lounge, padel court, yoga and breakout spaces, kids play area, and kids club along with a roof-top infinity pool.

According to Knight Frank’s The Wealth Report, prime property prices are still a lot cheaper than other major global cities. It has calculated that for US$ 1 million, a Dubai buyer could acquire 105 sq mt of property, but for the same amount, the respective buyer in Monaco, Hong Kong, New York, London, Paris, Tokyo and Melbourne would only get 17 sq mt, 21 sq mt, 33 sq mt, 34 sq mt, 43 sq mt, 60 sq mt and 87 sq mt respectively. The fact that Dubai prices are a lot lower on a global scale is one of the main reasons why the local market has led in terms of prime property price increases for the second consecutive year in 2022, registering an increase of 44% out of one hundred markets tracked by Knight Frank. Other factors in play include it being a regional hub and positive/progressive government initiatives, allied with a widening global awareness and appeal. On top of that, Dubai has become the most connected city post-Covid in the world last year, up from second position during pre-Covid. The emirate also leads the consultancy’s forecast with prime prices expected to jump 13.5% this year – higher than other ranked global city. Prime properties in Madrid, Mumbai, Cape Town and Sao Paulo are cheaper than the emirate in a list of twenty cities.

Despite the lagging impact of mounting global macroeconomic pressures, including rising interest rates, inflation and the devaluation of emerging market currencies, S&P Global Ratings report is still bullish on the Dubai property market, adding that it is resilient. Its March report also indicates that, for the fourth year in a row, property developers are expected to record positive cash flows in 2023, attributable to healthy pre-sales and favourable payment terms on offer.  Developers will also benefit from the fact that post-handover payment plans appear to be giving way to residual cash collections of about 20% – 30% of the total on handover.

It is reported that Gayo Aviation has signed a Letter of Intent to buy ten nineteen-seater PHA-ZE amphibious planes from Jekta. The Dubai air charter and brokerage firm is expected to use the Passenger Hydro Aircraft Zero Emissions for regional transport to underserved areas; the amphibious aircraft can take off and land on both water and land. According to the Swiss plane-maker, it is taking advantage of enhanced battery technology that will cut per-passenger-per-hour costs by more than 70%, compared to current seaplanes. It is expected that a prototype will be ready within three years and the planes will be flying commercially by 2028.

All the regional central banks raised their benchmark borrowing rates after the US Federal Reserve raised its key interest rate by 25bp; the Central Bank of the UAE raised the base rate applicable to the Overnight Deposit Facility (ODF) by 25bp – from 4.65% to 4.90%.  Three other central banks – Saudi Arabia, Bahrain and Qatar – lifted their benchmark borrowing rates by the same amount.

The Ministry of Economy has increased prices of eggs and poultry products in the country in line with the provisions of Federal Law No. 15 of 2020 on consumer protection. These temporary six month 13% increases are aimed at ensuring a balanced merchant-consumer relationship and preserving food security across all marketplaces at a national level. The ministry took action following a request submitted by a number of companies indicating that they had incurred significant losses over the last period, as a result of high production costs and production inputs from imported material, including fodder, and increasing shipping costs.

This week, the country’s Central Bank announced the launch of its digital currency strategy, appointing G42 Cloud and R3 as the infrastructure and technology providers for implementing the initiative. The main aims of the Central Bank Digital Currency strategy are to improve domestic/cross-border payments, and to enhance financial inclusion, ahead of a move towards a cashless society. CBDC is a risk-free form of digital money issued and guaranteed by the Central Bank and serves as a secure, cost-effective and efficient form of payment and a store of value. The first phase, expected to last until Q2 2024, will include:

• the soft launch of mBridge to facilitate real-value cross-border CBDC transactions for international trade settlement
• proof-of-concept work for bilateral CBDC bridges with India
• proof-of-concept work for domestic CBDC issuance, covering wholesale and retail usage

There was strong demand for a five-year US$ 600 million Sukuk for Air Lease Corporation – the first such bond issued by a US corporation on the local market. ALC is one of the world’s largest aircraft leasing companies and had already raised over US$ 20 billion through the global  bond market. There were orders of over US$ 2.2 billion that allowed the US company to increase its offer to US$ 600 million, with a profit rate of 5.85%, at a spread of 185 bp over US treasuries. ME investors received 80% of the allocation.

DFM shareholders approved the 2022 audited financial statements, at Tuesday’s AGM, whilst also ratifying the Board of Directors’ recommendation of a cash dividend of US$ 37 million, equivalent to 1.68% of the capital. At the same time, it approved a new fixed dividend policy for the Company, that the annual distribution should be at least 50% of its distributable net profit, superseding the current practice of cash dividends every two years.

Because of “very strong demand from retail investors and elevated oversubscription of the UAE Retail Offer”, Al Ansari Financial Services has increased the size of the retail tranche in its initial public offering from 37.5 million to 56.25 million shares, equating to 7.5% of the total shares on offer; the qualified investor offer has been reduced by 18.75 million shares to 693.75 million shares, or 92.5% of the total shares on offer. The price range will be between US$ 0.272 and US$ 0.281 per share.

The DFM opened on Monday, 20 March 2023, 37 points (1.1%) lower on the previous week, remained flat to close on 3,349 by Friday 24 March. Emaar Properties, US$ 0.05 lower the previous week, gained US$ 0.04 to close the week on US$ 1.48. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.66, US$ 3.46, US$ 1.49, and US$ 0.34 and closed on US$ 0.68, US$ 3.51, US$ 1.42 and US$ 0.34. On 20 March, trading was at 95 million shares, with a value of US$ 54 million.

By Friday, 24 March 2023, Brent nudged US$ 1.13 (1.5%) higher to close on US$ 74.98 but was US$ 9.46 (11.2%) down on its month opening of US$ 84.44.  Gold was US$ 1 higher on the week, at US$ 1,981, on Friday 24 March, but up US$ 145 (7.9%) on MTD. Oil experts got their US stock figures in tangle this week expecting a 1.6-million-barrel drawdown in crude inventories, with the American Petroleum Institute later confirming a 3.3 million barrel rise. Meanwhile, US Energy Secretary Jennifer Granholm also said that replenishing the country’s Strategic Petroleum Reserve, at its lowest level in forty years, could take several years.

Russia, the world’s second biggest exporter, announced that it would continue to reduce oil production by 500k bpd until June; the cut had been introduced last month, following the introduction of a G7 price cap, and an EU embargo, on its refined oil products. The International Energy Agency noted that global supply should “comfortably” exceed demand in H1. This follows last week’s trading that saw Brent posting its biggest declines in months, following the collapse of two large US banks and the Credit Suisse debacle. Next week will see the Opec+ meeting, where it will probably adjust its output in response to the changing market conditions – in Q4, the bloc had slashed its collective output by two million bpd in response to a slowing global economy. Oil prices fell on Friday because of demand concerns following on from the ongoing bank crisis and the fear that rising interest rates could slow the global economy.

The IMF is to lend Ukraine US$ 16.6 billion in what is one of the largest financing packages Ukraine has received since the March 2022 invasion; it comes after the world body changed its rules allowing loans to countries facing “exceptionally high uncertainty”. The war has seen the embattled country’s economy contract by 30% last year, with a major part of its capital stock destroyed. The IMF noted that “the programme has been designed in line with the new fund’s policy on lending under exceptionally high uncertainty, and strong financing assurances are expected from donors, including the G7 and EU.” Surprisingly, their 2023 forecast is for a slight contraction or growth.

There are still only two publicly declared bidders – Ineos owner Sir Jim Ratcliffe and Qatari banker Sheikh Jassim – to buy Manchester United, with reports that several other potential investors have recently made their submissions, one of which is US investment company Elliott which has made an offer to purchase a minority stake, irrespective of who ends up owning the club. To date, it is reported that United officials met eight different potential investors over a ten-day period of high-level meetings recently, including Ratcliffe and representatives of Sheikh Jassim. Reports indicate that both parties have submitted their initial bids and both come in around the US$ 5.5 billion mark – and some way off the Glazers’ US$ 7.0 billion level. Latest betting points to the fact that the Glazers will still own Old Trafford by the end of the process.

Latest data from the OECD points to global growth rising  2.6% this year and 2.9% in 2024, driven by improved business and consumer confidence, declining food and energy prices and the re-opening of the Chinese economy. Its latest Interim Economic Outlook also sees headline inflation, in most G20 countries, dipping 2.2% this year to 5.9% and a further 1.4% in 2024 to 4.5%. The decline is down to several factors including tighter monetary policy taking effect, lower energy prices easing, and declining global food prices. But these figures are still above most central banks’ 2.0% inflation target, and it appears that inflation will go down at a much slower pace than it rose. With global inflation being held up by strong service price increases and cost pressures from tight labour markets, it seems that inevitable that many central banks will have to continue with high policy rates well into next year. If only they had taken action earlier when rates started to drift above the 2.0% target in 2021, then much of this would have been avoided.

The OECD also expects that 2023 and 2024 growth in the US, China and the euro area will come in at 1.5%/0.9%, 5.3%/4.9%. and 0.8%/1.5%. It noted that “the outlook today is slightly more optimistic than our previous forecasts, though the global economy remains fragile.” The key concern continues to be the war in Ukraine, and its global impact, with other disrupting factors such as persistence in services inflation, turbulence and uncertainty in global financial markets, and the downward trend in underlying growth prospects.

The UN Conference on Trade and Development has forecast that after a significant slowdown in Q4, driven by geopolitical tensions and macroeconomic headwinds, global trade is expected to remain “subdued” in 2023; it expects that trade will nudge 1.0% higher this quarter, while trade in services is expected to increase by about 3.0%.

Furthermore, Unctad reiterated that:

• commodity prices are expected to remain above pre-pandemic averages, especially for energy, food and metals
• interest rates will continue to edge higher as many central banks try to rein in surging inflation pressures – most of whom should have done something about it eighteen months ago and, if this had occurred, the world would be in a better place economically.
• current record levels of global debt will continue to impact the macroeconomic conditions of many countries

but on the flip side noted that the economic outlook for major economies has been helped by:

• decreasing shipping costs
• a weakening greenback
• rising demand for services will help bolster global trade

The world body summarised by saying that “overall, although the outlook for global trade remains uncertain, the positive factors are expected to compensate for the negative trends.”  Many analysts would argue against this conclusion and that we are heading into more turbulent economic times in 2023.

The world’s third largest economy, which had seen salaries largely unchanged over the past twenty years, has witnessed the country’s largest pay increases this century. On Wednesday, the three hundred top Japanese companies and labour unions heeded Prime Minister Fumio Kishida’s call for higher wages to offset rising living costs. The PM, noting that inflation is at a forty-year high, allied with a weak yen and higher commodity prices pushing up import costs, saw the need for higher pay, with the average 3.0% increase at the “shunto” spring wage negotiations being the biggest since 1997. This is the first time ever that all of Japan’s major automakers had fully accepted union demands. However, these increases were only negotiated with the country’s larger companies, and it appears that, yet again, workers at smaller companies – which make up almost 70% of Japan’s workforce – have not been so lucky. Even now, Japanese salaries remain well behind the average for the OECD grouping of rich countries, as January saw real wages decline at their fastest pace in nine years, (when the sales tax was increased from 5% to 8%). It is estimated that wages have grown just about 5% over the last thirty years, far below an average 35% gain among member countries during the same period.

Japanese shares fell on Friday on the back of the Fed’s 0.25% rate rise, as markets digested the possibility of further hikes and a possible pause in US monetary tightening. Both the benchmark Nikkei 225 Index and the broader Topix declined to 27,385 and 1,955 points respectively.

