Two of a Kind, Working on a Full House

Two of a Kind, Working on a Full House.                                                    25 March 2022

For the past week, ending 25 March 2022, Dubai Land Department recorded a total of 2,461 real estate and properties transactions, with a gross value of US$ 1.85 billion. A total of 330 plots were sold for US$ 450 million, with 1,653 apartments and villas selling for US$ 933 million. The top three transfers for apartments and villas were all apartments – one was sold for US$ 125 million in Marsa Dubai, a second sold for US$ 121 million in Burj Khalifa, and the third sold for US$ 76 million in Business Bay The top two land transactions were for a plot of land in Nadd Hessa, worth US$ 52 million, and one in Palm Jumeirah for US$ 25 million. The most popular locations in terms of volume and value were Al Hebiah Fifth, with 164 transactions, totalling US$ 91 million, followed by Merkadh, with 25 sales transactions, worth US$ 24 million, and Wadi Al Safa 5, with 26 sales transactions, worth US$ 31 million. Mortgaged properties for the week totalled US$ 420 million, with the highest being for land in Al Qusais First at US$ 87 million. 124 properties were granted between first-degree relatives worth US$ 57 million.

The latest S&P Global Ratings report notes that Dubai property prices and rents will continue to increase this year, in line with the trend of 2021, driven by the emirate’s “strong economy”. It forecast that this year there would be “moderate increases in prices and rents as well as strong sales”, which will encourage developers to launch new developments. To those who think prices have already peaked, they should bear in mind that current prices are still up to 30% below those recorded in 2014. S&P also advanced the notion that “high oil prices will remain an important positive factor for investor sentiment in the GCC region,” and “geopolitical tensions could highlight Dubai’s reputation as a haven and provide a boost to demand.” The report also indicated that “the addition of about 30k units over 2022 should moderate price and rent increases,” and it expected a slower growth in mortgage transaction volume as rates begin to move higher.

Damac’s latest contribution to the Dubai property market is the twin tower, Safa One scheme, located by Safa Park.  The project is designed to replicate a masterpiece necklace, based on a design by Fawaz Gruosi, the founder of Swiss jeweller de Grisogono. The project will have lush garden terraces and hanging gardens, an artificial beach and swimming pool. The higher Tower A will have an urban tropical island with cascading waterfalls and plentiful plants. 1 -3 B/R apartments will be available on the luxury levels, while super luxury levels will feature 2 – 5 B/R apartments, with prices starting at US$ 454k.

Pearlz introduces Dubai’s first real estate launch of 2022 – and its second project in five months by Danube Properties after their US$ 129 million Skyz project in Arjan last October. The latest US$ 82 million project, located in Al Furjan area close to Ibn Battuta Mall, will comprise 1k residential units, as well as a number of retail and recreational facilities. The Pearlz development will bring the developer’s portfolio to over 8k, (with nearly 4.6k, with a sales value of US$ 989 million so far delivered), and a development value of US$ 1.44 billion.

Dubai International Airport (DXB) is gearing up for the peak holiday rush, with an estimated 1.4 million passengers expected to pass through over the next two weekends – 25–28 March and 07-09 April, as schools close for their spring holidays. The authorities are urging passengers to use Dubai Metro to avoid congestion, on the roads in and out of the airport, as well as to use Smart Gates whenever possible.

In line with the Government Procurement Programme, Emirati entrepreneurs and national enterprises in Dubai won contracts worth US$ 251 million, (3.0% higher than in the previous year), from sixty-nine various local and federal government entities, semi-government bodies and private businesses in 2021. Under the directives of HH Sheikh Mohammed bin Rashid Al Maktoum, any government body, or entity in which the government has at least a 25% stake, are required to allocate 10% of their purchasing to Emirati companies that are members of Dubai SME. Since 2002, GPP has secured over 16.9k procurement contracts for 362 Emirati companies, with those in the commercial sector accounting for 83% of the contracts, the professional sector, with 13%, and 4% to industrial firms.

Last year, HH Sheikh Mohmmed bin Rashid Al Maktoum announced his intention for Dubai to attract 100k coders, and this week, ten initiatives were launched to empower 15k coders in the UAE over the next six months. Launched by Coders HQ, in partnership with global tech companies, the scheme is open to expats and citizens, with the double aim of creating a large community of trained coders in the country and providing programmers with optimal job opportunities in the market. It is estimated that there are already 63k digital skilled professionals in the country.

Dubai’s Crown Prince, HH Sheikh Hamdan bin Mohammed bin Rashid, has directed the establishment of a specialised entity, focused on ensuring fair trade and consumer rights protection. The directive is aimed at enhancing sustainable economic growth in Dubai and to make it a more attractive global fair trade destination, providing increased growth opportunities for the emirate’s business community. He also commented that “the trade sector is the backbone of our economy. Today, Dubai is a base for global, regional and local companies to tap opportunities in the world’s most attractive and fastest-growing markets, and we continue to strengthen our position as a global leader in supporting businesses to enhance their success and innovation.”

Following a roasting in the UK media, after terminating 800 staff, P&O Ferries has shared details of its redundancy payments of over US$ 48 million, claiming its settlement with its workers is believed to be “the largest compensation package in the British Marine Sector.” The Dubai-owned company, which claimed that it risked collapsing into administration without the cuts, noted that more than forty staff would get severance packages of more than US$ 132k (GBP 100k) each, some employees are set to get 91 weeks’ pay as well as the chance of new employment, and no employee will receive less than US$ 20k, (GBP 15k). Unions claim that some of those laid off will be replaced by Indian seafarers on US$ 2.39 an hour. On Tuesday, the ferry operator responded to UK ministers explaining its conduct, details of which have yet to be released. It was also reported that the UK government was reviewing all of its contracts with P&O Ferries, and its owner DP World, including a US$ 33 million subsidy to DP World to help develop London Gateway as a freeport. There is not too much press coverage on the investments that DP World has made in the UK – only last September, it agreed to invest a further US$ 395 million in the new fourth berth at London Gateway logistics hub to strengthen UK’s supply chain, bringing its total investment in the country over the past decade to over US$ 2.63 billion – a little more than the US$ 33 million UK subsidy! It sees that prime minister, Boris Johnson, and some of his ministers, may have been wrong assenting that the sudden sacking of the 800 employees could cost the company fines “running into millions of pounds” if found guilty of breaking UK employment law However, addressing a committee of MPs yesterday, P&O’s boss, Peter Hebblethwaite, apologised for the distress caused by the cuts, but said they were necessary to save the business which has been loss-making.

In the final throes of completing its administration process, NMC Health has divested its final international asset by selling its 53% stake in Saudi Medical Care Group. In 2019, the UAE-based hospital operator formed a JV with Hassana Investment Company and contributed five of its private hospital assets and an additional cash injection for its 53% stake. There were no details available as to the buyer and the value of the deal. In 2020, it was found that NMC Health had hidden US$ 4.0 billion of debt in it books and had inflated its cash position, resulting in the company going into administration. At the time, April 2020, it was one of the biggest privately-owned healthcare groups in the UAE, with two hundred healthcare units in seventeen countries.

Shuaa Capital has acquired a majority stake in locally based financial comparison website Souqalmal, but price and investment size have not been made public. The financing by the Dubai-based investment bank, with assets under management of almost US$ 14 billion, will be used to execute an ambitious growth plan over the next two years. Other shareholders in the business are Riyad Capital and UK comparison website GoCompare. It is estimated the UAE is the MENA’s biggest country when it comes to the number of deals and funding, with Emirates-based start-ups raising US$ 1.17 billion across 155 transactions last year. Souqalmal’s founder, Ambareen Musa, will continue as chief executive and oversee the expansion of its services.

Yesterday, DEWA’s IPO opened for subscriptions, with a price range of between US$ 0.613 and US$ 0.676, equating to a market cap of between US$ 30.63 billion and US$ 33.76 billion, making it the largest company on the bourse by market cap. The IPO subscription will be open until 02 April for retail investors and 05 April for qualified investors, with a total of 6.5% of the utility’s existing shares, (3.25 billion), on offer. If all goes to plan, trading will start on the DFM on 12 April.

At this week’s virtual AGM, DFM shareholders approved a 3% cash dividend, equivalent to US$ 65 million, the 2021 accounts, and the Fatwa and Shariah Supervisory board’s report. It also reappointed PricewaterhouseCoopers as the external auditors for the fiscal year 2022. The AGM approved the sale of 4.2 million treasury shares allocated to the company at the time of its IPO for employees’ stock option program.

At another virtual AGM, Amanat Holdings shareholders approved the consolidated financial statements for 2021, and to distribute a cash dividend of US$ 0.016 per share. This figure equates to a total dividend pay-out of US$ 41 million, equating to 6% of the firm’s share capital and 53% of profit attributable to equity holders. Last year, its profit skyrocketed twenty-eight-fold to US$ 77 million.

The DFM opened on Monday, 21 March 79 points (2.3%) lower on the previous fortnight, gained 62 points (1.8%) to close on Friday 25 March, at 3,412. Emaar Properties, US$ 0.12 higher the previous three weeks, was US$ 0.05 higher at US$ 1.52. Emirates NBD, DIB and DFM started the previous week on US$ 3.76, US$ 1.64 and US$ 0.63 and closed on US$ 3.92, US$ 1.65 and US$ 0.64. On 25 March, trading was at 127 million shares, with a value of US$ 92 million, compared to 275 million shares, with a value of US$ 505 million, on 25 March 2022.

By Friday 25 March 2022, Brent, US$ 10.08 (9.3%) lower the previous fortnight, had gained US$ 4.75 (4.4%), to close on US$ 112.68. Gold, US$ 73 (3.7%) lower the previous week, gained US$ 39 (2.0%), to close Friday 25 March on US$ 1,958.  

Helped by near record high prices, the world’s largest oil-exporting company saw 2021 profits more than double last year from US$ 49 billion to US$ 110 billion. Saudi Aramco’s results were also helped by the consolidation of Sabic’s full-year results and stronger refining and chemicals margins. 2021 capex was 18% higher on the year, to US$ 31.9 billion, with 2022 guidance ranging between US$ 40 billion to US$ 50 billion. The world’s third largest company, behind Apple and Microsoft, believes that “substantial new investment is required to meet demand growth, against a broader decline in upstream investment across the industry globally. Its share value rose 3.6%, on the news, to US$ 11.56, as Aramco maintained its 2021 dividend at US$ 75 billion, as well as issuing one bonus share for every ten shares held.

Despite an eight-month delay after local authority licensing problems, Elon Musk has finally opened a huge electric car “gigafactory” near Berlin which is Tesla’s first European hub. Built at a cost US$ 5.3 billion, the plant will produce 500k vehicles every year and employ some 12k, at full capacity. Last year, VW sold 450k battery-electric vehicles worldwide, and has a 25% market share in Europe’s electric vehicle market, compared to Tesla’s 13%. This week, the US car maker delivered its first thirty German-made Model Y Performance cars, with a 514 km range and at a cost of US$ 70k.

Another fatal crash puts Boeing under the spotlight yet again. On Monday, a seven-year-old China Eastern Airlines Boeing 737-800 crashed in southern China with 132 people onboard, and to date it is not yet known what caused the accident. The airline has grounded all its 737-800s, whilst the Indian regulator has placed the country’s fleet of Boeing 737 planes under “enhanced surveillance”; in the country, SpiceJet, Vistara and Air India Express all have Boeing 737 aircraft in their fleets. It is estimated that there are over 4.2k Boeing 737-800 passenger planes in service, of which some 25% are to be found in China; they have been in production for over twenty years. This comes as the US plane maker is still trying to recover from two fatal crashes involving its 737 MAX aircraft which claimed the lives of 346 passengers and crew. Boeing’s share price fell by 3.5% in New York on Monday, whilst China Eastern Airlines’ share price fell by more than 6% in Shanghai on Tuesday.

In 2021, global music revenues grew at the fastest rate this century, surging 18.5% to US$ 25.9 billion, with a breakup indicating that streaming, (with paid subscribers 18.1% higher at 523 million) now accounts for 65% of total revenues, followed by CDs, vinyl/cassettes, (19%) and downloads 4%, with the 11% balance attributable to a mix of royalty payments and licensing music to films, TV shows and adverts. Sales of CDs increased for the first time this millennium, and vinyl revenues were up by 51%. South Korean band BTS were the biggest-selling act for the second year running, followed by Taylor Swift was the year’s second best-seller, the same position she held last year, while Adele, who had the most popular record overall, selling 4.7 million copies came third. The UK music industry, the third biggest in the world behind the US and Japan, grew at a slightly slower rate than the global average, with revenues up 12.8% to US$ 1.72 billion.

Not since 1969 has the number of Americans applying for unemployment benefits has been as low, with the US job market continuing to show strength in the midst of rising costs and an ongoing coronavirus pandemic. For the week ending 19 March, jobless claims fell 28k to 187k, with a total of 1.35 million Americans collecting jobless aid. Last month, 678k new jobs were added, as the unemployment rate dipped 0.2% to 3.8%.

Having raised its benchmark lending rate by 25 bp last week, Federal Reserve Chairman Jerome Powell has confirmed that it is prepared to raise interest rates by bigger steps if needed to contain “much too high” inflation. That seems to point to the Fed being prepared “to move more aggressively by raising the federal funds rate by more than 25 basis points” to damp down inflationary pressures, if so needed. Inflation, now at its highest level in four decades, will continue to move northwards as the Ukrainian crisis worsens, and the US economy gets further hit by supply chain problems. The Fed chief is keen “to restoring price stability while preserving a strong labour market,” but there is always a chance that this strategy may push the economy into a recession.

February government borrowing was higher than expected as the gap between spending and tax receipts reached US$ 17.4 billion, as surging inflation resulted in interest payments being more than 50% higher; the expected figure was a lot less at US$ 10.7 billion. So far this fiscal year, interest payments on government debt have rocketed by 78.7% to US$ 88.8 billion, partly as a result of higher coupons being paid on the US$ 662.5 billion of inflation-linked gilts it has issued; on the flip side, inflation has helped propel tax receipts higher. For the first eleven months of the fiscal year (in the UK the fiscal year ends in March), borrowing at US$ 183.4 billion, was less than half the figure compared to a year earlier, when large scale public economic support was the order of the day; the figure is also US$ 34.3 billion below the last official OBR forecast, allowing the Chancellor, Rishi Sunak, some wiggle room. Meanwhile, public debt of US$ 3.0 trillion is 94.7% of GDP – its highest level in nearly sixty years.

