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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).

Wind of Change                                                                            13 January 2023

The 2,574 real estate and properties transactions totalled US$ 2.21 billion, during the week, ending 13 January 2023. The sum of transactions was 221 plots, sold for US$ 322 million, and 1,889 apartments and villas, selling for US$ 1.34 billion. The top three transactions were all for land, the highest in Jabal Ali First, sold for US$ 13 million, and the other for plots in Wadi Al Safa 4 for US$ 12 million and Al Thanya Fourth for US$ 11 million. Al Hebiah Fifth recorded the most transactions, with 112 sales worth US$ 118 million, followed by Al Jadaf, with twenty-five sales transactions, worth US$ 16 million, and Jabal Ali First, with twenty-one sales transactions, worth US$ 31 million. The top three transfers for apartments and villas were all for apartments – the first in Al Raffa, at US$ 34 million, the next in Al Jadaf for US$ 33 million and In Island 2 for US$ 32 million. The mortgaged properties for the week reached US$ 411 million, whilst ninety-two properties were granted between first-degree relatives worth US$ 136 million.

The latest CBRE report confirmed that Dubai’s property market had a record year in 2022 with total transactions of 90.9k, easily surpassing the previous 2008 record of 81.2k. Over the year, average property prices increased by 9.5%, with apartments up 9.0% and villas 12.8% higher, as sales prices ended the year at US$ 318 per sq ft and US$ 377 per sq ft. The most expensive area in the apartment segment is Jumeriah, at US$ 633 per sq ft, and for villas, Palm Jumeirah at US$ 1,068 per sq ft. It has to be noted that 2022 prices are still below those set in 2014 – apartments trailing by 21.5% and villas still 4.2% lower. Property rents went through the roof last year – with increases of 27.1% for apartments and 24.9% for villas. CBRE also indicated that villa rents now stand at US$ 76.9k – 45.3% up on 2019 rates – and apartments 17.2% higher at US$ 25.9k. (Whether such rises can continue at these levels into this year remains unlikely but there will be some growth in both sectors). According to Zoom Properties, the top areas to buy apartments were Business Bay, (10.3k transactions, valued at US$ 4.8 billion), Dubai Marina, (7.4k transactions), JVC, Downtown Dubai, Dubai Creek Harbour and Palm Jumeirah.

In a bid to cash in on the current boom in the luxury Dubai residential market, MAG has released a further four ultra-luxurious mansions, in addition to the eight already released, at its Ritz-Carlton Residences project. The Sky Mansions, part of the Keturah Resort, are each priced at US$ 54 million, with each having four floors,  eight bedrooms, a majlis, media room, lounges, spa, gym and cinema, with the added bonus of a private mooring for up to 120 ft yachts. The overall Keturah Resort, which also contains a Ritz-Carlton hotel, offers homeowners access to the beach and will have a private members-only club, a women’s club, a kids club, Michelin-star restaurants and a retail promenade.

A massive US$ 5.45 billion project, located in Dubai South, has been announced by Azizi Developments, which will boast a two km long glass-covered, air-conditioned boulevard, which will comprise shopping areas, commercial space, restaurants, and other amenities. The mixed-use development will also feature luxury villas, residences, hospitals, schools and commercial/recreational space, as well having its own large swimmable crystal lagoon, with three km of beach-like shores and water features, along with vast parks. The developer, which has recently bought the fifteen million sq ft plot of land, with twenty-four million sq ft of GFA, will be the master developer in charge of constructing the buildings, roads and all infrastructure, and has signed an agreement with KEO International Consultants for the masterplan consultancy.

Dubai’s hospitality sector continues to improve and ended the year on a high, with most indicators heading north in December; revenue per available room and average daily rate jumped to US$ 186 and US$ 243, 31.1% and 33.8% higher compared to pre-Covid December 2019. STR noted that “overall, tourism demand has been returning to Dubai throughout 2022 and December was no exception with 397,910 more rooms sold, representing a 13% increase over 2019.” However, hotel occupancy rates dipped 2.0% to 76.6%, compared to 2019 levels. During December, 397.9k rooms were sold and on New Year’s Eve occupancy, ADR and RevPAR came in at 91%, US$ 481 and US$ 437. This week, Euromonitor International ranked Dubai as the second most attractive  global city destination, behind Paris but ahead of Amsterdam, Madrid and Rome.

New guidelines relating to Emirates’ Skywards Miles loyalty programme will see passengers having to pay more for upgrades to Business and First-Class travel, but at the same time offering increased bonus miles for all of its Platinum, Gold, and Silver members. The transition will be completed by the end of this month. Under the change, it appears that Skywards Platinum members will earn a further 100% of the Economy Flex+ Miles – increasing from 75%, whilst Gold and Silver members will earn 75% and 30% – up from the previous 50% and 25% respectively. The programme boasts thirty million members, many of whom may well be disappointed with the news that makes it harder to trade up on future flights.

Latest OAG data sees Dubai International Airport featuring in five of the top ten global busiest routes in terms of seats, noting that with the post-pandemic recovery, coming in better than expected, resulted in a robust growth in passenger traffic; the survey covers the twelve months starting in October 2021. The UAE’s Federal Authority for Identity and Citizenship data showed that Dubai received 21.8 million passengers in 2022, through Dubai’s two airports, and that DIA was the world’s busiest international airport, last month with total seats of 4.556 million. Cairo-Jeddah was the busiest global route – 3.234 million seats – followed by Dubai-Riyadh, with forty flights per day and 3.191 million seats. The four other routes involving DIA were Dubai-LHR, Dubai-Jeddah, Mumbai-Dubai and Delhi-Dubai coming in fourth, sixth, eighth and tenth with 2.697 million, 2.425 million, 1.977 million and 1.898 million seats respectively.

OAG also ranked Emirates as twentieth in a global airline list of on-time performance (OTP) of 81.13%, one place behind its neighbour Etihad, scoring 81.14%. On-time performance is gauged on flights that arrive or depart within fifteen minutes of their scheduled times. The two local airlines also had one of the lowest flight cancellations rates of 0.55% – Emirates – and 0.02% for Etihad in 2022 and were the only two Gulf carriers that made it to the top twenty list of 2022. Globally, Garuda Indonesia, South Africa’s Safair, German low-cost carrier Eurowings, Thai AirAsia and South Korea’s Jeju Airlines were the top five most punctual airlines last year. According to OAG, the top ten airports by punctuality in the Middle East and Africa were Durban King Shaka International, Cape Town, Amman Queen Alia International, Bahrain, Muscat, Addis Ababa, Beirut, Abu Dhabi International, Doha and Jazan.

The total foreign assets held by the Central Bank of the UAE (CBUAE) increased on a monthly basis by 0.41% to US$ 118.8 billion at the end of last October, mainly attributable to the monthly increase in bank balances and deposits with banks abroad by 2.2%, to reach US$ 67.1 billion. Foreign securities, within the foreign assets of the Central Bank, nudged 1.44% higher to US$ 33.1 billion. Meanwhile, other foreign assets decreased 8.3% to US$ 15.8 billion but increased on an annual basis by 22.7%.

The DMCC confirmed that, by the end of 2022, it attracted over 3k new member company registrations – a year on year increase of 22.7%. The record growth was attributable to several factors including the growing demand from commodities, global trade and blockchain/web3 businesses and rising international interest. To back up its claims to be the biggest and best free zone in the world, DMCC was named Global Free Zone of the Year by the Financial Times’ fDi Magazine for the eighth consecutive year.

The Arab Monetary Fund posted that, by the end of last year, the market cap of Arab stock exchanges exceeded US$ 4 trillion, with the values of the DFM at US$ 158.4 billion. The local bourse’s value was lower than the likes of the Saudi Stock Exchange, the Abu Dhabi Securities Exchange and the Qatar Stock Exchange with values of US$ 2.63 trillion, US$ 714.6 billion and US$ 167.09 billion; however, it was ahead of the market caps of the Boursa Kuwait’s US$ 152.7 billion, Muscat Stock Exchange’s US$ 61.6 billion and Bahrain’s bourse’s US$ 30.2 billion.

