No Woman, No Cry


No Woman, No Cry                                                                                       12 February 2021

The latest weekly value of Dubai real estate transactions totalled more than US$ 900 million, including US$ 384 million relating to 802 real estate sales, (villas/apartments), US$ 439 million for registration of 856 pledges and 54 pledges of land for US$ 53 million. With regard to sales of apartments/villas, the three largest were a US$ 14 million pledge in the second Umm Hurair area, followed by a sale of US$ 12 million in the Palm Jumeirah area, and a pledge of US$ 8 million in the Al Thanyah Fourth area. Land sales saw the three high value transactions being in Al Thaniyah 4, Al Barsha South of the Fifth District and Sheikh Mohammed bin Rashid Gardens, fetching US$ 10 million, US$ 5 million and US$ 3 million respectively. Nad Al Sheba, the third region, was the leading location for the number sales, at 20 pledges, worth a total of US$ 13 million, followed by Al-Wafra 2 region, with 12 pledges, amounting to US$ 3 million, and Sheikh Mohammed bin Rashid Gardens, with sales of US$ 11 million.

It is reported that Abu Dhabi’s Aldar Estates has acquired the full-service real estate services company Asteco Property Management and all its branches across Abu Dhabi and Dubai. Through the acquisition, Aldar Estates will scale up its existing integrated estate management solutions to include building consultancy, valuation and advisory as well as franchising services. Asteco’s founder, Elaine Jones, commented that in the thirty-five years of its existence, the firm “has built a solid reputation for consistently delivering high quality, professional, value-added services in a transparent manner”. Because of this purchase, Aldar has managed to expand its portfolio by an additional 18.6k units under property management and more than 5k units under owner association management.

In Q4, DP World Limited handled 19.1 million TEUs (twenty-foot equivalent units) across its global portfolio of container terminals, with gross container volumes increasing by 7.6% year-on-year on a reported basis and up 6.5% on a like-for-like basis. Over the year, the figure was flat at 71.2 million TEUs, whilst there was an 0.2% increase on a like-for-like basis. Volume growth was driven by operations in India, Europe, MEA, and Americas with a strong performance from Mundra (India) London Gateway (UK), Rotterdam (Netherlands), Antwerp Gateway (Belgium) and Sokhna (Egypt). At a consolidated level, DP World terminals handled 11.2 million TEUs in Q4 – up 10.1% on a reported basis and 5.2% on a like-for-like basis; for 2020, the figures were 41.7 million TEUs, 4.6% higher on a reported basis but 1.8% lower on a like-for-like basis.

Dubai came in third overall in the ‘FDI Global Cities of the Future 2021/2022’ report’s overall global rankings and second in the ‘Major Cities’ category, according to the report published on Thursday by fDi Intelligence, part of the Financial Times. The emirates was also ranked third, behind Berlin and Hong Kong, in the FDI strategy sub-indicator among ‘Major Cities’ and eighth in the overall global rankings. Dubai also received a special commendation by the panel for its investment in green development.

Matrix International Financial Services has been appointed by the consortium bidding for Finablr whose companies include the UAE Exchange, Xpress Money, Bayan Pay, Remit2India and Unimoni brands. Its original owner, BR Shetty, has claimed he is a fraud victim perpetrated by former senior staff. The US firm has expertise in devising and implementing fraud prevention strategies, as well as fighting financial crime and money-laundering. The consortium, of Abu Dhabi’s Royal Strategic Partners and Prism Group’s Swiss subsidiary Global Fintech Investments, bought Finablr for US$ 1; the deal also included a further 25% of any funds recovered from “third parties in respect of possible historic wrongdoing” at the company, up to a maximum of US$ 190 million. Last May, Finablr reported undiscovered liabilities, resulting in its debts being US$ 1 billion higher than the US$ 334 million posted in its last filed accounts for the year to June 30, 2019.

With regard to BR Shetty’s other enterprise, Perella Weinberg Partners, with Resonance Capital, the NMC Health’s administrators have begun the sales process to try and find a suitable buyer for the firm’s core healthcare businesses in the UAE and Oman. At the same time, they are having discussions with regional and international lenders about corporate restructuring. Last year, the company reported that its 2020 gross revenue was 6.1% lower on the year at US$ 1.54 billion, with EBITDA only down by 1.7% at US$ 106 million. NMC Health was placed into administration in April last year following the discovery of more than US$ 4 billion worth of previously undeclared debts at the group, which also owes more than US$ 6.8 billion in loans and guarantees. There is no doubt that the company would be worth more as a whole unit rather than broken up.

Covid-19 is the main reason why Aramex posted a 43% decline in 2020 net profit to US$ 78 million, as costs and provisions moved higher. Its revenue was up 9% at US$ 1.5 billion, whilst it booked US$ 6 million in estimated credit losses on the company’s bank deposits in Lebanon. Although its freight forwarding division dropped 5% in revenue, to US$ 272 million, both its international and domestic express businesses posted growths of 10% to US$ 700 million and 23% to US$ 371 million. Overall global trade contracted by 9.6% last year with the IMF forecasting growth for this year and 2022 at 8% and 6%. The ME’s biggest courier company is confident of a better 2021, as “demand-side fundamentals are encouraging as more and more businesses will depend on us to move and deliver shipments globally and domestically.”

Having disposed of one of its subsidiaries, embattled Drake & Scull managed to turn in a profit of US$ 59 million in 2020, compared to a loss of US$ 24 million a year earlier. However, the good news was tempered by the fact that profit, from continuing operations, sank 45% to US$ 35 million, with revenue 68% down at US$ 59 million – it made a US$ 96 million profit on the sale of one of its subsidiaries. The profit enabled the contractor to reduce its accumulated losses to US$ 1.33 billion, with shareholders’ equity improving slightly to negative US$ 1.02 billion. The company noted that its restructuring process had reached its “final and advanced stages”.

Emaar Properties’ unit, Emaar Malls, posted falls in both 2020 revenue and net profit by 25.1% to US$ 954 million and 69.3% to US$ 192 million respectively. One bright light was the performance of Nashmi which Emaar Malls acquired in 2019. The regional e-commerce platform recorded a 28% hike in sales to US$ 357 million, attributed to its continued growth in Saudi Arabia and addition of news brands on the platform. Despite the pandemic, occupancy rates at its locations – including The Dubai Mall, Dubai Marina Mall, Gold & Diamond Park, Souk Al Bahar and the Community Retail Centres – was at a respectable 91.5%. The company provided more than US$ 272 million in support to tenants as part of its flexible rental relief policy in the early stages of the global pandemic.

Amanat Holdings posted its preliminary unaudited Q4 results, with an 86.2% slump in profit to just US$ 2 million on revenue nudging 1.0% higher to US$ 39 million. By 31 December 2020, shareholders’ equity stood at US$ 681 million, total assets stood at US$ 736 million and cash at US$ 124 million at the holding level. However, in Q4, the GCC’s largest healthcare and education investment company did manage to post a 94.2% jump in income from investments to almost US$ 11 million, with education investments up 43.3%, while losses from healthcare investments narrowed by 51.7%.

A sign of the troubled times was seen with Mashreq posting a 2020 loss of US$ 348 million, (compared to a US$ 56 million 2019 profit), driven by a lower interest rate environment; revenue fell 14.1% to US$ 138 million. Dubai’s oldest bank also posted an increase in impairments to US$ 913 million, as liquidity problems – especially in the construction and hospitality sectors – came to the fore. The bank is “cautiously optimistic” that business will pick up in H2, after “a challenging first half in 2021”.

With the ongoing impact of Covid-19, it was no surprise to see that DXB Entertainments’ 2020 loss was 21.5% worse than that of the previous year – to negative US$ 740 million -not helped by US$ 460 million worth of impairment losses on property and equipment and a US$ 94 million non-cash depreciation charge. Its revenue sank 71% to just US$ 39 million, with theme parks being the biggest contributor with US$ 26 million; park visitors were 69% lower at 802k.  Operating costs were 49% lower at US$ 78 million, whilst the available cash balance stood at US$ 109 million.

The bourse opened on Sunday 07 February and having shed 64 points (2.3%) the previous fortnight, shed a further 36 points (1.3%) to close on 2,633 by Thursday 11 February. Emaar Properties, US$ 0.03 higher the previous week lost US$ 0.02 to close at US$ 1.03. Emirates NBD and Damac started the week on US$ 3.16 and US$ 0.37 and closed on Thursday at US$ 3.17 and US$ 0.34. Thursday 11 February saw the market trading at 187 million shares, worth US$ 45 million, (compared to 167 million shares, at a value of US$ 72 million, on 04 February).

By Thursday, 11 February, Brent, US$ 0.33 (0.6%) lower the previous week, gained US$ 5.60 (10.2%) in this week’s trading to close on US$ 60.70. Gold, US$ 37 (2.0%) lower the previous fortnight, lost a further US$ 17 (1.0%), by Thursday 11 February, to close on US$ 1,821.

Driven by Saudi-Russian led production cuts, a feel-good Biden honeymoon for the US and a global rollout of Covid-19 vaccines, the price of Brent has breached the US$ 60-barrel price. On Monday, it rose to US$ 60.17. Prices are expected to edge higher especially because of Saudi Arabia’s pledge of extra supply cuts in February and March, with other members of Opec and Opec+ also reducing output which will go a long way to balance global markets. Like other commodities that trade in US dollars, oil will also benefit from a weaker greenback.

Opec+, the international coalition of producers, led by Saudi Arabia and Russia, will maintain its current level of curbs at 7.2 million bpd, equivalent to about 7% of global supplies, until the end of March, with Saudi also cutting a further 1 million bpd production in February and March to support oil markets. Latest estimates show global oil demand to increase 5.9 million bpd this year, with OECD demand up 2.6 million bpd and non-OECD by 3.3 million bpd. Inventories have continued to head south following a Q2 2020 peak, which has rebalanced the market somewhat, as demand indicators move higher. Oil demand from China, the world’s second-biggest economy, is also rising – and with factors such as these in play, there is every chance of Brent climbing 15% higher from its current US$ 60 level.

In a bid to cut costs to stem losses, caused by a drop in sales with fewer jets in the air requiring servicing, Rolls Royce is looking at a plan to close its jet engine plants for civil aircraft for two weeks; if their plan bears fruit, it will have no impact on its defence or energy divisions. The engine-maker agreed with unions last summer to enter into negotiations about delivering a 10% productivity and efficiency improvement across its civil aerospace operations in the UK. Last month, the company said it expects to get through more cash than expected this year; in 2021, having already slashed billions of pounds in costs, US$ 2.8 billion of cash is expected to leave the business, more than double earlier forecasts. As it is paid on the number of hours its engines are in use, its revenue stream will continue to be almost dry whist Covid and flight restrictions continue.

Meanwhile, the supermarket price war has stepped up a notch, following Tesco’s March 2020 move to launch its supermarket Aldi price-match scheme, with Sainsbury’s now saying: “It will help shoppers who are working hard to balance budgets”; initially, it will cut prices on 250 popular items, including meat, chicken, fresh fruit and vegetables and dairy. There is no doubt that the German interloper continues to ruffle feathers with the big players worried that Aldi (and to a lesser extent Lidl) are increasing their market share. The supermarkets are also suffering from the increase in online shopping because of making less profit caused by delivery and higher staffing costs.

Having dominated the supermarket sector for so long and having probably filled its boots over the 102 years it has been in existence, Tesco is facing competition on two fronts. The first is from the discounters such as the two German infiltrators, Lidl and Aldi, and the fact that Sainsbury’s and Asda are doing their best to improve their 14.9% and 14.5% market shares, compared to Tesco’s 28.1%. The second and probably the most dangerous to Tesco is the online pureplays and retailers. As Ocado overtook the supermarket giant last September to become the UK’s most valuable retailer, with a market value of US$ 30.0 billion, compared to Tesco’s US$ 29.1 billion. This came about even when Ocado sells just 1.7% of the UK’s groceries. In 2019 Tesco had a market share of 30.7% in online grocery in the UK, followed by second-placed Asda (17.6%), Ocado (15.3%), Sainsbury’s (14.4%), Morrisons (4.5%) and Waitrose (3.0%). Other players accounted for 14.5% of the sector. Now Tesco has joined some of its online rivals, such as Morrisons, Asda and Waterstones, to call for a 1% sales tax to be levied on online competitors, including Amazon. They will meet with the UK Chancellor, Rishi Sunak, to request a “level playing field” on tax, arguing that the current system puts retailers with large estates at a disadvantage to online firms.

At the same time, eighteen company chief executives have written to the Chancellor warning that a return to Business Rates “will hamper the recovery of the retail sector post-pandemic, potentially putting thousands of jobs at risk”. The tax is calculated on a property’s rateable value and multiplying it by a tax rate set by the government which is amended every fiscal year so that a new rate will be introduced on 01 April. There is understandable concern about the future of “brick and mortar” shops, with latest official figures that 2020 retail sales at physical shops fell 10.3% to US$ 395.4 billion. Their chief protagonist, Amazon was criticised for paying less in business rates than British bricks-and-mortar retailers, as its 2020 revenue jumped 51% to US$ 26.5 billion, with its overall business rates bill estimated at just US$ 99 million – just 0.37% of its retail sales. Because of Covid, the bricks-and-mortar retailers were given a tax holiday for the year but if that had not occurred, their total bill would have been US$ 11.4 billion, equating to 2.9% of retail sales. The tech giant argues that it pays its tax and has not only created thousands of jobs in the UK, but also invested US$ 31.4 billion in jobs and infrastructure in the UK since 2010.

Boohoo has bought the Dorothy Perkins, Wallis and Burton brands from failed retail group Arcadia for US$ 35 million – and in line with similar deals in recent weeks does not include their physical presences. This particular sale sees the end of 214 shops and the 2.5k workers employed in them. With Asos acquiring Arcadia’s other leading brands – Topshop, Topman, Miss Selfridge and HIIT – it finally sees the end of Sir Philip Green’s and his Arcadia group which fell into administration last year. This business failure has seen most of the 13k Arcadia employees out of a job, with only about 260 jobs moving to the online fashion retailer, mainly at Boohoo’s head office. Boohoo has already bought a number of leading High Street names in the past two years, including the Karen Miller and Coast brands, in 2019, Oasis and Warehouse last year and more recently Debenhams. It seems only to be a matter of time before Boohoo becomes the UK’s largest retail marketplace, as well as the leading disruptor in fashion, reaching the top branches of the retail tree.

Following a year of “unprecedented disruption”, Heineken is to slash 8k – or almost 10% – of its payroll after a sharp drop in sales due to the coronavirus pandemic, with bars closing all over the world. The UK seems to have got off lightly with only 4.3% of its 2.3k workforce facing redundancy. The Dutch company – which also owns the Tiger and Sol brands – is the world’s second-largest brewer, with its Heineken brand the best-selling lager in Europe. The brewing giant called on the Johnson government for continued support for the pubs sector, including an extension of rates relief and a cut in VAT. To date, it had seen more sales out of the pub environment, but this has nowhere near made up of loss of revenue from its diminished pub trading. It hopes that the government will continue its support for the pubs sector including an extension of rates relief and a cut in VAT. Having made a US$ 1.4 billion profit in 2019, it posted a loss of US$ 132 million last year, as sales volumes fell in Europe, Mexico, South Africa and Indonesia. Over the next three years, Heineken hopes to slash costs by US$ 2.43 billion including US$ 425 million in personnel expenses.

To end what Jack Dorsey said had been”an extraordinary year” for the platform, Twitter noted that a 28% hike in Q4 saw a record US$ 1.3 billion in revenue, with “monetisable” daily active users growing by five million to 192 million, on the quarter. The company, that has 5.5k employees, has warned that total costs will be at least 25% higher in 2021, with payroll numbers 20% higher. The fact that the company took the unprecedented step of banning the then US President may have an impact on Q1 figures.

If you are an investor you cannot grumble about Bumble, as the dating app topped US$ 13 billion after listing its shares. Shares initially traded at US$ 43 (giving a market value of US$ 8 billion) but opened on Thursday 11 February at US$ 76. This despite the fact that it posted a nine-month loss to 30 September 2020 of US$ 116 million and saw its growth rate drop to just 15% (following a 2019 rate of 35% and a US$ 69 million profit). Whitney Wolfe Herd, who founded Bumble in 2014 to put women in charge of making contact with potential mates, became a self-made female billionaire overnight and also became one of twenty US firms to list publicly while led by a female founder. The thirty-one-year-old Texan also co-founded the dating app Tinder, whilst Bumble acquired Badoo in 2019.

January saw Amsterdam – with share trades totalling US$ 11.2 billion – replace London as Europe’s largest financial trading centre, with a monthly trade of US$ 10.4 billion, as Brexit-related changes to finance rules came into force on 01 January. New directives see EU-based banks wanting to buy European shares being unable to trade via London, meaning a loss of fees for City firms. The BoE chief, Andrew Bailey, indicated that there were signs that the EU had plans to cut the UK off from its financial markets, but talks are afoot that would see both parties harmonise rules over financial regulations – so-called equivalence. It has to be remembered that financial services make up about 7% of the UK’s income in total, and about 40% of banking and investment’s business abroad is with the EU. The BoE governor noted that EU demands had so far been unreasonable, and that he would not accept being “dictated” to by Brussels – something that the bureaucrats there are not used to.

Uber‘s chief executive, Dara Khosrowshahi confirmed that the tech company would  start accepting Bitcoin and other cryptocurrencies, as a form of payment, if it benefits the business and if there is a need for it. But he did comment that Uber would not buy the digital currency with its own cash, noting that the company was not in the speculation business. This week, the global ride-hailing firm posted a 2020 loss of US$ 6.8 billion (20% lower on the year), with its delivery service ticking over but ride-sharing nose-dived; revenue slumped 14% to US$ 11.1 billion. In 2020, it acquired new businesses like Cornershop in Mexico for groceries and Postmates courier service but rid itself of ATG and Jump to save on costs.

By the end of last week, the UK economy was receiving all the plaudits, with upbeat news and the vaccination programme going quicker than planned, The Bank of England forecasted a stronger than expected recovery later in the year, as the Covid-19 crisis begins to normalise. However, UK’s recent return of a stricter lockdown protocol will result in a disappointing Q1 4% contraction. With a steady hand on the tiller, the BoE maintained both the policy rate unchanged at 0.1% and the size of its bond buying programme steady at US$ 1.24 trillion. One note of interest was the bank’s guidance on negative interest rates indicating that any change would be highly unlikely over the next six months, if at all. The latest BoE projections expect GDP to return to pre-Covid levels as early as Q1 next year but has downgraded its 2021 forecast by 2.25% to 5% but raised 2022 to 7.25%. Their 2021 estimate looks a little too conservative and it will not be the first time that the BoE has erred on the side of caution.

After only two years in production, luxury goods group LVMH and singer Rihanna have agreed to shut down her Fenty fashion label; the only good news for the singer was that it be “put on hold”, pending better conditions. However, the Fenty brands in cosmetics – Beauty and Skin, along with the Savage X Fenty lingerie line will continue. Although the singer, whose real name is Robyn Rihanna Fenty, has a huge fanbase, the Fenty label’s prices were too steep for most of them. However, both parties pledged to concentrate on the long-term development of the “Fenty ecosystem”. Maybe the singer can now return to her singing career which seems to have been on hold since 2016 – the year of her last album.

Women are taking over the financial world – and some may say this is not before time. The latest two sees KPMG appointing its first female leaders in its 150-year old history, after current incumbent Bill Michael was fired for alleged offensive remarks, he made advising consultants to “stop moaning” about the pandemic’s impact. Bina Mehta has been asked to step in as acting chairman in his place and Mary O’Connor will take over Mr Michael’s day-to-day executive responsibilities, as acting senior partner. Then there is Ngozi Okonjo-Iweala, Nigeria’s ex-finance minister, who was vying for the position of head of the World Trade Organisation with another woman, Yoo Myung-hee, who has withdrawn her candidacy; the South Korean was favoured by the Trump administration last October who said it wanted another woman, South Korea’s Yoo Myung-hee. At the time, the ex-US President, who seemed to be the only one of the 164 WTO members who objected to the Nigerian’s appointment, described the WTO as “horrible” and biased towards China; perhaps with a smidgeon of truth. The Nigerian, who also becomes the first African to hold the position, joins the likes of Ursula von der Leyen, President of the EC, Kristalina Georgieva, Managing Director of the IMF, Janet Yellen the newly appointed US Secretary of the Treasury and Christine Lagarde, President of the European Central Bank. No Woman, No Cry.

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Truth Hurts

Truth Hurts                                                                            05 February                             

On the back of some positive drivers, (including public infrastructure spending, trade growth nudging higher, lower entry property prices and expat-friendly changes to certain legislation), the Dubai real estate sector looks set for a recovery in H1. Most analysts are pointing to the fact that they consider the worst is over, (after 2020’s 14.3% and 13.0% declines in prices for apartments and villas), and that prices have started to move off their six-year lows. Valustrat also noted that apartment rentals dropped 18.0% in the year, whereas villa prices were lower by only 1.0%. With the caveat that there will be some form of closure to the impact of Covid, probably by mass vaccinations, and the fact that the Dubai economy is set to grow 4% in 2021 the local property market prices must benefit, more so for villas rather than apartments. Add to the mix, a low US dollar and rising energy prices, now hovering around the US$ 60 level, with the possibility of a further 15% uptick during the year, then it augurs well for the market.

The Dubai Land Department reported that there were 51.4k real estate transactions, with a value of US$ 47.7 billion, last year, despite the negative impact of Covid necessitating periods of lockdown and other restriction movements. Of the total, 35.4k involved real estate transactions, 13k were mortgage-related and 3k were recorded as grants, valued at US$ 19.8 billion, US$ 23.9 billion and US$ 4.1 billion respectively. A further breakdown in the figures shows that: 6.7k GCC investors recorded 8.7k investments, valued at US$ 4. billion and 4.4k Arab investors – 5.3k transactions, valued at US$ 2.0 million. The top three GCC and Arab investors were from the UAE, Saudi Arabia and Kuwait and from Jordan, Egypt and Lebanon. Indians topped the list of foreign investors, followed by the Chinese, British, Pakistanis and the French, with the 19.8k foreign investors, recording 24.7k investments worth over US$ 9.7 billion. The top ten nationalities in the market were Indian, Emirati, Chinese, Saudi, British, Pakistani, French, Russian, Jordanian and Egyptian.

The top five locations in terms of the number of transactions were Dubai Marina, Al Barsha South Fourth, Business Bay and Burj Khalifa, whilst from the value angle, Jebal Ali First headed the list followed by Dubai Marina, Al Merkadh, Palm Jumeirah and Hadaeq Sheikh Mohammed Bin Rashid. Jebal Ali 1 also topped the list of areas in terms of the value of mortgages, followed by Palm Jumeirah, Al Merkadh, Al Yelayiss and Nad Hessa.

This week, HH. Sheikh Mohammed bin Rashid Al Maktoum made the surprise announcement that the UAE will allow selected expatriates to obtain citizenship, with the aim of attracting overseas talent. It appears that the likes of investors, specialised talents and professionals, (including scientists, doctors, engineers, artists and authors), and their families, could soon become UAE citizens. Nominations will be vetted by the UAE cabinet, local Emiri courts and executive councils. The UAE’s property market is not the only sector, which is expected to get a boost from this unprecedented citizenship initiative – it will also be a game-changer that sets the foundation for sustained growth, boosting the country’s knowledge based-economy. There are hopes that it will help local companies, universities and government authorities attract and retain top talent and the knock-on effect for the economy, with more savings being retained in the UAE rather than being remitted overseas. According to a recent report, the UAE is ranked at number sixteen in the world of “strong” passports, with holders able to travel to 173 countries, without the requirement for pre-visa requirements. The need for the country to attract and retain top global talent has seen the government making massive, (and what would have been unthinkable changes in the past), amendments to legislation, including bankruptcy consumer protection laws, commercial companies’ laws (including 100% foreign ownership and decriminalisation of bounced cheques).

The Ruler of Dubai also issued Decree No.3 of 2021 on the listing of joint stock companies in securities exchanges in Dubai, which mandates all such companies – whether registered on the mainland or in a free zone, including the DIFC – to list their stocks in local securities exchanges including the Dubai Financial Market and Nasdaq Dubai. Foreign companies, established and licenced outside the country, with branches, assets and activities in Dubai, will be allowed to list their shares in local markets in line with the rules and regulations of the local bourses. Non-local companies should list their stocks in local markets when their annual Dubai-generated profits or revenues reach 50% or more of their total annual profits or revenues, or when their total Dubai-owned assets owned amount to 50% or more of their entire assets. Subject to regulatory compliance, non-local companies, whose profits or assets have not reached the required percentage, can also list their shares in local markets, as can foreign companies.

This week, HH Sheikh Mohammed bin Rashid Al Maktoum also launched a digital platform to help entrepreneurs to start a business in Dubai. To speed up the set-up process, 2k commercial activities will be unified under the, with various local and federal entities linked to financial institutions. The Dubai Ruler thanked all parties involved which he said was the “culmination of four months and 80k hours of work”.

After the September White House signing of the Abrahams Accord, the UAE cabinet has approved establishing an embassy in the city of Tel Aviv. At the same time, the UAE and Israel agreed to promote investment and tourism, as well as launch direct flights. In the five months since the historic agreement, bilateral trade has reached US$ 281 million (over one billion dirhams), comprising imports (US$ 89 million), exports (US$ 165 million) and transit trade (US$ 27 million). Over the period, 423 kg was airlifted, valued at US$ 258 million, and 5.7k tonnes by sea, valued at US$ 23 million. Dubai main exports were diamonds, smart phones, engine spare parts, perfumes and lubricants, whilst the emirate’s imports from Israel comprised vegetables, fruits, diamonds, flat screens, hi-tech devices as well as medical and mechanical devices. The value of trade is expected to top US$ 1.1 billion (four billion dirhams) in the first full year. Israel has also expressed its interest in leveraging Jebel Ali Port as a re-export hub for Israeli products for easy access to fast-growing markets such as India, Pakistan, Bangladesh and Sri Lanka.

It is reported that Israeli is considering a road link with the UAE to further strengthen the bilateral trade corridor; currently, the main channels are by air – up to four hours – and by sea – around sixteen days. A new road link would see a three-day travel time for lorries and trailers. According to the Head of Mission at the newly-opened Israeli Embassy in Abu Dhabi, both countries would benefit, bringing their relative advantages – UAE links with the sub-continent and the East, and Israel with its trade agreements with the EU and US. Furthermore, he noted that 130k Israelis have visited the UAE since diplomatic links were formed last September and he expects at least 50k Israeli visitors a month to the UAE.

One of Donald Trump’s final acts was to exempt the UAE from the tariff on most aluminium imports, saying the two countries had reached a quota agreement that would restrict them, and designating the country a “major security partner” whilst signing a deal to sell it fifty F-35 fighter jets. This has been reversed by the incoming President, Joe Biden, who said “in my view, the available evidence indicates that imports from the UAE may still displace domestic production, and thereby threaten to impair our national security.” The tariff was first imposed in 2018 to revive idled US aluminium facilities, open closed smelters and mills, and boost domestic production; a drop of 25% in aluminium imports from the UAE, after the tariff, followed. In 2019. Aluminium imports from UAE totalled US$ 1.3 billion in 2019.

As part of the Abraham Accord, the UAE was promised a chance to acquire Lockheed Martin’s F-35 jets in a side deal when it established ties with Israel under a US-brokered agreement. Although Donald Trump signed agreements, valued at US$ 23 billion, for the UAE to buy up to fifty F-35s, eighteen armed drones and other defence equipment, the deal has to be reviewed by the incoming President, Joe Biden. It will be interesting to see what he does and whether he will be as “friendly” to this region as was his predecessor, as well as his future dealings with Iran.

There was some good news for the embattled local economy, as January’s Purchasing Managers’ Index posted an uptick in employment numbers for the first time in a year, as an improvement in business confidence encouraged some firms to slowly expand their operations. The latest IHS Markit UAE PMI remained steady at 51.2 which is its highest level since November 2019 – every reading above 50 indicates positivity. Sales were weaker in January but with the resumption of construction projects, activity grew in the month. Although nothing much to write home about at the moment, there is no doubt that business conditions are improving, albeit at a slower rate. LinkedIn has noted that there has been an increase in demand for specialised medical professionals (by 112%), digital content freelancers, professional/personal coaches and financial business staff.

Dewa has allocated US$ 1.2 billion to supply Expo 2020, with water and electricity, as well as supporting and maintaining the related infrastructure. As official sustainable energy partner of Expo 2020, it will provide the six-month event with 464 MW of clean energy from the MBR Solar Park, the largest single-site solar park in the world, using the Independent Power Producer (IPP) model. Dewa is building a smart grid to become the first network in the world to provide the entire value chain of generation, transmission and distribution systems to the Expo. Dewa will also install seventeen Green Charger stations for electric vehicles at the offices of Expo Dubai, as part of its efforts to make this a sustainable Expo.

The government agency has also built three 132/11 kilovolt (kV) substations, with 45km of high-voltage (132kV) cables; they have been named Sustainability, Mobility and Opportunity after the three sub-themes of Expo 2020 Dubai. It is also building water-transmission networks, with pipelines that are 600 and 1,200 mm in diameter, with pumping and distribution stations. It is also working on the Green Hydrogen project, in collaboration with Expo 2020 Dubai and Siemens., which is the first project of its kind in the Mena region to produce hydrogen form clean energy.

UAE petrol prices for February remain unchanged for the eleventh consecutive month, whilst diesel prices dipped; this comes even as global oil prices have moved higher over recent weeks, with Brent crude now nearing the US$ 60 level, as global economic activity starts to pick up. The UAE Fuel Price Follow-up Committee announced that Special 95 petrol will remain at US$ 0.490 per litre, whilst diesel has dipped 2.4% to US$ 0.548 per litre.

The December UAE inflation rate ticked slightly higher on the month by 0.09% to 105.97, driven by spending improvements in nine out of the thirteen sectors that make up the index. The only sectors that witnessed declines were housing, utilities and F&B, whilst spending on health services remained flat. The Dubai index was the only emirate to show a decline – 0.38% – whilst Abu Dhabi showed the biggest increase of 0.40%.

Latest figures from the Federal Competitiveness and Statistics Centre saw the country’s automotive trade, including cars, tractors and other vehicles amounted to US$ 18.7 billion during the first nine months of 2020. The UAE has always been a leading regional reexport hub for many products including the automotive sector. Over the period, car and tractor reexports reached almost US$ 7.0 billion, with exports coming in at US$ 343 million; imports were valued at US$ 11.4 billion. Official statistics show that the UAE vehicle trade accounts for 6.6% of the country’s non-oil trade.

According to the Brand Finance report, ten UAE banks are included among the world’s top 500 most valuable and strongest banking brands of 2021, with a combined brand value of US$ 13.7 billion, down 13.7% in value over the year because of Covid-19. Although losing 10% in brand value – because of the pandemic and increased impairment provisions – Emirates NBD came in 74th, worth US$ 3.5 billion, with First Abu Dhabi Bank and ADCB declining 10% and 19%, with values of US$ 3.6 billion and US$ 2.1 billion. Two other Dubai-based banks to make the list were Mashreq and CBD – both down 7% and 4% to US$ 484 million and US$ 334 million. On the global stage, China’s ICBC retained its title as the world’s most valuable banking brand, worth US$ 72.8 billion.