It is reported that Russian President Vladimir Putin wants “unfriendly” countries to buy its oil and gas with roubles, whilst it seems that “friendly” countries, such as China and Turkey, could be allowed to pay in Bitcoin or in their local currencies. The move is seen as a means to boost the Russian currency, which has lost over 20% in value YTD, and has also seen the cost of living rise to almost 20%, as a consequence of sanctions imposed by the UK, US and the EU, following the invasion of Ukraine.

Meanwhile in an attempt to reduce Europe’s dependence on Russian energy supplies, the EU and US have agreed to the US to provide the EU with extra gas, equivalent to around 10% of the gas it currently gets from Russia, which supplies almost 40% of current EU needs; and with other countries also agreeing further supplies to the EU, it is estimated that this extra 15 billion cu mt will equate to 24% of the gas currently imported from Russia. The ultimate aim is to lift this annual figure to about 50 billion cu mt to the EU, and according to EC President Ursula von der Leyen, in a meeting this week with Joe Biden, this “is  replacing one-third already of the Russian gas going to Europe today.” The US President noted that the long-term benefits of the deal would outweigh the short-term pain that reducing Russian gas supplies would cause. To the outsider, it seems that certain countries are already feathering their own nest and may have forgotten that, in the short-term, their focus must be on saving the Ukraine.

It has to be Australia where the Perth Casino Royal Commission concluded that “Crown Resorts has been found unsuitable to hold a gaming licence in Western Australia”, and that there had been failings and “numerous deficiencies” by both Crown and state regulators. The 1k page report contained fifty-nine recommendations and identified a series of failures by Crown Resorts, including:

  • facilitating money laundering through what were identified as the Riverbank accounts
  • failing to have an effective anti-money laundering program
  • permitting junkets with links to criminals to operate at the Perth casino
  • failing to minimise casino gambling-related harm
  • failing to be open and accountable in communications with the Gaming and Wagering Commission.

The Commission noted that the Crown’s corporate and governance structure, as well as the Perth casino’s risk management, gambling-related harm and money laundering programs, all required attention. Furthermore, it also found that the regulatory framework to manage Crown was “anachronistic” and was designed “without the experience or understanding of modern casino gaming operations and the risks which they pose to the public”. The Commission found that neither the WA’s gaming regulator, the Gaming and Wagering Commission, and the Department of Local Government, Sport and Cultural organisation had “an adequate or accurate understanding of its role in casino regulation” With the poacher, unsuitable to hold a gaming licence in Western Australia, and the gamekeeper, apparently unfit to regulate the industry, it seems Two of a Kind, Working on a Full House.

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A World Without Love

A World Without Love                                                                     18 March 2022

For the past week, ending 18 March 2022, Dubai Land Department recorded a total of 2,400 real estate and properties transactions, with a gross value of US$ 2.53 billion. A total of 355 plots were sold for US$ 362 million, with 1,547 apartments and villas selling for US$ 807 million. The top three transfers for apartments and villas were all apartments – one was sold for US$ 101 million in Marsa Dubai, a second sold for US$ 73 million in Business Bay, and the third sold for US$ 58 million in Burj Khalifa. The top two land transactions were for a plot of land in Al Safouh First, worth US$ 49 million, and one in Al Thanayah Fourth for US$ 13 million. The most popular locations in terms of volume and value were Al Hebiah Fifth, with 244 transactions, totalling US$ 142 million, followed by Jabal Ali First with 25 sales transactions, worth US$ 24 million, and Al Merkadh, with 20 sales transactions, worth US$ 54 million. Mortgaged properties for the week totalled US$ 1.26 billion, with the highest being for land in Palm Jumeriah at US$ 86 million. 130 properties were granted between first-degree relatives worth US$ 102 million.

According to CBRE, February property prices rose in most areas of the city, as the two-month YYTD transaction volume hit a record high of 11.1k. In the month, average prices were 10.7% higher, year on year, with average villa prices 21.0% to the good and apartments 9.1% higher. Month on month, the highest price gains for villas and apartments were seen in JVC and Palm Jumeirah, 3.0% and 2.9% higher, for villas and the Green Community, Jebel Ali, DFC and Meydan City with average monthly price hikes of 3.0%, 2.8%, 2.7% and 2.7%. There are many factors that have made Dubai one of the hottest property markets in the world and they include:

  • government initiatives, including residency permits for retirees and remote workers, the expansion of the ten-year golden visa
  • the economic boost from Expo 2020 Dubai
  • the country’s widespread successful coronavirus vaccination programme
  • demand for extra space and additional amenities amid spells of working from home
  • favourable packages offered by developers
  • historic low interest rates
  • a marked improvement in business conditions, (and consumer confidence), in the non-oil private sector

Readin data indicates that total February residential activity rose 34% a year to US$ 4.22 billion, with 6.9k units sold, driven by a triple surge in the value of off-plan sales and a 107% jump in the sale of move-in ready homes. During the month, 2.4k off-plan units, valued at US$ 1.15 billion, were sold compared with 955 homes valued at just US$ 343 million during same month in 2021.The most active areas for off-plan sales were found in Mohammed bin Rashid City, Dubailand, Dubai Marina, Business Bay and Downtown Dubai. In the month, affordable homes accounted for 48% of total residential transactions, while budget and luxury home sales made up 31% and 21% of the total mix.

The EFG Hermes report estimated that the split between villa, apartment and land sales value was 36%, 31% and 29%, and that residential sales rose 41.3% on the year to US$ 439 per sq ft across all segments. It noted that Palm Jumeirah registered the biggest increase annually, up 87.7% to US$ 2.0k per sq ft whilst, on the other side of the coin, Bur Dubai registered a 51.2% fall to US$ 355 per sq ft. When it came to rentals, the report noted that Downtown Dubai led the recovery, with International Media Production Zone, Sports City and Dubai Silicon Oasis being the worst performers in February. In the luxury market segment, total annual activity rose 156% to US$ 899 million, with the five leading locations being Palm Jumeirah, Downtown Dubai, Dubai Harbour, Dubai Creek Harbour and Jumeirah Bay Island. In the affordable property segment, the report indicated that the transaction value of cheaper homes rose 26% a year to US$ 2.02 billion, with MBR City, Dubai Marina, Business Bay, Damac Lagoons and Arabian Ranches making up the top five areas by transaction value. Dubailand accounted for 41% of the total activity in the budget property market, which grew 9% annually to US$ 1.31 billion, followed by Al Furjan, Tilal Al Ghaf, Jumeirah Village Circle and Jumeirah Golf Estates.

The federal Ministry of Economy is re-launching its 2014 National Programme for SMEs, with new services including registration for the federal government’s procurement tenders, business services from telecoms to internal audits, and easier access to funding. The enhanced programme will offer Emirati-owned SMEs over US$ 27 million in financing through the Emirates Development Bank. It has added a further twenty public and private sector entities, to its programme which are participating in the development of these initiatives and services. It is estimated that SMEs comprise 98% of the country’s total companies and some 52% of its non-oil economy. In the latest Global Entrepreneurship Index, the UAE beat the rest of the world and was ranked first. Last year, it was estimated that over 29k new commercial licences were registered for Emirati entrepreneurs. The National Programme for SMEs comprises three main initiatives – government procurement, business support and financing solutions. The funding ranges from US$ 545k for SMEs in the services sector to US$ 954k for SMEs in the industrial sector.

Binance has been granted a virtual asset licence to operate in Dubai, within the emirate’s “test-adapt-scale” virtual asset market model, and as part of the Virtual Asset Regulatory Authority initial regulatory phase. The world’s largest cryptocurrency exchange will be “permitted to extend limited exchange products and services to pre-qualified investors and professional financial service providers”. Earlier in the week, Binance, founded by Changpeng Zhao in China five years ago, had received regulatory approval from the Bahrain Central Bank to operate as a crypto-asset service provider in the kingdom. Even though it has headquartered offices, in both Seychelles and Cayman Islands, it is hoping to expand in the ME which is one of the fastest-growing global crypto markets; it is estimated in the twelve months to June 2021, the region was the beneficiary of US$ 271.7 billion worth of cryptocurrency, equating to 6.6% of global activity. Last December, Binance signed an initial agreement with the Dubai World Trade Centre Authority to develop an industry hub for global virtual assets in the emirate; the deal not only included exchange operations but also the development of a blockchain technology hub in DWTC.

Emirates has announced that Skycargo will reactivate its cargo hub in Dubai South for dedicated freighter aircraft operations from next week, after a gap of almost two years because of the pandemic – it will still also operate out of DXB. Emirates SkyCentral DXB will handle cargo arriving or departing on passenger aircraft and Emirates SkyCentral DWC will be for cargo on freighter aircraft; the latter, inaugurated in 2015, has a total cargo capacity of more than one million tonnes per annum.

At the 28th edition of the Dubai International Boat Show 2022, which ended earlier in the week, French firm, SeaBubbles, and local solutions provider, Al Masaood Power Division, signed an MoU that could see the country become a manufacturing base for flying boats. There is every chance that X-Pearl crafts, powered by a hybrid hydrogen-electric propulsion system and retractable foils, could be on UAE waters before next year’s COP28. Both parties have agreed to pilot and assess the performance of hydrogen-powered flying boats, and to manufacture and maintain operations in the UAE; the operation will also retrofit existing boats with SeaBubbles’ sustainable powertrain system. SeaBubbles’ flying boats, able to carry up to twelve passengers, plus the pilot, and travel up 50 kph, make them versatile for a range of water mobility solutions, whilst ensuring 100% reliance on renewable energy sources. It will also be 35% more power-efficient than a regular boat, with its foils reducing wetted surface area and thus power usage. By producing minimal wake and water disturbance, it also provides a solution for eco-tourism sightseeing tours in the UAE protected areas. Virginie Seurat, Vice President of SeaBubbles, commented that “the MoU agreement marks another step forward in terms of driving hydrogen mobility in the UAE.”

Thursday proved an eventful day for 800 staff working for P&O Ferries, being told that the day was their “final day of employment”, and that they would be replaced buy cheaper agency workers. It appears that the company would be suspending services for “a week to 10 days while they locate new crew” on the Dover to Calais, Larne to Cairnryan, Dublin to Liverpool and Hull to Rotterdam routes.  The DP World-owned P&O said it was a “tough” decision, but it would “not be a viable business” without the changes and that its survival was dependent on “making swift and significant changes now”. The company commented that it had been making “a £100 million, (US$ 132 million) loss year on year”. There was no surprise to see the UK media “hanging Dubai out to dry”, in a feeding frenzy, and giving one side of the story, as seems the routine when this emirate is involved.

e& has made an offer to increase its stake in Saudi telecoms company Etihad Etisalat (Mobily) to 50% plus one share from its current 28.0% shareholding; it has made a proposed price of US$ 12.53 (47 Saudi riyals) per Mobily share through a pre-conditional partial tender offer. The UAE company, formerly known as Etisalat, is the biggest telecoms operator in the UAE, and this bid is in line with its “strategic objectives to expand and optimise its portfolio by pursuing opportunities within its existing footprint”.

This week, an e& consortium has acquired a controlling equity stake of around 57% in STARZPLAY ARABIA, with this expansion, leveraging STARZPLAY ARABIA’s reach across twenty global telcos. The investment is based on a post-money valuation of US$ 420 million, while also investing E-Vision’s existing stake and secondary investments to join the other existing shareholders, including STARZ and SEQ Investors.

As expected, DEWA will be the first of ten initial public offerings among state-linked companies aimed at reviving the DFM. The Dubai government is planning to offer a 6.5% stake in the utility, equating to 3.25 billion shares, at the end of the month, ready to go live on the local bourse next month. Shares will be offered in two tranches – to institutional investors and retail investors – from 24 March. DEWA expects to pay a minimum annual dividend of US$ 1.69 billion over the next five years, starting this October, with dividends planned twice a year, in April and October.

Emaar Properties has advised the DFM that it plans to increase its stake, by up to a further 3%, in Emaar Development, its UAE build-to-sell property business; as of 31 December 2021, the parent company held an 80% stake in Emaar Development and its subsidiaries. In November 2017, Emaar Properties raised US$ 1.31 billion from the sale of a 20% stake in its development business.

The DFM opened on Monday, 14 March 27 points (3.7%) lower on the previous week, shed 52 points (1.5%) to close on Friday 18 March, at 3,350. Emaar Properties, US$ 0.09 higher the previous fortnight, was US$ 0.03 higher at US$ 1.47. Emirates NBD, DIB and DFM started the previous week on US$ 4.06, US$ 1.63 and US$ 0.61 and closed on US$ 3.76, US$ 1.64 and US$ 0.63. On 18 March, trading was at 275 million shares, with a value of US$ 505 million, compared to 94 million shares, with a value of US$ 67 million, on 11 March 2022.

By Friday 18 March 2022, Brent, US$ 5.34 (4.6%) lower the previous week, had shed a further US$ 4.74 (4.2%), to close on US$ 107.93. Gold, US$ 102 (4.5%) higher the previous fortnight, shed US$ 73 (3.7%), to close Friday 18 March on US$ 1,919.  

After four companies had applied for the National Lottery’s next licence, the current holder, Camelot lost its bid but is named as the “reserve applicant”; it had run the National Lottery since its 1994 launch. To date, it has raised more than US$ 59 billion for 660k causes across the country. The Gambling Commission awarded Allwyn Entertainment Ltd, a UK-based subsidiary of Europe’s largest lottery operator Sazka, the lottery’s next licence, starting in 2024. Owned by Czech oil and gas tycoon Karel Komarek, Sazka has a bit of ‘Wasta’, with the likes of former members of the London 2012 Olympics organising committee, Lord Coe and entrepreneur Sir Keith Mills, sitting on its advisory board.

In its first year as a public company, Deliveroo has slipped further into the red by posting a US$ 392 million 2021 pre-tax loss, compared to a US$ 280 million deficit a year earlier. The food delivery company noted that one of the main drivers for this increase was down to marketing and technology investment as it sought to maintain momentum after being boosted by the lifting of the restrictions. However, in 2022, it forecasts an increase of up to 25% in the value of its transactions on its platform, well down on the 70% registered last year, when activity was boosted by lockdowns. Its founder, Will Shu, noted that there will be further problems in Europe, with the triple whammy of the geopolitical/economic impacts of the Ukraine crisis, inflation that is still heading north and the phasing out of government stimulus measures. It was only last March that the food delivery company debuted on the London Stock Exchange and saw its share price sink 30% on the first day, wiping out US$ 2.63 billion off its US$ 10 billion valuation. Although its share price lifted 6% in early Tuesday morning trading, it was still 44% lower YTD.

