Do You Believe In Magic?

Do You Believe in Magic?                                                                             12 August 2021

professionals are starting to bear fruit. Incentives to support entrepreneurs and the private sector, proactive safety measures to combat Covid-19, and visionary thinking for events such as Expo 2020, have underpinned investor appetite for real estate in Dubai. While nothing is guaranteed, we expect that confidence to continue to grow for the remainder of the year,” said

For the past shortened week ending 11 August, Dubai Land Department recorded a total of 1,188 real estate and properties transactions, with a gross value of US$ 1.28 billion. It confirmed that 1,072 villas/apartments were sold for US$ 621 million, and 116 plots for US$ 178 million over the week. The top three transfers for apartments and villas were an apartment for US$ 76 million in Marsa Dubai, a villa sold for US$ 62 million in Wadi Al Safa 5 and thirdly, an apartment sold for US$ 45 million in Um Suquam Third. The top two land transactions were for a plot in Island 2, sold for US$ 15 million, and a plot that was sold for US$ 8 million in Hadaeq Sheikh Mohammed Bin Rashid. The most popular locations were in Nad Al Shiba First, with 21 sales transactions worth US$ 16 million, Jebal Ali First, with 19 sales at US$ 15 million, and Hadaeq Sheikh Mohammed Bin Rashid, with 15 sales transactions worth US$ 9 million. Mortgaged properties for the week totalled US$ 545 million, including a plot for US$ 59 million in Al Hebiah First. 47 properties were granted between first-degree relatives worth US$ 29 million.

As Dubai economy continues to recover from the impact of Covid-19, July property prices in Dubai rose 15%, year on year. Property Monitor noted that the average property price was US$ 256 per sq ft – 15.0% higher over the past twelve months – and that YTD, Dubai prices were up 11.8%, and 1.9% higher in July. Emaar accounted for 23.1% of all property transactions, followed by Sobha Group with 15.1% of the total.

A report by SmartCrowd confirmed what the market already knew – that Dubai’s residential property sector had witnessed a V-shaped recovery in H1, after finally bottoming out late last year. In their “Dubai Residential Property Report,” it noted that the market had recorded a 74%, year on year, increase in overall volume of transactions, with the value of property transactions rising 113%. The report also added that “with a lack of new supply in Dubai’s most popular areas, and pricing at levels last seen in 2011, there is positive sentiment in the market and a resultant boost in demand for existing properties.” Other interesting points indicated that H1 growth for ready and off plan villas came in 19.3% higher, at US$ 247, and up 9.3% to US$ 204 respectively, whilst ready apartments and off plan apartments increased by 8.7% and declined by 9.5% respectively.

According to Knight Frank, Palm Jumeirah is not only registering new record high villa prices but also posting the highest number of home sales in almost five years. It estimates that the average transaction prices, of US$ 572 per sq ft, are at their highest levels since 2016, and 40% higher than four years ago. Furthermore, 19 of the 34 US$ 10 million + homes sold in Dubai were on the Palm Jumeirah; in H1, the highest price paid for a villa was One100 Palm sold for US$ 30 million in March – this was surpassed by a July Jumeirah Bay Island villa sale for US$ 33 million. Although only accounting for 2.0% of total Dubai sales in Q1, numbering ninety transactions, Palm Jumeirah sales accounted for 13.5% of the US$ 4.31 billion value. Palm Jumeirah apartments, of which 300 were sold in Q2, are selling at an average US$ 490 per sq ft – its highest level since 2016.

Dubai’s hospitality sector is gearing up for what promises to be an eventful end to 2021, as the country celebrates its golden anniversary, Expo 2020 starts in October and 80% of the country is now vaccinated, with international travel restrictions slowly being lifted. Global demand for travel to Dubai is beginning to ramp up, with Wego reporting that its website had seen 533k searches last month on flights and hotels for the six-month Expo period. Indeed, hotels have started offering packages and special deals for visitors to the exhibition. Figures from Dubai’s Department of Tourism and Commerce Marketing showed that the emirate welcomed over 2 million visitors in the five months to May 2021 and that there will be no problem with coping the expected surge in demand in Q4; the emirate has a portfolio of 128.5k hotel rooms spread across 715 hotels, 134 of which are five-star.

In July, Dubai’s non-oil private sector economy, as measured by the HIS Marketing PMI, rose 2.2, month on month, to 53.2 – its fastest pace in a year – as demand gained traction, driven by an uptick in customer numbers that boosted sales in the travel/tourism and wholesale/retail sectors. New employment numbers for Dubai rose at their quickest rate in eighteen months, whilst businesses recorded a rise in new orders in July, with increased consumer spending, leading to the joint-fastest rise in output since July 2020.

An interesting move by Abu Dhabi Department of Economic Development sees the introduction of a new professional licence that gives foreigners 100% ownership of businesses related to over six hundred different activities; they include accounting, training, consultancy, beauty centres, computer and internet network companies. Furthermore, a local service agent will be responsible for managing licensing requirements, if there is no Emirati partner, and the new licence holder can also open an additional branch “if the business activity is consistent with or complements the professional licence issued”. Existing businesses can amend their legal status from a commercial to a professional facility. Currently, this new regulation only applies in the emirate of Abu Dhabi.

Having raised US$ 50 million in its latest Series B funding round, bringing its total financing to US$ 130 million, Dubai-based Tabby is now valued at US$ 300 million. At this price, the buy now, pay later provider has become one of the most valued start-ups ever in the Mena region. The money raised will be used to expand both its product range and also to enter a number of new markets. Tabby, which boasts over 400k active shoppers, integrates with 2k retailers, including Chalhoub Group, Al Futtaim Group, Landmark Group, and Apparel Group, to allow their customers to shop at their online and physical stores with interest-free instalments.

On 01 September, creditors of NMC Health, who are owed more than US$ 6.4 billion, will meet to discuss proposals from joint administrators relating to future financial restructuring of the UAE healthcare group, founded by BR Shetty. Having already agreed to US$ 4.0 billion of the debt being wiped out, and replaced by equity instruments, the creditors will discuss “revised” proposals and the proposed Deeds of Company Arrangements. NMC Health had been placed in administration in April 2020 when an independent investigation uncovered more than US$ 4.4 billion in previously unreported debt.

Shuaa Capital reported over a 1k% jump in H1 profits to US$ 15 million on the back of higher net fee and commission income, with net fee and commission income increasing 52% to US$ 43 million. However, Q2 profits came in at US$ 8.0 million, compared to US$ 73 million a year earlier, as operating expenses jumped 37% to US$ 23 million. The Dubai-based investment bank, which merged with the Abu Dhabi Financial Group two years ago to create a business with both an asset management and investment banking platform, has assets under management worth US$ 14 billion. The company also plans to establish three SPACs, with a capital of US$ 200 million each, in a bid to tap into the growing market for blank-cheque companies – development stage entities that have no specific business plan or purpose or have indicated their business plan is to engage in a merger or acquisition with an unidentified company.

Emaar Malls posted an 80% hike in H1 profit to US$ 169 million, with revenue climbing 23% to US$ 452 million, with Q2 witnessing a steady recovery from the pandemic’s impact on the global retail market. Its wholly owned subsidiary, Namshi, saw Q2 sales 65% higher, on the quarter, at US$ 116 million, with H1 revenue figures at US$ 186 million. The e-commerce fashion and lifestyle platform added 240 new brands in the period and saw strong growth in the GCC.

Despite H1 revenue increasing 52% to US$ 3.4 billion, Emaar Properties posted an 8.0% decline in net profit to US$ 425 million, as operating and other expenses headed north. During the period, property sales were 229% higher at US$ 4.49 billion. In Q2, Dubai’s largest listed developer posted a 17.0% decline in net profit, at US$ 246 million, although revenue was up 125% to US$ 1.8 billion. Since 2002, Emaar has handed over a total of 77k residential units and has currently 36.7k units under development, of which 25.7k are in the UAE. Meanwhile, both H1 revenue and net profit rose at its Emaar development arm – by 61% to US$ 2.1 billion and 46% to US$ 411 million.

The DFM opened on Sunday 08 August, 106 points (1.9%) higher the previous three weeks, dipped 5 points (3.9%) to close the shortened week, (because of the Islamic New Year), on 2,815. Emaar Properties, US$ 0.03 higher the previous week, was US$ 0.01 lighter at US$ 1.10. Emirates NBD and Damac started the previous week on US$ 3.65 and US$ 0.33 and closed flat at US$ 3.65 and US$ 0.33. On Wednesday, 11 August, 103 million shares changed hands, with a value of US$ 35 million, compared to 86 million shares, with a value of US$ 44 million, on 05 August.

By Thursday, 12 August, Brent, US$ 3.50 (4.7%) lower the previous week, dipped US$ 0.11 (0.1%), to close on US$ 71.31. Gold was US$ 26 (1.4%) lower last week and lost a further US$ 53 (3.0%) to close Thursday 12 August on US$ 1,749.   

Even with an extra 400k bpd hitting the market for the rest of the year, as Opec+ nations raised the output limit imposed on five countries, including the UAE, by phasing out 5.8 million bpd production cuts by September 2022, it appears that the market will be in deficit by year end. The current proposed 1.6 million bpd hike will not take immediate effect and will probably be enforced by a redistribution of quotas between members. This minimises the risks of any future supply hikes and a possible flooding of the market by some members. There are fears that the market may see a downturn if the Delta variant spreads more quickly, which would see China’s energy demand reduce, or there was renewed Taliban unrest in Afghanistan.

Meanwhile, Aramco – in line with many other energy giants – posted very healthy Q2 figures, with net income climbing 288% to US$ 25.5 billion, on the back of a 30% YTD rise in oil prices as demand recovers, with global lockdown measures easing and businesses returning to some form of normalcy. The Saudi conglomerate noted that “we are heading into the second half of 2021 more resilient and more flexible, as the global recovery gains momentum.” In July, US energy giant Exxon Mobil posted a Q2 rise in income of US$ 4.7billion, compared to a loss of more than US$ 1.0 billion a year earlier.

It is reported that Virgin Atlantic Airways, founded in 1984, is considering an IPO on the London Stock Exchange later this year, as international air travel shows promising signs of recovery. The airline, founded by Richard Branson, has received a “positive” reaction from institutional investors, whilst Citi and Barclays have reportedly been hired to oversee the listing. Currently, Branson’s Virgin Group holds a 51% stake in the airline, and it is likely that if the IPO goes ahead, its founder will relinquish control. Because of its dependence on the UK-US transatlantic routes, Virgin has been badly hit by the pandemic which has decimated demand for air travel, particularly for long-haul trips. Now the airline is keen to raise funds to return to some form of operational normalcy.

Following news that online food delivery firm Delivery Hero had paid US$ 393 million to buy a 5% stake in its rival, Deliveroo shares jumped 11% on Monday to US$ 4.98 – its highest level since it went public in March at US$ 5.40.  Niklas Oestberg, Chief Executive of the German Delivery Hero, commented that his investment was acquired “at a decent gross profit margin”, and that he considered Deliveroo’s stock to be “undervalued”, due to being “oversold at IPO”. Interestingly, despite rising revenue figures, bought on by the pandemic, neither company has yet to make a profit.

Paddy Power owner Flutter has exceeded expectations by seeing H1 revenue 28% higher at

US$ 4.1 billion, as its average number of gamblers rose 40% to more than 7.5 million. There is no doubt that there has been a general uptick in online gambling since the onset of the pandemic in early 2020, as many countries closed physical shops, with gamblers moving on-line. Flutter, which owns brands such as Betfair and Sky Betting and Gaming, posted that it had 59% more online customers than in the same period in 2019 before the coronavirus crisis. In the UK, numbers (rising 44% to 3.3 million), outpaced the 30% revenue grow to US$ 900 million.

Fortress Investment Group has raised its initial offer, by 7.1% to US$ 9.3 billion, to acquire Morrisons, which has been agreed by the UK supermarket chain. UK’s fourth largest grocer has attracted interest from several private equity groups, including former Tesco boss Sir Terry Leahy and Clayton Dubilier & Rice, because of its large real estate portfolio, with the company owning about 90% of its almost 500 stores; CD&R had earlier submitted a US$ 7.66 billion offer which was rejected by the board. Morrisons is attractive to potential buyers because it generates large amounts of cash and has low underlying debt, as well as a pension surplus. Because of this, it is highly unlikely that we have seen the last move for Morrisons, but even if that is the case, perhaps Sainsbury’s could be next supermarket up for grabs.

Australia’s largest lender, Commonwealth Bank of Australia, posted a 19.7% jump in annual profit, (to the year ending 30 June), to almost record highs of US$ 6.5 billion, driven by a sustained economic recovery from the coronavirus pandemic. It also saw its impairment provision reduce to US$ 408 million, (down from US$ 1.9 billion last year). Its profit would have come in higher at US$ 7.5 billion, if discontinued operations – such as the sales of its Colonial First State, CommInsure Life, Colonial First State Global Asset Management, PT Commonwealth Life divisions – had been included.  CBA also declared a final US$ 1.47 dividend and announced a record US$ 4.4 billion share buyback.

With gains in the leisure/hospitality, education and professional services, the US economy saw July employment numbers jump by 943k. However, as the rise in the number of Delta variant cases only surfaced towards the end of the month, there are concerns that if new restrictions are imposed, this would have a negative impact on August employment data. Although the July unemployment figure dipped 0.5% to 5.7%, the total number of employed at 8.7 million is still much higher than the pre-pandemic return of5.7 million in February 2020. However, a month earlier, US job numbers had hit a record high, up 590k, on the month, to 10.1 million – a sure indicator that the country could be facing a labour shortage, particularly in the leisure and hospitality sectors. The shortfall has been attributed to various factors such as lack of affordable childcare, generous unemployment benefits, and pandemic-related retirements and career changes.

Mainly because of the hospitality sector opening in April, along with non-essential retailers including gyms, hairdressers and outdoor dining, the UK economy grew by 1.0% in June and 4.8% in Q1; this was the fastest quarterly growth of the G7 countries. In addition, schools were fully opened as well as restaurants, cafes, theatres, galleries and cinemas. Although the GDP figure was 22.2% higher than at this time last year, it is still 2.2% lower than in February 2020, just prior to Covid. There was a 2.2% June decline in total exports of goods, excluding precious metals, attributable to a 5.6% fall in exports to non-EU countries, mainly because of declines in medicinal and pharmaceutical products and cars. Whether the pace of the recovery continues into Q3 is debatable because of staff shortages, caused by self-isolation requirements, and the government’s over-zealous contact tracing rules, along with global supply-chain bottlenecks. Furthermore, the government’s wage support scheme is set to end in September, and this may have a drag effect on the economy.

On top of the US$ 1 billion package, that will see infrastructure investment in roads, bridges, airports and waterways, US senators also began voting on a follow-up US$ 3.5 trillion spending package that Democrats plan to pass without Republican votes. The main beneficiaries would be companies in the energy, industrial and material sectors and so there was no surprise to see the share prices of Caterpillar, Deere and Vulcan Materials each posting 2%+ rises. Energy shares also moved higher, as crude prices rebounded more than 2%. With daily new coronavirus cases rising by 35%, to over a 100k in the country, progress on the infrastructure package should support the recovery in the world’s largest economy.

This week saw record highs on the blue-chip Dow and the benchmark S&P 500 in the US as well as the ASX in Sydney. Driven by gains in economically sensitive value stocks, after the Senate passed a US$ 1 trillion bipartisan infrastructure package, but still to go through the House of Representatives, the Dow Jones Industrial Average rose 172 points, to 35,274 and the S&P 500 gained 7 points to 4,439, in Tuesday trading. Again, on Tuesday, the ASX 200 rose for the sixth time in August to close on 7,584 points – over 15% higher YTD – driven by the banks and the mining companies, (although the price of iron ore has tanked 30% since May). There is no doubt that the market will turn probably before the end of the year and when it does, it will not be a pretty sight. If you do not think so – Do You Believe in Magic?

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Robin Hood – Prince of Thieves!

Robin Hood – Prince of Thieves!                                                    31 July 2021

According to Property Finder, July sales transactions in Dubai hit a 12-year high, registering 4,384 sales deals, worth US$ 3.05 billion, and this despite the fact that July is normally considered a “quiet” and slower month for the market. Last month, 59.4% of sales, (2.6k at US$ 2.11 billion) were in the secondary market – and the balance (1.8k at US$ 937 million) off-plan; the average transaction value for secondary or ready property increased by 4.62% to US$ 790k and off-plan units by 33% to US$ 518k. It reported that the top locations for villa/apartment sales were Dubai Hills Estate, Arabian Ranches, The Palm Jumeirah, Damac Hills and Mohammed bin Rashid City, with Dubai Marina, Downtown Dubai, The Palm, Business Bay and Jumeirah Village Circle for apartments. In the first seven months of the year, 31.8k sales transactions took place, valued at US$ 19.93 billion; the whole of 2020 saw 35.4k sales worth US$ 19.58 billion.

For the past week ending 05 August, Dubai Land Department recorded a total of 1,581 real estate and properties transactions, with a gross value of US$ 1.91 billion. It confirmed that 1,083 villas/apartments were sold for US$ 689 million, and 91 plots for US$ 195 million over the week. The top three transfers for apartments and villas were all apartments – one was sold for US$ 138 million in Marsa Dubai, a second sold for US$ 82 million in Burj Khalifa and thirdly, an apartment sold for US$ 45 million in Palm Jumeirah. The top two land transactions were for a plot in Me’Aisem First sold for US$ 17 million, and a plot that was sold for US$ 11 million in Madinat Dubai Almelaheyah. The most popular locations were in Hadaeq Sheikh Mohammed Bin Rashid, with 18 sales transactions worth US$ 75 million, Jumeirah First, with 15 sales at US$ 42 million, and Nad Al Shiba First with 11 sales transactions worth US$ 9 million. Mortgaged properties for the week totalled US$ 1.09 billion, including a plot for US$ 253 million in Palm Jumeirah. 35 properties were granted between first-degree relatives worth US$ 34 million.

Having resumed international travel three months earlier, in October 2020, Dubai became one of the first cities in the world to reopen for international meetings, conferences and conventions. Going into H2, it has built a healthy list of high-profile events, the most notable being the hosting of the delayed six-month long Expo 2020 Dubai, starting on 01 October. Some other major events include the Congress of the Société Internationale d’Urologie, Society of Petroleum Engineers Annual Technical Conference and Exhibition, International Astronautical Congress, World Chambers Congress, LPG Week, Gastech, (having been relocated from its originally planned host city of Singapore), and Africa Oil Week; the latter is usually held in South Africa but has been transferred to Dubai to coincide with Expo. Major incentive groups visiting the city will include AFC Life Science, Amway, Sunhope, Jeunesse and OMNILIFE. To build on this momentum, Dubai Business Events will continue to engage with meeting international planners, both here in Dubai and in their own overseas market, to highlight the city’s business events infrastructure and rapidly developing knowledge economy.

The Business Registration and Licensing (BRL) sector of Dubai Economy posted a 77.0% hike in business licences to 31k in H1 – a figure that surpassed pre-pandemic returns. Since the onset of Covid in March 2020, the Dubai economy has recovered a lot quicker than many had expected, mainly attributable to several rapid and effective government actions. H1 also saw the entry of 246 new investment firms and the establishment of twelve new holding companies, with the ‘Invest in Dubai’ platform attracting 10.6k foreign investors from 117 nationalities.

It is estimated that 51% of UAE’s wealth is in the hands of those individuals whose net worth is more than US$ 5 million, which in turn accounted for 26% of the GCC’s financial wealth last year. According to BCG, this wealth is expected to grow at an annual compound 4% rate to 2025, by which time the country’s wealth will have grown an extra US$ 700 billion, whilst the GCC total will have reached US$ 63 trillion. Saudi Arabia and the UAE account for 71% of the bloc’s total wealth.

Business activity in the UAE’s non-oil private sector continued to improve in July, posting its highest level in two years of 54.0, (52.2 in June), as demand rebounded from the pandemic-induced slowdown. Furthermore, employment rose at its fastest rate since January 2019, whilst both the output and new order indices also followed last month’s upward trajectory, driven by soaring domestic sales and strengthening market confidence, hitting their highest levels since July 2019. However, on the flip side, delays to shipments resulted in the worst lengthening of suppliers’ delivery times in over a year and contributed to a quicker rise in input costs. Business confidence indicated that the future economic outlook was bullish helped by the upcoming Expo 2020 and the easing of lockdown restrictions.

On Sunday, the UAE took over the mantle from the Seychelles to become the world’s most vaccinated country, having administered 18.8 million doses, equating to 78.3% of the country’s population.

In order to further promote Dubai as a regional and global hub for 3D printing technology, HH Sheikh Mohammed bin Rashid has issued a decree to regulate the use of 3D printing in the emirate’s construction industry which has already built two buildings; The Office of the Future at Emirates Towers was the world’s first 3D-printed office and Dubai Municipality’s Centre for Innovation the first 3D-printed two-storey building in the world. This decree is further support for the 2016 Dubai 3D Printing Strategy, aimed at ensuring that 25% of Dubai’s buildings will be constructed using the technology by 2030. The new law further aims to enhance efficiency in construction projects, boost the competitiveness of local industry, reduce waste and attract leading companies in 3D printing to Dubai.

The Dubai Ruler has also issued a further four decrees involving government-related entities including changes to board members. The first sees Sheikh Ahmed bin Saeed chairing the board of trustees of the British University in Dubai, while the head of the university will serve as vice chairman. Other members include Hussain Al Sayegh, Ahmad Al Muhairbi, Sheikha Hind Ali Rashid Al Mualla, as well as a representative each from Dubai Holding, the British Council in Dubai and the Northern Emirates, Emirates NBD, Rolls-Royce International, the British Business Group and Atkins.

The second decree appoints Reem Al Hashimy, Minister of State for International Co-operation, as chair of Dubai Cares, with Tariq Al Gurg as vice chairman. Other board members include Sami Al Qamzi, Abdulla Karam and Sultan Al Shamsi. Another appointed its MD, Mona Al Marri, as chairwoman of the board of the Dubai Women Establishment, with Hala Badri as her deputy. Other members of the board include Huda Al Hashimi, Huda Buhumaid, Khawla Al Mehairi, Mona Bu Samra, Fahima Al Bastaki, Aljoud Lootah and Moaza Al Marri, in addition to the chief executive of DWE. The fourth decree saw Tamim Al Muhairi appointed as chairman of Watani Al Emarat Foundation, with Saeed Al Aweem as vice chairman, and other members being Mohammed Al Theeb, Mohammed Al Hali, Dherar Belhoul, Abdulla Al Jatbi and Mohammed Al Tayer.

Dubai Airport Free Zone Authority, which supports more than 1.8k companies across more than twenty sectors, came up with some impressive H1 financial figure, posting an 8.3% hike in sales revenue, driven by an 88.4% annual increase in the number of registered companies and a 24% rise in leased areas. Over the period, the number of multinationals jumped 23.5% while the number of registered SMEs climbed 96.4%. To further support SMEs, (which make up 95% of all companies in the emirate and contributes 40% of Dubai’s GDP), Dafza also launched Scality, a start-up programme aimed at attracting local, regional and global tech start-ups to set up and grow in the emirate. H2 results will be bolstered by Dubai’s economy bouncing back quicker than expected and the opening of the six-month Expo in October. Following an agreement with the Securities and Commodities Authority earlier in the year, companies will be allowed to trade with crypto assets and cryptocurrencies within Dafza’s jurisdiction.

In Q1, trade rose 4.7% on an annual basis to more than US$ 39 billion and recorded a US$ 664 million, whilst accounting for accounted for 11% of Dubai’s trade. Goods including machinery, televisions, electrical equipment, pearls, semi-precious stones and metals accounted for 94% of the authority’s total trade. Trade with China surged 56.4%, year on year, and remained Dafza’s biggest partner, accounting for 31% of its total trade.

Dubai Economy has already fined 148 firms US$ 4.1k (AED 15k) each for failing to register their ‘Beneficial Owner’ data by the 30 June deadline. This followed several reminders from its Commercial Compliance and Consumer Protection division about the deadline and the importance of registering their Ultimate Beneficial Owner data with the commercial registry.

There was no surprise to see a PwC UK report claiming that Dubai is the leader in the world when it comes to workers taking home 100% of the total income earned, placing it ahead of peers such as Hong Kong, Singapore and New York. It seems that this was a no brainer considering that the emirate ‘s residents do not pay tax or social security payments and because of this Dubai has long attracted high-income individuals and multinational corporations.