Because of not achieving appropriate levels of compliance, regarding their anti-money laundering and sanctions-compliance standards, the UAE Central Bank fined eleven banks a total of US$ 13 million last week, under Article 14 of the Federal Decree Law No 20 of 2018. All banks were requested in 2019 to ensure compliance by the end of that year and had been warned that penalties would follow non-compliance. The country has strict legislation in relation to money laundering and the financing of terrorism, and these laws have been further strengthened over the past twelve months. In June last year, the UAE become the first GCC country to launch ‘goAML’, a reporting platform developed by the UN to curb organised crime.

The bourse opened on Sunday 31 January and having shed 38 points (1.4%) the previous week, shed a further 28 points (1.0%) to close on 2,669 by Thursday 04 February. Emaar Properties, US$ 0.08 lower the previous week traded US$ 0.03 higher, to close at US$ 1.05, Emirates NBD and Damac started the week on US$ 3.31 and US$ 0.38 and closed on Thursday at US$ 3.16 and US$ 0.37. Thursday 04 February saw the market trading at 167 million shares, worth US$ 72 million, (compared to 176 million shares, at a value of US$ 78 million, on 28 January).

For the month of January, the bourse had opened on 2,492 and, having closed the month on 2,654 was up 162 points (6.5%) in the month. Emaar traded higher from its 01 January 2021 opening figure of US$ 0.96 – up by US$ 0.06– to close January on US$ 1.02. Two other bellwether stocks, Emirates NBD and Damac, started January on US$ 2.81 and US$ 0.36 and closed on 31 January on US$ 3.16 and US$ 0.37 respectively.

By Thursday, 04 February, Brent, US$ 0.33 (0.6%) lower the previous week, gained US$ 3.74 (6.8%) in this week’s trading to close on US$ 58.84. Gold, US$ 37 lower the previous fortnight, lost US$ 46 (2.5%), by Thursday 04 February, to close on US$ 1,792.

Brent started the month on US$ 51.80 and gained US$ 3.65 (7.0%) during January to close on US$ 55.43 Meanwhile, the yellow metal lost US$ (1.7%) in January, having started the month on US$ 1,895 to close on 31 January at US$ 1,863.

BP saw its Q4 profit slump, year on year, from US$ 2.57 billion to just US$ 115 million, driven by the triple whammy of depressed demand, poor downstream sales and lower refining margins, which dented profitability; quarter on quarter, it was up 31.5% from US$ 86 million. Q4 operating cash flow, excluding Gulf of Mexico oil spill payments of US$ 100 million, was 55.6% lower at US$ 2.4 billion. Asset sales brought in US$ 4.2 billion, including US$ 3.5 billion on completion of the disposal of its petrochemicals business to Ineos, for US$ 5 billion. The energy giant posted a 2020 loss of US$ 5.7 billion. As part of it continuing divestment programme, on Monday, it agreed to sell a 20% stake in an exploration block in Oman to Thailand’s largest oil and gas producer, PTT Exploration and Production Public Company, for US$2.6 billion. This sees BP halfway to its US$ 25 billion divestment planned total by 2025.

2020 saw Exxon posting its first annual loss in decades, driven by the same forces that saw BP, Shell and Chevron returning disappointing annual returns. The energy giant recorded a massive US$ 22.4 billion loss, compared to a US$ 14 billion profit a year earlier, on a 30% slump in revenue to US$ 181.5 billion.  The firm wrote down the value of its shale business by US$ 20 billion and took on billions of dollars in debt. By 2023, it said additional cuts, including payroll, would reduce costs by an estimated USS 6 billion a year. The ever-changing economic climate has eventually forced BPto bow to activists’ pressure to expand its focus to more climate-friendly technology.

The company declared a full-year loss of US$ 5.7billion, compared to a US$ 10 billion profit a year earlier, caused by lower oil and gas prices, significant exploration write-offs, reduced refining margins and depressed demand. Its debt levelfell 14.3% to US$ 39.0 billion at year end but this is expected to move higher in H1 because of severance payments, the annual Gulf of Mexico oil spill payment and payment following completion of the [US] offshore wind joint venture with Equinor.

Not to be outdone by the other three energy giants, Royal Dutch Shell sank to a 2020 net loss of US$ 21.7 billion, with it noting that “significant uncertainty” would continue to have a negative impact on demand for oil and gas products. Consequently, it will introduce further cost reducing measures to cut production, having already announced in September that it would lose 9k from its global payroll and last month. A further 500 from its operations in the North Sea.

It is reported that Boohoo is in “exclusive” talks with Philip Green’s failed retail group to buy the Dorothy Perkins, Wallis and Burton brands. Last week, the online fashion retailer paid US$ 75 million for the Debenhams’ brand and website – but not its physical shops. This was not the first company that Boohoo has bought from administrators, having acquired Oasis & Warehouse (for US$ 7 million), Coast and Karen Millen, but again not the associated stores. Boohoo’s owner is on record saying that “our ambition is to create the UK’s largest marketplace” and that Debenhams was expected to relaunch on Boohoo’s web platform later this year.

The 2019, 25% US sanction, in retaliation to the EU subsidies given to Airbus, has already cost the Scotch whisky industry US$ 700 million, with estimates that single malt exports have fallen by more than a third since then. The Scottish Whisky Association, describing the situation as “unsustainable”, noted that distillers were “continuing to pay the price for an aerospace dispute that has nothing to do” with them. The US had been the most lucrative market for the industry and should have expanded during the lockdown, as Americans seem to have moved away from beer to spirits; Diageo, the leading spirits company, observed that the US market has seen “strong activations in the at-home occasion”. Although it seems that tequila has benefitted most from this market shift, all whiskies, except Scotch, have done well, as Irish, Canadian and US have seen sales rise, helped by their cheaper prices. Interestingly, Diageo noted that H2 sales for malts were 33% lower, with Johnnie Walker blended range up 11% – the former were subject to the 25% tariff, the latter not.

Marston‘s confirmed that it had received an “unsolicited” takeover offer from US private equity firm Platinum Equity Advisors and will not make another announcement until they have fully analysed the proposal. The UK pub giant saw its shares climb 20% on news of this US intervention. but added there could be “no certainty that any firm offer will be made for the company”. Prior to this, its shares were languishing at near 20-year lows and even its current price of the equivalent of US$ 1.03 is US$ 0.40 lower than it was at this time last year. The company runs nearly 1.4k pubs across the country, all of which are currently closed because of the latest lockdown. Its latest financials reported a drastic fall in Q4 revenue from US$ 1.64 billion to just US$ 74 million. In 2020, Marston’s combined its brewing operations with Carlsberg UK in a US$ 1.07 billion merger and in December, agreed to take over the running of all 156 pubs owned by Brains, the largest brewer in Wales.

In a US$ 420 million deal, Asos has acquired the Topshop, Topman, Miss Selfridge and HIIT brands from Philip Green’s failed retail group Arcadia, which fell into administration last November. According to Asos chief executive Nick Beighton, the online retailer has not bought the stock but only the brands and no mention was made by either party about the future of the 2.5k jobs which are at risk. He also noted that acquiring the brands would accelerate Asos’s mission to become “the number one destination for fashion-loving 20-somethings throughout the world”.

With the UK’s Competition and Markets Authority ruling that a proposed US$ 4.1 billion merger between ticketing site Viagogo and StubHub could harm customers’ interests and result in a “substantial reduction in competition” in the UK secondary ticketing market, it has meant that Viagogo will have to sell all of StubHub’s business outside North America to satisfy competition concerns. This will see StubHub’s international business being independently owned and run by a separate company, with no input from Viagogo. In the UK, these two companies account for more than 90% of secondary ticketing platforms.

Drugs giant Pfizer is forecasting 2021 revenue of over US$ 15 billion because of sales this year of the coronavirus vaccine it developed, with German firm BioNTech; vaccine sales of some two billion doses represent will represent 25% of its expected revenue for this year after posting US$ 154 million worth of sales in Q4. To meet its annual target, Pfizer will have to deliver ten million doses a week for the rest of 2021, with forty million doses earmarked for the UK. Supply of the vaccine has faced delays in parts of Europe due to changes in manufacturing processes to boost production but now they have been resolved and BioNTech noted that firms were back on track to meet their European timeline.

Not only assisted by booming payment volumes and an increased number of businesses digitising because of the pandemic, but also by the October introduction of enabling cryptocurrency transactions, PayPal’s Q4 profit jumped 206% to US$ 1.6 billion on the year; revenue came in 23.0% higher at US$ 6.1 billion. Its 2020 annual profit was 70% higher at US$ 4.2 billion, on the back of a 22% hike in revenue to US$ 21.5 billion. During the year, it added 16 million new accounts, bringing the total at year end to 377 million. PayPal also posted record growth in 2020, with 72.7 million new users and handling payments worth US$ 936 billion; Q4 saw volumes 36% higher, valued at US$ 277 billion, and with growth like that it will soon hit the US$ one trillion level, as it aims to grow revenue 19%, to US$ 25.5 billion, and add 50 million new users.

Having invested more on research, and seeing production and overhead expenses moving higher, Merck posted a loss of US$ 2.1 billion, compared to a US$ 2.4 billion profit in 2019. Q4 figures included a US$ 2.7 billion charge for acquiring cancer drug developer VelosBio in a move to expand Merck’s cancer drug franchise. This company has been focussing on immunotherapy treatment Keytruda, an approved drug for dozens of different cancer treatments, which saw sales top US$ 14.4 billion last year. Merck has recently announced that it was scrapping two of its Covid vaccines but will continue to work on a pair of potential treatments for the new coronavirus.

At least there is some good news at last for Jack Ma, who founded Alibaba with the e-commerce giant posting a 37% Q4 hike in revenue to US$ 34.2 billion, helped by strong sales on Singles Day and the fact that the Chinese economy was the only major one in the world to advance in 2020. Its cloud computing revenues rose 50% to US$ 2.5 billion over the same quarter last year, posting a profit for the first time. However, the good news is clouded by the fact that its financial technology (fintech) affiliate Ant Group remains under intense scrutiny from local regulators. The planned November launch in what would have been the world’s biggest ever market debut was pulled by regulators, with Ant’s share market launch remaining on hold indefinitely. On Wednesday, both parties seem to have agreed to a restructuring plan that will see Ant become a financial holding company, making it subject to more stringent capital requirements like those for banks. It was thought that Ant would have preferred putting only financial operations into the new structure – not all of its businesses, including its tech entities in the blockchain and food-delivery sectors.

US sanctions played havoc with Huawei’s Q4 sales of smartphones, with revenue slumping 44% to 18.8 million, as data from International Data Corp (IDC) showed overseas shipments plunging 43% to 32 million. Because of US sanctions, the Chinese tech giant was unable to meet the high global demand, as well being restrained to serve its domestic market. Donald Trump also introduced sanctions that saw it being cut off from access to vital components and also pressured allies to shun its telecom networking gear, with the then US President claiming that Huawei’s telecom equipment could be used by China for espionage purposes.

The continuing farcical state of the global economy can be seen by the fact that Elon Musk only has to tag the cryptocurrency in his Twitter account for Bitcoin to climb 14% on the day. The Tesla chief did that last Friday by writing just “simply” in his Twitter biography, which is followed by 43.7 million people, and the cryptocurrency jumped by almost US$ 5k to US$ 37.3k within an hour of the billionaire entrepreneur adding the hashtag #bitcoin to his bio. Earlier this week, Musk joined the battle between short sellers and retail traders over videogames retailer GameStop, tweeting a link to Reddit’s WallStreetBets forum along with the word “Gamestonk!!” As a result, the stock surged 50% on the day.

A fairly new phenomenon has hit High Streets around the world and has become a problem area in Australia; now it seems that UK regulators are beginning to take a close view of pay later firms such as Klarna, Clearpay, and LayBuy. Such platforms are used by more than ten million in the UK and allows shoppers to split payments, without paying interest; it is estimated that 4% of all spend is via pay later companies. The Financial Conduct Authority is so concerned that especially the young could soon rack up debts of over US$ 1k, more so because the value of these services almost quadrupled in 2020, with sales totalling US$ 3.8 billion. The FCA also found that 10% of users already had debt arrears elsewhere, that women make up 75% of the total and 90% of transactions involve fashion and footwear; 75% of users were under the, age of 36, with a third of the total being between ages of 18 – 24. The government realises that although buy now, pay later was convenient for some people, for others it was “a really easy way to fall into problem debt”. The government confirmed it would legislate as soon as possible, following consultation.

It is estimated that Australian house prices are at their highest ever, following a 0.9% hike last month, and 1.0% higher than they were pre-pandemic and 0.7% up on the previous record high in September 2017. Capital city price rises have been slower than those witnessed in the regions, with figures showing that capital city annual increases, averaging 1.7%, ranged from 0.4% in Sydney and Melbourne to 2.3% in Darwin. This compared to a much higher 6.5% increase in regional home prices. Prices in Sydney and Melbourne are still 4% shy of their record highs, whilst prices in Perth and Darwin are still 19% and 25% lower than their 2014 peaks. Another interesting feature was that apartment prices, especially in Sydney and Melbourne, have lagged house prices and indeed apartment prices fell by 0.6% last year. Apartment rentals also dropped 7.8% in Melbourne and 5.6% in Sydney.

Much of the activity has emanated from first time buyers, with data showing that first home buyer loan commitments jumped 9.3% in December and 56.6% over the past year, with 15.2k new buyers acquiring their own property for the first time; this was the highest level of first home buyers in the market since the GFC when the then Rudd government temporarily tripled the first homeowners grant as part of an economic stimulus package. In the month, the value of new home loan commitments rose 8.6% to nearly US$ 20 billion. Furthermore, the value of construction loan commitments grew 17.1% in December – double that of the amount in June when the implementation of the HomeBuilder grant. Some economists are forecasting an 8% hike in property prices this year, with houses 9% higher and apartments at a lower 5%.

The Reserve Bank of Australia maintained its cash rate target at the historical record low of 0.1% and, at the same time, indicated that it would pump more cash into the economy, starting with an additional U$ 76 billion (AUD 100 billion) worth of bonds, spread over twenty weeks, starting mid-April, issued by the Australian Government and states and territories. Along with the US$ 76 billion, the bank committed to purchase in long-term government bonds over a six-month period, this brings the total to US$ 152 billion (AUD 200 billion). At their Tuesday meeting, the RBA (which always holds their monthly meeting on the first Tuesday of the month) was cautiously optimistic about Australia’s recovery, whilst noting that “the outlook for the global economy has improved over recent months due to the development of vaccines.” The economy was expected to return to pre-pandemic levels by mid-year and their forecast growth for the next two years was for 3.5% a year. However, there were two notes of caution – inflation will continue to grow at its “slowest rate on record” and the unemployment rate will remain high at 6.0% by year end, and 5.5% by the end of 2022. The bank expected little rate changes for thenext two years, unless the housing market starts to boil over.

Latest figures indicate that the Indian economy contracted 7.7% in the 2020-21 financial year, but regulators are confident that it will claw back 11.0% in the next fiscal year beginning in April; Q1 to June saw the economy tank 24.0%, followed by a 7.5% contraction in the September quarter It indicates that the recovery will be driven by a resurgence in demand for power and steel, rail freight and tax collections on goods and services. One of the highlights of last year’s figures was that agriculture moved 3.4% higher, whilst Finance Minister Nirmala Sitharaman forecast that it will take two years for the economy to return to pre-pandemic levels; this is in line with the IMF forecasts of 11.5% and 6.8% over the next two years. The Modi government has introduced two stimulus packages – one for US$ 266 billion in May and later smaller one for US$ 35 billion – to boost consumer demand and manufacturing. However, much of the first package comprised bank loans, many of them without collateral.

India is on record of having the world’s largest diaspora population, with eighteen million living abroad, of which 3.5 million count the UAE as their second home; in addition, they are also among the biggest sources of remittance to India. The country’s finance minister Nirmala Sitharaman had described the upcoming paperless budget as unlike anything seen before, with non-resident Indians (NRIs) in the Arabian Gulf expecting incentives that will allow them to remit more and make long-term investments back home more attractive. Because of the impact of Covid-19, many Indians would like to see further clarification when it comes to residency; the pandemic has seen many NRIs “marooned” in India for various reasons, including lockdowns, health and safety reasons, and being unable to spend more than 180 days in the Arabian Gulf. The budget could also help by allowing more freedom when it comes to duty free imports. The Indian economy would benefit if NRIs had more choices to invest freely in India and perhaps given more time to set up businesses in their home country, without any impact to their existing residency or tax treatment status. Time will tell if Ms Sitharaman comes to the party.

It seems that India’s Finance Minister Nirmala Sitharaman has surprised the market by presenting a spending budget, as the country continues to struggle with the impact of Covid-19 that has led to soaring unemployment queues, a shrinking GDP and a crisis-ridden banking sector. The main beneficiary seems to have been the health sector, that has always been underfunded, with its budget doubled to over US$ 30 billion, with more than US$ 8.5 billion to be used to upgrade healthcare infrastructure at the primary, secondary and tertiary levels over a period of six years. The Modi government has already committed another US$ 4.8 billion to the country’s vaccination programme.

A new Development Finance Institution (DFI), with a starting capital of US$ 2.7 billion, will be set up to help fund large-scale infrastructure projects, with overall spending rising 35%. Places like Tamil Nadu, Kerala, Assam and West Bengal will see national highway projects and infrastructure corridors, whilst textile parks will be established all over India. This is expected to kickstart spending and offer some relief to banks, which are reeling from a mountain of debt. The administration is looking at setting up an asset reconstruction and management company or a “bad bank” that will take on unpaid debt from existing banks to free up their lending capacity. The government will continue to divest its assets including the national airline, Air India, and other public sector companies, along with privatising two public banks and an insurance company. Another positive move was the budget increasing foreign investment limits in insurance companies, allowing foreign ownership and control.

The country’s fiscal deficit is expected to reach its highest ever level of 9.5% this year but the target next fiscal year is 6.8%, with the aim to halve the total within five years. Experts are also predicting a sharp rebound in India’s economy – which is now projected to contract 7.7% in the current financial year, but grow by 11% in 2021-22, making it among the fastest growing economies in the world. The sharp rebound comes from a much lower base, given that GDP entered the negative zone in 2020-21. However, the global ratings are not currently impressed with the Indian economy as S&P, Moody’s and Fitch all have the lowest investment grade rating, just a notch above junk.

Saudi Arabia has issued a ban on travellers from twenty countries as from yesterday, 03 February.  This comes as the kingdom is taking increased steps to try to reduce the increasing case numbers arising from new variants of coronavirus. The full list of countries barred is Argentina, Brazil, Egypt, France, Germany, India, Indonesia, Ireland, Italy, Japan, Lebanon, Pakistan, Portugal, South Africa, Sweden, Switzerland, Turkey, the United Arab Emirates, the United Kingdom and the United States of America. The Ministry of Interior announced that the temporary suspension and said the ban also applies to those who had passed through any of these twenty countries listed in the previous fortnight.

Earlier in the week, France became yet another country to close its borders to people arriving from outside the EU in a vain attempt to put a lid on the spread of the virus and to avoid a full-blown third lockdown. All large shopping centres in the country have been forced to close, as the government becomes increasingly concerned about the spread of new variants of Covid.

The Lebanese central bank governor has been charged over foreign exchange misuse. Riad Salameh, who has held the position since 1993, has been accused of dereliction of duty and breach of trust over the alleged misuse of millions of dollars, provided by the regulator last year. It appears that up to U$ 7 million were squandered in H2 last year, with thirty-seven financial institutions profiting from the fact that dollars provided by the central bank, through an electronic trading platform to help people pay for essential needs and expenses, were sold on the black market, where they fetched a much higher price. The central bank continues to subsidise fuel and wheat at the official exchange rate of 1,500 per dollar. The subsidised rate that applied to the electronic platform was 3,900 and on the black market rates are a high as 8,800 pounds. The governor is also being investigated by the Swiss authorities into possible embezzlement from the Lebanese central bank, in relation to a US$ 400 million transfer linked to him. Strangely, the head of the central bank enjoys immunity from legal prosecution under Lebanese law.

There is no doubt that the Turkish economy is struggling, as January’s inflation rate mushroomed to 14.97%, up 0.37% on the month. The economy has been plagued by double-digit inflation for most of the past three years, well above the government’s 5.0% target. Since Naci Agbal, the new governor of the central bank, was appointed three months ago, the key rate has moved from 10.25% to its current 17.0% level and despite the Turkish economy having the tightest monetary policy of any major developed country, he has promised to continue with the current policy. The bank’s governor is confident that inflation would drop to single digits this year, whilst the Turkish lira has gained 5% already in 2021.

In a bid to assist municipalities and businesses, struggling as a result of Covid-19, the Norwegian government has proposed US$ 1.9 billion in extra fiscal spending this year; this includes US$ 175 million for a hybrid loan to Norwegian Air, which is undergoing financial restructuring. This follows the government backing a plan by the airline to emerge from a court-ordered bankruptcy protection to become a leaner and more local carrier focused primarily on the Nordic region rather than the behemoth that existed prior to the pandemic when it was the fastest growing airline in the world.

As businesses in their major economies weather the autumnal storms of further lockdowns in Q4, the European economy shrank by a smaller-than-expected 0.7%; for the year, the figure was 6%.  Initial Q4 estimates were looking at a 2.5% contraction, whilst Germany actually posted a 0.1% quarterly expansion, with France declining by 1.3%. However, the 19-member bloc is still struggling – not helped by their inept vaccine policy – and are expected to lag behind China and the US in their post-Covid recoveries. It is difficult to forecast what’s going to happen in the future especially past figures like the eurozone’s Q2 and Q3 retail sales figures of an 11.7% contraction, followed by a 12.4% rebound. The ECB expects the eurozone to return to pre-pandemic levels by mid-year whilst the IMF has downgraded its 2020 growth forecast from 5.2% to 4.2%.

According to the latest IHS Markit/CIPS UK Composite Purchasing Managers’ Index, the UK economy is heading for a Q1 contraction, (having slumped from 50.4 to 41.2 on the month), but will recover from thereon in, on the back of the increased vaccine programme. The services PMI dipped from 49.4 to 39.5 over the two months. The reason for these readings – the lowest since May – comes about because of the recently severe lockdown protocol throughout the UK. To date, the vaccination has covered 14.5% of the population and is ahead of the government’s aim to vaccinate fourteen million by mid-February. Because of the speedy delivery of vaccines business confidence is at its highest since May 2014.

As expected, the UK will make a formal request to join a trans-Pacific free trade pact between eleven countries – Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The UK government confirmed that negotiations will start later in the year to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. The CPTPP will remove most tariffs between the members, including food, drink and motor vehicles, as well helping to boost the technology and services sectors. This is a positive step by the Johnson administration and those still expounding the benefits of remaining in the EU will eventually realise that the Truth Hurts.

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Casino Royale

Casino Royale                                                                                    29 January 2021

Leading portals, Bayut and Dubizzle, have reported that, last year, off-plan transactions accounted for 52.9% of total sales, equating to US$ 3.9 billion of the total of US$ 7.4 billion. It is estimated that there were declines of between 7% – 13% in affordable apartment communities, such as JLT, Dubai Silicon Oasis, Business Bay and International City, whilst there were lesser percentage falls of between 2% – 10% in Dubai’s popular communities; these were in line with 2018 and 2019 returns. Over the year, rents fell by between 9% – 17%. In the world of luxury apartments, Dubai Marina remained the most popular in 2020, recording 526 transactions in H2. Other popular locations were Palm Jumeirah, JBR, Downtown Dubai and DIFC where there were price declines of between 3% and 10%.

When it comes to apartment yields, there is no better return than the 8.5% garnered from International City rentals, with Dubai Marina apartments giving about 6.2%. In contrast, villa yields were highest in JVC (5.9%) and Arabian Ranches (5.5%). In the rental market, apartments in JVC were the most in demand, among budget-conscious tenants last year, as rents declined between 10% and 17%. 

According to a Luxhabitat Sotheby’s study, of the ten most expensive properties sold in 2020 for a total of US$ 169 million, five were located in MBR City. The three costliest villas were in Dubai Hills (over US$ 20 million), Sector C Emirates Hills (almost US$ 19 million) and Cluster C in District 1 (US$ 16 million). The fourth most expensive was a US$ 16 million apartment in Il Primo followed by three villas in District 1 of MBR – all in the region of US$ 15 million. A property in Bvlgari Resorts & Residences sold for US$ 16 million, with the 9th and 10h costliest properties being in Emirates Hills and Umm Suqeim, both costing US$ 13 million.

It is estimated that the total value of prime residential market sold in Dubai last year was US$ 8.0 billion, encompassing 10.6k apartments and 1.5k villas. Q4 saw sales at US$ 2.5 billion. The average price of a prime market villa was 3% higher last year at US$ 1.7 million, and interestingly the average size was 1k sq ft bigger with a built-up level of 6.0k sq ft. The top three areas, in terms of sales volume, were MBR City (US$ 1.74 billion), Downtown Dubai (US$ 1.39 billion) and Palm Jumeirah US$ 954 million). When it comes to apartments, prime prices remained stable at US$ 383 per sq ft, with an average price of US$ 490k and an average 1.7k sq ft built up area.

Binghatti Developer’s CEO reckons that the upcoming Dubai Expo 2020, starting in October, will give a glimmer of hope to the real estate sector, as companies arrive, many of whom will be interested in opening offices or branches in the emirate. Muhammad Binghatti commented that because of major government incentives – and their positive policies to mitigate the impact of the pandemic – along with digital transformation and technological progress will help the real estate sector move higher this year. Another factor dragging the sector out of the doldrums is that of an increase in local liquidity and the effect of pent-up demand, as those lucky enough to keep their jobs have not spent money on travel in 2020 and have been forced to curb discretionary spending because of the various degrees of lockdowns in 2020. Furthermore, with the UAE being second in the world, with their vaccine uptake, has added to a feeling of optimism and increased customer confidence.

Brand Finance’s latest report places Abu Dhabi National Oil Company, Etisalat and Emirates as the country’s three most valuable brands among the world’s top 500 brands. The study placed Adnoc at 163rd, slipping three places, with Etisalat improving seventeen positions to 208th. Meanwhile, Emirates dropped from 300th to 421st. The study covers factors such as marketing investment, customer perceptions, staff satisfaction, corporate reputation and revenue forecasts, and based on these factors, Etisalat landed among the top twenty-five  brands globally on Brand Strength Index – and the region’s only company with an AAA brand strength rating. On a regional basis, Saudi Aramco maintained its leading position, although losing US$ 37.5 billion in value over the year. Globally, Apple jumped into the leading position, followed by Amazon, Google, Microsoft, Samsung, Walmart, Facebook, ICBC, Verison and WeChat.

Following an agreement with the Port of Luanda, DP World will invest US$ 190 million, over the next twenty years, to ensure that the facility is in line with global standards and to increase the terminal’s annual throughput to approximately 700k TEUs (twenty-foot containers). The Multipurpose Terminal at the port handles both containers and general cargo, and has a pier of 610 mt, a depth of 12.5 mt and a yard of 23 hectares.  The deal to operate the MPT, at Angola’s largest port,  will also see the introduction of a modern port management system, as well as further training and development of Angolan staff.

According to the latest Dubai Chamber report, the UAE non-oil maritime transport and trade sector, supported by several positive global economic trends, (the min driver being an expected uptick in maritime transport activity), could expand by an eighth this year. UAE non-oil trade has performed well in recent times, as witnessed by growth rates of 8.5% and 1.0% in 2018 and 2019, with maritime trade accounting for 83% of total goods traded; if anything, it has become more resilient in 2020, during the ongoing pandemic. Dependent on whether the Covid impact lessens or not, and the vaccine effect, the IMF has indicated a 4.2% global growth in this sector but the added benefits of UAE government policies, easing of lockdowns in key markets, the opening of global markets and China’s resumption of commercial activity could see the local sector perform three times better than that estimate. There is no doubt that the government is aiming for a V-shaped recovery with the economy quickly bouncing back.

From tomorrow, Friday 29 January, Emirates and Etihad have suspended flights between UAE and UK, following the Johnson government’s travel ban. Dubai has been placed on the UK’s red list meaning that direct flights will end and tough self-isolation rules will apply to arrivals. The UAE has been added to the 30 existing countries which are currently subject to a travel ban. UK, Irish and third country nationals – with residence rights in the UK – will be allowed to return from the UAE but they will need to travel via a third country.

Driven by a 78% year on year growth in Q4, Dubai’s private jet hub at Dubai South posted a 21% hike in the number of jet movements. Several reasons have been given for the improvement at the Mohammed bin Rashid Aerospace Hub, made more impressive because of the global turndown in air travel post Covid. They include the government’s positive measures in combating the spread of the pandemic, the emirate being the preferred choice for overseas travellers, and the fact that it is considered one of the safest countries in the world. MBRAH is also home to maintenance centres and training and education campuses.

Since its launch in 2005, Dubai Science Park has become a high-class global health, energy and environment business community and is now home to over 400 companies, employing 4k professionals with a wide range of expertise and experience. In 2020, many new firms joined the Park including New York Stock Exchange-listed biotechnology multinational Biogen, which makes neurological disease treatments, Dubai-based DGrade, the first bottle-to-yarn manufacturing company to make clothes out of plastic waste, and Indian’s largest biopharmaceutical company, Biocon a developer of medicine to treat diabetes, cancer and autoimmune diseases. Other existing companies enhanced their presence such as Germany’s life sciences leader Bayer, which opened a new regional headquarters, along with US-based IFF that opened a 1.4k sq mt creation, application and innovation centre for its Taste, Food & Beverage division, to drive further growth in Africa, Middle East, Turkey, and India (AMETI).

Following the merger of the Insurance Authority into the Central Bank – pursuant to Decretal Federal Law No. (25) of 2020 – the CBUAE is obliged to monitor the financial solvency of insurance companies, ensure ethical conduct of firms, and protect the rights of the insured. Accordingly, it has started with operational procedures, aimed at assuming the supervisory and regulatory responsibility of the insurance sector. The bank’s chairman, Sheikh Mansour bin Zayed Al Nahyan, noted that the decision to merge the Insurance Authority into the UAE Central Bank is part of a bigger initiative to transform the CBUAE into one of the top ten global central banks. Abdulhamid M. Saeed Al Alahmadi, the bank’s Governor, stated that “giving the Central Bank a broader mandate will ensure that high standards of supervision and regulation apply to all the sectors which we regulate including banking, insurance, money exchangers and payment services providers”.

Following a request by the UAE’s Public Funds Prosecution, an indictment has been served against Khaldoun Saeed Al Tabari, the founder and former CEO of Drake & Scull International. The Public Prosecutor in Jordan has filed against Al Tabari, his daughter Zeina and Saleh Mustafa Muradweij on “charges that include the felony of committing fraud in buying, selling or managing movable and immovable state or public authority funds”. In 2019, the then management of DSI revealed that the company had losses of almost US$ 1.4 billion, with the PFP accusing the former CEO of “several transgressions”.