Fast-food giant McDonald’s has again defended its long-standing practice of paying hundreds of millions of dollars of royalties offshore, which reduces its local tax bill in Australia, and other global locations. McDonald’s Australia paid a service fee of US$ 600 million to related entity, McDonald’s Asia Pacific in 2020 – this helped reduce its Australian tax bill to US$ 130 million. No surprise to see the company confirming that it complies with all tax laws in the countries it operates in. It appears that McDonald’s paid its head entity a “service fee” amounting to hundreds of millions of dollars; previously the company indicated this as a royalty fee. As part of a global restructure announced in 2017, McDonald’s head entity is still registered in Delaware, but tax residency is now in the UK rather than Singapore.

Even if they wanted to close their Russian-linked operations there are some Western brands still unable to do so. It seems that the likes of M&S, (with 48 shops), Burger King (800 restaurants), Marriott (28 hotels) and Accor (57 properties) are restricted by complex franchise deals preventing them from withdrawing; they do not own the operations bearing their name, since they have all been outsourced to Russian third parties. Even if a brand managed to succeed in getting a UK court judgment against a franchise in Russia, there is no chance of a Russian court enforcing the order in the present political climate.

However, the four brands listed have taken other measures to show their displeasure at the Russian action. M&S has pledged more than US$ 2 million to support refugees and is donating 20k coats and thermals, whilst Burger King is redirecting its profits from franchised operations in Russia to humanitarian efforts. Marriott has also halted hotel developments and investments and have closed their corporate offices – which they own themselves and so have control over – in Moscow, whilst Accor has suspended all future hotel openings and has stopped services and distribution to hotels affected by sanctions.

Today, Russia’s Central Bank warned of a looming economic contraction, (that could top 8% this year), and an imminent spike in inflation, that could reach 20% by year end; earlier in the week, the inflation rate stood at a seven-year high of 12.5%. It also announced that it would keep its key interest rate at 20% and that it would start buying local OFZ government bonds. Although trading on the Moscow Exchange has been suspended since 28 February, currency trading has continued, with the rouble hitting a record low of 120 against the dollar on 06 March 6 but has since improved to today’s rate of 108.

With nearly 47%, (equating to US$ 300 billion out of a total of US$ 640 billion) of its gold and foreign currency reserves frozen, Russia will have to count on China to help it withstand the economic battering it faces because of the sanctions. It is interesting to note that the two countries have tightened co-operation in recent times and that the Olympics presented a chance for the two countries’ leaders, Vladimir Putin and Xi Jinping, to meet in Beijing on 04 February to announce a strategic partnership, aimed at countering the influence of the US, describing it as a friendship with no limits. Twenty days later, on 24 February, Russia started its invasion of Ukraine. Russia has maintained that it would be able to withstand sanctions thanks to abundant reserves and that it would be able to fulfil its state debt obligations and pay roubles to its debt holders until the state reserves are unfrozen.

To the surprise of nobody, the US Federal Reserve raised interest rates by 25 bp, to 0.5%, and signalled six more such increases this year, in a belated attempt to tackle the fastest inflation in four decades, despite increased risks to economic growth. The vote was 8-1, with St Louis Fed President James Bullard dissenting in favour of a 50 bp increase, the first vote against a decision since September 2020. Fed Chair, Jerome Powell believes that the economy will remain sturdy enough to carry out a series of rate increases, without causing a downturn; the best guesses going forward are a 1.9% rate by the end of the year, and 2.8% a year later. Without giving any details, the Fed confirmed it would start allowing its US$ 8.9 trillion balance sheet to shrink at a “coming meeting”, but it realises that it faces a fine balancing line as it tries to secure a soft landing for the economy – too slow, and inflation will run out of control, too fast could wreak havoc on the markets and push the global economy back into recession. (Following the Fed raising rates, the Central Bank of the UAE has, as usual, followed suit).

When the Russian army launched its attack against Ukraine on 24 February, food prices worldwide were already at record highs. The war is likely to push them even higher. February global food prices reached record highs, 24% higher than a year earlier, following February 4.0%, and 3.5% January month-on-month rises. These sharp rises have been attributed to a variety of factors, mainly energy and transport which continue to sky-rocket. The direct impact of Putin’s decision to invade Ukraine saw wheat prices 50% higher and other food products’ prices fast moving higher; Russia and Ukraine, once known as the breadbasket of the world, produce about 30% of global food commodities such as wheat and maize. Even Ukraine provides 16% and 12% of the world’s wheat and maize respectively. As the crisis has escalated, Ukraine has decided to ban exports of food staples, with Russia chiming in by banning exports of wheat to some neighbouring counties until the end of June. 

It seems that eurozone finance ministers have finally seen some sense by deciding, after three years of printing money, to agree to tighten fiscal policy next year. Noting that “the fundamentals of the euro area economy are strong,” they have realised that with the Ukraine crisis, soaring inflation, (almost quadruple their 2% target), rising energy prices and continuing supply chain problems, “uncertainty has increased significantly”. After three years of pumping billions into the economy, due to the coronavirus pandemic, it seems that 2023 will see EU governments reverting from a supportive fiscal stance to a neutral one, as, the economy has grown, and the member states have large debts as a result of the pandemic. The ECB has cut 2022 growth forecast by 0.5% to 3.7%, with next year’s at 2.8%, whilst it expects inflation to average 5.1% this year and fall to 2.1% in 2023.

The OECD is yet another global body that has stated the obvious – the Ukraine invasion is a major humanitarian and economic shock that is set to derail the global recovery from the Covid-19 pandemic; it also noted that it will be of “uncertain duration and magnitude”, and that it will see growth outlook decline and inflation rise. It expects that the 38-developed country bloc will see growth decline from its earlier estimate of 4.5% to 3.0%, and that its inflation forecast will be 50% higher at 7.5%. There is some concern that other global problems – climate objectives and global supply chain problems, whilst ensuring energy, food and digital security. On top of that will be the need to offer humanitarian aid to a marked increase of refugees from the various global trouble spots. We are fast becoming A World Without Love.

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Such A Mess!                                              11 March 2022

For the past week, ending 11 March 2022, Dubai Land Department recorded a total of 2,333 real estate and properties transactions, with a gross value of US$ 3.65 billion. A total of 245 plots were sold for US$ 569 million, with 1,542 apartments and villas selling for US$ 896 million. The top three transfers for apartments and villas were all apartments – one was sold for US$ 107 million in Marsa Dubai, a second sold for US$ 98 million in Burj Khalifa, and the third sold for US$ 78 million in Al Wasl. The top two land transactions were for a plot of land in Trade Centre Second, worth US$ 54 million, and one in Palm Jumeirah for US$ 44 million. The most popular locations in terms of volume and value were Al Merkadh, with 74 transactions, totalling US$ 215 million, followed by Al Hebiah Fifth with 53 sales transactions, worth US$ 31 million, and Wadi Al Safah 5, with 33 sales transactions, worth US$ 46 million. Mortgaged properties for the week totalled US$ 1.04 billion, with the highest being for land in Palm Jumeriah at US$ 272 million. 145 properties were granted between first-degree relatives worth US$ 1.09 billion.

For the previous week, ending 04 March 2022, Dubai Land Department recorded a total of 2,131 real estate and properties transactions, with a gross value of US$ 1.91 billion. A total of 329 plots were sold for US$ 392 million, with 1,455 apartments and villas selling for US$ 896 million. The top three transfers for apartments and villas were all apartments – one was sold for US$ 148 million in Palm Jumeirah, a second sold for US$ 79 million in Marsa Dubai, and the third sold for US$ 68 million in Al Khairan. The top two land transactions were for a plot of land in Marsa Dubai, worth US$ 112 million, and one in Al Wasl for US$ 17 million. The most popular locations in terms of volume and value were Al Hebiah Fifth, with 90 transactions, totalling US$ 55 million, followed by Jabal Ali First, with 29 sales transactions, worth US$ 27 million, and Wadi Al Safah 5, with 22 sales transactions, worth US$ 30 million. Mortgaged properties for the week totalled US$ 591 million, with the highest being for land in Hadaeq Sheikh Mohammed bin Rashid at US$ 144 million. 59 properties were granted between first-degree relatives worth US$ 45 million.

Sobha Realty expects 2022 revenue to come in at US$ 1.6 billion, 60% higher than last year, on the back of continued economic growth, as the emirate’s impressive recovery from the impact of the pandemic continues. The developer is constructing its mega eight million sq ft Sobha Hartland, with 9k residential units, (comprising villas, townhouses and apartments), and located near Mohammed bin Rashid City. It is also planning a similar project, Hartland Sanctuary, also near MBR City, comprising 9k units and eleven million sq ft, with work starting later this year. By the end of 2022, it expects to have handed over 3k units in its Sobha Hartland development, which is slated for completion by 2026.

HH Sheikh Mohammed bin Rashid Al Maktoum has approved a new law to regulate virtual assets, and that an independent regulatory body called the Dubai Virtual Asset Regulatory Authority (VARA) will oversee the implementation of the law, in line with best international practices. It will be responsible for licensing and regulating the sector across Dubai Mainland and Free Zone territories (excluding the DIFC), with the law being applicable throughout Dubai – including special development zones and free zones. The VARA has legal personality and financial autonomy, and will be linked to the Dubai World Trade Centre Authority, with any fines or penalties imposed on a violator, being determined by a decision issued by the board of directors of the DWTC. The law stipulates that anyone wishing to practice any of the virtual assets’ activities must establish a presence in Dubai to conduct business and must have clearance from VARA.

The law defines the activities subject to VARA authorization as follows:

  • Operating and managing virtual assets platforms services
  • Exchange services between virtual assets and currencies, whether national or foreign
  • Exchange services between one or more forms of virtual assets
  • Virtual asset transfer services
  • Virtual asset custody and management services
  • Services related to the virtual asset portfolio
  • Services related to the offering and trading of virtual tokens

After declining to a four-month low the previous month, February’s seasonally adjusted IHS Markit PMI gained 1.5 to 54.1 in February driven by the impact of Expo 2020, boosting the travel and tourism sector, (posting its strongest growth since June 2019), as well as new orders rising; any number above the 50.0 mark indicates economic expansion. January’s figures had been dampened by the continuing Omicron variant, but since then, new orders have resulted in an uptick in client demand and a better-than-expected economic recovery has improved confidence levels and enhanced PMI figures. Indeed, the new order figure was one of the highest seen since the start of the pandemic two years ago. Although new business growth, in both the wholesale and retail sectors, remained strong, construction companies reported only a modest increase in new work. In the month, cost inflation eased so that businesses lowered their output charges at a much quicker pace, with the result that the rate of discounting was the second-fastest since September 2020. Dubai Statistics Centre has reported Dubai’s economy growing at 6.3%, year on year, in the nine months to September 2021, driven by the hospitality, trade and real estate sectors.

Since its 01 October opening, Expo 2020 Dubai has recorded 17.4 million visits, and 174 million virtual ones up to 07 March, driven by a “spectacular line-up of events and performers”. There is no doubt there is more to come over the next three weeks before the world symposium closes on 31 March.

On Monday, Dubai’s Crown Prince opened the new Meta regional headquarters in Dubai Internet City. HH Sheikh Hamdan bin Mohammed commented that the establishment of   the parent company of Facebook “reflects Dubai’s growth as a global business hub and the continued confidence of leading technology companies in the city as a base for tapping new opportunities and advancing innovation”. Serving millions of customers in the Mena region, and employing over one hundred staff, it has introduced training and business resource centres, and a MetaBoost programme, to help businesses expand.  It has also awarded grants to more than one hundred Dubai-based SMEs, as part of its efforts to support businesses impacted by the pandemic.

He also opened the five-day Dubai International Boat Show 2022, noting that the event is one of the world’s top three most influential international yacht shows. The Crown Prince also commented that it reflects Dubai’s status as a prominent global maritime destination and demonstrates Dubai Harbour’s capabilities, as a dedicated superyacht marina. Now in its 28th year, the show, which has such a positive effect on growth and investment in the global maritime sector, features more than eight hundred brands.

Surpassing pre-pandemic returns, flydubai posted a 2021 profit of US$ 244 million, driven by an 86% surge in revenue to US$ 1.44 billion, with passenger numbers 76% higher at 5.6 million.  Flight numbers rose by 12.8% to 6.4k, from January 2020’s level of 5.7k. The demand for connecting traffic has jumped 34%, as passengers connect on to its network or through its codeshare with Emirates. During the year, the budget airline introduced twenty-two new routes, thirteen of which were unserved destinations from Dubai. From this month, the carrier will start taking delivery of twenty Boeing 737 MAX 8 aircraft. Over the year, its five busiest routes were Alexandria, Bahrain, Bucharest, Doha, and Karachi, whilst it launched flights for the summer season to Batumi, Bodrum, Mykonos, Santorini and Trabzon. Its CEO Ghaith Al Ghaith commented that “as the momentum for travel continues to build, we will increase frequencies and introduce new destinations on our network during 2022.”

In a move that promises to capture more market share and to expand its business offerings, Al Fardan Exchange has teamed up with Singaporean cross-border payments FinTech Thunes. The combination will introduce real-time remittances, permitting customers to make instant payments to bank accounts in eighty-seven countries, as well as to monitor the status of their transactions in real time. Chief executive, Hasan Al Fardan, commented that “this collaboration with Thunes will further digitise our payment services and help boost our business growth strategy.” Earlier in the year, the Dubai-based exchange teamed up with US blockchain tech company Ripple to offer instant cross border payments, as an increasing number turn to using mobile apps to remit money home, rather than queuing at physical branches. The World Bank estimates that, in 2021, there had been a 7.3% increase, to US$ 589 billion, of global remittances to poor and middle-income countries, and that outward remittances from the MENA region had jumped 9.7%.

DP World Limited posted a 26.3% rise in 2021 revenue to US$ 10.78 billion, driven by acquisitions and new concessions including Angola, Unico and Transworld, and resulting in adjusted EBITDA growing 15.3% to US$ 3.83 billion, equating to a 35.5% margin.  Higher storage and reefer monitoring revenue saw containerised revenue 14.2% higher, as like-for-like revenue rose by 11.7% with like-for-like containerised revenue up 14.2%, driven by volume growth; like-for-like non containerised revenue grew 9.5%. Cash from operating activities jumped 27.3%, to a record US$3.69 billion in 2021, whilst capex came in 29.5% higher at US$ 1.39 billion with 2022 guidance figures at US$ 1.40 billion.