THE RTA reported that it had collected US$ 805 million, via digital channels (e-payment portal and smart kiosks), last year, with the number of digital transactions reaching 527.1 million, the number of registered users on digital platforms 2.2 million, and the number of smart apps downloads was 6.1 million. The introduction of digitalisation has seen numbers at customers happiness centres fall 64.5% in 2020 and that the rate of digitisation of RTA’s transactions exceeded 91%. It does appear that the RTA is doing its bit to contribute to transform Dubai into the smartest city in the world. The authority is currently updating and following-up the implementation of 111 projects as part of its digital strategy 2020-2024.

Dubai-based venture capital firm Vy Capital, along with Alphabet Inc’s Google Ventures, led the funding round that raised US$ 205 million for Elon Musk’s 2016 brain-chip startup, Neuralink. Funds raised in Round C will be used to take its first product, N1 Link, to the market, and for research and development. The company aims to implant wireless brain computer chips to help cure neurological conditions, including Alzheimer’s, dementia and spinal cord injuries and fuse humankind with artificial intelligence. According to Elon Musk “First @Neuralink product will enable someone with paralysis to use a smartphone with their mind faster than someone using thumbs.”

 A Dubai-based fintech start-up, baraka, has raise a further US$ 4 million in its latest seed round. It has officially launched its mobile investment app, whose aim is to educate, enable and empower retail investors in the ME. The money raised will help target a large and underserved segment of investors in the region, in an industry which focuses on the higher income segments. It has also received regulatory authorisation from the Dubai Financial Services Authority and its commission-free investment app allows its users access to over 5k US-listed securities, with no minimum investment requirement.

Dubai Investments reported a 47.3% hike in H1 net profits to US$ 82 million, mainly attributable to enhanced performance of the manufacturing and contracting and investment segments. Total income for the period came in 50.9% higher, at US$ 469 million, mainly driven by increased margins in their property sector. During the period, DI acquired an additional 15.19% stake in National General Insurance, bringing its total shareholding to 45.18%.

Although there were declines in both its H1 revenue – 6.8% lower at US$ 167million – and net profit to US$ 18 million, down 49.0%, Dubai Aerospace Enterprise still announced that it was looking for early redemption of an additional $1.25 billion this month, following its March’s redeeming of approximately US$ 456 million of high coupon debt. In H1, operating cash flow rose 15.2% to US$ 498.5 million. DAE had 99.1% fleet utilisation rate and confirmed that in the coming months it would sell 27 aircraft and purchase 26, including 15 new 737-8 MAXs from Boeing.

The DFM opened on Sunday 01 August, 52 points (1.9%) higher the previous fortnight, was up a further 54 points (1.9%) to close the week on 2,820. Emaar Properties, US$ 0.01 lower the previous week, was US$ 0.03 higher at US$ 1.11. Emirates NBD and Damac started the previous week on US$ 3.65 and US$ 0.34 and closed at US$ 3.65 and US$ 0.33. On Thursday, 05 August, 86 million shares changed hands, with a value of US$ 44 million, compared to 126 million shares, with a value of US$ 46 million, on 29 July.

By Thursday, 05 August, Brent, US$ 1.87 (1.6%) higher the previous week, shed US$ 3.50 (4.7%), to close on US$ 71.42. Gold was US$ 23 (1.3%) higher last week but lost US$ 26 (1.4%) to close Thursday 05 August on US$ 1,802 Brent started July on US$ 73.31 and gained US$ 1.88 (2.6%) during the month, to close on US$ 75.19. Meanwhile, the yellow metal opened July trading at US$ 1,776 and gained US$ 41 (2.3%), during the month, to close on US$ 1,817.

Driven by an uptick in the global economy and higher energy prices, BP posted a Q2 profit, US$ 2.8 billion, after posting a massive US$ 16.8 billion loss a year earlier. It announced that it would raise dividends payment by 4.0% and it also will start with a US$ 1.4 billion share buyback programme. Its H1 profit at US$ 7.7 billion compares with a US$ 21.2 billion loss in 2020. BP joins other mega energy companies, such as Chevron, Royal Dutch Shell and Total Energies, to start share repurchases amid a favourable environment for crude commodity prices, currently hovering around the US$ 70 level. – more than 50% higher YTD.

Although revenue dipped 7.0% to US$ 25.7 billion, HSBC posted a 112% leap in H1 profit to US$ 11.9 billion, attributable mainly to the effect of the 2020 interest rate cuts. Of those figures, Q2 accounted for US$ 12.0 billion of revenue, (down 10.0% year on year), and US$ 5.6 billion of profit, (up 124%).  The three main drivers behind this drastic improvement for Europe’s biggest bank by assets were the return of growth in its main markets, an increase in lending and a drop in bad loan charges; its bad loan provision dropped from US$ 7.2 billion last year to US$ 719 million. The bank noted that all its regions had traded profitably in H1, with Asia driving the strongest growth in profitability. The bank declared an interim US$ 0.07 cash dividend but advised that “reflecting the current improved economic outlook and operating environment in many of our markets, we now expect to move to within our target dividend pay-out ratio range of 40 per cent to 55 per cent of reported earnings per ordinary share in 2021.”

Standard Chartered posted a higher-than-expected 57.0% jump in H1 profit to US$ 1.24 billion, as its Middle East and Africa (MEA) region’s operating income more than quadrupled to a five-year high of US$ 476 million, mainly attributable to a “significant” drop in provisions for loan losses, down on the year to US$ 40 million from US$ 370 million. The bank’s strongest returns were seen in its Asian region where profits were 75.0% higher at US$ 1.0 billion, driven by “fantastic results in Hong Kong and in China.” However, results in Europe were not as good, with a 5.0% decline in profit to US$ 337 million.

The Johnson government confirmed that it would be “closely monitoring” the planned US$ 8.8 billion takeover of Meggitt by US company, Parker-Hannifin. It added that “under the Enterprise Act 2002, the Business Secretary has powers to intervene in mergers and takeovers which raise national security concerns”. The Coventry-based defence and aerospace firm employs 9k globally, of which 2.3k are in the UK. Meggitt’s shares climbed 55% in Monday’s trading when the takeover bid was announced but still traded some 10% lower than the takeover bid. On the same basis, the government is also monitoring the proposed US$ 3.6 billion takeover of UK firm Ultra Electronics by US private equity-owned company, Cobham.

Despite having to pay a large anti-trust fine, Alibaba Group posted a Q1 (to 30 June) net profit of US$ 7.0 billion, slightly down on the comparative 2020 figure of US$ 7.4 billion; revenue was 34.0% higher at US$ 31.8 billion, driven by growth in the company’s China commerce retail business and its international retail and Cainiao logistics businesses. Alibaba has 1.18 billion annual active consumers of which 265 million are from overseas and the balance from within China; the total number increased by 45 million in the quarter.

It appears that the Chinese authorities are continuing with their recent policy of tightening their control over technology and private education companies and this is having a negative impact on the share value of Chinese online gaming firms. This week, a state media outlet labelled them as “electronic drugs”, following which the shares of Tencent and NetEase declined more than 10% in early Hong Kong trading. Investors are becoming increasingly concerned about the Beijing crack down, with the state-run Economic Information Daily reporting that “no industry, no sport, can be allowed to develop in a way that will destroy a generation,” and likening online games to “spiritual opium”. The latest government move is seen to be an attempt to tackle Tencent’s dominance of online music streaming where it controls more than 80% of China’s exclusive music streaming rights. Last week, the US$ 120 billion private tutoring sector was stripped of the ability to make a profit from teaching core subjects in China, with the new guidelines also restricting foreign investment in the industry.

The growing influence of players in the “buy now, pay later” market was brought home by the announcement that digital payments platform, Square, is to acquire Australia’s Afterpay for US$ 29.0 billion in an all-share offer. It valued Afterpay’s shares at US$ 92.91 each, a 34.1% premium on the market price last Friday but this is still well down on its February high of US$ 198.97. In Monday’s trading Afterpay shares were trading 29% higher at US$ 91.82. The US company has realised that there has been a shift, particularly in the younger age market, away from traditional credit and it now plans to integrate Afterpay into its consumer Cash App and its Seller product for small businesses. The sale will also see Square’s customer base increase from 70 million to 86 million.

Despite the impact of Covid-19, the UAE managed to boost its financial wealth by 3.0% to over US$ 600 billion. The report by the Boston Consulting Group noted that investable wealth accounted for about 69% of the total. On a global scale, financial wealth climbed 8.3% last year to US$ 250 trillion, whilst following the 2008 GFC it had actually declined 8.0%. 2020 witnessed both equities & investments funds, (driven by a strong stock market performance fuelled by supportive central bank policies, as well as cash and cash deposits both growing by 11.5% and 10.6%, the latter due to pent up savings). Over the period, governments pumped in over US$ 16 trillion in fiscal stimulus measures and global central banks a further US$ 9 trillion to bolster worldwide economies.

According to figures from CoreLogic, Australian house prices are going through the roof and, with July prices 1.6% higher, climbing at their fastest rate since February 2004. Although the monthly growth rate has begun to trend lower over the past four months, when the national index rose 2.8%, a continuance of the current trend of higher prices is pushing an increasing number of Australians out of the house-buying market. The current regime of low interest rates and generous tax breaks for housing will ensure that prices will continue to skyrocket. Darwin recorded the highest annual increase in house prices at 23.4% with Sydney, (still the country’s most expensive city), Brisbane and Melbourne posting increases of 18.2%, 15.9% and 10.4%. Houses continued to record much stronger growth in values relative to units – 18.4% against 8.7% – in every city except Hobart where the trend was 21.7% against 23.0%. With 42% of borrowers now having a loan-to-value ratio of 80%, the highest on record, when the market does implode, there will be a lot of mess to clear up.

The eurozone’s economy escaped the shackles of recession by a 2.0% Q2 GDP growth, following a double-dip recession, but it still remains 3.0% lower than its pre-pandemic level.

All countries in the 19-nation bloc recorded growth with some – such as Portugal, (growing at 4.9%) and Austria – performing better than others.  Whilst the likes of Italy and Spain saw growth hovering around the 3.0% average, the two powerhouses reported only moderate expansion – Germany (1.5%) and France (0.9%). One of the main growth drivers was household spending, especially noticeable in France, (which reported a 29% jump in its hotel and restaurant trade), Germany and Spain. Similar figures in Q3 are expected which would bring the eurozone economy almost to par compared to its pre-pandemic level.

Last Friday’s IPO, Robinhood shares dived to end its first day of trading at US$ 36, as some bigger investors shunned the trading platform for being too risky, along with fears it could face a future regulatory crackdown. Since then, its shares have surged and by yesterday 04 August, were trading as high as US$ 86, as speculation mounted that it could be heading in the same direction as Gamestop which earlier in the year saw its shares skyrocket as users of the social media platform Reddit bought them up to drive up the price. The same ‘meme stock’ phenomenon could well happen again with Robinhood. Interestingly, retail investors held a third of its shares at the IPO and on Tuesday it was estimated that retail trading in Robinhood shares was up tenfold, according to Vanda Research. Robin Hood – Prince of Thieves!

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Bottleneck Blues

Bottleneck Blues                                                                               29 July 2021

For the past week ending 29 July, Dubai Land Department recorded a total of 1,617 real estate and properties transactions, with a gross value of US$ 1.47 billion. It confirmed that 1,135 villas/apartments were sold for US$ 619 million and 88 plots for US$ 169 million over the week. The top three transfers for apartments and villas were all apartments – one was sold for US$ 110 million in Marsa Dubai, a second sold for US$ 67 million in Business Bay, and thirdly, an apartment sold for US$ 62 million in Palm Jumeirah. The top two land transactions were for a plot in Island 2 sold for US$ 33 million, and, interestingly, a plot that was sold for US$ 14 million in Palm Deira. The most popular locations were in Nad Al Shiba First, with 19 sales transactions worth US$ 18 million, Hadaeq Sheikh Mohammed Bin Rashid, with sales at US$ 36 million, and Jumeirah First with 9 sales transactions worth US$ 17 million. Mortgaged properties for the week totalled US$ 417 million, including a plot for US$ 84 million in Marsa Dubai. 24 properties were granted between first-degree relatives worth US$ 20 million.

Mo’asher, Dubai’s official sales price index, posted 6,388 real estate sales transactions in June totalling US$ 4.03 billion – the highest value of sales in eight years; compared to the previous month and June 2020, the figures were 33.2% and 44.3% higher. Q2 saw figures of 15.6k sales transactions, valued at US$ 10.04 billion – 33.3% (volume) and 46.8% (value) higher than in Q1. YTD there were 27.4k sales transactions totalling US$ 16.89 billion. For the whole of 2020 the figures were 35.0k, valued at US$ 19.58 billion. According to Property Finder, the top areas of interest in terms of sales transactions for villas/townhouses in Q2 2021 were Mohammed Bin Rashid City, Dubai Hills Estate, Dubai Land, Green Community and Town Square; for apartments, the top five locations were JLT, Dubai Marina, Meydan, Jumeirah Village Circle and Downtown Dubai.

According to Luxhabitat Sotheby’s International Realty latest Q2 report, Dubai’s prime residential market posted a 43.8% hike in sales volume, quarter on quarter, as property prices rose 1.4%. In the three months, there were sales of 4,681 apartments and 818 villas, valued at US$ 4.55 billion. The top five areas volume-wise were The Palm Jumeirah, MBR City, Downtown Dubai, Dubai Marina and Emirates Living, with sales of US$ 1.14 billion, US$ 662 million, US$ 657 million, US$ 430 million and US$ 390 million respectively. Although the Q2 sales volume was 48.0% higher, at US$ 1.61 million, on the quarter, the average prime villa price was slightly down, by 1.65%, at US$ 2.2 million. Apartment sales were 25.0% to the good, at US$ 2.23 billion, with an average prime apartment now costing US$ 572k, equating to an average price of US$ 392 per sq ft. In H1, the top four property sales in Dubai were all on the Palm, with three residences in The Palm Jumeirah XXII Carat selling for US$ 33 million, US$ 30 million and US$ 29 million and another on Frond N going for US$ 22 million.

According to Knight Frank, the average Q2 price for Dubai property was 1.0% higher at US$ 315 per sq ft – the first time since 2014 that the market has recorded a consecutive gain. One sector that performed well was houses valued at more than US$ 5.45 million (AED 20 million), with 128 such deals recorded in the six months to the end of June; this was higher than the 75 deals recorded for the whole of 2020 and was the highest level since 2014 when 137 sales were recorded.

French transport company MND has signed an early stage working agreement with the RTA to develop a network of high-speed suspended passenger pods in Dubai. Similar in design to those already presented by the Chinese Zhong Tang Sky Railway Group and USky Transport of Belarus, the MND Cabline is flexible, energy saving, and has only a minor impact on the urban environment. It is a fully automatic, driverless transport system, with self-propelled cabins moving along ropes at speeds of up to 45 kph. The RTA is hoping that it will be able to achieve their target of 25% of all trips in Dubai to be self-driving by 2030.

Dubai Economy has started imposing fines on companies that have not registered their Ultimate Beneficial Owner data with the authorities by the end of last month. An earlier 2020 Cabinet Decision had required all registered businesses in the UAE to reveal the identity and furnish details of their Beneficial Owner to be included in the commercial registry. The data required includes the name, nationality, gender, passport number, residence address and mobile number of the owner, with the law applicable to all categories of establishments, commercial, professional or industrial.

HH Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum issued Executive Council Resolution No. (19) 2021 on waivers and reductions of fees for a total of 88 services provided by various Dubai Government entities. They include Dubai Land Department, Dubai Maritime City Authority, Roads and Transport Authority, Dubai Municipality, Dubai Tourism, Dubai Courts, Dubai Economy and Dubai Health Authority. The decision will cut costs for many Dubai businesses, stimulate economic expansion and further enhance the emirate’s attractiveness as a business and investment hub.

The latest decree, No (27) of 2021, issued by HH Sheikh Mohammed bin Rashid Al Maktoum, sees the establishment of the ‘Emirati Human Resources Development Council in Dubai’. Including representatives from the public and private sector, it will oversee the implementation of policies, plans and initiatives aimed at enhancing the employment of Emiratis in the private sector. Emiratis will also be mentored and offered career planning advice and guidance on working in the private sector. Its first chairman will be HE Sultan bin Saeed Al Mansoori, while the Director General of the Dubai Government Human Resources Department will be the Vice Chairman. Other members, from the public sector, include the Directors General of the Knowledge and Human Development Authority, the Dubai Department of Economic Development and the Dubai Chamber of Commerce and Industry. Other members from the public sector will be from the Dubai Free Zones Council, the University of Dubai and the Director of Zayed University, whilst representatives from Emirates NBD, Emirates Group and Al Futtaim Group will represent the private sector. The council will work with companies to “increase the number of UAE citizens employed in some fields”.

The Dubai Government’s Department of Finance is to organise the Dubai International Public-Private Partnership Conference. The two-day event, set for 10-11 October, will help advance Dubai’s development strategy and raise its profile as a commercial and investment hub that plays a pivotal role in both global and regional economic growth. The international conference, under the umbrella of Expo 2020 Dubai, is in line with the vision of HH Sheikh Mohammed bin Rashid Al Maktoum.

Two Dubai companies – the sixty-seven-year-old Al Fardan Exchange and digital banking start-up Jingle Pay – have agreed a partnership that will offer instant remittances for workers who need no-fee accounts and low or no-cost cross-border money transfers. This buys into the recent trend of money exchange providers tying up with FinTechs to cater to the growing need of customers relying on apps, rather than having to go to physical outlets to remit money. Currently, Al Fardan’s total business is skewed 90:10, for retail:digital remittances, but this will become more on-line in the future. Last year, remittances by foreign workers in the UAE dipped 5.0% (US$ 2.3 billion) to US$ 43 billion, with transfers through exchange houses falling by US$ 4.93 billion or 13.8%, while outward remittances through banks increased by US$ 2.67 billion, or 28.8%. At the same time, Al Fardan has tied up with contactless mobile payment app Empay, which will allow the latter’s customers to utilise the exchange’s facilities to immediately transfer money to a bank account or withdraw instant cash.

Led by regional investors and venture capitalists, Udrive has raised US$ 5 million to be used to accelerate its growth over the next twelve months. The Dubai-based start-up aims to double its fleet size in Q3 and to target 500% revenue growth in the next 12 months. Its founder, Hasib Khan, commented that “as people return to work, we’re once again seeing an increased need for mobility”.

It will only be a matter of time before Dubai sees SPACs (special purpose acquisition companies) becoming a common occurrence. Colloquially known as blank-cheque companies, they are formed with the intention of raising funds through an IPO and then seeking to acquire existing companies. They start with no commercial operations and trade without business fundamentals. The Dubai-based Swvl will be the first ever tech start-up in Dubai and will list on Nasdaq, via a SPAC. The mass transit and shared mobility services provider is set to go public through a merger with Queen’s Gambit Growth Capital and has a US$ 1.5 billion valuation. Swvl, which was co-founded by Mostafa Kandil in 2017, in Cairo, allows commuters to reserve seats on private buses, operating on fixed routes and paying fares through its mobile app. It currently operates in Egypt, Kenya, Pakistan, the UAE, Saudi Arabia and Jordan, and to date more than 1.4 million riders have booked over 46 million rides through the app. Last year, it earned approximately US$ 26 million in revenue and is expecting to triple that figure this year.

A JV, between DP World and nuclear energy and technology company Rosatom, has been established to develop the Russian Northern Transit Corridor as a “viable and sustainable” route between Asia and Europe. The new entity will invest, build and operate transport and logistics capacity along the route that connects South-East Asia with north-western Europe. Apart from cutting nineteen days from the journey time between the two continents, there will be two other significant benefits – it will speed up trade flows between the two continents, that account for over 30% of global trade, and the shipping time saving will see a major reduction of carbon dioxide emissions. In 2020, a record 33 million tonnes of cargo were carried along the Northern Transit Corridor, and the forecast is to expand to 80 million tonnes by 2024. DP World has already committed to invest US$ 2.0 billion with the Russian Direct Investment fund. The Northern Transit Corridor aims to enable the development of ports and transport links along Russia’s north coast to sustain economic activity.

DP World Limited posted healthy returns, as it handled 19.7 million TEUs (20’ equivalent units) across its global portfolio of container terminals, with gross container volumes increasing by 17.6% on the year, on a reported basis, and 17.1%, on a like-for-like basis. Growth was seen across all regions, notably in India, Europe, Australia and Americas, with Jebel Ali reporting a 4.2% increase, handling 3.4 million TEUs. In H2, DP World handled 38.6 million TEUs, with gross container volumes increasing by 13.9%, year-on-year, on a reported basis and 13.3%, on a like-for-like basis. Group Chairman. Group Chairman Sultan Ahmed Bin Sulayem commented: ”Looking ahead, the near-term outlook remains positive, but we do expect growth rates to moderate in the second half of 2021. Furthermore, we remain mindful that the Covid-19 pandemic and geopolitical uncertainty could once again disrupt the global economic recovery.”

Etisalat Group posted a 3.2% hike in H1 revenue to US$ 7.19 billion, driving a 3.9% rise in consolidated net profit to US$ 1.28 billion, equating to a net margin of 18.0%. Consolidated EBITDA reached US$ 3.65 billion, with a 51% margin. Its global subscriber base climbed 7.0%, year on year, to 156.1 million, whilst its UAE subscriber base reached 12.1 million subscribers.

Emirates Integrated Telecommunications Company (Du) posted a year on year 11.4% hike in Q2 net profit of US$ 65 million, driven by cost-saving initiatives and lower provisions. Its revenue came in 7.0% higher at US$ 778 million, with EBITDA of US$ 308 million. Because of a 27.5% hike in capex to US$ 177 million, its operating free cash flow decreased 11.7% to US$ 131 million. Its customer base grew 2.2% to 6.6 million, as fixed revenues grew 6.5% to a record US$ 187 million, with its mobile revenue stream stabilising at US$ 353 million. The Board of Directors approved an interim dividend of US$ 0.027 per share.

Emirates NBD posted a 22.0% hike in Q2 net profit, attributable to equity holders, to US$ 670 million, with impairments for credit losses declining by 48.0% to US$ 232 million and allowances for bad loans coming in 52.0% lower as Dubai’s economic recovery continued to gain traction because of ongoing monetary and fiscal support and a successful mass inoculation programme. H1 profit was 17.0% higher at US$ 1.30 billion and 66% up on H2 2020, with expenses declining 6.0% to US$ 1.0 billion and impairment provisions falling 38% to US$ 711 million. Assets at the end of June remained flat at US$ 189 million, as both loans and deposits fell by 1.0%. The bank’s 2019 Turkish acquisition, DenizBank, contributed US$ 902 million – or 29% of group income. The bank expects “the recovery in the non-oil sector to gain momentum in the second half of 2021”, with a 3.5% growth forecast for 2021.

Dubai Islamic Bank, posted a Q2 net profit of US$ 274, almost identical to the figure last year, helped by declining impairments, (down 29% to US$ 5429 million), and stronger top-line growth, with customer deposits rising 6.0% to US$ 59.5 billion. The UAE’s biggest Sharia-compliant lender by assets also posted a H1 profit of US$ 518 million. It remains “committed to applying digital tech in every aspect of banking,” with “a singular focus to make remote banking easier for our customers.”

Dubai Financial Market registered an almost halving of H1 net profit at US$ 11 million, compared to US$ 21 million during the corresponding period of 2020, as Q2 profit sank 65.4% to US$ 4 million. Consolidated revenue was 24.6% lower at US$ 37 billion, of which US$ 24 billion was attributable to operating income and US$ 13.o0  million to investment income and others. Expenses were 3.3% lower at US$ 27 million.

The DFM opened on Sunday 25 July, 30 points (1.1%) higher the previous week, was up 22 points (0.8%) to the good to close the week on 2,766. Emaar Properties, US$ 0.08 lower the previous three weeks, was US$ 0.01 higher at US$ 1.08. Emirates NBD and Damac started the previous week on US$ 3.57 and US$ 0.34 and closed at US$ 3.65 and US$ 0.34. On Thursday, 29 July, 126 million shares changed hands, with a value of US$ 46 million, compared to 67 million shares, with a value of US$ 17 million, on 22 July.

For the month of July, the bourse had opened on 2,811 and, having closed the month on 2766, was 45 points (1.6%) lower. Emaar traded lower from its 01 July 2021 opening figure of US$ 1.14 – down US$ 0.06 – to close June on US$ 1.08. Two other bellwether stocks, Emirates NBD and Damac, started the month on US$ 3.65 and US$ 0.35 and both closed lower on 29 July on US$ 3.57 and US$ 0.354 respectively.