On Wednesday, the US Securities and Exchange Commission filed a complaint against Justin Sun accusing him of artificially inflating the trading volume of Tronix and BitTorrent and concealing payments made to celebrities, including Lindsay Lohan and Jake Paul, to promote the tokens. Sun was also accused of instructing his employees to conduct massive amounts of simultaneous, or nearly simultaneous, purchases and sales of TRX and BTT without any actual change in ownership so as to appear that normal trading was being carried on, causing investors to suffer losses whilst the companies garnished illegal profits. It is alleged that Lohan and Paul, along with rapper Akon, recording artists Ne-Yo and Lil Yachty, and adult actress Michele Mason, promoted Sun’s companies to their millions of online followers, without disclosing that they had received commission; although these six “celebrities”  settled with the SEC by paying more than US$ 400k in fines , others such as rapper Soulja Boy and pop singer Austin Mahone, who were also named in the SEC’s complaint, have yet to settle with the authority.

Embattled Chinese property giant Evergrande is back in the news again as it announces a US$ 20.0 billion restructuring offshore debt plan which could be seen as a model for other struggling developers. The company, saddled with more than US$ 300 billion in liabilities, famously was unable to pay its debts in 2021. At that time, it was China’s top-selling developer and the world’s most indebted property developer – and also failed to repay US$ 1.2 billion interest on foreign loans.  The developer fell foul of new rules in 2020, that were introduced to control the amount owed by big real estate developers ,and was then forced to sell property at big discounts to maintain some form of liquidity to keep the company running. Under this proposal, creditors will swap Evergrande bonds for new bonds and equity-linked investments backed by the company and two Hong Kong-listed subsidiaries; earlier this week, it was reported that a key group of offshore bondholders had agreed to the proposal, with the company hopeful of convincing other bondholders to agree to the proposal by the end of the month. The company’s overdue financial reports for 2021 and 2022 will also be released in the coming months.

The chances of overseas airlines, including Emirates and flydubai, increasing their foothold into India airspace, have diminished as India’s aviation minister, Jyotiraditya Scindia, urging local carriers to fly long-haul and help establish new hubs as it seeks to recapture control of Indian travel and air space from foreign rivals. Only last month, the new owners of Air India placed a record order for 470 jets whilst IndiGo is also in talks for a new order of more than five hundred planes. Both carriers are taking a forceful approach to take control of the Indian market, whilst making an aggressive push in the international arena. Th Indian market is one of the fastest growing sectors in the world where current demand far outstrips supply and this is the main reason why Mr Scindia is pushing for aerospace companies to step-up local production and finalising rules to safeguard rights of lessors on repossession of jets. The minister also stated that domestic and international passenger traffic through six major metro airports will more than double to 420 million over the next five years, with its aviation fleet almost trebling from seven hundred to 2k over the same period. India’s fleet is set to grow to over 2,000 planes from 700 today. He also confirmed that India was not looking at increasing air traffic quotas with Gulf states and that he is working with some airlines and Delhi airport to create a hub and spoke model in the capital and has spoke about the necessity for India to have its own aviation hub rather than depending on hubs “in either the eastern border of my country or the western border of my country”.

Following the BoE’s decision to nudge rates 0.25% higher to 4.25%, (its highest rate in fourteen years), its supremo, Andrew Bailey, has noted that he is “much more hopeful” for the UK economy, and that the UK was no longer heading into an immediate recession. The unexpected decision came after inflation figures rose again into double-digit territory – 10.4% last month – and following the collapse of the Silicon Valley Bank along with the debacle of Credit Suisse. However, he added the caveat that the UK was “not off to the races”, with the economy expected to grow only slightly in the coming months.

Although 3.5% lower than twelve months ago, UK February retail sales 1.2%, following an 0.9% rise a month earlier, as shoppers turned to discount/second-hand stores, charity shops and auctions last month – and accounting for the 2.4% growth in non-food sales. According to the Office for National Statistics, food sales also headed north but reductions were seen in spending on restaurants and on takeaway meals. These figures arise at a time when inflation returned to double-digit territory. However, closer analysis confirms that retail sales have shown little real growth since the end of 2021, as price rises eat into consumer spending ability.

Not before time the banking world and Switzerland have seen the end of the corrupt-ridden, arrogant and mismanaged Credit Suisse. On Monday, it was announced that the troubled financial institution would be taken over by UBS in a Swiss-government brokered rescue deal, with the latter paying US$ 3.23 billion for the bank and taking over US$ 5.4 billion in losses. Not only had Credit Suisse lost both customer and market confidence, but Switzerland has also taken a major blow to its once-paramount industry. It was estimated that combined, both banks would hold assets of up to 140% of Swiss GDP. It is difficult to estimate the fallout collateral to a country so dependent on the finance sector for its economy. The Neue Zuercher Zeitung noted that “The Swiss bank had a stock market value of CHF 100 billion in 2007, of which CHF 7 billion were left last Friday.”

Over the past fortnight, gold prices have surged by around US$ 150 per troy oz, driven by the fear factors of banking stress and the increased probability of a US recession of sorts over the next twelve months. Even that word ‘contagion’ has reappeared in the banking sector – after laying dormant since the 2008 GFC – following the SVB and Credit Suisse collapses and whether they are the start of another full-blown banking crisis. With Deutsche Bank’s share price falling sharply in recent times, German Chancellor Scholz has had to come out and confirm that the bank remains profitable and there is no reason to doubt its future. However, with its past history, and it having lost 20% of its value this month, along with the cost of its five-year credit default swaps at a four-year high, this could be the proverbial canary in the coal mine. With global banking stocks losing value by the day, there will be many sleepless nights before the current banking crisis has been finally put to bed. Until then Beds Are Burning!

Signed Sealed and Delivered                                                  10 February 2023

The 2,785 real estate and properties transactions totalled US$ 2.81 billion, during the week, ending 10 February 2023. The sum of transactions was 311 plots, sold for US$ 545 million, and 1,999 apartments and villas, selling for US$ 1.25 billion. The top three transactions were for land, the highest in Wadi Al Safa 2, selling for US$ 21 million, followed by a plot in Umm Suqaim Second, worth US$ 15 million and the other in Palm Jumeirah, for US$ 14 million. Al Hebiah Fifth recorded the most transactions, with 130 sales worth US$ 109 million, followed by Al Yufrah 1, with fifty-one sales transactions, worth US$ 82 million, and Jabal Ali First, with twenty-three sales transactions, worth US$ 34 million. The top three transfers for apartments and villas were a US$ 50 million villa in Palm Jumeirah, followed by two apartments, one in Business Bay for US$ 43 million and the other in Al Wasl for US$ 32 million. The mortgaged properties for the week reached US$ 948 million, whilst eighty-eight properties were granted between first-degree relatives worth US$ 80 million.

Imtiaz Developments has completed the ground-breaking works of Westwood Grande by Imtiaz, located in Jumeirah Village Circle; the project comprises fourteen residential floors and retail space, with prices for fully furnished studio and one-bedroom apartments starting at US$ 133k, along with an attractive payment plan. This follows its success of Westwood by Imtiaz in Al Furjan. The developer has a further four projects planned in JVC, along with six more in other Dubai locations.

All hospitality indicators continued to post returns confirming the sector’s robust recovery post-Covid and the cost-of-living crisis. 2022 average occupancy for the hotel sector came in 6% higher on the year at 73%, one of the highest returns in the world; it is only 4% short of the pre-pandemic period of 2019, even though there has been a 16.2% increase in room supply, to 146.5k rooms, since 2019, with the number of hotel establishments up 8.5% to 804. There were marked increases in other key metrics including Occupied Room Nights, up 31.37% to 37.43 million, and 16.6% higher seen in pre-pandemic 2019. Meanwhile Average Daily Rates topped US$ 146, 18.8% higher on the year, and 29.1% up on 2019; RevPar posted a significant US$ 106+ – up 29.9% on the year and 25.3% compared to 2019.

The Jumeirah Group, launched in 1997 and part of the Dubai Holding since 2004, currently operates a 6.5k-key portfolio of twenty-six luxury properties across the ME, Europe and Asia, with its flagship property being the Burj Al Arab; last year, in line with its strategy to expand into the luxury serviced residences segment, it unveiled its fourth branded residence in Dubai – also part of its new Peninsula waterfront development. This week, it announced that it had acquired Geneva’s 1875 Le Richemond hotel, with eighty-seven rooms and twenty-two suites. This purchase becomes the Group’s fifth European property which includes the Carlton Tower Jumeirah, and Jumeirah Lowndes Hotel in London, the Capri Palace Jumeirah in Italy and Jumeirah Port Soller Hotel & Spa in Mallorca, Spain.

Dubai’s Department of Economy and Tourism reported that there was a 97.3 % surge in in international overnight visitors last year to 14.36 million. In pre-Covid 2019, that figure stood at 16.73 million – down 14.2 % – but well ahead of the UN’s World Tourism Organisation estimate that 2022 global tourist travel in 2022 was 37% lower. (The ME regions saw the strongest relative increase, with arrivals climbing to 83% of pre-pandemic numbers). It is estimated that Dubai was the world’s most visited and re-visited destination, and that the emirate has emerged as a clear leader in the global tourism industry. The main markets continued to be Western Europe and GCC regions – each accounting for 21% of arrivals – followed by South Asia, MEMA, the Americas, North Asia, SE Asia, Africa and Australasia, with shares of 17%, 12%, 7%, 5%, 5%, 5% and 2%.

Dubai’s seasonally adjusted S&P Global PMI in January remained in positive territory but softened 0.7 on the month to 55.2 – still way ahead of the 50.0 threshold that distinguishes expansion from contraction; improvements were noted in consumer demand and with employment, but the pace of growth was the lowest in twelve months The strong improvement has been witnessed in most sectors, with “robust expansions in both output and new orders”. The rate of new order growth remained “marked overall”, boosted by the strongest increase in new work at construction companies, which rose to a three-and-half-year high, whilst strong demand resulted in higher customer orders and increased advanced bookings, as new projects commenced. Delivery times improved at the strongest rate since the end of 2019, while overall input costs were largely unchanged following a slight drop in December. There was no surprise to see employment numbers heading north again, as companies took on more staff to meet with the increased demand, especially noticeable in the tourism and hospitality sector. These figures are even more remarkable when compared to other nations struggling because of headwinds facing the global economy at large.

At Monday’s Cabinet meeting, HH Sheikh Mohammed bin Rashid announced that the country’s 2022 foreign trade rose 17.0%, on the year, and topped the US$ 600 trillion (AED 2.2 trillion) mark for the first time. The meeting also approved several other initiatives, including the establishment of a National Space Fund which will be established to support the implementation of ambitious projects in the field of space; it will be managed by the UAE Space Agency. The Cabinet approved the National Policy for IoT security, the National Programme for Cybersecurity Accreditation and the National Policy for Cloud Security, as well as the National Framework for Sustainable Development, which aims to preserve ecosystems and ensure the sustainability of the country’s natural resources. It also adopted a decision on updating the “Made in the UAE” unified national mark ecosystem, to support national products. The meeting approved the establishment of embassies in four countries – Denmark, Czech Republic, Finland and Mongolia – and also several international agreements with a number of friendly countries, including Lithuania, the Democratic Republic of Ethiopia, Poland, Russia and Israel.

In a study by Redcap, Dubai was placed first in the region and second globally as a cryptocurrency hub, beaten by London which was placed as the leading crypto hub in the world, thanks to its strong financial infrastructure and thriving start-up ecosystem. Kuwait was the only other ME country to make the top twenty list which included the likes of New York, Singapore, Los Angeles, Zug, Hong Kong, Paris, Vancouver and Bangkok, making up the other eight positions. The study looks at several key points including quality-of-life score, crypto-specific events, people working in crypto-related jobs, crypto companies, R&D spending as a percentage of GDP, number of crypto ATMs, capital gains tax rate, and ownership of crypto.

It is reported that GMG has acquired aswaaq LLC, including its companies operating in retail, trading, and properties, from the Investment Corporation of Dubai. GMG, a global well-being company retailing, distributing, and manufacturing a portfolio of leading international and home-grown brands across sport, food and health sectors, announced that this deal adds a total of eleven community malls and twenty-two supermarkets to GMG’s rapidly expanding retail network. Last April, it purchased Géant operations in the UAE from Urban Foods by Dubai Holding, which then added eighteen hypermarket and supermarkets to its portfolio. Currently, GMG employs 8.7k people and this move will see an additional 10% added to its payroll.