Taaleem Holdings posted a 14.3% hike in its Q4, (ending 30 November), profits to US$ 14 million, driven by higher enrolments, leading to higher revenue. The Dubai school operator, the first education company to be listed on the DFM, saw quarterly revenue rise 32.4%, to US$ 63 million, as total expenses rose 38.0% to US$ 50 million, including finance costs more than doubling to nearly US$ 2 million. Earnings before interest, taxes, depreciation and amortisation rose 22.1 to US$ 21 million, an EBITDA margin of 33.8%. Taaleem, formerly known as Beacon Education, was founded in Dubai in 2004, and operates twenty-six schools in the UAE, with 28.2k pupils enrolled.

The DFM opened on Monday, 09 January 2023, 34 points (1.0%) lower on the previous week, gained 22 points (0.7%) to close on 3,324 by Friday 13 January. Emaar Properties, US$ 0.09 lower the previous fortnight gained US$ 0.02 to close the week on US$ 1.59. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.62, US$ 3.57, US$ 1.53, and US$ 0.40 and closed on US$ 0.63, US$ 3.50, US$ 1.53 and US$ 0.40. On 13 January, trading was at 74 million shares, with a value of US$ 49 million, compared to 58 million shares, with a value of US$ 28 million, on 09 January 2023.

By Friday, 13 January 2023 Brent, US$ 7.36 (8.6%) lower the previous week, gained US$ 6.68 (8.6%) to close on US$ 85.28.  Gold, US$ 68 (3.8%) higher the previous three weeks, rose a further US$ 52 (2.8%) to close, at 1,923, on Friday 13 January.

The start of the week saw oil prices rising on the back of news that China was reopening its borders, with Brent trading 3.33% higher at US$ 81.11; only last week, Brent registered its biggest weekly loss – at 8.6% – since 2016. This came about after nearly three years of strict strict entry requirements, and as China is the world’s biggest crude oil importer, it was inevitable that there would be a boost in oil prices, with the lockdown slowing growth. As the Lunar New Year approaches, the holiday season could be a welcome boon for both international and national travel.

Northumberland battery firm Britishvolt, which is planning a US$ 4.62 billion “Gigafactory”, for electric cars, “is in discussions with a consortium of investors concerning the potential majority sale of the company”, indicating a deal would allow it to “pursue” plans to build a “strong and viable” battery manufacturing business in the UK. It has already had to delay production until Q3 2025, and the sale is expected to provide funding to continue its plans to build the site, which if completed would employ 3k people. The government had earlier promised US$ 122 million to the company but had refused to allow any funding to be drawn down early but this sale appears to allow it to develop the factory, until it can begin actually making a profit from the sale of batteries.

Admitting that he had made “some costly mistakes”, James Watt has had to pay out US$ 609k. Brewdog’s supremo admitted that he thought that some cans of his iconic beer were actually made out of solid gold but were actually gold-plated in a 2021 beer can promotion. Some winners complained to the Advertising Standards Authority, who agreed that the advertising was misleading and found in favour of the consumers. The chief executive of the Scottish brewer confirmed that he had contacted all fifty winners to offer the “full cash amount” as an alternative to the prize if they were unhappy” and indicated that he now owns forty of those “gold” cans.

According to reports, Subway could be up for sale and, that being the case, it could be valued at over US$ 10 billion. The sandwich maker, a privately held company, owned by its two founding families for more than five decades, has a presence in over one hundred countries, with 37k outlets, making it one of the largest global quick-service restaurant brands. If the sale were to go through, it seems likely that the buyer will either be a corporate buyer or a private-equity firm.

This week, Goldman Sachs Group started cutting the first of a reported 3.2k positions, from its 49.1k workforce, (6.5%), across the firm, as in line with its peers, it is set for a tough 2023 economic environment, after adding significant numbers of new staff during the pandemic. It would appear that its investment banking division will be impacted most, as the sector has suffered a major slowdown in corporate dealmaking activity because of volatile global financial markets; on a global scale, the investment banking sector lost 41.8%, on the year ,to US$ 77.0 billion and the value of mergers and acquisitions globally slumped 38.0% to US$ 3.66 trillion. It is also expected that numbers will be reduced in its loss-making consumer business after it scaled back plans for its direct-to-consumer unit Marcus. These cuts were confirmed to staff by its chief executive, David Solomon, via a year-end voice memo to staff warning of a headcount reduction in the first half of January and comes at a time when the financial institution is set to announce annual bonus payments, expected to be 40% lower on the year.

Redundancies were also announced at Twitter, as Elon Musk continued his staff cost cutting strategy focusing on the trust and safety team handling global content moderation and, in the unit, related to hate speech and harassment; these included personnel located in both the Singapore and Dublin offices. Even senior managers such as Nur Azhar Bin Ayob, the head of site integrity for the Asia-Pacific region, and Analuisa Dominguez, Twitter’s senior director of revenue policy were shown the door. Workers on teams handling policy on misinformation, global appeals and state media on the platform were also eliminated. This follows the initial November cull of 3.7k employees which saw hundreds of others resigning as well.

Elon Musk has not only alienated some Twitter employees (and users) but has also earned the ire of some two hundred Chinese Tesla car buyers, who have complained that they had overpaid for electric cars they had bought earlier. The protest was against the US. carmaker’s decision to slash prices for the second time in three months the previous Friday, making the cars between 13% – 24% cheaper than they were in September 2022. Many expect that these reductions will boost sales, (which tumbled in December, at a time of faltering demand in the world’s largest market for battery-powered cars), and support production at its Shanghai factory, which employs 20k. The protesters were left frustrated and disappointed with the abruptness of the latest price cut and Tesla’s lack of an explanation to recent buyers.

European customers will reap the benefit of Tesla reducing the price of some of its most popular electric cars by between 10% to 13%, and as high as 20% on some US models, as demand for its vehicles slow because of a difficult global economic outlook and increased competition from other carmakers. It is estimated that UK purchasers will save about US$ 6.7k on an entry-level Model 3 and US$ 8.5k on the cheapest Model Y. It was misfortune for the 16k customers who bought Tesla cars before the price cuts were announced. However, mainly because of disgruntled Tesla buyers, who were left paying the ‘old’ prices, the US EV maker has posted those customers who had ordered, but not yet received, their vehicle would be charged the new lower price. However, it seems that, within eighteen months, supply will be greater than demand as Tesla faces a turbulent time because of slowing global growth and higher interest rates, increasing competition from more established carmakers and from Chinese brands. It appears that the latest events have already seen second-hand Teslas lose up to 20% in value.

Of the 12k redundancies indicated by Amazon last week, 1.2k will be in the UK, as it plans to shut three warehouses in Hemel Hempstead, Doncaster and Gourock, in the west of Scotland. However, the online retail giant is planning to open two new “state of the art” robotic units, over the next three years, in Peddimore, West Midlands, and Stockton-on-Tees, creating 2.5 new positions. It also plans to close seven delivery stations in England, which employ dozens of workers, but will open two new ones in Havant and Aylesford.

In November 2020, Chinese authorities cancelled Ant Group’s US$ 37 billion IPO, (at the time the world’s biggest), at the last minute. Over two years later, its founder, Jack Ma, has announced that he will surrender control of his company to draw a line following the government’s crackdown and could result in an effort to resurrect a new IPO. However, this could take more time as China’s domestic A-share market requires companies to wait three years after a change in control to list, two years for Shanghai’s Nasdaq-style STAR market and one year in Hong Kong. Ma only owns a 100% stake in Ant, an affiliate of e-commerce giant Alibaba Group Holding Ltd 9988.HK but has exercised control over the company through related entities, according to Ant’s IPO prospectus filed with the exchanges in 2020. It now seems likely that Ant will be fined US$ 1.0 billion, as part of Beijing’s sweeping and unprecedented crackdown on the country’s technology titans over the past two years.  However, it does seem that Chinese authorities, recognising that the US$ 17 trillion economy has not yet fully recovered from the pandemic, may well be softening their robust approach to the sector which has lost billions of dollars in both revenue and profits.