By Thursday, 29 July, Brent, US$ 3.67 (4.8%) lower the previous four weeks, clawed back some of that loss, gaining US$ 1.87 (12.6%), to close on US$ 74.92. Gold prices also moved northwards, having been down US$ 23 (1.3%) the previous week, regaining all that deficit, trading US$ 23 (1.3%) higher, by Thursday 29 July, to close on US$ 1,828.

For the first time in two years, Boeing posted its first quarterly profit, as deliveries of its 737 Max model rose and air travel demand improved; sales were 44% higher at US$ 2.4 billion. Q2 profit came in at US$ 567 million, compared to a US$ 2.4 billion deficit in the same period in 2020. Cash and investments in marketable securities decreased by US$ 400 million to US$ 21.3 billion, mainly driven by operating cash outflows. In Q2, the plane maker delivered more than 130 of its bestselling 737 Max aircraft, whilst global airlines have returned more than 190 previously grounded planes to service since the safety ban was lifted last November. Currently, Boeing is producing sixteen 737s a month and expects to almost double this number to thirty-one by early 2022. Having to deal with structural defects in 787 jets, Boeing plans to reduce production levels to less than five a month and expects to deliver fewer than half of the 787s currently in its inventory this year.

Meanwhile, Airbus posted a 70.0% surge in Q2 profit to US$ 14.18 billion, with a net profit of US$ 2.01 billion – a big jump from the US$ 1.23 billion loss a year earlier. For H1, its revenue jumped 30% to US$ 24.6 billion and profit was at US$ 2.7 billion compared to a loss of US$ 945 million in 2020. For the first six months of the year, it delivered 297 aircraft, 100 more than in 2020, and expects that figure will be 600 by 31 December, as well as launching an A350 freighter. It also doubled its EBITDA forecast to US$ 4.0 billion.

The same day Tesla announces a record Q2 revenue and profit, its shares rose 2.2% on the day to US$ 658 and have surged 113% over the past twelve months. Capex increased by 176% to US$ 1.5 billion, as cash balances decreased to US$ 16.2 billion, attributable to “net debt and finance lease repayments of US$ 1.6 billion, partially offset by free cash flow of US$ 619 million”. The electric carmaker noted that it met its production targets despite the negative impact of a global semiconductor shortage because of post-Covid supply chain disruptions. In the quarter, it delivered a record 201k vehicles, 8.9% higher quarter on quarter; of that total, 199k units were Models 3 and Y, with the 2k balance being the more expensive Models – S saloons and X SUVs. Tesla is forecasting a 50% average annual growth and is set to build its first Model Y vehicles at its Berlin and Austin factories this year and has decided to move its lorry launch until next year so it can focus more on these factories. In 2020, Tesla was the leading global manufacturer of electric vehicles producing over 500k of the global total of 3.2 million which was a rise of 43% from 2019.

Another carmaker feeling the double impact of the pandemic and the global semiconductor shortage is Jaguar Land Rover’s owner Tata Motors. The worry to the Indian owners is that the chip supply shortage is likely to worsen in the short term and that the impact on JLR may see production halved in Q3; this would be a major hit to the company financials as JLR, accounts for most of the group’s revenue, with quarterly sales 68% higher year-on-year. In H1, Tata’s losses have  almost reached US$ 1.6 billion, of which more than US$ 1.0 billion occurred in Q1.

Following reports that Softbank is planning to sell a third of its stake, (45 million shares, worth US$ 2.0 billion), in Uber, the ride-hailing firm’s shares have fallen about 5% in Thursday trading. The Japanese technology investment firm is reportedly trying to recoup some of the US$ 4 billion it has lost in the Chinese ride-hailing firm Didi and other investments after a series of actions by Chinese authorities spooked investors. Three years ago, Softbank invested US$ 7.6 billion in Uber and a further US$ 333 million a year later and is also Didi’s largest investor with a 20%+ stake; Uber also owns almost 13% of Didi. With Chinese authorities tightening their grip on their local tech giants, their stock market value on various international bourses has suffered, including Didi which has lost almost 40% of its value since it started trading in New York last month.

It seems that an increasing number of shareholders is against the proposed US$ 8.8 billion takeover of Morrisons by US firm Fortress Investment Group, which was backed by Morrisons’ board of directors. They include the likes of Silchester International, which owns a 15.14% stake in Morrisons, and is “not inclined to support” the agreed deal, and Hambro, which owns a 1.9% stake, indicating that the proposed price per share is too low. Next month, the shareholders are due to vote on the offer of US$ 3.52 per share, as well as a conditional special dividend at US$ 0.028 per share for investors.

Pfizer has raised its full-year sales forecast by 29%, for the Covid-19 vaccine it developed with Germany’s BioNTech, to US$ 33.5 billion, as countries continue to stock up on supplies. The updated sales forecast is based on signed deals of 2.1 billion doses – to date, it has shipped one billion doses since it received regulatory approval in the US, Europe and other regions. Some of its rivals have fallen behind, including AstraZeneca and Johnson & Johnson (J&J) who have faced global manufacturing and safety hurdles, whilst US mRNA vaccine maker Moderna Inc, has had trouble scaling up production; J&J has estimated full-year Covid-19 vaccine sales of US$ 2.5 billion, while Moderna has forecasted sales of US$ 19.2 billion. Pfizer and BioNTech plan to test a version of the vaccine specifically designed to take on the fast-spreading Delta variant next month, with the first batch already manufactured. The more transmissible variant now accounts for more than 80% of new US Covid-19 cases and has also become dominant in many other countries, including the UK.

India’s first listing, 38 times oversubscribed, of a local unicorn resulted in a spectacular opening day. Zomato Ltd saw its shares surge 82.8% last Friday which valued the food delivery firm at about US$ 12.0 billion Its two principal shareholders of the company, founded in 2008 by Deepinder Goyal, are online technology company Info Edge (India), with a 18.55% stake, and China’s Ant Group with 16.53%.  It operates in some 525 Indian cities in India and partners with 390k restaurants. The company had posted a US$ 92 million loss for the year ending 31 March 2021, on revenue of US$ 226 million. This was the first of several Indian internet start-ups going public, with the likes of Berkshire Hathaway Inc-backed Paytm, hospitality company Oyo Hotels and ride-hailing firm Ola, hitting the market in the coming months.

Chinese listed companies on the various US bourses had their biggest two-day fall since the 2008 GFC. Shares listed on the Nasdaq Golden Dragon China Index, which follows the 98 biggest US-listed Chinese stocks, have fallen by almost 15%  in Monday and Tuesday trading – and a 45% slump since its February record high; over the past five months, the index has shed a massive US$ 770 billion in value. Over the past few months, the Chinese administration has cracked down on its technology and education industries and only this week unveiled a massive overhaul of China’s US$ 120 billion private tutoring sector, under which all institutions offering tuition on school curricula will be registered as non-profit organisations. Other on-line service companies are also being hit hard by regulators with both Tencent and Didi losing 7% and 11% in Hong Kong trading on Tuesday. The former follows a ruling that it must end global exclusive music licensing deals with major record labels and the latter because of reports that it faces heavy fines because of allegedly illegally collecting users’ personal data.

A shortage of available property, allied with historically low mortgage rates, has sent Australian prices skyrocketing, with six cities recording record prices for the third consecutive quarter. Real estate Domain reports that Canberra prices rose more than 30% and Hobart by 28%, as well as   Sydney, and Darwin rising by over 20% in the last year. With experts warning the increases are “unsustainable”, as property becomes unaffordable for many, with the Domain House Price Report highlighting a “perfect storm” of rock bottom borrowing costs, a small number of properties on the market, strong demand, and government stimulus money amid the pandemic. Despite most of the country under some type of lockdown, the Australian economy has rebounded to be above its pre-pandemic level, with growth being attributed to soaring demand for commodities around the world and spending by consumers and businesses. It is obvious that the recovery is dangerously uneven and will lead to economic hardship for a large slice of the population in the future and an inevitable fall in property prices.

According to the latest EY Item Club report, the UK economy is experiencing its fastest growth, at an estimated 7.6%, since the WWII, and could recover to pre-coronavirus pandemic levels by the end of 2021, with a slight growth decline to 6.5% next year; the main reason for this unexpected improvement was a smaller-than-expected fall in consumer activity after England’s third national shutdown in Q1. Last year, the UK economy tanked by 9.8% and was then the worst performing economy in the G7. Even though it had “more lost ground to make up” than other countries, its economy has been boosted by the success of its vaccination protocol and the large pent-up savings, (estimated at US$ 275 billion), accrued over the lockdown. Following last week’s lifting of the remaining lockdown restrictions, the economy is expected to grow at an even faster rate, although the report warned “should increased production be required due to higher demands, rising prices and inflationary bottlenecks could occur.” The economy can do without any further Bottleneck Blues.

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Out Of Time!

Out Of Time!                                                                                                  22 July 2021

A new survey Numbeo confirmed what many Dubai expats knew already – that the country’s residential rents are on the high side. UAE was ranked fourth globally spending the highest percentage of their monthly expenditure on rent. Using a three-bedroom house as the base, a study by money.co.uk noted that in the typical family of four, living in the UAE, spent an average 39.85% of their monthly outgoings on rent – US$ 1.9k – whilst their monthly cost of living came in at US$ 2.9k. The three countries were rent came in higher were Hong Kong, Singapore and Qatar, at 50.25%, 47.08% and 43.73% as a percentage of total spend; in terms of expense, Hong Kong, Singapore and Switzerland were the most expensive at US$ 3.8k, US$ 3.1k and US$ 2.6k. Kuwait, Ireland, the US, Bahrain, Australia and New Zealand round out the top ten list of destinations where rent accounts for maximum household spend. The cheapest country is Saudi Arabia, at US$ 0.6k, equating to 19.07%, while other expenses add up to US$ 2.5k. In Europe, Greece has the lowest rent of US$ 0.62k, compared to the cost of living, at US$ 2.52k, or 19.73% of the average monthly expenditure. In US$ terms, Turkey had the lowest rent at US$ 0.342k but average cost of living expenses were almost four times higher at US$ 1.36k.

Having sold US$ 163 million worth of units in Q1, Sobha is on track to reach sales of US$ 681 million, (AED 2.5 billion), in 2021 as the Dubai property sector gains traction and prices move markedly higher; it aims to deliver 1.6k units this year. The Dubai developer is building the eight million sq ft US$ 4 billion Sobha Hartland master development near Mohammed bin Rashid City, which started in 2014 and is slated for completion by 2025; 50% of the construction work has been completed. Sobha estimates that more than half of its customer base is from the UAE, with international buyers from India, China, Africa, Europe and other Gulf countries making up the rest. It has plans for further big master developments like Hartland in the future which will be financed through a mix of debt and equity.

HH Sheikh Mohammed bin Rashid Al Maktoum has introduced legislation that will see the creation of Dubai Academic Health Corporation that will comprise DHA’s Dubai Healthcare Corporation, including the hospitals and organisational units under it – the Mohammed Bin Rashid University of Medicine and Health Sciences, Dubai Dental Hospital, Al Jalila Foundation and Al Jalila Children’s Specialty Hospital; the whole consolidation process should take about six months. The primary aims of the exercise are to enhance the emirate’s position as a global hub for medical and life sciences, a healthcare and medical tourism destination and a leading centre for medical education, research and scientific innovation. The new entity is tasked with managing and operating health facilities including hospitals, primary healthcare centres, specialised care centres, medical fitness centres, and public health and occupational health centres.

DIB, one of the main creditors in the NMC Healthcare scandal, has confirmed that it remained committed to the restructuring of NMC Healthcare but said the process “must be based on an acknowledgement of existing legitimate security interests” after winning the latest round of a legal tussle with the joint administrators.  Alvarez & Marsal, had brought legal action against the bank in March in a dispute related to the lender’s attempts to enforce its security over sums held by twelve insurers that the healthcare company had set aside as collateral for loans. The bank had challenged a September court decision that ruled that a moratorium on all legal proceedings related to the healthcare group had been secured once NMC Healthcare and thirty-five other entities were placed into administration. It is reported that DIB would only recover US$ 19 million through the formal restructuring process, without imposing security, or US$ 86 million through the imposition of securities. It is easy to understand why the bank took the steps it did.

Last Friday, a court in the UK ruled that NMC’s former deputy chief financial officer, Suresh Kumar, will have to proceed with his defence of a US$ 1 billion fraud case brought by the healthcare group’s biggest lender, Abu Dhabi Commercial Bank, against former directors. Other company officers had challenged the UK court’s jurisdiction to hear the case.

Meanwhile, BR Shetty, the founder of NMC Health, has filed a case in New York accusing ex-directors, two banks and the company’s former auditors of conspiring to “artificially inflate the financials of NMC” and other group companies. He alleges that this fraud, involving eight different parties, resulted in shareholders suffering estimated losses of US$ 10 billion as the result of the “massive financial fraud”. The eight defendants include NMC’s former chief executive Prasanth Manghat, ex-UAE Exchange chief executive Promoth Manghat, Neopharma executive Vadakke Kootala and Nexgen Pharma executive Suresh Kumar Nandiraju, along with Netherlands-based Credit Europe Bank, India’s Bank of Baroda and auditors EY’s global and Europe, Middle East, India and Africa division, who allegedly acted as conspirators.

Despite the negative impact of Covid-19 on the banking sector, Mashreq managed to turn in an H1 profit of US$ 436 million – 4.6% higher than a year earlier – on a 1.4% rise in operating income to US$ 790 million, attributable to improvements in fees and commission; its non-interest income to operating income ratio improved to 49.8%. The rise in profit was “as a result of increased operating income and reduced operating expense.” Its impairment provision was 53.4% higher at US$ 409 million, “reflecting conservative provisioning policy.”

The bank’s focused strategy and advanced digital transformation program served Mashreq well throughout the first half of 2021. Three major indicators – capital adequacy ratios, Tier 1 ratio and liquid-to-total-assets ratio – came in at 14.0%, 12.8% and 31.8% respectively, with loan growth and customer deposits 8.0% and 8.1% higher.

Because of the Eid Al Adha holiday break, the bourse was only open for one day this week. It opened on Sunday 18 July, 149 points (5.2%) lower the previous four weeks, was 30 points (1.1%) to the good to close the shortened week on 2,744. Emaar Properties, US$ 0.08 lower the previous fortnight, closed flat at US$ 1.07. Emirates NBD and Damac started the previous week on US$ 3.61 and US$ 0.34 and closed at US$ 3.57 and US$ 0.34. On Sunday, 18 July, 67 million shares changed hands, with a value of US$ 17 million, compared to 120 million shares, with a value of US$ 59 million, on 18 July.

By Thursday, 22 July, Brent, US$ 2.64 (3.4%) lower the previous three weeks, shed a further US$ 1.03 (1.4%) to close on US$ 73.05. Gold, up US$ 78 (4.5%) the previous fortnight, shed US$ 23 (1.3%), by Thursday 22 July, to close on US$ 1,805.

Following overtures from the UAE and other members, Opec+ has decided to bring back a further 400k bpd from next month and will revise baselines used to calculate quotas from May 2022. Producers such as Iraq, Kuwait, Saudi Arabia, and Russia will see their baselines rise, whilst the UAE’s production will rise 0.332 million bpd to 3.5 million bpd. After weeks of deadlock, the members finally agreed to phasing out 5.8 million bpd of withheld supply, with a further review at the end of the year, and to extend its agreement until the end of December 2022.

According to the State Bank of Pakistan, the country posted a record US$ 29.4 billion of workers’ remittances for the twelve months ending June 2021 – a marked 27.1% increase from a year earlier; this included a total of US$ 2.7 billion remitted in June – the thirteenth straight month of monthly remittances of over US$ 2.0 billion. The top four remitting countries were Saudi Arabia, UAE, UK and USA, with figures of US$ 7.7 billion, US$ 6.1 billion, US$ 4.1 billion and US$ 2.7 billion respectively. This inward flow of funds has greatly assisted Pakistan’s external sector position, despite the challenging global economic conditions in the past year. Drivers behind the increase in remittances include the pandemic curtailing international travel, measures taken by the Khan government to incentivize the use of formal channels and altruistic transfers to Pakistan amid the pandemic.

One business to benefit from the pandemic is Crocs, posting record Q2 sales of US$ 640 million nearly twice as much as the same period last year, as net income before tax more than trebled from US$ 55 million to US$ 190 million. Making up about a third of the total, digital sales increased by 25.4%. The quirky shoemaker, noting that there was a strong global demand for shoes, upgraded 2021 revenue forecast growth from 50% to 65%. Crocs’ success has resulted in a surge of copycat companies, that inevitably bite into its sales figure, and it has filed a complaint with the US International Trade Commission and also trademark infringement lawsuits against twenty-one shops, including retail giant Walmart.

To many observers, Jamie Dimon is a lucky man, having already amassed a US$ 2.1 billion fortune. JP Morgan is lining him up for 1.5 million stock appreciation rights, that could be worth around US$ 50 million on paper. The bank’s chief executive, who was appointed in 2005 and has taken JP Morgan through the GFC, as well as making it the biggest and most profitable US bank, received almost US$ 32 million in compensation last year. The 65-year old has seen the bank’s share price nearly quadrupling over the past decade and is up 18% YTD.

McLaren Finance is to raise a bond issue of US$ 620 million, in an attempt to recoup losses, as it seeks to refinance existing bonds and bolster its balance sheet with the additional debt, arising from the impact of the coronavirus pandemic. The supercar-maker has already raised US$ 760 million from investors and has also sold and leased back its headquarters in Woking, near London, as well as a third of its racing unit to a consortium of US-based investors, in a bid to bolster flagging finances. The new bond is expected to be rated among the lowest rated debt.

US-based ice cream maker, Ben & Jerry’s, has upset some of its customer base by stop selling its products in the Israeli-occupied West Bank and East Jerusalem, saying the sales in the territories are “inconsistent with our values”. The Vermont-based company added that “we have a long-standing partnership with our licensee, who manufactures Ben & Jerry’s ice cream in Israel and distributes it in the region,” and “we have been working to change this, and so we have informed our licensee that we will not renew the license agreement when it expires at the end of next year.” Last month, a group, called Vermonters for Justice in Palestine, had called on Ben & Jerry’s to “end complicity in Israel’s occupation and abuses of Palestinian human rights”.

Driven by new, younger customers attracted to the brand’s savvy marketing campaigns, Burberry posted a massive 86% jump in revenue to US$ 661 million for the quarter to 26 June; strong growth in trench coats and handbags helped the cause, as comparable shop sales climbed 90% on the year, and up 1% on 2019 figures. The retailer was badly hit by Covid-19 and even sixteen months after the onset of the pandemic eleven of its 454 stores are still closed, whilst lack of international visitors is seeing revenue being affected; in addition, 35% of stores are still on reduced hours. Burberry has opened a flagship store in London and is expected to open three more in the coming year; these will become a major draw once air travel returns to pre-pandemic levels. Although Europe has yet to recover fully because of ongoing lockdowns, both Asia Pacific, (with strong growth in China and South Korea), and the Americas have witnessed sales growth of 27% and 341% respectively. Burberry sees revenue mileage in NFTs (non-fungible tokens), a type of digital asset, designed to show someone has ownership of a unique virtual item, such as online pictures and videos or even sports trading cards; it seems that Burberry is keen to tap into gaming and the fast-growing desire for NFTs with its collaboration with mythical games.

To meet the demands of increased interest in cryptocurrencies, including Bitcoin, Sarwa has launched its Sarwa Crypto portfolios, which have been globally diversified across class assets to include a 5% in Grayscale Bitcoin Trust (GBTC), the world’s first and largest publicly quoted Bitcoin Investment vehicle. This should be a safe way for many investors who have shown interest in cryptocurrencies but have shied away because to many it is seen to be a complex and inaccessible ‘asset class’, and they will be able to buy, store, and safekeep Bitcoin directly. Sam Bankman-Fried, a former trader at Jane Street Capital, founded the digital exchange, FTX, in May 2019, with the aim of building an exchange robust enough to be used by professional traders but easy enough for first-time users to manage. Last year, it managed to raise US$ 40 million from investors that gave the company a market valuation of US$ 1.2 billion. Following a later Series B round, in which it raised US$ 900 million to accelerate its growth plans and expand its global presence, it is now valued fifteen times higher at US$ 18 billion. FTX now has a customer base in excess of one million and an exchange that completes an average of US$ 10 billion worth of trades every day.

On Tuesday, Bitcoin fell below the US$ 30k level only to soar back the next day, trading 5.75% higher to close on US$ 31.4k, as Elon Musk said Tesla is “most likely” to start accepting it as payment again, having said in May that it would no longer accept the cryptocurrency for purchases. It had cited concerns over the environmental impact of Bitcoin mining which uses huge amounts of electricity. The Tesla chief told a B Word cryptocurrency conference that he had been investigating fossil fuel usage in Bitcoin mining. Critics had argued that it seemed incongruous that an environmentally friendly electric vehicle maker was allowing buyers to use energy-intensive cryptocurrency to purchase them. He also remarked that, along with the Bitcoin owned by Tesla and his rocket company SpaceX, he personally held Bitcoin and the cryptocurrencies Ethereum and Dogecoin. He also addressed claims that he had helped to artificially increase the price of cryptocurrencies before selling them saying “I might pump, but I don’t dump…. I definitely do not believe in getting the price high and selling… I would like to see Bitcoin succeed.”

New cryptocurrency laws proposed by EU regulators would see companies that transfer Bitcoin or other crypto-assets having to collect details on the recipient and sender. This law would make crypto-assets more traceable and would help stop money-laundering and the financing of terrorism; it would also ban anonymous crypto-asset wallets. The aim is for cryptocurrencies to be under tighter control and operate the same rules and regulations as wire transfers as well as ensuring that due diligence rules on customers take place.

After eight months of negotiations with US antitrust regulators, cloud computing company Salesforce has finally acquired Slack Technologies for US$ 27.7 billion.  Last year, Salesforce agreed to pay the messaging app’s shareholders US$ 26.78 for each company share, as well as a 0.0776% stake of Salesforce. The companies, that will now be a stronger rival to Microsoft’s Teams app, aim to offer solutions that let business entities use a single platform for connecting employees, customers and partners with each other and the apps they use every day – all within their existing workflows.

Whilst maintaining its two-year growth forecasts at 8.1% and 5.5%, the Asian Development Bank revised its growth projection for the Indian economy to 10.0%, down from 11.0%), and 7.5% (up from 7.0%), for 2022. For the 46-member bloc, it lowered 2021’s forecast to 7.2% and next year’s to 5.4%, from 5.3%. In Southeast Asia, the ADB’s revised 2021 growth forecasts were all lower, including Indonesia down 0.4% to 4.1%, Thailand down 1.0% to 2.0%, Malaysia 0.5% to 5.5% and Vietnam 0.9% to 5.8%. It expects Singapore to grow by 9.3% to 6.3%, with the Philippines flat at 4.5%. The ADB Chief Economist Yasuyuki Sawada commented that, “Asia and the Pacific’s recovery from the Covid-19 pandemic continues, although the path remains precarious amid renewed outbreaks, new virus variants, and an uneven vaccine rollout.”

Figures released by the AA notes that UK petrol prices, at US$ 1.83 a litre are at their highest level in almost eight years – and more than US$ 0.27 higher, compared to November 2020. With oil prices climbing 70% over the past twelve months, it is inevitable that this would fuel inflation as the June rate touched a three-year high of 2.5%. According to the AA, “surging pump prices continue to drain family and other consumer spending.”  Meanwhile, the RAC has estimated that drivers are planning an estimated 29 million UK holidays this year, with 16 million of these in the school holidays alone, with bookings 20% higher from April.

The Office for National Statistics posted that the Q2 number of job vacancies in the UK surpassed pre-pandemic levels – with 862k jobs on offer – and 9.6% higher than the same period in 2020. The main driver was vacancies in hospitality and retailing. At the same time, the number of people employed climbed 1.2% (354k) to 28.9 million but this is still 206k down on pre-pandemic levels. The unemployment level stood at 4.8% for the quarter ending May 2021 – an improvement from the previous quarter’s 5.0% mark. What should be good news hides other problems, the main one being that of a skills shortage. According to the British Chambers of Commerce, “the recruitment difficulties faced by firms go well beyond temporary bottlenecks and, with many facing an increasing skills gap, staff shortages may drag on any recovery.” This current tight labour market will continue for some time and will only improve with retraining on a mega scale to upskill those workers who have left the workforce so they can meet some of those skills shortages that could hold the recovery back.