Last year, DP World Limited handled 79 million 20’ equivalent units, with gross container volumes increasing by 1.4% on the year on a reported basis and up 2.8% on a like-for-like basis; its flagship base, Jebel Ali managed 14.0 million TEUs in 2022 – up 1.7% year-on-year – as its high-margin origin and destination cargo grew by 8.6%.  In Q4, this figure was at 19.5 million TEUs – a 2.4% hike on a like-for-like basis. Growth was driven by Asia Pacific, the Americas and Australia regions.

DP World has announced another foray into the sporting world by becoming an Official Partner of the McLaren Formula 1 Team from 2023, with the aim of making the F1 team’s supply chain faster, smarter, and more sustainable. The Dubai conglomerate, one of the leading providers of worldwide smart end-to-end supply chain logistics, will also become the lead partner of McLaren APEX, McLaren’s off-track business-to-business event programme. DP World’s smart logistics solutions will bridge McLaren’s global and complex supplier network, to support the ongoing development process and on-track performance gains. The partnership will also form an essential part of its business growth plans in the automotive, technology and energy sectors. From the 2023 F1 season, DP World branding will feature on the 2023 McLaren F1 cars and the overalls of McLaren F1 Drivers, Lando Norris and Oscar Piastri.

Dubai Electricity and Water Authority is set to become the first utility provider in the world – and the first UAE government entity – to use ChatGPT, supported by Microsoft; the services will be supported by Moro Hub, a subsidiary of Digital DEWA, with the aim of providing services supported by this technology and employing it in serving customers and employees.

Dewa posted a 25.0% annual jump in Q4 net profit to US$ 409 million, as revenue grew 14.0% to US$ 1.83 billion on the back of Dubai’s increased demand for electricity and water. For the whole year, revenue and net profit both moved higher – by 15.0% to US$ 7.47 billion and 22.0% to US$ 2.18 billion. Last year proved to be a record year for the utility measured by both financial performance and growth. Its MD, Saeed Al Tayer, has kept his shareholders happy confirming “for the year 2022, Dewa had promised to pay AED 6.2 billion (US$ 1.69 billion) in dividends. Instead, Dewa intends to pay AED 9.9 billion (US$ 2.87 billion) in dividends to its shareholders”. Last year, demand for power reached 53.2 terawatt hours (TWh), an annual jump of about 5.6% – and for water 136.9 billion imperial gallons, 6.5% higher on the year. It also added 51.1k new customers last year, up nearly 4.6%.

Today, TECOM announced double-digit growth in its 2022 revenue and profit figures – up 12.0% to US$ 537 million and by a record 28.0% to US$ 198 million, driven by strong consumer demand, a buoyant local economy and increased business and consumer confidence. Its EBITDA margin came in 2% higher to 68%, attributable to improved revenue quality from all its different business segments and enhanced operating expenses management. Following an initial interim dividend of US$ 54 million, (AED 200 million), last November, and in line with the company’s declared policy, the Group has decided to award a further US$ 44 million dividend, “following our exceptional FY 2022 performance”. Its chairman, Malek Al Malek also confirmed that “we remain committed to distributing a total dividend of US$ 218 million, (AED 800 million) per annum in our first three years of being a listed company.” As at year-end, Tecom reported an 8.0% rise in occupancy to 86%, with the number of companies 22% higher at 9.5k, and the value of its investment property portfolio 9.7% to the good, at US$ 5.80 billion.

Salik announced a 12.0% hike in 2022 revenue, to US$ 514 million, driven by higher growth in traffic, whilst net profit dipped 4.0% to US$ 360 million; total assets grew about 17 times to US$ 1.44 billion on the year. The emirate’s toll road operator posted a 12.6% increase in revenue-generating trips to 413 million though Salik toll gates. Prior to its September US$ 1.02 billion IPO, (which was forty-nine times oversubscribed), the RTA made Salik a separate legal entity with a forty-nine-year concession agreement. The government still has a 75.1% stake in Salik, with the UAE Strategic Investment Fund, Dubai Holding, Shamal Holding and the Abu Dhabi Pension Fund cornerstone investors in the IPO, with a total commitment of US$ 165 million.

Dubai Aerospace Enterprise posted a 2022 loss of US$ 279 million, mainly attributable to its US$ 538 million exposure to the Russian aviation sector – a year earlier, it had posted a US$ 150 million profit. However, the profit, before this write-off, stood at US$ 259 million – up 37.0% on the year – with revenue dipping 8.1% to $1.14 billion, driven by a decline in leasing income. Cash flow from operating activities increased by 12.0% to US$ 1.28 billion. The company, one of the global leaders in plane leasing, “lost” nineteen aircraft after Russia invaded Ukraine and commented that it “has no way” to determine whether the aircraft it had leased would be returned in the future. It did note that it had insurance cover for the aircraft and had filed “insurance claims and a litigation claim to recover amounts due under the policies”.

Commercial Bank of Dubai posted a 25.8% increase in posting a record net profit of US$ 497 million last year, with operating income 19.8% higher at US$ 1.04 billion, driven by higher net interest income and improved fee and commission income; operating profit climbed 21.5% to US$ 767 million. The bank’s operating expenses amounted to US$ 272 million, attributable to investments in digitisation, business growth, risk management and governance, whilst the net impairment charge totalled US$ 270 million. There was a 1.6% increase in total assets to US$ 31.6 billion, whilst decreases were noted in net loans and advances, down 2.4% to US$ 20.3 billion, and customers’ deposits 2.0% lower were at US$ 22.1 billion.

The DFM opened on Monday, 06 February 2023, 54 points (1.6%) higher on the previous week, gained 74 points (2.2%) to close on 3,457 by Friday 10 February. Emaar Properties, US$ 0.09 lower the previous fortnight, gained US$ 0.06 to close the week on US$ 1.57. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.64, US$ 3.68, US$ 1.52, and US$ 0.39 and closed on US$ 0.66, US$ 3.75, US$ 1.55 and US$ 0.39. On 10 February, trading was at 123 million shares, with a value of US$ 85 million, compared to 80 million shares, with a value of US$ 61 million, on 03 February 2023.

By Friday, 10 February 2023, Brent, US$ 6.72 (7.8%) lower the previous week, dipped US$ 0.27 to (0.3%) to close on US$ 86.39.  Gold, US$ 68 (3.5%) lower the previous week, nudged US$ 2 (0.1%) lower to close, at 1,876, on Friday 10 February.

Taking effect this week, the G7 nations, the EU and Australia have set price caps for Russian diesel and other refined petroleum products to keep markets supplied while limiting Moscow’s revenues. The agreement sees price caps at US$ 100 per barrel on products that trade at a premium to crude, principally diesel, and US$ 45 per barrel for products that trade at a discount, such as fuel oil and naphtha. This comes after a crude price cap of US$ 60 per barrel was set by the bloc on 05 December.

After last week’s announcement that Shell had posted a record 2022 profit of US$ 40.0 billion, beating its previous record of US$ 28.4 billion in 2008, this week it was BP’s turn. Driven by continuing high energy prices, it returned a record US$ 28.0 billion 2022 profit, with its underlying replacement cost profit, the company’s definition of net income, surging to US$ 27.65 billion, 115.7% higher on the year. The petro-giant raised its dividend by 10% to US$ 0.066 and announced another share buyback of US$ 2.75 billion. It also plans to add a further US$ 1.0 billion a year, up to 2030, to investment in “high quality” oil and gas projects. It expects to retain some oil and gas assets “longer than previously envisaged” due to improving commercial conditions over the past four years. Global Justice Now estimates that “the Big 5 oil companies handed well over US$ 100 billion to wealthy shareholders last year. They are cash machines for the rich.” The UK has increased the Energy Profits Levy on oil and gas companies by 10% to 35%, taking the total tax on the sector to 75%.

So that it can pour more money and resources into engineering and manufacturing, Boeing plans to scrap 2k jobs in finance and human resources this year and will outsource about 33% of these positions to India’s Tata Consulting Services. It did confirm that it would be strengthening its payroll numbers this year, by a further 10k, (compared to the 15k new starters in 2022), “with a focus on engineering and manufacturing”. It has been a turbulent few years for the plane maker, with the two fatal 737Max fatal crashes and design problems with the 777X.

Alphabet has had a week to forget when it lost US$ 100 billion, equating to 9%, in market cap as it introduced its new chatbot Bard, which shared inaccurate information in a promotional video – not the best way to launch a new product. Furthermore, Google’s live-streamed presentation on Wednesday failed to include any details about how and when Bard would be integrated into the company’s core search function, whereas rival Microsoft held an event showcasing its newly released Bing search with ChatGPT functions integrated.

Joining the long lines of tech giants that have recently slashed payroll numbers, Dell Technologies Inc announced the elimination of   6.6k jobs, equating to 5% of its global workforce. Like its peers, the company is being impacted by falling demand for its personal computers as it notes that market conditions “continue to erode with an uncertain future.” Not only has there been a fall in demand, and a declining revenue stream, it has seen costs driven higher by rising interest rates and marked increases in its cost structure.

Yahoo also announced big 20% cuts to their work force which will see nearly 1.8k employees made redundant. A reorganisation of its advertising unit will be the worst hit unit, with half of its workers let go by year-end, and 1k out of a job within seven days. Like its peers, it is struggling with a marked downturn in demand, rising interest rates, (which are still going higher), and soaring inflation, (which is showing signs of heading south). The tech company noted that, “these decisions are never easy, but we believe these changes will simplify and strengthen our advertising business for the long run, while enabling Yahoo to deliver better value to our customers and partners”.

This week, Zoom joined this long list of tech giant which have been slashing payroll costs. The video conferencing company is laying off 1.3k employees, equating to 15% of staff numbers. This comes at a time as the entire technology industry tries to bring some sort of equilibrium to staff numbers after an over-exuberant hiring spree seen during the early months of Covid; over a twenty-four-month period, Zoom has managed to triple its size. In the past twelve months, its share value has fallen 41%, but is up 27% YTD including jumping 10.0% on Tuesday, following the news.

Disney also joined the queue in flipping its staff, cutting 7k jobs – equating to 3.6% of its total workforce – as part of an effort to save US$ 5.5 billion in costs and to make its streaming business profitable. The cost cuts will comprise US$ 2.5 billion in sales/general administrative expenses and other operating costs, along with US3.0 billion in savings from reductions in non-sports content, including the layoffs. The main drivers behind these measures are slowing subscriber growth and increased competition for streaming viewers. Under the plan to cut costs, and return power to creative executives, the company will restructure into three segments – an entertainment unit that encompasses film, television and streaming, a sports-focused ESPN unit, and Disney parks, experiences and products. The media company reported its first quarterly decrease in subscriptions for its Disney+ streaming media unit, which lost more than US$ 1 billion. Q4 revenue and net income reached US$23.51 billion and US$ 1.28 billion.

Adidas has issued its fourth – and most probably its most damming – profit warning, since July, on the losses it could incur, following its decision to cut ties with the rapper and fashion designer Kanye West, now known as Ye, in November. The figure could run as high as US$ 700 million if the German fashion brand actually scrap its remaining stock of Yeezy sneakers; of that total, US$ 535 million of profits could be ditched if it were to dispose of its remaining Yeezy stock, and with a business shake-up, following this termination, to cost a further US$ 215 million, potentially pushing the company to an operating loss of US$ 750 million this year. In 2022, Adidas posted a 67% slump in profit to US$ 715 million, not helped by the war in Ukraine and the close down of most of its Chinese market; on the news, there was a 9.0% decline in its US-traded shares.