The Chinese News Agency, Xinhua, reported that the country’s foreign exchange reserves rose to US$ 3.127 trillion at the end of December 2022 – 0.33% higher on the month. The increase was attributable to the double whammy of currency translation and asset price changes, with declines in both the U.S. dollar index fell and prices of global financial assets. It is expected that forex reserves will remain stable in the coming months because of strong fundamentals, with the Chinese economy enjoying “strong resilience, tremendous potential, and great vitality”. The central bank’s targets including work, to maintain liquidity at a reasonably ample level, maintain effective growth in total credit volume, and ensure that increases in money supply and aggregate financing are generally in step with nominal economic growth.

Having already defaulted on its debts, Sri Lanka’s central bank has urged China and India, (with loans of US$ 7 billion and US$ 1 billion), to agree a write-down of their loans, as a US$ 2.9 billion IMF bail-out payment is dependent on these two countries, but this will only be released when both countries first agree to reduce Sri Lanka’s debt. Although nudging lower, inflation is still high with food prices up 65% on the year, with the World Food Programme estimating  that eight million, of the 22.2 million population, are food insecure. The World Bank estimates that Sri Lanka’s economy shrank by 9.2% in 2022 and that it will contract by a further 4.2% this year.

The fact that Australian inflation rose again in November, would point to the RBA agreeing to a further rise next month. The latest figures from the Australian Bureau of Statistics showed that inflation rose 7.3% on the year, and 0.4% higher on the month; there were marked rises seen in housing, (up 9.6%), food/non-alcoholic beverages, (by 9.4%), groceries, travel, dining out and takeaway food. Latest data point to the fact that there are still ongoing inflationary pressures in the economy. Along with other G20 nations, Australia is reeling from rising energy prices, mainly attributable to the war in Ukraine, along with soaring petrol and diesel costs. It is estimated that, in November, operating costs, including wages, electricity, and weather affected reductions in food supplies drove prices up by 16.6% from October’s 11.8% rate. Furthermore, holiday and travel costs increased by a surprisingly high 12.8% – the second highest for this sector in almost five years. With latest inflation data still rising, allied with ongoing robust retail sales data, rates will rise following the 07 February RBA meeting; estimates are between 0.25% and 0.50% and that further increases could see the rate reach 4.2% by May.

It is more than likely that global rate hikes will continue into 2023, and further tightening will continue until at least the end of H1; this comes after last year witnessing borrowing costs rising by the most in four decades. It is interesting that the people who caused the problem in the first place, by not lifting rates earlier, continued to get all their forecasts wrong last year. A study by Bloomberg of twenty-one jurisdiction indicated that ten would be increasing rates, nine doing the opposite and two remaining on hold. Based on the findings, the consultancy has forecast inflation will peak at 6.0% in Q3 before ending on 5.8% by year end. It also considered central banks’ rates and forecast that the US Fed, ECB, BoE and Bank of Japan would end 2023 at 5.0%, 2.25%, 4.25% and -0.1%, having started the year at 4.5%, 2.0%, 3.5% and -0.1%.

The World Bank has nearly halved its 2023 global economic forecast to 1.7% from 3.0% posted last July, and that by the end of 2024, the economic output of emerging and developing economies will grow by just 1.2% and will be about 6% below levels pre-Covid levels while inflation is expected to moderate, but remain high. The usual suspects for this latest downgrade include the impact from the war in Ukraine, central banks tightening money supply, continuing high inflation levels, deteriorating financial conditions and slowing growth in the US, (0.5%), China, (4.3%) and the euro area (zero); the 2023 growth in advanced economies is expected to slump from 2022’s 2.5% to just 0.5% this year. Things could get even worse if any of the factors listed above come more into play The World Bank also noted that “the deterioration is broad-based: in virtually all regions of the world, per-capita income growth will be slower than it was during the decade before Covid-19”, and that Inflation, currency depreciation and underinvestment in people and the private sector are eroding average income levels “significantly”.

To the surprise of many, the UK economy unexpectedly grew 0.1% in November, following a 0.5% rise a month earlier. The two main drivers were a boost from the FIFA World Cup in Qatar, (with increased sales in pubs and restaurants, as fans went out to watch the games), and a marked increase in demand for services in the tech sector. However, the economy is still in dire straits, as consumer confidence and spend diminishes at a time when food and energy bills go up and people cut back, along with the many strikes not helping the situation.

Another indicator that US price pressures may have already peaked, was that annual inflation fell to its lowest level in more than a year last month, assisted by the Fed’s tightening of monetary policy; CPI dipped, (by 0.1% on the month), for the sixth straight month to post an annual 6.5% increase – its lowest level in fifteen months – and well down on the June 2022 high of 9.1%.

US Treasury Secretary, Janet Yellen, has warned Congress that the country is projected to reach its statutory debt limit, (which stands at US$ 31.4 trillion), by 19 January, and advised that she would take “certain extraordinary measures” to prevent the US from defaulting once the debt limit is reached, which could be as early as next week; the debt level represents the total funds the US is able to borrow to meet its legal obligations. The situation will result in the first major battle in the Republican-controlled House of Representatives over a potential default, which if it occurs will be the first ever.

There is no doubt that the ECB will continue to ratchet up rates, well into 2023, in its belated efforts to return inflation to its long-standing target of 2%. There is a school of thought that maintaining rates at tight levels will result in declining consumer confidence and consumption which, in turn, will drag inflation levels down. Since July 2022, rates have risen 2.5% in four successive hikes and perhaps a 0.50% rise will be seen next month.

Corruption seems to be an ongoing global problem and the EU is not immune from its impact, having seen far too many financial scandals in its history. It is almost a month since four individuals rocked the EU bureaucracy, when it was alleged that Greek MEP Eva Kaili and her partner, Francesco Giorgi, et alia were involved in the illicit lobbying allegedly conducted by Qatar. Now the horse has bolted yet again, the European Parliament has decided to review undeclared trips from lawmakers and pieces of legislation that might have been unduly influenced as a result of the alleged cash-for-favours scheme. It seems that investigators are now closely looking at a committee vote in early December that approved visa liberalisation for Qatar and Kuwait, as well as an array of paid-for visits of multiple European lawmakers to the Gulf region.  Since then, the net has widened and it is reported that two additional MEPs from the socialist group – Marc Tarabella and Andrea Cozzolino – as well as intelligence and diplomatic officials from Morocco, are being investigated. There is no doubt that corruption is alive and kicking, not only in Europe, but all over the world – and once again, and not only in the EU, many scandals will be just swept under the carpet, as politicians ensure that in any investigations, they often become both judge and jury.

Munich Re confirmed that 2022 was one of the costliest years on record for natural disasters, noting that climate change was making storms more intense and frequent. The world’s largest reinsurer estimated that losses, covered by insurance, from natural catastrophes totalled US$ 83.7 billion – almost the same level as recorded in 2021; the average insured losses, over the last five years, equate to US$ 67.7 billion, with Munich Re’s Ernst Rauch, chief climate scientist, commenting that “we can’t directly attribute any single severe weather event to climate change. But climate change has made weather extremes more likely.” Total losses, whether insured or not, from natural catastrophes were US$ 188.3 billion in 2022, compared to US$ 223.2 billion a year earlier, but near the five-year average. Three of the worst events last year were Hurricane Ian, which hit Florida, causing US$ 41.8 billion of insured damages and US$ 69.7 billion in total losses, as well as US$ 3.3 billion and US$ 5.6 billion from floods in Australia. Record monsoon rains and floods in Pakistan, that killed at least 1.7k people, caused US$ 10.5 billion in damages, most of which was not covered by insurance. No surprise to see insurance rates moving higher as it seems that the weather will not be improving with the likelihood of more climatic disasters. It is about time that governments’ promises now become reality and they need to take immediate action; what is now needed is a lot more than just a Wind Of Change!

Missing In Action!                                                            06 January 2023

The 2,173 real estate and properties transactions totalled US$ 2.72 billion, during the week, ending 06 January 2023. The sum of transactions was 270 plots, sold for US$ 613 million, and 1,903 apartments and villas, selling for US$ 1.33 billion. The top two transactions were for land, the highest in Marsa Dubai, sold for US$ 170 million, and for a plot in Al Thanyah Fifth for US$ 21 million. Al Hebiah Fifth recorded the most transactions, with 133 sales worth US$ 105 million, followed by Jabal Ali First, with forty-nine sales transactions, worth US$ 62 million, and Al Merkadh, with twelve sales transactions, worth US$ 34 million. The top three transfers for apartments and villas were all for apartments in Island 2 – the first at US$ 32 million, the next two for US$ 31 million and US$ 20 million. The mortgaged properties for the week reached US$ 504 million, with the highest being for a building in Burj Khalifa, mortgaged for US$ 82 million, whilst 101 properties were granted between first-degree relatives worth US$ 272 million.