In June, the UK government spent a record US$ 11.97 billion in interest on repaying its debts, with the figure almost triple that of the June 2020 figure of US$ 3.71 billion; the main reason was put down to a surge in inflation, which raised the value of index-linked government bonds. Overall borrowing, (the difference between spending and tax income), at US$ 31.38 billion, was US$ 7.57 billion lower compared to a year earlier. Pandemic-driven borrowing has  pushed government debt to US$ 3.02 trillion, equating to 99.7% of UK’s GDP, as it is estimated that the Johnson administration had borrowed a total of US$ 409.74 billion in the fiscal year to March – equivalent to 14.2% of the country’s GDP, and the highest level since WWII. Because of the pandemic, day-to-day spending by the government rose by US$ 280.5 billion to US$ 1.29 trillion last year. The forecast for borrowing this fiscal year, ending March 2022, has been revised down by US$ 41.2 billion to US$ 294.0 billion.

In the US, as jobless claims hit a two-month high, the S&P 500 and the Dow indexes fell on Thursday; although unemployment claims jumped by 51k, to a seasonally adjusted 419k by 17 July, there is every chance that this month will see a strong job growth. The Fed will be aware that if the figures continue to decline, allied with higher inflation data, it may have to cut back on its stimulus measures sooner than expected.

Despite the worries from the fast-spreading Delta variant of coronavirus, that could lead to further lockdown restrictions, the EU is confident that the economy will grow faster, at 4.8%, than the 4.3% level expected in April, but inflation is also expected to move higher; it forecasts 2022 growth in the nineteen-member bloc to be 4.5%. The forecast comes with the now usual caveat that it is based on further easing of pandemic-induced restrictions in H2. Time will tell whether the “new” more contagious Delta virus will play havoc with their prognosis. To date, more than 62% of the adult EU population has received at least one vaccine dose and 45% are fully vaccinated. The three major economies – Germany, France and Italy – are expected to grow by 3.6%, 6.0% and 5.0% this year and 4.6%, 4.2% and 4.2% next. Whilst forecasting inflation this year at 1.9%, (below its 2.0% target threshold), the ECB notes that “inflation may turn out higher than forecast, if supply constraints are more persistent and price pressures are passed on to consumer prices more strongly”. The eurozone economy is projected to return to its pre-crisis level in Q4, although it will remain below the level expected before the pandemic hit.

According to the IMF, the global economy has lost US$ 15 trillion in output because of the pandemic, with central banks providing more liquidity in the past year than the previous ten years combined. It is estimated that since March 2020, the world’s central banks have seen their balance sheets increase by a cumulative US$ 7.5 trillion. The world body estimates that, without this intervention, the recession “would have been three times worse.”, whilst warning that the post Covid recovery will take years for most countries if reforms are not implemented. Unfortunately, some of the poorer nations will inevitably fall Out Of Time!

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The Writing’s On The Wall!

The Writing’s On The Wall!                                                              16 July 2021


For the past week ending 15 July, Dubai Land Department recorded a total of 1,826 real estate and properties transactions, with a gross value of US$ 1.5 billion. It confirmed that 1,218 villas/apartments were sold for US$ 760 million and 128 plots for US$ 233 million over the week. The top three transactions were for a plot of land in Hadaeq Sheikh Mohammed Bin Rashid, sold for US$ 24 million, a plot that was sold for US$ 18 million in Um Suqaim Third and a plot for US$ 11 million in Airport City. The most popular locations were in Hadaeq Sheikh Mohammed Bin Rashid, with 24 sales transactions worth US$ 61 million, Nad Al Shiba First, with 22 sales at US$ 17 million, and Al Hebiah Third, with 11 sales transactions worth US$ 9 million. Mortgaged properties for the week totalled US$ 417 million, including a plot for US$ 84 million in Marsa Dubai. 72 properties were granted between first-degree relatives, worth US$ 47 million.

A Property Monitor study notes that European buyers have been driving a significant rebound in Dubai’s property sector. It reported that June property prices had risen 10.0% on the year, at an eight-year high, and 2.1% on the month, with European buyers emerging as “a key demographic recently, driving sales with most being end users.” There appears to be a trend that not only the breadwinner is relocating to Dubai for employment reasons but all the family as well. There is also a movement that sees Dubai residents moving from rentals to buying property, for a myriad of reasons, and those already owning property upgrading to larger residences.

HH Sheikh Mohammed bin Rashid Al Maktoum, who celebrated his 72nd birthday this week, has announced that his plans for Dubai include creating 1k digital companies over the next five years and to train and attract 100k programmers. He has also indicated that the investment directed to start-ups will be boosted by a further US$ 680 million to US$ 1.1 billion. The Dubai Ruler noted that “The National Programme for Programmers is a new step to build our digital economy” and that the initiative has been launched in cooperation with Google, Microsoft, Amazon, Cisco, IBM, HPE, LinkedIn, Nvidia and Facebook. In June, the Dubai Digital Authority was established to speed up the transformation of government entities into smart service providers to individuals and businesses, as well as to double the size of the digital economy to US$ 545 billion by the end of 2023. Sheikh Mohammed also warned that survival will be for “the most prepared” and those who are quickest to “keep pace with the new changes in our world”.

Dubai’s latest tourist attraction – Deep Dive Dubai – has been opened to the public by the Crown Prince, HH Sheikh Hamdan bin Rashid. At sixty metres, it is by far the world’s deepest diving pool and being Dubai, it has to be something special. It holds fourteen million litres of water – which is filtered and circulated every six hours – and the 1.5k sq mt facility is shaped like an oyster, a recognition of the emirate’s historic link with pearl fishing. It also features an advanced hyperbaric chamber, a sunken city and two underwater habitats, as well as hosting an underwater film studio, with a media editing room and fifty-six cameras.

The newly created Dubai Collection, launched under the patronage of HH Sheikh Mohammed bin Rashid Al Maktoum, sees eighty-seven artworks, connected with the emirate, being acquired for public showing. It will be opened later in the year at the Etihad Museum for Artworks in the Collection and will also be accessible to the public through a dedicated digital museum. It will also be boosted by the personal collections of the Dubai Ruler and Sheikha Latifa bint Mohammed bin Rashid Al Maktoum, Chairperson of Dubai Culture and Dubai Collection’s Steering Committee. This latest initiative is set to see Dubai become one of the world’s leading cultural and creative hubs.

According to latest statistics from Dubai Customs, the value of the emirate’s Q1 external pharmaceutical and medical supplies trade expanded 30.8%, year on year, to US$ 1.85 billion. Further analysis sees imports and exports reaching US$ 1.44 billion and US$ 161 million. In terms of volume, Dubai’s trade in pharma and medical supplies jumped 47.3% to 48.6k tonnes.

An indicator that Dubai has become one of the leading cruise destinations in the world is that MSC Cruises will hold a naming ceremony for its newest flagship, MSC Virtuosa, in November at Mina Rashid. The event is in partnership with Dubai’s Department of Tourism and Commerce Marketing (Dubai Tourism), DP World and Emirates Airline. The event reflects the growing importance of Dubai as a must-visit destination for global travellers and the cruising’s key contribution to the city’s tourism industry. The occasion will also be a part of the celebrations surrounding the Golden Jubilee of the UAE and will be staged as Dubai welcomes the world to the delayed Expo 2020.

After a fleet review, and taking account of the impact of Covid, flydubai has cut its original 272 Boeing 737 Max order by 27.5% to 172 jets. The carrier took delivery of two 737 Max 8 jets in June and a further 11 aircraft will join the fleet by the end of the year. The state-owned carrier currently has 52 Boeing 737 jets – thirteen Max 8s, three Max 9s and thirty-six 737-800s. Boeing is trying to restore confidence in its best-selling model that earlier in the year resumed flights after a two-year global ban, prompted by two fatal crashes. The pandemic hit the global aviation industry hard, forcing airlines to preserve cash by grounding aircraft, deferring or cancelling plane deliveries and laying off or furloughing employees.

There has been a 347% surge in H1 private jet movements, to 8.1k, flying out of Mohammed bin Rashid Aerospace Hub, based in Dubai South; the comparative figures for 2020 and 2019 were 1.8k and 3.1k. The most popular destinations were Russia, India, the Maldives and Turkey. These figures demonstrate the proactive nature of the Dubai government, which followed all health protocols but also encouraged safe two-way travel whenever possible. It also showed Dubai to be one of the most resilient cities in the world.

Sokovo has signed an agreement with Dubai Industrial City, to set up a vertical indoor, 25k sq ft farm that will produce thousands of tonnes of leafy greens, fruits and vegetables. This is a major step forward for the country’s innovation-driven food security strategy. Sokovo will grow fresh kale, spinach, lettuce, tomatoes, strawberries and melons, supplying hundreds of hypermarkets, hotels and top chefs across the country. The industry is attracting and nurturing talents that are bolstering the UAE’s innovation-driven food security strategy as vertical farming booms nationwide. Located on a 100k sq Sft plot, the facility, with a retractable sunroof to maximise natural light, will utilise rotating seven-metre-tall towers that will also be used to make sure that all the crops get equal exposure to natural sunlight. Covering more than 550 million sq. ft. DIC divides the massive business district into strategic sector-focused zones, with the food and beverage site encompassing a total land area of 23.5 million.  It is home to more than sixty food and beverage manufacturers including Barakat, Patchi, Almarai Group, Barakah Dates Factory and Lifco, with a further eleven factories under construction.

As part of its strategy to become one of the ten leading global central banks, the Central Bank of the UAE is planning to issue its own digital currency, in line with the country’s goals for the next fifty years under UAE’s Centennial 2071 agenda; no dates for implementation were given. The overarching strategy encompasses seven objectives including driving the digital transformation in the UAE’s financial services sector by using the latest artificial intelligence and big data solutions. Earlier in the year, the CBUAE and the Saudi Central Bank completed a proof-of-concept project on a wholesale central bank digital currency “to settle domestic and cross-border transactions, using central bank money on a distributed ledger technology”.

Noor Capital has led a ‘Series A’ US$ 34 million funding round for iWire, as it plans to expand its geographic presence across twelve countries, by building the digital communication infrastructure to power the internet of things. Launched three years ago, iWire, which had already raised US$ 47 million, builds country-wide communication networks to power massive IoT solutions. The French sovereign wealth fund, Bpifrance has tied up with Noor by granting a long-term equipment purchase option to iWire through a buyer credit agreement.

Shuaa Capital is planning to invest US$ 600 million in three Spacs, as it becomes the latest investment bank to take more than a passing interest into the expanding market for blank-cheque companies. Special purpose acquisition companies are formed from invested cash, raised via an IPO, and to be spent on an existing commercial company. This method is normally quicker and does not have the more stringent checks of a “normal” IPO. The Dubai-based firm is currently in the early stages of research and negotiations with investment banks on the new initiative. According to Allen & Overy, H1 has seen 389 global Spacs, raising a total of US$ 110.1 billion, of which 310 listings, valued at US$ 95.5 billion, took place in Q1; last year, the total value of Spacs, which have only been a finance item since the end of 2019, was only US$ 83 billion.

The Dubai Financial Services Authority has fined Ashish Dave, former CFO of the disgraced Abraaj Group, US$ 1.7 million for his role in the downfall of the private equity company; he was also prohibited from “performing any function” in financial services within or from the DIFC. The regulator concluded that he was “knowingly involved” in deceiving investors over the use of money in Abraaj funds, and “in particular, Mr Dave was aware that approximately US$ 200 million was taken from the Abraaj Growth Markets Healthcare Fund and used for the Abraaj Group’s working capital or other investment commitments.” In 2019, the DFSA had fined Abraaj Group US$ 315 million and this week confirmed that that actions against other former senior members of Abraaj Group’s staff were ongoing and “in the final stages of the disciplinary process”.

Dubai Investments acquired a further 15.19% stake in National General Insurance Company, taking its total shareholding to 45.18%.  The Dubai-listed investment holding company, paid over US$ 19 million for 22.78 million shares at US$ 0.85 per share, as it continues to enhance its position in the country’s insurance sector. NGI, in which the government’s Investment Corporation of Dubai has an 11.54% stake, provides insurance to both individuals and corporates in all areas. Q1 saw the insurer post a US$ 34 million profit, compared to a US$ 2 million loss in Q1 2020, with total income 37.0% higher at US$ 174 million.

Emaar Properties’ US$ 500 million ten-year Sukuk on Nasdaq Dubai was celebrated by its chairman, Jamal bin Theniyah, ringing the market-opening bell on Monday. The Sukuk is part of the developer’s US$ 2 billion Trust Certificates Issuance Programme, solely listed on Nasdaq Dubai. Priced at 3.7% yield, it was nearly seven times oversubscribed, demonstrating that international investors find Dubai an attractive location for their funds. Currently, the bourse is home to US$ 78.0 billion of Sukuk listings, making it one of the largest Sukuk listing venues worldwide.

In February 2018, the Djibouti government illegally seized control of the Doraleh Container Terminal from DP World. Until then, the terminal was run under a JV between DP World and Port de Djibouti, (PDSA) – which is 23.5% owned by China Merchants Port Holdings Company Ltd of Hong Kong and 76.5% held by the Government of Djibouti. In July of that year, PDSA unilaterally declared that its agreement with DP World was terminated in a bid to seize control. This week, an arbitral tribunal of the London Court of International Arbitration confirmed the unlawfulness of PDSA’s efforts to terminate its JV and transfer its shares to the State.

Alvarez & Marsal confirmed that they had begun legal proceedings against “certain former directors of the company”, and EY, its former auditor, in a bid to recover part of the US$ 4 billion that disappeared from the UAE healthcare group, NMC Health. Filing will occur once the group’s restructuring, through a Deeds of Company Arrangement, (an agreement between the company and its creditors), is complete. The healthcare company was placed into administration in April 2020, after an investigation found that there was a US$ 4.4 billion under-reporting of debt. Since then, US$ 6.4 billion worth of claims were lodged from hundreds of creditors. The proposed restructuring is expected to reduce the company’s debt to a manageable level of US$ 2.25 billion, with creditors receiving equity for the US$ 4 billion that will be written off. The company’s biggest lender, Abu Dhabi Commercial Bank, has already taken action in UK and UAE courts to freeze the assets of former directors and of the group’s founder, BR Shetty. Although 99% of creditors have firmly committed to the restructuring plan, it seems that Dubai Islamic Bank, owed an estimated US$ 425 million, is already taking legal action in both the Dubai and Sharjah courts.

The bourse opened on Sunday 10 July, 83 points (2.9%) lower the previous three weeks, shed a further 66 points (2.4%) to close on 2,714 by Thursday 15 July. Emaar Properties, US$ 0.05 lower the previous fortnight, lost US$ 0.03 to close at US$ 1.07. Emirates NBD and Damac started the previous week on US$ 3.65 and US$ 0.34 and closed at US$ 3.61 and US$ 0.34. On Thursday, 15 July, 120 million shares changed hands, with a value of US$ 59 million, compared to 122 million shares, with a value of US$ 38 million, on 08 July. With the long Eid Al Adha break occurring next week, the bourse will only be open for one day – Sunday 17 July., and not much action is expected.

By Thursday, 15 July, Brent, US$ 1.97 (2.6%) lower the previous fortnight, shed a further US$ 0.67 (0.9%) to close on US$ 74.08. Gold, up US$ 27 (1.5%) the previous week, gained a further US$ 51 (2.9%), by Thursday 15 July, to close on US$ 1,828.

Following Richard Branson’s Sunday’s flight to the edge of space, it is reported that Virgin Galactic is planning to sell US$ 500 million of shares to develop its spaceship fleet and infrastructure. Early Monday, its shares had rocketed 8% in the US but had tanked 17% by the end of the day on the news; before Sunday’s flight, its market value had more than doubled YTD. Branson and his Virgin Group currently hold a 24% stake in the company.

Didi Global has had twenty-five of its mobile apps removed on the orders of China’s cyberspace administration, just days after the tech giant’s US$ 4.4 billion listing on the New York Stock Exchange. The apps had used data illegally collected by Didi and included those for its delivery service, camera device and finance services, with the regulator also ordering app stores to remove Didi’s main ride-hailing app. It was also ordered to stop registering new users, as it launched a probe into the company, citing national security and the public interest. With uncertainty on how much the government will rein in Didi’s activities, its market value was US$ 21.5 billion lower in last week’s trading.

PayPal Pay in 4 launched this week in Australia in a bid to take on market leader Afterpay, with the unique selling point of charging no fees.  Furthermore, the US digital payments giant will charge no interest, no late payment fees and no sign-up fees if customers use its four instalments option for purchases between US$ 22 and US$ 1.1k. The buy now, pay later industry has increased in popularity over the past two years and PayPal start with the added advantage of already having nine million accounts in the country. The market will get more crowded because Apple is also ready to enter the BNPL sector and Commonwealth Bank will launch its StepPay service soon.  Little wonder that shares in Afterpay, Zip, Sezzle and Hum all fell on the news of the new entrants, by 9.6%, 11.4%, 10.3% and 4.0%.

India’s central bank has barred MasterCard indefinitely from issuing new debit or credit cards to domestic customers. The Reserve Bank of India. has stated that the company had been violating data storage laws, as well as not complying with regulations requiring foreign card networks to store data on Indian payments exclusively in India, as required by a 2018 order; this would have given regulators “unfettered supervisory access” to payment details. Last year, Mastercard accounted for 33% of all card payments in India, and, in 2019, had announced an investment of a billion dollars over the next five years, as part of its expansion plans in the country. Earlier this year, American Express and Diners Club were blocked from issuing new cards due to similar violations.

Not helped by surging commodity prices, supply shortages, pollution control and new Covid-19 outbreaks, Q2 saw China’s economy grow at the slower rate of 7.9%, on the year, and was below the 8.1% market expectation and significantly lower than the annual 18.3% expansion recorded in Q1; on a quarterly basis, the GDP was 1.3% higher. It is readily apparent that the world’s second biggest economy is losing momentum, and this may see the government firming up stimulus measures to support the post-pandemic recovery, as the coronavirus continues to flare-up around the world, and this despite Premier Li Keqiang reiterating that the country would not resort to flood-like stimulus. However, the People’s Bank of China did announce that it would cut the amount of cash that banks must hold as reserves and there is every chance that the government will cut the bank reserve requirement ratio (RRR) sometime this year to bolster the country’s flagging GDP figures. Notwithstanding, China’s industrial output grew 8.3%, (down from an 8.8% rise in May), retail sales 12.1% higher on the year, (12.4% in May), and fixed asst investment 12.6%, down from 15.4% a year earlier.

Joe Biden seems determined to crack down on big tech firms and has signed an executive order that includes seventy-two actions and recommendations involving ten agencies. Noting that “capitalism without competition isn’t capitalism. It’s exploitation,” the US President is rightly concerned that the large tech firms collect too much personal information, buying up potential competitors and competing unfairly with small businesses. Three main aims of the legislation would see greater scrutiny of mergers, new rules on data collection and putting an end to unfair methods of competition on internet marketplaces. When it comes to the question of mergers, he wants to stop tech firms making “killer acquisitions”, essentially buying up the competition. Biden is also interested in seeing fairer competition in other sectors, including healthcare, travel and agriculture.

According to the Labor Department, for the week ending 10 July, US jobless claims touched a sixteen-month low, falling by 26 k to 360k, with 9.5 million people officially unemployed. Despite strong demand for goods and services, some companies are being hampered because of supply chain bottlenecks and labour shortages, and this has impacted on employment numbers. For example, manufacturing production declined in June, as the carmakers saw production levels dive, driven by a shortage of semi-conductors. However, Federal Reserve Chair, Jerome Powell, is confident that current shortages will abate, and that the comparatively high inflation levels will also dip.

June consumer prices surged 0.9%, (and 5.4% higher on the year) – the most since 2008, exceeding all forecasts and presenting the Federal Reserve more worries about when to start unwinding their ultra-easy monetary support. Excluding the volatile food and energy components, the so-called core CPI rose 4.5% from June 2020, the largest advance since November 1991. The main driver was used vehicles, (accounting for over a third of the total), along with hotel stays, car rentals, apparel and airfares. The Fed’s opinion is that it expects this a blip and that increases will normalise in the coming months, as most of the rises were down to outsize increases in prices in a few categories. It will also be closely watched by the White House, as Joe Biden may now have problems pushing through his recent additional fiscal spending of trillions of dollars.

This week, leading Senate Democrats agreed on a US$ 3.5 trillion new infrastructure investment plan they aim to include in a budget resolution to be debated soon; it is reported that some progress had been made between Democratic and Republican negotiators on the bipartisan measure. This agreement, which has to be endorsed by the fifty-member Senate Democratic caucus, would include a significant expansion of the Medicare healthcare programme for the elderly. It is highly likely that the Senate’s fifty Republicans will not back the broader infrastructure effort, which will probably lead the Democrats to pursue passage on their own under a budget “reconciliation” process that sidesteps a rule requiring at least sixty votes to advance legislation in the one hundred-member chamber. One sticking point will be Joe Biden’s move to increase taxes on corporations and the wealthy to help fund the initiatives, whereas the Republicans oppose any rolling back of tax cuts, which were achieved in their signature 2017 tax reform law.

With 29k new jobs created in June, Australia’s unemployment rate fell 0.2% to 4.9%, its lowest rate in a decade; it has now declined for eight consecutive months. Full-time employment increased by 52k, to 9.02 million people., with part-time employment decreasing by 23k, to 4.14 million people. However, the underemployment rate jumped 0.5% higher at 7.9%, attributable to a 1.8% decline in hours worked, equating to a total of 33 million hours across the whole economy. Although the economy is showing marked signs of improvement, this could all be derailed by major lockdowns in capital cities, as case numbers increase from almost zero; the damage to the economy will be seen in the July and August figures and it may not prove pretty; there are some forecasting a 200k fall in employment numbers and unemployment levels up by as much as 50k.

UK Q2 retail sales hit new record highs, helped by a gradual lifting of restrictions and pent-up demand, with sales up 28.4% on the year and 10.4% higher than the same period in 2019. The British Retail Consortium warned that, despite these encouraging figures, the High Street still faced “strong headwinds”, as the UK economy recovers from the pandemic. It noted that in June, fashion and footwear did well, during the brief burst of sunshine, while the start of the Euro 2020 football championship provided a boost for TVs, snack food and beer; on-line sales continue a lot higher than pre-pandemic levels which seems to indicate that e-commerce has changed the High Street for ever.

As coronavirus restrictions eased to allow pubs and restaurants to serve indoors, the UK’s economy expanded by 0.8% in May – a slower rate than the expected 1.5%, following a rebound in the hospitality sector which was offset by disruptions to car production. This follows the 2.0% uptick in April, and it is the fourth consecutive month of growth; however, the economy is still 3.1% below pre-pandemic levels. The overall services sector was 0.9% higher, as accommodation and food services jumped 37.1% in the month. On the flip side, carmakers continued to struggle with the microchip shortage, as there was a 16.5% decline in the manufacture of transport equipment; construction also suffered from a wet May, but it is still 0.3% above pre-pandemic levels. For the quarter to 31 May, the economy grew 3.6%, driven by strong retail sales, with pubs, restaurants and schools reopening from March.

Since their last G20 financial policymakers’ meeting in April, the global economic outlook has improved driven by worldwide mass inoculation programmes, as well as fiscal and monetary support packages. However, the global economic recovery is fragile as downside risks remain, with the virus continuing to evolve, with variants such as Delta spreading, and the marked different paces of vaccination especially between the rich and poor countries. At their two-day Venice meeting, the ministers confirmed “resolve to use all available policy tools for as long as required” to address the adverse consequences of the pandemic. However, the UN Secretary General Antonio Guterres did note that the one billion doses, already pledged by the IMF, in partnership with the World Bank, falls well short of the eleven million required to vaccinate 70% of the world’s population. Meanwhile, the IMF MD, Kristalina Georgieva, commented that further support from the G20 would lead to trillions of dollars of gains from a quicker economic recovery. It is estimated that, to date, more than US$ 16 trillion of fiscal and US$ 9 trillion of monetary support by global governments and central banks has been spent on trying to alleviate the negative impact of the pandemic.

The global economy is recovering broadly in line with the fund’s April projections of 6% growth in 2021, after plunging into its worst recession since the 1930s. The economic outlook is much better than at the beginning of the year, with more than US$ 16 trillion of fiscal and US$ 9 trillion of monetary support by governments and central banks across the world helping the recovery. However, the latest data confirms a deepening divergence in economic fortunes, with a large number of countries falling further behind.