Emirates Central Cooling Systems Corporation has announced a US$ 136 million 2021 dividend, equating to 53.4% of its 2021 US$ 255 million net profit. Empower posted a 9.3% hike in revenue to US$ 628 million, and operates in over 1.4k buildings, including real estate developers, owners, and end-users. It has recently concluded three deals – in Nakheel, Meydan and Dubai International Airport – to acquire their district cooling schemes for US$ 545 million. These three additions will boost top line figures this year, as will the start of operations, with new generation district cooling plants in Za’abeel and Dubai Production City.

Driven by rising regional sales and higher exports, Ducab posted a 35% hike in 2021 revenue, and is fairly confident of another boost to its top line this year, as it targets “a much closer and deeper partnership with our clients”. Ducab’s total production of cables and metal reached 170k tonnes last year. The company, jointly owned by the Investment Corporation of Dubai and Abu Dhabi holding company ADQ, benefited by global economies recovering after the impact of Covid, as well as the higher oil prices resulting in a marked rise in capex. The company will continue to focus on exports to established markets in Europe, the Americas, India, Australia and the GCC region but sees its “biggest potential in African and European markets”. As oil prices continue to head north, and with more financing available for belated expenditure in the oil and gas sector, along with massive infrastructure projects, such as Etihad Rail, Al Dhafra solar plant in Abu Dhabi, Mohammed bin Rashid Al Maktoum Solar Park in Dubai, Barakah nuclear plant plus Sudair solar plant in Saudi Arabia, Ducab’s growth prospects look highly promising.

Drake & Scull International has “officially completed” its restructuring plan after gaining the required two-thirds voting majority, (in terms of value), from its 600+ creditors for a consensual agreement. The Dubai contractor’s chairman, Shafiq Abdelhamid, noted that “we are hopeful that Drake & Scull will return to the path of growth and prosperity in the coming years.” Five years ago, DSI’s first restructuring plan resulted in US$ 462 million worth of shares being cancelled to clear historic losses, with private equity firm Tabarak Investment committing US$ 126 million for a strategic stake in the company. Last year, it applied to Dubai Courts for a further restructuring procedure, in accordance with the emergency provisions of UAE Bankruptcy Law, and now awaits their final decision.

Dubai Holding has posted a record 1,244% increase in 2021 net profit to US$ 735 million, driven primarily by its 50% subsidiary, Emirates Global Aluminium, which has benefitted by soaring global prices of aluminium, as well as good operational performance. The investment arm of Dubai Government, in the commodities and mining, power and energy, and industrial sectors, (in a JV with multiple partners), is currently constructing Dubai Waste Management Centre at Warsan – one of the world’s largest Waste-to-Energy plants – which will treat annually about 1.9 million tonnes of solid municipal waste and provide electricity to around 100k households. The project is scheduled for completion within thirty months.

Last June, Damac Properties’ founder, Hussain Sajwani, advised the DFM that he would buy the remaining 28% of shares in his company for US$ 595 million, via his fully owned company Maple Invest, which submitted a notice for the mandatory acquisition of all its shares. In October, it was announced that the remaining shareholders would receive US$ 0.381 per share, and shares stopped trading on the DFM on 15 February 2022, Last Monday, the general assembly meeting approved “the conversion of the legal form of the company from a public joint stock company to a private joint stock company” and now it will formally delist from the local bourse.

The DFM opened on Monday, 07 March 122 points (3.7%) higher on the previous week, shed 27 points (0.8%) to close on Friday 11 March, at 3,402. Emaar Properties, US$ 0.09 higher the previous week, was flat at US$ 1.44. Emirates NBD, DIB and DFM started the previous week on US$ 4.10, US$ 1.72 and US$ 0.66 and all closed lower on US$ 4.06, US$ 1.63 and US$ 0.61. On 11 March, trading was at 94 million shares, with a value of US$ 67 million, compared to 119 million shares, with a value of US$ 111 million, on 04 March 2022.

By Friday 11 March 2022, Brent, US$ 24.34 (26.0%) higher the previous fortnight, shed US$ 5.34 (4.6%), to close on US$ 112.67, having hovered around US$ 130 earlier in the week. Gold, US$ 85 (4.5%) higher the previous week, gained US$ 17 (0.9%), to close Friday 11 March on US$ 1,992. The Minister of Energy and Infrastructure, Suhail Al Mazrouei, has confirmed that the country had not agreed to raise output individually outside the OPEC+ framework and that the UAE believes in the value the pact brings to the world oil market. Earlier OPEC acknowledged the UAE’s stance to maintain consensus among the group’s members on all issues related to the global oil market.

Last Friday, the Food and Agriculture Organisation’s February food price index, was 5.3 points higher on the month, and up 20.7 points, year on year, at 140.7 – a record high, attributable to a surge in vegetable oils and dairy products. Higher food prices are one of the main drivers behind global surging inflation and these figures were collated before the onset of the Ukraine crisis; factors such as energy costs, a marked rise in transport/supply expenditure and rising fertiliser expenses all came into play. Everybody will lose but the FAOhas warned that the higher costs are putting poorer populations at risk in countries reliant on imports. The FAO food indices mostly headed north on the month with the likes of vegetable oils, cereal, maize, wheat, meat and dairy up 8.5%, 3.0%, 5.1%, 2.1%, 1.1% and 6.4% respectively; sugar was the only index to head lower – by 1.9%.

At this week’s Senate Select Committee on Job Security meeting, it was alleged that Sunny Ridge, one of Australia’s largest labour hire firms, oversaw Pacific and Timorese workers pocketing just US$ 67 (AUD 100) per week, after it deducted hundreds of dollars in additional costs.  The company’s chief executive, Matthew Collard claimed at the meeting that workers had earned more than expected under the Australian government’s Pacific Labour Scheme. Yesterday it heard about a Victorian strawberry picker who had earned US$ 685 for. working 30.38 hours, equating to US$ 22.54 per hour, but ended up with less than US$ 65 after labour hire company MADEC Employment’s deductions. (MADEC is one of Australia’s largest employers of overseas seasonal workers and operates the national Harvest Trail). MADEC’s chief executive Laurence Burt told the hearing that costs were recovered for several reasons, including air fares, visa costs, other expenses and cash advance payments, as well as accommodation, transport, and health insurance.

As indicated in a recent blog, Swedish telecoms company Ericsson, has finally had its day in court.  Last Friday, chief executive, Borje Ekholm, along with his CFO, have been named as defendants in a US class action lawsuit for misleading investors about the company’s dealings in Iraq, involving possible payments to the terrorist group ISIS, with the US DoJ arguing it was in breach of a 2019 deferred prosecution agreement for failing to fully disclose details of its operations in Iraq. (Under the conditions of the 2019 DPA, Ericsson paid more than $1 billion to resolve a series of corruption investigations, involving bribery in China, Vietnam and Djibouti, and agreed to co-operate with the Department for investigations). The filing said that Ericsson, among other things, had misled investors by overstating the extent to which it had eliminated the use of bribes. The Swedish telecom confirmed that it and “certain [company] officers” had been named as defendants in connection with “allegedly false and misleading statements” concerning Iraq. Over the past six weeks, when the news first broke, the company has lost over 30% in its share value.

By the end of last week, Zara, Paypal and Samsung became the latest international firms to suspend trading in Russia. The clothes retailer’s owner, Inditex, has shut all 502 stores of its eight brands, including Bershka, Stradivarius and Oysho. PayPal closed down its services because of “violent military aggression in Ukraine”, whilst Samsung cited “geopolitical developments”. Even if they had not closed operations, it would have been difficult to continue business in Russia because of the collapsing rouble – making prices even higher for local consumers – and the logistic difficulties of importing goods into the country. These three companies pulling out of the country, along with the likes of LVMH, Hermes, Kering and Chanel, will hit the younger Russians and their reaction to all these closures will prove interesting. On Saturday, US payments firms Visa and MasterCard both suspended operations in Russia, indicating that they would work with their clients and partners to cease all transactions in the country.

Much later in the week, Goldman Sachs, with a total Russian credit exposure of US$ 650 million became the first Wall Street bank to pull out of the country, as mega money transfer conglomerate, Western Union indicated that it would suspend operations there. Later, JP Morgan Chase also said it was “actively unwinding Russian business. Earlier on Thursday, the owner of Uniqlo made a U-turn and decided to suspend operations in the country.

According to an FT report, BlackRock could have taken a US$ 17 billion loss on its Russian securities holdings because of the military offensive in Ukraine. At the end of January, the US asset manager was holding more than US$ 18.2 billion in Russian assets, with their value being subsequently battered by global sanctions and the local market tanking; at the end of February, the book value had fallen to US$ 1.0 billion. The report noted that the majority of assets are “vast majority unsaleable, leading BlackRock to mark them down sharply”. The asset manager, which has some US$ 10 trillion under management, has suspended all trading in the country.

Meanwhile, Moody’s Investor service has slashed the ratings of ninety-five non-financial Russian companies. As expected, it also downgraded Russia’s ratings deeper into “junk”, (from B3 to Ca, with a negative outlook), or non-investment grade territory, for the second time in a fortnight; it is also forecasting that the country will contract by 7.0% in 2022, driven mainly by the sanctions which has forced the Central Bank to introduce capital control measures.  These will restrict cross border payments including debt service on government bonds. The Ca rating is a sign that Russia may not have enough cash reserves to meet its financial obligations, as well as making it more difficult – and more expensive – to raise funds globally. Furthermore, an increasing number of Russian banks have had sanctions imposed including exclusion from the global payments system Swift, which in turn has “significantly disrupted” the country’s ability to receive payments for exports, pay for imports and make cross-border financial transactions. Higher inflation and lower living standards are an inevitable result of the depreciation of Russia’s rouble.

A plethora of global MNCs have already exited or stopped providing their Russian markets, and by mid-week pressure, was growing on both McDonald’s and Coca-Cola to do likewise; other firms still operating there include KFC, Pepsi and Starbucks and Burger King. Last year, KFC reached a total of 1k restaurants in the country and had planned a further one hundred this year, whilstMcDonald’s can boast 847 stores in Russia, most of which are owned by the company, different from their usual global franchise approach. By Wednesday, further outside pressure, including from major pension funds, saw all these food firms eventually falling in line and cut off ties with Russia.

Having already been the recipient, from the IMF, of US$ 2.7 billion in emergency relief last August, and a US$ 700 million disbursement in December, Ukraine received a further US$ 1.4 billion in emergency funding from the world body. The IMF is in continuous discussions with Ukrainian authorities to assist them manage their economic crisis and to mobilise financial support and resources. Kristalina Georgieva, head of the IMF, noted that it was too early to predict the impact on the global economy, but it would result in the displacement of millions of people, higher energy/food prices and an erosion of business confidence, (which is already happening). The US House of Representatives approved a US$ 13.6 billion aid package to Ukraine, aimed at helping with bolstering the country’s forces as it battles Russian invaders as well as providing humanitarian assistance. House Speaker Nancy Pelosi indicated that this is likely to be just the tip of a much broader aid effort, as “all of us will have to do more” to help Ukraine in coming weeks or months and over the long-term to help it rebuild.

Because of its offensive manoeuvres in invading Ukraine, with Western countries responding with severe economic and financial sanctions, as well as freezing assets of HNWIs, including several oligarchs and the President himself, it is expected that the Russian economy will shrink by more than US$ 250 billion this year. At the beginning of 2022, the Russian economy was the eleventh biggest in the world – by the end it is estimated that it would have fallen to fourteenth with its GDP 15.2% down to US$ 1.86 trillion. Since 24 February, when Moscow launched its first military attack, the rouble has lost more than 30% in value, and Russian billionaires’ fortunes have, fallen by some US$ 88 billion according to Bloomberg Billionaires Index. There is no doubt that the economic damage, being suffered by Russia, will spill over into the global arena and there is the distinct possibility that Russia will become increasingly dependent on China whilst the international economy could easily slide into recession. Notwithstanding, the financial and economic woes, it must never be forgotten that Putin’s latest foray has already cost thousands of lives and seen a possible five million Ukrainians going into exile.

With several nations baying for a ban on Russian exports of thermal coal, one short-term beneficiary could be Australia. Russia, which supplies 70% of Europe’s thermal coal imports, could lose out on two fronts, as any ban will see other countries taking up the sizeable slack, and as prices skyrocket, it may speed up the transition to renewables. Late last week, the spot price for shipments leaving the Australian port of Newcastle soared to US$ 418 a tonne, easily surpassing the previous November record of US$ 269. Only two years earlier, prices had dipped to below US$ 50 a tonne, and if there is only marginal demand for Australian coal, in the current very tight market, any extra incremental demand could support higher prices probably for the rest of 2022. However, much of the coal sales are sold under long-term contracts and, that being the case, not much of the current coal sales will be leaving Australia valued at US$ 400 million a tonne – at least in the short-term. Longer-term, the outlook is not as rosy, as the calls, for fossil fuels to be replaced by renewable energy, grow louder.

A government forecast, delivered by Premier Li Keqiang to the national legislature, sees China’s economy growing at 5.5% in 2022; last year, the economy expanded by 8.1%. Other parts of the strategy are the creation of eleven million new jobs, maintenance of an unemployment rate at a maximum 5.5%, keeping grain output at over 650 million metric tonnes and to lower the ratio of its deficit to GDP to 2.8%. The legislature is also looking at tax cuts and refunds, amounting to a massive US$ 395 billion, and extending policies that support SMEs and self-employed individuals.

An executive order signed by Joe Biden this week requires the likes of the Treasury Department, the Commerce Department and other key agencies to assess the pros and cons of creating a central bank digital dollar, as well as other cryptocurrency issues; in January, a paper by the Federal Reserve, commented on the risks and benefits of a US-backed digital currency. There is no doubt that the Biden administration is keen to promote responsible innovation, and at the same time to mitigate the risk to consumers, investors and businesses. The lawmakers in the White House appear to be “clear-eyed that ‘financial innovation’ of the past has too often not benefited working families, while exacerbating inequality and increasing systemic financial risk”. As an aside, the Biden administration continues to play down the significance of cryptocurrency, and Russia’s misuse of it to evade sanctions, but it remains a concern. What is certain is that cryptocurrency will remain a part of the US economy for years to come and the desire to maintain the centrality of the dollar in the global economy.