It was reported that the UAE and Saudi Arabia account for 83.6% of all regional property transactions, equating to US$ 107.8 billion, with Dubai and Abu Dhabi grabbing 48% of the aggregate value over the ten months to October. In that period, the region posted a 21% hike in value, whilst Dubai witnessed a massive 81% surge, attributable to several factors including solid demand and price gains witnessed by luxury residential properties, and healthy revenues in the affordable segment. Although Dubai posted a 61% hike in transaction numbers, other nations – Saudi Arabia, Kuwait and Qatar – posted a decline compared to a year earlier. Saudi did top the listing when it came to the average value per transaction – at 35.5% – with Dubai returning a 12.2% increase.

Recent research work by Realiste indicates that Dubai real estate sector transactions are set to grow by 46% this year. The Dubai-based PropTech company also noted that last year, property prices grew by between 20% – 40%, with some areas posting even bigger rises; they included Palm Jumeirah and Trade Centre First, growing by 59% and 210% respectively. The company has developed an AI-powered tool that enables investing in real estate in major global capital cities, including New York, Abu Dhabi, Dubai, Riyadh, and London, that will notify the asset owners when it is the right time to buy or sell their properties. Using analytics, the company’s research shows trends in the Dubai’s real estate market, such as the areas of the city showing the most significant increase, the average cost of properties across locations, and the most high-priced or low-priced locations. According to its AI, the most expensive areas were Trade Centre First, followed by Al Wasl Part 2, and that Dubai average prices ranged from US$ 116k in Wadi Al Safa 2 Part 1 to US$ 3.28 million in Al Safouh First Part 2. There was an average 53% growth in average prices of Dubai Hills’ residences, climbing to US$ 436k.

According to data from analytics agency Dsight, more than 16% of Russian companies and entrepreneurs relocated to the UAE in H1 2022 and, with it, the biggest inflow of private wealth this year. Russian entrepreneurs, investors, and top-level professionals have arrived in the emirate to settle, and this has boosted the local property market. There is no doubt that Dubai will remain attractive to overseas investors who are seeking to shield their assets and looking for a safe haven.

Dubai hosted 12.82 million overnight international visitors – more than 85% of the pre-Covid figures from 2019 and more than double the 6.02 million figure reported in 2021; the latest numbers are still 3.91 million shy of the total 2019 return of 16.73 million. Last month, the country launched a national tourism strategy to attract forty million guests by 2031.  With its 794 hotels, and 145.1k available rooms, average occupancy in year-to-date November 2022 was only 2.3% less than pre-pandemic levels, despite the 17 per cent increase in room inventory. The RevPAR statistic came in at almost US$ 103, compared to the US$ 75 and US$ 83 figures recorded in 2021 and 2019. Last year, it is estimated that Dubai recorded almost 23.7 million traveller arrivals in 2022 – up 89% on the previous year, with 21.8 million arriving through Dubai’s airports, and the balance via Hatta Border Crossing (1.6 million) and 243k via the seaports.

There was a 78% hike, to US$ 1.73 billion, in Dubai Duty Free 2022 sales, as DXB passenger traffic started to return to some form of normalcy; it is expected that last year’s numbers will top 64 million. Over the year, the retailer’s head count jumped 16.6% to 4.7k, as sales transactions topped 17.3 million, with 47.3 million units of merchandise being sold.

Starting on 01 January 2023, all establishments purchasing alcohol in the emirate will no longer have to pay the 30% municipality tax, and, apart from now buying their drinks for 30% less, personal liquor licences will be free for those eligible to legally purchase alcoholic beverages in Dubai. However, for those applying for a licence, a valid Emirates ID for residents or passport for tourists, is still required to apply; a person must be at least 21 to drink legally in the UAE, and alcohol can only be consumed privately or in licenced public places. There is no doubt that this will be a boon for the travel and hospitality sectors, as Dubai becomes a more affordable tourism destination.

Also starting on New Year’s Day, the country’s ‘Involuntary Loss of Employment Insurance Scheme’, covering all workers, whether in the private or public sector in the country, and including Emiratis, came into effect. This social security programme will pay anyone, who becomes unemployed, a cash sum for up to three months from the date of an employee’s job loss and will be calculated at 60% of their basic salary for a maximum payment of US$ 5,450, (AED 20k) a month. For those earning US$ 4,360, (AED 16k), or less, the annual insurance cost is just over US$ 16, (AED 60k); for those earning more, the figures are double at US$ 32, (AED 120). The insurance, with premiums subject to VAT, is compulsory, and failure to register in an unemployment insurance scheme will result in a penalty of US$ 109 (AED 400) being imposed on the employee. It appears that employers are not required to register their employees nor to actually pay the insurance for them, with the onus on individuals to register and pay for themselves.

On 04 January – and on the anniversary of his Ascension Day – HH Sheikh Mohammed bin Rashid launched the Dubai Economic Agenda ‘D33’; its targets were to double the size of the emirate’s economy, over the next decade, and to consolidate its position among the top three global cities. He also commented that, “the Dubai Economic Agenda ‘D33’ includes one hundred transformative projects, with economic targets of AED32 trillion, (US$ 8.72 trillion), over the next ten years, doubling our foreign trade to reach AED25.6 trillion, (US$ 6.98 trillion) and adding four hundred cities as key trading partners over the next decade”. He also commented that, “Dubai will rank as one of the top four global financial centres with an increase in FDI to over US$ 38.58 billion in the period and an annual US$ 120.57 billion contribution from digital transformation”.

Despite a slowing economy, as well as surging inflation, and the December UAE adjusted S&P Global PMI dipping 0.2 to 54.2, the country’s non-oil business activity is still well in positive territory and on track to expand at its fastest pace in more than a decade last year. Output growth, driven by an increase in sales and customer numbers, was positive, as new business at non-oil companies continued to rise, although at a slower pace, and demand from domestic clients improved. Output charges fell for the eighth consecutive month, with more discounts on offer, as businesses fight for an increased share of the market There was a rise in some firms’ inventory levels in their expectation of higher sales and new projects being launched. (Meanwhile December PMIs for Saudi Arabia and Egypt came in at 56.9, down from 58.5, and 1.8 higher to 47.2 – but still in negative territory).

The country’s economy has rebounded strongly in the aftermath of the pandemic, driven by higher energy prices and progressive government initiatives. Estimates for 2022 growth range from around 6.5% to 7.6%, with this year’s growth forecasts just shy of 4.0%. In the first nine months of 2022, non-oil foreign trade grew 19% to US$ 446 billion, compared to the same period in 2021. In H1, hotel guest numbers jumped 42%, from the same period before the pandemic, with revenue from tourism touching US$ 5.2 billion and guest numbers topping twelve million.

The DFM opened on Monday, 02 January 2023, 20 points (0.6%) higher on the previous week, shed 34 points (1.0%) to close on 3,302 by Friday 06 January. Emaar Properties, US$ 0.06 lower the previous week, shed US$ 0.03 to close the week on US$ 1.57. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.59, US$ 3.54, US$ 1.55, and US$ 0.41 and closed on US$ 0.62, US$ 3.57, US$ 1.53 and US$ 0.40. On 06 January, trading was at 58 million shares, with a value of US$ 28 million, compared to 88 million shares, with a value of US$ 38 million, on 30 December 2022.

By Friday, 06 January 2023 Brent, US$ 9.31 (1.2%) higher the previous three weeks, shed US$ 7.36 (8.6%) to close on US$ 78.55.  Gold, US$ 27 (1.5%) higher the previous fortnight, rose US$ 41 (2.2%) to close at 1,871, on Friday 06 January.