At the same meeting, on Saturday, the finance ministers also backed a move to stop multinational companies from shifting profits to low-tax havens, with indications that some legislation could be introduced at their next G20 meeting in October; this would indeed swell the exchequers with billions of dollars in “extra” tax. The meeting confirmed that “we endorse the key components of the two pillars on the reallocation of profits of multinational enterprises and an effective global minimum tax.” The big tech companies will not be best pleased if this were to come into being.

With 90% of the world’s central banks looking at creating digital versions of their currencies, the Bank for International Settlements, the IMF and the World Bank have made a joint call for global co-operation between all interested parties. According to Jon Cunliffe of the Bank of England, “CBDCs (central bank digital currencies) offer the opportunity to start with a clean slate. It is crucially important that central banks take the cross-border dimension into account,” There is no doubt that even if some banks intend CBDCs to stay “in country”, they are bound to extend beyond borders. The report recommended the setting up of international payment infrastructures and basic compatibility with common standards.

Following its latest investment round, that raised US$ 800 million, from SoftBank and Tiger Global Management, London-based Revolut is now valued at US$ 33.1 billion – six times higher than its value twelve months ago. The digital banking and payments start-up, now the UK’s most valuable private tech company, was started six years ago by former Lehman Brothers trader Nik Storonsky.  The money raised will be used to expand its customer base from thirty-five countries as it plans to move into operations in the US and India. The tech firm, cum bank, which provides currency exchange, current account and crypto-currency services for customers is still in the process of attaining a UK banking licence. Last year it posted a doubling of losses, to US$ 278 million, attributable to the need of employing more staff.

The Australian government is concerned that new EU carbon tariffs could trigger reciprocated action from Australia’s major trading partners that would damage the nation’s coal, iron, cement iron ore, steel and aluminium industries. The EU’s Carbon Border Adjustment Mechanism, still to be passed into law, will charge EU-based businesses that import carbon-intensive products in a move to help the EU reach its goal of cutting emissions by 55% by 2030. Australia’s Trade Minister is rightly concerned that the measures may contravene WTO rules and that CBAM could be seen as “a new form of protectionism that will undermine global free trade and impact Australian exporters and jobs.” There could be greater worries in store as it is reported that maybe Canada and Japan are looking at potentially similar initiatives which would have a greater impact on industries that export aluminium or iron or steel. For many of Australia’s mining communities, the golden goose may have been cooked – The Writing’s On The Wall.

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Better Late Than Never!

Better Late Than Never!                                                                              08 July 2021

For the past week ending 08 July, Dubai Land Department recorded a total of 1,705 real estate and properties transactions, with a gross value of US$ 1.5 billion. It confirmed that 1,164 villas/apartments were sold for US$ 640 million and 102 plots for US$ 171 million over the week. The top two transactions were for a plot of land in Hadaeq Sheikh Mohammed Bin Rashid, sold for US$ 23 million, and a plot that was sold for US$ 17 million in Island 2. The most popular locations were in Nad Al Shiba First, with 17 sales transactions worth US$ 11 million, Hadaeq Sheikh Mohammed Bin Rashid, with 16 sales at US$ 56 million, and Jumeirah First, with 12 sales transactions worth US$ 28 million. The top three transfers for apartments and villas were all apartments – US$ 102 million in Marsa Dubai, US$ 59 million in Burj Khalifa and US$ 54 million in Palm Jumeirah. Mortgaged properties for the week totalled US$ 272 million, including a plot for US$ 68 million in Business Bay. 97 properties were granted between first-degree relatives, worth US$ 268 million.

June property sales touched US$ 4.0 billion in June – the highest monthly figure since 2013. Property Finder noted that this was partly down to the continued economic rebound and a boost in consumer confidence, with a move by many buyers to upgrade to larger homes and more garden space. In June, the top locations for villa sales were the Green Community, Mohammed Bin Rashid City and Dubai Hills Estate and for apartments, Meydan, Jumeirah Lakes Towers and Dubai Marina. Property Finder reported that June’s volume and value of sales transactions were 173.5% and 204.5% higher than the same month in 2020. It is estimated that 62.2% of transactions (4.0k valued at US$ 3.1 billion) were in the secondary or ready property market and the 37.8% balance, (2.4k valued at US$ 950 million) in the off-plan segment. In Q2, there were 15.6k sales transactions totalling US$ 10.0 billion and for H1 27.4k transactions worth US$ 16.9 billion.

The latest figures from ValuStrat shows that, in Q2, Dubai real estate prices came in 3.8% higher on the quarter, led by a 7.0% Q2 increase in villa prices – but only 6.3% up compared to the same period in 2020; apartments, which account for 87% of the Dubai property portfolio, saw prices 1.7% higher in Q2 but still 4.8% lower on the year. The locations with the better performances were JBR, Palm Jumeirah, Downtown Dubai and The Views. The ValuStrat index registered 69 points in June compared to 69.4 points a year earlier. There is still some way to go for the market to hit the 100 points, registered in January 2014, and its highest ever level of 112.9 points seen in June of that year. The highest annual capital gains were found in The Meadows, Arabian Ranches, The Lakes, Jumeirah Islands, Dubai Hills Estate and Mudon.

Wednesday saw the one-year anniversary of Dubai opening its borders to international tourists, after a three-month lockdown that had started in late March 2020. Since then, the emirate has welcomed 3.7 million overnight visitors in the eleven months to 31 May; in H2 2020, the number was 1.7 million and 2.0 million YTD to May. Staycations have boosted hotels’ revenue, as occupancy rates rose from 35% in July 2020 to 58% in May 2021, peaking in December at 69%. A total of 591 hotels, with 100k rooms, were available in June 2020 which had grown to 715 properties (128k keys) by the end of May 2021. During the nine-month period from September 2020, 814k delegates attended over 3.1k business events, including mega ones such as Arab Health, Arabian Travel Mart, Gulfood and Gitex.

Dubai Economy’s report on Business Bay indicates that there are 17.9k business operating in the location, dominated by two sectors – Commercial, 12.4k (69%) and Professional, 5.1k (28.7%), with the balance from the Tourism and Industry sectors. Business Bay boasts over 52k investors, with 84% of that total classed as businessmen. Accounting for 90% of the legal entities were LLCs (58%), Sole Establishments (23%) and Civil Companies (9%). The Business Bay concept was the brainchild of HH Sheikh Mohammed bin Rashid Al Maktoum, who saw it as a new quasi-city, within the city of Dubai, and built based on being a private, commercial and residential complex, as well as a new extension of Dubai Creek from Ras Al Khor to Sheikh Zayed Road. Business Bay has already built up a reputation for upscale amenities, and a fast-paced and contemporary lifestyle, with a range of residential and commercial properties.

Scarcely a week goes by without DP World announcing a major global deal and this week is no exception. To enhance its African capabilities, and expand regional infrastructure of its regional ports, terminals and economic zones, it has paid US$ 890 million to acquire JSE-listed Imperial Logistics. The company, listed in Johannesburg, is an integrated logistics and market access company, with operations in twenty-five countries, mainly across the African continent and in Europe. The offer price was at a 34.2% premium, when compared to the Imperial share price as of 07 July and is subject to shareholders’ and regulators’ approvals; the deal will be financed internally.

It is reported that Dubai’s Global Village, which claims to be the world’s largest tourist, leisure, shopping and entertainment project, will reopen on 26 October for 167 days to close the season on 10 April 2022. Prospective partners have until 01 August to submit their ideas and bids for kiosks or food carts. The concept started twenty-four years ago in January 1997 and was located on the Creek Side before later shifting to the Oud Metha Area near Wafi City for five years.  Since then, it has seen annual attendances of over six million and has been at its current location on the exit of Sheikh Zayed Exit 37.

The 24th edition of Dubai Summer Surprises opened on 01 July and is scheduled to run until 04 September, during which time the emirate will be home to amazing deals and promotions. It kicked off with a choreographed light and music show at Dubai Festival City, with specially created projections illuminating the night sky in tune to Dubai Kawkab. DSS will see exclusive shopping deals, daily surprises, thrilling competitions and shop-and-win promotions.

Latest Q2 figures from Dubai Economy sees consumer optimism in Dubai rising to its highest level since 2011, at 151 points, 6 points higher on the quarter and 26 points up on the year. The Consumer Confidence Index, launched in 2011, captures a consumer’s perceptions on the overall economy, personal finance and job opportunities as well as their intentions and expectations of buying and saving.

Since the signing of the Abraham Accords in Washington last September, bilateral trade between the UAE and Israel has topped US$ 658 million. The first official Israeli ministerial visit to the UAE involved Foreign Minister, (and Alternate Prime Minister), Yair Lapid, who noted that “it is estimated that the bilateral trade potential will multiply many times over in the coming years”.

Dubai Aerospace Enterprise expects to collect US$ 500 million as it prepares to sell nine narrow and wide body aircraft by the end of the year. According to its CEO, Firoz Tarapore, “the post-pandemic market for trading aircraft assets is robust. These transactions demonstrate DAE’s ability to originate and trade aircraft assets with a lease attached from high quality airline credits.” The Dubai-based DAE is a global aviation services company, servicing over 170 airline customers in over 65 countries from its Dubai HQ and six office locations in Dublin, Amman, Singapore, Miami, New York and Seattle. The leasing division has an owned, managed, committed and mandated to manage fleet of approximately 425 Airbus, ATR and Boeing aircraft with a fleet value exceeding US$ 16.0 billion.

The Emirates Development Bank has listed a five-year, US$ 750 million bond on Nasdaq Dubai which was four time oversubscribed. The money raised will support individuals, SMEs, and corporates across priority industrial sectors in the country to build a knowledge-based economy.  The bourse is the largest listing venue in the ME for US$ denominated debt listings, with a total value of US$ 98.5 billion.

With 1,230 new member companies in H1, DMCC reported their best-ever half-yearly figures since the halcyon days of 2013; in 2020, it had attracted over 2k new companies, greatly assisted by the free zone’s relief packages offered during the global pandemic. If the present trend continues, the DMCC will be home to over 20k entities by the end of the year.

The bourse opened on Sunday 03 July, 46 points (1.6%) lower the previous two weeks, shed a further 37 points (1.3%) to close on 2,780 by Thursday 08 July. Emaar Properties, US$ 0.02 lower the previous week, lost US$ 0.03 to close at US$ 1.10. Emirates NBD and Damac started the previous week on US$ 3.65 and US$ 0.35 and closed at US$ 3.65 and US$ 0.34. On Thursday, 08 July, 122 million shares changed hands, with a value of just US$ 38 million, compared to 76 million shares, with a value of US$ 32 million, on 01 July.

By Thursday, 08 July, Brent, US$ 0.57 (0.8%) lower the previous week, shed a further US$ 1.42 (1.9%) to close on US$ 74.08. Gold, US$ 119 (6.3%) lower the previous fortnight, recovered somewhat, gaining US$ 27 (1.5%), by Thursday 08 July, to close on US$ 1,777.

The government has voiced concern with other OPEC members about future output stating that the “UAE believes that the market needs an increase in production and supports an increase from August, whilst still affirming that “the UAE’s commitment to OPEC and OPEC+ agreements”. Over the past two years, the UAE has delivered 103% compliance but now “believes that the market needs an increase in production and supports an increase from August.” The dispute centres around the Joint Ministerial Monitoring Committee’s move to attach conditions to increasing production in August “on the condition of an extension to the current agreement, which would prolong the UAE’s unfair reference production baseline until December 2022, from the existing agreement end date of April 2022.” The UAE called on members of the exporters’ group to ‘decouple’ output restrictions from a planned extension of the agreement beyond April 2022.

According to Refinitiv, the Sharia-compliant finance industry is expected to register “low to mid-single digit growth” in 2021 and to be worth almost US$ 3.7 trillion by 2024.This year, the market will be supported by sustainability-linked and green sukuk issuances, but the volume of such Sharia-compliant instruments is expected to remain limited. In H1, the Islamic Development Bank issued sukuk worth US$ 2.5 billion, indicating that it would use 10% of the proceeds to finance green projects, with the balance earmarked for social development programmes. Malaysia also issued a US$ 1.3 billion Islamic bond that included an US$ 800 million sustainability tranche.

S&P Global Ratings expect that global sukuk issuance will jump 11% this year to US$ 155 billion, driven by low interest rates, higher energy prices and abundant liquidity; however, it will not touch 2019’s record of US$ 167 billion. H1 issuance, at US$ 90.6 billion, was 4.9% higher than the return in H1 2020. Market support came from Sharia-compliant bond sales in Malaysia, Saudi Arabia and Oman as well as higher primary issuance volume, which rose by 20%. Volumes fell in Bahrain, Indonesia, Turkey and the UAE, with the latter’s falling because of the adoption of new Sharia standards. Sukuk worth around US$ 20 billion is set to mature in H2, some of which will probably be refinanced through the market.

Two months after bringing 15% of the global trade to a standstill, Ever Given will finally leave the Suez Canal after a formal solution had been agreed between the insurers, the UK Club, and the Suez Canal Authority. The initial claim was for US$ 916 million, including US$ 300 million for a salvage bonus and the same amount for loss of reputation but the insurers rejected the claim on the basis of it being “extraordinarily large” and “largely unsupported”. The SCA later lowered their claim to US$ 500 million but the owners and insurers reportedly offered to pay US$ 150 million and a tugboat. However, the final settlement figure is still unknown.The ship was laden with 18k containers, with a value of US$ 775 million, at the time of the incident that blocked the canal for four days.

According to Deloitte’s ‘Global Power of Retailing 2021 report, Dubai-based Majid Al Futtaim and Lulu are the only two UAE (and ME) retailers among the world’s top 250 most powerful retailers. The list is headed by Walmart Stores followed by Amazon, Costco Wholesale Corp, Schwarz Group and The Kroger Co. Over the past year, there has been a 4.4% composite year over year retail revenue growth to US$ 4.85 trillion. MAF’s revenues reached US$ 9.57 billion, and the group posted a net retail income of $7.65 billion with CAGR retail revenue of 6.5%. Although the global sector was badly hit by enforced store closures, travel bans and reduced demand, Covid did present them a tasty alternative – online shopping that made up the shortfall and pushed the industry into a new way of shopping.

June figures from the Society of Motor Manufacturers and Traders (SMMT) saw Elon Musk’s Tesla Model 3 become the UK’s best-selling car model, with 5.5k units sold, ahead of Volkswagen Golf’s 4.6k, and the Ford Puma, with 4.5k. By the end of April, it was estimated that there were 39.9kTesla Model 3s and 38.9k Nissan Leaf electric cars on UK roads. However, YTD, Vauxhall’s Corsa and the Ford Fiesta remain the two most popular new cars on the road. There has been a slow but marked increase in a move towards electric and hybrid vehicles ahead of a ban on petrol and diesel cars. June UK sales jumped 28%, compared to a year earlier. The industry has been ravaged by the double whammy of the pandemic and the global semiconductor shortfall cuts which has eaten into production levels. A life saver for the UK industry will be the shift towards new technology to electric vehicles which is expected to create 40k new jobs by 2030. New cars that only rely on petrol and diesel will be banned in Britain from 2030, while hybrids will be stopped from 2035.

As the size of the UK High Street continues to diminish, retailer John Lewis has announced plans to move into the residential property market by building 10k rental homes over the next few years. 70% of the homes will be built on sites already owned by the company, whilst some may be built on new sites, which is hoped to give it a stable, long-term income, as well as providing new job opportunities. John Lewis also noted that this would it give a stable, long-term income, as well as providing new job opportunities. It also wanted to support local communities as well to address the national housing shortage. Tenants will have the choice of renting fully furnished, with John Lewis products, or using their own; each development will have its own concierge service and would feature a Waitrose convenience store nearby. It is reported that some homes could be built in department store car parks, above Waitrose supermarkets or next to distribution centres. The retailer has shed about a third of its store portfolio, since the start of the pandemic, and now has just thirty-five.

Apollo Global is considering making a rival offer for Morrisons, days after the UK supermarket agreed to a US$ 8.7 billion takeover by another US investment group led by Fortress Investment Group, the owner of Majestic Wine. The directors of the UK retailer are recommending that shareholders accept the latest offer. By Monday, shares in Morrisons had jumped 11% to US$ 3.71, somewhat higher than the original Fortress bid of US$ 3.51 which itself had been at a 42% premium on the retailer’s share price before the offer period. It is all but inevitable that a bidding war has started and that there will be other big players entering the battle; there is every chance that when it is all over, investors may be receiving more than US$ 4.00 per share. Even before this is finally put to bed, there is every chance that Sainsbury’s, and to a lesser extent Tesco, may have investment firms knocking on their doors.

Q2 saw Deliveroo’s order surging 88% to 78 million from the same period in 2020, with UK orders posting even better figures – up 94% to 38 million – with its international sector up 83% to 40 million. In relation to gross transaction value, the amount spent by customers was 87% higher to US$ 2.39 billion, with the UK segment accounting for US$ 1.26 billion of the total; the international share was up 65%, to US$ 1.13 billion. H1 figures were 99% to the good at US$ 4.68 billion. It must be noted that in March, Deliveroo debuted on the LSE and saw more than 30% (US$ 2.75 billion) wiped off its US$ 10.46 billion valuation. It nadired on 26 April at US$ 314.45 but has since recovered to trade at US$ 431.71 on 08 July. Deliveroo also indicated that it would be hiring a further four hundred software engineers, data scientists and designers over the next twelve months to drive innovation on its platform.

Wednesday saw London’s largest ever tech listing with Fintech company Wire gaining 10% on its first day of trading; with shares trading at US$ 12.13 by the end of the day’s session, the company was valued at US$ 12.06 billion, well above earlier market expectations of US$ 8.27 billion – US$ 9.65 billion. With such a strong opening for Wire, and a record-breaking year for London listings, allied with the government’s keenness to attract technology groups to list in the country, an increasing number of fast-growing companies in the financial technology sector may now be looking at London as a favourable option for future IPOs.

Westpac says it has fallen victim to an “elaborate fraud”, which has cost the bank more than US$ 215 million, committed by a Sydney equipment-leasing company, Forum Finance, headed by a person called Bill Papas, but whose real name is Basile Papadimitriou. He was also president of the Sydney Olympic Football Club, until he resigned last week, and is assumed to be overseas but his exact whereabouts are unknown. The bank became aware of the elaborate fraud in May after one of its customers discovered “an anomaly” in a lease agreement with their (the customer’s) name on it and then began legal proceedings against Mr Papas and co-director Vincenzo Tesoriero in the Federal Court. Following investigations, Westpac discovered that in less than three years, it had paid US$ 189 billion to Forum – for various leasing contracts for office equipment including computers, photocopiers and printers. There will be one or two red faces at the bank, (and perhaps their auditors), once further details are released.

Having jumped 8.8%, (on average with a value of US$ 29k), in the previous twelve months, the ongoing monthly rises in UK house prices came to a halt with a 0.5% monthly decline in June, as the stamp duty holiday began to be phased out. This tax break has been the main reason behind the price increase, as Halifax warned that it was “important to put such a moderate decrease in context.” Since June 2020, buyers have not had to pay any stamp duty on the first US$ 687k of their purchase price, but from the start of the month, it is being slowly phased out and will return to “normal” rates in October. Then the stamp duty will be levied at 5% on purchase between US$ 344k and US$ 1.27 million, (GBP 250k – GBP 925k). The average price of a UK property is now US$ 358k and there is a growing demand for detached properties, which sell for more than US$ 275k, than for the typical semi-detached house. However, the fact that there is a lack of available properties in the country may see prices continue their upward trend for some time.

 According to June’s Purchasing Managers’ Index from IHS Markit/CIPS, UK’s economic recovery slowed with the composite PMI dipping 0.7 to 62.2 on the month; any figure above 50.0 indicates that figures are still considered strong, with 50.0 being the threshold between expansion and contraction. A separate index showed that the services sector was down 0.5 to 62.4., with both months’ figures being driven by an easing of Covid-19 pandemic restrictions releasing pent up demand for business and consumer services. A marginal slowdown in monthly sales growth has been put down to capacity constraints and staff shortages resulted in some service providers struggling to keep up with new orders.  Despite job creation being at its highest level since 2014, staff shortages contributed to the highest level of backlogs since the survey began in 1996 which, in turn, pushed up prices by the most on record for inputs and prices charged.

Europe’s progress is in line with that displayed by the UK, with the economic recovery showing traction with inflationary pressure moving north quicker than initially expected. The bloc’s two powerhouses, Germany and France, saw their composite PMIs at very respectful levels of 60.1 and 57.4, However, hopes have been dashed that backlogs and producer price pressures would abate but this has not happened and will continue to edge even higher in the coming months.

The Delta variant has dealt a huge blow to what some may argue was a cavalier approach by the Australian federal and state governments. Prior to the middle of June, the country had been enjoying a “Covid normal” environment where people could visit restaurants and nightclubs and join crowds at sports events, festivals and theatres. It appeared detached from the rest of the world where governments had been imposing strict lockdowns and severe restrictions. With almost no person allowed to travel in or out of Australia, state border closures and mandatory quarantine, their Covid protocol appeared impenetrable, with weekly limits on the number of returning citizens and complete bans from global hotspots. All changed with the Delta variant.

Positive cases in one week rose from almost zero to 100 and by the end of last month, there were outbreaks not only in Sydney but also all over the country necessitating government action of putting 80% of the 25 million population under restrictions and Sydney, Darwin, Perth and Brisbane in lockdown. It appears that the government had failed to ensure that it fully understood that the new variants were more dangerous and more transmissible than the original Covid-19. It is a sad indictment that Australia is last among OECD countries, when it comes to the rollout of vaccines. Seven months after mass vaccinations started on the global stage, Australia has only managed 5% of their adult population being fully vaccinated, with 29% having received a first dose – and have now returned to early pandemic lockdowns, with an optimistic mass vaccination target by Q3 2022.  Reasons given include supply issues, complacency over low Covid rates, and concerns around Astra Zeneca’s rare blood clotting risk, further sensationalised by the media. It is hoped that the Morrison government has finally got the message and that they start taking the vaccination protocol seriously. Better Late Than Never!

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Blue Sky Mine

Blue Sky Mine                                                                                                01 July 2021

For the past week ending 01 July, Dubai Land Department recorded a total of 2,020 real estate and properties transactions, with a gross value of US$ 1.23 billion. It confirmed that 1,321 villas/apartments were sold for US$ 610 million and 119 plots for US$ 230 million over the week. The top two transactions were for a plot of land in Marsa Dubai, sold for US$ 34 million, followed by a plot that was sold for US$ 16 million in Al Thanayah Fourth. The most popular locations were in Al Hebia Third, with 20 sales transactions worth US$ 17 million, Hadaeq Sheikh Mohammed Bin Rashid, with 14 sales at US$ 38 million, and Jumeirah First, with 14 sales transactions worth US$ 29 million. The top three transfers for apartments and villas were all apartments – US$ 81 million in Marsa Dubai, US$ 72 million in Al Merkadh and for US$ 63 million in Palm Jumeirah. Mortgaged properties for the week totalled US$ 272 million, including a plot for US$ 139 million in Al Goze Fourth. 124 properties were granted between first-degree relatives, worth US$ 63 million.

Following April’s announcement that the Dubai government was considering an imposition of freezing residential rents for three years, there has been a noticeable move by landlords in certain residential communities to try to lock in higher rents before it becomes law. At the time, the DLD commented that the legislation would bring stability to the market for both landlords and tenants and reduce rental disputes. However, it is still not known when the start date will be and whether the law will apply to either new rental contracts or just renewals and whether it encompasses all three property sectors – residential, commercial and industrial.

Consultancy Knight Frank has recorded record luxury home sales in Dubai, as the emirate seemingly recovers from the impact of the pandemic. It noted that in the first five months of the year, 22 homes, each worth more than US$ 10 million were sold, the most since 2015 and up from 19 homes in 2020. Their research head, Faisal Durrani, commented that “in Dubai, we appear to be in the midst of a spectacular post-Covid rebound in luxury home sales.” Most of the activity, at this price scale, was seen on The Palm Jumeirah, where the total value of property sold at the US$ 10 million level came in at US$ 770 million; the most expensive home sold this year was a US$ 30 million villa on the group of islands developed by Nakheel. The consultancy reports that only London has more US$ 1 million homes for sale than Dubai which has 42.4k properties in that sector.