Even before the onset of the Ukrainian crisis, the US was reporting inflation levels at forty-year highs, with housing costs, accounting for a third of the CPI, continuing to head north. The main drivers include supply chain problems, further accelerated price increases, robust consumer spending and solid pay rises. Many prices have risen because of steady job growth, and increased consumer spending has led to higher demand which in turn has driven reduced supplies of items such as cars, building materials and household goods. Now with 7.9% inflation running faster than pay rises, many are now struggling to afford basic necessities, such as food, energy and housing. Over the past two months, inflation has risen 0.8% and 0.6%, and an interest rate hike of up to 0.5%, as early as next week, is all but certain, despite the economic consequences of Russia invading Ukraine. The world is now suffering because of the inaction of many governments and central banks, (including the Fed, ECB and BoE), in not addressing the unfolding issue of inflation. What is the purpose of setting a 2.0% inflation target and then letting it slide to as high as 8%? On top of that, sanctions will  not only badly effect Russia but could also push global economies into recession. Such A Mess!

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The Worst Is Yet To Come!

The Worst Is Yet To Come!                                                              04 March 2022

The Land Department, with Property Finder, has released the emirate’s first ever official Residential Rental Performance Index. Using 2013 as its base, this January, the overall monthly Index recorded 0.938, (and an index price of US$ 13.9k), with apartments at 0.943 and an index price of US$ 12.8k, and villas/townhouses recording returns of 0.868 and US$ 35.9k. According to the index, of the 51.5k leases posted in January 2022, 52% were for new contracts, and the balance for renewed contracts; 81% of contracts were for the year and 19% for non-annual. Further analysis of the figures points to the interesting fact that for the five years to 2020, the annual number of leases rose at an average annual 7.0% – but in 2021 this jumped to 56%, as 564k leases shattered a twelve-year record in terms of volume for real estate rental contracts. January saw 51.5k rental contracts, split almost equally between new and renewal contracts. That month, the top ten areas – led by Jabal Ali First with 1.8k registrations, followed by Naif’s 1.8k, Al Karama (1.7k) and Al Warsan First (1.6k) – accounted for 28% of that month’s transactions. Property Finder residential search data for apartment rental searches in 2021 indicates that Dubai Marina was the highest searched area, accounting for more than 11% of all searches, followed by Downtown Dubai, Business Bay, JVC and JLT. The top five locations for villas/townhouses were Jumeirah, Dubai Hills Estate and The Springs, (the three accounting for approximately 18% of all searches), followed by Arabian Ranches and Umm Suqeim.

According to Knight Frank’s The Wealth Report, a study of prime price performance in one hundred global city and second home markets, Dubai prices of luxury homes skyrocketed by 44% last year. Apart from Moscow, which had an annual price rise of 42%, all other locations trailed way behind with San Diego, (28.3%), Miami (28.2%) and The Hamptons (21.3%) taking up the other five leading places.  This blog concurs with the consultancy noting that, “in a sentiment driven market, this has helped to spectacularly mark the start of the city’s third property cycle. It’s unlikely the growth of 2021 will be repeated this year, but with such limited prime stock, the top end of the market still has room for growth”. It also commented that, “Dubai’s investments in world class infrastructure, health and education, coupled with the exceptional lifestyle and amenities, from the world’s best restaurants and hotels have helped transform the city into a destination that people want to own a property in.”

35% of the surveyed locations posted prices rises over 10% and only 7% fell into negative annual growth. This result, as Dubai prices rose at the fastest rate on record, and following seven years of negative price growth, still sees overall price 30% below their 2014 peak. The value of Knight Frank’s PIRI increased by 8.4% in 2021, up from just under 2% in 2020 – its highest annual increase since the index launched thirteen years ago. Location-wise, the Americas led the field with growth of 13.0%, followed by Asia-Pacific (7.5%) the EMEA region (7.2%) – despite Australia posting a 12.3% increase – and Asia (a modest growth of 5.5%). The report concludes that Dubai, Miami and Zurich will be the three leading locations, with the biggest increases in 2022, with global prime prices expected to end the year between 10% and 12% higher.

The consultancy lists nine factors that have pushed record prices on the world stage for prime properties. Most of these will also be some of the reasons why the Dubai property cycle is on the up:

  • Low interest rates, the availability of cheap finance
  • A shortage of prime stock
  • Rising wages and accrued savings in lockdowns
  • Strong-performing equity markets and record bonuses
  • A reassessment of housing need and lifestyles
  • More flexible working patterns
  • Wealth creation – five million new millionaires in 2021 globally
  • Growth of co-primary living, heightened demand for second homes
  • The appeal of property as an inflation hedge

What will become the world’s tallest stand-alone hotel, at 365 mt, is now at its half-way stage. Developed by The First Group and located in Dubai Marina, Ciel Tower is slated for completion in Q4 2023, and for opening in H1 2024. Designed by architectural company NORR, and built by the China Railway Construction Corporation, the building will surpass Dubai’s Gevora Hotel as the tallest in the world. The hotel, with eighty-two floors, will boast a 300 mt atrium with vertically stacked landscaped terraces and will have more than 1k guest rooms and suites. In 2018, the Gevora was ranked the tallest hotel in the world, at 356 mt, then beating its near neighbour, JW Marriott Marquis, by only six metres.

It is reported that HH Sheikh Hamdan bin Mohammed has approved a savings pension plan for non-Emiratis working in Dubai’s government and public sector which is in addition to the existing end-of-service benefit scheme under which staff receive a lump sum when they leave their job. The good news is that the Crown Prince indicated that it could be expanded to the private sector on a voluntary basis only. It appears that a variety of investment plans will be offered and that those who do not wish to invest will have their capital ring-fenced. This is yet another government measure to make Dubai more attractive to people from around the world. It is expected that there will be a mix of investment plans on offer ranging from just capital projection, for those who do not wish to invest, or to invest in Shariah, or those who want to utilise more traditional investment vehicles. A committee will be formed to supervise the project.

In cooperation with the UAE Artificial Intelligence Office, the DIFC has started an AI and coding licence – the first ever in the country and another step to enhance the UAE’s growing reputation in this field. Apart from providing an opportunity to obtain the UAE Golden Visa, it will allow licence holders to work in what is the region’s largest cluster of FinTech and innovation companies. It is estimated that 60% of GCC Fin Techs are based in the DIFC Innovation Hub which hosts more than five hundred firms, ranging from start-ups to global unicorns, which is set to expand, as Dubai becomes more amenable to AI companies and coders from around the world.

Despite recognising that the UAE had made positive progress, in its fight against money laundering and countering the financing of terrorism, the Financial Action Task Force, has surprisingly announced that it has placed the country under increased monitoring. FATF indicated that this action was being carried out to ensure the success and sustainability of the UAE’s efforts to strengthen its anti-financial crime framework. The UAE’s Executive Office of Anti-Money Laundering and Countering the Financing of Terrorism posted that, “the UAE takes its role in protecting the integrity of the global financial system extremely seriously and will work closely with the FATF to quickly remedy the areas of improvement identified. On this basis, the UAE will continue its ongoing efforts to identify, disrupt and punish criminals and illicit financial networks in line with FATF’s findings and the UAE’s National Action Plan, as well as through close coordination with our international partners.”

In 2021, the Executive Office to Combat Money Laundering and Terrorist Financing collected US$ 1.05 billion in penalties, as the department, founded in February 2021, carried out 5.5k desk inspections. This amount included asset seizures worth US$ 625 million, confiscations valued at US$ 109 million, preventive measures to address terrorist financing and collective actions amounting to US$ 234 million against forty-eight defendants and companies fines, for non-compliance to anti-money laundering and terrorism financing regulations, worth US$ 64 million, and tax evasion and money laundering fines on individuals worth US$ 11 million. There is no doubt that significant progress has been made in addressing anti-money laundering and terrorism financing, in line with international standards.

HH Sheikh Mohammed bin Rashid Al Maktoum tweeted that the country’s 2021 non-oil foreign trade had surged by a “record single year leap” 27% to US$ 517 billion – and a sure indicator, that the UAE’s economy continues to recover well from the pandemic, was that this figure was 11% higher than pre-Covid levels. All seven emirates recorded increases in non-oil foreign trade. Last month, the IMF reported that the UAE’s economy had grown 2.2% in 2021 but that its non-oil sector came in 3.2% to the good; this year, the world body sees the country’s economy expanding 3.5%, with non-oil at 3.4%, whilst the UAE Central Bank is a little more bullish forecasting total growth at 4.2%. The value of national non-oil exports rose 33.3% to US$ 96.5 billion, (AED 354 billion – and exceeding AED 300 billion for the first time in its history), and 47.3% higher compared to that of 2019.

On Tuesday, the construction of the 256 km rail link between Abu Dhabi and Dubai was completed, after 13.3k workers had toiled for more than 47 million hours. This link, which includes 29 bridges, 60 crossings and 137 drainage channels, is an important milestone for Etihad Rail and its aim to carry passengers and freight between the emirates and, eventually, across the country. A launch date for services between the two emirates has yet to be announced. Once the whole project is completed, its network will include eleven cities across the country, ranging from Sila in the west, to Fujairah in the north; trains will travel at speeds up to 200 kph. It is expected that 36 million passengers will be using the train by 2030.

Following double-digit price rises last month, there is more of the same this month. March petrol costs jumped to new seven-year highs, as from last Tuesday, 01 March, on the back of surging global oil prices, allied with tightening supply, as Brent started the week on US$ 97. Super 98, Special 95 and diesel rose by US$ 0.079 (9.86%) to US$ 0.880, by US$ 0.079 (10.63%), to US$ 0.085, and by US$ 0.087 (10.76%) to US$ 0.869. This is the first time that fuel prices have exceeded the AED 3.00 mark across the range.

Being the largest listing venue in the ME for US$-denominated debt listings, there was no surprise to the Capital Bank of Jordan select Nasdaq to list a US$ 100 million perpetual AT1 bond. The main aim of the issuance, which came within the requirements of Basel 3, was to cultivate a diverse base of investors from the region. Last year, Nasdaq Dubai posted thirty  listings of Sukuk and bonds, totalling US$ 23 billion, and a record-breaking fourteen bond issuances, valued at US$ 11.2 billion – 141% higher on the year.

Talabat UAE has seen a 60% year on year rise in orders which include food, groceries, and other non-food verticals, as well as a 30% growth in its customer base. In 2021, it had over two million new app downloads and saw a doubling of its non-food orders, whilst serving 17k restaurant partners. Talabat Mart, its own q-commerce and dark store concept, posted a 70% hike in orders, with more than twenty-five stores located across all seven emirates. With its in-app donations by customers, valued at US$ 668k, it was able to donate 565k meals to charitable causes.

SHUAA Capital announced its US$ 100 million Special Purpose Acquisition Company, listed on the NASDAQ Global Market on Wednesday. The leading asset management and investment banking platform in the region confirmed the successful pricing of the IPO of ten million units of SHUAA Partners Acquisition Corp I at US$ 10.00 per unit, with each unit comprising one Class A ordinary share and one-half of one redeemable warrant; each whole warrant entitles the holder to purchase one Class A ordinary share at a price of US$ 11.50 per share after the consummation of a business combination, with the company focussing on technology and/or tech-enabled financial services businesses based in the MENAT region. SHUAA recently led the successful listing of Anghami, the first Arab technology company on NASDAQ, via a similar SPAC transaction.

The shareholders of Dubai Islamic Bank approved a 2021 dividend payment of US$ 490 million, equating to 25% of its paid-up capital. The UAE’s biggest Sharia-compliant lender by assets, posted a 33% hike in 2021 profit to US$ 1.20 billion, as impairment charges during the period fell 46% to US$ 665 million, while income from investment properties more than doubled to US$ 61 million.

The DFM opened on Monday, 28 February, 15 points (0.5%) lower on the previous week, gained 122 points (3.7%) to close on Friday 04 March, at 3,429. Emaar Properties, US$ 0.04 lower the previous week, was US$ 0.09 higher to close on US$ 1.44. Emirates NBD, DIB and DFM started the previous week on US$ 3.62, US$ 1.64 and US$ 0.63 and closed on US$ 4.10, US$ 1.72 and US$ 0.66. On 04 March, trading was at 119 million shares, with a value of US$ 111 million, compared to 168 million shares, with a value of US$ 73 million, on 25 February 2022.

For the month of February, the bourse had opened on 3,208 and, having closed the month on 3355, was 147 points (4.6%) higher. Emaar traded US$ 0.06 higher from its 01 February 2022 opening figure of US$ 1.32, to close the month at US$ 1.38. Three other bellwether stocks, Emirates NBD, DIB and DFM started the month on US$ 3.64, US$ 1.50 and US$ 0.65 and closed on 28 February 2022 on US$ 3.90, US$ 1.66 and US$ 0.63 respectively. The bourse had opened the year on 3,196 and, having closed February on 3,355, was 159 points (5.0%) higher, YTD. Emaar traded US$ 0.05 higher from its 01 January 2022 opening figure of US$ 1.33, to close February at US$ 1.38. Three other bellwether stocks, Emirates NBD, DIB and DFM started the year on US$ 3.69, US$ 1.47 and US$ 0.72 and closed on 28 February on US$ 3.90, US$ 1.66 and US$ 0.63 respectively.

By Friday 04 March 2022, Brent, US$ 4.16 (4.4%) higher the previous week, gained US$ 20.18 (20.6%), to close on US$ 118.11. Gold, US$ 11 (0.6%) lower the previous week, gained by US$ 85 (4.5%), to close Friday 04 March on US$ 1,975.

Brent started the year on US$ 77.68 and gained US$ 21.55 (27.7%), to close 28 February on US$ 99.23. Meanwhile, the yellow metal opened January trading at US$ 1,831 and has gained US$ 90 (4.9%) during 2022, to close on US$ 1,921.

On the last day of the month, oil prices rebounded after falling below US$ 100 on Friday. It appears that the US and EU have been very selective in what is, and what is not, to be sanctioned. In the latter category, the decision has been made to exclude sanctions on Russia’s energy and commodity industries, which are integral to the global economy. Russia is among the world’s biggest energy producers, in addition to nickel, aluminium, palladium, cobalt, copper, wheat and barley. With producing 10.2 million bpd, Russia is the second biggest oil country after the US, but ahead of Saudi Arabia; it is also second globally to the US for natural gas condensate. Earlier last week, gold hit a US$ 1,971 high but had weakened to US$ 1,890 by Friday after it was found that the sanctions were not as severe as first thought, (or should have been). Early Monday trading saw a 1.18% increase to US$ 1,911.