Somebody who doesn’t like Mondays must be billionaire Indian businessman Gautam Adani whose Adani Group saw its market cap fall by a further US$ 6.00 billion on the day. The Group has managed to lose nearly US$ 140 billion in its share value, over an eight-day trading period, following a damaging report by Hindenburg Research on 24 January.

This week, AstraZeneca, with its HQ in Cambridge and plants in England, has decided to build its new US$ 380 million factory in Dublin, much to the disappointment of many including Chancellor of the Exchequer Jeremy Hunt. It appears that the drugs giant, the country’s biggest public listed company, would have preferred a site in NW England but was put off by the UK’s “discouraging” tax rate, with the UK minister agreeing with the firm’s “fundamental case” on business taxes, but insisting that the Sunak government would not consider tax cuts funded by borrowing. A sad loss of for the UK and another reason for companies to choose Ireland despite the fact that this will provide more than one hundred skilled jobs to one of the UK’s poorer regions.

There is no doubt that the Egyptian economy is struggling and its people suffering as January inflation rose 4.5% to 25.8% on the month – its highest figure in over five years. Nearly 30% of the 104 million population live in poverty, with many more hovering just above the poverty line. Over the past twelve months, because of numerous devaluations, the value of the pound has almost halved. Rising inflation is mainly driven by higher food prices, which account for 32.7% of the index’s basket, with huge monthly rises seen including meat/poultry by 18.9%, oil/fats by 11.1%, dairy products and eggs were up 10.3%, fish/seafood – 9.0% – and bread/cereals (7.1%).  To add to their woes, Egypt has a shortage of foreign currency causing continuing delays in getting imports into the country and subsequent shortages of some much-needed goods and manufacturing material.

New figures indicate that the UK narrowly avoided falling into recession in 2022, as the economy saw zero growth in Q4 despite a 0.5% fall in economic output during December, mainly down to strike action. The previous quarter’s figures were amended to show that Q3 contraction was 0.2%, not 0.3%. The BoE still expects the UK to enter recession this year but that the recession will now be shorter and shallower than previously expected, however, inflation is still in double-digit territory. Although the UK is still the only G7 country where the economy is smaller than pre-pandemic levels, the UK economy was 4.0% bigger last year than it was in 2021 – the biggest increase of all G7 nations for last year.

Australia’s Recharge Industries, owned by New York fund Scale Facilitation Partners, has  been named as the preferred bidder for  Britishvolt, the UK battery start-up which collapsed last month. The company, that had been placed into administration having run out of funds, had plans to build a US$ 4.6 billion mega factory to make electric car batteries, ran out of funds and entered into administration. It has entered into an agreement with Recharge, which is building a similar facility in Australia, to take over its business and assets. Although it is reported that Recharge paid a premium to win the bid, initial details are sketchy, but EY, the administrators, indicate that the deal may be completed within seven days.

This week, the Reserve Bank of Australia has confirmed that the nation can expect to see at least two more rate rises, but they most probably will be 25bp hikes, rather than the past four 0.50% rises, which occurred between July and September. Its cash rate target was 3.10% prior to Tuesday’s meeting and now stands at 3.35%, so with at least two more hikes of 0.25% in the coming months, this will move the rate to 3.85%. Some think that it could well be at over 4.0% by the 30 June year-end, particularly as wage forecasts have also been upgraded, with pay rises expected to pass 4.0% by the middle of this year. The bank infers that the rises are necessary to ensure that high inflation quickly starts to head lower, but it does expect inflation to remain higher than in its previous forecasts.

The RBA has estimated that between 50% to 75% of the inflation is derived from supply disruptions, many of which are now easing as Covid cases decline and supply chains adjust to disruptions arising from the Russia-Ukraine war. The problem is timing for the RBA, since Australia was about six months behind the curve when inflation started soaring – whether it is six months behind when inflation heads lower is highly unlikely but a possibility that has to be considered. Another factor is the timing that companies pass on the reduction of some of these supply chain costs which will have a bearing on how quickly the rate will fall. The RBA forecasts core inflation will peak at 6.25% by 30 June, and  fall to 4.25% by December, with wages set to rise 4% by June and peak at 4.25%. GDP is expected to fall 0.2% next year to 1.4% and with a population growth of 1.5%, this points to a growth in net immigration;  if that is the case, there will be a slight decline in GDP per capita. The “lucky” country is in for a rocky eighteen months.

The Food and Agriculture Organisation of the United Nations (FAO) confirmed that global food prices dropped for the tenth consecutive month in January, with the latest index, tracking monthly changes in the global prices of commonly traded food commodities, posting 131.2 points, 0.8 lower than in December. The world body also noted small price decreases on its latest meat and sugar indices. In the month, vegetable oil prices fell 2.9%, with cereal prices remaining flat on the month. For the third month in a row, wheat prices dipped – in January by 2.5% – whilst maize prices nudged slightly higher, with cheese coming up slightly, even though dairy prices averaged 1.4% lower than in December, attributable to lighter demand from leading importers and increased supplies from New Zealand. There was a 6.2% monthly hike in global rice prices caused by strong local demand in some Asian exporting countries and exchange rate movements.

Bilateral trade between China and the US has hit record highs, (with the total of imports – US$ 536.8 billion – and exports, at US$ 153.8 billion), nearing US$ 691 billion, despite diplomatic relations reaching historic lows. Last week’s Chinese balloon incident did not help with any improvement in the dispute that started five years ago when the then President Trump started imposing tariffs of more than US$ 300 billion, with China retaliating by placing import levies on about US$ 100 billion of American goods. Most of those measures remain in place more than two years since Joe Biden became the country’s 46^th US president. In his State of the Union address, he confirmed “I am committed to work with China where it can advance American interests and benefit the world”. However, the country’s top diplomat, US Secretary of State Antony Blinken, had been due to visit China, in what was seen as a thawing of relations, but the meeting was called off at the last minute, after the suspected surveillance balloon was spotted over American skies.

There are reports that a free trade agreement between China and the six-nation Gulf Cooperation Council could be closer than many would believe, as China’s new Foreign Minister Qin Gang this week called for it to be finalised “as soon as possible”. In a virtual meeting with Saudi Arabia’s Foreign Minister Prince Faisal bin Farhan, he also commented that “It is important that the two sides further expand co-operation in such areas as economy and trade, energy, infrastructure, investment, finance and high-tech … strengthen the China-GCC strategic partnership and build a China-GCC free trade zone as soon as possible”. The China-GCC FTA negotiations have been ongoing since 2004, and with the latest developments it seems that there is every chance the agreement could, by the end of the year, be Signed Sealed and Delivered.

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Right or Wrong                                                                             03 February 2023

The 2,157 real estate and properties transactions totalled US$ 2.45 billion, during the week, ending 03 February 2023. The sum of transactions was 237 plots, sold for US$ 425 million, and 1,920 apartments and villas, selling for US$ 1.57 billion. The top three transactions were for land, the highest in Al Wasl, sold for US$ 40 million, followed by a plot in Island 2, worth US$ 31 million and the other in Mohammad bin Rashid Gardens, for US$ 15 million. Al Hebiah Fifth recorded the most transactions, with 108 sales worth US$ 105 million, followed by Al Yufrah 1, with twenty-eight sales transactions, worth US$ 45 million, and Al Hebiah Fourth, with fourteen sales transactions, worth US$ 41 million. The top three transfers for apartments and villas were all for the former – Island 2 – for US$ 112 million, the next in Business Bay for US$ 60 million and in Palm Jumeirah for US$ 34 million. The mortgaged properties for the week reached US$ 458 million, with the highest being for land in Al Barsha South Fourth, mortgaged for US$ 88 million, whilst seventy-four properties were granted between first-degree relatives worth US$ 41 million.

According to a Dubai-based company, with offices in China, buyers from that country look set to reclaim their top ten spot on the UAE’s list of property purchasers this year after they slipped out of the rankings during the Covid pandemic. Driven Properties confirmed that it had already handled over US$ 17 million of property deals, (up 400% on the year), for Chinese buyers this year and it expects this specific sector to boom for the rest of the year. It was only five years ago that Chinese buyers lagged  behind  only the Indians, Brits and Pakistanis, as the top four foreign nationalities investing in Dubai property. Driven, which had sales of US$ 313 million between 2017-2019, reckons that China will become the new Russia in the Dubai sector – and they will have different buying habits; 80% of Russian buy apartments by the sea, whilst 80% of purchases by Chinese will be for studios. Another positive factor for Dubai is that over 90% of Chinese investors typically do not take on mortgages, so are not normally impacted by rising mortgage rates.

Abu Dhabi’s Aldar Properties has announced its first foray into the Dubai property arena, signing a JV agreement with Dubai Holding, to develop three new communities, along the E311 and E611 corridors, in close proximity to several residential communities. The development, covering 38.2 million sq ft, will see the capital’s interloper responsible for the full development cycle, including concept design, sales, delivery, and management. Encompassing 9k residential units, and the usual accoutrement of retail and community facilities, work will start this year.

Late last week, Danube Properties unveiled its largest real estate project, Viewz, in partnership with DMCC.  The twin tower US$ 381 million project will be developed in Cluster K of the JLT district and will be Danube’s first foray into the luxury residential market and its first in JLT. The project will feature Aston Martin furnished interior common areas and amenities, with buyers given the option to select Aston Martin furnished interiors. Viewz will deliver a range of studios, and 1B/R to 3 B/R apartments, along with Sky Villas – or duplexes – with prices for studios starting at US$ 259k; all 2-3 bedroom-apartments and Sky Villas come with private swimming pools built into the homes. Two skybridges will connect the two towers. To date, the developer’s portfolio, valued at over US$ 2.22 billion, comprises 10k units in twenty-one projects, of which eleven have already been delivered, with another three slated for completion before the end of H1.

On Monday, HH Sheikh Mohammed bin Rashid Al Maktoum officially opened the Arab Health Exhibition and Congress. At the inauguration, the Dubai Ruler noted that “our goal is to create a vibrant global healthcare hub that serves not only the needs of the people of our nation but also caters to the growing requirements of our vast region. Aligned with our goal of making the UAE one of the world’s best places to live and work, we are on a constantly evolving journey to raise standards of human development and welfare.” This year, the 48^th edition was held under the theme of ‘innovation and sustainability in healthcare’ and continues to be the largest gathering of healthcare companies, technology and products in the MENA region. The four-day event attracted over 51k attendees, with over 3k exhibitors from seventy countries.

DEWA announced that Dubai’s energy demand – at 53,180GWh – rose by 5.5% last year, driven by population growth and business expansion across all key activities. Over the year, DEWA outperformed major European and American utilities with a reduced line loss of 2.2% and a world-record low electricity Customer Minutes Lost of 1.19 minutes per customer. Per the government’s strategy, DEWA is aiming to develop efficient infrastructure and increase production capacity to meet growing demand while incorporating smart technologies.

DP World has been awarded a concession, by Deendayal Port Authority, to build and operate a mega-container terminal at Deendayal port in Gujarat, India. Bankrolled by a Public-Private Partnership, under a Build-Operate-Transfer, the terminal will have a 1.1k berth, with a capacity of 2.19 million 20’ Equipment Units (TEUs), capable of handling vessels carrying more than 18k TEUs. The new development will result in enhanced efficiency and cost reductions, as well as assisting in trade growth in Northern, Western and Central India.

With the aim of connecting Dubai’s 3.2 million population, by using a “healthy mode of transport, access to key services and locations by walking and cycling within minutes,” sustainable architecture firm URB is to develop ‘THE LOOP’. The development will result in an impressive ninety-three km climate-controlled highway for recreational use.

With the US Federal Reserve raising its target interest rate by an expected 0.25% on Wednesday, the UAE Central Bank followed suit by lifting the Base Rate applicable to the Overnight Deposit Facility (ODF) by the same amount– from 4.4% to 4.65%. The CBUAE has also decided to maintain the rate applicable to borrowing short-term liquidity from the Central Bank, through all standing credit facilities, at 50 bp above the Base Rate.