Huawei expects its 2022 revenue to reach over US$ 91.5 billion, in line with earlier forecasts. The Chinese tech giant confirmed that its ICT infrastructure business maintained steady growth, whilst the decline in device business has slowed; robust growth was seen in digital power and Huawei Cloud. It also indicated that future business opportunities would be found in digitalisation and decarbonisation, and that the company would continue to expand its R&D investment. Meanwhile, Samsung expects its Q4 profits to slump by 69% – its lowest level since 2014 – which made the global leader, of memory chips, smartphones and TVs, downgrade its quarterly forecast to US$ 3.4 billion. This is yet another indicator that the sector has been hit badly by the global economic slowdown and a marked decline in consumer demand.

Having delivered 405k vehicles in Q4, Tesla posted annual deliveries of 1.3 million – 40% higher than a year earlier, but quarterly down on the 405k Q4 Wall Street forecast. The outlook points to slowing demand in 2023, as the impact of a decelerating global economy and rising rates takes effect, with the EV manufacturer confirming that it had to deal with “significant Covid and supply chain related challenges throughout the year”. In the past, Tesla has always managed to deliver as many vehicles as it produced but is now facing increased competition from the traditional carmakers, such as Toyota, VW, Ford and GM. Tesla’s shares fell by 65% in 2022 – its worst year since going public in 2010.

Another tech giant facing problems is Amazon which this week announcing a lay-off of 18k jobs (about 6% of its total 300k workforce), which will mainly impact its e-commerce and human-resources units. Amazon has been impacted by the fact that soaring inflation has led to businesses and consumers to cut back spending, causing its share price halving over the past year. According to Layoffs.fyi, the tech industry has lost more than 150k jobs in 2022, with the trend continuing into the new year. This week, Salesforce Inc announced a 10% staff cut from its 8k payroll.

In the aviation sector, the company with the most sales could hinge on recent deals. As of the start of December, Airbus had 825 orders compared to 576 net sales for Boeing, but the US platemaker has chipped away at the lead with a 200-jet sale to United Airlines Inc and a 40-jet deal with a lessor. It is likely that Airbus will just be in the lead when final delivery – and sales – totals for 2022 are released shortly. However, after major problems since 2019, Boeing shares have jumped 57% in Q4, adding US$ 42 billion to its market value, as the plane maker released plans to revitalise the company; Boeing’s latest market cap, at US$ 113 billion, compares to its rival’s US$ 94 billion.

Another bad week for Meta as Ireland’s Data Protection Commission fined the Facebook parent company US$ 410 million for online privacy violations and also banned it from forcing European users to agree to personalised ads based on their online activity. There were two fines – US$ 221 million for violations of the EU’s strict data privacy rules and US$ 189 million for breaches involving Instagram. These are the latest penalties imposed on the tech giant which had already been hit with US$ 947 million of fines since 2021. The Irish watchdog is Meta’s lead European data privacy regulator because Meta’s regional headquarters is in Dublin.

Although still the world’s largest company, Apple’s value, fell by about 4% at the close of Tuesday’s trading to US$125.07, resulting in its market cap falling below the US$ 2 trillion level for the first time since March 2021; the US tech entity first attained the US$ 2 trillion level in August 2020, and surpassed the US$ 3 trillion level last January. The main drivers behind the fall continue to be inflation, international supply issues and a slowing global economy, with its share value trading more than 30% lower over the past twelve months.

Another one of the big US mega tech companies which has also seen its market cap tumble, is Tesla. With its share price tanking more than 12% in Tuesday’s trading to US$ 108.10, its current market cap of US$ 338.7 billion is a marked downturn in fortunes from its US$ 1 trillion mark reached in October 2021; over the past twelve months, its share value has sunk by around 72%., attributable to many factors, including concerns about EV demand and the impact of its chief executive Elon Musk’s acquisition of Twitter.

One of India’s best known business tycoons has been arrested, almost four years after investigations began – Venugopal Dhoot is facing a case of criminal conspiracy and fraud. It seems that India’s federal investigation agency is beginning to crack down on white collar crime and has seen the arrest of former ICICI Bank chief, Chanda Kochar, and her husband for an alleged fraud. The former bank’s supremo was alleged to have been involved in granting Dhoot’s companies high value loans in 2009, in return for investment in her husband’s renewables business. With the tycoon initially denying any of the claims against him, it seems that he has offered to give evidence against Kochhar, and if that happens it will be inevitable to bring other senior ICICI bankers into the limelight and could unravel a web of intricate fraud.

With higher energy prices last year, it is expected that Gulf sovereign wealth funds, awash with more cash, will play an increased role in the global markets in 2023. It is reported that five of the top ten global SWFs are to be found in the Gulf region, with Singapore’s GIC leading the pack of state-owned investors, having  US$ 40.3 billion invested in 2022 – up 17% on the year. ADIA, at second place, Mubadala and ADQ were also in the top ten. Last year, they more than doubled their investments in western economies, including the US and Europe, to US$ 51.6 billion in 2022, from US$ 21.8 billion in 2021. On the global stage, state-owned funds enacted fewer deals but with greater value – 747 deals, worth US$ 261.1 billion, compared to 890, worth US$ 229.9 billion; this year will see both figures move inevitably higher. The value of assets managed by SWF dipped US$ 0.5 trillion to $10.6 trillion in 2022, while those managed by public pension funds declined US$ 1.3 trillion to US$ 20.8 trillion. Like other investment vehicles, SWF will face all the global economic problems and disruptions – a looming recession, a cost-of-living crisis, record high inflation levels, a strong greenback and growing inequality,

President Tayyip Erdogan has announced that Turkey will decrease the price of natural gas between 13% to 25% for industrial users compared to November 2022. Natural gas prices for electricity production were cut by 12.73%, with electricity prices declining 16%.

According to CoreLogic, Australia’s Home Value Index fell 5.3% last year – its first decline since 2008 – with the largest being 12.1% and 8.1% noted in Sydney and Melbourne; the main driver was the surge in interest rates. With national values dipping 1.1% last month, home values could fall further in the early months of 2023 before stabilising after interest rates peak by the end of H1; rates have jumped 3.0% since last May to 3.1%. .Australia’s US$ 6.4 trillion housing market has declined 8% since its April 2022 peak, after surging 28.6% post-Covid. The RBA has posted that some 30% of Australian borrowers on fixed-rate mortgages will see repayments climb by more than 40% when their loans roll over in 2023. However, the consultancy noted that despite the downturn across many areas of the country, “housing values generally remain well above pre-Covid levels.”

Last month, US employers added a further 223k position to the country’s jobs market, pushing the unemployment rate 0.1% lower to 3.5%. These figures continue to show the resilience of the labour sector, despite soaring prices, with some forecasting that this will reduce the possibility of a severe economic downturn in H1. It must be noted that with the tech giants apparently reducing their payrolls, with double-digit job cuts, this could affect the labour market growth numbers, as consumer spending slumps and financial costs rise. The most recent report showed prices 7.1% higher on the year from a year earlier. It is readily apparent that the country’s economy has been slowing since 2021 and that, despite the economy still creating jobs, employers seem to be planning for a downturn, which will severely hit the market. The Fed is in a quandary – if it raises rates again, to rein in inflation, which is highly probable, this would result in higher costs for both businesses and consumers; this, in turn, will see a further slowdown in the economy and further job cuts.

Kristalina Georgieva has posted that this year will be “tougher” than that of 2022, as the economies of US, EU and China slow and, more worryingly, that over 33% of global economies will be in recession. The IMF supremo also indicated that the main drivers continue to be the war in Ukraine, rising prices, higher interest rates and the renewed spread of Covid in China, and noted that “even countries that are not in recession, it would feel like recession for hundreds of millions of people.”

Latest figures point to a slowing of China’s economy, with the official PMI data showing that its factory activity contracted for a third consecutive month in December – and at the fastest pace in three years – with coronavirus infections spreading in the country’s factories. Furthermore, home prices in one hundred cities fell for the sixth month in a row. Even President Xi Jinping called for more effort and unity as China enters what he called a “new phase”. The economy will also be impacted by the fact that demand for its products will slow, as other global economies cut down on their spending, as well as the fact that rising borrowing costs will ensure that investment is impacted. The knock-on effect is that lack of growth will see investors pulling money out of China, which in turn could see the see its currency weakening. A weak currency makes exports cheaper (but there are less exports because of reduced global demand) and imports dearer adding to China’s potential economic woes.