With the Opec+ twenty-three member producers meeting on Wednesday, 02 March 2022, Brent traded 6.3% higher at US$ 111.56, after the IEA released sixty million barrels of oil from emergency stocks to bring stability to energy markets. The group is still expected to stay the course and bring another 400k bpd of crude to the market in April. Apart from the rapidly deteriorating situation in Ukraine, there were other factors in play to concern the oil market, including “already tight global oil markets, heightened price volatility, commercial inventories, that are at their lowest level since 2014, and a limited ability of producers to provide additional supply in the short term”. Another interesting fact is that the self-imposed Opec compliance is running well above 100% which would indicate that most producers are already at full capacity; this, allied with the facts that 60% of Russia’s oil production, equating to 6 million bpd, is exported to Europe and that global oil demand is projected to rise by 4.2 million bpd this year, indicates that prices can only go one way and could soon top US$ 150.

Greg Kelly, the former Nissan executive and cohort of the fleeing of its ex-CEO, has been found guilty of assisting Carlos Ghosn to evade pay disclosure laws. He was sentenced to six months in jail, suspended for three years for assisting Ghosn hide part of US$ 80 million of his income from financial regulators. Although prosecutors were claiming that the American executive had been hiding the CEO’s true pay since 2010, he was convicted of just one count of misreporting financial information, for one year, 2018. The car maker, which had pleaded guilty before the trial started eighteen months ago, was fined US$ 2 million for failing to disclose Mr Ghosn’s pay. This case has been controversial highlighting the idiosyncrasies of Japan’s judicial system, in particular its system of detaining and interrogating suspects for long periods, without charge and without an attorney present.

In a dispute which appears to be becoming more acrimonious, Airbus has requested a British judge to award US$220 million in damages from Qatar Airways over two undelivered A-350s.This counterclaim arose because the ME airline refused to accept them because they had already lodged a US$ 600 million claim over the erosion to the surface of more than twenty previously delivered jets. To make matters worse, the French plane maker is also wanting to recover millions of dollars of credits awarded to the airline. The current argument seems to be over erosion to the painted surface and damage including gaps in lightning protection on A350 jets, with the airline indicating that the surface degradation raises unanswered questions over the safety of the jets, prompting its regulator to ground a new A350 every time they came under their jurisdiction; the latest, number 22, arrived in Qatar and was grounded last Monday for the same reason. Airbus has argued that the planes are safe because of margins built into the anti-lightning system and accused Qatar Airways of colluding with its safety regulator over the groundings; but it did acknowledge quality problems but accused the airline of mislabelling them as safety issues to get compensation.

Zoom Video Communications posted an 88.4% hike, year on year, (and 44.2% on the quarter) in Q4 profits to US$ 491 million, driven by a growth in the number of paying customers; revenue was 21.4% higher at US$ 1.07 billion. For the year, profit more than doubled to US$ 1.3 billion, as revenue climbed 54.6% to US$ 4.09 billion. This year, Zoom plans to “plan to build out our platform to further enrich the customer experience with new cloud-based technologies”. As at year end, the company saw an almost 9% increase in paid customers, with more than ten employees, equating to 510k. During the year, it invested US$ 117 million in research and development, equating to more than 9.2% of the total revenue earned during Q4. Its quarterly net cash flow, at US$ 209 million, was 47% down on the same period last year. By Tuesday, its share value had dropped 3.0%, on the day, to US$ 128.6, and 30.2% lower YTD.

Having claimed nearly US$ 150 million in furlough payments but seeing 2021 profits 125% higher, at US$ 520 million, (driven by a surge in online betting during the pandemic), Emtain has decided to return about 50% of that to the government coffers. The gaming giant, which owns Ladbrokes, has argued that the furlough scheme had helped to protect 14k jobs, and a “more certain medium-term outlook” had made the partial repayment possible. It has 3k betting shops in the UK, branded Ladbrokes or Coral, which it had to close for large parts of 2020 and 2021 because of restrictions, but revenue still climbed 8%. It seems that of its two main rivals, William Hills “did the right thing”, and returned the US$ 32 million it claimed in 2020, but that Betfred, which had claimed US$ 62 million, has yet to repay.

IATA is confident that, by 2024, global air passenger numbers will top four billion, surpassing the pre-Covid number by 3%. Last year, overall global traveller numbers were 47% of 2019 levels, but the ratio will improve over the next two years – 83% and 94%. However, it is less bullish on the ME region because of its limited short-haul markets and its focus on longer distances, and forecasts that it will only exceed its 2019 numbers come 2025, reaching 81% by 2022 and 98% in 2024. International air traffic is not expected to equal pre-Covid numbers until 2025 with the following percentages for the years 2021 – 2025 – 27%, 69%, 82%, 92% and 101%. Meanwhile, domestic traveller numbers will return to pre-pandemic levels by 2023, and will be 18% higher in 2025. But these forecasts could quickly change if the Ukraine crisis worsens and drags on.

On Monday, the Indian currency was moving in a tight range of 75.78 and 75.70 to the greenback, driven by the rising tensions over Ukraine, (exacerbated by Vladimir Putin ordering his nuclear forces to be on high alert), and surging crude prices., up over 4.2% to US$ 102. By Friday it was trading at 76.43. The dollar index, which gauges the dollar’s strength against a basket of six currencies, was trading 0.78% higher at 97.37.

This week, US unemployment figures surprised analysts, who had expected 400k in job gains, by adding 678k jobs in February, as activity continued to rebound, with the unemployment rate nudging down to 3.8%. Job growth was widespread, with the main drivers being gains in leisure, (175k new jobs), hospitality, (124k), professional/business services, (95k), health care, and construction. Over the past twelve months, average hourly earnings rose 5.1%, although this was 0.6% lower down on the month. Worryingly, the total number of jobs on US payrolls is still 2.1 million below pre-pandemic levels. The improving job sector is yet another reason that makes a March Fed rate hike inevitable.

Early Monday morning trading saw a turbulent forex market, none more so than the Russian rouble and the Indian rupee. Russia’s rouble plunged more than 28% to a record low of 118 against the dollar after the US and EU allies imposed tighter sanctions over the weekend, including disconnecting certain Russian banks from the global Swift payments network; on the domestic market rates were a lot higher at over 150 to the dollar, as people tried to get out of the tanking local currency. By Tuesday, the rouble had clawed back some of its Monday’s losses, to be trading at a more respectable 98 roubles to the US$ but by Friday’s close was at 124. Last Thursday, Moscow’s benchmark MOEX stock market briefly suspended trading, after it plunged more than 45%, losing up to US$ 254 billion, and closed 33% lower, making it the fifth-worst plunge in stock market history.

Not only are beer drinkers suffering from higher prices and sanctions against Russia but so are the brewers. Evidently, the Belgian brewing industry has already started feeling the pinch and not only from the usual ‘suspects’ – soaring energy prices, raw material supply issues, payment disruptions, lockdowns etc – but also from export markets disappearing overnight. For example, 70% of Wallonia’s Lefebvre brewery’s production is exported and 22% of that total goes to three countries – Ukraine, Belarus and Russia – where the chances of future deliveries and outstanding payments are currently non-existent.

Although it does not have any manufacturing sites in Russia nor Ukraine, Jaguar Land Rover has paused the delivery of its cars to Russia due to “trading challenges”, a country in which it sold 6.9k vehicles last year. Perhaps not for altruistic reasons, it is thought that the main reason for the pull-out was sanctions making it difficult for JLR to sell cars into the market.

The UK’s biggest car manufacturer, owned by Indian company Tata Motors, has a European manufacturing facility based in Slovakia and their decision came after Volvo confirmed it would stop delivering cars to Russia until further notice.

One of the first business casualties from the Ukraine crises sees BP exiting its 19.75% shareholding in Russian oil giant Rosneft and the resignation of its chief executive Bernard Looney from the Russian petro giant’s board with “immediate effect”. Noting that Russia’s attack on Ukraine “is an act of aggression which is having tragic consequences across the region,” BP chairman Helge Lund commented that, “it has led the BP board to conclude, after a thorough process, that our involvement with Rosneft, a state-owned enterprise, simply cannot continue.” This move will cost BP at least US$ 25 billion, which could rise even further.

Following BP’s announcement, Shell decided to end all its JVs with the Russian energy company Gazprom, including a 27.5% stake in a major LNG plant and a 50% stake in two Siberian oilfield projects, as well as quitting the flagship Sakhalin II facility, which is 50% owned and operated by Gazprom, and ending its involvement in the Nord Stream 2 gas 1.2k km pipeline from Russia to Germany, which it helped finance along  with a mix of other companies. While nowhere near the scale of BP’s potential loss, Shell could see a charge of up to US$ 3 billion, as it offloads any interests in which it is a partner with state-owned gas giant Gazprom. As with BP, it is unclear how or to whom these businesses will be offloaded and whether they are worth anything. Norwegian oil and gas producer Equinor also announced its exit from Russia, indicating that it would begin the process of divesting from its JVs in the country. ExxonMobil also decided to exit the country. French energy giant TotalEnergies stopped short of saying it would divest or pull out of Russia but confirmed its support of the EU sanctions. It did confirm that it will no longer provide capital for new projects in Russia and that it “condemns” Russia’s military offensive in Ukraine.

As the week progressed, more MNCs joined the boycott, with the growing list including auto makers GM, Volvo and Volkswagen; shipping giants, Maersk and MSC, followed suit, suspending container shipping to and from Russia, with their move deepening the country’s isolation, and resulting in the world’s eleventh-largest economy and supplier of one-sixth of all commodities, being now effectively cut off from a large chunk of the globe’s shipping capacity.

Social media outlets also showed their concern, with the likes of Facebook and TikTok taking steps to curb Russian media from using misinformation as a means of communication to its populace. Other tech giants, such as Apple and Google, have closed the doors on Putin’s Russia, with Apple confirming that it has stopped sales of iPhones and other products. Not to be outdone, both Airbus and rival plane maker Boeing have decided to cut ties with Russia, with the former stopping support and supply of spare parts for Russia’s aviation industry, and Boeing suspending operations. Harley-Davidson Inc has also suspended its business and bike shipments. Even the UK Co-op has stopped selling Russian vodka

Another blow to the Russian economy came with Moody’s Investors Service placing the ratings of fifty-one Russian non-financial corporates, as are the baseline credit assessments of government-related issuers, on review for downgrade. Moody’s, which last month had warned that this would happen if Russia decided to invade Ukraine, confirmed that the move “reflects the negative credit implications for Russia’s credit profile from the additional and more severe sanctions being imposed”.

The London Stock Exchange has suspended the shares of twenty-eight Russian-linked companies, including green energy and metals company En+ Group, run by US-sanctioned oligarch Oleg Deripaska, with Conservative peer and former energy minister Greg Barker being its chairman. Last week, a subsidiary of Russia’s second largest bank, VTB, was suspended, but there are several Russian companies, including the Roman Abramovich-backed Evraz, that continue to trade on the LSE, despite criticism from politicians. New economic sanctions have also been announced to stop Russian aviation and space companies getting access to the UK insurance market. The move will limit the benefits Russian businesses can receive from their access to the global insurance and reinsurance market through Lloyd’s, the world’s biggest insurance market.

David Malpass, the President of the World Bank, warned that the Ukraine war is a catastrophe for the world which will cut global economic growth, andcomes at a bad time for the world because inflation was already rising,” Both energy and food prices will be pushed higher which will “hit the poor the most, as does inflation”. He indicated that since both Russia and Ukraine are big food producers – Ukraine is the world’s biggest producer of sunflower oil, followed by Russia, with both accounting for 60% of global production and the two countries account for 29% of global wheat production. About 39% of the EU’s electricity comes from power stations that burn fossil fuels, and Russia is the biggest source of oil and gas The war will also have a drastic impact on the people and economy of Ukraine. In 2014, the World Bank had committed US$ 7.9 billion to make the country more efficient and more productive, including the privatisation of the banking and energy sectors; massive FDI and a crackdown on corruption were helping transform the country. Earlier in the year, Ukraine was looking at its US$ 180 billion economy growing by a credible 3.4% but mass destruction of its infrastructure, production collapsing and hundreds of thousands of Ukrainians fleeing the country will inevitably push the country back decades. Russia is the biggest source of oil and gas

In what to some seems a desperate move, Russia has more than doubled its key interest rate from 9.5% to 20.0% to help cushion the impact on prices because of the rouble’s slide. This comes after the US, the EU and their allies cut off a number of Russian banks from Swift, as well as freezing the assets of the country’s central bank, (whose reserves are estimated in the region of US$ 630 billion), which will limit the Kremlin’s access to its overseas assets, and stop it from selling assets overseas to support its own banks and companies. Because of its energy companies’ reliance for exports on Swift, this move will badly hit Russia as it will become isolated from the global economy and financial system. More trouble for the Putin administration is that there is every possibility that Moody’s may follow S&P and downgrade Russian bonds to ‘junk’ status which will make the country’s debt more expensive to service because of the higher borrowing costs for riskier assets. The central bank has announced that it “has the necessary resources and tools to maintain financial stability and ensure the operational continuity of the financial sector”. Time will tell when there is a run on Russian banks besieged by customers trying to withdraw money.

During the week, European authorities have also been targeting Russian oligarchs’ super yachts, with ‘Amore Vero’, a yacht owned by Igor Sechin, boss of Russian state energy company Rosneft, taken by French customs officers near Marseille, whilst in Hamburg shipyard authorities seized Alisher Usmanov’s 156 mt ‘Dilbar’, the world’s largest motor yacht by gross tonnage and valued at US$ 600 million. It has also been reported that yachts, belonging to five other Russian billionaires, were heading to the Maldives, regarded as a safe home because it does not have an extradition treaty with the US. Meanwhile, the Johnson administration has been quick to deny claims that it had been slower than the EU to introduce sanctions or that legal hold-ups were preventing sanctions on Russian oligarchs. Some have already been sanctioned, so their assets and bank accounts have been frozen, whilst others are taking advantage in any delay in their names being added to the list. In short, some oligarchs are making use of this extra time to move their money and portable assets out of the UK before sanctions are laid. There are 195 individuals on the UK’s government’s sanctions list, of which only fifteen, (including President Vladimir Putin), being added since this war began.