Emaar Properties plans to issue a new benchmark sukuk of probably a ten-year US$ 500 million value under their US$ 2 billion Trust Certificate Issuance Programme. The UAE’s biggest listed property developer, by market capitalisation, has maintained its BB+ ratings from S&P Global which has lifted its outlook from negative to stable. This change has been brought about by the agency considering “that the residential real estate market in Dubai has bottomed out and now offers attractive opportunities for developers, especially for premium properties”. The agency also noted that Emaar accounts for more than 50% of new home sales in Dubai, focussing on the premium end of the market, and is set to generate more cash flow from operations as it hands over 6k units this year and 10k in 2022; last year, it delivered 4.8k.

Confirming its position as the leading regional entrepôt, the UAE warehouse and distribution 2020 trade totalled US$ 129.8 billion, of which the re-export market accounted for 46.5% of the total re-exports and exports of commodities and services, valued at US$ 273.3 billion. According to the Federal Competitiveness and Statistics Authority, since 2018, although the value has dipped, the percentage has risen from 44.2% (US$ 142.2 billion) to 44.8% (US$ 140.7 billion) to 46.5% (US$ 129.8 billion) last year.

Dubai Clear has announced it has been admitted as a Primary Member of the 38-member Global Association of Central Counterparties (CCP12) who operate more than 60 individual CCPs globally. This subsidiary of Dubai Financial Market, launched in April 2020 as the first regional local equities CCP, has guaranteed trade settlements and reduced counterparty risk to Clearing Members for securities and derivatives worth US$ 5.1 billion through its enhanced risk management and secured settlement framework.

Dubai has ranked second in a recent Nestpick study, behind Melbourne, in a Work-from-Anywhere Index report on 75 global cities. It came ahead of Sydney, Tallinn, London, Tokyo, Singapore; Glasgow, Montreal and Berlin, by scoring well on its game-changing one-year residency permit for remote workers. Other factors considered included costs and infrastructure, taxes, freedoms, safety and liveability. Last October, the government launched an initiative that that allowed overseas telecommuting professionals to live in the city while continuing to serve their employers in their home country. This gave remote workers – and their families – the opportunity to live in one of the safest locations in the world, backed by a high-quality lifestyle and a solid digital infrastructure.

This week, HH Sheikh Mohammed bin Rashid Al Maktoum, approved the new Board of Directors of Dubai Chambers, which had recently been restructured into three entities – Dubai Chamber of Commerce, Dubai Chamber of Digital Economy and Dubai Chamber of International Trade.  They will be headed by Abdulaziz Al Ghurair, Omar Al Olama and Sultan bin Sulayem respectively, with Juma Al Majid as the Honorary Chairman of the Dubai Chamber of Commerce and Industry. The main drivers behind this move were to enhance the Chamber’s contributions to the emirate’s economy, raise the level of support provided to emerging business sectors and accelerate Dubai’s innovation journey. Sheikh Mohammed commented that, “in the light of the changes sweeping across the globe, we need to adopt new business models that enable us to raise our sustainability and attain continued success. Deploying innovative operational frameworks and developing flexible legislations will help us foster further growth and achievement in Dubai’s economy.”

The Dubai Ruler has also launched several economic initiatives to further enhance the emirate’s economic advance, including an accelerator for family-owned businesses, that supports them in accessing new markets, UAE Growth Lab – an economic research institute established in collaboration with leading universities – and a global investment conference (Investopia) to be held in March 2022 that “will discuss strategies to leverage the opportunities created by the new economy”, brought on by the evolving regional and global environment. He also noted that “we have also launched an entrepreneurial academy (Skill-Up Academy) and a new platform to support the growth of start-ups (Scale-Up Platform), in addition to a web portal (Grow in UAE) to provide comprehensive information about policies and investment opportunities in the UAE”. In yet another bid to boost the post Covid economy, HH Sheikh Mohammed has announced that the UAE cabinet has decided to “adopt the National Agenda for Non-oil Export Development, a vital step aimed at accessing 25 new markets”, that will help expand the country’s exports and foreign trade.

China Export and Credit Insurance Corporation, a state-funded and policy-oriented insurance company, has opened its first regional office in the DIFC. By the end of last year, SINOSURE had supported more than US$ 5.3 trillion of domestic and foreign trade and investment, provided credit insurance-related services for over 210k enterprises and facilitated nearly 300 banks, offering more than US$ 600 billion of financing for exporters. One of the main aims of the venture is to further support China’s national Belt and Road initiative.

To support future regional expansion, and further into Asia, Kitopi has managed to raise US$ 415 million in a new funding round, led by SoftBank’s Vision Fund 2.  Kitopi operates sixty cloud kitchens across the GCC and employs 2.5k, whilst partnering with several restaurants and food and beverage brands to serve customers. The Dubai based cloud kitchen company, co-founded in 2018, by Mohamad Ballout and three others, is keen to take advantage of the sector’s huge potential; in 2019, the size of the global cloud kitchen market stood at about US$ 43.1 billion and, with an expected 12.0% annual growth will reach US$ 71.4 billion by 2027.

London-based venture capital firm AP Ventures and global FinTech Afterpay have invested US$ 10 million into two-year old Dubai-based buy-now-pay-later company Postpay which will allow the firm to best serve retail groups and brands across the GCC and the MENA region. This buy now pay later business model, has boomed globally since the onset of Covid by allowing consumers to make online purchases instantly and spread their payments out over interest-free instalments. For example, Australia’s Zip, a similar global platform, acquired Dubai-based Sopitii for US$ 16 million last month. Postpay works with global brands, including H&M, Footlocker, Dermalogica, and regional names such as Alshaya Group, The Entertainer and Kcal. On a global scale, this industry is expected to see growth of fifteen times by 2025.

The bourse opened on Sunday 27 June, 6 points lower (0.2%) the previous week, shed 40 points (1.4%) to close on 2,817 by Thursday 01 July. Emaar Properties, US$ 0.09 higher the previous fortnight, lost US$ 0.02 to close at US$ 1.13. Emirates NBD and Damac started the previous week on US$ 3.76 and US$ 0.35 and closed at US$ 3.65and US$ 0.35. On Thursday, 01 July, 76 million shares changed hands, with a value of just US$ 32 million, compared to 97 million shares, with a value of US$ 55 million, on 24 June. For the month of June, the bourse had opened on 2,798 and, having closed the month on 2811, was 13 points (0.1%) to the good. Emaar traded higher from its 01 June 2021 opening figure of US$ 1.08 – up US$ 0.06 – to close June on US$ 1.14. Two other bellwether stocks, Emirates NBD and Damac, started the month on US$ 3.76 and US$ 0.37 and both closed lower on 30 June on US$ 3.65 and US$ 0.35 respectively.

By Thursday, 01 July, Brent, US$ 10.18 (15.6%) higher the previous six weeks shed US$ 0.57(0.8%) to close on US$ 75.50. Gold, US$ 119 (6.3%) lower the previous fortnight, was flat by Thursday 01 July, to close on US$ 1,777. Brent started the month on US$ 69.39 and gained US$ 3.92 (5.6%) during June to close on US$ 73.31. Meanwhile, the yellow metal had a disappointing month, shedding US$ 133 (6.8%) in June, having started on US$ 1,905 to close on 30 June at US$ 1,776.

Perella Weinberg Partners has announced an initial public offering, fifteen years after being founded by Joe Perella and Peter Weinberg, and will merge with a special purpose acquisition company, (SPAC), sponsored by finance entrepreneur Betsy Cohen. The investment bank is the latest firm to go public in an industry that has already seen US$ 1.8 trillion of M&As this year and is on course for a record year. The firm has advised on deals this year including AT&T’s sale of media assets to Discovery – the largest announced combination in 2021 – and the purchase of Cloudera by a group of buyout firms.

After Facebook won the dismissal of two antitrust cases filed by the federal government and a coalition of states, it finally reached a landmark US$ 1 trillion market valuation last Monday when shares jumped 4.4% on the day; YTD the social media company market cap has risen by 29%. It now follows four other companies with a thirteen-digit valuation – Apple, Microsoft (which topped the US$ 2 trillion level this week), Amazon and Google parent Alphabet.

The UK’s Financial Conduct Authority has banned Binance, the world’s biggest crypto-currency exchange, ruling that the firm cannot conduct any “regulated activity” in the country. At the same time, the financial regulatorissued a consumer warning about Binance.com, advising people to be wary of adverts promising high returns on cryptoasset investments. The Group, originally based in Malta, and now in the Cayman Islands, is an online centralised exchange that offers users a range of financial products and services, including purchasing and trading a wide range of digital currencies; its affiliate firm, Binance Markets Limited, is based in London, with multiple global entities. The FCA confirmed that no entity in the Binance Group holds any form of authorisation, registration or licence to conduct regulated activity in the UK. The Group has experienced similar problems in other countries. In the US, Binance Holdings has been the subject of a probe by SEC, specifically by its officials dealing with money laundering and tax offences; earlier in the week, Binance announced it was pulling out of Ontario, Canada, after the Ontario Securities Commission (OSC) accused it and several other crypto trading platforms of failing to comply with province regulations; Japan’s Financial Services Agency has recently warned Binance for the second time in three years that it is operating in the country without permission.

Investor power has again come to the fore – this time with Toshiba shareholders ousting chairman of the board Osamu Nagayony director, who is also a director for Sony; for the past decade, the Japanese conglomerate has rarely been out of the news for all the wrong reasons, being besmirched by on-going scandals and shoddy management. Since 2011, it has paid a record fine in an accounting scandal and then lost billions on a bungled foray into nuclear power. The latest crisis came about because investigators had uncovered alleged collusion with senior Japanese government officials to influence last year’s board selection; since the beginning of the year, its principal shareholder, Effissimo Capital Management, had been crying foul and managed to oversee a rare victory, especially in Japan, with Nagayony’s head,, for shareholder rights.

By the end of the year, there will no longer be any Gap physical stores in the UK, as the retailer has decided to go on-line and close all its remaining eighty-one shops in the UK and Ireland, Although, it will continue trading online, the US retailer plans to close all its outlets in France and Italy, following a strategic review of its European business. The chain, which began business in San Francisco, selling only Levi’s and LP records, first entered the UK market in 1987.  Although business in its early years was impressive, it failed to change with fashion trends and fell behind the likes of Primark when it came to price and variety of selection; it was also one of latest big names to catch on with online sales and paid the consequences when retailers like Next, which had spent millions in creating a strong internet presence, took a large slice of Gap’s market at the same time. Another criticism of the retailer was that it carried out too many discount offers which tempted many customers to wait for sales to buy their products and also created a perceived lack of value. It could also be argued that Gap did not keep up with changing trends across its core customer group and became a “run of the mill” retailer.

Welcome economic news for the Northeast this week on two fronts – Newcastle-based Greggs and Sunderland’s Nissan plant. The Japanese car manufacturer has announced plans to expand its battery production and may also launch a brand-new electric model in addition to its Leaf electric car production at the factory there. The Johnson government is contributing to the overall cost of the project, which is expected to cost hundreds of millions, which will result in creating thousands of new jobs both directly and in the supply chain. It is expected the new plant will be producing batteries in time for 2024, the year when the level of UK-made components in UK-made cars is required to start increasing in line with the terms of the UK’s trade deal with the EU which is the main market for the Sunderland-made vehicles. In 2018, it was estimated that theUK made about half of the electric cars built in Europe and it is feared that unless the Government pours more money into the sector, this figure could fall to as low as 4%. This is borne out by the fact that Nissan has already sourced funds for 474GWh of production across seventeen European sites, and that the Sunderland plant accounts for just 6.5GWh.

Meanwhile Greggs confirms that sales have been stronger than anticipated in the weeks since lockdown measures were eased, with a “strong recovery” in May, which saw sales remain 1% – 3% ahead of pre-pandemic levels. Earlier in the year, it posted its first ever loss in thirty-six years after sales sank by 33% during the 2020 coronavirus restrictions.

Car dealership Lookers has also reported “exceptionally strong” trading for 2021, with consumer demand “robust” and annual profits expected to behigher than previously forecast. However, it did issue a caveat that there was “some uncertainty” going into H2 due to the pandemic and “notable” supply restrictions in both new and used vehicles.

This week, the UK’s accountancy watchdog has launched an investigation into the auditor of Greensill Capital, Saffery Champness, and also into PwC, which audited financial statements made by Wyelands Bank. Greensill was the now bankrupt Australian Bank, better known for having David Cameron as a Special Adviser. The supply chain finance company went bust in March, raising concerns over the future of GFG Alliance, the sprawling empire controlled by Sanjeev Gupta and his family which owns the UK’s Liberty Steel.

In what would be a European first, the UK and Singapore have started negotiations on a new digital-trade agreement. The Johnson administration has bold plans to capitalise on investment opportunities abroad, (and try to help a post-Covid recovery), to ensure the country’s aim to become a “global tech powerhouse”. It has also commented that any agreement with Singapore could remove barriers to digital trade and enable British exporters to expand into high-tech markets and become global leaders in digitally delivered trade and industries like FinTech and cyber security.

   %age30 Jun       
 UnitRise20212020201920182017201620152014
GoldUS$oz-6.28%1,7761,8951,5171,2851,3051,1511,0601,186
Iron OreUS$Lb37.80%214.55155.791.5371.371.28754773
Oil -BrentUS$bl45.75%75.551.866.6753.866.6256.8236.457.33
CoffeeUS$Lb21.95%156.4128.25129.2101.9126.2133124161
CottonUS$Lb9.92%85.8778.1268.9572.278.5696462
SilverUS$oz-0.45%26.2926.4117.8615.5616.991613.8215.77
CopperUS$Lb20.74%4.253.522.82.643.32.482.142.88
AUDUS$-3.12%0.7460.770.7020.70.780.720.730.81
GBPUS$1.55%1.381.3591.3261.271.351.241.481.53
EuroUS$-3.12%1.181.2181.121.141.21.051.091.21
RoubleUS$0.00%0.0140.0140.0160.0140.0170.0160.0140.017
FTSE 1008.59%7,0386,4817,5426,7217,6887,1426,2426,548
CSI30022.26%6,3725,2124,0973,1424,0313,3103,7313,532
S&P 50014.43%4,2983,7563,2312,5072,6742,2382,0442,091
DFMI12.80%2,8112,4922,7652,5303,3703,5313,1513,774
ASX 20010.73%7,2946,5876,8025,6526,1715,6655,3455,415
BitcoinUS$ 20.56%35,01529,0437,2013,69413,081998427302

From the above, the standout performers in H1 were commodities and the stock markets, with Brent, iron ore, coffee and copper all showing healthy upticks of 45.75%, 37.80%, 21.95% and 20.74% respectively. Stock markets proved fertile ground for those who were risk averse, with four of the five surveyed recording double digit gains. Interestingly, the FTSE 100 did not perform as well as its peers, but this could be a sign that there is more profit to be made on London stocks going into H2.  Gold and silver have disappointed in H1, both losing traction and direction. Sterling performed well against the greenback, whilst both the euro and Aussie dollar dipped by over 3%. Bitcoin had a rollercoaster half year and even went above the US$ 60k mark for a time; perhaps the brave investor could take a punt in H2 but remembers to get out when it rises above the US$ 50k mark.

Since 1959, when the Australian Bureau of Statistics started publishing trade figures, the country has witnessed 221 quarterly deficits and just 26 surpluses, of which eight have been over the past two years, equating to the longest consecutive run of current account surpluses on record. The latest data shows that May’s trade surplus was US$ 7.3 billion, just off the record high of US$ 7.4 billion set in January, with the last national accounts data showing that the current account surplus had reached 3.1% of GDP. The main reason for the on-going surpluses is simply iron ore (along with other mined metals). Eighteen months ago, the Department of Industry expected iron ore exports to reach a value of US$ 49.7 billion – its latest update puts the figure at more than double that at US$ 112.2 billion. Maybe former Australian politician and lead singer of Midnight Oil, Peter Garrett, got it spot on when he sang “nothing’s as precious as a hole in the ground” – Blue Sky Mine.

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Go East Young Man!

Go East Young Man!                                                                                     24 June 2021

For the past week ending 24 June, Dubai Land Department recorded a total of 1,982 real estate and properties transactions, with a gross value of US$ 2.10 billion. It confirmed that 1,336 villas/apartments were sold for US$ 706 million and 98 plots for US$ 187 million over the week. The most popular locations were in Marsa Dubai, with 131 sales transactions worth US$ 93 million, Al Thanyah Fifth with 119 sales, at US$ 32 million, and Dubai Investment Park, with 117 sales for US$ 9 million. Mortgaged properties for the week totalled US$ 1.18 billion, including a plot for US$ 272 million in Business Bay. 84 properties were granted between first-degree relatives, worth US$ 91 million.

A European investor has paid US$ 90 million for a plot in Palm Jumeirah – the highest valued Dubai land sale this year. Located adjacent to the Zabeel Saray five-star hotel, it encompasses over 671k sq ft; the anonymous buyer has yet to reveal what is going to be built on the land. The site is one of forty plots marked for hotel/mixed use projects on the Palm’s Crescent – and one of the last such sites available.

Knight Frank’s latest (Y)our Space report, places the UAE home to 869 green-rated buildings, 14th globally for the highest national concentration of sustainable buildings. Other GCC countries were somewhat eclipsed by the UAE with Saudi Arabia, (38 green-rated buildings) Kuwait (12) and Oman (12) being ranked 54th, 69th and 70th. The UAE is committed to the Paris Agreement on climate change to reduce its greenhouse gas emissions by 23.5% by the end of the decade.

Ahead of this week’s four-day Arab Health medical equipment exhibition, JAFZA announced that it had seen a 12% expansion in its healthcare and pharmaceuticals customer base last year. The free zone’s specific segment spans an area of around 170k sq mt, and houses 174 companies from 41 countries. Employing 1.1k, the sector was valued at US$ 273 million, with a 25k metric tonne volume.

Before the school summer holidays, and the Eid Adha long holiday next month, Dubai International is expecting a marked improvement in passenger numbers, which will see an extra 3.5k personnel required to deal with the rush, as its main terminal reopens this week. For the past fifteen months, sixty-six airlines have been utilising Terminals 2 and 3 and today they have shifted operations to Terminal 1, with Terminal 3 being solely used by Emirates, flydubai and Qantas; Emirates has posted that it expects 90% of its flight schedule back to normal by the end of July.The new Terminal 1 arrangement will allow the airport handle a further 18 million passengers. In 2020, traffic slumped 70% to just 25.9 million but the operators are confident of returning to 90% of pre-pandemic levels by the end of the year.

Following completion of the first phase of the port’s expansion this week, DP World and the Government of Somaliland inaugurated the new container terminal at Berbera Port which sees its container capacity more than triple from 150 20’equivalent units to 500 TEUs. The terminal, which can handle the largest container vessels in the world, has a 17 mt deep draft, along with a quay of 400 mt and three ship to shore gantry cranes; it also includes a modern container yard with eight rubber tyred gantry cranes with a new port One Stop Service Centre, ready by the end of Q3. DP World has committed to investing up to US$ 442 million to develop and expand Berbera Port to help it become a major regional trade hub to serve the Horn of Africa.

Mercer’s latest Cost of Living survey sees of 209 cities sees Dubai dropping to 42nd, down from 23rd last year, and Abu Dhabi to 56th from 39th in 2020. The UAE has seen its cost of living declining due to the diversification of its economy, which reduced the impact of low oil prices on GDP, and subsequently deflation. The three most expensive cities for expatriates to live and work in were Ashgabat in Turkmenistan, Hong Kong and Beirut, which had been placed at 45th a year earlier. More than half of the top ten cities were in Asia, with Shanghai (6th), Singapore (7th), with Beijing (9th). Zurich (5th), Geneva (8th) and Bern (10th); New York and London came in at 14th and 18th. The world’s cheapest city is Bishkek, the capital of Kyrgyzstan, followed by Lusaka in Zambia and Tbilisi, Georgia. The ranking measures the comparative cost of more than two hundred items, including housing, transportation and food.

In a bid to bolster the SME sector, state-owned Emirates Development Bank has signed an agreement with Dubai-based Beehive who will be provided with over US$ 8 million to provide loans to “creditworthy” clients. The Dubai-based peer to peer platform will help firms expand their operations or boost their working capital with much needed funding. Over the next five years, EDB has a five-year plan to provide US$ 8.17 billion (AED 30 billion) financing to support the country’s efforts to more than double the size of its industrial sector by 2031, as well as generating 25k new jobs. The bank has also signed two separate agreements with RAK Bank and CBD to offer credit guarantees and participate in co-lending programmes to SMEs.

Although already rising at a comparatively fast rate, Covid-19 accelerated the growth of online retail even higher to 53% to US$ 3.9 billion last year, equating to 8.0% of the country’s overall retail market. A Dubai Chamber of Commerce and Industry report projected the value of the online retail e-commerce market will more than double to US$ 8.0 billion by 2025. Drivers behind this surge include high internet penetration, developed transport logistics, modern digital payment systems, a tech-savvy youth and strong government support. E-commerce sales in the Middle East and North Africa region are set to triple to US$ 28.5 billion in 2022, from US$ 8.3 billion in 2017.

Dubai Economy has extended the deadline to 30 June for all registered businesses in the emirate to add their Beneficial Owner data to the commercial registry, in line with the UAE Cabinet Decision No. (58) of 2020. The Decision requires all registered businesses in the UAE to reveal the identity and furnish details of their Beneficial Owner to be included in the commercial registry as part of enhancing corporate compliance in the country per global best practices. All registered businesses in Dubai must register their Beneficial Owner data, irrespective of their category.

Under its Euro Medium Term Note Programme, Dubai Government has repaid a ten-year US$ 500 million Fixed Rate Note that matured on 22 June 2021. Abdulrahman Saleh Al Saleh, Director General of DoF noted that “the government’s solvency has allowed it to fulfil its past and current obligations and will continue to enable it to meet all future obligations on time.”

According to Humaid Al Miuhairi of the Ministry of Economy, government economic Covid-related support initiatives has reached a total of US$ 107.6 billion. He also indicated that the UAE Central Bank estimated a 2021 growth of 3.6%, slightly higher than the IMF’s latest forecast of 3.1%. He also commented that “the growth rate of government revenues from economic activities has increased by 115% in Q4 2020, compared to Q3; Q1 came in 13% higher than the previous period. The country also saw the number of newly registered companies up 4% in 2020, year on year.

Led by GMP Investments, locally-based The Luxury Closet has raised US$ 14 million to finance global expansion, as the online marketplace witnessed a surge in online sales and demand for recycled fashion. The nine-year old on-line marketplace resells luxury goods in eighty-five countries from its platform and has benefitted from the worldwide restrictions and lockdowns which has seen a real boost in its business. Founder, Kunal Kapoor, commented that “resale is the future of shopping. We expect one in six transactions to be pre-owned by the end of the decade.”

This week, “The Bitcoin Fund”, Canada’s largest digital asset investment fund manager, was launched on Nasdaq Dubai and becomes the first listed digital asset-based fund in the MENA region; it will be dual listed as it has been trading on the Toronto Stock Exchange. 3iQ, with more than US$ 2.0 billion in assets, will manage the fund that offers investors indirect exposure to Bitcoin by trading its units within a world-class regulated and transparent exchange environment. The fund will have Dalma Capital and Canaccord Genuity as the joint-lead arrangers, with BHM Capital having been appointed as the Fund’s Liquidity Provider.

It seems that Maple Invest has notified Damac Properties that it is delaying its offer to buy out the traded shares of the Dubai developer, awaiting the findings of a regulatory review. The developer’s founder, Hussain Sajwani, owns both Maple Invest and 72% of Damac and has made a US$ 595 million offer to buy the remaining shares, equating to US$ 0.354 a share. Damac has appointed KPMG Lower Gulf as valuer and Arqaam Capital as financial adviser to evaluate the offer from Maple, with Al Tamimi & Company being named as legal adviser.

Another step in the Arabtec Group companies’ liquidation was taken this week with the Court appointment of trustees for each of the seven companies involved – Arabtec Holdings, Arabtec Construction LLC, Austrian Arabian Readymix, Arabtec Precast, Arabtec Constructions LLC, Emirates Falcon Electromechanical Co, with one more bearing the same name. They have been given thirty-five days to record all the creditors and review the accumulated debts. The Dubai Court of First Instance also instructed each trustee to prepare an “initial separate report” on the that company’s assets and its rights with third parties, as well as to submit their opinion of the management and the preservation of company assets.