With the latest December round of rate rises taking effect, UK mortgage approvals fell to their lowest level in two years at 46k, and almost 12k lower last month; the September mini budget, hatched by the comedy duo, Liz Truss and Kwasi Kwarteng, was also a main driver behind the fall in the mortgage sector.  Things will also get worse this year and with mortgage approvals drying up, the knock-on effect will have a negative effect on house prices; latest forecasts indicate that they will dip by as much as 10% in 2023. These figures from the BoE also show that people were also borrowing more on credit cards, as cost of living pressures continue to weigh on household budgets, and that people were saving more for the proverbial “rainy day”. It is estimated that, in November, households deposited US$ 6.87 billion, (GBP 5.7 billion) – an indicator that because of the weakening consumer confidence index, households are spending less, with credit card debt rising by US$ 1.44 billion, (GBP 1.2 billion).

There is no doubt that the UK economy is in for troubled times in 2023, with both the BoE and the Office for Budget Responsibility forecasting a continuing recession – the former’s outlook is for a longer recession, if consumers increase their precautionary spending, and the latter a short sharp dip, as consumers dip into their savings. Any recession will see a slowdown in consumer spending, and this will present an economic headache, bearing in mind that UK Private Consumption accounts for over 63% of its GDP. After two years of decline, 2021 witnessed a 16.9% hike in ‘household final consumption expenditure’ to US$ 2,369.1 billion, (GBP 1,959.1 billion). Despite a seemingly strong labour market, even though actual wages are heading lower, the government’s guarantee energy prices, (probably costing less than initially forecast, and the possibility of it being extended in April), along with petrol pump prices edging lower would point to a soft landing. However, the canary in the mine is the ongoing industrial action which seems to be getting more serious by the day, with every man and his dog out on strike. If this continues ad infinitum, then the UK is heading for both a deeper recession and increased social unrest.

Lady Michelle Mone and her companies are being investigated by the National Crime Agency, investigating PPE Medpro a company that received US$ 242 million of government contracts, weeks after the Conservative peeress had referred it to ministers at the onset of Covid-19. It seems that the good lady is not the only government-related person to have had her “nose in the trough”. Some disturbing data has been revealed that could possibly implicate certain politicians who have done likewise, the most disturbing being that US$ 14.5 billion spent on PPE had been wasted, including US$ 4.9 billion, not being used because it did not meet NHS standards, and US$ 6.0 billion being written down to reflect subsequent price falls. Yet another report, by the National Audit Office confirmed that of the US$ 20.9 billion, spent between March and July 2020, a massive US$ 12.7 billion was awarded without any competition and US$ 8.1 billion to pre-approved suppliers (although they were not necessarily pre-approved for the products they were selling), Strangely, only US$ 0.24 billion was awarded using the established competitive process. To some, it does seem that during this period, some. Within the upper echelons of the ruling party, some were given ‘tickets to board the gravy train’; many of the ‘connected’ companies, many without any prior experience, and some had been newly established at the time, were given contracts, without due process. To date, just like dealing with the country’s current civil unrest, by not negotiating with many of the striking sectors, Rishi Sunak and his cohorts appear to be Missing In Action!

Shake It Off!                                                                                   30 December 2022

The 2,790 real estate and properties transactions totalled US$ 2.62 billion, during the week, ending 30 December 2022 and the year. The sum of transactions was 179 plots, sold for US$ 379 million, and 2,071 apartments and villas, selling for US$ 1.54 billion. The top three transactions were all for land, the highest in Marsa Dubai, sold for US$ 63 million, followed by sales for US$ 48 million, in Jabal Ali Industrial Area 1, and Palm Jumeirah for US$ 26 million. Al Hebiah Fifth recorded the most transactions, with ninety-five sales worth US$ 65 million, followed by Jabal Ali First, with twenty-four sales transactions, worth US$ 22 million, and Al Yufrah 2, with ten sales transactions, worth US$ 3 million. The top three transfers for apartments and villas were all for apartments, the first in Trade Centre at US$ 92 million, the next two both in Island 2 for US$ 36 million and US$ 35 million. The mortgaged properties for the week reached US$ 545 million, with the highest being for land in Jumeirah First, mortgaged for US$ 139 million, whilst ninety-four properties were granted between first-degree relatives worth US$ 147 million.

According to Knight Frank, Dubai’s prime property sector will end the year, with prices 50% higher, attributable to the fact that there is not enough supply in the market to meet current demand – with more of the same expected next year. There is every chance that Dubai’s real estate market will reach over a record 98k transactions by tomorrow – and this despite the global economic turbulence, including higher mortgage rates and lower consumer spending, impacting most other countries. By the end of November, Property Finder noted that YTD, there had been 88k sales transactions – up 50% compared to the same period last year and 38% higher than the market peak of 2013. Knight Frank also indicated that the high influx of high-net-worth individuals has pushed the luxury residences’ value higher, and that the emirate is forecast to have the best prime price growth in the world in 2023, ahead of the likes of Miami and Paris. Interestingly, it “believes that the luxury supply chain in 2023 is going to be limited to approximately 300 to 400 units” and that “the demand for this price point will remain quite strong.”

Meanwhile, Betterhomes posted that “supply in the secondary market will remain under stress, with handovers lagging population growth. The supply and demand equilibrium is likely to rebalance in 2024, as the most recent wave of new launches comes to fruition.” This being the case, there is no doubt that the local property market will continue to see price increases for at least H1, but there will be a time this year when Dubai prices will flatten and may even dip as the global economy contracts; No Man Is An Island. However, long-term, there is only one way for the sector to go, bearing in mind that, over the next decade, the population could easily rise by 50% to 5.3 million, along with an increasing number of foreign investors pushing demand higher. Asteco posted there were high rent increases recorded in Q3, with the likes of Downtown apartment rents, along with villas in Arabian Ranches and The Springs, up 24%, 27% and 24% respectively.

Danube Properties confirmed that its latest US$ 150 million project Elitz has been sold out at the launch. The project, located in Jumeirah Village Circle, is to be built on a 37k sq ft site, with a built-up area of 695k sq ft. Slated for completion in 2025, the twin-tower building will house 203 1 B/R, sixty-five 2 B/R, thirteen 3 B/R and four duplexes. To date, the Dubai-based private developer has delivered 4.6k units, with a combined sale value of US$ 1.0 billion, almost more than half of its 8.8k portfolio.

The Ministry of Energy usually adjusts fuel prices in the UAE by the first day of every month, but has made an exception this 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 marginally decreased December retail petrol prices:

• Super 98: US$ 0.757 – down by 15.76% on the month and up 4.85% YTD from US$ 0.722  
• Special 95: US$ 0.727 -– down by 16.04% on the month and up 5.51% YTD from US$ 0.689
• Diesel: US$ 0.896– down 12.00% on the month and up 28.55% YTD from US$ 0.697
• E-plus 91: US$ 0.706 – down by 16.80.% on the month

DubaiNow smart application has surpassed the 1-million users’ milestone, facilitating over twenty million transactions across thirty different government and private entities. Over that time, more than twenty million transactions, worth over US$ 2.72 billion, (AED 10 billion), have been completed, including four million transactions worth US$ 545 million this year. Dubai’s Crown Prince His Highness Sheikh Hamdan bin Mohammed noted that “it confirms the success of the Dubai government in providing smart, easy and fast services to all segments of society”.

Dubai Aerospace Enterprise has reportedly signed two new deals for unsecured term financing, worth US$ 800 million, with a weighted average maturity of 5.5 years. The company, one of the biggest global plane lessors, noted that “the signing of these financing facilities underscores DAE’s commitment to maintaining exceptional liquidity and a strong balance sheet”. It had posted a nine-month deficit of US$ 577 million attributable to “loss of control” over planes it previously leased to airlines based in Russia, as it incurred a loss of US$ 335 million, compared with a profit attributable to equity holders of US$ 91 million a year earlier; however, it had earned US$ 203 million before net exceptional items, with available liquidity almost flat at US$ 2.8 billion.

Following a general assembly meeting earlier in the week, Emaar Properties has increased its share capital by 8% to US$ 2.4 billion, (AED 8.83 billion), and also approved the issuance of a mandatory bond convertible into 659 million new shares in the company. The DFM confirmed that last Friday was the start date of trading for Dubai’s largest listed developer’s new shares. Latest figures show that Emaar’s Q3 profit 46% higher at US$ 420 million, driven by new project launches and strong demand.