There is the danger that all the economic factors and commentary emanating from the Ukraine crisis over the past eight days have masked the true cost of the Russian invasion – and that is human lives. According to the country’s state emergency sector, the number is above 2k civilians, with other figures indicating a further 2.9k troops. Unfortunately, this number will carry on rising in the days ahead, as Ukrainians continue their fierce resistance. On top of that, there is the devastation to the country’s infrastructure, more than one million refugees, (that will quickly escalate to over five million), already having left the forty-four million populated country, and the potential for a major accident at Europe’s biggest nuclear power plant, which has been a target for heavy Russian shelling. As usual, it seems that the bodies, most notably the UN and NATO which, over the years, have been recipients of huge amounts of public money and resources appear almost powerless, despite “the allies having never been so unified and Russia having been so divided”. Going into Day 9, to the outsider, ‘boots on the ground” is winning the battle over diplomacy and random sanctions. One thing that both sides seem to agree on is that The Worst Is Yet To Come!

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16 Tons – Another Day Older and Deeper in Debt!

16 Tons – Another Day Older and Deeper In Debt!                    25 February 2022

For the past week, ending 25 February 2022, Dubai Land Department recorded a total of 2,064 real estate and properties transactions, with a gross value of US$ 1.93 billion. A total of 300 plots were sold for US$ 703 million, with 1,382 apartments and villas selling for US$ 784 million. The top three transfers for apartments and villas were all apartments – one was sold for US$ 141 million in Marsa Dubai, a second sold for US$ 68 million in Al Khairan First, and the third sold for US$ 66 million in Burj Khalifa. The top two land transactions were both for plots of land in Marsa Dubai, worth US$ 146 million and US$ 130 million. The most popular locations in terms of volume and value were Al Hebiah Fifth, with 131 transactions, totalling US$ 79 million, followed by Jabal Ali First, with 67 sales transactions, worth US$ 62 million, and Al Merkadh, with 21 sales transactions, worth US$ 30 million. Mortgaged properties for the week totalled US$ 387 million, with the highest being for land in Business Bay at US$ 47 million. 56 properties were granted between first-degree relatives worth US$ 15 million.

According to latest January figures from CBRE, the emirate’s average residential market property market rose 10.2% – a sure sign that the strong uptick in the market continues, as it surged at its fastest rate in seven years. The consultancy noted that the average price increases for villas and apartments were 21.8%, to US$ 341 per sq ft, and 8.5% to US$ 296k respectively. However, these figures are still way down on their peak seen in 2014, by 13.5% and 27.1% (for apartments). The real estate consultancy indicated that, for villas, Palm Jumeirah witnessed the highest average sales rate, at US$ 735 per sq ft, and Downtown Dubai recorded the highest average sales rate, at US$ 534 per sq ft, for apartments.CBRE report further said average rents in the 12 months to January 2022 have increased by 10.1%, with average villa and apartment rents increasing by 22.8% and 8.3% respectively. In January, average annual apartment and villa rents stood at US$ 20.8k and US$ 62.7k respectively. Downtown Dubai remained the most popular area for apartments, (as average annual rents rose to US$ 41.1k) and Al Barari for villas – with average annual rates of US$ 217.5k.

Meanwhile, Zoom Property, like many other property consultants, forecast that the Dubai real estate market will sustain an upward growth momentum this year, noting“with a 33.4% increase in property prices in January, the Dubai real estate has started the year on a high note” – a portent that 2022 will carry on the momentum that started in the previous year. It concluded that the villa segment will continue its dominance, while the apartment market will become more stable, assisted by key factors such as expatriate-friendly policies, visa reforms, and the transition of Expo 2020 into District 2020.

In a bid to raise Dubai’s standing as a year-round global gastronomy hub, in line with the visionary leadership’s goal to make it the world’s best city to live in, work and visit, the Department of Economy and Tourism hosted the inaugural industry gastronomy briefing, with restaurateurs and key stakeholders from the emirate’s F&B sector. The gathering, which will meet on a quarterly basis, shared an overview of strategic plans which will further raise Dubai’s profile on the world stage, as a leading gourmet destination, with the DET providing a summary of its ‘Gastronomy Always on Campaign’. It was also announced that the ninth Dubai Food Festival will take place between 02 – 15 May.

Dubai boasts over 12k diverse eateries, drawn from the two hundred different nationalities found in the emirate, and ranging from homegrown kitchens to international fine dining, and everything in between. Last year, and despite the negative impact of Covid, Dubai attracted almost 7.3 million international overnight visitors, compared to 5.51 million in 2020 and 16.73 million in pre-Covid 2019; it is expected that this year’s number will more than double that of 2021. There is no doubt that Dubai is the gastronomy capital of the region and this is borne out by the fact that at the recent inaugural edition of MENA’s 50 Best Restaurants, independently owned casual dining restaurant 3Fils, located in Dubai Fishing Harbour, topped the list, as Dubai scooped six out of the top ten restaurants, and sixteen in the fifty list.  In TripAdvisor’s Travellers’ Choice Awards 2022, Dubai won the top spot as the No.1 global destination and the fourth leading destination for ‘Food Lovers’ – an indicator of Dubai’s ‘culinary standing’ in the gastronomic world.

Having welcomed 29.1 million passengers last year, up 12.7% compared to 2021, Dubai International is still the world’s busiest airport, by international passenger numbers, for the eighth consecutive year. During the year, DXB successfully hosted the Dubai Air show 2021, the world’s first major air show since the start of the pandemic, and it opened one of the world’s largest in-house airport laboratories for fast-track processing Covid-19 PCR test samples for Dubai’s visitors. In November, it returned to 100% capacity for the first time since the onset of the pandemic. The current forecast is that this year, numbers will almost double to 55.1 million. The top six destination countries were India, Pakistan, Saudi Arabia, UK, US and Egypt with 4.2 million passengers, 1.8 million, 1.5 million, 1.2 million, 1.1 million and 1.0 million respectively. The top four city destinations were Istanbul (916k), Cairo (905k), London (814 k) and New Delhi (791k). The number of flights in 2021 totalled 233.4k, with the average number of passengers per flight at 154, down 18.9% year-on-year. Cargo did not disappoint, with annual freight volume 20.0% higher, at 2.319 million tonnes.

As part of ongoing efforts to boost Dubai’s economy and enhance the efficiency of the logistics sector, Dubai Maritime City is to invest US$ 38 million to further develop its infrastructure. The result will also consolidate the emirate’s position as a global maritime centre. This latest project will integrate DMC with the Mina Rashid area that includes the QE2 Hotel, P&O Marinas and Marina Cubes. The infrastructure project includes developing networks for deep sewage, stormwater, fire, irrigation, potable water, telecommunication, and roads. The sewage and stormwater networks are each serviced by a lift station. The fire and irrigation networks are served by a combined pump station, consisting of an underground tank of 460m3 for firefighting and 1240m3 for irrigation. The other networks consist of 6km of potable water, 10km telecom and 7km of road.

In a move that will strengthen its expanding position in Africa, DP World has finalised its acquisition of Imperial Logistics; last July, it had commented that it would purchase the South African company for US$ 890 million. It will now be delisted from the main board of the Johannesburg Stock Exchange on 15 March. Imperial Logistics is an integrated logistics and market access company, with operations in Africa and Europe and tis can only enhance DP World’s position as one of the world’s biggest operators of marine ports and inland cargo terminals. It will also build on the Dubai company’s growing presence in Africa where it already has projects in Egypt, Algeria, Djibouti, Rwanda, Somaliland, Mozambique and Senegal, where only last January it announced a US$ 1 billion investment to begin construction of that country’s Ndayane deep-water port.

DXB will close one of its runways, the northern one, for refurbishment, for forty-five days starting 04 May, at which time the emirate’s second international airport, Al Maktoum International, will reopen to scheduled, commercial passenger flights for the first time since the March 2020 onset of Covid-19 pandemic. The airport will still service airlines that operated from there before the pandemic.

The UAE Minister of State for Foreign Affairs indicated this week that an introduction of an employee income tax “is not at the table at all now,” in a Bloomberg TV interview. This comes two weeks after a 9% federal corporate tax on profits, from the financial year starting on or after 01 June 1, 2023, was announced. At the time, it was stated that there would be no tax on personal income “from employment, real estate and other investments or on any other income earned by individuals that does not arise from a business or other form of commercial activity licensed or otherwise permitted to be undertaken in the UAE”. The Minister also noted that “we have to comply with international directions. The OECD announced last year that most of the world is going to apply it [corporate tax].” Last October, the world body stated that 136 countries had agreed to a global deal to ensure big companies, (i.e. companies with revenue of more than US$ 868 million), pay a minimum tax rate of 15% from 2023. This would result in over US$ 150 billion being raised by new taxes, with US$ 125 billion in multinationals’ profits being reallocated to the countries in which they operate.

The UAE’s third nuclear reactor’s operating license will be issued this year, as the country seeks to produce clean energy in line with its 2050 zero emissions target. Notwithstanding any unexpected events, it appears that the Federal Authority for Nuclear Regulation (FANR) will issue the operating license for Unit-3 of the Barakah Nuclear Power Plant later in the year. If all goes to plan, then the licence for Unit-4 of the nuclear reactor, located in Abu Dhabi’s Al Dhafra region, will be issued. The four units will generate 5.6GW of power, while preventing more than 21 million tonnes of carbon emissions a year, as well as contributing to UAE’s Net Zero by 2050 Strategic Initiative. To date, Unit-1 is fully operational, and delivering electricity to the grid, with Unit-2 currently undergoing tests, in preparation for commercial operation.

A day after it was announced, at the fifth Dubai Diamond Conference, that the UAE had become the world’s largest rough diamond hub, with 2021 trade valued at US$ 22.8 billion, DMCC’s Almas Tower saw the opening of the Israel Diamond Exchange representative office at its Dubai Diamond Exchange on Tuesday. It is anticipated that the new IDE office will facilitate doing business for Israeli diamond companies operating in or looking to set up in Dubai. The entire global diamond industry is in Dubai this week for Dubai Diamond Week, which also includes the inaugural JGT (jewellery, gem and technology) Dubai and the President’s meeting for the World Federation of Diamond Bourses.

As part of the events being held at Dubai’s Museum of the Future, Thursday saw the debut of ‘Future Talks’ series by part-time Dubai resident Changpeng Zhao. Also known as CZ, the CEO of Binance, was the first of nine subjects to share their success story.  (Over the next month, to 29 March, ‘Future Talks’ will host eight other prominent futurists, industry experts and scientists offering unique insights into the greatest challenges humanity will face in the future). Also known as CZ, the Canadian-Chinese businessman, with a personal fortune of US$ 96 billion, is reportedly the richest businessman in Canada and the 14th on the list of the world’s richest people, issued by Bloomberg. In his Talk, he spoke about life before and after the setup of Binance, which has a current trading value of US$ 2 trillion. He also shared his vision for the future of finance, the potential future applications of cryptocurrencies and blockchain technology, and the pivotal role of Dubai in globalising the future of the sector. Binance has also chosen to organise its largest digital blockchain conference, attracting senior industry experts from the region and the world, from 28 – 30 March in Dubai.

UK’s International Finance magazine has ranked Ahmed Al Naqbi, the “Best CEO for Banking Transformation in the UAE for 2021”. The chief executive of Emirates Development Bank has been the face of the bank’s new US$ 8.17 billion, (AED 30 billion) strategy to finance 13.5k SMEs and corporates in priority sectors over the next decade. To date, it has lent more than US$ 190 million to such entities over the past twelve months. The CEO has been involved in several funding exercises including a total value of US$ 2.72 billion, (AED 10 billion) as part of the UAE’s Projects of the 50 campaign which allocated 50% to support Emirati entrepreneurship and innovation, and the balance to accelerate industrial development and the adoption of advanced technology in the UAE. He was also involved in the launch of the EDB Business Banking app, which offers SMEs access to “secure, on-the-go digital banking services”.

Wolfi’s, a long-standing player in the cycling community, is the first company within the tourism sector that Adio has added to the programme, in line with Abu Dhabi’s goal to attract investment to sustainable tourism. Wolfi’s was one of the first cycling shops in the UAE and now it will be provided with financial and non-financial incentives to boost cycling access and participation at events, which will lead to environment-friendly ways for tourists to discover Abu Dhabi’s attractions. Wolfi’s is developing showrooms across Abu Dhabi, in four destinations, offering a range of bicycles, e-bikes and equipment to buy or rent, near Abu Dhabi’s cycling destinations. It will also develop “Made in Abu Dhabi” electronic bicycles. In the past two years, since its formation, the government body responsible for attracting and promoting investment in Abu Dhabi, has been opening up tourism investment opportunities in the emirate through its Innovation Programme, which has so far invested US$ 545 million to 37 high-growth firms; the programme is part of Abu Dhabi’s US$ 13.62 billion, (AED 50 billion), Ghadan 21 initiative assisting tech-focused industries.

After Dubai-based Udrive had raised US$ 5 million in a funding round last year, its valuation topped US$ 20 million. According to its co-founder, Nicholas Watson, “the recent funding secured will help us invest in new technologies as well as grow our offerings into the region this year;” this will include expansion in the MENA and Turkey, as well as focusing on streamlining customer experiences.  It was reported that Cultiv8, Dubai government’s SME and start-up investment arm, and Oman Holding International, participated in the latest round of funding for the pay-per-minute car rental platform. Earlier finding came from a seed+ round in 2020, (US$ 2.5 million) and Eureeca, the Dubai-based equity crowdfunding platform, (US$ 1.3 million). In the five years since its foundation, Udrive – that allows customers to rent a vehicle by the hour, or even the minute – has recorded over two million trips.

E&, the telecom formerly known as Etisalat, posted a 3.2% hike in 2021 consolidated revenue to US$ 14.52 billion, the same percentage increase that saw net profit at US$ 2.53 billion. Consolidated EBITDA nudged 1.0% higher to US$ 7.27 billion. By the end December, its UAE database stood at 12.7 million subscribers, as the number of aggregate subscribers rose 3.0% to top 159 million. The telecom will maintain its previous Etisalat branding identity.

It is mooted that DEWA may be the first of ten Dubai state-owned companies off the blocks to float on the DFM and that this could happen early next month, with an IPO, followed by an April bourse debut. There will be strong investor interest in this historic IPO, especially if the valuation is at the lower end of the suggested US$ 27 billion to US$ 37 billion range. Annual dividends could top US$ 1.7 million which would make it an attractive investment, dependent on its initial market price.