The bourse opened on Sunday 20 June, 238 points up (9.1%) the previous seven weeks, was flat shedding just 6 points to close on 2,857 by Thursday 24 June. Emaar Properties, US$ 0.06 higher the previous week, gained US$ 0.03 to close at US$ 1.15. Emirates NBD and Damac started the previous week on US$ 3.81 and US$ 0.35 and closed at US$ 3.76 and US$ 0.35. On Thursday, 97 million shares changed hands, with a value of US$ 55 million, compared to 123 million shares, with a value of US$ 71 million, on 17 June.

By Thursday, 24 June, Brent, US$ 7.63 (11.7%) higher the previous five weeks gained US$ 2.55 (3.5%) to close on US$ 75.50. Gold, US$ 112 (5.9%) lower the previous week, shed US$ 7 (0.4%), by Thursday 24 June, to close on US$ 1,777.

Within two years, Lego plans to be using bricks made from recycled drinks bottles but will have to ensure that the product can last for decades and that they can be used in conjunction with their existing bricks made from acrylonitrile butadiene styrene (ABS), a virgin plastic made from crude oil. Lego makes about 3.5k different bricks and shapes.  In 2018, Lego set a goal to make all of its core products from sustainable materials by 2030 and now the target is to find a product good enough that people do not notice the difference. The toy manufacturer wants to start using the US-sourced bottle-made ones “as soon as possible” with the next stage adding colours to the prototype bricks, and then user testing. Green Alliance said the recycled plastic plan is “certainly preferable to using virgin plastic but “hopes the supply of single use plastic bottles falls in future as people embrace reuse”.

With Morrisons rejecting an initial US$ 7.7 billion takeover offer from Clayton, Dubilier & Rice, a US private equity giant, its share value increased by 30% on Monday. The US private equity giant is backed by Sir Terry Leahy, who headed up Tesco for fourteen years. The Board rejected this unsolicited offer on the basis that the “conditional proposal significantly undervalued Morrisons and its future prospects” on the day the shares were trading at US$ 3.316, US$ 0.098 higher than CD&R’s offer price. This would point to an increased offer on the cards which has kept Morrison’s shares moving higher and, under UK takeover rules, CD&R has until 17 July to announce a firm intention to make an offer. Coincidentally, last week the UK competition watchdog approved the US$ 9.52 billion buyout of Asda by the Blackburn billionaire Issa brothers, as shares in competitors, such as Ocaido, Sainsbury’s and Tesco, rose 4.4%, 3.0% and 2.7% on the chance that the latest takeover offer could be the forerunner of more takeovers in the future.

China continues to show its displeasure at the use of cryptocurrencies by telling banks and payments platforms to stop supporting digital currency transactions and to take tougher action over the trading of cryptocurrencies; with that report on Monday, the currency, along with others, fell 10%. This follows last week’s government directive shutting down Bitcoin mining operations in Sichuan province. It is reported that the country mined 65% of 2020 global production. This comes a month after China’s cabinet said it would crack down on cryptocurrency mining and trading as part of a campaign to control financial risks. Also, at the beginning of the week, a short-term average trendline crossed below a long-term average trendline, known as a “death cross” occurred which was another factor for the price fall. Despite all this, Sotheby’s is getting in on the act by allowing cryptocurrencies to be used when it puts up a rare pear-shaped diamond that is expected to sell for as much as US$ 21 million at an auction next month.

By Tuesday, Bitcoin dipped below the US$ 30k mark and briefly dropped to US$ 28.6k – a five-month low. The value of the cryptocurrency has fallen by around 50% since hitting a record high US$ 63k+ in April and ended on Thursday trading at US$ 34.6k. Other cryptocurrencies were dragged down with Bitcoin, including Ether and Dogecoin. As short-term fundamentals continue to worsen, there is every chance that its new bottom may well be around US$ 20k as the long-running bull market comes to an end – only for the time being.

Last year, when the bilateral trade spat was becoming more acrimonious, China imposed up to 218% tariffs on incoming Australian wine in retaliation. It is going to file an official complaint with the World Trade Organisation after extensive consultation with winemakers. The Morrison government, which has denied China’s claim that the tariffs were increased because of trading malpractice, including dumping, confirmed that it was open to engaging directly with China to resolve the issue. Until then, China had been Australia’s top wine export market and the imposition of such high tariffs has wreaked havoc on the industry. In Q1, the total value of exported wine to China was just US$ 9 million, compared to US$ 250 million in the same 2020 period.

CBA, Australia’s biggest home lender, became the third major bank, (after Westpac and ANZ), to warn that interest rates will rise before the end of 2022, a lot earlier than the 2024 date that the Reserve Bank of Australia had been forecasting that it would be raising the cash rate. CBA considers that the current 0.1% rate will reach 1.25% by September 2023, with the first increase of 0.15% commencing in November 2022.If that were to happen, it would take the official rate back to what it was in June 2019 and only slightly below the 1.5% rate in 2016. If the CBA’s forecast turns out to be true, the typical owner-occupier mortgage rate will rise from 3.10% to 4.25% and the average investor rate from 3.44% to 4.59%. On a US$ 380k (AUD 500k) mortgage, that rate increase would result in a US$ 247 (AUD 324) per month increase in repayments.

The latest May statistics, produced by IHS Markit/CIPS, indicate that consumer prices have risen and that input costs rose at the fastest rate since 2008. Furthermore, as raw material prices soar, with supply chains spluttering, inflation of prices charged by firms hit its highest since records began in 1999; it sees May CPI at 2.1%, a two-year high, at a time when the IPS Markit/CIPS Composite Purchasing Managers’ Index’s reading was 61.7 – a sure sign that the UK economy is expanding faster than most analysts had predicted. There is now a real possibility of the economy overheating and that being the case, the BoE will be forced to raise rates earlier than they had hoped to slow down rising prices. However, those in the other camp expect that the current uptick in the economy could be a temporary blip and that prices pressures will soon ease.

Q1 saw UK food and drink exports to the EU dip 47% from the same period a year earlier, with the main drivers being UK’s shaky trading relationships with the bloc, over-zealous EU bureaucracy and the impact of the pandemic. The Johnson government noted that it was “too early to draw any firm conclusions” on the long-term impact of Brexit but indicated that the last two months had seen a marked uptick in trade, exceeding the average monthly levels across 2020. Badly hit sectors included exports of cheese, fish and chocolate – all down by 72%, 52% and 37% on the year. Country-wise, the five countries which saw comparable significant trade falls were Ireland, Spain, Italy, Germany and Denmark, with falls of 70.8%, 62.9%, 61.0% 54.9% and 39.9% respectively. For the first time this century, shipments to Europe accounted for less than 50% of the UK’s total exports, with Q1 non-EU exports accounting for 55% of the country’s total exports.

In the UK, May retail sales dipped a disappointing 1.4%, month on month, as many seemed to prefer visiting reopened bars and restaurants instead of buying food at supermarkets. Interestingly, sales at non-food shops rose 2.3%, on demand for outdoor furniture, whilst online sales were lower, (for the third consecutive month but still 60% higher, year on year), as people returned to physical shops. With sales decreasing 5.7% at food stores, sales in the hospitality sector moved in the other direction Although there were declines in sales for both clothing and department stores, (following strong growth in previous months), year on year both were up 28.9% and 12.6%. One worrying statistic is that that credit and debit card payments in the seven days to 10 June were 5% lower compared to February 2020 and there is a chance that the current pent-up spending may fizzle out sooner than many had forecast – and when the furlough scheme is pulled and inflation nudges inexorably higher.

Having applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership on 01 January 2021, (the day after leaving the EU), the UK is set to start negotiations with the eleven-nation bloc which includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Membership of the CPTPP, which has a 500 million plus population, would reduce tariffs on UK exports such as cars and whisky. If the UK succeeds with its application, it would become the first non-founding country to apply to join the CPTPP and would be its second biggest economy after Japan. The free trade agreement aims to reduce trade tariffs between member countries and includes a promise to eliminate or reduce 95% of charges on traded goods. International Trade Secretary Liz Truss said that membership would help “farmers, makers and innovators sell to some of the biggest economies of the present and future, but without ceding control over our laws, borders or money”. In reality, with deals already in place with eight of the CPTPP members, joining may add as little as 0.1% to the size of the UK economy, and the UK may have to concede some points to get the deal through. To put matters into perspective, trade with the US is twice as important to the UK as all the CPTPP nations put together. However, as trade between the UK and the EU declines, trade with the existing eleven members is set to increase by 65%, to around US$ 52 billion, between now and 2030. On top of that, there is every chance that bloc numbers will expand, with the likes of Indonesia, the Republic of Korea, the Philippines, Taiwan and even the US as possible joiners. Traditional advice to exporting businesses used to be Go West, now it seems that the government’s guidance may change to Go East Young Man.

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Go East Young Man

Go East Young Man!                                                                                     24 June 2021

For the past week ending 24 June, Dubai Land Department recorded a total of 1,982 real estate and properties transactions, with a gross value of US$ 2.10 billion. It confirmed that 1,336 villas/apartments were sold for US$ 706 million and 98 plots for US$ 187 million over the week. The most popular locations were in Marsa Dubai, with 131 sales transactions worth US$ 93 million, Al Thanyah Fifth with 119 sales, at US$ 32 million, and Dubai Investment Park, with 117 sales for US$ 9 million. Mortgaged properties for the week totalled US$ 1.18 billion, including a plot for US$ 272 million in Business Bay. 84 properties were granted between first-degree relatives, worth US$ 91 million.

A European investor has paid US$ 90 million for a plot in Palm Jumeirah – the highest valued Dubai land sale this year. Located adjacent to the Zabeel Saray five-star hotel, it encompasses over 671k sq ft; the anonymous buyer has yet to reveal what is going to be built on the land. The site is one of forty plots marked for hotel/mixed use projects on the Palm’s Crescent – and one of the last such sites available.

Knight Frank’s latest (Y)our Space report, places the UAE home to 869 green-rated buildings, 14th globally for the highest national concentration of sustainable buildings. Other GCC countries were somewhat eclipsed by the UAE with Saudi Arabia, (38 green-rated buildings) Kuwait (12) and Oman (12) being ranked 54th, 69th and 70th. The UAE is committed to the Paris Agreement on climate change to reduce its greenhouse gas emissions by 23.5% by the end of the decade.

Ahead of this week’s four-day Arab Health medical equipment exhibition, JAFZA announced that it had seen a 12% expansion in its healthcare and pharmaceuticals customer base last year. The free zone’s specific segment spans an area of around 170k sq mt, and houses 174 companies from 41 countries. Employing 1.1k, the sector was valued at US$ 273 million, with a 25k metric tonne volume.

Before the school summer holidays, and the Eid Adha long holiday next month, Dubai International is expecting a marked improvement in passenger numbers, which will see an extra 3.5k personnel required to deal with the rush, as its main terminal reopens this week. For the past fifteen months, sixty-six airlines have been utilising Terminals 2 and 3 and today they have shifted operations to Terminal 1, with Terminal 3 being solely used by Emirates, flydubai and Qantas; Emirates has posted that it expects 90% of its flight schedule back to normal by the end of July.The new Terminal 1 arrangement will allow the airport handle a further 18 million passengers. In 2020, traffic slumped 70% to just 25.9 million but the operators are confident of returning to 90% of pre-pandemic levels by the end of the year.

Following completion of the first phase of the port’s expansion this week, DP World and the Government of Somaliland inaugurated the new container terminal at Berbera Port which sees its container capacity more than triple from 150 20’equivalent units to 500 TEUs. The terminal, which can handle the largest container vessels in the world, has a 17 mt deep draft, along with a quay of 400 mt and three ship to shore gantry cranes; it also includes a modern container yard with eight rubber tyred gantry cranes with a new port One Stop Service Centre, ready by the end of Q3. DP World has committed to investing up to US$ 442 million to develop and expand Berbera Port to help it become a major regional trade hub to serve the Horn of Africa.

Mercer’s latest Cost of Living survey sees of 209 cities sees Dubai dropping to 42nd, down from 23rd last year, and Abu Dhabi to 56th from 39th in 2020. The UAE has seen its cost of living declining due to the diversification of its economy, which reduced the impact of low oil prices on GDP, and subsequently deflation. The three most expensive cities for expatriates to live and work in were Ashgabat in Turkmenistan, Hong Kong and Beirut, which had been placed at 45th a year earlier. More than half of the top ten cities were in Asia, with Shanghai (6th), Singapore (7th), with Beijing (9th). Zurich (5th), Geneva (8th) and Bern (10th); New York and London came in at 14th and 18th. The world’s cheapest city is Bishkek, the capital of Kyrgyzstan, followed by Lusaka in Zambia and Tbilisi, Georgia. The ranking measures the comparative cost of more than two hundred items, including housing, transportation and food.

In a bid to bolster the SME sector, state-owned Emirates Development Bank has signed an agreement with Dubai-based Beehive who will be provided with over US$ 8 million to provide loans to “creditworthy” clients. The Dubai-based peer to peer platform will help firms expand their operations or boost their working capital with much needed funding. Over the next five years, EDB has a five-year plan to provide US$ 8.17 billion (AED 30 billion) financing to support the country’s efforts to more than double the size of its industrial sector by 2031, as well as generating 25k new jobs. The bank has also signed two separate agreements with RAK Bank and CBD to offer credit guarantees and participate in co-lending programmes to SMEs.

Although already rising at a comparatively fast rate, Covid-19 accelerated the growth of online retail even higher to 53% to US$ 3.9 billion last year, equating to 8.0% of the country’s overall retail market. A Dubai Chamber of Commerce and Industry report projected the value of the online retail e-commerce market will more than double to US$ 8.0 billion by 2025. Drivers behind this surge include high internet penetration, developed transport logistics, modern digital payment systems, a tech-savvy youth and strong government support. E-commerce sales in the Middle East and North Africa region are set to triple to US$ 28.5 billion in 2022, from US$ 8.3 billion in 2017.

Dubai Economy has extended the deadline to 30 June for all registered businesses in the emirate to add their Beneficial Owner data to the commercial registry, in line with the UAE Cabinet Decision No. (58) of 2020. The Decision requires all registered businesses in the UAE to reveal the identity and furnish details of their Beneficial Owner to be included in the commercial registry as part of enhancing corporate compliance in the country per global best practices. All registered businesses in Dubai must register their Beneficial Owner data, irrespective of their category.

Under its Euro Medium Term Note Programme, Dubai Government has repaid a ten-year US$ 500 million Fixed Rate Note that matured on 22 June 2021. Abdulrahman Saleh Al Saleh, Director General of DoF noted that “the government’s solvency has allowed it to fulfil its past and current obligations and will continue to enable it to meet all future obligations on time.”

According to Humaid Al Miuhairi of the Ministry of Economy, government economic Covid-related support initiatives has reached a total of US$ 107.6 billion. He also indicated that the UAE Central Bank estimated a 2021 growth of 3.6%, slightly higher than the IMF’s latest forecast of 3.1%. He also commented that “the growth rate of government revenues from economic activities has increased by 115% in Q4 2020, compared to Q3; Q1 came in 13% higher than the previous period. The country also saw the number of newly registered companies up 4% in 2020, year on year.

Led by GMP Investments, locally-based The Luxury Closet has raised US$ 14 million to finance global expansion, as the online marketplace witnessed a surge in online sales and demand for recycled fashion. The nine-year old on-line marketplace resells luxury goods in eighty-five countries from its platform and has benefitted from the worldwide restrictions and lockdowns which has seen a real boost in its business. Founder, Kunal Kapoor, commented that “resale is the future of shopping. We expect one in six transactions to be pre-owned by the end of the decade.”

This week, “The Bitcoin Fund”, Canada’s largest digital asset investment fund manager, was launched on Nasdaq Dubai and becomes the first listed digital asset-based fund in the MENA region; it will be dual listed as it has been trading on the Toronto Stock Exchange. 3iQ, with more than US$ 2.0 billion in assets, will manage the fund that offers investors indirect exposure to Bitcoin by trading its units within a world-class regulated and transparent exchange environment. The fund will have Dalma Capital and Canaccord Genuity as the joint-lead arrangers, with BHM Capital having been appointed as the Fund’s Liquidity Provider.

It seems that Maple Invest has notified Damac Properties that it is delaying its offer to buy out the traded shares of the Dubai developer, awaiting the findings of a regulatory review. The developer’s founder, Hussain Sajwani, owns both Maple Invest and 72% of Damac and has made a US$ 595 million offer to buy the remaining shares, equating to US$ 0.354 a share. Damac has appointed KPMG Lower Gulf as valuer and Arqaam Capital as financial adviser to evaluate the offer from Maple, with Al Tamimi & Company being named as legal adviser.

Another step in the Arabtec Group companies’ liquidation was taken this week with the Court appointment of trustees for each of the seven companies involved – Arabtec Holdings, Arabtec Construction LLC, Austrian Arabian Readymix, Arabtec Precast, Arabtec Constructions LLC, Emirates Falcon Electromechanical Co, with one more bearing the same name. They have been given thirty-five days to record all the creditors and review the accumulated debts. The Dubai Court of First Instance also instructed each trustee to prepare an “initial separate report” on the that company’s assets and its rights with third parties, as well as to submit their opinion of the management and the preservation of company assets.

The bourse opened on Sunday 20 June, 238 points up (9.1%) the previous seven weeks, was flat shedding just 6 points to close on 2,857 by Thursday 24 June. Emaar Properties, US$ 0.06 higher the previous week, gained US$ 0.03 to close at US$ 1.15. Emirates NBD and Damac started the previous week on US$ 3.81 and US$ 0.35 and closed at US$ 3.76 and US$ 0.35. On Thursday, 97 million shares changed hands, with a value of US$ 55 million, compared to 123 million shares, with a value of US$ 71 million, on 17 June.

By Thursday, 24 June, Brent, US$ 7.63 (11.7%) higher the previous five weeks gained US$ 2.55 (3.5%) to close on US$ 75.50. Gold, US$ 112 (5.9%) lower the previous week, shed US$ 7 (0.4%), by Thursday 24 June, to close on US$ 1,777.

Within two years, Lego plans to be using bricks made from recycled drinks bottles but will have to ensure that the product can last for decades and that they can be used in conjunction with their existing bricks made from acrylonitrile butadiene styrene (ABS), a virgin plastic made from crude oil. Lego makes about 3.5k different bricks and shapes.  In 2018, Lego set a goal to make all of its core products from sustainable materials by 2030 and now the target is to find a product good enough that people do not notice the difference. The toy manufacturer wants to start using the US-sourced bottle-made ones “as soon as possible” with the next stage adding colours to the prototype bricks, and then user testing. Green Alliance said the recycled plastic plan is “certainly preferable to using virgin plastic but “hopes the supply of single use plastic bottles falls in future as people embrace reuse”.

With Morrisons rejecting an initial US$ 7.7 billion takeover offer from Clayton, Dubilier & Rice, a US private equity giant, its share value increased by 30% on Monday. The US private equity giant is backed by Sir Terry Leahy, who headed up Tesco for fourteen years. The Board rejected this unsolicited offer on the basis that the “conditional proposal significantly undervalued Morrisons and its future prospects” on the day the shares were trading at US$ 3.316, US$ 0.098 higher than CD&R’s offer price. This would point to an increased offer on the cards which has kept Morrison’s shares moving higher and, under UK takeover rules, CD&R has until 17 July to announce a firm intention to make an offer. Coincidentally, last week the UK competition watchdog approved the US$ 9.52 billion buyout of Asda by the Blackburn billionaire Issa brothers, as shares in competitors, such as Ocaido, Sainsbury’s and Tesco, rose 4.4%, 3.0% and 2.7% on the chance that the latest takeover offer could be the forerunner of more takeovers in the future.

China continues to show its displeasure at the use of cryptocurrencies by telling banks and payments platforms to stop supporting digital currency transactions and to take tougher action over the trading of cryptocurrencies; with that report on Monday, the currency, along with others, fell 10%. This follows last week’s government directive shutting down Bitcoin mining operations in Sichuan province. It is reported that the country mined 65% of 2020 global production. This comes a month after China’s cabinet said it would crack down on cryptocurrency mining and trading as part of a campaign to control financial risks. Also, at the beginning of the week, a short-term average trendline crossed below a long-term average trendline, known as a “death cross” occurred which was another factor for the price fall. Despite all this, Sotheby’s is getting in on the act by allowing cryptocurrencies to be used when it puts up a rare pear-shaped diamond that is expected to sell for as much as US$ 21 million at an auction next month.

By Tuesday, Bitcoin dipped below the US$ 30k mark and briefly dropped to US$ 28.6k – a five-month low. The value of the cryptocurrency has fallen by around 50% since hitting a record high US$ 63k+ in April and ended on Thursday trading at US$ 34.6k. Other cryptocurrencies were dragged down with Bitcoin, including Ether and Dogecoin. As short-term fundamentals continue to worsen, there is every chance that its new bottom may well be around US$ 20k as the long-running bull market comes to an end – only for the time being.

Last year, when the bilateral trade spat was becoming more acrimonious, China imposed up to 218% tariffs on incoming Australian wine in retaliation. It is going to file an official complaint with the World Trade Organisation after extensive consultation with winemakers. The Morrison government, which has denied China’s claim that the tariffs were increased because of trading malpractice, including dumping, confirmed that it was open to engaging directly with China to resolve the issue. Until then, China had been Australia’s top wine export market and the imposition of such high tariffs has wreaked havoc on the industry. In Q1, the total value of exported wine to China was just US$ 9 million, compared to US$ 250 million in the same 2020 period.

CBA, Australia’s biggest home lender, became the third major bank, (after Westpac and ANZ), to warn that interest rates will rise before the end of 2022, a lot earlier than the 2024 date that the Reserve Bank of Australia had been forecasting that it would be raising the cash rate. CBA considers that the current 0.1% rate will reach 1.25% by September 2023, with the first increase of 0.15% commencing in November 2022.If that were to happen, it would take the official rate back to what it was in June 2019 and only slightly below the 1.5% rate in 2016. If the CBA’s forecast turns out to be true, the typical owner-occupier mortgage rate will rise from 3.10% to 4.25% and the average investor rate from 3.44% to 4.59%. On a US$ 380k (AUD 500k) mortgage, that rate increase would result in a US$ 247 (AUD 324) per month increase in repayments.

The latest May statistics, produced by IHS Markit/CIPS, indicate that consumer prices have risen and that input costs rose at the fastest rate since 2008. Furthermore, as raw material prices soar, with supply chains spluttering, inflation of prices charged by firms hit its highest since records began in 1999; it sees May CPI at 2.1%, a two-year high, at a time when the IPS Markit/CIPS Composite Purchasing Managers’ Index’s reading was 61.7 – a sure sign that the UK economy is expanding faster than most analysts had predicted. There is now a real possibility of the economy overheating and that being the case, the BoE will be forced to raise rates earlier than they had hoped to slow down rising prices. However, those in the other camp expect that the current uptick in the economy could be a temporary blip and that prices pressures will soon ease.

Q1 saw UK food and drink exports to the EU dip 47% from the same period a year earlier, with the main drivers being UK’s shaky trading relationships with the bloc, over-zealous EU bureaucracy and the impact of the pandemic. The Johnson government noted that it was “too early to draw any firm conclusions” on the long-term impact of Brexit but indicated that the last two months had seen a marked uptick in trade, exceeding the average monthly levels across 2020. Badly hit sectors included exports of cheese, fish and chocolate – all down by 72%, 52% and 37% on the year. Country-wise, the five countries which saw comparable significant trade falls were Ireland, Spain, Italy, Germany and Denmark, with falls of 70.8%, 62.9%, 61.0% 54.9% and 39.9% respectively. For the first time this century, shipments to Europe accounted for less than 50% of the UK’s total exports, with Q1 non-EU exports accounting for 55% of the country’s total exports.

In the UK, May retail sales dipped a disappointing 1.4%, month on month, as many seemed to prefer visiting reopened bars and restaurants instead of buying food at supermarkets. Interestingly, sales at non-food shops rose 2.3%, on demand for outdoor furniture, whilst online sales were lower, (for the third consecutive month but still 60% higher, year on year), as people returned to physical shops. With sales decreasing 5.7% at food stores, sales in the hospitality sector moved in the other direction Although there were declines in sales for both clothing and department stores, (following strong growth in previous months), year on year both were up 28.9% and 12.6%. One worrying statistic is that that credit and debit card payments in the seven days to 10 June were 5% lower compared to February 2020 and there is a chance that the current pent-up spending may fizzle out sooner than many had forecast – and when the furlough scheme is pulled and inflation nudges inexorably higher.