Disgraced former Abraaj Group chief Arif Naqvi has lost his appeal in a UK court and should be extradited to the United States to face a trail for fraud and money laundering. The sixty-year-old was accused of misappropriating funds, after the Dubai-based private equity giant collapsed, owing creditors more than US$ 1 billion. In the US, he could face a jail term of thirty years; he has denied any wrongdoing and claimed that his worsening mental and physical health meant he should not be kept in a US jail before a trial. Despite this, the court found that US prison healthcare was sufficiently good and that it was more likely that he would be granted bail.

Driven by loan growth, including contributions from Denizbank, Emirates NBD posted a 4.0% hike in annual total income to reach US$ 6.3 billion but despite net profit slumping 52% to US$ 1.9 billion, on the back of higher provisions for bad loans, the bank is recommending a cash dividend of AED 0.063 per share; the previous year’s accounts included a non-recurring gain from the sale of Network International shares in 2019 – and if this was excluded, 2020’s profit would have only been 31% lower. Dubai’s biggest bank by assets saw its impairment allowances mushroom 65% to US$ 2.9 billion because of the market’s softness caused by the impact of Covid-19. Over the year, the net interest margin slipped 0.24% to 2.65%, whilst the cost to income ratio rose 1.7% to 33%. The bank’s total assets grew 2% to US$ 190 billion.

The bourse opened on Sunday 24 January and having gained 377 points (16.0%) the previous three weeks, shed 38 points (1.4%) to close on 2,697 by Thursday 28 January. Emaar Properties, US$ 0.14 higher the previous three weeks traded down, by US$ 0.08, to close at US$ 1.02, whilst Arabtec is now in the throes of liquidation, with its last trading, late in September, at US$ 0.14. Thursday 28 January saw the market trading at 176 million shares, worth US$ 78 million, (compared to 372 million shares, at a value of US$ 118 million, on 21 January).

By Thursday, 28 January, Brent, US$ 15.89 (39.1%) higher the previous ten weeks, shed US$ 0.33 (0.6%) in this week’s trading to close on US$ 55.10. Gold, US$ 11 (0.6%) lower the previous week, lost US$ 26 (1.4%), by Thursday 28 January, to close on US$ 1,838.

Boeing posted a Q4 loss of US$ 8.4 billion, as a result of the continuing Covid-19 pandemic and the ongoing grounding of its 737 Max jet; this compared to a US$ 1.0 billion deficit in the same period in 2019. Q4 revenue was 15% lower at US$ 15.3 billion. For the year 2020, revenue fell by almost 25% to US$ 58.1 billion, as the net loss was well down at US$ 11.9 billion, compared to US$ a US$ 636 million deficit in 2019. During 2020, the plane maker added a charge of $468m of abnormal production costs related to the 737 Max’s grounding and a US$ 744 million charge for settling with US authorities to avoid any future prosecution over the 737 Max debacle. The pandemic has wreaked havoc on air travel, pushing some airlines to bankruptcy or forcing them to seek government aid and delay taking delivery of jets. Its 737 Max has returned to the skies, whilst the delivery of its first 777X widebody is still three years away.

A report from the United Nations Conference on Trade and Development has confirmed that China is the world’s top destination for new foreign direct investment, at US$ 163 billion, overtaking the US’s US$ 134 billion, which had seen incoming new investments down by almost a half; last year, direct investment into China headed in the other direction by 4% last year. Since 2015, the US has seen FDI slump 71.6% from a high US$ 472 billion, with China up 21.6% from US$ 134 billion. On the global stage, 2020 was a bad year for investment, falling 42%, driven by the negative repercussions of Covid-19, with the UK FDI figure falling by more than 100% from US$ 45 billion to minus US$ 1.3 billion.

This week, Frank Lampard was dismissed as manager of Chelsea Football Club, becoming the tenth manage to depart, since billionaire Roman Abramovich bought the club in 2003. High profile dismissals included Maurizio Sarri, (who was replaced by Lampard), Jose Mourinho and Carlo Ancelotti. It is estimated that it has cost the Russian owner US$ 150 million in manager payoffs, prior to the latest dismissal, and, of that total, US$ 100 million was picked up by the three mangers listed above. The latest dismissal follows a poor run of form that has seen the London club, which spent nearly £300 million ($409m) on new players ahead of this season, disappear from the Premier League title race.

As expected, the Debenhams’ brand and website has been bought by fashion retailer, Boohoo for US$ 75 million; however, the main part of the struggling retailer, 118 stores employing over 12k, remains unsold and the 242-year old chain is set to close, as administrators have failed to find a suitable buyer. When Debenhams listed on the stock exchange in 2011, investors valued it at US$ 2.2 billion. This was not the first company that Boohoo has bought from administrators, having acquired Oasis, Coast and Karen Millen, but not the associated stores. Boohoo’s owner is on record saying that “our ambition is to create the UK’s largest marketplace” and that Debenhams was expected to relaunch on Boohoo’s web platform later this year.

Asos is in “exclusive” discussions with Philip Green’s Arcadia Group that own Topshop, Topman, Miss Selfridge and HIIT to buy them all out of administration. However, any interest is centred only on the brands which indicates that the shops will close with 13k employees affected. Boohoo and Asos appear to be the future for UK retail, who see no value in bricks and mortar and focussing on development of the brands and the associated customer data.

A former National Australia Bank twenty-year employee managed to defraud her employer in a multi-million-dollar scam operation over a period of five years to 2017. A court heard Rosemary Rogers accepted millions in kickbacks, in the form of international holidays, home renovations and a car. The court heard she was motivated by “greed, personal gain and self-gratification” and sentenced her to eight years in jail, as well as taking steps to regain some of her ill-gotten gains. For nine of the years in employment, she was chief of staff to CEOs Andrew Thorburn and Cameron Clyne. She made her money by conspiring with Helen Rosamond, from event management company Human Group, to inflate invoices for the event and function services to NAB over four years. Over that time, she received more than US$ 4 million from the event company “as an inducement or reward to ensure that Human Group maintained a contract with NAB”. How she got away with it for so long beggars belief – in one example, US$ 450k was spent to fly Rogers and members of her extended family to the US, where they chartered a private jet and a yacht, and another US$ 110k was spent flying the family to Europe. No wonder Judge Paul Conlon concluded that “I find it absolutely staggering that this fraud was not detected by some appropriate system of internal auditing by NAB.”

On the back of Q4 earnings skyrocketing 62% in the year, Blackstone Group’s quarterly profits came in higher at US$ 749 million, with revenue up 71%  at US$ 1.04 billion. However, the world’s biggest alternative asset manager posted annual profits almost halving to US$ 1.04 billion, with revenue dipping 17.0% to US$ 6.1 billion. For the fourth consecutive year, Blackstone managed almost US$ 100 billion of capital inflows, with assets under management jumping 8.0% to US$ 610 billion, as fee-earning assets rose 15% to US$ 469.4 billion. The four biggest contributors to the total of capital inflows were real estate (US$ 33.4 billion), credit/insurance (US$ 28.1 billion), private equity (US$ 23 billion) and hedge fund solutions ((US$ 10.4 billion).

Just another example that riles the average man in the street when it comes to financial shenanigans. It seems that four top SoftBank executives were granted US$ 600 million in loans last February to allow them to buy their company’s shares, with a one year “lockdown provision”. A year later they could cash in with a mouth-watering US$ 1.2 billion profit. Some investors have requested whether their stepping down as directors in November had any connection with avoiding future disclosures of the loans.

Having acknowledged their role in Malaysia’s 1MDB scandal, in which they helped raise US$ 6.5 billion, by selling bonds to investors, the proceeds of which were largely stolen, Goldman Sachs’ chief executive David Solomon has been handed a US$ 10 million pay cut; no need to shed any tears for the banker, who was not “involved in or aware of the firm’s participation in any illicit activity at the time”, as he still was paid US$ 17.5 million last year! Although the bank admitted that its involvement in the scandal was an “institutional failure”, prosecutors alleged that senior Goldman executives ignored warning signs of fraud in their dealings with 1MDB and Jho Low, an adviser to the fund; two Goldman bankers have been criminally charged in the scandal. Having collected commission of US$ 600 million for arranging the bond sales in 2012 and 2013, the bank agreed, last October, to pay almost US$ 3 billion to end an investigation into work it performed for 1MDB. Overall Goldman has paid out almost US$ 5 billion in compensation and penalties across five countries, Hong Kong, Malaysia, Singapore, UK and US.

Mastercard announced that later in the year, it would quintuple fees – from 0.3% to 1.5% – it charges merchants on every transaction when UK cardholders buy goods and services from the EU. This would impact the travel sector, (including transactions involving airlines, hotels, car rentals and holiday firms based in the EU), with Mastercard attributing the rise to the UK’s decision to leave the EU. In true bank logic, the global payments company noted that “in practice”, UK consumers would not notice the move. In 2015, the EU introduced a cap on such fees in 2015, after concerns they pushed prices up for consumers and unfairly burdened companies with hidden costs. Since 01 January,  the UK is no longer in the EU so the cap no longer applies. Once again for the banks, opportunity knocks!

Meanwhile, Visa is said to be keeping the issue of price increases under review. It seems that some EU companies have already stopped exports to the UK because of new VAT-related charges, whilst UK customers, receiving goods from the EU, have seen extra charges of up to 40% to cover VAT, duties and other charges.

This week, some Barclaycard customers saw their minimum repayments rise, with the new requirements individually tailored to each customer, although some may see a significant rise in demands. The only good side to the new arrangements is the scrapping of charges for exceeding a credit limit. The new repayment rates will apply to many of the cards – but not Premier or Woolwich – and those who have only started using the facility in the past decade used to have their minimum monthly payment calculated at the lowest of US$ 6.87 (GBP 5), 2.25% of the full balance or 1% of the balance plus interest, now replaced by the highest of US$ 6.67, 2%-5% of the full balance or between 1%-3% of the balance plus interest. Some would smile at the bank advising that “we are increasing minimum payments for some customers to help them pay off debt quicker.’

At least part of the UK car industry is secure for the foreseeable future, following a trade deal reached between the UK and the EU which saw Nissan confirming that it would continue to manufacture cars at its Sunderland plant, the UK’s largest. The car manufacturer also added that it would move additional battery production, of  62kWh, from Japan to close to the plant, where it has 6k direct employees and supports nearly 70k jobs in the supply chain; this move will ensure that UK cars will comply with trade rules agreed with the EU requiring that at least 55% of the car’s value to be derived from either the UK or the EU to qualify for zero tariffs when exported to the EU – 70% of  ‘Sunderland cars’ are exported, most of which  to the EU. The Nissan decision is an indicator that there is still life in the UK car industry, despite all the doom and gloom expounded by the Remain camp. It comes after guarded comments from the Vauxhall boss, Carlos Tavares, about the future of their Ellesmere Port plant being dependent on the support the UK government. He indicated that it would make more sense to locate an electric vehicle factory closer to the larger EU market. The obvious conclusion is that to support UK car manufacturing, going forward, the Johnson government needs to pump huge amounts of money into battery investment which is not happening at the moment. In the five years to 2016, government car investment averaged an annual US$ 4.8 billion and has since fallen to just US$ 1.4 billion. Without increased government investment, 800k jobs are at risk. Later in the week, the car company confirmed it was in union talks over a number of staff redundancies – probably around 150 – but no production cuts are involved.

A Deloitte report estimates that Europe’s top twenty football clubs are well on their way to lose over US$ 2.3 billion by the end of the season; up to the end of the extended 2019-2020 season, their losses were at US$ 1.35 billion from both broadcast and matchday revenue. Barcelona, Real Madrid, Bayern Munich, Manchester United and Liverpool were the top five revenue earners, with totals of US$ 861 million, US$ 861 million, US$ 764 million, US$ 699 million and US$ 628 million, down 15.8%, 6.1%, 4.4%, 18.8% and 8.1% respectively. Manchester City, Paris St Germain, Chelsea, Tottenham Hotspur and Juventus make up the remainder of the top 10. The strength of the English game can be seen that, apart from the five clubs in the top ten, there are two other teams – Arsenal and Everton – in the list. However, the full financial impact of Covid-19, which has wreaked havoc, may not be realised for years to come. Clubs have suffered a loss of US$ 1.14 billion in broadcast revenue, with Manchester United posting a 41.9% decline to US$ 193 million. There was also a £228m overall fall for the twenty clubs in matchday revenue, although there was a £93m increase in commercial revenue.

Not before time, James Shipton will step down from his position as head of the Australian Securities and Investments Commission. Last year, an investigation was launched after it was revealed that ASIC, the authority he was going to lead, paid US$ 90k for his personal tax advice when he was relocating from the US to Australia. He stepped aside during the enquiry which concluded that there were no adverse findings against hm. Treasurer Josh Frydenberg commented “in the light of the outcomes of the review, Mr Shipton will return to his role, but Mr Shipton and I have agreed that it is in the best interests of ASIC that he will step down as the chairperson of ASIC in the coming months.” Some will consider this somewhat of a bureaucratic cop-out.

Australia exported a wide range of goods to China in December, and this despite the ongoing trade war between the two countries that has seen China impose an unofficial ban on Australian coal, along with crippling tariffs on wine (of over 200%) and barley. (The country’s barley and coal were sent to India, Japan and other countries). China also added other restrictions on the import of some other goods such as Australian timber, lobsters and beef. Despite these setbacks, Australia posted a 21.0% hike in December exports to China of US$ 1.8 billion, whilst imports dipped 7.0% to US$ 496 million. Driven, as usual, by iron ore, the country’s monthly trade surplus with China (for goods) climbed to a credible US$ 4.0 billion. The importance of this bilateral trade is that exports to China account for 40% of the country’s total, and 29% of imports, with the Australia being its second largest trading partner.

Last year, the US economy shrank by only 3.5% – much better than most other G20 countries – despite the heavy economic toll caused by the pandemic; however, with virus cases on the rise, the economy has slowed with a lower than expected 4.0% climb in Q4. The final 2020 return was the biggest annual decline since 1946. Over the year, the US witnessed soaring unemployment numbers, (with 18.2 million people collecting some form of unemployment benefits), and a marked increase in poverty numbers but the economy would have fared a lot worse if it were not for the massive stimulus packages which have sent trillions of dollars to households and businesses. The US figures compare favourably with contractions noted elsewhere – with the UK down 10%, whilst Canada, Japan and Germany all dropped by more than 5%. Last week, the US Labor Department reported that another 847k people had filed new claims for jobless benefits. However, on Wednesday, Fed Reserve Chairman, Jay Powell spooked the market, by indicating a continuance of pumping massive amounts of monetary stimulus into the economy and adding that the economy will struggle for “some time”.

The IMF’s latest forecast sees 2021 growth at 5.5%, following a 3.5% contraction last year, to be driven by the start of the roll out of vaccines and continued fiscal support by many global countries; growth in 2022 is expected at 4.2%. Noting that 2020 saw the worst downturn since the Great Depression with over 150 economies expected to have per-capita incomes below their 2019 levels by the end of this year. The global organisation sees “at US$ 22 trillion, the projected cumulative output loss over 2020-2025 relative to the pre-pandemic projected levels remains substantial.”

There is some very funny business going on in Wall Street and concerns a US video games bricks and mortar retailer called Gamestop. Over the last week to Tuesday, its share value had skyrocketed over 300% and then by 92% on Tuesday and a further 116% at the start of trading yesterday (Wednesday 27 January). It seems that a group of savvy social media day traders, utilising low-cost trading platforms such ss Robin Hood, were exchanging tips and pushing up prices via Reddit’s chat thread wallstreetbets. Gamestop, which made a US$ 719 million loss in 2019, (and probably a bigger deficit in 2020), is everybody’s favourite at the moment, but these punters are looking at other stock including Blackberry, AMC, and Nokia Oyjis.

To some observers it seems that this is the start of a battle royale between the establishment of Wall Street and mainly young, tech savvy day traders, pumping the stock in what some consider to be a generational and increasingly personal fight, redistributive and all about robbing the rich to give to the millennial ‘poor’. It seems that they are against hedge funds – and their modus operandi – and at the moment they are winning.  

Gamestop is the most shorted stock on Wall Street, with some estimates that up to 30% of stock being in the hands of hedge fund borrowers, who have bet billions of dollars that GameStop’s shares would fall. This market ploy occurs when a hedge fund, or a big market player, borrows shares in a company from other investors, betting that its price is going to fall. The hedge fund sells the shares on the markets at, say US$ 20, only to buy them back when the price retreats to say US$ 12 The borrowed shares are returned to the original owner, and the hedge fund pockets a profit. What is happening sees the young upstart investors continuing to buy more shares, pushing the price northwards at a rapid speed, whilst putting a “short squeeze” on the “traditional” market investors. When that happens, they have to get back into the market to cut their losses which in turn moves the share price higher. It is reported that Melvin Capital Management had to be bailed out with more than US$ 2 billion to cover losses on some shares, including Gamestop. This could be the start of a new regime and protocol in Wall Street and could represent a generational shift in attitudes to money and use of new technology.

One has to wonder what the regulators have been doing to rectify the situation – basically nothing. Action taken by online brokers on Thursday clamped down on the recent surge in speculative activity, with the likes of Charles Schwab and TD Ameritrade restricting some options trading. Online trading app, Robinhood also prevented clients from adding new positive bets on stocks and the NYSE stopped trading more than a dozen times in the morning session, with GameStop’s share value sinking 77% from the day’s opening. It does seem incongruous that the likes of Robinhood can block retail investors from purchasing stock while hedge funds have no problem accessing the market. Some players cannot believe that young, inexperienced day traders have been able to wipe out hedge funds’ negative bets on Gamestop and obviously someone’s cage has been rattled. Unfortunately, these day traders will eventually lose the battle – and their money – as any enquiry will be handled by the establishment which will act as both judge and jury. On Wednesday, a record 24 billion shares were traded and what started as a Battle Royale, between the establishment and day traders, has seen the bourse becoming a Casino Royale.

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Waterloo                                                                                            22 January 2021

JLL has come out and forecast that Dubai property prices are set to fall again in 2021 by between 5% to 8%, as excess supply remains the sector’s bugbear. According to Dana Salbak, head of research ““Dubai does have oversupply in residential units … and that is likely to put further downward pressure on the market.” The firm notes that the Dubai market was under pressure last year, driven by Covid-19, with prices dipping 8% on the year, whilst forecasting a further 53k units to hit the market  in 2021 – increasing Dubai’s property portfolio by 8.9% to 648k. (Official figures for 2020 are not yet available but at the end of 2019, the emirate boasted 663k units, of which 543k were apartments and 120k were villas). Over the past three years, Dubai’s population has grown 7.3% to 3.192 million, 5.1% to 3.356 million and 1.6% to 3.411 million at the end of December 2020). There is no doubt that there has been a dearth of new releases over the past eighteen months, so the supply line is beginning to slow quite appreciably and that will start to see a move to some sort of equilibrium. One of the main drivers behind the bearish property market has been the low energy prices but with oil breaking out towards the US$ 60 mark, and some looking at a US$ 75 a barrel, there is no doubt that a higher oil price is good for the emirate’s economy and will prove a boon for property prices. Furthermore, a low US$ is another factor that bodes well for Dubai and then add on the Expo factor and the recent regulatory changes taking effect, there is only one direction for the property market to go – and that is north.

Whereas JLL forecast an additional 53k units in 2021, Core reckon a lower number of 39k, driven by significantly lower buying costs and a raft of government-led demand drivers, although developers will adjust supply during the year, in line with consumer demand. The consultancy mentioned that 36k units were added to the Dubai property portfolio last year, indicating that the secondary market rose 7%. It noted that there had been a marked slowdown in the off-plan market, contracting by 32% on the year, and relative resilience in the secondary market, with record transaction volumes seen, largely led by end-user buyers. There is no doubt that interested buyers should focus on villas, in well-developed areas such as The Meadows, which will inevitably see prices move north in 2021. In contrast there is still too much softness for apartments and off-plan villas and apartments which will only see prices plateau towards the end of the year. In 2020, there were sharp declines in apartment prices including 15% lower in Discovery Gardens and Dubailand, with lower 4% falls noted in Downtown and Palm Jumeriah. Since the last property price peak in 2014, villa and apartment prices have tanked 31% and 35%.  With selling prices almost equating to actual cost prices, historically low interest rates and attractivebank packages, this year will turn out to be the best economic opportunity for buyers to purchase their own property. Since the last property peak in 2014, villa and apartment prices have tanked 31% and 35%.

Core also commented on the state of the commercial property sector and noted that there are some landlords offering twelve months’ free rent for clients, signing up for five years., as well as helping with fitout costs. There seems to be up to 50% vacancy rates in some of Dubai’s newer developments. Covid-19 has been particularly unkind to Dubai’s older commercial buildings, with Deira, Bur Dubai and Garhoud witnessing year on year rental falls of up to 25%., with tenants either closing their offices or moving to newer locations in locations such as JLT and SZR. Although JLT and Business Bay are in most demand, they also have seen 2020 rentals declines of up to 20%; average rents in both locations start at US$ 17 per sq ft. The reality of the situation is that this sector will continue to struggle this year as its starts 2021, with a 24% vacancy rate, or 25.2 million sq ft out of a total 104.9 million sq ft office stock. There are bargains to be had for renters this year.

A Dubai-based renewable energy firm is investigating deploying wind capacity to support companies that are cement quarrying in Abu Dhabi and West Africa. Enerwhere, specialising in portable, easy-to-install solar hybrid systems for off-grid projects, believes renewables can be used to help mining and quarrying industries in the UAE and West Africa to reduce their carbon footprint. The company has installed floating solar photovoltaic panel systems off Zaya Nurai island in Abu Dhabi and is already using solar installations to power cement recycling processes at Al Dhafrah. Enerwhere also plans to raise “a double-digit million dollar figure” this year to meet capital deployment for existing projects in solar and battery technology, as well as to expand one of its software systems internationally.

One of the last actions of the departing President Trump was to exempt he UAE from a 10% tariff imposed on metals imports, as from 03 February.  The decision came after the US and the UAE agreed to a quota limiting the volume of aluminium imports and follows the strengthening of bilateral national security and economic ties. The new quota will see Dubai’s aluminium exports return to almost the same level they were before the tariff was imposed in March 2018. The UAE, which is the third-largest aluminium exporter to the US, joined Argentina, Australia, Canada and Mexico who were also exempted. Donald Trump also noted that the measure “will provide effective, long-term alternative means to address the contribution of the United Arab Emirates to the threatened impairment to our national security by restraining aluminium article exports from the United Arab Emirates to the United States, limiting export surges by the United Arab Emirates, and discouraging excess aluminium capacity and excess aluminium production”.

The UAE became the first country in the world to manufacture aluminium using solar power. An agreement between Dubai Electricity and Water Authority and Emirates Global Aluminium will see DEWA supplying EGA’s smelter with solar power from the Mohammed bin Rashid Al Maktoum Solar Park. It is expected in its first year, 560 megawatt hours of solar power will be supplied, enough to make 40k tonnes of aluminium in the first year, with the potential for significant expansion. The solar aluminium is branded under the product name, CelestiAL. This will go some way to make Dubai the most sustainable city in the world and become a global leader in the development and application of scientific and technological advances in the energy sector.

Dubai Maritime City (DMC) reported that, after eleven months of work, 80% of its US$ 38 million road and infrastructure works in Phase 1 of its commercial district are nearing completion. When finished, the site will become a major hub for maritime services and enhance Dubai’s position as a leading global maritime centre. DP World’s purpose-built maritime centre is an integrated, specialised development and will add significant value to the maritime industry and support the expansion of the business community in the UAE.

With online business and e-commerce gaining momentum, the DED Trader licence recorded a 132% growth in numbers to 5.8k last year. This particular permit was launched to licence freelancers at their place of residence in Dubai and enable start-ups to conduct business activities online and across social networking accounts. Interestingly since its 2017start-up, a total of almost 10k licences have been issued, 57% of which were for women. The top three categories were for ‘Marketing Services Via Social Media’, ‘Perfumes & Cosmetics Trading; Portal’ and ‘Sweets & Candies Preparing’. The total number of DED Trader licence groups now numbers 86. The DED licence is issued electronically, with the whole process, including payment, being carried out on-line.

One of Dubai’s best export earners, dnata has invested US$ 40 million in a new, state-of-the art 150k sq ft cargo complex, dnata City North, at Manchester Airport. The company, one of the largest global air services providers, has expanded its operations, that now include 125k sq ft of warehouse space, so that it can process over 150k tonnes of cargo annually. Over the past decade, dnata has made significant investments in the UK to enhance its position as one of the leading players in the country. It currently operates fourteen facilities at six airports and is able to handle more than 850k tonnes of cargo annually across the country. On the global stage, it serves 300 airlines, at 126 airports, in 19 countries, with ground handling, cargo and catering services.

Last year, Dubai Customs posted there was a 30.2% increase in the number of customs declarations to 13.8 million, with 97% of all transactions not requiring human intervention, thanks to their Smart Workspace Platform. Over the same period, there was a 37.4% hike in business registration requests to 250k. Other statistics show that there were 875k refund requests applications and certificates, 475k report and certificate requests and 334k inspection booking requests. These figures are an indicator how well Dubai has weathered the economic environment during Covid-19. The success of recent innovative measures is reflected in the fact that only 0.6% (102k) of the total transactions were carried via a personal visit, with the remainder (15.9 million) split between smart channels (62.8%) and electronic channels (37.5%).

According to the Central Bank, in the seven months to November, the total assets of Dubai and Abu Dhabi banks rose 1.7% to US$ 803 billion of the UAE; Dubai banks’ total came in at US$ 413 billion. These two emirates accounted for 92% of the total bank assets in the country, with the other five emirates making up the balance.. Year on year to September, there had been a 7.6% jump, to US$ 886 billion, in the total assets of all banks operating across the UAE. The total loans and advances given by Dubai banks were US$ 236 billion and deposits taken at US$ 226 billion. The combined value of the capital and reserves of Abu Dhabi and Dubai banks totalled US$ 100 billion, which constitutes about 92% of the total capital and reserves of the UAE banking system. In their most recent report, Fitch considered the general business and operating environment for banks in the UAE to remain as challenging in 2021 as it was in 2020, and that defaults are set to rise as government support measures wane. It also expects the asset quality of UAE banks to deteriorate this year, as payment holidays expire and not all borrowers being  able to weather the downturn with real estate, contracting, retail, aviation and hospitality being the most affected sectors.

At the beginning of the week, Al Mal Capital REIT started trading on the DFM, the culmination of collaboration between the bourse, the Securities and Commodities Authority and Dubai Land Department, that expands and also diversifies share investments open to investors. The listing follows the successful November floating of the new fund by Al Mal Capital, raising US$ 95 million. These funds will be invested by the company in a Sharia-compliant diversified portfolio – including healthcare, education and industrial – of companies’ income generating properties, with a target 7.0% annual return. Dubai Investments owns 66.61% of the shareholding. It is expected that this new class to the market will encourage other Reits, (Real Estate Investment Trusts), to join the local stock market which in turn will also have a positive knock-on impact on the Dubai property sector. The DFM has signed an MoU, with the DLD, as a general framework for their collaboration as well as drafting attractive rules for creation, listing and trading of Reits in collaboration with the SCA. One of the aims is to facilitate accessibility for future Reits to trade on the DFM by making the whole process streamlined to meet the needs of such entities. The other benefit is that since real estate tends to be capital intensive, a listing on the share market is a relatively cheap way of funding.

UAE’s  two biggest telecoms companies – Etisalat and du – are to increase the ownership limit for non-UAE nationals from 20% to 49% of its capital; the move still requires rubber stamping by the regulatory authorities and shareholders. However, local and international telecommunication companies are not permitted to hold shares in du and no individual or legal entities are allowed to own more than 5%in the company’s capital, except those holding a current balance of more than 5%. The move is expected to see both share values move north from their current values of US$ 5.31 (Etisalat) and US$ 1.80 (du), with these prices already 14% higher on the week, since the announcement.

Emirates Central Cooling Systems Corporation posted a 3.4% hike in 2020 profits to US$ 246 million, on the back of a 3.0% rise in revenue at US$ 616 million. Empower services 1.25k buildings, with district cooling services and has a customer base of over 140k. By the end of the year, the facility’s total cooling capacity had topped 1.64 million Refrigeration Tons.

The bourse opened on Sunday 17 January and, having gained 344 points (14.6%) the previous fortnight, gained a further 33 points (1.2%) to close on 2,735 by Thursday 21 January. Emaar Properties, US$ 0.13 higher the previous fortnight, traded up again, by US$ 0.01, to close at US$ 1.10, whilst Arabtec is now in the throes of liquidation, with its last trading, late in September, at US$ 0.14. Thursday 21 January saw the market trading at 372 million shares, worth US$ 118 million, (compared to 203 million shares, at a value of US$ 56 million, on 14 January).

By Thursday, 21 January, Brent, US$ 15.12 (36.8%) higher the previous nine weeks, was up US$ 0.77 (1.3%) in this week’s trading to close on US$ 55.43. Gold, US$ 56 (2.9%) lower the previous week, gained US$ 11 (0.6%), by Thursday 21 January, to close on US$ 1,864.

With the Organisation for Economic Co-operation and Development investigating environmental destruction and alleged human rights abuses at the massive Cerrejon thermal coal mine in Colombia, there is every chance that the three leading global miners – BHP, Anglo American and Glencore – could be forced to close down the thirty-year old mine. Latin America’s largest mine has long been accused by the local community, including the Indigenous Wayuu people, of forced evictions, pollution and human rights abuses. Late last year, the United Nations showed its concern by calling on the three miners to suspend some operations at the coal mine, The OECD have received formal complaints from the Global Legal Action Network, as well as from a coalition of Colombian and international human rights and environmental groups. GLAN commented that there had been a systemic failure by the mine’s owners to respect basic human rights – and if the OECD thinks likewise, the mining giants could be forced to progressively stop mining, rehabilitate the environment and compensate surrounding communities.

HSBC is to close 16.0% of its 593 UK branches between April and September this year, as an increasing number of customers are turning to digital banking, with coronavirus lockdowns accelerating the move to online banking; no redundancies are expected, with staff moving to nearby branches. The bank commented that branch usage by customers had fallen by over 33% since 2016, and that 90% of all customer contact was over the phone, internet or smartphone.

As he has done for his club Manchester United on many occasions, Burberry hopes that Marcus Rashford will do the same for them. Having seen its sales tank almost 40% during the festive season and underlying sales fall in 9% in Q4 ,it hopes that the Rashford magic works for the luxury brand. Of late, it has had a torrid time seeing, for the third time in 2020, comparable store sales in Europe, the Middle East, India and Africa declining 37%. The usual driver continues to be the Covid-19 pandemic, closing shops and lockdowns resulting in fewer tourists visiting its European stores. Currently 15% of its outlets remain closed during the third wave – and this number will inevitably rise with further lockdowns as the new strains take effect. One note of optimism was that digital sales jumped by 50%.

The de facto head of Samsung Electronics for the past six years has been sentenced to two years and six months in a bribery case which was a retrial of an earlier one involving the country’s former President Park Geun-hye, who was also jailed for bribery and corruption. It was alleged – and accepted by the court – that Lee Jae Yong “actively provided bribes and implicitly asked the president to use her power to help his smooth succession” at the head of Samsung. In a damming accusation of the way that the conglomerate is run, the court noted that “it is very unfortunate that Samsung, the country’s top company and proud global innovator, is repeatedly involved in crimes whenever there is a change in political power.” It found Lee guilty of bribery, embezzlement and concealment of criminal proceeds, worth about US$ 8 million. The company was accused of paying US$38 million to two non-profit foundations operated by Choi Soon-sil, a friend of the disgraced jailed president in exchange for political support – alleged to include backing for a controversial Samsung merger which paved the way for Lee to become eventual head of the conglomerate.