January’s UAE S&P Global PMI continues to expand but softened on the month by 0.1 to 54.1, as the non-oil sector continues to demonstrate resilience despite the global economy in some disarray and high inflation levels. In January, 20% of businesses surveyed reported a rise in their output levels – with only 2% recording a decline – and new orders rose, as did employment. Growth was mainly driven by higher sales and a push to complete existing projects, but the slowing global economy impacted overall sales growth. The UAE Central Bank noted that the country’s economy grew by 7.6% last year, the highest rate since 2012, with the main drivers being progressive government initiatives, higher oil prices, a strong performance in its real estate sector and a rebound in travel and tourism. It also forecast that UAE’s economy is projected to grow 3.9% this year, while non-oil sector expansion is estimated at 4.2% and oil GDP projected at 3.0%.

The Ministry of Energy, as usual, adjusted fuel prices in the UAE on the first day of every month. According to the government, the UAE liberalised fuel prices 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 February retail petrol prices:

• Super 98: US$ 0.882 – up by 9.71% on the month and down 9.71% YTD from US$ 0.757  
• Special 95: US$ 0.798 – up by 9.73% on the month and up 9.73% YTD from US$ 0.727
• Diesel: US$ 0.921 – up 2.74% on the month and up 2.74% YTD from US$ 0.896
• E-plus 91: US$ 0.779 – up by 10.40.% on the month and up 10.40% YTD from US$ 0.706

In 2022, Dubai’s 10.5k wooden dhow movements ferried 1.7 million metric tonnes of merchandise – 12.0% higher on the year – from countries across the MENA region and further afield. The Marine Agency for Wooden Dhows, established in 2020 by Dubai’s Ports, Customs and Free Zone Corporation, continues with its strategy to improve overseas trade and contribute to the objectives of the Dubai Economic Agenda D33. Recent initiatives have resulted in faster entry and exit procedures for these wooden ships and has improved the efficiency in loading cargo. The Agency has managed to slash waiting times for departures from up to ten hours to just thirty minutes for sailing outside the emirate.

NBD REIT posted that its 31 December 2022 Net Asset Value (NAV) amounted to US$173 million (US$ 0.69 per share), 3.0% higher on the year. The Shari’a compliant real estate investment trust, managed by Emirates NBD, attributed this improvement to the continued positive momentum in the emirate’s real estate sector and the benefits from effective asset management initiatives. Its property portfolio, helped by occupancy hovering around 85% and an increase in gross income, rose 0.5% to US$ 365 million.

The DFM posted a 41.7% hike in 2022, year on year, net profit to US$ 40 million, with revenue 19.0% higher at US$ 96 million; in Q4, net profit came in at US$ 16 million on revenue of US$ 31 million. The Board has recommended a cash dividend of U$ 37 million, equating to 1.68% of the company’s capital, as well as stipulating that the company distributes a minimum of 50% of its net profit annually. Improvements were made across the board, including a 24.5% increase in trading value to US$ 24.5 billion, and a 41.4% increase in market cap of listed securities to US$ 158.6 billion.  Over the year, the DFM General Index rose by 4.4%., as foreign investors accounted for 48.7% of DFM’s trading value and for 19% of the market cap by year-end. During 2022, the DFM welcomed 167.3k new investors – up twenty-three times on the year – bringing the total number of investors to over 1 million from 212 nationalities.

Mashreq posted a 39.2% jump in 2022 with a 39.2% rise in operating profit, to US$ 1.20 billion, with net profit at US$ 1.10 billion, driven by a 12.1% annual rise in customer deposits. Over the year, impairment provision was reduced to US$ 135 million, as the non-performing loan ratio declined to 2.2%, with the loan-to-deposit ratio ending the year at 79.4%.

The DFM opened on Monday, 30 January 2023, 24 points (0.9%) lower on the previous week, gained 54 points (1.6%) to close on 3,383 by Friday 03 February. Emaar Properties, US$ 0.04 lower the previous week, lost a further US$ 0.05 to close the week on US$ 1.51. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.65, US$ 3.53, US$ 1.53, and US$ 0.40 and closed on US$ 0.64, US$ 3.68, US$ 1.52 and US$ 0.39. On 03 February, trading was at 80 million shares, with a value of US$ 61 million, compared to 133 million shares, with a value of US$ 73 million, on 27 January 2023.

For the month of January, the bourse had opened on 3,336 and, having closed the month on 3303 was 33 points (1.0%) lower. Emaar traded US$ 0.09 lower from its 01 January 2023 opening figure of US$ 1.60, to close the month at US$ 1.51. Four other bellwether stocks, Dewa, Emirates NBD, DIB and DFM started the month on US$ 0.59, US$ 3.54, US$ 1.55 and US$ 0.41 and closed on 31 January on US$ 0.65, US$ 3.53, US$ 1.51 and US$ 0.38 respectively. On 31 January, trading was at 92 million shares, with a value of US$ 77 million, compared to 66 million shares, with a value of US$ 18 million, on 31 December 2022.

By Friday, 03 February 2023, Brent, US$ 0.97 (1.1%) higher the previous week, slumped US$ 6.72 to (7.8%) to close on US$ 86.66.  Gold, US$ 143 (7.9%) higher the previous six weeks, shed US$ 68 (3.5%) to close, at 1,878, on Friday 03 February. Brent started the year on US$ 85.91 and shed US$ 0.45 (0.5%), to close 31 January on US$ 85.46. Meanwhile, the yellow metal opened January trading at US$ 1,830 and gained US$ 114 (6.2%) during the month, to close on US$ 1,944.

The Opec+ alliance of twenty-three oil-producing countries has agreed to roll over its existing oil output cuts at two million bpd set last October. It has been estimated by the International Energy Agency that nearly 50% of its 2023 1.9 million bpd growth forecast will emanate from the Asian region, and that demand will reach 101.2 million bpd – compared to its previous record of 100.6 million bpd posted in pre-Covid 2019.  It seems likely that supply will tighten in the coming months, bearing in mind an EU embargo on Russian crude products coming into effect on Sunday, 05 February, and that China, accounting for up to 15% of global demand, is recovering faster than expected – and not all this growth has been factored in. Furthermore, there is the chance that the global economy may yet escape a major recession and recover quickly from the current downturn. Over the past eleven months, oil prices have been volatile and having hit US$ 140 a barrel last March seems to have settled in the US$ 80 – US$ 90 range.

Relieved and embarrassed Rio Tinto officials, who had been left red-faced when it became known that it had managed to lose a capsule, no bigger than the size of a penny, breathed a sigh of relief when it was found on Wednesday. The problem facing officials was that the capsule – which was just 6mm in diameter and 8mm long – was lost somewhere along the 1.4k km Great Northern Highway. The search area was far bigger than the traditional haystack and the quarry was far more dangerous than the proverbial needle because it contained a minute quantity of radioactive Caesium-137, which could cause serious illness to anyone who came into contact with it, including skin damage, burns or radiation sickness, as well as long-term exposure could result in cancer. Miraculously, it has been found some two weeks  after it was “lost”.

The last commercial Boeing 747 ever built has been delivered to Atlas Air this week, some fifty-three years since the “Queen of the Skies” started her reign as a PanAm passenger jet, leaving New York on 22 January 1970. Over the years, Boeing manufactured 1,574 747s for more than one hundred customers. The tail is as tall as a six-storey building and the larger version could transport more than five hundred passengers, which in turn revolutionised air travel – indeed the 747 shrank the world. However, time has taken its toll and the move over the past twenty-five years was to more efficient twin-engine jets.

On Saturday, Flybe ceased trading for the second time in three years, cancelling all flights and making 276 workers, out of a workforce of 321 redundant. However, the good news is that other airlines ware in the market for staff experienced in the aviation sector. EasyJet has a reported 250 vacancies for cabin crew, whilst Ryanair posted it had vacancies in all categories, including pilots, engineers and ground staff. The airline had first fallen into administration in March 2020, then affecting 2.4k jobs, to be sold later in the year to Thyme Opco Ltd; it resumed flights in April 2022. Early Saturday morning, the UK regional airline announced that “Flybe has now ceased trading and all flights from and to the UK operated by Flybe have been cancelled and will not be rescheduled,” and advised people due to fly not to travel to airport. The Birmingham-based airline, with a fleet of eight leased Q400 turboprop aircraft, operated flights on twenty-one routes to seventeen destinations across the UK and the EU.

With Tesco announcing changes – by cutting 1.75k team manager posts, cancelling roles elsewhere and closing its counters and hot delis, because of lack of demand – more than 2k jobs are at risk. It is also closing eight pharmacies, moving overnight roles to daytime in twelve stores, reducing hours within some post offices cutting some jobs at its head office, and closing its Maintenance National Operating Centre in Milton Keynes. The supermarket will introduce a new tier of 1.8k lower paid shift leader positions that will take over running its shop floors. Like other big supermarkets, Tesco is facing increased competition from the German interlopers -Aldi and Lidl – and has to become more efficient and cut costs.

Meanwhile, Tesco is also in the news that it has acquired the brand and intellectual property of High Street stationery chain Paperchase. However, it did not buy any of the 106 shops, employing 820 staff, as Paperchase went into administration; seventy-five HO employees have already been dismissed. The chain had been struggling for several years and has seen sales decline and costs rise – a sure indictor that a business is in trouble. Tesco will now sell the stationer’s goods in its stores across the UK.

Swatch has announced 2022 increases in both revenue – up 2.5% to US$ 8.18 billion – and net profit by 5.0% to US$ 871 million, driven by sales of the MoonSwatch, its collaboration with Omega. YTD, its share value has already jumped 18.0% on optimism of China reopening after abandoning most of its Covid restrictions, with the Swiss watchmaker noting that “after the end of Covid measures, consumption quickly recovered, not only in China, but also in the surrounding markets of Hong Kong SAR and Macau,” and that “the sales growth in January in China reinforces the group’s expectation to aim for a record year in 2023.” Swatch is confident of sales nearing the US$ 10.00 billion mark this year.

A sign of the times is that China’s smartphone sales fell 13.1% on the year to 286 million units – the largest decline since 2013– on the back of a marked cut back in consumer spending. Vivo, the android handset maker, with an 18.6% market share, was the top-selling brand – despite its total shipments tanking 25.1% – followed by Honor and Apple tying with Oppo. Last year, global smartphone shipments fell more than 11.0%, hitting 1.2 billion – again the lowest since 2013; in Q4, iPhones was the top selling brand, with supply chain issues caused by worker unrest at the manufacturer, still hampering production.

Q4 saw Facebook’s parent company, Meta shed 4.4% and 55% in Q4 revenue and profit respectively to US$ 32.1 billion and US$ 4.6 billion. The disappointing return was down to two main drivers – escalating costs and a decrease in the average price per advertisement. Total expenses surged 22.0%, on the year, to US$ 25.8 billion, which included a US$ 4.2 billion restructuring cost. Despite being the conglomerate’s third straight quarter of declining sales, its market cap jumped over 20% in after-hours trading, as Meta, which also has Facebook, Instagram, Messenger, WhatsApp in its portfolio, announced a US$ 40 billion stock buyback.

PayPal becomes the latest tech giant to announce cuts in its workforce, following in the steps of Alphabet, Amazon, IBM, Meta, Microsoft, Spotify and Twitter. (A total of 97.2k jobs, up 649% on the year, were cut in the technology sector last year). The Fintech company posted that it would be retrenching 2k, (around 7%) of its workforce, with chief executive Dan Schulman noting that “these reductions will occur over the coming weeks, with some organisations impacted more than others.” Like its peers, the payment company is cutting back following a hiring surge that began after the onset of the Covid in March 2020. He also posted that it still needs to cut back on its payroll numbers despite already having slashed costs. PayPal’s market cap has taken a battering over the past twelve months, losing 54% in value, but gained 2.3% at the close of Tuesday trading to US$ 81.49.