Having applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership on 01 January 2021, (the day after leaving the EU), the UK is set to start negotiations with the eleven-nation bloc which includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Membership of the CPTPP, which has a 500 million plus population, would reduce tariffs on UK exports such as cars and whisky. If the UK succeeds with its application, it would become the first non-founding country to apply to join the CPTPP and would be its second biggest economy after Japan. The free trade agreement aims to reduce trade tariffs between member countries and includes a promise to eliminate or reduce 95% of charges on traded goods. International Trade Secretary Liz Truss said that membership would help “farmers, makers and innovators sell to some of the biggest economies of the present and future, but without ceding control over our laws, borders or money”. In reality, with deals already in place with eight of the CPTPP members, joining may add as little as 0.1% to the size of the UK economy, and the UK may have to concede some points to get the deal through. To put matters into perspective, trade with the US is twice as important to the UK as all the CPTPP nations put together. However, as trade between the UK and the EU declines, trade with the existing eleven members is set to increase by 65%, to around US$ 52 billion, between now and 2030. On top of that, there is every chance that bloc numbers will expand, with the likes of Indonesia, the Republic of Korea, the Philippines, Taiwan and even the US as possible joiners. Traditional advice to exporting businesses used to be Go West, now it seems that the government’s guidance may change to Go East Young Man.

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Just One More Chance!

Just One MoreChance!                                                                        17 June 2021

For the past week ending 17 June, Dubai Land Department recorded a total of 1,921 real estate and properties transactions, with a gross value of US$ 1.36 billion. It confirmed that 1,298 villas/apartments were sold for US$ 692 million and 135 plots for US$ 195 million over the week. The top three transfers for apartments and villas were all for apartments – in Marsa Dubai for US$ 94 million, Burj Khalifs (US$ 76 million) and US$ 53 million in Palm Jumeirah. The most popular locations were in Al Hebiah Third, with 35 sales transactions worth US$ 21 million, Hadaeq Sheikh Mohammed Bin Rashid with 23 sales, at US$ 34 million, and Al Hebiah Fourth with 20 sales for US$ 25 million. The top two land transactions were a plot in Island 2 sold for US$ 24 million, followed by land that was sold for US$ 17 million in Al Hebiah First. Mortgaged properties for the week totalled US$ 545 million, including a plot for US$ 75 million in Al Qusais First. 84 properties were granted between first-degree relatives, worth US$ 55 million.

For the month of May, the DLD recorded 5,359 investments totalling US$ 3.0 million. There was a massive 197% year on year growth to 6,021, valued at US$ 5.94 billion, with brokerage value reaching US$ 225 million in the first five months of 2021. YTD has seen 254k Ejari contracts, of which 53% were new to the sector. The more popular locations for villas were, Hadaeq Sheikh Mohammed Bin Rashid, followed by Wadi Al Safa 5, Wadi Al Safa 7, Al Thanyah Fourth, and Palm Jumeirah and for apartments, Dubai Marina, Burj Khalifa, Palm Jumeirah, Business Bay, and Al Thanyah Fifth.

It was interesting to read Kalpesh Kinariwala’s comments on why he expects affordable homes to increase in price. Whilst noting that Dubai property prices had declined up to 15% over the past three years, cement and steel prices have headed in the other direction by 20% and 35% since the end of Q3 2020; other building materials have also witnessed price hikes. It is inevitable that developers will have to start passing on such price increases to the buyer, as their margins have been cut to the bone. Not only have the factory gate prices of imported products jumped, but freight costs have also skyrocketed due to the lack of available containers.

After a downturn last year because of the negative impact of Covid-19, Dubai’s commercial sector has seen an uptick in 2021. Led by increased traction in locations such as Business Bay and JLT, which accounted for 39.0% and 36.6% of Coldwell Baker’s total transactions for the first five months of the year. Meanwhile, Property Finder points to four locations with the highest sales transactions – the two listed above along with Dubai Silicon Oasis and Dubai Sports City. It is reported that median sales prices of secondary office space have increased 7.0% at US$ 191 per sq ft. compared to June 2020; overall rentals were 9.0% higher over the same period.

Next week sees another major event in Dubai’s MICE calendar – Arab Health 2021, from 22-24 June – with an expected 24.5k ‘live’ attendees, from 170 countries, and 2k exhibiting companies. Over 300 speakers are expected for the Arab Health Congress to improve medical practice and ultimately improve patient outcomes, with a total of twelve medical conferences taking place. The medical device market includes any product used in healthcare for the diagnosis, prevention, monitoring or treatment of illness or handicap, other than drugs such as consumables, diagnostic imaging, dental products, orthopaedic/prosthetic products, and patient aids. It is estimated that the country’s medical device market will top US$ 1.52 billion by 2025, with an annual compound growth rate of 4.4%, driven by a growing economy leading to population growth, changing epidemiology, a growing medical tourism industry, healthcare infrastructure developments, expanding health insurance, digital transformation and new technologies.

According to leading local retailer, Majid Al Futtaim, the region’s retail economy is “inching towards pre-pandemic levels”, as customer confidence returned. MAF noted that spending on fashion items had already reached pre-Covid-19 levels by March, whilst consumer spending by residents surged 17% month-on-month, with footfall almost back to 2019 levels. The retail economy has recovered well in a year, compared to April 2020, when the retail economy had slumped 40% at the height of movement restrictions. Euromonitor International reckoned that UAE consumer spending is forecast to grow 3% this year to US$ 146 billion, followed by a compound annual average rate of 4.3% over the next five years to US$ 175 billion. With e-commerce penetration rates having doubled since 2019, February was 30% higher on the year and it is estimated that 25% of all electrical items are now purchased online, as well as 8% of grocery and 7% to 9% of fashion items. Although March spending in the leisure and entertainment sector was 17% higher, month on month, it was still 52% lower than in March 2019.

Last month, UAE regulators issued new guidelines on anti-money laundering (AML) and combating the financing of terrorism (CFT), in line with international standards. It appears that all companies from every sector must implement strict compliance processes in their internal policy to abide by the rules related to AML, CTF and KYC (know your customer). Every business entity is required to ensure its own third parties are not linked to any fraudulent actions because they will also be responsible by association. The fines range from US$ 13.6k to US$ 136k, (AED 50k to AED 500k), with other penalties including closure of the business.

Last year, there was a 3.9% increase, in the number of parks and economic zones registered by DP World, UAE Region, to 9.6k. Its MD, Abdulla bin Damithan points to the fact that the improvement was down to the emirate’s investment-friendly environment and the ease of doing business in Dubai. He also noted there had been an increase in demand for its logistics and warehousing facilities.

After posting a US$ 288 million profit in the year ending 31 March 2020, this year, the world’s biggest international carrier recorded a massive US$ 5.5 billion loss after the aviation industry was ravaged by the impact of Covid-19. Emirates’ revenue tanked 66% to US$ 8.4 billion attributable to global traffic restrictions so that airline capacity was sank to 24.8 billion, with aircraft fleet size reduced by eleven aircraft. The Group turned in an annual US$ 6.0 billion loss, with Dnata reporting  a US$ 496 million loss, compared to a US$ 168 million profit a year earlier. The airline received a government capital injection of US$ 3.1 billion. For the first time in its thirty-year history, the carrier had to implement redundancies and reduced their workforce by 31%. Chairman HH Sheikh Ahmed bin Saeed Al Maktoum, commented that “our top priorities throughout the year were: the health and wellbeing of our people and customers, preserving cash and controlling costs, and restoring our operations safely and sustainably”.

Malabar Investments has shifted its base to Dubai International Financial Centre and also registered its international operation’s shares with Nasdaq Dubai’s Central Securities Depository. This latest move, by the international investment arm of Malabar Gold & Diamonds, enables its 300+ shareholders to trade shares with the approval of the Board of Directors through nominated brokerage companies; trading will take place off-exchange as the company remains privately held. Malabar Gold and Diamonds currently generates an annual turnover of US$ 4.51 billion, through an extensive network of over 260 outlets, 14 wholesale units and 14 jewellery manufacturing centres across ten countries.

By the end of the year, DEWA will have added 300MW from solar photovoltaic panels and another 300MW from concentrated solar power to the grid in 2021, equivalent to a 12% increase in clean power capacity. The Dubai-based utility announced that its total power capacity from clean energy will have increased to 1,613MW compared to a present level of 1,013MW, reflecting an increase of 12% by year-end. The clean energy coming online this year is mainly based on PSP and CSP. Next month, DEWA will commission the 300MW first stage of the fifth phase of the Mohammed bin Rashid Al Maktoum Solar Park and then in September the tallest CSP tower, with a capacity of 100MW; this will be followed by the end of the year with a further 200MW from the parabolic trough, as part of the fourth phase of the solar park. The main aim of the Dubai Clean Energy Strategy 2050 is for clean energy to 75% of the emirate’s total power capacity by then.

According to the UAE’s Central Bank, outward personal remittances in 2020 dipped 5.0%, US$ 2.26 billion, year-on-year, with transfers through exchange houses declining 13.8%,  (US$ 4.93 billion), but increasing via banks by 28.8%, (US$ 2.67 billion). On a global scale, remittance flows to low- and middle-income countries fell 1.6% to US$ 540 billion but are expected to move higher this year, as the global economy recovers; the 2020 fall was not as severe as that of 2009, following the GFC, which witnessed a 4.8% fall. The World Bank is forecasting a 1.5% rebound in 2021, but that could be higher in the UAE for various reasons such as the recent federal changes in company ownership, amendments in certain visa categories, the delayed six-month Expo 2020 starting in October and a notable increase in foreign direct investment. All will see an increasing number of employees being recruited from overseas, remitting money back to their home countries, as well as companies repatriating parts of their profits to their home base. The country’s economy is expected to grow 2.4% in 2021, and non-oil economy by 4.0%, according to the Central Bank, with growth of 3.8% next year.

Pursuant to the US Federal Reserve Board’s decision to lift its Interest on Excess Reserves (IOER) by 5 basis points, the Central Bank of the UAE has raised its Base Rate applicable to the Overnight Deposit Facility (ODF) also by 5bp, with the new rate being 15bp. The CBUAE’s rate applicable to borrowing short-term liquidity from the CBUAE, through all standing credit facilities, was maintained at 50bp above the Base Rate.

Driven by its highly successful vaccination protocol, and the input of various government stimulus measures, Dubai’s Q1 non-oil external trade surged 9.7% to US$ 96.5 billion and 5.0% higher compared to Q1 2019. Exports, imports and reexports all headed north by 25.0% to US$ 13.7 billion, 9.0% to US$ 55.8 billion and 5.5% to US$ 27.0 billion respectively. Dubai’s Crown Price, Sheikh Hamdan bin Mohammed, commented that “this remarkable growth will get us closer to the ambitious target of Dubai’s five-year strategy to raise the value of external trade to AED 2 trillion” (US$ 545 billion). The Dubai government’s forecast is that the emirate’s economy will grow by 4.0%, assisted by a boost from the upcoming Dubai Expo in October.

A further breakdown of the figures sees Q1 direct trade up 15% to US$ 59.1 billion, free zone 2.0% higher at US$ 36.8 billion and customs warehouse trade grew 23.0% to US$ 627 million. Of that total, airborne, sea and land trades came in 15% higher at US$ 48.8 billion, 3% to US$ 32.7 billion, and 7% to US$ 15.1 billion. China continued to be the emirate’s leading trade partner, followed by India and US, with totals of US$ 12.0 billion, US$ 9.5 billion and US$ 4.2 billion respectively. The top five traded commodities in Q1 continued to be gold, telecoms, diamonds, jewellery and diamonds with figures of US$ 17.2 billion, (27% higher), up 32% to US$ 13.6 billion, 61% higher at US$ 7.9 billion, US$ 4.6 billion and US$ 3.8 billion respectively.

This week, Nasdaq Dubai announced that the Indonesian government had listed further sukuk tranches, totalling US$ 3 billion, making its total values of sukuks listed on the local bourse to US$ 19.75 billion. The issues were for a five year US$ 1.25 billion sukuk at 1.5% yield, a 2.55%, ten year US$ 1 billion sukuk and a US$ 750 million green sukuk at 3.55% yield and 30 years’ maturity. The Asian country is the largest sovereign sukuk issuer on Nasdaq Dubai which has become one of the largest global centres for listing sukuks, with a total of US$ 76.6 billion; the bourse also welcomed the listing of a US$ 600 million sukuk by Ahli United Bank, one of Kuwait’s leading financial institutions.

Dubai-based Drake & Scull International posted a US$ 31 million Q1 profit on the back of 16.5% hike in revenue to US$ 12 million, as the company wrote back US$ 45 million of liabilities that no longer need repaying; over the same period a year earlier, the contractor recorded a US$ 8 million deficit. Total assets at 31 March were 6.0% lower at US$ 149 million, with total liabilities declining 3% to US$ 1.18 billion. With its accumulated losses now at US$ 1.30 billion, DSI is to circulate its debt restructuring proposals among its 600-plus creditors for approval, having reached a similar agreement with a group of its biggest lenders in Q1. If approval is reached from over two thirds of the creditors, the contractor can then approach the courts to obtain their approval which will then bind all creditors.

The bourse opened on Sunday 13 June, 217 points up (8.3%) the previous six weeks, gained a further 21 points (0.7%), to close on 2,863 by Thursday 17 June. Emaar Properties, US$ 0.04 lower the previous week, gained US$ 0.06 to close at US$ 1.12. Emirates NBD and Damac started the previous week on US$ 3.73 and US$ 0.35 and closed at US$ 3.81 and US$ 0.35. On Thursday, 123 million shares changed hands, with a value of US$ 71 million, compared to 171 million shares, with a value of US$ 67 million, on 10 June.

By Thursday, 17 June, Brent, US$ 6.65 (10.2%) higher the previous three weeks gained US$ 0.98 (1.4%) to close on US$ 72.95. Gold, up US$ 144 (8.2%) the previous five weeks, shed US$ 112 (5.9%), by Thursday 17 June, to close on US$ 1,784. With the US Energy Information Administration forecasting an H2 decline in global oil inventories, (despite oil production moving higher towards the 100 million bpd level), allied with an easing of global pandemic restrictions, and a continued recovery in global oil consumption demand, there is every chance that oil prices will continue in the bull market and may even test the US$ 80 mark.

Joe Biden and the EU agreed a long-term truce, (for at least five years), in the seventeen-year Airbus-Boeing feud after marathon talks by EU and US officials and formalised at a meeting between the US leader and Europe’s Charles Michel and Ursula von der Leyen. The President commented that Washington and Brussels will “work together to challenge and counter China’s non-market practices in this sector that give China’s companies an unfair advantage,” Both manufacturers welcomed the deal.

Last November, the UK government directed that all Huawei 5G equipment had to be removed from their networks by 2027. This week, in a major coup for Samsung in their bid to extend their UK coverage, Vodafone UK has chosen the South Korean telecom as a supplier for its 5G infrastructure. In a surprise move, considering that the UK had joined other countries in banning Huawei products, Ericsson and Nokia, seen as a “shoo-in” duopoly, had been the two favourites to obtain the business.Phase 1 will seeSamsung kit installed in 2.5k rural sites in SW England and most of Wales. Samsung is one of a number of companies contracted by Vodafone to build what it calls, “the “first commercial deployment of Open Radio Access Network (Open RAN) in Europe. The equipment from different suppliers is interoperable so that various companies’ components can be interchanged to build the network as opposed to just one supplier carrying out all the work. Open TRAN will have additional benefits of allowing Vodafone to release new features simultaneously across multiple sites, add capacity more quickly and resolve outages “instantly”.

Electronic Arts has confirmed that some source code and other software tools have been stolen by hackers who have reportedly advertised the stolen software for sale in various dark web fora. It appears that some of the stolen codes were being used for games including FIFA 21 and the Frostbite engine. The maker of popular titles such as Battlefield has noted that the attack was unlikely to have an impact on gamers or business operations. This attack comes a week before E3, this year a virtual Electronic Entertainment Expo, brings the global players together.

Peter Cowgill has received a huge US$ 6 million bonus this year. This comes as the chairman of JD Sports heads a company that received millions in Covid support from the UK government and has rejected suggestions the firm should repay US$ 86 million of furlough money and US$ 53 million in business rates relief. He has argued that this bonusresulted from a long-term incentive share plan (Ltip), and that he had received only one payout from the scheme in the past eight years; during that time, JD Sports saw annual profits surge more than fivefold from US$ 115 million to US$ 592 million.

An unidentified buyer has approached the Canadian Weston family, the owners of 113-year old Selfridges, which has the giant London department store, as well as outlets in Manchester and Birmingham. Reports indicate that the department store could be worth more than US$ 5.6 billion, driven higher by the fact that it owns valuable real estate, including the large area in Oxford Street. Whilst many retailers have struggled even before the onset of Covid-19, Selfridges has withstood the High Street downturn in recent years with its blend of cutting-edge fashion and a broad range of goods for sale. Any sale will not include its overseas retail chains, including Arnotts and Brown Thomas in Ireland, Holt Renfrew in Canada and de Bijenkorf in the Netherlands.

In years past, this blog had been very critical of Sepp Blatter’s modus operandi as head of the then scandal-ridden FIFA. Apart from his largesse habit of giving expensive watches to many FIFA delegates and outright bribes to buy votes for his causes, he was the person that introduced major sponsorship deals with the likes of Coca Cola, Heineken and McDonalds to support a sport that was diametrically opposite to what these companies espoused. Fast food, beers and fizzy drinks hardly point to a healthy lifestyle. This week, it has taken Cristiano Ronaldo to move two coke bottles out of sight of cameras at a press conference, to drive the message home to FIFA that they should focus on other sponsors. His action saw Coke’s market value lose US$ 2.6 billion on the day and might make FIFA realise that it has to be morally wrong to be eschewing the benefits of unhealthy foodstuffs.

Since the last rate adjustment in March 2020, the Fed has kept the target range for its benchmark policy rate unchanged at zero to 0.25% and it remained following the last Federal Open Market Committee meeting. It also confirmed that it would continue asset purchases at the current US$ 120 billion monthly pace until “substantial further progress” had been made on employment and inflation, whilst also signifying that there would be two rate hikes towards the end of 2023., brought forward in line with the quicker than expected economic recovery. One of the drawbacks, with the speed of the recovery, is that demand has outstripped capacity; this in turn has led to bottlenecks in the supply chain, longer lead times and higher prices. The consumer price rises in both April (0.8%) and May (0.6%) have been the two biggest monthly increases since 2009. On the news, the greenback moved higher, stocks lower and yields on 10-year Treasuries headed north.

This week, the EU has started to seek external funds to finance its massive deficit, resulting from the public spending splurge that has occurred since the onset of the pandemic, as it tests investors’ appetite to fund nearly US$ 1.0 trillion. The ECB President, Christine Lagarde, introduced ten-year bonds as part of its NextGenerationEU (NGEU) programme, with an initial offering ofover US$10 billion and with slightly better terms for investors; money raised will finance grants and loans to member states. There will probably be a further two syndicated NGEU bond sales before the August summer break. In September, the NGEU green bond framework will be introduced and will account for about US$ 300 billion of the total proposed funding.

One of the major announcements from the weekend’s G7 meeting in Cornwall related to its attempt to counter the impact of China’s multi-trillion-dollar Belt and Road project on developing nations, by offering them a similar type of infrastructure plan. The so-called Build Back Better World scheme aims to provide a transparent infrastructure partnership to participating nations. It is hoped that B3W will help narrow the US$ 40 trillion needed by developing nations come 2035, and also to minimise the threat of China’s surging economic and military rise over the past forty years. The Group and its allies will mobilise private-sector capital in areas such as climate, health and health security, digital technology, and gender equity/equality to enhance the initiative.

There was a record rise of 197k in the number of UK workers on payrolls in May, month on month, as the jobs market continued to recover; however, this figure was almost 500k down on pre-pandemic levels. The Office for National Statistics also noted that the month’s unemployment rate dipped 0.1% to 4.7% for the quarter ending 30 April. Hotspots for unemployment were among the under 25 age and those working in London.

In April, UK’s economy came in 2.3% higher, as lockdown restrictions eased across the country. With this April’s economic output 27.6% higher than a year earlier, Chancellor Rishi Sunak commented that the figures showed a “promising sign that our economy is beginning to recover” and that “with more than a million people coming off furlough across March and April, and the number of employees in work rising, it is clear that our Plan for Jobs is working.” The April bounce back was helped by strong growth in the services sector, up 3.4%, attributable to rises in retail spending, increased car and caravan purchases, schools being open for the full month and the beginning of the reopening of hospitality. However, the latest figures are still 3.7% lower than they were in pre-pandemic February 2020, but the outlook is bright, based on the strength of the country’s vaccination drive, signs of pent-up demand and lower-than-expected unemployment rates. The Bank of England’s latest forecast points to a 2021 growth level of 7.25%.

In simple terms, inflation means that the dirham in your pocket does not go as far as it did. For example, if the weekly food bill was US$ 300 and now it is US$ 320 for the same “basket”, a person is financially worse off. The supermarket may have had to raise prices because of an increase in their cost of goods, brought on by any number of factors such as higher transport costs and their suppliers pushing prices higher. The result is that for the status quo to return, the person needs to see an increase in their salary to compensate for this inflationary price rise. In short, inflation is the rate at which the prices for goods and services increase and, in short, if the inflation rate is at 5%, the consumer has lost 5% of his prior spending power. In most cases, the only way to counteract this is for a similar increase in salary and wages. If that is not forthcoming there is an inevitable loss in consumer confidence and a fall in the standard of living.

May US inflation surged as consumer prices jumped 5.0% on an annual basis – up from April’s 4.2% – and its biggest year-on-year increase since August 2008. The main drivers behind last month’s figures were a 7.3% hike in the price of second-hand cars and lorries, accounting for about one-third of the overall increase, and a rise in energy prices. There are those who put this down to temporary factors such as supply bottlenecks driven by increases in freight rates, factories restocking and pent-up demand spending, as many prices dipped at the 2020 onset of the pandemic. Other analysts see that with the Federal Reserve’s target of 2.0% being breached, there are real concerns that rising prices could push up interest rates at a quicker pace to cool the economy down. The Fed is hoping that the recent figures are just temporary, as the economy realigns after the impact of Covid. If it persists then that will be a major problem and no wonder the global central banks are watching what happens in the US with great interest.

There is little surprise to anyone to discover that over 62% of Europeans believe corruption is a problem in their country and that Covid-19 pandemic had made matters worse. The survey by Transparency International, involving 40k Europeans in the 27-nation EU bloc, concluded that government corruption was a big problem in their country, with 33% believing that corruption had got worse post the onset of the pandemic in early 2020. Healthcare was seen as an area of concern, with itsGlobal Corruption Barometer finding that 6% of people across the EU had paid a bribe for health care, with a worryingly high 29% having used personal connections to receive medical attention; just as what seems to have happened in the UK, most people also did not consider that their government had handled the pandemic in a transparent manner. As Delia Ferreira Rubio, chair of Transparency International, noted: “During a health crisis, using personal connections to access public services can be as damaging as paying bribes. Lives can be lost when connected people get a Covi-19 vaccine or medical treatment before those with more urgent need”.

Unsurprisingly, the survey found that  the likes of Slovenia (70%), Bulgaria and Cyprus (both 68%) and the Czech Republic (67%) thought that their government was controlled by private interests, with the Nordic countries at the other end of the scale; the average saw 53% concerned about such ties and, no doubt, the UK would be at the higher end of the scale Recent examples include David Cameron’s excessive lobbying role with the now bankrupt Australian Greensill Bank, Dominic Cummings’ and Michael Govescronies benefitting from PPE contracts, (with no tenders) and the recent knighthoods to Tony Gallagher, who had donated almost US$ 6 million  to the Conservative Party over the past decade, and William Adderley who donated over US$ 700k to “the cause”, during the 2019  general election.

MPs are rated as the most corrupt, followed by business executives, bankers and national government officials including personnel in the president’s and prime minister’s office. More than 50% of those surveyed believed big companies avoid paying taxes and that connections are commonly used by businesses to secure contracts. Probably another truism is that only 21% of Europeans think that corrupt officials face appropriate repercussions, if caught with “their snouts in the trough”. The NGO concluded that three immediate steps could be taken to help improve the situation – increase lobbying transparency at the EU and national levels tackle tax avoidance/money laundering more strictly and introduce robust measurers to protect whistle-blowers. It would be a safe bet that the EU technocrats will continue operating in an opaque environment and will not introduce any measures to substantially change their current modus operandi even by being given Just One More Chance!

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