Notwithstanding the ongoing pandemic, and its continuing drag on  global economic life, Q4 proved a bonanza for JP Morgan, with profits 42.5% higher at US$ 12.1 billion, equating to US$ 3.79 per share or, excluding one-time items, $3.07 a share – well above the analysts’ forecast of $2.62 per share; the one-time item was the New York-based bank “releasing” US$ 1.9 billion  of funds it had set aside last year to cover potential loan losses caused by the coronavirus pandemic and subsequent recession; it still has over US 30 billion in provisions to weather any future credit crisis. The largest bank by assets in the US confirmed that these stellar figures were mainly attributable to the firm’s investment banking division which saw profits jump 82.0% to US$ 5.35 billion.

Having raised US$ 230 million from existing shareholders, the latest funding round indicates the value of UK-based Deliveroo could be as high as US$ 7.0 billion, as reports indicate that the food-delivery start-up could be contemplating an early IPO. The money raised will be utilised by Deliveroo “to continue to innovate, developing new tech tools to support restaurants, to provide riders with more work and to extend choice for customers, bringing them the food they love from more restaurants than ever before”. The seven-year old firm currently operates in twelve countries, including the UAE, UK, Australia and Singapore, and has more than 2k employees in offices around the world. Its network spans 140k restaurants and 110k riders globally.

There are indicators that Turkey is increasing its presence in the African continent, as it tries to curry favour with countries by doses of aid and trade. Over the past fifteen years, Turkish president, Recep Erdogan, has overseen the number of Turkish embassies in Africa increase from 12 to 42; there are 55 countries in the African Union. The Turkish administration recognises the economic and geopolitical importance of the continent and is now in the midst of a regional power struggle, centred on trade and influence. It seems that there are certain African countries which prefer to have a Turkish benefactor, rather than say a British/Portuguese/French occupation – and of late a growing Chinese influence. Most of its focus seems to be centred on the Horn of Africa, with Ethiopia, the continent’s second most populous country, being of particular interest; almost 42% of the US$ 6 billion that Turkish companies have invested in the area has gone there.

By Thursday, Australian shares had risen to their highest level since pre-Covid February 2020, driven by the feel-good factor of Joe Biden’s inauguration, boosting global sentiment, while local data showed a faster-than-expected recovery for the nation’s job market. The ASX  200 closed 0.8% higher on the day at 6,824 points, with the broader All Ordinaries index up by a similar margin to 7,107. Meanwhile, its economic life-line commodity, iron ore, closed on US$ 170, as there are signs that shipments are slowly rising, with 17 million tonnes being shipped the previous week. Other good economic news came with the December unemployment rate dropping 0.2% to 6.4% – slightly better than an earlier Reserve Bank forecast – as 50k people started a new job. This double whammy of positive news had the knock-on effect of pushing the Aussie dollar higher, to just under US$ 0.78, with every likelihood of moving slightly higher by the end of the month, assisted by a weaker greenback.

US markets also hit record highs, as Joe Biden was inaugurated as the 46th US President, with both the S&P 500 and Nasdaq hitting all-time highs on Wednesday. By the end of Thursday trading the S&P 500 was at 3,853 points, the Dow Jones 31,176 and NASDAQ Composite 13,531 points. The markets are potentially hopeful about the new President passing a proposed US$ 1.9 trillion stimulus package, which will enhance the bullish sentiment, and see markets rise even further. It is interesting to note that the Dow has gained 57% since Donald Trump first took office in January 2017 but this figure was less than the 72% hike recorded in Obama’s first four years in office.  

Last week saw a 151k applications for US state unemployment benefits to 961k. Despite the fall, the numbers are still on the high side, driven by the rising number of coronavirus cases and the relatively low uptake of the vaccine in the country. Continuing claims in state programmes, which monitors the number of citizens receiving ongoing jobless benefits, fell by 127k to just over five million. It will be interesting to see what the new Biden administration can do to improve the situation.

Despite warning of rising deficits, increased lockdowns – as corona virus continues almost unabated – and post Brexit problems, Fitch has maintained UK’s AA- debt rating and outlook at negative; the agency noted that the deficit had widened to 16.2% over the last year and that “the impact of the coronavirus pandemic on the UK economy and the resulting material deterioration in the public finances.” However, it was fairly bullish that its early rollout of Covid vaccines could see a “sustained recovery” in H1 and it raised its 2021 economic forecast from 4.1% to 5.0%, although the recent surge in virus cases could see a Q1 3.0% contraction.

With the advantages of being the first major economy to recover from Covid-19, having enforced strict virus containment measures and emergency relief for businesses, China ended the year, as the only major economy to have expanded in 2020. However, its economy – which grew at 2.3% – grew at its slowest annual pace in more than four decades; Q4’s growth was at a more respectable 6.5%, indicating that the economy is quickly returning to some form of normalcy, (a major improvement on Q1 2020’s 6.8% contraction). Latest monthly data sees the manufacturing sector reporting a 7.3% jump in industrial output, as coronavirus disruptions around the world fuelled demand for Chinese goods. The country’s export figures are even more impressive, considering the current strength of the yuan. This week saw the inauguration of Joe Biden and China cannot expect trade relations, which have deteriorated so much over the past four years of a Trump administration, to improve.

Recent action by  global hedge funds tend to point to a continued weakening of the greenback, with the likes of sterling and the euro heading into positive territory. The expected dollar’s downtrend will also see both the Australian and NZ dollars moving upwards, as hedge funds boost their US dollar net short positions. It is expected that if the pandemic impact lessens earlier in the year, it will benefit those currencies, particularly those from the emerging market countries, which are more leveraged to global growth. There are those who espouse that the greenback is on the rebound after a two-year slide, as US yields recently rose to a ten-month high. However, continuing low rates, high dollar valuations and a strong global economic recovery will see the US currency trade lower on the global stage.

The problem of accountability continues to bug world trade. Last week, questions were raised when Twitter permanently closed Donald Trump’s account and now there are questions on who has the final say when it comes to human rights. For example, this week Foreign Secretary Dominic Raab warned that UK companies would face fines, if they could not show that their supply chains were free from forced labour, particularly when it comes to the Uighur Muslims in the cotton fields of Xinjiang; this area provides 20% of all global cotton. The question is whether the courts, or the UK government, should decide what defines human rights violations and furthermore what action to take if a country is found to have “broken these rules”. For example, China is the UK’s fifth biggest trading partner, with annual trade of US$ 110 billion, and it would be economic suicide to cut ties on the grounds of human rights violations. Amendments to the Trade Bill currently going through Parliament would oblige the government to assess the human rights records of potential partners. There is already one amendment proposing to allow the High Court to declare a genocide in other countries and forcing the immediate cancellation of trade deals with said nations. If that were to happen, then other countries would quickly fill the breach and continue to applaud UK’s stance for taking the moral high ground, whilst filling their public coffers. Then what about several other countries that would not pass the test?

The ECB maintained both interest rates (at 0.5%) and the stimulus package unchanged, at US$ 2.3 trillion, and to run until March 2022 at the earliest, but did not rule out any possible future changes which may occur if the coronavirus cases continue to mount. To maintain liquidity in the system, it will keep long-term loans at minus 1.0% but some analysts reckon that this rate can only continue if the bloc’s governments ‘come to the party’ and offer support through fiscal policies. ECB President Christine Lagarde noted that, because of the pandemic, there had been “some downside risks to the short-term economic outlook,” but there is “an ample monetary stimulus remains essential” and the central bank stands ready to “adjust all its instruments”.  The EU hierarchy estimate that the eurozone economy slumped 7.8% in 2020 and that this year’s rebound will be 4.2%.

There is no doubt that Eurostar is struggling and could be in further financial trouble if no further investment is made. A report late last year noted that passenger numbers were 95% lower in November than they were just before the onset of the pandemic in March and the two trains an hour from London to Brussels/Paris then have been replaced by just two trains a day. No wonder then that some London business leaders have written to the government calling for financial support for the struggling rail firm, requesting, at least, government loans and relief from business rates. It seems that the firm, (60% owned by the French state rail firm SNCF and the balance, formerly owned by the UK government before being sold to private businesses for almost US$ 1.1 billion in 2015) has not yet been eligible for government-backed loans. Eurostar, launched in 1994 and having carried 190 million passengers over the past twenty-six years, has warned that “without additional funding from government there is a real risk to the survival of Eurostar”. Has the Eurostar met its Waterloo?

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Everybody Wants To Rule The World!

Everybody Wants To Rule The World!                         

Everybody Wants To Rule The World!                                                          15 January 2021

As Dubai property starts to recover, after nearly six years of bear trading, the value of Q4 Dubai property transactions, at US$ 6.0 billion, was 21.0% higher than the previous quarter; the actual number of transactions was 25% up at 11.1k. As a sure indicator that the sector is in recovery mode – and bearing in mind that the emirate was in lockdown in Q2 and 2020 figures represent say eight months of trading – the value of trades, at US$ 19.7 billion, was only 9.5% lower than a year earlier; similarly, the number of 2020 trades of 35.4k was 11.7% lower on the year. Q4 figures echoed the improvement with the number of deals also climbing nearly 25% to 11.1k, according to listings portal, Property Finder. The figures also indicate transaction values and volumes have more than doubled since the Q2 lockdown, when there were 5.5k transactions worth US$ 2.9 billion.  In December, secondary/ready transactions were 9.7% higher on the month, with 2.5k transactions, valued at US$ 1.7 billion; total transactions numbered 2.5k, worth US$ 2.0 billion. The last two months of 2020 witnessed seven-year highs in the volume of secondary/ready market transactions, whereas April and May were the lowest months historically for such sales.

There is no doubt of the negative impact of Covid-19 has had on the sector, but one interesting feature is that deals for completed homes now account for 72% of the total value, equating to US$ 52.2 billion and 20.7k units, of 2020 transactions; off plan properties accounted for 14.7k transactions, worth US$ 5.5 billion. There have been several reasons put forward why secondary/ready properties have seen a resurgence in demand., including an increased number of lower priced properties available, and with more time being spent at home, there is a positive move away from apartments to villas/townhouses, with bigger space and gardens, proactive government initiatives, and historically low mortgage rates; in 2020, most of the 13k Dubai mortgage transactions, worth US$ 23.8 billion, were for secondary/ready property. Other government measures, including visas for expat retirees, the golden visa scheme and amendments to commercial companies’ law, as well as many new projects having been put on hold (which cuts down the future supply pipeline), will see the supply/demand curve move to some form of equilibrium. The only canary in the coal mine is the pandemic and the possibility of future lockdowns.

Berkshire Hathaway HomeServices Gulf venture has launched its luxury collection division (covering sales of properties above the US$ 5 million level). The global real estate giant is confident that the emirate is witnessing renewed interest in the luxury market sector, as buying activity has increased in recent weeks. The new launch will target high profile locations, such as Emirates Hills, Palm Jumeriah, Bluewaters Island and Bulgari Residence, with positive signs that demand will remain buoyant.

To the surprise of no one, Dubai topped the league in 2020, building more skyscrapers (any building over 200 mt) than any other city in the world. Last year, the emirate saw the completion of a record twelve such buildings, three higher than a year earlier. It seems the reason behind the recent surge in building skyscrapers was down to the upturn in commitment in investment for this type of project around five years ago, aligned with the strong property market at the time – and those projects have finally come to completion. The tallest building completed in Dubai last year was the SLS Tower in Business Bay, which at 336 mt is now the 11th-tallest worldwide, followed by Amna Tower at Habtoor City (307 mt), Jumeirah Gate (303 mt) at JBR, ICD Brookfield Place (282 mt) at DIFC and Boulevard Point (280 mt) in Downtown Dubai.  There was a 20% decline in the number of such buildings to 106 – the lowest number since 2014. For the first time in five years, the year’s tallest building was not to be found in China – this year, the honour went to the Park Tower in New York City (472 mt). China completed more than half the total buildings in the study (56), down from 57 in 2019 and 92 in 2018.

Four months after his September appointment as Emaar Mall’s chief executive, Rajiv Suri has resigned from his position, with immediate effect; he previously worked as chief executive of Shoppers Stop, a department store chain based in India. The retail arm of the emirate’s biggest listed developer, Emaar Properties, has issued a statement advising that Amit Jain will take over until further notice. Q3 profits were 60% down at US$ 66 million, as revenue fell 30% to US$ 321 million.

In December, Dubai’s seasonally-adjusted IHS Markit PMI climbed 2.0 to 51.0 on the month – the first expansion in three months, as companies clawed back business, following the pandemic slowdown, driven by an increase in output and new orders. The monthly rate of expansion was the second quickest in 2020, behind July, but employment continued in decline, (recording job numbers falling for the tenth consecutive month), along with lower levels of inventory; the rate of job shedding has moved higher since November. The survey confirmed continuing weak cost pressures, as average selling prices fell again over the month, with companies continuing efforts to secure more business by offering discounts, but the rate of decline softened.

The local economy has benefitted by the lifting of most of the restrictions put in place last year to contain the spread of the virus. Dubai has begun to roll out a free mass inoculation campaign with the Pfizer-BioNTech Covid-19 vaccine; this is another measure that wlll help boost the economy and business confidence. There is no doubt that the reopening of borders with Qatar will prove a boon for Dubai’s economy, still recovering from the initial impact of Covid-19. Many sectors, such as cross border trade, re-exports, aviation, hospitality and tourism will benefit hugely, after three and half years of almost non-contact with each other’s country. However, this will not happen overnight, and it may be some time before Dubai sees the full effect.

It can only be Dubai that, in a middle of a pandemic, announces that at least twelve iconic restaurants will open their doors and kitchens in 2021. This month, Bla Bla, a massive 9k sq mt venue, opens, with twenty bars, three restaurants and a beach club, in a bid to cater for a wide range of patrons. The three licensed restaurants will also open in the first phase, and serve Italian and Japanese cuisines, and Texas-style barbecue. Another opening in Q1 will be the country’s largest food hall, as Dubai becomes Time Out Market’s seventh international location after Lisbon, Miami, New York, Boston, Montreal and Chicago. Located in Souk Al Bahar, it will feature thirteen restaurants, including Reif Japanese Kushiyaki; Little Earth by Nabz&G, The Mattar Farm Kitchen, Scoopi Café, Two Leaves by Project Chaiwala, Masti, BB Social, Folly by Nick & Scot, Vietnamese Foodies, Pickl, Pitfir, Brix, and Nightjar.

There are reports that one of Cannes’ hotspots, Baoli is coming to the ninth floor at Gate Village in DIFC. Serving a fusion of Mediterranean and Asian fare, with a focus on fresh seafood, it will comprise a restaurant, bar and outdoor terrace. Later in the year, Dubai, specifically the 51st floor of The Palm Tower, will welcome Sushi Samba. With branches already in New York, London, Miami, Las Vegas and Amsterdam, it will serve a blend of Japanese, Brazilian and Peruvian cuisine, culture, music and design.

With Atlantis, The Royal due to open in October, it will be home to a number of new restaurants, bringing with them some major global franchises and internationally acclaimed chefs.

Ling Ling will open its third resto-lounge, after Oslo and Marakesh, on levels 22 and 23, bringing the dining-to-dancing concept that draws inspiration from izakayas, the pairing of craft beverages with Cantonese food; it will overlook the hotel’s 90 mt sky pool. Little Venice Cake Company will introduce celebrity-favourite UK baker Mich Turner to the emirate as she opens her first cake atelier outside the UK. She has created cakes for royalty, including Queen Elizabeth, and famous personalities, and has been described by Gordon Ramsay as “the Bentley of cake makers”. New Andean cuisine will be represented by the Peruvian restaurant, La Mar, the brainchild of chef and restaurateur Gaston Acurio, famed for his Peking guinea or cuy, served with a rocoto pepper hoisin sauce and wrapped in a purple corn pancake. The cevicheria also has branches in Lima, Mexico, Brazil, Argentina and Miami.

Estiatorio Miloswill feature six mt high ceilings, Greek marble, floor-to-ceiling glass doors and an open-show kitchen, as well as rooftop seating. First opened in Montreal in 1979, Greek chef, Costaas Spiliadis,  also has Mediterranean restaurants in New York, Athens, Las Vegas, Miami and London. Following the success of her cookery and travel series, ‘Ariana’s Persian Kitchen’, Iranian-American chef, Ariana Bundy, is set to open her first restaurant in the hotel which will be located on a garden terrace. Spanish chef, Jose Andres, is to bring his first international Jaleo restaurant to Dubai after opening his first in Washington in 1993, followed by branches in Maryland, Virginia, Las Vegas and Florida. It will serve traditional Spanish dishes, using authentic and local ingredients.

Dubai will be the third base for Dinner by the experimental UK chef Heston Blumenthal which will bring to the emirate his unique cuisine of adapting food traditions that date back to the 1300s. His London and Melbourne branches of Dinner, for example, feature roast fruit (c1500), marrowbone (c1720), spiced squab pigeon (c1780), goats’ milk cheesecake (c1390) and a chicken liver parfait dish that looks like an unpeeled mandarin.

Covid-19 has resulted in a 64.4% decline, to 17.9 million, travelling through Dubai airports in 2020; a year earlier, the number of passengers was at 86.4 million. Prior to the onset of the pandemic, Dubai International was the world’s busiest international travel hub. Three months after the UAE went into the lockdown in March 2020, Dubai opened its doors to international visitors on 07 July.

Last year, the Department of Economic Development (Dubai Economy) posted a 4% rise in new licences to 42.6k; the split was 64:35:1 for professional, commercial and others, (tourism and manufacturing activities), respectively. The fact there was an increase in numbers, despite the negative impact of Covid-19, is an indicator of the emirate’s unique resilience. Even in tough economic times, Dubai seems to maintain its growth and development momentum and continues its position as a leading global economic and business destination. During the year, over 346k business registration and licensing transactions were completed, up 3% on the year; licence renewals grew 15% to 162.8k.

2020 was a record year for Dubai South, with 650 new companies starting business, as well as utilising 945k sq mt of space, in its Business Park. Like other free zones, it has relied on a mix of stimulus packages, both to attract new businesses but also to retain 90% of existing tenants. To meet future demand, an additional floor in the Business Centre will be available by the end of Q1. The Business Park has a diverse client base from a variety of sectors such as IT, insurance, education and, online gaming.

Ducab has appointed Mohammed Abdul Rahman Al Mutawa, as its new chief executive, to replace the departing Andrew Shaw, who, after thirteen years of holding the reins, takes on the role of board adviser. The new headman, formerly the chief executive of Ducab’s cable business, becomes the first Emirati to hold the number one position. The UAE cable maker, a subsidiary of Abu Dhabi’s industrial holding company Senaa, has plans to increase its exports to more countries around the world; the Investment Corporation of Dubai also has a stake in the company. Over the past decade, the company has doubled its export markets to take in more than thirty countries, with ventures such as Ducab Aluminium Company and Ducab Metals both contributing to growth. The company has about 1.5k employees and, with 2019 revenue of US$ 1.3 billion, it currently operates six manufacturing facilities, across four sites in the UAE.

Network International estimates that its 2020 revenues will be US$ 284 million – ahead of earlier forecasts. The digital transactions platform noted an improvement in Q4 results and sees the new year starting with positive momentum across all of its business lines. Although Q4’s returns were 19% lower, year on year, they were higher than those of Q3, reflecting the continuing recovery in card and digital transactions across its markets. By the end of the year, its UAE direct acquiring total processed volume had fully recovered to pre-pandemic levels, driven by strong e-commerce spending.

Enoc Link has announced that sales volume for its digital mobile fuel delivery service has grown tenfold in 2020, with its fleet size expanding 46% in the year. Their range of fuels supplied includes EPLUS91, Special 95 as well as diesel, with the company recently launching a dedicated fleet line to offer biodiesel (B5 and B20) – this contributed 20% to Enoc Link’s overall sales volumes. It has also recently launched a fleet of mobile fuelling trucks, equipped with 11k litre tanks, powered with simultaneous multi-product fuelling capability. These trucks can serve large-scale customers who require different fuel products concurrently. The new trucks can contribute to significant savings for customers, by reducing time and expenses spent for fuelling at a traditional service station, and eliminates the need to send two Enoc Link trucks to the customer premises to provide different fuel grades to the same customer. Enoc Link operates a diverse fleet of trucks equipped with varying tank capacities; including 800 litres, 2.6k litres, 4.5k litres and 11k litres.

One of the biggest local retail collapses came with news that the Toy Store owner, Gulf Greetings General Trading, abruptly ceased business at the beginning of the week, leaving suppliers being advised by email of the closure of the business, citing “unavoidable and unprecedented circumstances”. The company, with 400 employees, operated a total retail space of 125k sq mt, and had distribution centres in all six GCC countries. The company held exclusive representative rights for Hallmark Cards in the GCC and is the owner of The Toy Store – a chain of eight branded toy shops operating across sites such as MoE and Dubai Mall.

According to data platform Magnitt, MENA start-ups in 2020 secured record funding of more than US$ 1 billion – 13% higher on the year – despite 13% fewer deals of 496. Most of the funding occurred in H1 – US$ 725 million (29% higher than a year earlier) – with US$ 306 million raised in H2 from 198 deals. Covid has managed to wreak havoc on sectors such as air transport, tourism, supply chains, manufacturing and shipping. In contrast, businesses operating in key sectors, such as healthcare and technology, have seen an uptick in demand. E-commerce and FinTech accounted for about 25% of all deals in 2020, whilst healthcare start-ups more than tripled  in value to US$ 72 million during the pandemic. The UAE, Egypt and Saudi Arabia accounted for 68% of total deals, with the former attracting the largest share of funds raised and ranked first in terms of the number of deals. Furthermore, the country’s start-ups received more than half of the total venture capital into the region and just over a quarter of the total Mena deals, with funding up 5% to US$ 579 million, and total deals dropping by 17%.TheUAE also attracted the two biggest funding rounds with EMPG raising US$ 150 million, in its April Series E round, and Kitopi with US$ 60 million.

Smart Solution Logistics FZE has signed an agreement with Israel-based Allalouf Logistics to explore new growth opportunities for the logistics and general freight forwarding business in both countries. DP World’s port-centric logistics arm, with its global network of ports and terminals, offers a wide range of containerised logistics solutions, whilst its new Israeli partner is one of that country’s largest and longest established shipping agencies. In the UAE, the freight and logistics market is of increasing importance to thenational economy and is expected to increase its contribution to the country’s GDP to 8% of its total this year.

A US$ 308 million buyout by Shuaa Capital has saved the future of troubled Stanford Marine Group which, if it had gone under, would have resulted in over 1.8k retrenchments.  The consequences of the deal see Shuaa buying the debt, held by five local and two international lenders, at a discount and SMG strengthening its liquidity position, so that the company is now trading profitably. The company, one of the region’s major diversified offshore services companies, focuses on chartering, building and repairing offshore support vessels for the oil and gas industry. The deal will result in the company being able to continue to make vessels in its Grandweld shipyard’s facility and to carry out ship repairs, in Dubai Maritime City. Last year saw SMG post exports of more than US$ 27 million. The company was previously owned by private equity firm Abraaj Group, which was placed into liquidation two years ago. Shuaa Capital is hoping to close at least two more debt buyout transactions this year.

The bourse opened on Sunday 10 January and, having gained 134 points (5.4%) the previous week, gained a further 210 points (8.4%) to close on 2,702 by Thursday 14 January. Emaar Properties, US$ 0.11 higher the previous week, traded up again, by US$ 0.02, to close at US$ 1.09, whilst Arabtec is now in the throes of liquidation, with its last trading, late in September, at US$ 0.14. Thursday 14 January saw the market trading at 203 million shares, worth US$ 56 million, (compared to 421 million shares, at a value of US$ 110 million, on 07 January).

By Thursday, 14 January, Brent, US$ 13.44 (32.7%) higher the previous eight weeks, was up US$ 1.68 (3.1%) in this week’s trading to close on US$ 56.20. Gold, US$ 115 (6.4%) higher the previous four weeks, shed half of recent gains, down US$ 56 (2.9%) to close on US$ 1,853 by Thursday 14 January.

After initially issuing a statement saying it was in the “early stage” of talks with Apple, about a possible electric car partnership, Hyundai quickly backtracked with a retraction indicating it was talking with a number of potential partners, without actually naming the iPhone maker. Following the initial statement, Hyundai’s shares jumped 20%. Apple is known for its secretiveness when it comes to new products and partnerships and only last month did it become known that the US tech company was hoping for a 2024 launch date for a self-driving car. Last month, the South Korean car giant took a controlling stake in the mobile robot firm Boston Dynamics, that is valued at US$ 1.1 billion, as it continues to push into new technologies such as electric, driverless and flying cars. Currently, it is in negotiations with Aptiv to establish a US$ 4 billion autonomous-driving JV, with the Irish auto spare parts company contributing 700 engineers and transferring patents and intellectual property to the venture.

UK Foreign Secretary, Dominic Raab, has warned businesses they face penalties if they cannot show that their products are not linked to forced labour in China’s Xinjiang region, where there are more than one million Uighurs, and other minorities, being held in forced labour camps. They have been advised that the government will be monitoring the situation where there is mounting evidence of modern slavery. Only last week, Marks & Spencer, that uses about 40k tonnes of lint cotton each year from various sources, signed onto a call to action on human rights abuses in China’s Xinjiang region. In a related story, it seems that Huawei has introduced a patent for a system that identifies people who appear to be of Uighur origin among images of pedestrians. Having previously denied their technology was being used to identify ethnic groups, the tech giant now plans to alter the patent.

Although there was modest growth in food sales, (like for like sales were up 2.6%), and trading was “robust” over Christmas, Marks & Spencer saw overall performance fall sharply for the thirteen weeks to 26 December, with revenue 8.2%, lower at US$ 3.42 billion; international revenues took a big hit at 10.4% lower, whilst clothing and homes division tanked 24.1%. The retailer blamed “on-off restrictions and distortions in demand patterns” due to the coronavirus crisis. (M&S must know that this is the same for other retailers). The retailer is concerned that potential post-Brexit tariffs may impact on its business in Eire and the Czech Republic, along with its French franchise interest.

M&S has finally announced that it has bought the Jaeger brand, (but not any of its 63 stores and concessions), which fell into administration last November. Last May, it announced that it planned to stock other complementary brands to boost sales, and although this is its first real acquisition, M&S has started to sell products online from the Early Learning Centre, as well as from two designers, Nobody’s Child and Ghost London. The retailer’s MD Clothing & Home, Richard Price, announced “we have set out our plans to sell complementary third-party brands as part of our Never the Same Again programme to accelerate our transformation and turbocharge online growth”.

Meanwhile, Sainsbury’s had a bumper Christmas, as sales came in 9.3% higher during the festive trading period, following a bad November period, when clothing/home sales slumped 40.5% and food sales down 4.5%. Morrison’s posted a 9.3% hike in sales for the three weeks to 03 January and noted a 64% jump in champagne sales and 40% for whole salmon. For the nine-week period, like for like sales were 8.5% to the good. Overall, Research Kantor estimated that December was the busiest month ever for the supermarket sector, with a spend of US$ 15.9 billion; however, US$ 5.4 billion of that total was down to what would normally have been spent on food and drink outside the home over the Christmas season.

A consortium of international investors, led by the existing management team, has injected fresh funds into Edinburgh Woollen Mill, to save the business from closing, after going into administration last year. Although 2k staff will retain their jobs, 85 Edinburgh Woollen Mill stores and 34 Ponden Home stores have been closed permanently, with the loss of 485 jobs. It is expected that 246 EWM and Ponden stores will remain operational, whilst Wakefield-based Bonmarché will retain 72 of its stores. EWM is part of a stable, including Ponden Home and Bonmarché chains, owned by Dubai-based billionaire businessman, Philip Day, who it is thought will effectively lend the group the money to buy the businesses which will be paid back over a number of years.

Permira Holdings, the owner of Dr Martens, is planning an LPO on the London Stock Exchange, as it looks to sell a stake in the iconic British bootmaker; the parent company paid US$ 462 million for the brand in 2014.  The company, that invented its first boot in 1960, now has 130 global stores and had a US$ 907 million revenue stream last year, ending 30 March 2020, after adopting a direct-to-retail strategy, through physical stores and online.  It sold more than eleven million pairs of footwear in the year. During the pandemic, Dr Martens was forced to close some of its shops but still managed to increase its six-month EBITDA by 30.0% to US$ 116 million on an 18.0% hike in revenue to US$ 429 million; during the period, and despite the onset of Covid-19, it sold 700k more boots than the same six months a year earlier, as revenue jumped an impressive 74%.

The wheels have come off UnbeatableHire Limited, a company that borrowed money from lenders, to buy motorhomes, promising to return all the money plus, with returns of up to 10%; the company then hired out the motorhomes to holidaymakers in the UK. People were invited to lend the company US$ 55k, with each loan secured against an individual motorhome that would be bought with their money. The scheme appeared to go well for at least a decade but now investors are facing big losses, as the firm has collapsed not only owing US$ 10 million but that 123 vehicles have gone “missing”. The administrators, who were appointed over a year ago, estimate that the company still has 350 vehicles and found that some motorhomes were found to have more than one chattel mortgage listed against them; in some cases, some were shown as “stolen” in company records, but the administrators said they had never been reported stolen to the police, whilst others had been destroyed in two separate fires at two of the company’s depots. There is no smoke without fire and it seems that the company’s MD, Andrew Hughes, has a lot of explaining to do.

This week saw the value of Postmark reach US$ 7.1 billion in its first day of trading, as it raised about US$ 277 million in the Nasdaq listing; in spring, the second-hand shopping site posted its first ever quarterly profit. There is no doubt that such sites will become even more popular, whilst the pandemic encourages the need for online shopping and as shoppers grow more budget and environmentally conscious. Its shares were listed at US$ 42 at the beginning of Monday’s trading and had risen to US$ 97.60 by the end of the day.

Benefitting from the pandemic, Crocs is on track to report its best annual sales ever, with 2020 revenue expected to top a record US$ 1.4 billion, and at 12%, much higher than the company’s initial 7% estimate. There is no doubt that the company is on a winning streak, with its shares 50% higher last year and 12% up on this Monday’s trading. Crocs expects another record year in 2021, with revenue up to 25% higher, as their product line seems highly suitable for indoor wear during lengthy periods of self-quarantine; the company has also expanded its range to include sleeker designs.

Alimentation Couche-Tard, that owns the Circle K chain, has started “exploratory discussions” on a friendly deal with Carrefour, representing a major strategy shift for the Canadian firm. Shares in Carrefour are already 10% higher in January and, by Tuesday, the supermarket chain had a market cap of US$ 15.4 billion, whilst the friendly suiter is valued a lot higher at US$ 36.0 billion, even though it shed 2.2% in market cap, on the news breaking earlier in the week. The 40-year old Canadian conglomerate has not focused on supermarkets but on convenience stores and petrol stations for its growth, expanding into the US and Europe in 2001 and 2012; of late, it has concentrated its efforts on the Pacific regions and probably would have acquired Caltex Australia if it were not for the onset of Covid-19. Last year, it was one of the unsuccessful bidders for US gas station operator Speedway, which was eventually sold to Seven & I Holdings for US$ 21.0 billion. It currently has a network of more than 9k convenience stores in North America, most of which also offer fuel retail, and It also has about 2.7k locations in Europe. Carrefour has 2.8k supermarkets and 703 larger-format hypermarkets, as well as a presence in Argentina and Brazil, but has lost ground to the likes of Germany’s Aldi and Lidl, as well as to Leclerc. Its international forays have seen mixed results in Latin American and China, where it sold an 80% stake in its Chinese operations to local retailer Suning two years ago.