Philips will shed a further 6k jobs worldwide, (half of which will be in this year), as it tries to restore its profitability, and improve the safety of its products, following a recall of respiratory devices. Over recent months, the Dutch health technology company had reduced its workforce by 13%, equivalent to 10k employees.  Roy Jakobs, appointed as chief executive last October, announced that patient safety would be put “squarely at the centre” of the new organisation, with the company  still recovering from the fallout of the recall of millions of ventilators used to treat sleep apnoea over worries that foam used in the machines could become toxic. The company is still in ongoing discussions with the US Department of Justice on a settlement following the recall, and of ongoing litigation and investigations. Q4 adjusted EBITA was at a flat US$ 707 million  (US$ 703 million in the same quarter in 2021), and well ahead of market expectations of US$ 465 million. This year, it will be aiming for a low-teen margin on EBITA, rising mid to high-teens by 2025. Profitability will be improved by investing in safety, with innovations targeted at “fewer, better resourced, and more impactful projects”. Sales will show a low single digit growth this year, after nudging up 3% last year.

By Monday, embattled Adani Group had managed to lose a massive US$ 70 billion in market cap, (in the three previous days), despite rebutting Hindenburg’s previous week’s criticism that questioned the veracity of its debt levels and the use of tax havens. Later in the week, the Group’s losses topped US$ 100 billion. Hindenburg claimed that Adani companies had “substantial debt” and that shares in seven Adani listed companies have an 85% downside due to what it called “sky-high valuations”. The company’s founder, Gautam Adani, had confirmed that the Group complied with all local laws and had made the necessary regulatory disclosures – but the market appeared to have different ideas. All his seven companies – Adani Transmission, Adani Total Gas, Adani Green Energy, Adani Power, Adani Wilmar and Adani Ports and Special Economic Zone – posted losses of between 4.2% and 20.0% in Monday’s trading. His Adani Trading’s US$ 2.5 billion secondary share sale was trading at US4 32.96, someway off its offer price range of US$ 38.18 – US$ 40.20. On Monday it was estimated that the offer had received only 688k of the 45.5 million shares on offer – equating to 1.5% of the total – with no bids from foreign and domestic institutional investors, as well as mutual funds. State-run insurance giant, Life Insurance Corporation, holds 5.0% of the anchor portion, worth around US$ 734 million, as well as holding a 4.23% stake in the flagship Adani firm, a 9.14% stake in Adani Ports and 5.96% in Adani Total Gas.

To nobody’s surprise, Adani Enterprises called off its US$ 2.5 billion share sale due to prevailing market conditions, following days of its share value tanking, after scathing criticism by Hindenburg Enterprise, a U.S. short seller. Its report spared no punches and accused Adani of “pulling the largest con in corporate history” and had engaged in decades of “brazen” stock manipulation and accounting fraud, claiming that its companies had “substantial debt” which put the entire group on a “precarious financial footing”. Mr Adani said the company’s balance sheet was “very healthy with strong cashflows and secure assets”. The Indian conglomerate confirmed that “given the unprecedented situation and the current market volatility the Company aims to protect the interest of its investing community by returning the FPO proceeds and withdraws the completed transaction.” Also on Wednesday, shares in Adani Enterprises and Adani Ports and Special Economic Zone sank by 28% and 19% respectively – both companies’ worst ever trading day; in five trading days, the Group had lost more than US$ 100 billion in market cap.

Despite high inflation, which peaked at 10.1% in October, Portugal’s state budget deficit contracted 58% to US$ 3.9 billion, as the country’s total public revenue grew by 11% to US$ 111 billion in 2022, and spending increased by just 5.1% to around US$ 114 billion. Tax revenues increased by 14% to US$ 28.2 billion last year, as VAT revenue jumped 19% to almost US$ 23.0 billion. The country’s economy is expected to have grown by 6.7% in 2022, following a 4.9% increase a year earlier, whilst the public deficit could be below 1.5% of GDP in 2022. The improvement was led by a sharp rise in tax revenues due to robust economic growth, because of strong demand and improving tourism numbers, amid high inflation.

As inflation takes hold again in Argentina, nearing 95% last year, (and at its fastest pace in over thirty years), the country’s central bank has issued a new 2k peso note, officially worth US$ 11.00. The largest current 1k peso note is worth U$S 2.70, but when introduced in 1992 was pegged at US$ 1; ten years later the fixed exchange rate was abandoned in the face of a major financial crisis. The country has been battered by several financial crises and has been badly impacted by soaring cost of living expenses, rising energy prices, the war in Ukraine and the main rate of interest set at 75% last September. Two months ago, the IMF approved a further US$ 6.0 billion bailout payment – its latest of a US$ 44.0 billion, thirty-month pay-out programme.

House prices are tanking in Australia, with two states, Brisbane, (down 10.9%) and Hobart, (9.3% lower), posting record falls over the eight-month period to 28 January 2023; other states recorded falls with NSW slumping 14.0% (which was not a record decline, as it posted a 15% decline in 2018). Nationally, the average decline has been 8.6% since the RBA first started rising rates nine months ago. Greater Brisbane saw house prices climb 43.0% after a pandemic population surge – and so is still 28% higher compared to pre-Covid levels – with Hobart coming off after a five-year upswing. Both states saw interstate migration swing higher because of the pandemic impact.

According to Nationwide Building Society, UK house prices have dipped lower every month since last August, with average January prices at US$ 311.4k, as annual growth slowed to 1.1% from 2.8% a month earlier; it is all but inevitable that the market will not improve in the coming months, and will dip into negative territory in Q2, with mortgage rates set to rise – albeit not quickly. The BoE noted that the 35k mortgages posted last month were 24.0% down on those recorded on the month – its lowest number, excluding the Covid period, since 2009, and attributable to the marked slowdown in mortgage applications, following the Truss government’s mini-budget in September, (when rates topped 6.0%); other drivers included declining consumer confidence and falling real incomes.

Today, the FTSE 100 closed at an almost five-year record high of 7,902 points, with the market boosted by the possibility of a weaker sterling, that will make exports cheaper, and by a feeling that the worst of the cost-of-living crisis has passed. The FTSE 100 includes many firms, with big footprints overseas, which would inevitably benefit from a weaker pound making their products cheaper. Furthermore, as the economy improves and inflation heads lower, interest rates will move lower, making borrowing cheaper and helping money flow more freely through the economy. However, sterling is trading at US$ 1.21 – over 11.0% lower on the year – and is 6.0% lower versus the euro. Most of the bad economic news currently doing the rounds has probably already been priced in by the markets by late last year so there are distinct signs that the bad days may be behind as inflation steadily moves lower and interest rates are unlikely to rise much higher. Even the BoE Governor, Andrew Bailey, is of the opinion that the current recession will be shorter and less severe than previously anticipated.

January saw US employers add an extra 517k jobs to the economy – a sign seen by many to be in contrast to the fears that the US Economy is heading for a downturn; these latest figures, which surprised the market, resulted in the country’s unemployment rate dipping to 3.4% – its

lowest rate since 1969. Some economists are banging their heads to explain how this can happen in an environment of rising interest rates, high cost of living expenses and a cutback in consumer spending. However, the Fed has cautioned that that the job market is too strong to allow price growth to stabilise around the bank’s 2% target, with wages having risen 4.4% over the past twelve months. However, the latest 0.25% rate increase this week coincided with a softening of price increases, with fears that the economy could witness a severe contraction, bringing economic activity to an abrupt slowdown that leads to firms to cutting jobs. It seems that the Fed will have a fine balancing act to avoid such an occurrence.

The US Federal Reserve lifted its benchmark rate by the expected 0.25% to a range of 4.5%-4.75% – its highest since 2007, and the smallest increase since last March. Officials warned that, despite indicators that inflation levels are heading lower, further rate hikes are on the horizon in a bid to cool the economy and ease the pressures pushing up prices.

Whenever the IMF releases a report, this blog generally adds the caveat that the organisation has not a good track record and any information should be treated with a degree of caution. So is the case this week when it comes out with a report that the UK economy will be the worst performer of the G20 nations this year. Now it has upgraded its eurozone 2023 forecast indicating that 2023 growth will rise from 0.5% to 0.7 % and by 1.6% in 2024.  In October, it estimated that the German economy would contract by 0.3% and now the revised forecast three months later comes in with a growth figure of 0.1%, with France and Italy recording growth levels of 0.7% and 0.6%; it points to the resilience and adaptation of the European economy for the improvement. It notes that the balance of risks remains tilted to the downside, but adverse risks have moderated since the October 2022.

Meanwhile, the world body expects the UK economy will contract by 0.6% in 2023, rather than grow slightly as previously predicted in October, and perform worse than other advanced economies, including Russia, as the cost of living continues to hit households. It is expected to be the only country to shrink next year across all the advanced and emerging economies.  The report did concede that the UK is now “on the right track”, but that the downgrade arose because of high energy prices, rising mortgage costs, increased taxes, and persistent worker shortages – all the same factors dogging other world economies. Strangely, the UK had “one of the strongest growth numbers in Europe”, having expanded by 4.1%, ahead of the EU’s 3.6% and Eurozone’s 3.5%.  Time will tell whether the IMF has got their forecasts Right or Wrong.

Give Me Love (Give Me Peace On Earth)                             27 January 2023

The 2,786 real estate and properties transactions totalled US$ 2.29 billion, during the week, ending 27 January 2023. The sum of transactions was 285 plots, sold for US$ 463 million, and 2,043 apartments and villas, selling for US$ 1.201 billion. The top two transactions were for land, the highest in Al Safouh Second, sold for US$ 38 million, and the other for a plot in Al Thanyah Fifth, for US$ 33 million. Al Hebiah Fifth recorded the most transactions, with 135 sales worth US$ 113 million, followed by Al Yufrah 1, with fifty-six sales transactions, worth US$ 90 million, and Al Yufrah 2, with twenty sales transactions, worth US$ 6 million. The top three transfers for apartments and villas were Palm Jumeirah were for US$ 23 million, the next in Al Bada for US$ 13 million and in Al Mezhar First for US$ 11 million. The mortgaged properties for the week reached US$ 425 million, whilst sixty properties were granted between first-degree relatives worth US$ 213 million.

This week, Damac Properties officially announced the launch of Damac Bay by Cavalli, located in Dubai Harbour. The project, designed by the Cavali brand, is a forty-two storey, triple- tower property which will offer a range of 1 B/R to 5 B/R super-luxury duplexes and will highlight a Cavalli-inspired bridge that coils across its rooftops; the first thirty-two floors will house all units from 1 B/R to 3 B/R, whilst the 3 B/R to 5 B/R units will be found  on the upper floors. All residents will have access to a white-sanded private beach and a range of food and beverage outlets, whilst the towers’ podium level will have a maritime getaway in the form of an elegantly crafted water maze and snorkelling excursions. Other features will include three infinity pools, at the top of each tower, a rooftop area fitted with a state-of-the-art opera pavilion and the showpiece enormous water fountain located in the central tower.

According to AirDXB, there has been a surge in homeowners, who previously were renting in the short-term rental market, turning to long-term contracts. Consequently, there is a reduced supply of short-term rentals available, which in turn will see rents inevitably rising higher and the short-term rental sector becoming more attractive. The premier short-term rentals company noted marked increases last year, with occupancy levels topping 99% in March, dipping to 87% over the next six months, before rising to 90% in September and 93% in Q4. The most popular areas for short-term rentals continue to be Dubai Marina, JBR, Downtown Dubai and Bluewaters Island, with Palm Jumeirah remaining a hotspot.  It sees the likes of JLT, JVC, Business Bay and Meydan are becoming more attractive because of their proximity to hubs and the fact they are cheaper alternatives. Dubai has always been a magnet for entrepreneurs and investors and as its popularity surges, and with tourist numbers also quickly heading north, the outlook for the sector is bullish.