Figures indicate that the net investments of non-Arab investors in the DFM and the Abu Dhabi Securities Exchange amounted to almost US$ 8.0 billion in 2022. During the year, non-Arab investors’ purchases of local shares amounted to US$ 37.4 billion, while the sales hit around US$ 29.4 billion which equals to net investments worth around US$ 8.0 billion.

The DFM opened on Monday, 26 December, 13 points (0.4%) lower on the previous week, gained 20 points (0.06%) to close on 3,336 by Friday 30 December. Emaar Properties, US$ 0.02 higher the previous week, shed US$ 0.02 to close the week on US$ 1.60. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.63, US$ 3.60, US$ 1.55, and US$ 0.41 and closed on US$ 0.59, US$ 3.54, US$ 1.55 and US$ 0.41. On 30 December, trading was at 66 million shares, with a value of US$ 18 million, compared to 88 million shares, with a value of US$ 38 million, on 23 December 2022.

For the month of December, the bourse had opened on 3,332 and, having closed the month on 3336 was 4 points (0.1%) higher. Emaar traded US$ 0.06 lower from its 01 November 2022 opening figure of US$ 1.66, to close the month at US$ 1.60. Four other bellwether stocks, Dewa, Emirates NBD, DIB and DFM started the month on US$ 0.68, US$ 3.50, US$ 1.60 and US$ 0.47 and closed on 30 December on US$ 0.59, US$ 3.54, US$ 1.55 and US$ 0.41 respectively. The bourse had opened the year on 3,196 and, having closed December on 3336, was 128 points (4.3%) higher.  Emaar traded US$ 0.27 higher from its 01 January 2022 opening figure of US$ 1.33, to close at US$ 1.60. Four other bellwether stocks, Dewa, Emirates NBD, DIB and DFM started the year on US$ 0.00, US$ 3.69, US$ 1.47 and US$ 0.72 and closed on 30 November on US$ 0.59, US$ 3.54, US$ 1.55 and US$ 0.41 respectively.

By Friday, 30 December 2022, Brent, US$ 7.37 (9.6%) higher the previous fortnight, gained a further US$ 1.94 (2.3%) to close on US$ 85.91.  Gold, US$ 3 (0.2%) higher the previous week, rose US$ 24 (1.4%) to close at 1,830, on Friday 30 December.

Brent started the year on US$ 77.68 and gained US$ 8.23 (5.9%), to close 30 December on US$ 85.91. Meanwhile, the yellow metal opened January trading at US$ 1,831 and shed just US$ 1 during 2022, to close on US$ 1,830. For the month, Brent opened at US$ 86.77 and closed on 30 December, US$ 1.14 lower (1.0%) at US$ 85.91. Meanwhile, gold opened December on US$ 1,793 and gained US$ 37 (2.1%) to close at US$ 1,830 on 30 December.

With announcements that China would end its quarantine requirements for inbound travellers starting on 08 January, amid concerns that US winter storms may impact on energy production, oil prices continued to head north over the last week of 2022. Concerns over a possible 7% production cut by Russia also contributed to oil price gains.

With the aim of enticing the EU to scrap its new windfall tax on energy companies, Exxon Mobil is planning to sue, arguing that it has exceeded its legal authority by imposing the levy. The US oil giant is claiming that the windfall profits tax is “counterproductive”, discourages investments and undermines investor confidence. The company also warned that it would factor in the tax as it considers future multibillion-euro investments in Europe’s energy supply and transition, which could see future investment markedly lower; over the past decade, it has invested over US$ 3 billion in the continent. It also claimed that these taxes could cost the sector at least US$ 2.0 billion by the end of next year. Chevron is yet another company weighing up future investment in the EU.

After passing through the Senate a day earlier, last Friday, the US House of Representatives approved a US$ 1.7 trillion spending bill which will fund the US government through the next fiscal year up to 30 September – and averted a partial government shutdown. The biggest beneficiaries will see US$ 772 billion for domestic programmes, US$ 858 billion, for defence, and about US$ 38 billion for regions recovering from natural disasters.

Sad news for global bankers are reports that end of year bonuses may be up to 50% lower, than those paid out in 2021, and that there will be more lay-offs in the coming months; last year saw them being awarded their biggest awards since 2006, as the economy recovered from the pandemic.  This comes on the back of a year that has seen a global slowdown in the economy, a marked reduction in the pace of mergers and acquisitions, (down 37% to US$ 3.6 trillion), continuing stock market volatility, (with a US$ 517 billion, 66%, slump in global equity underwriting), and debt financing markets collapsing.

Both Apple, (at its lowest since June 2021) and Tesla, (down 73% from its November 2021 high) have seen their stock values sink, driven by concerned delays at their Chinese production lines. After months of struggling with production because of draconian Covid restrictions and ongoing lockdowns, they now face a labour shortage, as a new Covid wave hits the country. It also seems that the labour problem will not go away, and it will be at least the end of February before production is ramped up, as most migrant workers will go back to their home villages for the Lunar New Year at the end of January. To add to their financial woes, like other companies, they will face problems arising from additional interest rate hikes, a global economic slowdown, and the ongoing war in Ukraine.

 On Wednesday, Elon Musk sent an email to Tesla staff telling them that  he believes that long term, Tesla will be the most valuable company on earth and urged all employees to “please go all out for the next few days and volunteer to help deliver if at all possible. It will make a real difference!” This announcement came after the automaker offered discounts on its vehicles in the United States and China, as worries mount that demand will decline because of the global economic slowdown and worrying Chinese Covid figures. Latest data expect that Tesla Q4 deliveries will top 442k. Morgan Stanley analysts cut their price target on the stock to US$ 250 from US$ 330, saying the last two years of demand exceeding supply will be “substantially inverted to supply exceeding demand” in 2023. Time will tell whether Elon Musk or Morgan Stanley, is right.

Having been convicted in May of masterminding a stock scam that wiped US$ 8.7 billion off Singapore’s exchange, John Son Chee Wen and his girlfriend, Quah Su-Ling, have been sentenced to jail for thirty-six years and twenty years respectively. It seems that the Malaysian and his Singaporean accomplice had used their knowledge of financial markets to inflate share prices, by setting up more than one hundred and eighty trading accounts to inflate the share prices of three companies – Blumont Group, Asiasons Capital and LionGold Corp – and borrowed large sums to manipulate stock prices. High Court judge, Hoo Sheau Peng, called it a “scheme of substantial scale, complexity and sophistication”, and that “immense harm” was caused by the stock market crash in 2013. Shares were used as collateral, with several banks, including Goldman Sachs, to extend US$ 126 million of credit lines to finance their ruse which was to create demand for penny stocks, reportedly managing to push up some prices by around 800% in 2013.

Christmas came late for Spaniards, as the government, on Tuesday, announced a US$ 10.7 billion package of measures to ease the pain of inflation – its third such measure this year, bringing total aid to US$ 47 billion. This includes a one off US$ 213 bonus to 4.2 million households, with annual incomes up to US$ 28.7k, and an extension of tax cuts for energy bills into H1 2023. The Sanchez government has also reached an agreement with the EU to place a limit on gas prices for electricity production, which has been the major driver behind Spain having the lowest inflation rate – at 6.7% – in the 27-country bloc. The country will also cut VAT on essential foods such as bread, cheese, milk, fruit and vegetables and cereals to 0% from 4%, and there have been twelve-month extensions on subsidies for train travel for commuters and limits on rental increases, whilst last month saw electricity prices 22.4% lower than a year earlier. Meanwhile, food prices have climbed 15% over the past twelve months. To put the icing on the Spanish ‘pastel’, growth forecast for 2022 is expected to come in at over 5%.