Although Airbus delivered 34% fewer aircraft in 2020, 566, (compared to a record 863 a year earlier), it still retained its number one spot, as the world’s biggest plane maker.  The Toulouse-based Airbus recorded 268 net orders last year, after adjusting for 115 cancellations, a 65% decline from 768 orders in 2019; by the end of 2020, it had a backlog totalling 7.2k.

 In comparison, its main rival, Boeing, was way behind with only 157 aircraft, (59% down from 2019 and well down from the 806 in 2018), driven by the Chicago-based plane maker struggling with the grounding of its best-selling 737 Max narrow body jet and its 787 Dreamliner; however, it did hand over 27 737 Max in December but did not deliver any 787 widebodies in the last two months of 2020, with the jets undergoing inspections after production flaws were found. The disappointing results from both Airbus and Boeing were a direct result of the onset of Covid-19, which wiped out air travel demand, forcing airlines to ground aircraft and to delay, defer or even cancel jet deliveries to preserve cash.

The Institute of International Finance is concerned about the massive increase brought on by Covid-19, as governments’ debt to GDP in 2020 jumped 15% to 105%; global debt levels rose more than US$ 17 trillion to US$ 275 trillion, driven by a marked rise in sovereign debt issuance. The knock-on effect is that this may have a negative impact on economic prospects this year, with a sharp rise in financial and budgetary imbalances. In 2020, there was a US$ 7 trillion increase in negative-yielding bonds issued to US$ 18 trillion and, with the added impact of abundant liquidity from global central banks, investors have had to move to the new territory of emerging markets to access better returns. The IIF warned that one drawback is that foreign currency debt may exacerbate debt-related vulnerabilities for emerging market borrowers, as “greater reliance on foreign capital could leave emerging market borrowers more exposed to sudden shifts in global risk sentiment”.

According to the Federation of Small Businesses, a record number of small UK firms could close in the next 12 months; it estimates that, without further government aid, more than 250k businesses, (equivalent to 5% of the total number of SMEs – 5.9 million) and effecting 700k – 1.1 million, may go under. It has written to the government with a suggested proposed support scheme, aimed to help many self-employed workers currently excluded from aid. The federation noted those not receiving public support included “company directors, the newly self-employed, those in supply chains and those without commercial premises.” It suggests that grants of around US$ 10k be paid to cover three months of lost trading profits and limited to those who earn less than US$ 70k.

As 2020 sales in physical shops dipped – food by 20%, and non-food by 25% – UK’s retail sales recorded their worst ever year, whilst overall food sales rose 5.4% in the year, non-food sales dropped about 5%. Matters were made worse with the third lockdown clashing with the festive period, usually the best season for the High Street. With the lockdown continuing into January, closures will cost the industry billions of dollars and will result in many retailers having to close their doors. Over the five-week period to early January, thanks to online shoppers, non-food sales rose 44.8%, with online retail overall jumping 33% to account for 46.1%of all sales. Last year, 180k retail jobs were lost – almost 25% up on the 2019 figure, with this year presenting the triple whammy of a new national lockdown, economic downturn and a new relationship with the EU.

Even when the coronavirus dies out, whenever that may be, online shopping will continue to gain popularity, whilst there will be more people working from home, with the inevitability of an increasing number of ‘bricks and mortar’ shops closing, and the possibility of a further 400k redundancies, along with the loss in the High Street of up to 40% of their retail offerings. In the study, which covered 109 UK towns and cities, the report noted that “the reduction in commuter footfall (and) the accelerated shift to online shopping is exacerbating the vacuum in city and town centres, with less people calling in to shop.” Working from home carries many advantages, two of which are that the individual will not only have more time to enjoy life – because of cutting out commuter travel – but also more money to spend because of reducing their commuting expenses.

South Korea’s post pandemic rebound continues with Samsung Electronics reporting a Q4 26% jump in profit, to US$ 8.2 billion, on a 1.9% rise in revenue to US$ 56 billion, still driven by continued remote working and TV-watching which in turn fuelled sales of chips and display panels; full earnings will be available by the end of the month. On Thursday, the company launched a new line-up of its Galaxy S series smartphones – S21, S21 Plus and S21 Ultra – and a slew of other products at a virtual event. Samsung is fighting hard to retain its leading position in the market, with increasing competition from its current main rivals, Apple and Huawei.

In a case relating to Monaco-based consultancy Unaoil, Australian police have arrested a second former Leighton executive over an international bribery investigation. Former COO, David Savage, following that of a previous MD of Leighton Offshore, Russell Waugh, was charged with have knowingly provided misleading information to authorities, contrary to Australian law. Investigators have identified a US$ 77 million suspicious payment, made through third party contractors, and allege that the Leighton subsidiary was used to funnel these bribes through Unaoil and an unnamed ME contractor to “grease palms”. It appears that this refers to Iraqi oil ministry officials and government officials within the South Oil Company of Iraq. As a side note, it is reported that Leighton won contracts, in 2010-2011, valued at US$ 1.5 billion, that needed official approval from the two entities above. In 2019, the two brothers, who ran Unaoil, pleaded guilty to being part of a 17-year scheme to pay millions of dollars in bribes in nine different countries; they later decided to cooperate with authorities which may have had some bearing on the two Australians being arrested. Last year, two Unaoil officials were found guilty by a UK court for paying bribes to secure contracts of more than US$ 1.0 billion.

Last August, the US administration listed China State Construction Engineering Corporation as a Chinese military company and this week it appears that the Morrison administration has blocked the same company’s US$ 230 million bid for the Australian construction firm Probuild, and being accused by the Chinese government of further undermining trust between the two countries. Treasurer, Josh Frydenberg, used the national security “card” to stop the bid going any further. China has accused the Australian government of discriminating against Chinese companies noting that “the Australian government has been politicising trade and investment issues, violating market principles and the spirit of the China-Australia free trade agreement, and imposing discriminatory measures on Chinese companies.” The Australian government introduced tough new foreign investment rules, as from the beginning of 2021, giving regulators enhanced powers to review and scrutinise investments that could have national security implications. Last year, bilateral trade sank to new lows with China targeting multiple Australian products, including wine, timber, barley and coal, with severe trade sanctions, whilst investment into Australia has tanked

With the labour market still struggling, applications for US state unemployment benefits surged last week, by 181k to 965k, the most since late March – a sure indicator thatthe impact from the pandemic points to the need for a further massive federal stimulus package and the national vaccination programme to be ramped up.. The increase in numbers surprised analysts, who were predicting littleor no changefrom the previous week, with a median forecast of 789k.Continuing claims in state programs – an approximation of the number of people receiving ongoing benefits – climbed by 199k to 5.27 million in the week ended 02 January. There is no doubt that incoming President, Joe Biden, in true Democratic style, will be considering a massive additional relief package that could further extend unemployment benefits; this could come in as high as a mouth-watering US$ 2 trillion. Furthermore, Federal Reserve Chair, Jerome Powell, confirmed there will be no raising of interest rates anytime soon, whilst also rejecting suggestions the Fed might start reducing its bond purchases in the near term.

The Australian government has urged Google to focus on paying for Australian content instead of blocking it, as Australian news websites were apparently not showing up in searches, Google later confirmed it was blocking the sites for a small number of users, as it was conducting experiments to determine the value of its service to Australian news outlets. With the likes of Amazon, Apple and Google ejecting it from their platforms, Parler is now virtually homeless on the internet. Amazon decided to remove the alternative social media platform, favoured by conservatives, after mounting pressure from the public and Amazon employees, which resulted in the Parler website becoming inaccessible by early Monday. Some will see this as an action to completely remove free speech off the internet – on the apparent whim of  their own employees!

The chief executive of Twitter, Jack Dorsey, is right saying that banning President Donald Trump from its social media platform, after last week’s violence in Washington, sets a dangerous precedent but wrong and arrogant to say it was the “right decision”. Twitter is among several social media platforms and messaging services to ban Donald Trump, with Snapchat also permanently banning the president. Whatever you think of the outgoing US President, the actions of Twitter to permanently ban him for life seems a step in the wrong direction and one has to applaud German Chancellor Angela Merkel for attacking the platform for the ban and calling it a “problematic” beach of the “fundamental right to free speech”. She appears to be taking the correct and logical approach that the US should follow laws that restrict online incitement, rather than leaving it up to the likes of Twitter and Facebook to make up the rules themselves. It is only a small step away for the tech giants, who are fond of flexing their muscles – but no paying their fair share of international taxes – to dictate to the rest of the world what they can and cannot say. Everybody Wants To Rule The World!

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It’s A Man’s, Man’s, Man’s World!

It’s A Man’s Man’s Man’s World                                                          08 January 2020

The big news of the week (and perhaps the year) was the signing of the AlUla Declaration at the conclusion of the GCC Summit, marking a definitive end to the Gulf dispute with Qatar and restoring full ties with Doha. In June 2017, the UAE, along with Saudi Arabia, Bahrain and Egypt, severed diplomatic, trade and transport ties with Qatar, accusing it of supporting terrorism. Saudi’s Crown Prince Mohammed bin Salman confirmed that leaders of the six-member GCC signed two documents on Tuesday, with the Gulf states, inking an agreement that affirms “our Gulf, Arab and Islamic solidarity and stability”. The Crown Prince singled out “the threats posed by the Iranian regime’s nuclear and ballistic missile program and its plans for sabotage and destruction.”

This is just the fillip that is required to get Dubai speeding forward again. Another positive is the fact that Brent has almost reached US$ 55 – a starting level that will benefit the Dubai economy. By the end of the week, further good news was the fact that the Democrats’ victory in the Georgia Senate run-offs will add further pressure on the US dollar, which this week reached its lowest level since April 2018; a low dollar is often seen as a major plus for the Dubai’s tourism sector which will benefit from overseas visitors getting more for their local currency when buying plane tickets and spending money here.    The only fly in the ointment seems to be the increased lockdowns and rising Coronavirus cases in Europe, and elsewhere which could have a negative effect on the local hospitality sector if tourist numbers were to drop.

For the week ending 07 January, there were 1,546 Dubai real estate and properties transactions valued at US$ 1.2 billion. According to the Department of Land and Property, 1,035 apartments/villas were sold for a combined total of US$ 452 million and 109 plots for US$ 119 million. The top three sales were for land in Palm Jumeirah, (two for US$ 10 million each) and the other in Island 2 for US$ 9 million. The three locations, with the highest number of transactions, were Nad Al Shiba Third (27 – US$ 18 million), Al Hebiah Fourth (20- US$ 12 million) and Nad Al Shiba First (18 – US$ 10 million). The top prices of the week were for a villa in Marsa Dubai, selling for US$ 41 million, a Business Bay apartment for US$ 38 million and another apartment in Nad Al Shiba First for US$ 37 million. Mortgaged properties for the week totalled US$ 545 million, whilst 98 properties, valued at US$ 117 million, were granted between first-degree relatives worth US$ 117 million.

With no figures readily available, Sobha Realty reported a doubling of H2 sales at its eight million sq ft flagship development, Sobha Hartland, situated in Mohammed Bin Rashid Al Maktoum City. The massive development of villas and townhouses at Sobha Hartland includes the Gardenia Villas, Forest Villas, Waterfront Villas and Garden Houses; the master development is slated for completion by 2025. The real estate developer expects to achieve 70% of its 2020 target, as the demand for larger homes and outdoor spaces increases as a result of Covid-19.  Property Finder has indicated that the number of villas and townhouses searches has quadrupled since the onset of the pandemic. In the eight months to November, it estimates that of the 4k villas sold, 63% were for ready units.

Emaar has divested The Sky View, comprising the Address hotel and residential apartments, for US$ 205 million – an indicator that Dubai’s commercial property sector is on the move up. European fund, Evergreen Hospitality, has made the acquisition in one of the biggest deals in Dubai’s property sector for some months. The deal is “in line with the company’s asset-light strategy for hospitality assets.” Two years ago, the Dubai developer sold five properties in its Dubai hotel portfolio to Abu Dhabi National Hotels for US$ 605 million. It is expected that the current management, the Address, will continue operating the property which has 169 rooms and 551 apartments, along with a 70 mt infinity pool and a floating skybridge.

In a bid to help local family businesses prosper, the federal Ministry of Economy is keen to work alongside them to develop a legislative structure. Over the past sixty years, some of these businesses have grown from a one man shop to a multi-business conglomerate, and in some cases employing three generations of the family; others have failed., with one of the main drivers being lack of corporate governance. Earlier in the week, there was a meeting between the Ministry and the Family Business Council-Gulf to discuss how better to organise businesses so that they remain operational for successive generations. Joint work committees are already in place between the two sides working on strategy, research and legislation.

The Dubai Gold & Commodities Exchange had a record 2020, during which it traded 12.73 million contracts. The best performing product, trading over 260k contracts, was DGCX’s AUD Futures Contract, up 4,694%, year-on-year. The two best DGCX launched products were the Weekly INR-US Dollar (USD) Futures Contract, along with the launch of three FX Rolling Futures Contracts – EUR, GBP and AUD against the USD.

This week, Dubai launched its fifth economic package worth US$ 86 million, to mitigate the effects of the global health crisis on businesses, bringing the total value of stimulus packages to date to US$ 1.93 billion. According to the Crown Prince, Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, the package will provide necessary elements for business continuity and accelerate the pace of recovery. Some of the current package will extend the validity of some of the initiatives, announced in the previous stimulus packages, for another six months, until June 2021. It will also continue the market fee exemption to commercial establishments and hotels, that were not included in the previous package, as well non-beach hotels and their restaurants being refunded 50% from the hotel sales fee as well as the Tourism Dirham Fee.

In the tourism, entertainment and events sector, the exemption from the fees charged for postponement and cancellation of recreational and sports events and activities, including conferences and exhibitions, has been extended. Other measures include extending the freeze on fees charged for ticket sales, issuing permits and other government fees imposed on entertainment and business events, as well as extending the cancellation of the 25% down payment requirement for accepting instalments of licensing fees and licence renewal on a monthly basis. Furthermore, nurseries, leasing land lots from the Knowledge Fund Establishment, will continue to benefit from the 50% reduction in land rent.

After a 2020 6.3% contraction, the World Bank has revised slightly downward its UAE economic growth forecast to 2.4% next year, following a 1.0 % increase projected for this year. The bank has forecast a 4.0% expansion this year “assuming an initial Covid-19 vaccine rollout becomes widespread throughout the year,” It predicts a 2.1% economic growth for the MENA region “reflecting the lasting damage from the pandemic and low oil prices.” For the other `GCC nations its forecast shows  2021 and 2022 growth of 2.0% and 2.2% for Saudi Arabia, Kuwait – 0.5% and 3.1%,  Oman – 0.5% and an impressive 9.4%,  Qatar – 3.0% and 3.0% and Bahrain – 2.2% and 2.5%.

2020 was a historic year for the Dubai Multi Commodities Centre, as over 2k new companies joined the free zone, driven to some extent by the introduction of incentives to attract new businesses.; for example, following the onset of Covid-19 in March, DMCC introduced its “Business Support Package”, with offers of a wide range of incentives and value-added services. It was estimated that over 8k member-companies took up 13k offers. Recently, the authority Introduced a limited time offer of allowing virtual licences to be issued in five working days, with zero upfront fees.

With the imminent retirement of banking veteran, Simon Haslam, Network International, has appointed Nandan Mer, Mastercard’s strategy head for international markets, as its new chief executive as from 01 February. The current incumbent, who joined the Dubai-based payment processing firm in 2017, will remain with the company during a six-month notice period to ensure a smooth transition. Network Internaional went public on the London Stock Exchange in 2019, with Mastercard, a 10% stakeholder, pledging to invest a further US$ 35 million in the business over the next five years.

The bourse opened on Sunday 03 January and, having slipped 58 points (2.3%) the previous fortnight, gained 134 points (5.4%) to close on 2,492 by Thursday 07 January. Emaar Properties, US$ 0.02 lower the previous week, traded US$ 0.11 higher at US$ 1.07, whilst Arabtec is now in the throes of liquidation, with its last trading, late in September, at US$ 0.14. Thursday 07 January saw the market trading at 421 million shares, worth US$ 110 million, (compared to 139 million shares, at a value of US$ 47 million, on 31 December).

By Thursday, 07 January, Brent, US$ 10.72 (26.1%) higher the previous seven weeks, was US$ 2.72 (5.2%) higher in this week’s trading to close on US$ 54.52. Gold, US$ 101 (5.6%) higher the previous three weeks, gained a further US$ 14 (0.7%) to close on US$ 1,909 by Thursday 07 January.

In November, Japan imported nineteen million barrels of crude oil from the UAE which equates to 27.5% of the country’s monthly total of just over 69 million barrels.

In a show of flexing its muscles, Saudi Arabia surprised the market by making a large cut in its oil production, an indicator to the rest of the world that the kingdom is still the prime mover in the industry. It could also be seen to be a slap in the face for Russia, which had been targeting a 500k bpd increase in February. On the news breaking, crude prices jumped to ten-month highs and energy shares on the global bourses surged. Saudi Arabia also pledged an additional unilateral cut of one million bpd in February and March, whilst Opec+ allowed both Russia and Kazakhstan to add a token combined 75k bpd for these two months. Whilst the move did paper over cracks in the fragile oil bloc, it was a major blow for the bear investors who read the market badly and had to buy back their bets.

One consequence of the pandemic is that investment in the energy sector fell off a cliff in 2020, with the impact being felt across the sector, from fossil fuels to renewables and efficiency. Driven mainly by the pandemic, and the double whammy of falling prices and slowing demand, capex in international upstream projects. has significantly reduced, with many projects being deferred for better times. The lack of investment will have a negative impact on the future supply line, so it is inevitable that when demand returns to pre-pandemic levels, supply will be unable to meet demand in the short to medium-term, as new projects will take more time for completion.  It is estimated that current production could be ramped up by seven million bpd, using existing facilities, but the market may be in need of twelve million bpd; without any investment now, the market will be five million bpd short because of the dearth of present investment. The short-term impact will be a spike in oil prices for a while until the oil sector recovers, and supply catches up with demand. Last year, global investment in energy fell by 21.0% to US$ 1.5 trillion – and not the US$ 1.95 trillion expected at the beginning of 2020. With revenues down across the board, oil companies still have to cover both their operating and capital costs so the only options for most is to cut costs or take a loan.

It was no surprise to read that the UK car sales last year suffered their largest fall since World War II, declining 29.0%, (equivalent to 680k units), to 1.63 million vehicles, with most of the lost sales occurring during the first lockdown, when showrooms and factories closed, impacting with a loss of a one million in unit sales in the quarter to May. December new car sales sank 10.9%. It is estimated that the industry lost US$ 27.2 billion in lost sales and the government US$ 2.6 billion in lost VAT receipts. 62.7% of new cars were for petrol and mild-hybrid vehicles, whilst mild-hybrid diesel cars comprised about 20% of the market. The big winners were battery and plug-in hybrid electric cars, along with plug-in hybrids (PHEVs), with the former posting a 186% growth to 108k units and the latter jumping 91.2% to 67k. The latest lockdown will continue to add salt to the industry’s wounds, as showrooms remain closed once again. The UK-EU trade deal will also have an impact on the industry since last year about 70% of vehicles were imported from Europe.

The US Justice Department has reached an agreement wit Boeing concerning criminal charges that it hid information from investigators about the safety and design of its 737 Max planes. The shamed US plane maker was fined US$ 2.5 billion (of which US$ 500 million has been earmarked for families of the 346 people killed in the two plane crashes). The DoJ accused Boeing of not cooperating with investigators for six months and concealing information about changes to an automated flight control system, known as MCAS. This resulted In pilot training manuals lacking information about the system, which overrode pilot commands based on faulty data, forcing the planes to nosedive shortly after take-off. In a damning indictment, Boeing was accused of choosing “profit over candour” and impeding oversight of the planes, which were involved in two deadly crashes, which were involved in two deadly crashes, whilst the plane maker acknowledged how the firm “fell short”. Isn’t Life Strange?

Troubled Rolls Royce has another problem to deal with – this time because it has had to put its UltraFan engine programme “on ice”, when testing finishes next year; further investment will be put on hold until a new aircraft is launched and that could be years, bearing in mind the state of the aviation sector, battered by the on-going pandemic. No manufacturer will consider introducing a new model in the present climate until demand for air travel returns to pre-Covid levels. To date, RR has already invested over US$ 680 million in the project, which is expected to be more than 25% efficient than the company’s Trent engines; this is part of a strategy to return to this sector, a decade after leaving a JV with Pratt & Whitney. Last month, the UK aero-engine maker noted that it was burning through cash at a faster rate than expected after raising US$ 6.8 billion – a US$ 2.7 billion rights issue and new credit lines.

Having leased planes since 2016, Amazon has bought eleven used Boeing 767-300s, from struggling airlines Delta and WestJet, to “support Amazon’s growing customer base”. The fact that the company is finally purchasing planes is a good sign that the tech giant will become a credible competitor in logistics, with the added benefits of lowering overall lifetime costs and greater control over the speed, reliability and quality of service. Since 2015, the company has found it more economical to handle logistics itself rather than using third parties, and has built its own global end-to-end logistics network, with its own vans, trucks and aircraft. There seems every possibility that it will overtake, in size, the likes of UPS and Fedex, as a supply chain provider, with the possibility of Amazon Air becoming an independent carrier in the US. It has been estimated by Chicago’s De Paul university that Amazon’s fleet was likely to grow to two hundred aircraft by 2028. Currently, Amazon lifts 2.3 billion packages every year, compared to the 3.1 billion and 2.7 billion carried by Fedex and UPS, but could overtake both by next year.

In what has been an off-on deal for some time, LVMH has finally completed its purchase of US jeweller Tiffany for US$ 15.8 billion, slightly discounted from the initial price of US$ 16.2 billion. The main benefit for the French luxury giant is that it will  be able to expand into the jewellery sector – a fast-growing area of the luxury goods market. Covid-19 and some tough negotiations slowed the deal which was announced over a year ago, leading to Tiffany suing LVMH to force the agreement to go ahead. Chief Executive, Bernard Arnault, has appointed his 28-year old son, Alexandre, as member of the new executiveteam toraise Tiffany’sprofile among younger buyers and customers in China, as well as enhancing online sales as it pushes to revive the iconic brand.

In line with many other store chains,John Lewis, which had offered EU delivery via its website, has scrapped overseas deliveries but confirmed that the decision was not related to Brexit, but because of its new strategy to focus on the UK. It seems that other retailers, including Asos and Fortnum & Masons, have temporarily suspended EU deliveries due to confusion surrounding post Brexit trading. Meanwhile store chain Debenhams has temporarily shut its online business in Ireland.

It is a wonder what the pandemic can do to company valuations. Yesterday, Robolox raised US$ 520 million, in private capital, valuing the children’s online gaming platform at US$ 29.5 billion – a massive sevenfold increase since February 2020. The funding was led by Altimeter Capital and Dragoneer Investment Group, with Warner Music Group one of several current investors. The company first released Robolox in 2006 and has seen revenue climb 91.0% to US$ 242.2 million. The company is planning a direct listing – rather than the more orthodox IPO route – where a company typically does not raise capital and investors do not have to wait for a lockup period to expire before selling their shares.

In a bold prediction JP Morgan estimates that Bitcoin could top US$ 146k, if it were to become a safe-haven asset. There is no doubt that it has caught investors’ attention, viewing it as a hedge against inflation and an alternative to the depreciating greenback. The bank noted that for Bitcoin to match the value of private gold holdings, it would have to reach US$ 146k but considers that it is likely to outshine gold, with the younger generation’s propensity for “digital” – rather than physical – gold, as millennials become a more important component of the investment market. If there were a move to oust gold as an ‘alternative’ currency, that could leave the door open for Bitcoin to move even higher, looking long-term.

On Thursday, Bitcoin reached US$ 40,367, lifting the total value of the entire cryptocurrency market to over US$ 1 trillion, (and Bitcoin to over US$ 740 billion), before falling back in later trading to hover around the US$ 38k level. So far in the seven days of 2021, the digital coin is up over 30% – and over 400% since the beginning of 2020. Not an investment for the faint-hearted, there is every chance that Bitcoin could top US$ 100k but along the way there will double-digit weekly gains and double-digit weekly losses. Until it becomes part of the “establishment”, it will remain volatile, with every possibility of its price dropping as quickly as it rises. Real risk-seekers could look at investing in rival cryptocurrency Ethereum which sank more than 10% to as low as US$ 1,087 yesterday.

The latest big IPO in the US will be Max Levchin’s Affirm Holdings, with a probable US$ 9.0 billion valuation; he also co-founded PayPal Holdings. The IPO is pitching the share price between US$ 33 to US$ 38 which would rake in funding of up to US$ 935 million. The company, established in 2012, gives people, without credit history or savings accounts, access to small loans, offering monthly pay-back financing for online purchases. Its major investors include Singapore’s SWF, VC firm Spark Capital and Peter Thiel’s Founders Fund, and at its last private funding round, the company was only valued at US$ 3 billion. 2021 will be another boom year for the IPO sector, which last year raised US$ 167.6 billion, its highest level since 1999. This year will be more of the same, with major players, such as Robinhood, Instacart and Coinbase, joining the New York bourses.

MGM Resorts International has failed in a bold US$ 11.1 billion bid for Entain, which includes a number of gambling sites in its portfolio, such as Bwin, Coral, Ladbrokes, Partypoker, Eurobet, Gala and Foxy Bingo. The Las Vegas casino operator is keen to add such attractive on-line sites, ever since sports betting was legalised in US in 2018. An earlier US$ 10 billion all-cash bid from MGM failed last year and this time, the London-listed Entain noted that the bid undervalued the company, which has benefitted from a boom in online betting since the onset of the pandemic. Last September, MGM’s rival Caesars Entertainment agreed to buy UK-based William Hill for US$ 5.2 billion. With the FTSE 100, the worst performing major bourse in the world last year, it is inevitable that other US companies will be trawling around the City to pick up some basement bargains.

There are concerns about Nvidia’s 2020 acquisition of Arm for a reported US$ 40 billion. The UK’s competition regulator has invited interested parties to forward their views on the US tech company’s purchase from SoftBank of the British chip designer. The Competition and Markets Authority, which has the authority to stop the sale if it considered it would reduce competition, has a track record of blocking more deals than its peers in other countries, and of being one of the world’s most aggressive antitrust enforcers. The formal investigation is start towards the end of the year.

After years of on-going negotiations, the proposed US$ 52 billion merger, between Fiat Chrysler and France’s PSA Group has been approved by both sets of shareholders and will create the world’s fourth biggest carmaker, behind VW, the Renault-Nissan-Mitsubishi alliance and Toyota. The new entity, to be called Stellantis, will be home to fourteen different brands such as Peugeot, Citroen, Vauxhall, Fiat, Jeep and Chrysler, as well as the upmarket brands such as Maserati and Alfa Romeo. Although the new group will have spare production capacity of almost six million cars, PSA has pledged not to close factories after the merger, but there are concerns about the future of the 3k Vauxhall workers in the UK. Like with most mergers, the hope is that the two partners can pool expertise and resources – and save costs. Reality usually turns out differently.

A deal, signed at the beginning of last year, seemed to indicate the demise of Ford in the Indian market, in which the US carmaker planned to transfer most of its local operations, including two factories, into a JV to be majority-controlled by Mahindra & Mahindra. Now, it has announced that it will pull out of the accord, with both partiers agreeing to the termination after reassessing in part due to the global coronavirus pandemic. Ford has confirmed that “the company is actively evaluating its businesses around the world, including in India” and it is public knowledge that the company has struggled for more than twenty years to grow in the world’s fourth-largest car market. Last year, Ford took a US$ 799 million asset impairment charge – based on “fair value less cost to sell” – ahead of the expected Mahindra transfer and the recent termination of the agreement will have no bearing on that particular transaction.

One consequence of the boom in online shopping can be seen in the US, as consumers there are expected to return unwanted goods, valued at US$ 115 billion, with retailers having to process millions of extra items. It is estimated that “online returns” are normally three times greater in number compared to “normal retail sales”. For example, online buyers are more likely to buy more clothes than needed to try out size etc, only to return those not fitting the bill. Returns are expected to be 15% higher this year. Two other surprising facts are that 50% of returned goods have little or no salvage value and that almost 2.7 billion kg of these returns – enough to fill 7.7k fully-loaded Boeing 747s – found their way to a landfill. Whilst retailers take a beating, the big winners are the logistics companies gaining because of the two-way traffic.

Good news for the global economy came from South Korea – considered a bellwether for global trade – reporting December exports jumping at their fastest race since October 2018, driven by robust growth for computer chips and an improving global economy. December exports grew by 12.6%, year on year – a lot higher than the expected 5.6% expansion or the previous month’s 4.1% return. Sales of IT products, including semiconductor exports, (30% higher on the year), were prominent, accounting for eleven of the fifteen major export items posting growth; mobile devices, displays and computers all reported impressive growth – at 39.8%, 28.0% and 14.7% respectively. Exports to its prime market, China, were 3.3% higher, whilst exports to the US and EU jumped 11.6% and 26.4% respectively. December imports were 1.8% higher – compared to a 1.9% decline in November.

It seems that Donald Trump is leaving the White House, with all guns blazing having, this week signed an executive order banning transactions with eight Chinese apps, including popular payments platform Alipay, QQ Wallet and WeChat Pay, on the grounds of them being threats to US national security. The ban becomes effective after forty-five days, by which time Joe Biden will be sitting in the Oval Office. As his four-year presidential stint comes to an end, President Trump has signed executive orders against a range of Chinese firms – including TikTok and Huawei – arguing they could share data with the Chinese government. Even his sternest critics should be able to see that he has a valid point to make. Only last month, the Commerce Department added to its trade blacklist many Chinese companies, including the country’s top chipmaker SMIC and drone manufacturer DJI Technology, as well as restricting a number of companies, with alleged military ties, from buying sensitive US goods and technology.

In December, the number of US private jobs declined for the first time since April by 123k – an indicator of the impact of the recent rise in Covid-19 cases across the country and the slow introduction of the vaccine; November had seen a 304k gain. The sectors that suffered most were leisure, retail and hospitality. By the end of the year, private payrolls were some ten million off pre-pandemic levels and the unfortunate fact is that this will get even worse, with winter ahead and national lockdowns increasing. Meanwhile, the US manufacturing sector grew at its strongest pace since August 2018, as the Institute for Supply Management index for tracking Factory activity was up 3.2 to 60.7. In December, new orders were 2.8 higher at 67.9 and supplier deliveries by 6.5 to 67.6, with employment moving from negative territory by 3.1 to 51.5.