Last week, Emirates announced a major ramp up in operations to China – this week it seems to be Australia’s turn. As another indicator of the marked upturn in global air travel, the carrier is to operate sixty-three weekly services to the land Down Under, with a 55k capacity. Commencing on 26 March, the world’s largest long-haul airline will increase daily services, from two to three flights from via Singapore to Melbourne, and will also restart services to Christchurch, via Sydney; it will also add a third direct service to Sydney from 01 May. These additional flights will offer more than 500k additional seats to and from Australia in a year.

Speaking to Australia’s ABC, Tim Clark, the president of Emirates, noted that “I would say you will get to that (lower pricing) in the middle of next year, maybe even sooner.” With Chinese tourists travelling for the first time in three years, this will keep demand high but that consumers could see cheaper flight prices by mid-next year, once the airline industry gets back to “equilibrium”. He indicated that airlines would need to hit the “sweet spot of price” that ensures what consumers pay is “commensurate with the margins that the business needs to sustain itself”, but once equilibrium is restored, prices will be readjusted lower. However, he added the caveat that “whether they’ll go down to pre pandemic (levels), I don’t know.”

Dubai Health Authority posted that the emirate is home to nearly 4.5k private medical facilities – 45% higher than five years ago in 2018. Included in that total, there were fifty-six hospitals, fifty-seven day-care surgery centres, fifty-nine diagnostic centres, twenty-one specialised centres for People of Determination, and 1.6k specialised outpatient clinics. The facilities also include 417 school clinics, 154 home healthcare agencies, nine fertility centres, six dialysis centres, three cord blood and stem cell centres, a gastrointestinal endoscopy centre, forty-nine dental laboratories, seventeen telehealth centres, four patient transfer service centres, fifty-seven facilities for traditional, complementary and alternative medicine, 1.4k pharmaceutical facilities, seventeen medicine storage facilities, and 410 optical centres. It has also seen a 61% hike in licensed medical professionals to reach 55.2k last year and expects that this figure could grow by between 10% – 15% this year. According to the latest Medical Tourism Index, Dubai ranks No. 1 in the MENA region and sixth globally for medical tourism, with the city ranking fifth globally on the sub-index of Quality of Facilities & Services.

This week, the FTA announced that it will start early corporate tax registration for certain categories of companies and that they would receive invitations to register using the Emara Tax platform for digital services; this early registration phase will be in place until May at which time, the tax authorities will open the process for other companies and businesses. The FTA will provide more information about registration for corporate tax “in due course”. Introduced a year ago, and starting, as from 01 June 2023, the new federal tax will have a 9% rate on all registered companies, with a profit of over US$ 102k, (AED 375k), i.e. taxable profits below that threshold will be subject to a zero rate. The tax will not apply on salaries or other personal income from employment. In comparison to other developed countries, the UAE tax rate stacks up well, with the Tax Foundation in Washington DC estimating that the average tax rates for countries in the EU and OECD are 21.3% and 23.04%. It also Indicated that corporate tax rates have declined over the past forty years, with the global average down from more than 40% to between 25%-30%.

Following two major US$ 7.4 billion investments last year – at DP World’s flagship UAE assets, Jebel Ali Port, Jebel Ali Free Zone, and National Industries Park – Moody’s has upgraded DP World’s ratings, a sure indicator of investor confidence in the company’s business and future prospects. The ratings agency noted that its diversified global port operations in strategic, fast-growing emerging market locations, solid profitability, and long-term growth potential were the main drivers behind the improved rating.

According to Mohamed Al Hadari, the listing of eleven companies on the country’s bourses in 2023 will raise more than US$ 2.18 billion, and, in addition, four free-zone entities and two special purpose acquisition companies (SPACS) are in the listing pipeline. The deputy chief executive of the Securities and Commodities Authority also commented that the next two years will see “significant growth and development in the local markets and IPO markets.” It is expected that these listings will boost the liquidity of local capital markets, attract more retail investors and improve trading efficiency. He also concluded that “it will also make the UAE markets even more attractive to foreign investors, who are investing in the future of one of the best-performing economies in the world.” The quicker than expected rebound from the pandemic, and the high energy prices, buoyed the local markets, that last year witnessed twelve IPOs, raising US$ 11 billion. Of the twelve IPOs, four state-owned entities – DEWA, Salik, Empower and Tecom – raised US$ 8.3 billion, with DEWA “contributing US$ 6.1 billion of that total; in November, schools’ operator Taaleem also listed its shares on the DFM, raising US$ 205 million. The Dubai government also announced a US$ 545 million market maker fund to encourage the listing of more private companies from sectors such as energy, logistics and retail.

Last year, the seven listed banks in the UAE reported a combined net profit of US$ 9.03 billion, with the highest being First Abu Dhabi Bank, posting a figure 7.0% higher at US$ 3.65 billion. The leading two Dubai financial institutions were Emirates NBD and DIB – with profits 40.0% higher at US$ 3.54 billion, and by 26% to US$ 1.50 billion. The former’s profit was driven by strong regional economic growth and the success of its diversified business model, with its Q4 profit, at US$ 1.06 billion, up 94% year-on-year, attributable to improving margins and a lower cost of risk; total income came in 36.0% higher to US$ 9.95 billion, driven by increased transaction volumes and improved margins. International operations, accounting for 39% of the bank’s total income, helped the bank to diversify and expand its operations. Customer deposits rose 10.0%, year on year, to US$ 137.1 billion, while the total assets of the bank grew 8.0% to US$ 202.2 billion. Consequently, a 50% increase in dividends, to US$ 0.163 a share, was proposed

Emirates Islamic posted a 51% hike to a record profit of US$ 338 million, as total income climbed 33%, driven by “higher funded income and non-funded income with a significant reduction in the cost of risk reflecting the strong economic recovery.” The bank’s operating expenses increased 29% on the year, as it invests for future growth, with its total assets rising 15% to US$ 20,4 billion. There were also increases in both customer financing and customer deposits – by 14% to US$ 13.2 billion and by 19% to US$ 15.3 billion; current account and savings account balances remained at 74% of total deposits, with its non-performing financing ratio improving to 7.0%. It also posted that 38% of its total staff numbers are Emiratis.

Dubai Islamic Bank posted increased 2022 revenue and net profit figures – by 19.0% to US$ 3.84 billion and by 25.0% to US$ 1.49 billion; provisions for bad loans fell by 14.0% on the year to US$ 572 million, “demonstrating resilience of the financing book”. Overall, net financing and sukuk investments last year grew by 5.0% annually to US$ 64.9 billion, whilst total assets were more than 3% higher on the year at US$ 78.5 billion. The country’s biggest Sharia-compliant lender by assets, which recorded its strongest ever year, proposed a 30% dividend.

Assisted by the current property boom, Deyaar posted a very credible 184% surge in net profit last year to US$ 39 million, as revenue rose 62.0% to US$ 220 million; in the year, total assets grew 7.0% to US$ 1.68 billion. The company, majority owned by Dubai Islamic Bank, invested US$ 708 million in developing the Midtown project in Dubai Production City, and also last year it completed a capital restructuring programme, as it wrote off accumulated losses worth US$ 463 million from previous years. During 2022, it received its final settlement payment of US$ 54 million relating to a long-standing dispute with master developer Limitless. It also has plans to invest US$ 82 million in three Al Furjan projects to build about four hundred residential units and hotel apartments.

The DFM opened on Monday, 23 January 2023, 51 points (1.5%) higher on the previous fortnight, shed 24 points (0.9%) to close on 3,329 by Friday 27 January. Emaar Properties, US$ 0.03 higher the previous fortnight, lost US$ 0.04 to close the week on US$ 1.56. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.65, US$ 3.50, US$ 1.52, and US$ 0.40 and closed on US$ 0.65, US$ 3.53, US$ 1.53 and US$ 0.40. On 27 January, trading was at 133 million shares, with a value of US$ 73 million, compared to 107 million shares, with a value of US$ 48 million, on 20 January 2023.

By Friday, 27 January 2023, Brent, US$ 9.03 (11.1%) higher the previous fortnight, shed US$ 0.97 to (1.1%) to close on US$ 86.66.  Gold, US$ 125 (6.9%) higher the previous five weeks, rose a further US$ 18 (0.9%) to close, at 1,946, on Friday 27 January.

Airbus is planning to hire 13k new workers this year, with many of the vacancies being in technology roles, which will add a further 10% to its current payroll of 130k; of the new positions, 7k will be newly created posts, and the balance will be in Europe. About 25% of the jobs will be the fields of decarbonisation, digital transformation, software engineering and cyber technology, and 33% of the total will be young graduates.  In a statement, it posted that “we call on talented individuals from all over the world to join us in our journey to make sustainable aerospace a reality and to help us build a better, more diverse, and inclusive workplace for all our employees.”

An improved performance in Q4 2022 saw Boeing narrowing its 2021 loss, by 83.8% from US$ 4.1 billion to US$ 663 million on the year, driven by higher commercial deliveries. Over the period, the plane maker posted a 35% hike in revenue to almost US$ 20.0 billion, with a total company backlog of US$ 404 billion. The commercial plane division’s revenue increased 94% on the year to more than US$ 9.2 billion, driven by higher 737 and 787 deliveries; in Q4, the unit delivered 152 planes, with a backlog of more than 4.5k planes valued at US$ 330 billion. The company posted it is manufacturing thirty-one 737s per month, to be ramped up to fifty per month by 2025, whilst its 787 programme continues at a low production rate, reaching only five per month by Q4 2023 and ten per month by 2025. Its operating cash flow improved to over US$ 3.4 billion, from US$ 716 million.

The Chinese-owned London Electric Vehicle Company, owned by Geely, announced a major investment to become a high-volume, all-electric brand, with a range of commercial and passenger vehicles. LEVC’s Chief Executive Alex Nan confirmed “Geely will make consistent investments into LEVC because this is a very unique project.” This comes after the company, badly mauled by the pandemic, laid off 130 staff last October. The Chinese owners took control of its UK subsidiary in 2013, and to date has invested US$ 620 million building a hybrid US$ 82k taxi model which has a battery providing 103 km of range and a petrol range-extender giving an extra 480 km. Meanwhile, it announced that it would look for other investors for its zero-emission portfolio and would consider partnering with other carmakers to develop new technology. Its Coventry factory has the capacity to build 3k taxis a year, running on a single shift, that could easily be increased to 20k. LEVC is exploring a range of commercial and passenger car models on a common electric platform, and can lean on other group brands that already have EVs to “move forward in a fast, agile way”. In its portfolio, Geely boasts Lotus, Volvo, Polestar – via a joint venture with Volvo – and Zeekr, which has just filed for an US IPO, in December.

Despite the global economy heading to a marked slowdown, demand for luxury cars heads in the other direction, with the likes of Rolls Royce, Bentley and Lamborghini witnessing increased 2022 sales – by 8% to 6.0k units, 4% to 15.2k and 10% to 9.2k respectively. Sales were boosted because there was increased demand for EVs, a greater selection of SUVs made by high-end brands, as well as the option to customise new cars.

LVMH posted strong sales, driven by the holiday shopping season, with a second straight record year, with Q4 revenue 9.0% higher to US$ 25 billion – and this despite geopolitical tensions and high cost of living. The world’s biggest luxury group reported that stronger sales in Europe, US and Japan made up for losses in China due to ongoing Covid lockdowns, as its Asian business witnessed a 20% decline in the first nine months of the year. The French conglomerate, whose brands include Tiffany’s, Christian Dior, Sephora, Hennessey and Moët, noted that its flagship brand Louis Vuitton posted record revenue of US$ 21.7 billion. The company is seen as a bellwether for the sector, with forecasts that the personal luxury market will grow at least 3-8% this year, even given a downturn in global economic conditions.