Moody’s Investors Service downgraded Russia’s ratings from B3 to Ca, deeper into “junk”, or non-investment grade territory, with a negative outlook, it expects that its GDP will contract by 7% this year due to mounting pressure on its finances. The move was triggered by the Central Bank of Russia’s capital control measures put in place following international sanctions. The ratings agency indicated that “the downgrade to Ca is hence driven by severe concerns around Russia’s willingness and ability to pay its debt obligations,” with its control measures restricting cross border payments including debt service on government bonds. Key interest rates have more than doubled to 20% to try to shield the US$ 1.5 trillion economy and a currency that has tanked 61% to 121 roubles to the greenback fell to a record low. In a similar vein, S&P Global Ratings has downgraded the country eight notches to CCC –  a week after it had already cut the rate to BB+. According to Moody’s, the world’s second largest energy exporter faces the likelihood of “sustained economic disruption and increased susceptibility to shocks” next year. There is no doubt that there is worse to come and that continuing high inflation, allied with a depreciating rouble, will see much lower living standards and possible social unrest.

			%age	31 Dec	31 Dec	31 Dec	31 Dec	31 Dec	31 Dec	31 Dec	31 Dec	31 Dec
		Unit	Rise	2022	2021	2020	2019	2018	2017	2016	2015	2014
Gold	US$	oz	-0.05%	1,830	1,831	1,895	1,517	1,285	1,305	1,151	1,060	1,186
Iron Ore	US$	lb	13.68%	121.3	106.7	155.7	91.53	71.3	71.28	75	47	73
Oil -Brent	US$	Bl	10.45%	85.91	77.78	51.8	66.67	53.8	66.62	56.82	36.4	57.33
Coffee	US$	Lb	-23.26%	174.00	226.75	128.25	129.2	101.9	126.2	133	124	161
Cotton	US$	Lb	-25.97%	83.40	112.65	78.12	68.95	72.2	78.5	69	64	62
Silver	US$	Oz	3.51%	24.18	23.36	26.41	17.86	15.56	16.99	16	13.82	15.77
Copper	US$	Lb	-14.35%	3.82	4.46	3.52	2.8	2.64	3.3	2.48	2.14	2.88
AUD	US$		-6.20%	0.681	0.726	0.77	0.702	0.7	0.78	0.72	0.73	0.81
GBP	US$		-10.57%	1.21.0	1.353	1.359	1.326	1.27	1.35	1.24	1.48	1.53
Euro	US$		-5.63%	1.073	1.137	1.218	1.12	1.14	1.2	1.05	1.09	1.21
Rouble	US$		4.62%	0.014	0.013	0.014	0.016	0.014	0.017	0.016	0.014	0.017
FTSE 100			0.66%	7,452	7,403	6,481	7,542	6,721	7,688	7,142	6,242	6,548
CSI300			-21.62%	3,872	4,940	5,212	4,097	3,142	4,031	3,310	3,731	3,532
S&P 500			-19.43%	3,840	4,766	3,756	3,231	2,507	2,674	2,238	2,044	2,091
DFMI			4.38%	3,336	3,196	2,492	2,765	2,530	3,370	3,531	3,151	3,774
ASX 200			-10.26%	7,039	7,844	6,587	6,802	5,652	6,171	5,665	5,345	5,415
Bitcoin	US$		-64.89%	16856	48011	29,043	7,201	3,694	13,081	998	427	302

The above table covers certain economic indicators, with two sectors standing out. Compared to all the other currencies covered in the table, the US$ dollar reigned supreme in 2022, as it did a year earlier, During the year, Sterling, the euro and the Ozzie dollar all traded lower closing 2022 down 6.20%, 10.57% and 5.63% respectively. Two others – gold and silver – did little to encourage investors, with the former nudging US$ 1 higher and the other up 3.51% on the year; it is unlikely that they will fare much better going into 2023. Notwithstanding iron ore, that has had three prior stellar years, being 13.68% higher on the year, other commodities performed badly with copper, cotton, and coffee all trading lower in 2022, down by 14.35%, 25.97% and 23.26%; this after all three had mega 2021 results, then up by 26.70%, 44.20%, and 76.80%. If the impact of Covid continues to dissipate in 2023, some sort of peace agreement is arranged between Russia and the Ukraine and the central banks finally get a grip on inflation, then most commodities are in for a good recovery year. If nothing changes on those three fronts, then batten down the hatches.

It is estimated that global stocks and bonds shed more than US$ 30 trillion in a year, that many had predicted to be positive, was beset by many problems including raising interest rates, soaring inflation and, to top it all, the war in Ukraine. 2022 proved to be a disappointing year for most of the global stock markets, with all three US bourses having their worst year since 2008, and all posting annual falls – the Dow, the S&P and the Tech-heavy Nasdaq down by 8.8%, 19.4% and 33.1%. As occurred in 2021, when it rose by 28.35%, one of the best performing markets in 2022 was our own DFM – up 4.38%.  Last year, Australia’s ASX gained more than 19%, but hit the buffers in 2022, losing 10.26%. It was a brutal year for Asian markets either showed less impressive gains, or losses in the case of Japan’s Nikkei 9.37% shy, Hong Kong’s Hang Seng index, down 15.46%, as well as the Shanghai Composite losing 14.24% and New Zealand’s NZX, 1.2% lower.

No question about the 2022 currency of choice, as the US dollar proved that it was still the global leader in times of economic volatility, surpassing the likes of the yen, sterling, Ozzie dollar and the Loonie (CAD), with the greenback 14%, 12%, 7%, 4% and 4% higher during the year. Whether the US currency remains paramount in 2023 is unlikely and there is little chance that the market will see the Federal Reserve push up rates by another 4% next year – at the beginning of 2022, the interest rate was at 0.25%, at the end 4.25% and probably will peak at around 5.0% during 2023.

A triple whammy of the Ukraine war, soaring, energy prices soar and slowing growth will result in a tough 2023 for the euro which at one stage was trading at 0.97 to the US dollar, after starting the year on 1.37. Although it had recovered somewhat to US$ 1.06 by the end of 2022, there is every sign that it could struggle to keep above parity by the end of next year, especially if the ECB remains bearish and not lift rates as quickly as it should. However, Economics 101 teaches that it will recover but 2023 may not be its year.

When it comes to cryptocurrency, anything can happen and volatility will remain the name of the game. Bitcoin has indeed lost its shine in 2022, as its price nosedived 64.89% to US$ 16.9k, with investors seemingly more concerned about the identity of the next crypto exchange to self-implode. Bitcoin has crashed since hitting its US$ 68,991 peak in November 2021, plunging the sector into chaos and ongoing crisis. The general view is that there is still room for further declines but there will come a price – some time in 2023 – which will encourage investors to return to the sector. There would be no surprise to see the price climb to above US$ 15k when this happens.

The economic forecast for the UK is more than gloomy, with the distinct possibility of a short – but damaging – recession, with some analysts forecasting that it will take a further three years just to return to pre-pandemic levels. Many will recall that George Osborne was appointed Chancellor of the Exchequer in 2010, following in the steps of Labour’s Alistair Downing who left a huge public debt, attributable to the 2008 GFC. He introduced an era of austerity policies aimed at reducing the budget deficit and launched the Northern Powerhouse initiative, (which has not been a startling success). “Dodgy Dave’s” crony was dismissed by Theresa May following the 2016 Brexit referendum. In 2010, the national debt equated to 74.6% of GDP, 86.8% in 2016 and 101.9% in June 2022, so it is evident that the Conservative austerity programme has been an out and out failure and the country is a lot worse off now than it was in 2010. The UK economy cannot afford another ‘lost decade’ of growth.

With inflation set to remain high and business investment largely on hold, the UK economy is forecast to contract by at least 1.0% in 2023. There is no doubt that the country has been badly impacted by the surge in natural gas prices, (as have the rest of Europe), slowing global economic growth, a patchy labour market recovery and continuing low productivity and weak investment – a sure indicator that the UK is in  a period of stagflation. Unemployment is expected to jump to 5.0%, by Q1 2024, from its 3.6% level, whilst inflation hit a forty-one year high of 11.1% in October. Its reduction will be slow, with some expecting it still to be at over 6.0% by the end of 2023, before halving to 2.8% in 2024 – still above the BoE 2.0% target. The most damaging forecast is that from the CBI that business investment at the end of 2024 will be 9% below its pre-pandemic level, and output per worker 2% lower. Unfortunately, the UK is on the way to be Europe’s weakest performing economy, bar Russia next year, and become the poor man of the G20 – a position that could take years to Shake It Off!