The eurozone saw November retail sales sink 6.1%, as much of the bloc was in some sort of lockdown, as the next wave of the pandemic led to heightened movement restrictions. This followed a 1.4% rise the previous month and was 2.9% and 3.25 lower on the same month in 2019 and in February just before the pandemic’s onset; in April, it was 20% down. France performed the worst of the 19-country bloc eurozone, with overall retail trade down 18.0%, led by falls of 10.6% and 8.9% in demand for automotive fuels and for non-food products. Belgium was not far behind with a 15.9% decline. The IHS Markit/CIPS construction PMI slipped 0.1 to 45.5 in December – the 10th straight month of contraction in construction activity with France reporting its steepest fall since May. Across the bloc, reduced workforce numbers rose at a slightly quicker rate. This is in contrast to the UK where construction continues with its recovery, although its PMI data did drop 0.1 to 54.6 in December.

In the past ten months, the ECB has invested US$ 2.3 trillion in monetary stimulus packages to prop up companies and households, including US$ 613 billion last month. For the fourth month in a row, inflation was in negative territory, at minus 0.3%; this is likely to move higher – albeit well short of the bloc’s 2.0% target – driven by higher energy prices. The ERC sentiment index in December rose 2.7 to 90.4, as economic confidence rose among consumers and in the industrial sector; strangely, some of the strongest gains were witnessed in Italy and Spain. Any immediate economic recovery will be thwarted by the fact that, in contrast to the UK, there has been a slow and uneven start to the implementation of vaccination campaigns.

November UK mortgage approvals hit their highest monthly level since August 2007, as UK lenders approved nearly 105k mortgages, with year on year unsecured consumer lending dipping 6.7% – its biggest fall since monthly records began in 1994. Driven by pent up demand, as well as the Stamp Duty Land Tax holiday, resulting from the lockdown effects of the first wave, the UK property market experienced a surge over the summer. Notwithstanding the impact of Covid-19, November saw 715k house purchase approvals. Although prices rose 7.3%, year on year, in December, (their biggest increase in six years), the market will inevitably slow after the Chancellor withdraws the tax break in March.

However, the general UK economy has not been performing to the same level, as output falls whilst unemployment rises. Unsecured lending to consumers fell in November at a record pace because of the lockdown, when many non-essential retailers having to shut up shop, along with the likes of bars and restaurants. In the same month, year on year net consumer lending declined 6.7% to US$ 2.1 billion – the biggest monthly fall since monthly records began in 1994. The December IHS Markit/CIPS manufacturing PMI rose 1.9 to 57.5 – its strongest growth since November 2017, as factories rushed to complete work before the end of the post-Brexit transition period on December 31, with manufacturers stockpiling materials at the fastest rate since March 2019 amid fears of disruption to trade with the EU. In November, non-financial corporates borrowed US$ 2.7 billion, (90% – SMEs and 10% – larger businesses), well short of the March figure of US$ 42.2 billion.

Just as the country enters its third lockdown in ten months, UK Chancellor of the Exchequer, Rishi Sunak has introduced a US$ 6.2 billion support package. Businesses in the retail, hospitality and leisure sectors will be able to claim up to US$ 13k to help them through the beginning of the year. This comes at a time when the country was facing a highly contagious new coronavirus variant that was spreading so fact that the NHS could buckle under the pressure by the end of the month.

2020 has been a good year for the world’s five hundred richest people who saw their combined wealth jump 31% to US$ 7.6 trillion, at a time when the remaining 99.99999% of the population had to make do with the impact of the pandemic, such as rising unemployment and global economic contraction. Much of the gain was thanks to the burgeoning stock markets that have risen by US$ 3 trillion from their March nadir. The top five richest people each have wealth of more than US$ 100 billion, with the top two, Jeff Bezos and Elon Musk, gaining an extra US$ 217 billion during the year. This week, Musk, who started 2020 barely making the top 50, is now considered richer than Bezos, with personal wealth of US$ 185 billion.  A further twenty had assets in excess of US$ 50 billion, including Zhong Shanshan who saw his wealth reach US$ 71 billion this year; known as the “Lone Wolf”, and a low-profile water-bottle tycoon”, he became Asia’s richest person replacing India’s Mukesh Ambani. Although the Chinese members of this exclusive ‘club’ gained a total US$ 569 billion in 2021, some of the others, with mega e-commerce and tech giants, including Jack Ma of the Alibaba Group, did not fare as well. In these days of egalitarianism, when it comes to obscene wealth, It’s A Man’s Man’s Man’s World.

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Magical Mystery Tour

Magical Mystery Tour!                                                                      01 January 2021

Located in the heart of Jebel Ali, Azizi Developments officially inaugurated Aura, a 479-unit, 18-storey development, comprising 349 studio, 87 1 B/R and 43 2 B/R apartments. The project is a freehold residential development, featuring a comprehensive range of amenities, including two swimming pools, a fully equipped gym, a health club with sauna, open recreational areas, concierge service, covered parking, and a podium level with over 9k sq ft of retail space.

DP World’s interest in Africa continues with this week’s news that the port operator is in discussions with the Angolan government to operate the terminal in the Port of Luanda. It has been granted a twenty-year concession and plans to invest US$ 190 million into the multi-purpose terminal which will increase annual throughput to 700k TEUs (twenty-foot containers). The Dubai-based company already has African investments in Algeria, Djibouti, Egypt, Mozambique, Rwanda, and Somaliland, along with its biggest port investment deal in Africa last week, to develop Senegal’s Ndayane deep-water port.

HH Mohammed bin Rashid Al Maktoum has approved Dubai’s 2021 general budget which allocates US$ 15.6 billion for spending, with an estimated US$ 14.3 billion coming into the government’s coffers, despite a reduction in fees. The new budget takes into account the “exceptional economic conditions” of the 2020 fiscal year and the repercussions of the Covid-19 pandemic on the global economy. (This is in contrast to last year’s budget which assigned a record US$ 18.1 billion in spending). On the spending front, 80% of the total will be expensed on payroll (35%), grants and public support for community development and public services (25%), and general and administrative expenses (21%). The balance will be spent on investments in infrastructure (9%), servicing public debt (6%), capital expenses (3%) and private reserve (1%). A further analysis of spending sees a breakdown of 41% on developing infrastructure and transportation, 31% on health, education, housing, women and children’s care, 22% to be allocated to support security, justice and safety and the balance of 6% on innovation, creativity and scientific research. A breakdown of the revenue stream is split into non-tax revenue (59%), tax revenue (31%), return on government investment (6%) and oil revenues (only 4%). The government noted that the budget “sends a clear message to the business community that Dubai is pursuing an expansionary fiscal policy, which contributes to strengthening confidence in the emirate’s economy and attracting more direct investments.”

Having awarded construction and expansion contracts totalling US$ 379 million this year, Emirates Central Cooling Systems Corporation is looking forward to a bumper 2021, with an expected surge in the number of clients and contracts. Empower posted a 23.0% hike in the value of contracts and with the addition of new districts cooling plants and the expansion of its district cooling networks, as well as enhancing its internal processes, it is well prepared to service new business in the new year and improve its top line. The company, which holds 76% of the district cooling market in the Dubai city, has also ensured that its expansion policy is in line with the growing demand for environmentally friendly district cooling services. Its two latest contracts, valued at US$ 96 million, are for new district cooling plants in Za’abeel and Business Bay, with a total capacity of 100k refrigeration tons (RT).

Having received regulatory approval last week to operate a real estate investment fund, Al Mal Capital raised US$ 96 million, through the public float of its real estate investment. The asset management subsidiary of Dubai Investments will see the Al Mal Capital Reit begin trading next month on the DFM subject to final approvals. The new Reit will focus on long-term assets and lease agreements with investments expected in healthcare, education and industrial property sector assets, both locally and offshore. It is targeting Sharia compliant assets, with a return of around 7%, 80% of which will be income to investors.

In a blow to some in the country, TransferWise will no longer provide multi-currency accounts, (that allow customers to buy and sell and hold accounts in different currencies) to customers with a UAE address. The nine-year old UK-based fintech offers low-cost foreign exchange services allowing users to hold funds in over fifty currencies at very competitive rates. The firm, whichhas fourteen global offices, seven million global customers and processes US$ 5 billion in customer payments every month, is registered with Abu Dhabi Global Market’s Financial Services Regulatory Authority and started operations last April. Transferwise has noted that “our team on the ground is working hard on a solution and we hope to bring bank transfers back soon.”

Dubai Aerospace Enterprise has announced it has bought back US$ 100 million of its outstanding common shares. The region’s biggest plane lessor, which is owned by the Investment Corporation of Dubai, posted a 35.8% decline in nine-month profit to US$ 167 million, with revenue dipping 8.7% to US$ 984 million, to 30 September. The aviation sector has been one of the biggest casualties of the pandemic, which has seen air travel demand tank, and although the introduction of vaccines will prove beneficial, there are worries about what has been the first of many new strains, that is reportedly 70% more transmissible, and has seen the introduction of draconian lockdown measures in many countries. Earlier in the month, DAE delivered the first of eighteen Boeing 737 Max 8 aircraft to American Airlines as part of a purchase and leaseback agreement, signed in the third quarter of 2020.

DXB Entertainments has replaced its chief executive, Mohamed Al Mulla, with its chief financial officer Remi Ishak, who will also retain his current portfolio. He joined the theme park last April and he will hold his new position and will “focus on ensuring the smooth continued operations of the company while the board of directors continues its search for a permanent CEO.” The company is currently considering the ramifications of an offer by Dubai property company Meraas, which owns 52.29% of DXBE, to buy the remaining shares and take it private; this week, it has hired KPMG and Shuaa Capital, as financial advisers, and Allen & Overy, as legal adviser, to evaluate the buyout offer. The offer comprises acquiring US$ 1.2 billion of the DXB’s debt and converting its US$ 403 million bond for newly issued shares in the business, resulting in increasing its stake to 93.92%, following which it will buy out the remaining 6.08% shareholders.

The bourse opened on Sunday 27 December and, having slipped 22 points (0.9%) the previous week, shed 36 points (1.4%) to close on 2,492 by Thursday 31 December. Emaar Properties, US$ 0.02 higher the previous week, traded US$ 0.02 lower at US$ 0.96, whilst Arabtec is now in the throes of liquidation, with its last trading, late in September, at US$ 0.14. Thursday 31 December saw the market trading at 139 million shares, worth US$ 47 million, (compared to 154 million shares, at a value of US$ 57 million, on 24 December).

For the month of December and for the year 2020, the bourse had opened on 2,420 and 2,765 and, having closed the month on 2,492 was up 72 points (3.0%) in December but well down by 273 points (9.9%) YTD. Emaar traded lower from its 01 January 2021 opening but higher from its 01 November starting figures of US$ 1.10 and US$ 0.87 – down by US$ 0.14 but up by US$ 0.09 – to close December on US$ 0.96. Even at the beginning of the year, Arabtec was struggling, trading at US$ 0.35 and by the time stumps were drawn in late September, was trading at US$ 0.14 – a major fall from grace, considering that in May 2014 one Arabtec share was worth US$ 8.03. 

By Thursday, 31 December, Brent, US$ 10.21 (22.6%) higher the previous six weeks, was US$ 0.51 (1.0%) in this week’s trading to close on US$ 51.80. Gold, US$ 89 (5.0%) higher the previous fortnight, gained a further US$ 12 (0.6%) to close on US$ 1,895 by Thursday 31 December.

Brent started the year on US$ 66.67 and lost US$ 14.87 (22.3%) during 2020 but, having started December on US$ 47.59 gained US$ 4.21 (8.8%) during the month of December to close on US$ 51.80 Meanwhile, the yellow metal gained US$ 378 (24.9%) in 2020, having started the year on US$ 1,517 to close at the end of December on US$ 1,895, with the December price up US$ 118 (6.6%) from its month opening of US$ 1,777.

2020 will see a record write down in assets for the world’s oil companies and independent producers, as illustrated by seven super major oil companies and independent producers in the US and Canada writing off over US$ 150 billion this year. Asset values have diminished because of the short-term price impact on their property but also the long-term implications of the energy transition, (including the rise of renewables and electric vehicles), and socially responsible investing. With the prospect of relatively low oil prices in the short-term, and the move to renewable energy more long term, they would seem to be the main drivers behind these impairments, equivalent to 10% of the companies’ collective market value.

2020 was the second best ever, after 2007, for companies raising monies via stock market listings, collecting a global total of about US$ 300 billion; the US was the biggest contributor to the total with US$ 159 billion, along with Asia that witnessed a 70% year on year growth, to US$ 73 billion. The US blank cheque business accounted for US$ 76 billion of the cash raised in the country. In contrast, European listings disappointed, with a 10% decline to a total of US$ 24 billion.

With companies raising more than US$ 5 trillion this year, to raise cash to soften the pandemic economic blow, it is no surprise that investment banks around the world picked up nearly US$ 125 billion in fees for underwriting debt and equity offerings. Lenders earned US$ 43 billion arranging debts, 25% higher on the year, whilst fees underwriting IPOs skyrocketed 90% to US$ 13 billion, as overall equity underwriting revenue came in 75% higher at US$ 32 billion. The main beneficiary of the tech listings was Goldman Sachs, which led the likes of DoorDash, Snowflake and Unity Software IPOs to grab more than 10% of the market. One sector that saw a decline was M&A, with business down 10% on the year, but still earning around US$ 30 billion for the bankers. There was no surprise that the US Big five banks – JP Morgan, Chase, Goldman Sachs, BoA, Morgan Stanley and Citigroup – accounted for just under US$ 37 billion of the investment banking revenue, equating to 30% of the total.

Tata Group has paid Air Asia US$ 38 million to increase its JV stake in AirAsia India from 51% to 84%, as it looks to increase its stake in India’s airline industry; last week it submitted a bid to take over the struggling national carrier, Air India. The Tata Group, which actually founded Air India in 1932, only to sell it to the government in the 1950s, also operates the Vistara airline, in partnership with Singapore Airlines. Air Asia’s Tony Fernandes has been scaling back and trying to reduce its cash burn, with the Indian JV struggling in one of the toughest markets in the world made worse by high fuel taxes and fierce competition. In November, Air Asia’s Japanese unit filed for bankruptcy. However, Air Asia believes that cutting back in “a non-core market” will allow it to focus more on its key sectors – Malaysia, Thailand, Indonesia and the Philippines.

In order to protect their status as majority EU-owned companies, two airlines, Ryanair and Wizz Air, are to take away the voting rights of UK shareholders (and other non-EU investors). Ryanair posted that “these resolutions will remain in place until the board of the company determines that the ownership and control of the company is no longer such that there is any risk to the airline licences.” Meanwhile, the Hungarian-based carrier estimates that if no action were taken, 80% of Wizz Air’s shares would be held by non-EU nationals. (Wizz Air Abu Dhabi, a JV with Abu Dhabi state holding company ADQ, will begin operations from 15 January, flying to Athens, with fares starting at just US$ 35!).

It has not been a good year for some German tech companies, with their flagship Wirecard entering into liquidation, with several stakeholders facing the court in 2021 for fraud and money laundering. Now it seems that the Berlin-based Delivery Hero’s hopes of acquiring Woowa Brothers, which owns Baedal Minjok, in a US$ 4 billion has fallen foul of South Korean antitrust regulators who will only let the deal go through if the German company sold its existing South Korean, Yogiyo. There were concerns raised that if the deal went through, Deliver Hero would control up to 90% of the country’s burgeoning online food delivery market.

The Pope has finally decided to strip the Vatican’s central administration office of a tainted investment portfolio that has resulted in massive losses and has led to the arrest of Gianluigi Torzi, who acted for the Secretariat in London; he has been arrested and charged by the Vatican with “extortion, embezzlement, aggravated fraud and self-laundering”. Last month, the Vatican requested the Italian financial police to execute a search warrant against a group, associated with the Secretariat’s investments, including a suspended Vatican official and Raffaele Mincione who oversaw a luxury Chelsea property development. At the same time, the Pontiff has decided that the management of “Peter’s Pence” charitable donations would also be transferred to Apsa’s control, with this centralised asset manager also taking over the London investment portfolio.

Coinbase, the world’s second-biggest crypto exchange by volume, has suspended trading in the world’s third-biggest cryptocurrency XRP, after the US Securities and Exchange Commission accused Ripple Labs of conducting an unregistered security offering; it classified it as a security, subjecting it to a much stricter set of regulations governing how it is sold and traded. It was alleged that Ripple managed to raise US$ 1.3 billion in cryptocurrency markets over seven years through the sale of XRP, without submitting the proper documentation required for such sales. On Tuesday, the stock had slumped 27.7% to US$ 0.21821 on the Luxembourg-based Bitstamp exchange, with the cryptocurrency’s market cap 66% lower than its 24 November high. Investors seem to be transferring funds to Bitcoin, which jumped US$ 7k, over the week to  US$ 29k, and other digital coins.

Following a recent crackdown by the Chinese administration on his e-commerce and financial empire, founder Jack Ma has seen his Alibaba shares slump 9%, or losing US$ 116 billion in its market cap, on Monday, to its lowest level since June.  His upsized US$ 10 billion attempt to buy back shares failed to convince the market, which is also concerned that the antitrust investigation into the firm may carry heavy penalties and any negative conclusion would greatly change its valuation. The situation has not been improved by news that China’s central bank had requested his other company, Ant, to shake up its lending and other consumer finance operations, after suspending its US$ 37 billion IPO last month. Jack Ma must be ruing the fact that he publicly criticised the regulatory system for stifling innovation and now it is payback time for the government.

There are three main drivers behind the recent rise of gold on the global stage – massive stimulus from both the Fed and the Trump administration, optimism about the positive impact of the Covid vaccine and Joe Biden’s presidential victory. With the expectations next year for reflation trade, this will see the greenback trading lower, which in turn will have a positive impact on the gold price, which ended the year edging closer to the US$ 2k level, as US real yields hover below zero. However, if the pandemic peters out – an unlikely event at the time of writing – and there is a major roll-out of Covid-19 vaccines, then any major advance in price will be limited. Meanwhile, there is every chance that silver has the momentum to hit US$ 30 per oz. having currently more than doubled since it sank to US$ 12 per oz at the height of the pandemic; apart from the same drivers listed for gold, silver also will benefit from the expected pick-up in industrial demand next year and further development of renewable energy technology, likely to be introduced by the incoming Biden administration.

Covid-19 is one reason why property prices in both the UK and US moved higher in 2020. The UK registered its highest annual rise in six years – up 7.3% to US$ 314k, also helped by the government’s decision to nullify stamp duty on most properties until March 2021. December saw prices nudge 0.8% higher, whilst since the onset of the pandemic in March, prices are 5.3% higher, as there has been a shift in how people want to live, e.g., bigger properties or homes with gardens or in less densely populated locations. However, with the stamp duty holiday expiring in March, and an estimated one million joining the country’s dole queue in H1, there is no doubt that this will have an adverse effect on prices which could fall by 5% by June 2021.

Likewise, US house prices moved at their highest rate since 2014, with strong demand and limited supply pushing prices 7.9% higher in October, driven by similar drivers seen in the UK, as Americans seek more space for home offices, bigger kitchens and working out. The latest trend reported is that potential buyers are wanting to move from urban apartments to suburban homes, The three cities with the biggest growth rates were Phoenix (12.7%), Seattle (11.7%) and San Diego (11.6%).  In November, the number of homes for sale fell to record lows of 1.28 million, equivalent to last just 2.3 months at the current pace of sales.

For the sixteenth time in 2020, US interest rates slipped to a record low, with the average for a 30-year fixed loan falling one notch to 2.66%. Such low rates have proved a catalyst for a housing rally that, in turn, has managed to boost an economy beset with pandemic problems. However, as the number of cases move higher, there is some reason for concern if the rally can continue and a lot will depend on the efficacy of any vaccine and which direction the coronavirus will take. These lower rates, combined with demand for more space to ride out the pandemic, have pushed buyers into the market, whilst existing homeowners have managed to save money by renegotiating current loans in line with better rates. A low inventory of homes to buy, combined with the surging demand, has driven up prices but this could change quite quickly if rates started moving north again. Meanwhile, new-home sales in the US tumbled to a five-month low last month dropping 11% in a sign the market is cooling off as coronavirus cases surge, with the median selling price jumping 14.6%, the fourth straight month of double-digit increases.

In one of his last acts as President, Donald Trump seems to be doing his level best to delist China Mobile, China Telecom and China Unicom Hong Kong from the NYSE. Shares in the three tech giants, which earn all of their revenue in China and have no significant presence in the US, will be suspended next week whilst the regulators begin proceedings to move them off the bourse. Last month, the President barred American investments in Chinese firms, owned or controlled by the military and has been targeting a number of Chinese companies including TikTok, Huawei and Tencent on the grounds of national security; in a tit for tat move, China responded with its own blacklist of US companies.

US jobless claims in December fell by 19k to 717k, surprising the market that expected a figure in the region of 835k. The approximate number of citizens claiming state unemployment benefits also declined to 5.37 million. The damage afforded by the pandemic can be seen from comparing 2020 figures with those of the previous year; this year, the average weekly number has been 1.45 million, compared to 220k in 2019. The figures will remain roughly the same into January, with the recent stimulus package making a short-term impact but then the economic fall-out will see numbers heading north again.

Having criticised its “wasteful spending” and calling for higher pay outs to people hit by the pandemic, Donald Trump left it to the last minute before signing a US$ 900 billion coronavirus relief and spending package bill, averting a partial government shutdown; this was part of a US$ 2.3 trillion spending package, that includes $1.4tn for normal federal government spending. If he had not signed the bill, which he did reluctantly, more than fourteen million would not have received unemployment benefit payments and new stimulus cheques.  The departing US President described the package as a “disgrace” and full of “wasteful” items and would have preferred to give Americans a payment of US$ 2k instead of US$ 600. He also argued that the annual foreign aid money would be better served going to Americans, struggling by the impact of the pandemic.

According to the Centre for Economics and Business Research, China is set to overtake the US as the world’s largest economy by 2028; this is five years earlier than a previous forecast, mainly because it controlled the initial pandemic, through swift and extremely strict action, meaning it did not need to repeat economically paralysing lockdowns as seen elsewhere. Because of its “skilful” management of Covid-19, it is the only major economy to avoid an economic recession in 2020, whilst its relative growth, compared to the US and Europe, in coming years will be boosted.  It notes that China’s share of the global economy has risen from just 3.6% in 2000 to 17.8% now and the country will become a “high-income economy” within three years. The UK-based thinktank estimates the India will become the third biggest global economy by 2030, by overtaking the UK, Germany and Japan by 2024, 2027 and 2030 respectively.

Jun 21Unit    20202020201920182017201620152014
165Iron OreUS$Lb70.11%155.7091.5371.371.28754773
57.5Oil -BrentUS$bl-22.30%51.8066.6753.866.6256.8236.457.33
6,650FTSE 100-14.07%6,4817,5426,7217,6887,1426,2426,548
3,780S&P 50016.25%3,7563,2312,5072,6742,2382,0442,091

From the above, it can be seen that Brent, the rouble and the FTSE 100 posted the worst returns in 2020 – by 22.3%, 15.38% and 14.07% respectively. Notwithstanding Bitcoin more than tripling in value to over US$ 29k, the standout performer was iron ore climbing by 70.11%, with silver, copper, gold and cotton returning double digit growth. This year, most commodities will move north albeit at a slower rate. When it comes to currencies, the greenback is expected to take a backseat and that sterling, (thanks to Brexit) and the Aussie dollar (courtesy of record iron ore prices) will move higher at a much quicker rate than say the euro which will be beset by internal squabbling and higher unemployment. Markets will be largely flat after a volatile 2020.

In 2021, Dubai needs two events to occur – Brent to move at least 10% higher and the vaccine to take effect.  That being the case, Dubai will be the place to be, as it will have had a head start on most of the rest of the world. A weak dollar makes Dubai exports cheaper and will be a boom for the tourism sector, as European visitors will have more money to spend. It still needs to encourage SMEs and tech start-ups that will form the basis of Dubai’s new economy. The population mix will slowly change, with construction numbers falling, whilst population growth will soften. 2019 population growth stood at 5.1% at 3.356 million, whilst last year, because of Covid, growth was at 1.6% to end 2020 on 3.411 million. In 2021, optimum growth should be around 3.5%, to end the year with a population of 3.530 million. With the new economy, it will be a case of quality rather than quantity, which will see more money in circulation being spent supporting the local economy. Furthermore, there is the prospect of a successful Dubai Expo starting in October, with the emirate also benefiting from the fact the UAE celebrates its golden anniversary in 2021. Here in Dubai, one thing we know is that, in 2021, we are going on a Magical Mystery Tour!

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Go Your Own Way!

Go Your Own Way!                                                                        25 December 2020

For the latest week ending 24 December, real estate and properties transactions were valued at US$ 1.25 billion, including 92 plots selling for US$ 131million, along with 808 apartments/villas for US$ 360 million. The top two land deals involved a US$ 16 million sale in Palm Jumeirah and one for US$ 15 million in Saih Shuaib 4. When it came to villas/apartments, the top three deals all involved apartments – Marsa Dubai (US$ 63 million), Business Bay (US$ 29 million) and Burj Khalifa (US$ 26 million). Total value of mortgages was US$ 817 million, with one mortgage, (for land at Al Yelayiss 2), at US$ 272 million, whilst there were 43 properties involving first-degree relatives worth US$ 53 million.

A week earlier, for the week ending 17 December,  there had been 1.3k real estate transactions, valued at US$ 872 million; in the week, 857 apartments/villas were sold, totalling US$ 411 million, and 74 plots for US$ 81 million. The leading land sales was seen in Saih Shuaib (US$ 6.7 million) whilst the top three sales for residential units were for a Business Bay apartment selling for US$ 56 million in Business Bay, another one in Marsa Dubai (US$ 51 million) for AED 186 million, and a US$ 25 million villa in Dubai Investment Park First. The amount of mortgaged properties for the week was US$ 272 million, with a total of 70 properties were granted between first-degree relatives, worth US$ 48 million.

The latest Property Finder report confirms what many already knew – that there has been an increase in user demand for units in the suburbs this year as tenants sought more spacious homes amid the Covid-19 pandemic, noting that certain communities – including Tilal Al Ghaf, Al Muhaisnah, Wasl Gate, Town Square, Mira, Rukan and Dubai Harbour – reported increases. It also notes that, with prices falling, prime locations such as The Springs, Dubai Marina, JLT and Arabian Ranches saw a rise in demand as they became more affordable.

According to Property Finder, November saw the highest number of sales registrations since February – 3.9k, valued at US$ 2.1 billion – bringing the YTD total to 33.5k at US$ 18.8 billion. More interestingly, secondary property sales registered last month reached their highest level in nearly seven years – and the highest ready apartment sales in sixteen months. Based on the number of property listings on their portal, the greatest number of apartments currently available are in Al Jaddaf, Jumeirah Heights, Al Barari and Al Kifaf, while the most villas and townhouses can be found in Nad Al Sheba, Meydan and Mudon. It was also noted that demand increased for 3-4 B/R villas. JLL estimate that a further 26k new homes were scheduled for completion in Q4 – this figure does seem on the high side

Hussain Sajwani, Chairman of Damac Properties, reckons that 2021 is going to be yet another challenging one for the property market and that big developers should avoid “dumping” properties in an already oversupplied market. He notes that his company will “not be going to bring new products to the market, maybe a few hundred or less than a hundred just to keep the momentum going. We have no intention of expanding because the situation doesn’t look rosy going forward.” With the government having set up a committee to oversee supply and demand, this has helped the market to try to attain a demand-supply balance, which he expects to be achieved by 2022.

Magic has hit the local property sector with Kleindienst Group announcing that prices of its US$ 5 billion The Heart of Europe project have more than quadrupled; it noted that the cost of a Floating Seahorse Villa at US$ 5.4 million (Dhs 20 million), has now increased to US$ 24.5 million (Dhs 90 million), while a Beach Palace on the Sweden island has jumped from US$ 21.8 million (Dhs 80 million) to US$ 97.5 million (Dhs 358 million). The developer noted that these prices are becoming more in synch other with sought-after global property hubs such as Monaco, London, Moscow, Geneva, Vienna and Paris, where prime property prices can range between US$ 16k up to US$ 64k per sq mt.  According to recent research by Knight Frank, luxury properties in Dubai are almost 10 times cheaper than in some of the world’s most expensive cities, with US$ 1 million buying 16.4 sq mt in Monaco, 21.3 sq mt in Hong Kong and 30.4 sq mt in London, whereas it would be 154 sq mt in the emirate.

HH Sheikh Mohammed bin Rashid Al Maktoum has issued Decree No. (32) of 2020, transferring the ownership of certain educational lands (granted to government entities and real estate developers, including lands leased to third parties, and undeveloped lands granted to individuals and private entities that have not been developed within five years of the date of the grant or those that have ceased to have education activity) in Dubai, to the Knowledge Fund Establishment. The educational lands excluded from the articles of this Decree included those granted to public education facilities, lands within education zones like Dubai Academic City and Dubai Knowledge Park, mortgaged lands and common lands that include educational lands. However, developers can retain these lands if they are willing to pay 75% of the land’s market value (determined by the Department of Land and Property in Dubai) to the Knowledge Fund Establishment, in annual instalments, within a period not exceeding 34 years.

UAE-based Blends & Brews Coffee Shoppe has signed an agreement with Sultan Saad Seed Al Qahtani Trading Est, to open its first outlet in Saudi Arabia. The brand, part of the Thumbay Group’s Hospitality Division, already has a number of coffee shops in the UAE and in Hyderabad.

This week saw DP World sign an agreement, its biggest ever African port investment, with Senegal. DP World Dakar will invest a total of US$ 1.1 billion over two phases of the project, to develop its Ndayane deep-water port; it is located about 50 km from the existing Port of Dakar and near the Blaise Diagne international airport. The first phase, costing US$ 837 million, will include a new container terminal with 840 mt of quay and a new 5 km marine channel. It is expected to invest a further US$ 290 million during the second phase which will include 410 mt of additional container quay and a further dredging of the marine channel. This will boost Dakar’s position as a major logistics hub and gateway to west and north-west Africa, and, according to Sultan bin Sulayem, DP World’s Chairman, “will create jobs, attract new foreign direct investment to the country and enable new trading opportunities that bring about economic diversification.”

Etihad Credit Insurance has estimated that the UAE has extended US$ 114 million worth of trade credit to support SMEs in the first eleven months of the year to help companies protect their liquidity amid the coronavirus-induced economic slowdown. It also noted that this figure translated into US$ 272 million “secured turnover” for the firms. ECI’s measures have been able to support exporters by helping those businesses, impacted by the pandemic facing payment and supply chain disruptions, with export credit insurance and additional funding. The two-year old firm provides credit guarantees and insurance to mitigate the political and commercial risks of exporting by offering financing or refinancing for export transactions on behalf of the UAE government.

The ECI came out with interesting SME statistics and their contribution to the national economy. In 2018, such firms contributed 49% to the UAE GDP, rising to 53% a year later. It was noted that “their delicate lifespan is the reason SMEs are considered as high-risk by financial institutions, leading these businesses to have difficulty getting access to credit.” It estimates that only 50% of “new” firms survive more than five years, with only a third making it past a decade in business.