Millions of users were impacted on Wednesday when Microsoft Corp was hit with a networking outage that took down its global cloud platform Azure, along with services such as Teams and Outlook., with only China and its platform for governments not being hit. The tech giant later discovered the problem involved network connectivity affecting clients on the internet to Azure, as well as connectivity between services in datacentres. It later confirmed that it had rolled back a network change that it believed was causing the issue. This is not the first time that the platform has had issues – the second largest cloud services provider, after Amazon, faced outages last year. Among the services affected were Microsoft Teams, (used by 280 global million users), Microsoft Exchange Online, SharePoint Online, and OneDrive for Business,

Two of the world’s leading payments companies, Visa and MasterCard, posted healthy results, with the former reporting a 6.0% rise in net profit to US$ 4.2 billion because of higher payment volumes, cross-border transactions and processed transactions; revenue was up 12.0% to US$ 7.9 billion. The company’s cash, cash equivalents and investment securities stood at US$ 18.9 billion, at the end of 2022. Over the last three month of the year, the company recorded a 10% increase in processed transactions to 52.5 billion. Over the three-month period, Visa repurchased 15.6 million shares, at an average price of US$ 198.74 each, for US$ 3.1 billion, with US$ 14 billion of remaining authorised funds for share repurchase as of 31 December. Its board of directors declared a quarterly cash dividend of US$ 0.45 a share

MasterCard posted a 6.0%, year on year, hike in Q4 net profits to US$ 2.5 billion, but flat quarter on quarter. Revenue increased by 12.0% to US$ 5.8 billion, driven by a boost in cross-border transactions, (growing 31%), and a recovery in global spending; operating expenses rose 10.0% to US$ 2.6 billion. In the quarter, the aggregate dollar amount of purchases made with MasterCard-branded cards, surged 11%. The company’s diluted earnings per share rose 9% to US$ 2.62, whilst its share value, almost 11% higher YTD, nudged up 0.7% to US$ 385 in yesterday’s trading. For the year, net income was 14.0% higher at US$ 9.9 billion, as revenue climbed 18.0% to US$ 22.2 billion.

It has been more than a bad week for Gautam Adani who started last Monday as the world’s third richest person and ended today as the seventh; he is still worth some US$ 97.6 billion. To say that the Indian billionaire is in trouble is an understatement, with seven of his listed companies losing US$ 48 billion in market cap, and US bonds of his companies also tanking, following a scathing report by Hindenburg Research which had flagged concerns about debt levels and the use of tax havens. It also noted that the conglomerate was on a “precarious financial footing”, and that “sky-high valuations” had pushed the share prices of seven listed Adani companies as much as 85% beyond actual value. The rout took shares of Adani Enterprises, the group’s flagship company, well below the offer price of its record US$ 2.45 billion secondary sale starting today which had initially been offered at a discount. The company had set a floor price of US$ 38.18 a share and a cap of US$ 40.19. But on Friday, the stock slumped to as low as US$ 33.28— well below the lower end of the price offering. It is reported that Indian regulators are studying the US report as it continues to probe into offshore fund holdings of the Adani Group. There are valid concerns that there will be a knock-on impact on the Indian market and for Indian banks, with exposure to the Adani empire; there are estimates that in the fiscal year ending last March, they are exposed to about 40% of the US$ 24.5 billion of Adani Group debt.

In a bid to deter gold smugglers, Indian authorities are planning to slash the import duty on gold, as illicit gold imports boomed after COVID-19, impacting badly on the official market whose market revenue, including those of banks and refiners, plummeted. If this were to happen, and the fact that it would make gold purchases cheaper, it would greatly benefit not only the retail sector, ahead of peak demand season, but also the operations of domestic gold refineries, as well as supporting global prices. Last July, the Modi government decided to lift the basic import duty by 5.0% to 12.5% to support the sinking rupee and help bring down the growing trade deficit. The effective rate now stands at 18.45% when the likes of the 2.5% agriculture infrastructure development levy and other taxes are added. This rise has been a godsend for smugglers, who had struggled the prior two years because of the pandemic and travel restrictions; their market price undercuts current official domestic rates by some US$ 40 per oz. In the first eleven months of 2022, 3.1k tonnes of “illegal” gold was seized by customs and other agencies – the highest amount since pre-Covid. It was also reported that December imports were a marked 79% down on the year – its lowest level in over twenty years – and a sure sign that the government should take immediate action,

The ECB’s President Christine Lagarde is in the news again, this time warning that China’s reopening is “something that will be a positive for China mostly, something that will be a positive for the rest of the world, but we will have inflationary pressure on many of us, simply because the level of energy that was consumed by China last year was certainly less than what they will consume this year”. There is no doubt that she could be right but the fact that China is returning to some sort of normalcy, the opening of supply chains will be a driver in reducing inflation. The IEA has also noted that there will indeed be more competition for natural gas purchases which would push prices north again.

Meanwhile, the central bank, which had raised rates four times last year, bringing its deposit rate to 2%, also confirmed that said it would be increasing rates further in 2023 to address sky-high inflation, with every likelihood of two separate 0.50% rate hikes next month and in March; there are also signs that the ECB will continue to raise rates in the months thereafter if inflation rates still hover near double digit levels. Although the rate has dipped last month to 9.2%, with November also seeing a slight decline, it is still well above the bank’s 2.0% target.

A UBS survey concluded that Australian supermarket prices rises speeded up over the last quarter ending 31 December, with food prices at their two major supermarkets up 9.2% on the year. Meat prices were up 10%, (with pork 16% higher) and lamb (up 10%) leading the way, whilst dairy prices rose 14% over the year, driven by a 24% surge for cheese and an 18% hike in butter; however, milk production continues to fall, down 7%. Fruit and vegetable prices stabilised in the quarter. Woolworths posted the biggest price increases, rising by 0.9% to 9.3%, on the quarter, followed by Coles that saw a quarterly hike of 1.0% to 9.1%.  The bank’s Evidence Lab tracks the online prices of more than 60k different products at Australia’s two main supermarket groups and noted that Coles prices were marginally lower because of its aggressive discounting to try and make up some of the market share it had lost in recent times. Woolworths has generally raised food prices more than its main rival Coles over the past four years, but of late this has changed with Coles’ price rises 9.8% higher, year on year, to its rival’s 8.9%.  Although many expect inflation to have already peaked, it is expected price pressures will be slower to follow suit. On Wednesday, official figures saw the CPI rise to 7.8% on the year, and 1.9% on the quarter. The biggest increases were seen in domestic holiday travel and accommodation (13.3%), electricity (8.6%), and international holiday travel and accommodation (7.6%).

Another week and another record for Lebanon, with news that inflation reached 171.2% as the country endures its worst ever economic crisis; this rose 6.7% from November’s return and 122% on the year. The main drivers behind these shocking figures are triple digit jumps in communication, food, water and energy costs. Bad as it is, the current inflation mark has some way to go before it reaches its 741% 1987 peak during the country’s fifteen-year civil war ending in 1990 and is behind Sudan’s 741% level posted in 2021  – and its 180% hike forecast for last year. The economic melee has seen Lebanese fleeing the country, as unemployment tops the 50% level, with more than half the population sliding below the national poverty line. Easy as it sounds, the country could receive a US$ 3 million IMF assistance package, (which would release a further US$ 11 billion package by international donors), conditional on the formation of a new government, the election of a president and political consensus across political lines. To date, nothing has happened even after the six-year term of former president Michel Aoun expired at the end of October and the absence of a cabinet, eight months after the last elections.

Mainly attributable to rising interest rates on its debt, as well as having to support households with their energy bills, UK December borrowing costs hit record levels, topping US$ 157 billion – the highest ever figure since records started in 1993. Borrowing – the difference between government spending and government receipts – reached US$ 33.8 billion, with interest costs, almost doubling on the year to US$ 21.0 billion. The ONS said total public sector debt reached US$ 3.08 trillion at the end of December, equating to 99.5% of GDP – a level last seen over sixty years ago. Although gas prices have started to decline, they are still almost double what they were before February 2022, the month Russia invaded Ukraine; these price hikes are the main driver behind why inflation is surging; It is estimated that the government’s Energy Price Guarantee scheme, which limits average household bills to US$ 3.1k per year, along with it cutting energy bills in by US$ 493 this winter, added a further US$ 8.6 billion to December’s borrowing figures. Furthermore, since many gilts are “index-linked”, the government’s repayment has risen since they rise in line with the Retail Prices Index measure of inflation which is currently at double-digit levels. There is no doubt that the Chancellor, Jeremy Hunt faces a Herculean task to get the public finances back to some form of normality, with borrowing at unprecedented levels, along with debt interest payments, government spending too high, and the economy in a marked downturn.

Today, he set out a plan to help lift the UK’s economic growth, but warned it is “unlikely” that there will be room for any “significant” tax cuts in the Budget, whilst admitting what everybody already knew, that the country was going through “a difficult patch”, but insisted the country “can get through it and we can get to the other side”. The Chancellor reckons that “the biggest tax cut that we can give the British people is to halve inflation, that means the value of their weekly shop won’t continue to go up, and the value of their pay packet won’t continue to be eroded”. His plan would focus on four pillars, or “four Es” – enterprise, education, employment and everywhere – with the Institute of Directors adding a fifth – empty because his strategy  did not include any concrete plans and lacked any substantial detail.

It still remains a conundrum on how he can boost economic growth and cut inflation levels, (which at 10.5% is still five times more than the BoE’s 2.0% target), to get public debt levels much lower. Another quandary is that the BoE uses the Consumer Price Index as its measuring base, whereas the government has the Retail Price Index as its guideline when it comes to measuring inflation. In November, the CPI was at 10.7% whilst the RPI came in 3.3% higher at 14.0%. The government issues “gilts”, also known as bonds, to suit big investors such as private pension funds, whose pay-outs to customers are linked to RPI and therefore need an asset linked to it. Why does the government continue to pay higher debt issue than going for a cheaper option?

The chances of the UK and EU changing their post-Brexit relationship are slim, a new report has found, with Changing Europe (UKICE) concluding that there was little chance of either of the two parties changing their post-Brexit relationship – and this despite the island nation’s economy being badly hit by the change and the fact that recent polls would support a move back into the bloc. Even three years after the UK left the dysfunctional EU, discussions are still ongoing on the final outcome of implementing Brexit, with the main area of dispute involving the management of the largely open border between Northern Ireland, which is part of the United Kingdom and EU member, Ireland. There are still major problems in other sectors including financial services, fisheries and energy. The report noted that relations were “far from either settled or stable”, but it indicated that neither side seemed likely to want to reassess the 2020 Trade and Cooperation Agreement.

Despite the pressure of high interest rates and widespread fears of a looming recession, in Q4, the US economy expanded at 2.9%, on an annual basis; however, this was 0.3% lower than the previous quarter’s figure of 3.2%. The money seems to be on a similar reduction in the current quarter, perhaps followed by a weak recession in Q2. Overall annual growth was 2.1%, down from 5.9% a year earlier. Such better than expected figures do point to the probability of further rate hikes, starting with 0.25% next week, and that they could remain at these higher levels in the short-term. Although inflation has declined from 9.1% to 6.5%, over the past four months, the figure is still more than triple that of the Fed’s 2.0% target,  whilst unemployment is set to rise by over 30% from 3.5% to 4.6% by the end of this year.

This week, the US announced that it would send thirty-one M1 Abrams battle tanks to help Ukraine in its war against Russia, after the Biden administration U-turning on its original stance of arguing that the tanks would be difficult to deliver, expensive to maintain and challenging for Ukrainian troops to operate.  Finally, Germany has agreed to initially send fourteen Leopard 2 tanks, (but a total of 114 over an unspecified period of time), in a move that will allow other European nations to send German-made tanks from their own stocks; this comes after months of Ukraine lobbying Western allies to send the military equipment. Ukraine’s President Volodymyr Zelensky said, “it was an important step on the path to victory”, with Russia condemning the moves as a “blatant provocation.” This could be a turning point in the war that would allow Ukraine regain momentum and regain land previously lost to the Russian aggressors. Unfortunately, this can only prolong the conflict, with the number of deaths, which already numbers tens of thousands, continuing to climb. So much for Give Me Love (Give Me Peace On Earth).