Following an agreement with NMC administrators, Germany’s Fresnius Helios is expected to pay US$ 526 million for the Eugin Group, comprising Spain’s Luarmia group of fertility clinics and US-based Boston IVF. This is in line with administrators’ aim to focus on NMC Health’s core local assets and divest of other “non-essential” assets to pay off debts or fund ongoing operations. UAE’s biggest privately-owned healthcare group was placed into administration last April, following the discovery of more than US$ 4 billion worth of previously undeclared debts at the group. A final decision on whether there will be a lender-led restructuring, or an outright sale, will take place before April, but in the meantime, an investigation report into missing money from the company will be concluded by the end of December and a litigation strategy recommended to recover assets.

It is reported that local start-up, Trukker could be considering a potential listing, as it aims to raise fresh funds to propel regional growth. The company provides an Uber-like service for trucks and averages more than 1.2k daily transactions. Earlier in the month, it raised US$ 10 million venture debt from Silicon Valley-based Partners for Growth. The firm is looking at a further funding round early next year, to be mainly used for enhancing payroll numbers and regional expansion. The company has a fleet of more than 25k trucks and 500 B to B operators, with some of the funds being used to finance the “instant payment of thousands of transporters” operating on the firm’s network in the UAE, Saudi Arabia and Egypt.

Because of recent changes to local governance rules of public companies, (by the market regulator, the Securities and Commodities Authority), that company chairmen should not hold executive positions, former chairman of Emaar Developments, Mohammed Alabbar, has had to stand down. He is to be replaced by Emirates airline executive Adnan Kazim. Only last week, Jamal Al Theniyah took over the same position from him with Emaar Properties. The former chairman will “continue to be devoted to the executive management matters and the day-to-day affairs of Emaar”, as well as continuing as an executive board member. Although it has moved higher in recent weeks, Emaar Properties’ share value had fallen 12% YTD, trading on Sunday at US$ 0.97; over the same period, the market has seen a 14.4% decline.

Following their September request to all its creditors to submit proof forms to register their claims, Drake & Scull International announced that it had completed the first phase of a restructuring plan and will present the second phase next month. These claims, currently under review by their Financial Reorganisation Committee, will shortly be published in local newspapers. The company will share the results with its creditors in January and then have a vote on it. DSI posted a US$ 35 million nine-month profit to September, compared to a US$ 330 million loss a year earlier; for Q3 there was a US$ 19 million loss.

In a statement to the local bourse, Damac Properties has advised it is looking at increasing its shareholding in the Nine Elms project in London. The UAE’s third-biggest property developer by market capitalisation, posted a Q3 loss of US$ 148 million, following a US$ 158 million write-down, amid the coronavirus pandemic, although revenue was markedly higher at US$ 349 million.

There are reports that indebted theme parks operator DXB Entertainments will benefit from a capital restructuring exercise led by its 52.29% majority shareholder, Meraas Leisure and Entertainment; this will inevitably lead to the company to undertake a capital restructuring plan, by converting most of the company’s outstanding debt into newly issued shares. This will lead the Dubai Holding subsidiary to holding 93.92% of the park operator, in a move that would also lead to it taking the company private, as it will also launch a tender offer to buy out remaining stakeholders, who will be offered US$ 0.0218 a share.  Meraas will convert their US$ 403 million bond into new DXBE shares at a conversion rate of US$ 0.283 and will also take on nearly US$ 1.2 billion of senior debt owed by DXB Entertainments in return for new shares and will also take on US$ 1.17 billion of senior debt owed by DXB Entertainments in return for new shares. As of 30 September, DXB Entertainments had accumulated losses of US$ 1.7 billion, including a YTD deficit of US$ 289 million.

The bourse opened on Sunday 20 December and, 263 points (17.9%) to the good the previous six weeks, finally gave up a little of that gain, slipping 22 points (0.9%) to close on 2,528 by Thursday 24 December. Emaar Properties, US$ 0.02 lower the previous week, traded US$ 0.02 higher at US$ 0.98, whilst Arabtec is now in the throes of liquidation, with its last trading, late in September, at US$ 0.14. Thursday 24 December saw the market trading at 154 million shares, worth US$ 57 million, (compared to 160 million shares, at a value of US$ 59 million, on 17 December).

By Thursday, 24 December, Brent, US$ 10.27 (22.6%) higher the previous five weeks, was almost flat in this week’s trading to close US$ 0.06 on US$ 51.29. Gold, US$ 43 (2.3%) higher the previous week, gained a further US$ 46 (2.5%) to close on US$ 1,883 by Thursday 24 December.

It has taken copper seven years to return to a value of over US$ 8k – a possible indicator of the start of a new commodities super-cycle, (the last one being earlier in the century), as supply-side investment falls short of an expected surge in demand. The metal’s price has rallied 80% since its March low, driven by China’s appetite for commodities, supply snags in the early stages of the pandemic, expectations for a deficit, the weaker greenback, and copper’s role in green technology. In line with other industrial commodities, including oil and iron ore, copper will benefit from China’s increasing economic activity, after its apparent success at containing the coronavirus pandemic and optimism about global economic growth.

Last week, Tesla’s share value topped US$ 600 billion and now it has unveiled its second US$ 5 billion capital raise Investors in three months, as the Elon Musk company cashes in on a stellar rise in its shares this year. By the end of last week, Tesla shares had skyrocketed by 670%, which in turn saw Elan Musk’s net worth nearly sextuple to US$ 155 billion. Depending on which source is used, when it comes to global production, last year, the number of vehicles dipped 5.2% to 91.8 million, with the five biggest manufacturers – Toyota, VW, Hyundai, GM and Ford – accounting for 41.3 million (45.0%) of the total; the next ten accounted for 36.6 million (39.9%), so that almost 85% of global production was carried out by the fifteen of them. Tesla, in that period, managed to produce 367.5k or just 0.4% of the global total.

Although its production levels fell well short of the legacy car makers, it is by far the most valuable auto company in the world, with its value more than the combined market cap of the nine largest car companies globally. The jury is out on the future value of Tesla, with many analysts forecasting even more upside for the electric vehicle maker heading into 2021. On the other side, are those who believe Tesla’s share value is in a bubble and will head south now that it has been added to the S&P 500 index since Monday, 21 December, where it now accounts for about 1% of the total index value; it has replaced property firm, Apartment Investment, which was worth 0.02% of the index.

The US Securities and Exchange Commission has charged crypto-currency, Ripple with conducting investments without proper licences, indicating that Ripple XRP is a tradeable asset, known as a security, and thus subject to its regulations; the firm counterclaims that XRP is a currency and therefore does not have to be registered as an investment contract, with digital currencies being under the umbrage of another US regulator – the Commodity Futures Trading Commission. When news was broken, the value of XRP, the third largest crypto currency after Bitcoin and Ether, fell by more than 30%. Whilst the two major currencies have been ruled out of trading exchanges, following a 2018 decision by the US Commodity Futures Trading Commission ruling that both could be traded as commodities, like currencies or oil, XRP has not.

Tech giant Alibaba is being investigated by China’s State Administration for Market Regulation over monopolistic practices, having previously warned Jack Ma’s company about forcing merchants to sign exclusive deals which prevent them from offering products on rival platforms. The alleged monopolistic behaviour involves pressure over the so-called “choosing one from two” practice which sees sellers signing exclusive cooperation pacts, preventing them from offering products on rival platforms. On another front, regulators are also meeting to discuss Alibaba’s financial technology offshoot Ant Group.  In November, the firm was just launching what would have been the largest IPO in the world, only to be ordered to halt its listing about its micro-lending services. The People’s Bank of China noted that the meeting was “to guide Ant Group to implement financial supervision, fair competition and protect the legitimate rights and interests of consumers”. Chinese authorities, worried about the growing size and power of mega tech firms such as Alibaba and Tencent, have since introduced new anti-trust laws.

Within a fortnight of its 13 October launch, Apple’s iPhone 12, priced at US$ 817, became the world’s best-selling 5G smartphone, with a 16% share of the total sales, ahead of Samsung and Huawei that had launched their rival models a year earlier. By the end of that month, it had captured 16% of the 5G smartphone market. By the end of October, Samsung’s Galaxy Note 20 Ultra had lost its September number one placing to drop to third place, with only 4% of the market, behind iPhone 12 Pro that grabbed 8% of the market.

Apart from being the dominant force in the 5G smartphone sector, Apple, utilising its own LFP (lithium iron phosphate) battery technology – that could radically reduce the cost of batteries and increase the vehicle’s range – is targeting 2024 to produce its first electric car. Apple aims to be a major player in the electric car market, joining the likes of Tesla, Audi and General Motors, and will use a third-party manufacturing partner to build the vehicles. Other tech giants, such as Amazon and Alphabet, are also backing autonomous-electric initiatives but they are more focused on mass transport. The former has Zoox, an autonomous ride-hailing fleet Industry which can also use automated cars to deliver goods to customers. Meanwhile, Alphabet’s Waymo is operating a commercial self-driving taxi service.

SsangYong, 75% owned by Indian automaker, Mahindra & Mahindra, has filed for bankruptcy after failing to repay US$ 55 million to creditors. The South Korean carmaker has warned of massive disruptions to its operations and is highly unlikely to receive state aid, because of its overseas ownership; however, it is possible that the company’s suppliers may receive public financial support. Any further investment from its Indian owners, who acquired the company that specialises in SUVs a decade ago, has been looking for a buyer since June, is improbable, bearing in mind that SsangYong had posted losses for the past fifteen quarters.

Just when they have the troubled 737 Max aircraft flying again, after a twenty-month hiatus, Boeing has been accused of “inappropriately coaching” test pilots during efforts to recertify the company’s troubled plane. US Senate investigators have accused both the manufacturer and Federal Aviation Administration officials of “attempting to cover up important information”. The Senate Commerce Committee’s report noted that based on “corroborated whistle-blower information and testimony during interviews of FAA staff”, it concluded that FAA and Boeing officials involved in the test had “established a pre-determined outcome to reaffirm a long-held human factor assumption related to pilot reaction time” and that “Boeing officials inappropriately coached test pilots in the MCAS simulator testing contrary to testing protocol.” If this were to be true, it will be another damaging blow to the integrity and already-tarnished reputations of both Boeing and the US watchdog, the FAA.

One company is in hot water with the Australian consumer watchdog for trying to sell clothes they said could protect against coronavirus. Activewear brand Lorna Jane has been prosecuted for trying to sell clothes they said could protect against coronavirus. In June it claimed that “LJ Shield breaks through the membrane shell of any toxic diseases, bacteria or germs that come into contact with it, not only killing that microbe but preventing it from multiplying into anymore,” and was fined US$ 30k for making these claims. Now, the Australian Competition and Consumer Commission is taking the private company to the Federal Court over alleged false or misleading claims, alleging “that the statements made by Lorna Jane gave the impression that the COVID-19 claims were based on scientific or technological evidence when this was not the case.” The twenty-year old company, with 108 stores in Australia, as well as a number of international stores, is to defend itself in Court.

Another month and another record for the UK economy – with government borrowing topping US$ 96 billion, this was the highest ever November figure, as well as the third-highest figure for any month. In the first eight months of the UK fiscal year, starting in April, borrowing has almost tripled to a massive US$ 335 billion, compared to a year earlier. By the end of the year in March, it is estimated that the annual borrowing will top US$ 500 billion. The government has also seen tax receipts slump by US$ 51 billion in the eight months to November year-on-year. The increase has resulted in the national debt rising to US$ 2.8 trillion, with the current debt now reaching 99.5% of GDP. Revised figures by the Office of National Statistics show that the UK economy slumped 18.9% in the June quarter (slightly lower than the initially posted one of 19.8%) with a bounce back of 16.0% in the next quarter. With everything dependent on the vaccine efficacy, the UK could go into a double dip recession – if restrictions and lockdowns extend into early 2021 – or could stage a monumental rebound in H2 2021.

After many months of bitter wrangling, US lawmakers have finally agreed to a US$ 900 billion pandemic aid package which includes financial help for businesses and unemployment programmes; this is expected to run in tandem with a US$ 1.4 trillion funding for government operations over the next nine months. This arrives as many Covid-19 economic relief programmes were set to expire at year end which would have seen twelve million Americans at risk of losing access to unemployment benefits. The latest funding will be spent on supporting business (US$ 300 billion), direct stimulus payments to most citizens (US$ 600 billion) and money for vaccine distribution, schools and renters facing eviction. The bill does not include substantial aid to local governments, which had been a top priority for many Democrats.  Last March, US$ 2.4 trillion was injected in economic relief, including US$ 1.2k stimulus cheques, funds for businesses and money to boost weekly unemployment payments by US$ 600.

1,664 days after the UK voted to leave the EU, a trade deal has been finally agreed that will ensure tariff and quota free trade between the two. The deal still needs approval from the UK parliament and the 27 EU member states. The 500-page agreement will mean there are no quotas or tariffs on the goods trade that makes up half of the annual commerce between the UK and EU, worth more than US$ 1 trillion. The deal will also support the Northern Ireland peace agreement which will please the incoming US President-elect Joe Biden, who had warned Mr Johnson the Irish status quo had to be maintained. However, it must be remembered that it does not include services which account for about 80% of the UK economy so this may cause problems for UK financial institutions requiring access to the EU stage. A euphoric Downing Street commented “Deal is done,” and “We have taken back control of our money, borders, laws, trade and our fishing waters.” Time To Go Your Own Way!

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Time Is Running Out!

Time Is Running Out!!                                                                       17 December 2020

The latest Valustrat report points to a stabilisation in property prices in 2021 with two caveats – the economy recovers from the pandemic-induced slowdown and government initiatives, including overseas visas for expatriate retirees and the expansion of the ten-year golden visa scheme, attracts foreign professionals. The report further adds that it expects increased buying activity from China and higher business activitie,s brought on by the delayed six-month Dubai 2020 Expo, starting next October, as well as the 50-year anniversary of the UAE.. Furthermore, the recent reforms in commercial and inheritance laws, along with the easing of certain other social restrictions, have done much to improve both business and expat confidence, which has a knock-on impact on the realty sector.

Although Chesterton’s Mena expects stability to return to the sector in 2021. It stlll sees moderate declines next year, although there will be differences between property types and locations. ValuStrat estimates that November property prices are down 13.8% on the year, but only 0.2% month on month, making it still a buyers’ market.  Villa prices in Jumeirah Village and Dubai Sports City recorded the biggest falls of 14.8% and 14.4%, whilst Discovery Gardens, Dubai Production City, Jumeirah Village, Business Bay, Burj Khalifa and Dubai Marina dropped 16.8%, 16.4%, 16.0%, 14.5%, 15.2% and 13.8% respectively. However, with such low prices, there has been strong buying interest in certain locations, including Dubai Marina, International City, Jumeirah Lake Towers, Arabian Ranches, Jumeirah Village, Meadows, Business Bay and Downtown Dubai.

Next year, Cavendish Maxwell expects the Dubai market portfolio to increase by 50k, but this does seem to be on the high side. There is no doubt that with developers, such as Emaar and Damac, curbing new supply, by temporarily curtailing all future developments, market equilibrium will soon come into play. Two major trends which started in 2020 will continue into the new year – the secondary market will dominate transactions and increased demand for villas in selected locations will continue.

The following uses official data from the Government of Dubai’s Statistics Centre. In the past five years, to mid-December 2020, Dubai’s population has increased 40.5% from 2.43 million to 3.41 million but only by 0.07 million, 0.2%, over the past year because of the impact of Covid-19. Meanwhile, the number of units at the end of 2015 totalled 481.6k (397.6k apartments and 84.0k villas), increasing by 168.3k (23.4%) to 649.9k (537.4k apartments or by 35.2% and 112.5k villas or by 33.9%). Over that four-year period, the population, expanded by 38.3%., at a slightly quicker rate than the rise in residential units.

A new law, introduced by HH Sheikh Mohammed bin Rashid Al Maktoum, sees the establishment of a special tribunal to oversee the liquidation of unfinished and cancelled projects, as well as the settling of related claims; this will supersede the 2013 law, dealing with cancelled projects, and will also take up existing cases that the previous committee has not settled. Decisions made by the special tribunal will be “final and uncontestable”, If the Dubai Land Department’s Real Estate Regulatory Agency has confirmed a project cancelled, the tribunal will be responsible for liquidating the assets and will “define the rights of investors and purchasers”.  More importantly for the end user – and in a step that will encourage increased investment into the residential sector -a second decree states that if a developer fails to start a property project for reasons beyond their control, or if it has been cancelled by Rera, the developer in question “must refund the entire amount paid by purchasers”.

The Dubai Ruler also issued Law No. (14) of 2020 regulating the timeshare industry in the emirate, with the aims of strengthening the pertinent legal framework, along with stimulating both the tourism and real estate sectors. As tourism matures in the emirate, timeshare is increasing its footprint, giving adequate alternative residential alternatives for tourists and visitors, whilst encouraging investments in the vacation ownership sector. The management of the emirate’s timeshare industry has been handed to Dubai’s Department of Tourism and Commerce Marketing who will coordinate with the Dubai Land Department and Dubai International Financial Centre in all matters related to the timeshare-related activities of developers and brokers, and registration of timeshare contracts and right of usufruct. Timeshare permits will be valid for a renewable period of one year.

Emaar has named Mohammed Alabbar as its new MD, with him being replaced by Jamal Al Theniyah as Chairman, in a move brought on by new regulations that prohibit combining the chairmanship of a company with another executive position; Ahmed Jawa becomes the new vice-chairman. The move comes a week after Dubai’s largest property developer announced that it was holding back on new launches in a bid to overcome the current oversupply in the market. One consultancy reckoned that Dubai has 585k homes at the end of Q3 and nobody really seems to know how many will come to completion for the year 2020, with estimates ranging from 35k to 55k.

Reportage Properties is set to develop ten real estate projects, delivering 4k units, in both Dubai and Abu Dhabi. The Abu Dhabi-based developer noted that the real estate sector market is beginning to show positive developments, resulting in increased sales during the current year, particularly for residential units in Rukan Tower, which is being developed in Dubailand, in cooperation with the Continental Investment. Comprising 488 units of studio to 2 B/R apartments, with prices of US$76k, US$ 106k and US$ 163k respectively, the project will be ready for handover by the end of 2022. Last year, the developer launched Rukan Tower, consisting of two phases of 349 and 305 residential villas; 20% of the construction work has been completed.

It is estimated that the UAE has injected support packages of US$ 107 billion to try and support the economy, battered by the pandemic, with a selected committee formed to administer and oversee the process. Two of the packages included the Central Bank’s Targeted Economic Support Scheme in March, (to boost liquidity in the financial and banking sectors), and the US$ 13 billion Tess programme, offering zero-cost collateral funding to banks to encourage lending to the broader economy.  Other governmental measures have been added to ease the cost of doing business in the country. These include a major overhaul of commercial companies’ law and that, in most cases, the need for onshore companies to have an Emirati shareholder has been removed. Other ‘legal’ initiatives include major changes to the commercial transactions and bankruptcy laws, as well as the decriminalisation of bounced cheques.  The government has also allocated grants and incentives to tourism establishments and reduced tourism sector fees and taxes. To date, it is estimated that such measures have benefitted 10k SMEs, 1.5k private sector companies and more than 310k of the population.

The seasonally adjusted November IHS Markit PMI fell 0.9 to 49.0, on the month, with only titbits of positive news, such as job losses being at their lowest since February, as business picked up in the wholesale and retail sector. News of vaccines being available could result in a quicker than expected economic recovery.

In a move that intends to ease access to credit insurance and reduce exporters’ non-payment risk, Etihad Credit Insurance and the Israel Foreign Trade Risks Insurance Corporation (Ashr’a) have signed a deal to strengthen bilateral trade ties that will encourage exports and investments. According to the ECI, the annual exchange of trade between the UAE and Israel is expected to reach $4 billion, with the deal expected “to ease access to export credit facilities” for exporters and minimise risks associated with non-payment. Both parties will also explore mutual opportunities for co-insurance services for exporters and facilitating market access to SMEs.

In 2019, the UAE’s US$ 414 billion economy was driven by Abu Dhabi and Dubai, accounting for 59% and 28% of that year’s GDP. The latest report from S&P Global Ratings estimates that, because of the pandemic, the economy will lose 5.7% in value but will post a 3.1% expansion in 2021. However, the International Finance the Corporation expects the country to experience a contraction of 5.7 % this year, followed by a modest recovery of 3.1% in 2021.  It is not expected that the economy will recover fully until 2023, as sharp falls in key sectors – tourism and real estate – will take time to recover. The ratings agency indicated that Dubai’s economy would contract sharply on the back of the pandemic battering that the travel and tourism sectors have taken, as well as broad declines across the rest of the economy. However, there is every chance that the delayed Expo 2020 will prove a catalyst for some sort of economic recovery in Q4 2021.With the hydrocarbon sector production being boosted from 2022, with Opec+ oil production limits being lifted and new gas production coming on stream, the non-oil sector recovery will be driven by public investment in manufacturing particularly petrochemicals, logistics, and construction. Credit agencies have been hopelessly wrong in the past and there is every chance that this will be the case this time, with Dubai recovering much quicker and returning to pre-pandemic levels (and more) well before S&P’s 2023 mark.

UAE Q3 sales of mobile phones saw Chinese company Xiaomi joining the pack of the three main suppliers – along with Samsung and Huawei – as sales rose 6.4% to one million, quarter on quarter, partly driven by pent-up demand. The GCC witnessed a slight 0.2% decline in the period to 4.97 million units, with UAE sales accounting for 24.1% of the total, behind Saudi Arabia’s 52.6%; Saudi sales dipped because of the tripling of their VAT rate to 15%, pushing prices higher. Samsung remained the region’s leading provider, accounting for a 44.6% share. In units shipped, but second with a 30.8% share of the monetary value, indicating that the market preference is for the entry-level and mid-range price brands; this explains Samsung’s market share discrepancy between units sold and their monetary value. Q4 and Q1 sales will probably see similar quarterly unit increases, at around 6.5%, with brands like Apple (reportedly planning to increase iPhone production by 30% in H1 2021), and Samsung selling more with their newly released models.

It is estimated that the UAE accounts for 11% of the total global gold exports, with the country becoming increasingly important on the world stage. Trading in the yellow metal accounts for more than 29% of the total national non-oil exports and that, despite the pandemic, the gold trade was 6% higher, year on year to August. The federal government has introduced a new policy for the gold sector, aimed at enhancing the UAE’s governance of gold trade so as to align with best international practice. The new policy covers four areas – establishing the UAE’s standard for good gold delivery, development of a federal platform for gold trade, establishing a committee for the UAE bullion market, and building a database for companies and individuals involved in the gold trade.

Disgraced payments firm Finablr, which owns a number of foreign exchange and digital payments companies, including UAE Exchange, Xpress Money, Unimoni, Remit2India and Bayan Pay, has been sold to Global Fintech Investments Holding for a nominal US$ 1. GFIH – an affiliate of Israel-based Prism Group – has formed a consortium with Abu Dhabi’s Royal Strategic Partners to purchase Finablr and will provide the company with working capital to help it operate and support its creditors and employees; it will also undertake to support and facilitate the company’s continued efforts to recover funds from third parties  The BR Shetty  company was listed on the London Stock Exchange in May 2019, at which time it also owned the Travelex foreign exchange business,  which has since been divested to another lender Then it was valued at US$ 1.5 billion but was hit with two major problems – a cyberattack on Travelex, along with the unfolding collapse of its parent firm, BRS Investment Holdings. In May, with it being disclosed that its debt was US$ 1 billion more than what was accounted, itappointed a law firm to “investigate historic potential malfeasance within the Finablr Group and any misappropriation of assets” in July.

A JV with the Republic of Rwanda will see DP World launch its new global B2B and B2C e-commerce platform,,  following a Memorandum of Understanding with the Rwanda Development Board. Apart from making it easier for Rwandan companies to trade on the international stage, it will also strengthen commercial trading links between the UAE and Rwanda. The platform will enhance the promotion of exports of coffee, tea, and horticulture from the African country. DP World, which has already invested in world class port and logistics facilities in Kigali, will also assist with improvements to the country’s supply chain logistics, including in rural areas, and access to digital tools to help businesses become more efficient and expand their reach to local, regional, and global markets.

A new law enacted this week sees the granting of more autonomy to the Dubai Civil Aviation Authority, in tandem with the UAE’s General Civil Aviation Authority. Whilst also boosting sectorial safety, security and sustainability, its twin aims are to consolidate the emirate’s global leadership in the civil aviation sector, and also to enhance its attractiveness as a destination for aviation businesses. A government spokesman commented that “under the new law, DCAA is authorised to sign agreements … related to air traffic rights to operate via Dubai airports, and implement them in co-ordination with the GCCA.” The local agency will represent Dubai in all civil aviation matters, including all nature of negotiations, including air traffic rights, and accident investigations. Dubai will no longer have to seek approval from the GCAA, and report Dubai’s air traffic data to the federal regulatory body.

Dubai Aerospace Enterprise has a deal with American Airlines to deliver eighteen Boeing 737 MAX 8 aircraft, with the first of those arriving to the airline this week. DAE’s owned and committed fleet includes twenty-two Boeing 737 MAX 8 aircraft, which has just been allowed to return to US skies, some twenty-one months since two fatal crashes saw the plane being grounded. This is part of the Purchase and Leaseback agreement signed with the US carrier in Q3.

Following governmental directives, Dubai-based district cooling provider Emirates Central Cooling Systems Corporation has started reducing fuel surcharge on electricity and water for more than 140k of its customers,  reducing charges by US$ 13.1 million. Empower, which has an availability of a total cooling capacity of 1.53 million refrigeration tonnes, is keen to increase the share of renewable and clean energy in Dubai’s energy mix, in line with government targets of 25% from renewable sources by 2030 and 50% by 2050.

Recent figures indicate that foreign interests have invested US$ 5.8 billion, totalling 8.4 billion shares, in the six real estate companies listed on the Abu Dhabi and Dubai financial markets as on 09 December. As with most listed companies, foreign ownership of up to 49% of a company is allowed and perhaps this has helped the Dubai bourse jump 17.9 % over the previous four weeks. The significant rise in the number and value of shares owned by foreign investors in real estate companies has followed a surge in their share prices in recent months. Three of the Dubai listed companies – Emaar, Damac and UP – accounted for 35.51%, 33.83% and 17.06% of all real estate companies’ shares listed. It is expected that the percentage of foreign share ownership will continue to move north in the future.

The bourse opened on Sunday 13 December and, 260 points (17.9%) to the good the previous five weeks, nudged 3 points higher to close on 2,550 by Thursday 17 December. Emaar Properties, US$ 0.11 higher the previous week, traded US$ 0.02 lower at US$ 0.96, whilst Arabtec is now in the throes of liquidation, with its last trading, late in September, at US$ 0.14. Thursday 17 December saw the market trading at 160 million shares, worth US$ 59 million, (compared to 456 million shares, at a value of US$ 80 million, on 10 December).

By Thursday, 17 December, Brent, US$ 9.30 (22.6%) higher the previous four weeks, gained a further US$ 0.97 (1.9%) in this week’s trading to close on US$ 51.35. Gold, US$ 2 (0.1%) lower the previous week, gained US$ 43 (2.3%) to close on US$ 1,837, by Thursday 17 December.

Bitcoin has once again hit a new record. with the cryptocurrency having tripled in value this year, trading at US$ 22,945 by the end of Thursday trading. With bitcoin’s supply capped at 21 million, investors see it as a hedge against the risk of inflation, with governments and central banks turning on the stimulus taps to tackle the negative impact of Covid-19. When this particular “tap” is turned off, there will be those who will search for alternative currencies due to constant fiat money debasement. Only four years ago, it came close to topping the US$ 20k mark but since then has hit extreme lows and even falling below US$ 3.3k. Despite BoE Governor Andrew Bailey (and he has been wrong before) cautioning over its use as a means of payment, it is being widely utilised as a form of payment with PayPal among the most recent adopters of the digital currency.

In a cash deal of over US$ 3.9 billion, Zurich Insurance is planning to acquire MetLife’s US property and casualty business, extending its reach of its Farmers subsidiaries; it is expected that the cost of the purchase will be divided between Zurich’s Farmers Group and Farmers Exchanges subsidiaries in the US. Zurich, which saw its gross written premiums declining 3% to US$ 15.3 billion in Q3, hopes that with the Farmers businesses gaining a nationwide presence and access to MetLife’s distribution channels to 3.8k companies for ten years, will see a boost in its revenue stream. The MetLife deal, which includes 2.4 million policies and a reported US$ 3.6 billion net written premiums, is expected to contribute a 10% return on investment to Zurich’s earnings from 2023.

UK’s video-game-maker Codemasters, in a deal worth an estimated US$ 1.2 billion, has been acquired by games giant Electronic Arts which owns the global franchise to Need for Speed. Codemasters, also involved in racing games, including the Dirt Rally series and Formula 1 licences, had earlier rejected a US$ 973 million offer from New York-based Take-Two Interactive and has indicated that it would recommend its shareholders accept the offer. However, there is still a chance that Take-Two could respond with a better offer, which would see the two US gaming giants raising the stakes for Codemasters, founded in 1986 by two schoolboy brothers.  

Cyberpunk 2077, touted as one of the biggest gaming releases of the year, has been pulled from PlayStation stores after complaints of bugs, compatibility issues and even health risks; its long-awaited arrival had already been delayed twice. This will be a major blow for Sony Interactive Entertainment, as this is one of the most expensive video games ever made,  The company has indicated that it will “begin to offer a full refund for all gamers who have purchased Cyberpunk 2077 via PlayStation Store”. It will also remove the game until further notice.

It seems that the huge on-going financial scandal, bedevilling Germany, may claim another victim, Ralph Bose, who has headed Apas, the country’s accounting regulator, since 2016; before that, he was a senior partner at the Big Four firm, KPMG.  He has confessed that he had bought and sold shares in Wirecard last April, at the same time, his own watchdog was investigating the fraudulent payments company auditor, EY. It seems that many were aware of Wirecard’s problems even before Apas opened a preliminary probe into EY’s audit work in October 2019 and it took the watchdog a further eight months to open a full investigation, whilst in September it filed a criminal case against three EY auditors. It looks highly likely that another one will bite the dust.

Covid-19 has not been kind to AMC Entertainment Holdings, the world’s largest movie theatre operator, which has seen attendances slump by 92% in the US and 86% internationally. It has secured a further US$ 100 million in emergency funds – but that will only see it to the end of December at best, as its average monthly cash burn has been 25% higher at US$ 125 million. Whist most of the cinemas have been closed, the growth of streaming has becoming so popular that there is no doubt it will continue to present a major problem, even when some sort of normalcy returns to the screen. Both Warner and Disney have plans to push more of their new releases through streaming services – the former confirming that all of its 2021 films will be released online on the same day, with Disney also indicating that it plans to push more of its films to its Disney+ streaming service.

Ride-hailing firm Uber Technologies Inc was fined $59 million on Monday for failing to provide the California Public Utilities Commission (CPUC) with information on certain sexual assault and harassment claims between 2017 – 2019.

Following the earlier success of DoorDash, Airbnb hit the jackpot this week when its IPO share price of US$ 68.00 ended its first trading day 112.8% higher at US$ 144.71, proving the resilience of the home sharing company, during a year when global travel ground to a halt; a year earlier, 54 million guests stayed at an Airbnb. The closing price gave the company a valuation of just over US$ 100 billion, although Airbnb only raised US$ 3.7 billion in its offering, making it the biggest US IPO this year.  It still is a mystery how a company can be so valued even though it has never made a profit – and its nine-month revenue to September was down 32% to US$ 2.5 billion. It is reported that Airbnb controls around 39% of the global short-term rental market and is the market leader in Europe but trails VRBO, a vacation rental company owned by Expedia, in North America. It has 7.4 million listings in 22 countries and operated by four million hosts.

Another week, another IPO and another jackpot for investors but this time it was not in the US but India where Burger King jumped 87.5% on its market debut on Monday, with each US$ 0.82 share closing on US$ 1.53.  At the beginning of the day, the company, that runs the franchise of Restaurant Brands International Inc’s US chain Burger King, was valued at US$ 583 million and ended worth almost US$ 1.1 billion. The IPO raised about US$ 110 million and was an indicator that the country’s food service sector was moving forward.

A rarely known fact is that sportswear firm Reebok started life almost seventy years ago in Bolton, England, but was later bought by an enterprising US entrepreneur. The company became a global player in 1982 on the back of its development of the Reebok Freestyle aerobics shoe, the first athletic shoe designed for women, at the start of the aerobics fitness trend. Adidas, which acquired the company in 2006 for US$ 3.8 billion, is now possibly in the market to sell it and will decide by March; it seems that interested parties could include the private equity firm Permira, which owns the Dr Martens footwear company, and Timberland brand owner, VF Corp. 2019 figures of an increase in revenue to US$ 2.1 billion only account for 7% of Adidas’ total annual sales. Currently, Reebok, based in Boston, currently has a six-year US$ 70 million deal with Ultimate Fighting Championship.

McLaren is to sell as much as 33% in its racing unit to a US consortium led by MSP Sports Capital and is set to receive US$ 245 million – funding that will be spent to refinance bonds due in 2022 and repair its finances to continue developing new models. At this level of investment McLaren’s racing unit is valued at US$ 740 million. To raise extra financing, the company is considering a sale of its Woking headquarters. Continuing the F1 connection in the week that saw the Abu Dhabi Grand Prix closing the 2020 season, Ferrari was in the news ,with the sudden departure of its chief executive Louis Camiller;  he was quickly replaced by an Agnelli family descendant, John Elkann, on an interim basis.

Aiming to help Americans, who were struggling because of the pandemic, MacKenzie Scott, has donated more than US$ 4 billion to food banks and emergency relief funds in four months; this brings her total charitable donations to over US$ 6.0 billion with 380 charities benefitting from her largesse. The ex-wife of Amazon founder Jeff Bezos, and now the world’s 18th-richest person, has seen her personal wealth jump 156% this year to US$ 60.7 billion. Latest figures show that the US poverty rate has surged since June to reach 7.8 million citizens.

By the end of the week, once again, all three US markets hit record highs, with the Dow Jones gaining 147 points (0.5%) to close at its highest ever level of 30,302 points, whilst the benchmark S&P 500 closed 0.6% higher at 3,722, with the tech-heavy Nasdaq 0.8% to the good to 12,764 points.  The main drivers continue to be rising unemployment rates, surging pandemic cases and confidence that the US Government would need to pass a stimulus bill to bolster the economy. Latest data also points to manufacturing activity in the mid-Atlantic region cooling, with factories reporting a sharp slowdown in new orders and job growth.

There are reports that indicate that Spain will be the main beneficiary of the EU’s US$ 920 billion coronavirus fund, with a possible US$ 172 billion in project financing. Some of the country’s blue-chip companies – including Seat, Telefonica and Iberdrola – are making plans to ensure that they will receive funding. Other countries in the line-up include “old favourites” – Croatia, Bulgaria, Greece, Portugal and Romania – some of them which have had economic well documented woes in the past.

Meanwhile, the bloc’s stand-out economy, Germany, is heading for a double-dip recession, as the Merkel administration has imposed a severe four-week lockdown, which could knock off 4% from the country’s growth rate, compared to the 2.5% from the first lockdown earlier in the year.

The EU is to introduce a pair of laws – the Digital Services and Digital Markets Acts – focusing on competition and making platforms responsible for hosted content. The new laws will “overhaul” the digital market, including how tech giants operate, with transgressors facing heavy penalties. Driven by Competition Commissioner, Margrethe Vestager, and Internal Market Commissioner, Thierry Breton, they have noted that much of the current outdated law goes back to the start of the century and that “the business and political interests of a handful of companies should not dictate our future”, adding “that our rules and principles are respected everywhere. Online as well as offline.” In the past, the EC has taken swipes at the US tech giants, such as Google and Facebook, and their market dominance along with their preponderance to utilise the data they gather from one service to “improve or develop” a new one in a different area, making it difficult to compete with them. Labelling such firms “gatekeepers”, that “set the rules of the game for their users and their competitors”, the EU will surely have a battle on their hands.

Cuba is set to devalue its peso to US$ 0.24 on 01 January 2021, as the government struggles with its worst economic crisis since the collapse of the Soviet Union. For years, the currency has been artificially set at parity to the greenback. The Miguel Diaz-Canal government plans to raise state wages and pensions fivefold to compensate for the almost-certain jump in inflation, driven by the devaluation. However, this move will only benefit 60% of the working population, with the 40% balance working in the private and informal sectors.

In a rare setback for the Australian medical research centre, Australia has cancelled plans to proceed with CSL’s promising Covid vaccine, as clinical trials, being developed by the University of Queensland and CSL, have been abandoned because some participants returned what are called false positive test results for HIV. (Importantly, the participants did not develop HIV or any of its symptoms, but in tests for disease they returned results that incorrectly looked positive for it). The federal government had already signed deals with four companies for the supply of a Covid vaccine including 51 million doses from CSL. CSL is one of the country’s most valuable companies, having started the century, with a share value of US$ 5.30, and, having doubled its price over the past five years to US$ 255, last March it temporarily become the largest market cap on the ASX; last year, it posted a profit in excess of US$ 1.6 billion.

Once a geological survey and fundraising are finalised, work is planned to start in 2026 in Western Australia on a US$ 27 billion project to mass-produce hydrogen, from renewable power sources; this could present the country a major revenue generating opportunity to move away from coal to clean energy exports. When completed, it will churn out 1.75 million tons of hydrogen annually, equating to enough fuel for thermal power plants equivalent to six nuclear reactors Utilising a leased space of 6.5k sq mt, (six times the size of Hong Kong), the Asian Renewable Energy Hub plans to build wind turbines and photovoltaic systems generating 26k megawatts. The four-company consortium, including a private investment company affiliated with Australia’s Macquarie Group, aims to meet Canberra’s hydrogen production cost target of US$ 1.50 per kg; this would inevitably generate massive demand, as the current cost in Japan is US$ 7.20. The country aims to become a hydrogen powerhouse by 2030 and expects the hydrogen sector to contribute as much as US$ 19.5 billion to GDP in 2050.

The Financial Conduct Authority, which was then led by the current Bank of England Governor, has been reprimanded for failing to “effectively supervise and regulate” London Capital and Finance which collapsed in January 2019. Records show that some 11.6k investors had lodged US$ 330 million before its failure, with many who lost all their investment may now receive a one-off compensation; the firm was offering 8% for people investing for more than three years. Former Court of Appeal judge, Dame Elizabeth Gloster, who wrote the review, noted that FCA’s “flawed approach” allowed LCF to look respectable, even regarding its non-regulated products and that Its failure to regulate properly was due to “significant gaps and weaknesses” in its practices and policies. It concluded that “responsibility for the failure in respect of the FCA’s approach to its perimeter rests with the executive committee and Mr Bailey”. Belatedly the current governor, appointed in March 2020, was gracious enough to apologise to those, many of whom were first-time investors, who lost life savings whilst he got promoted to the top job in the banking world. To make matters worse, several independent financial advisers had warned the FCA, some four years earlier, about what they felt were “misleading, inaccurate and not clear” adverts, often promoted on social media.

By the end of the week, hopes of a Brexit deal grew, as it was reported that the EC President, Ursula von der Leyen had told the European Parliament that that “there is a path to an agreement now”, albeit a narrow one. Boris Johnson later joined in the farce telling UK lawmakers that there was “every hope, every opportunity” of a deal if the EU were to recognise the country’s sovereignty in important areas. Even MPS, who were yet on another holiday, were put on standby to approve any last-minute deal.  Sterling responded well to the news reaching two-year highs of US$ 1.35 and even bookies now estimate there is an 81% chance of a deal. It does seem incongruous that the original referendum was in June 2016 and it has taken so long to come to this stage. But the EU does have form when it comes to last minute deals but Time Is Running Out!

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Found Shelter From The Storm

Found Shelter From The Storm                                                       10 December 2020

Because of an oversupply in the Dubai market, Emaar Properties announced the halting of all new projects. For the past six years, the sector has laboured through a construction boom, that has led to an oversupply, and just when it appeared that the bottom had been reached, along came Covid-19. Its chairman, Mohamed Alabbar, speaking at a UAE-Israel conference in Dubai confirmed that “we as a group have stopped supply,” although noting that demand was improving, and that Dubai property was reasonably priced. Undoubtedly, any moratorium on construction will help stabilise the real estate sector, and it is highly likely that other developers will follow the lead of Mohammed Alabbar (Emaar) and Hussein Sajwani (Damac) and abandon future projects until a supply/demand equilibrium is reached in the sector.  It is estimated by Cavendish Maxwell that 220.2k units have been handed over since 2008, of which 140k have been delivered since 2014 – equating to under 24k a year, a lot lower than some figures that have been bandied around over the past few years.

Having broken ground in 2019, phase 1 of Dubai Holding’s flagship 54-building residential development, Madinat Jumeirah Living, is on course for delivery within six months. The initial phase of the exclusive 3.85 million sq ft project, comprising two residential buildings, includes a range of 1-4 B/R apartments, with prices starting at US$ 460k; this is already 99% sold out. Construction of phase 2, comprising three buildings, is well under way, being 42% complete and slated for a Q3 2021 handover. Madinat Jumeirah Living is the first freehold residential development in Umm Suqeim and is handily located opposite the Burj Al Arab.

Acknowledging that Israel is a “very well-established market” with traders, Sultan bin Sulayen Group Chairman of DP World, has “estimated at least US$ 5 billion trade in the beginning between the UAE and Israel” which will increase further in time. He further commented “there are plenty of opportunities”, especially in technology, logistics and other industries. In addition, it is expected that at least 10k Israelis will visit the country this month. There were many Israeli technology companies taking part at the Gitex Technology Week and who see Dubai as a hub to cater to the wider Gulf, Africa and Asia regions. There are strong growth prospects for established Israeli companies, as well as a number of start-ups attending Gitex, to establish a presence in the region, with Dubai an obvious hub.

A May 2020 survey carried out by cybersecurity company Proofpoint indicated that 80% of respondents in the UAE claimed that they had been subject to at least one cyber-attack the previous year. The most common forms of attack were phishing and credential theft and it is estimated that attacks have become more prevalent since the onset of Covid-19, with Iran being the common source for many. The UAE’s cyber security chief, Mohamed Al Kuwaiti, also reckoned that the country had become more of a target for cyber-attacks after establishing formal ties with Israel No other details were made available but he did confirm that Israel has the “best talent in the field” and that the two countries will work together to combat future threats.

Despite the aviation sector facing the brunt of the pandemic, with flight schedules being decimated, and only now marginally improving, Emirates has taken delivery of three new Airbus 380s to be used when their new premium economy class takes to the skies. The first of the three, the airline’s 116th jumbo, arrived this week with the other two set to join the fleet by the end of the year.

Typical of its cavalier approach to marketing, Emirates is to run a multi-million-dollar global campaign to promote Destination Dubai. The multi-channel advertising campaign, which will initially launch in the UK and key European markets on television, online and social media channels, will send the message that Dubai is open for business and tourism; its target is to show the emirate’s diverse attractions to those seeking a winter getaway. The airline will also partner with Dubai’s Department of Tourism and Commerce Marketing to offer complimentary stays at the JW Marriott Marquis to all Emirates customers visiting Dubai from now until 21 February 2021. Emirates, which has reinstated passenger flights to more than one hundred destinations, is the first and only airline to offer all its customers multi-risk travel insurance and COVID-19 medical cover, free of cost, as well as offering visas on arrival for citizens of over fifty countries.

As per a new law introduced by HH Sheikh Mohammed, Dubai is establishing a framework for regulating procurement at all the emirate’s government entities. The Law on Contracts and Warehouse Management, to be introduced on 01 January 2021, will ensure unified processes to obtain the “highest level of financial efficiency” and to “foster integrity, transparency and equal opportunities among suppliers”.

Moody’s has confirmed that it considers the UAE has the best sovereign rating in the region, assigning a credit rating of AA2, with a stable outlook. HH Sheikh Mohammed bin Rashid Al Maktoum notes that this is thanks to “interior stability, wise financial policies, strong international relations and well-established economic diversification”. The international rating agency indicated that the UAE’s credit strength was supported by the country’s financial strength and a high per capita GDP, along with its internal stability and strong and broad international relations. It also added that the country had demonstrated strong institutional effectiveness by spearheading reforms and diversifying its revenue base.

At a virtual UAE-UK ministerial briefing this week, Abdulla Bin Touq Al Marri, UAE Minister of Economy, confirmed that the UAE was looking forward to a Free Trade Agreement between the UK and the GCC. He noted that “the UK is the UAE’s third leading partner in non-oil commodities trade today. The UAE was UK’s top Arab trade partner in 2019, accounting for 32% of the UK’s foreign trade with other countries.” In the meeting with UK Minister for Investment, Lord Grimstone, they also discussed the importance of strong bilateral trade and investment ties in promoting a sustainable economic rebound and deepening links post-Brexit. The UK ambassador also said the UAE will have a greater role in a free-trade framework between the UK and the GCC, when the FTA is materialised. In the first eight months of 2020, non-oil foreign trade between both countries was valued at approximately US$ 5.5 billion, whilst the UAE’s non-oil export to UK accounted for nearly US$ 500 million.

As part of its global expansion plans, California’s Diamond Foundry, has opened its office in Dubai Multi Commodities Centre. The company, which specialises in laboratory-grown diamonds, noted that the free zone was “the logical choice” for its international office, given its expertise in diamonds and the ease of its set-up process. Another plus point for the emirate was that “Dubai is a strategically important location for us, providing us direct access to some of the world’s most important diamond markets such as India, Israel and Europe.” Dubai has become a major trading centre for precious stones, with US$ 23.0 billion of rough and polished diamonds being traded last year. The eight-year old company is one of a number of makers of lab-grown diamonds to set up in the DMCC, which last year held the first laboratory-grown diamonds tender, offering more than 50k carats worth of stones.

The local bourses had a field day at the Sunday start of trading, following the five-day National Day holidays, adding US$ 4.4 billion to the market cap – an indicator that the UAE economy is displaying positive signs of recovery. The DFM rose 2.37% on the day, on the back of 627 million shares, valued at US$ 275 million, closing at a several-month high 2,481 points. There is renewed investor confidence following recent changes to company/bankruptcy laws and what could be seen as an easing of certain regulations in laws affecting expats, including wills and inheritance.There is no doubt that investor confidence has moved higher and this, in turn, has had a positive impact on the DFM. As this could be seen as the beginning of a post-Covid recovery, the local capital markets will witness even greater growth when the economy returns to some form of normalcy; the local economy will also benefit when oil prices head north again and when the global economy returns to pre-pandemic levels.

The bourse opened on Sunday 06 December and, 260 points (12.0%) to the good the previous four weeks, climbed a further 127points (5.2%) to close on 2,547 by Thursday 10 December. Emaar Properties, US$ 0.02 lower the previous week, traded US$ 0.11 higher at US$ 0.98, whilst Arabtec is now in the throes of liquidation, with its last trading, late in September, at US$ 0.14. Thursday 10 December saw the market trading at 456 million shares, worth US$ 80 million, (compared to 307 million shares, at a value of US$ 162 million, on 03 December).

By Thursday, 10 December, Brent, US$ 7.55 (18.4%) higher the previous three weeks, gained a further US$ 1.75 (3.6%) in this week’s trading to close on US$ 50.38. Gold, US$ 33 (1.8%) higher the previous week, shed US$ 2 (0.1%) to close on US$ 1,837, by Thursday 10 December. Because of encouraging news on the Covid vaccine front, gold lost a little of its lustre this week but still has much to offer the savvy investor.

It seems that the US$ 86 billion global toy market is set for a major shake-up, as Miniso Group, the newly New York-listed Chinese budget retailer, is poised to make its first foray on the global stage. The group, better known for low-cost items, ranging from household goods to electronic gadgets, will open the first store of its new chain Toptoy in Guangzhou. The group, which has benefitted as the pandemic has led to a boom for discount retailers, now hopes that its low prices and popularity can give it a foothold in China’s US$ 12 billion toy market, which its founder Ye Guofu reckons is split between “old-fashioned”, higher-end retailers like Toys ‘R’ Us, and cheap, low-quality goods, peddled at small stores and supermarkets. Toptoy will differentiate itself from its competitors by focusing on specific products, popular among children and young adults in China, and introduce ”a good home-grown toy brand to serve children”. Miniso, which has 25.2k stores in China and 16.8k in eighty other countries, hopes to cash in on the expanding global market, with its domestic market said to become the biggest in the world by 2022, surpassing the US$ 25 billion US industry, according to Bloomberg Intelligence.

Google’s US$ 2.1 billion bid for health tracker Fitbit is set to be approved by the EU more than a year after it announced plans to purchase the smartwatch maker to improve its lagging hardware business. It appears that the US tech giant has had to agree to certain concessions, which have not been made public, to allay EU anti-trust concerns about its move into wearable fitness devices. Long gone have the days of very loose regulation, when it came to antitrust issues, but that is rapidly changing, and it is becoming more difficult to blind side regulators and for them to expand into new industries. Meanwhile, Australia’s Competition and Consumer Commission published an offer from Google, that could be similar to the European commitments. It pledged that it would maintain health and fitness apps’ access to Google and Fitbit data and ensure Android phones could keep working with other wearable devices until 2030.

To nobody’s surprise, Uber has abandoned efforts to join the self-driving sector themselves and has decided that its cash would be better spent by acquiring a 26% stake in Aurora, a self-driving start-up already interesting both Amazon and Sequoia. The deal sees the company transferring its 1.2k payroll to Aurora, as well as investing US$ 400 million. With Uber’s investment, the US$ 2.5 billion company will quadruple to a US$ 10.0 billion valuation. Further investor interest by current Uber stakeholders will see Uber and its partners holding 40% of Aurora, a company that has worked in the past with big petrol car makers, such as VW, Hyundai and Fiat Chrysler; none of these dealings have progressed any further. Aurora will also benefit from the new arrangement not only because Uber runs the world’s largest ride-hailing fleet, it also has a close relationship with Toyota, a potential partner in the future.

What a debut for DoorDash on its first day of trading on the New York Stock Exchange where it traded 86% higher on Monday which valued the company at a mouth-watering US$ 60 billion. The US’s largest food delivery service proved a lifeline for SoftBank following a muted Uber IPO and September’s WeWork debacle when its value fell by almost 75% to around US$ 10 billion. SoftBank has a torrid time but has benefited to the tune of US$ 11.2 billion for an initial US$ 680 million investment; that will go a long way to soften the blow of a US$ 12.7 billion loss last financial year. However, better times lay ahead for the Japanese conglomerate, which has cash reserves of US$ 80 billion, as it has stakes in seven companies that are expected to go public by the end of 2021.

Shares of JD Health, the online pharmaceutical and healthcare spinoff of China’s second-biggest online retailer, traded 34% over its IPO price of US$ 9.11, valuing the company at US$ 29.0 billion. The holding company is China’s second-biggest online retailer and will still retain a majority stake in JD Health, which, in turn, will remain a subsidiary of the e-commerce giant. It is estimated that China is the world’s second-largest market for health care, nearing US$ 1.0 trillion last year. As one of China’s biggest pharmaceutical retailers, it has seen active annual users jump by 35.5% to 72.5 million. It is highly likely that the parent company may hive off two more subsidiaries, JD Digits, (a consumer credit and supply chain financing company), in which it has a 37% stake and its logistics arm. The group’s Q3 revenues were US$ 25.7 billion – 29.2% higher year on year, an increase of 29.2% over the same quarter in 2019.

Following late November’s announcement that Arcadia was going into administration, it now appears that Mike Ashley’s Frasers Group is considering buying some of its brands, including Topshop, Burton and Dorothy Perkins, as well as being in discussions about acquiring Debenhams. Frasers Group posted a 17.8% jump in H1 profits to 25 October of US$ 141 million, partly due to business rates relief, despite a 7.0% decline in revenue because of temporary store closures during the coronavirus lockdown; other drivers for the increased profit were its growing online business and the opening of new Flannels stores. Frasers Group owns 491 Sports Direct stores and 46 Flannels outlets across the UK.

November saw global food prices at their highest level in six years, driven by adverse weather conditions, with the Food and Agriculture Organisation noting that prices were up across the board that, in turn, put extra pressure on the forty-five countries that rely on outside aid to feed their populations; their food index was 3.9% higher on the month to 105 points – and 6.55% higher compared to twelve months earlier. Rises were seen in vegetable oil (up 14.5% because of low palm oil stocks), sugar – 3.3% higher because of “growing expectations of a global production shortfall” – and cereal prices (2.5% higher but up nearly 20% over the past twelve months because of reduced harvest prospects in Argentina).

By the end of last week, Indian shares had risen to a record high, led by finance stocks and market heavyweight Reliance Industries. The boost was also driven by news that the UK became the first Western country to approve a Covid-19 vaccine. Further positive economic data also helped the markets, with news that India’s trade deficit in November narrowed 21.9%, year on year, as imports fell sharply compared to the drop in exports.

The November Caixin/Markit Services PMI posted growth in China’s services sector, with new business rising at the fastest pace in over a decade – an indicator of a further recovery in consumer demand post Covid-19. The PMI rose 1.0 to 57.8, the second highest reading since April 2010, driven by new export business expanding for the first time in five months. Furthermore, business confidence improved to its highest since 2010, whilst services firms hired more workers for the fourth straight month and at a much faster pace. Both the manufacturing and service sectors recovered at a faster pace, as overseas demand kept expanding and employment saw substantial improvement. Caixin’s composite manufacturing and services PMI also rose 1.8 to 57.5, signalling the steepest increase in total Chinese output since March 2010. Analysts expect China’s economy to grow about 2% in 2020, the weakest since 1976, but still far stronger than any other major economy.

China is definitely cutting back on its overseas lending programme, as seen by the fact that its two largest policy banks, China Development Bank and Export-Import Bank of China loaned US$ 75 billion to overseas countries in 2016 which has slumped to just US$ 4.0 billion last year.   The two banks’ lending prowess can be seen by the fact that between 2008-2019, they lent US$ 462 billion, just US$ 5 billion short of the US$ 467 billion from the World Bank coffers. Over that period, ten recipient countries received 60% of Chinese funds, with Venezuela the leading recipient with 12.5% of the total, followed by Pakistan, Russia and Angola. The Chinese approach to lending in the past has received string criticism for lending to low-income countries with shaky finances and little hope of repaying all the loan, as well as lack of transparency with its feasibility studies. Another driver behind the funds drying up was the ongoing trade war with the US, which may have convinced Beijing to keep dollars in home vaults.               

Last week, the number of US unemployment benefits rose for first time in three months by 137k to 853k, on the back of new shutdowns, as Covid cases do not show any sign of reducing. Continuing claims rose 230k to 5.76 million – the first weekly increase seen since August. Numbers were on the high side of analysts’ forecasts and indicate that fresh job losses are occurring, as more businesses are forced to close due to new lockdown regulations in some states.

Having hit a 20 March low of US$ 0.574, the Australian dollar is now flyng high at over US$ 0.750, now that both confidence and conditions are above average, and stronger than pre-pandemic levels. However, the country is still not out of the woods and it will take some time for the economy to return to normal, with unemployment remaining at high levels, wages stagnating and the government inevitably having to cut back on subsidies. If the dollar continues to rise, it will act as a major barrier to any quick fix recovery. There are several factors for the dollar’s increase, the main one being the rising prices of commodities, particularly iron ore, which is at an eight-year high US$ 142 per tonne, and the fact that China cannot get enough of the commodity; it is estimated that the cost to the Australian producer is as low as US$ 15. Since China needs AUD to purchase Australian products, demand for the currency increases, pushing its value higher. Even at historic lows, Australian rates are relatively higher than comparable global rates – especially in the United States. Money normally goes to what will give the highest return and its move to the AUD adds further pressure on the currency to move north. However, there will be a time when the authorities will have to dampen the demand for the currency as a high currency makes imports cheaper, it has the opposite effect on exports, and this will have a negative impact on Australian trade. That being the case, it is only a matter of time that the Australian dollar will return to what could be considered an appropriate rate.

It has to Australia when the tax authority there confirms that hundreds of companies have reduced their tax bills to zero but that the proportion of entities with nil tax payable has decreased over the past three years, by 2% to 32% in 2016–17. However, the ATO confirmed that it had, for the first time, invoked the Diverted Profits Tax law to fight multinational tax avoidance. Of the 2.3k entities in scope for the 2018-2019 transparency report, 741 did not pay any tax. Of the balance, the 1.6k entities did pay tax totalling US$ 42.0 billion – US$ 2.8 billion higher, year on year, driven by mining companies with increases in commodity prices. However, the tax authority has finally utilised powers in relation to Diverted Profits Tax and has already taxed one major company, with several others in their radar. Also known as the “Google tax”, it allows the ATO to tax companies, it deems to be engaging in “contrived arrangements”, with a 40% tax on all profits. However, a plan to tax digital giants has been delayed due to the pandemic, with Google Australia still counting lucrative advertising revenue offshore.

Australia was quick to recover from its first recession since 1991, with Q3 growth at 3.3% but with Treasurer Josh Frydenberg noting that the country still had a lot of ground to make up from the Covid-19 economic downturn; he added that “Australia’s recession may be over, but Australia’s economic recovery is not”. With the economy recording contractions of 0.3% and 7.0% in the first two quarters of 2020, this still shows that the economy has contracted 3.8% annually. What may eventually prove to be a bigger curse on the Australian economy, than the pandemic, is its relationship with China, which worsens week on week. Australia cannot continue to take the high ground on all global issues and should be clever enough to pick its battles and should be more wary of continual criticism of its biggest trading partner.

Late last month, China landed a knock-out punch on the Australian wine trade by imposing anti-dumping tariffs of over 200% – this week, it added salt to the wounds by applying a further 6.3% tariff, due to claims that Australian winemakers have been subsidised and are dumping their product on the Chinese market. It is estimated that the US$ 850 million trade has already ground to a halt and the new tariff will have no further impact.

The Australian government will have to learn when to choose its battles and is now facing the consequences of taking on China on a number of important international issues such as backing a global inquiry into the origins of the coronavirus, apparent support of Hong Kong democracy and the Uighur Muslims. It seems that bilateral relations are at their worst in over fifty years. To date, Beijing has targeted Australian imports, starting in May with barley being hit with an 80% tariff, followed by cotton, timber, coal, sugar and rock lobster. Some abattoirs were hit and, in September wheat exporters were suspended from trading. This week, the import of more Australian beef was suspended. One sector that will not face any problems would be commodities.

Last month saw UK new car registrations slump by 27.4%, year-on-year, with the country spending most of November in a partial national lockdown that closed showrooms. With monthly sales of 113.8k vehicles, the car market “lost” sales of 42.8k vehicles, valued at over US$ 1.7 billion. In October, UK car manufacturing was 18.2% lower (24.5k vehicles), year on year. The Society of Motor Manufacturers and Traders is hoping that business will pick up in December, now a vaccine has been approved which in turn will see business and consumer confidence improving. YTD, the car market has contracted 30.7%, equivalent to 663.8k units. Overall, private demand has slumped by 32.2% and registrations by large fleets saw a 22.1% decline. The top selling vehicle for the YTD has been the Ford Fiesta (45.8k units) and for November, Vauxhall Corsa (3.7k units), VW Golf (3.6k) and Mercedes Benz A Class (3.2k).

Driven by a surge in house prices, (rising 6.5% in November, year on year), the UK’s construction industry grew faster than expected in November, with the IHS Markit/CIPS construction Purchasing Managers’ Index (PMI) rising 1.6 to 54.7, month on month. There are signs that the main growth driver is moving from catch up work to new projects. Although house building remained the sector’s mainstay, commercial construction continued to lag behind, as the Covid-19 pandemic still holds back any real progress for office space, retail developments and other corporate projects.

In contrast the EU PMI figures paint a duller picture, with a November PMI reading of 45.6, as French building firms recorded the most marked contraction, along with a disappointing contraction in Germany. The bloc also reported a quicker fall in new orders, as businesses continued to lower staffing numbers for the ninth straight month. IHS Markit noted that construction businesses in the bloc are pessimistic for 2021, due to the second wave of Covid-19 and the lack of projects coming to tender over the coming months.

In another bid to shore up the battered eurozone economy, the ECB injected a further US$ 605 billion stimulus package, bringing its total, since the onset of the pandemic, to US$ 2.3 trillion. The bank indicated that this latest measure would contribute to preserving favourable financing conditions during the pandemic by “supporting the flow of credit to all sectors of the economy, underpinning economic activity and safeguarding medium-term price stability”. This comes after the bloc’s economy in Q3 rose at its fastest ever pace of 12.5% but this will not be repeated, as lockdowns measures have been reintroduced in most of the twenty-seven countries – and the lack of progress in Brexit talks will have a further negative impact on any progress.  Negotiators have giving themselves until this Sunday to seal a new trading pact, with some US$ 1 trillion in annual trade at risk of tariffs if no deal can be reached by then. Interest rates remain unchanged at record lows as the euro hits a 30-month high of US$ 1.218.

In October, the UK economy grew by just 0.4%, compared to 1.1% a month earlier – a sure indicator that recovery continued to slow in the face of tougher coronavirus restrictions, which will see November returns even lower because of the reintroduction of lockdowns. However, following April’s record 19.5% contraction, the economy has continued to improve for the sixth straight month, driven by marked growth in education, retail and car manufacturing, but it is still 8.0% off pre-pandemic levels. Although the arrival of a vaccine, and a potential mass rollout, will boost the economy somewhat, the Brexit transition remains a drag on any economic recovery. 2021 will see the country’s biggest economic decline in over three hundred years and, at this rate, the country will not return to pre-pandemic levels until the end of 2022, at the earliest.

Bob Dylan has become the latest singer-songwriter, after the likes of the Leonard Cohen, Bruce Springsteen, John Lennon, Kurt Cobain, Stevie Nicks and Billie Eilish, to sell the rights to his entire back catalogue to Universal Music Group (UMG), which will acquire over six hundred Dylan tracks. In probably the biggest deal of its kind, the company will pay the 79-year old up to US$ 450 million for rights to all future income from the songs, including all royalties and control of all future income from the songs. Both parties have yet to confirm actual details of the deal. The Minnesota-born star, whose self-titled first album was released in 1962, released his latest – his 39th, entitled ‘Rough and Ready Ways’ – earlier in the year and became the first songwriter to receive the Nobel Prize for Literature in 2016. He is still touring and last year co-headlined a UK festival with Neil Young, at London’s Hyde Park. Finally, Bob Dylan has Found Shelter From The Storm.

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