The DFM opened on Monday, 21 February, 155 points (4.9%) higher on the previous fortnight, shed 15 points (0.5%) to close on Friday 25 February, at 3,327. Emaar Properties, US$ 0.15 higher the previous week, shed US$ 0.04 to close on US$ 1.35. Emirates NBD, DIB and DFM started the previous week on US$ 3.76, US$ 1.61 and US$ 0.65 and closed on US$ 3.62, US$ 1.64 and US$ 0.63. On 25 February, trading was at 168 million shares, with a value of US$ 73 million, compared to 91 million shares, with a value of US$ 57 million, on 18 February 2022.

By Friday 25 February 2022, Brent, US$ 1.22 (1.3%) lower the previous week, gained US$ 4.16 (4.4%), to close on US$ 97.93, after hitting highs of US$ 105.79 when news that Russia had actually invaded Ukraine earlier in the week. Gold, US$ 111 (6.2%) higher the previous three weeks, dipped a US$ 11 (0.6%), to close Friday 25 February on US$ 1,890; it had topped US$ 1,942 two days earlier.

As the global economy continues to recover at a faster rate than initially expected, HSBC more than doubled its 2021 profit from US$ 8.8 billion to US$ 18.9 billion. The profit figure was boosted by releasing US$ 900 million on previous bad loan provisions, compared with an $8.8bn charge it booked against expected losses in 2020. All regions posted profits including Asia, recording a US$ 12.2 billion profit, and Europe with a bottom line of US$ 4.8 billion. As mortgage balances grew, mainly in the UK and Hong Kong markets, 2021 customer lending was US$ 8 billion higher, on the previous year, on a reported basis and US$ 23 billion on a constant currency basis. Having paid a US$ 0.07 interim dividend earlier, the board approved a second interim dividend of US$ 0.18 per share, as well as announcing a US$ 1 billion share buyback.

After leaving Barclays last November, Jes Staley was reportedly expected to receive a long-term bonus and share payments, valued at almost US$ 30 million, but now these payments have been suspended, as regulators investigated his links with the dead sex trafficker, Jeffrey Epstein. Regulators are investigating whether the bank’s supremo’s relationship with Epstein was closer than he described to the board, having already admitted he maintained contact with Epstein for about seven years after his 2008 conviction for solicitation of prostitution involving a minor; he even visited his Little St James Island in 2015. In 2019, it is reported that his former employer, JP Morgan, handed the US regulators some 1.2k emails between the banker and the paedophile.

The two regulators – the Prudential Regulatory Authority and the Financial Conduct Authority – were concerned that these emails displayed that there was a closer relationship between the two; earlier Barclays has indicated that the link had been professional. Once the regulators had forwarded their report to the Barclays, Jes Staley resigned late last year, saying he was “shell-shocked, angry and upset” at the findings and that he would contest them. Mr Staley’s relationship with Epstein can be traced back to US investment bank JP Morgan where the sex offender was a customer.

Although Credit Suisse “strongly rejects the allegations and insinuations about the bank’s purported business practices”, German daily Sueddeutsche Zeitung and other media have released details of a data leak of some 30k of the bank’s client base. It is claimed that there have been possible failures of due diligence in checks on many customers. The newspaper, along with the Organised Crime and Corruption Reporting Project and dozens of media partners including The New York Times and The Guardian, evaluated data from the 1940s and it seems that the bank has, in the past, accepted “corrupt autocrats, suspected war criminals and human traffickers, drug dealers and other criminals” as customers. Noting that it had reviewed a large number of accounts potentially associated with the allegations, and about 90% of them “are today closed, Credit Suisse commented that the allegations are “predominantly historical” and that “the accounts of these matters are based on partial, inaccurate or selective information taken out of context, resulting in tendentious interpretations of the bank’s business conduct”.

Another financial institution not immune from past financial scandals is Lebanon’s central bank. It is reported that for more than a decade it has been charging local commercial banks commissions when they bought government securities. Nothing wrong with that except that, according to documents seen by Reuters, it failed to notify them that some of those commissions went to Forry Associates, a company controlled by Raja Salameh, the brother of Riad Salameh, governor of the central bank. Swiss authorities suspect the brothers may have illegally taken more than US$ 300 million in this way from BDL between 2002 and 2015 and it is reported that the Swiss attorney general’s office told Reuters it is conducting a criminal investigation into suspicions of “aggravated money laundering related to alleged embezzlement offences to the detriment of BDL”.

The bank Invest reports that UK household energy bills could top US$ 4.3k a year, in part due to the Ukraine crisis, as well as surging global demand, having made gas and electricity prices soar. It expects that this figure will be reached when the energy price cap, which limits what suppliers can charge, is next adjusted in October. The cap is already due to rise by US$ 0.9k to US$ 2.6kin April when it is estimated to impact about twenty-two million households. The current Ukraine crisis does not help matters, as Russia is the world’s largest natural gas exporter, and there are concerns western sanctions could push President Vladimir Putin to “weaponise” his resources and constrict supplies to Europe. The energy crisis has arisen in tandem with soaring inflation that has seen marked increases in the prices of food and manufactured goods. By Wednesday, average UK petrol prices had already hit a record high of over US$ 2.00.

There is no doubt that the crisis, in addition to the economic fall-out, could have a major impact on the well-being of people around the world, and that an escalation and an elongation will only exacerbate the problem. Russians are fighting with boots on the ground whilst the western countries are fidgeting around with various sanctions designed to cripple the Russian economy and military effort. The invasion started on Thursday 24 February and the economic effect was felt immediately as the oil price jumped to over US$ 100 a barrel, (its highest level in more than seven years), and future gas prices skyrocketed by 60% in just one day. One hopes that the European allies, along with US President Joe Biden, realised that Russia is the second-biggest global exporter of crude oil, and the world’s largest natural gas exporter. The UK is fairly lucky in that it only sources 6% of its crude oil and 5% of its gas from Russia, whilst the EU, obtains nearly 50% of its gas from there.

The two countries also provide about 25% of the world’s wheat and 50% of its sunflower products, like seeds and oil, with Ukraine also a major player, exporting corn to many countries, whilst Russia is also one of the world’s biggest exporters of fertilisers. Even though the UK produces 90% of its wheat, the price may rise because of the shortage, and the increased shipping and producing cost of fertiliser, will surely push wheat, and other grain crops, higher

Putin’s invasion not only angered the western alliance but would have irked the Russian oligarchs who, in one day, lost US$ 39 billion – more than they had lost since 01 January. Two of the bigger losers on the day were Lukoil chairman Vagit Alekperov, who suffered the sharpest decline, with his net worth slashed from US$ 19.2 billion to US$ 13.0 billion, and Alexey Mordashov, chairman of steel maker Severstal, losing US$ 4.2 billion to US$ 23 billion. In the House of Commons, Liberal Democrat MP Layla Moran, using parliamentary privilege, read out a list of thirty-five people who Russian opposition leader Alexei Navalny suggested should be sanctioned.  The Johnson government has announced more individuals and companies that it is sanctioning following the Russian invasion of Ukraine, but worryingly there are still several Russian individuals who have been sanctioned by the US or the EU but not by the UK. The cynical observers will just shrug their shoulders. Shares of the Moscow-based oil producer, Lukoil, slumped by about a third yesterday, 24 February, whilst the MOEX Russia Index closed 33% lower, as some stocks tanked 45%, with banks and oil companies among the worst-affected. Meanwhile, the UBS Group, who reportedly services 50% of the world’s billionaires, has triggered margin calls on some wealth management clients that use Russian bonds as collateral for their portfolios after cutting the lending value of some debt from the country to zero.

Volatility was the name of the game elsewhere, but global stock markets capped their losses this side of 5%, including the Dax, at 5%, and the FTSE 100 at 3.0%. Every time the stock markets dip, it normally reduces the value of pension funds and other investment funds which in turn will dent consumer confidence and reduce their spend – both of which will have a negative impact on economic growth.

If anyone thought they had seen it all when it comes to inflation, the message is that they ain’t seen anything yet. Households in the US and the UK are already being squeezed by the rising cost of living, while wages struggle to keep up. For a variety of reasons, including soaring petrol/gas prices, higher commodity prices, reduced supply of energy, food etc, inflation levels will inevitably reach double digit levels. Even before that level is reached, interest rates will move higher and that, for instance, impacts the 2.2 million UK homeowners with mortgages, at a time when household budgets are already stretched.

With Russia one of the biggest global suppliers of metals, such as nickel or palladium, used in car manufacturing, the industry, already battered by a chip shortage and supply chain problems during the pandemic, will have further problems, if Russia decided to cut off supplies of these metals in retaliation to sanctions. This comes at a time when nearly 20% of UK’s nearly new cars are now selling at more than their brand-new equivalents. On top of that, Russian car factories, manufacturing the likes of brands like Stellantis, Volkswagen and Toyota, could struggle to operate under sanctions, potentially hampering production and the availability of new cars.

With investor concerns apparently easing today, global markets soared  as it digested the severity, (or lack of it), of the extent of sanctions on Russia which seemed to focus on its banks but left its energy sector largely untouched. Rather surprisingly, the expected disconnecting of Russia from the Swift international banking system or targeting its oil and gas exports has not taken place, so the market responded by share price gains, after weeks of decline, with oil and gold returning to pre-invasion levels. The FTSE 100 index climbed 3.9% on the day, with both German and French bourses 3.5% higher; in the US the Dow Jones Industrial Average, S&P 500 and the Nasdaq rose by 2.5%, 2.2% and 1.6% respectively, as markets in Asia also closed higher.

According to Rightmove, the asking price for an average UK house rose by US$ 10.6k in one month, from January to February, driven by a shortage of homes being put up for sale – the largest month-on-month rise for twenty years. The increase in demand, driven by those looking for more space, and who were ready to move on from their first homes, has pushed the average asking price to a record US$ 475k.  65% of potential buyers pointed to the fact that the lack of available homes was having a severe effect on their ability to buy, whilst 94% of buyers, with a US$ 1.36 million (GBP 1 million) budget, thought there was a lack of choice available. It is inevitable that soaring inflation, a reduction in consumer spending and higher mortgage rates will have an impact and that “realistic pricing” could return to the market by the end of the year – most probably starting after spring which is seen as the industry’s busiest season.

With the threat from the Omicron variant apparently diminishing, the UK economy has bounced back, reaching its highest level since June 2021, with February’s IHS Markit/CIPS composite PMI 6.0 higher on the month to 60.2. The improvement was mainly attributable to a surge in consumer spending on travel, leisure and entertainment but a caveat that costs were surging, at the second fastest pace on record, which would indicate an almost inevitable rate rise next month; the only question is whether it will be 25bp or 50bp. The BoE has been surprisingly reticent to take any positive action considering that inflation could top 10.0% by April – quintruple the bank’s 2.0% target. Although February’s manufacturing PMI remained flat at 57.3, the flash services PMI rose 6.7 to 60.8, as private sector companies reported another steep increase in incoming new work, with UK economic confidence fast improving, with the easing of restrictions.

Again, because of the lifting of lockdown restrictions boosting its service industry, the eurozone economic recovery also rebounded sharply this month, with prices surging at record levels. IHS Markit’s Flash Composite Purchasing Managers’ Index and the PMI for the service industry were both at five-month highs – up 3.5 on the month to 55.8 in February, and 4.7 higher to 55.8, respectively. Just like the UK economy, the main drivers behind the increase were the further easing of restrictions, which led to increased demand for many consumer services such as recreation, hospitality, travel and tourism, allied with an improvement in supply bottlenecks; despite, a minor reduction in the pace of growth, there was also a better-than-expected return in the manufacturing sector. Despite the positive trends going forward, more so in Q2 and Q3, inflationary pressures will continue to impact on the economy, especially consumer spending.

Another casualty of soaring inflation is the UK government, with monthly interest payments topping US$ 83 million, over a third higher than in January 2021, and the highest amount for a January since 1997. The payments are pegged to the Retail Prices Index measure of inflation – which touched 7.8% last month. Despite government debt levels being at their highest level in sixty years, overall interest payments by the government are still at remarkably low levels.

With lockdowns easing, the economy improving and tax receipts heading north, the Office for National Statistics indicated that government finances recorded a surplus of US$ 3 .9 billion last month – a major improvement on the US$ 3.4 billion deficit recorded a year earlier, but well down on January 2020’s return of US$ 13.4 billion. In the first ten months of the fiscal year, (to January), borrowing was at US$ 188.2 billion – the second highest for the period since records began in 1993 – whilst revenue from self-assessed tax was US$ 2.7 billion higher, on the year, at US$ 25.0 billion. The ONS figures showed that total public sector debt stood at US$ 3.15 trillion at the end of last month, equivalent. to 94.9% of GDP but even with that mega figure, the public deficit is steadily decreasing, but still staggering. 16 Tons – Another Day Older and Deeper In Debt!

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What’s Going On?

What’s Going On? 18 February 2022

For the past week, ending 18 February 2022, Dubai Land Department recorded a total of 2,098 real estate and properties transactions, with a gross value of US$ 1.23 billion. A total of 219 plots were sold for US$ 305 million, with 1,022 apartments and villas selling for US$ 613 million. The top three transfers for apartments and villas were all apartments – one was sold for US$ 136 million in Marsa Dubai, a second sold for US$ 58 million in Al Merkadh, and the third sold for US$ 47 million in Burj Khalifa. The top two land transactions were for a plot of land in Palm Jumeirah, worth US$ 16 million, followed by a plot sold for US$ 11 million in Hadaeq Sheikh Mohammed Bin Rashid. The most popular locations in terms of volume and value were Al Hebiah Fifth, with 90 transactions, totalling US$ 55 million, followed by Jabal Ali First, with 57 sales transactions, worth US$ 38 million, and Al Hebiah Fourth, with 39 sales transactions, worth US$ 90 million. Mortgaged properties for the week totalled US$ 260 million, and 56 properties were granted between first-degree relatives worth US$ 15 million.

Dubai January property prices posted their best ever opening month of the year returns, which grew 33.4%, to an average US$ 429 per sq ft, over the past twelve months. The EFG Hermes report noted that price rises differed between three sectors – luxury, affordable and budget, with increases of 35.1%, 37.2% and 15.7% respectively. The luxury homes segment grew 31.7% to reach 4.1k deals in January, with the affordable and budget sectors dipping slightly to 5.3k and 3.7k deals respectively during the month. The high-end market was also up 10%, month-on-month, but transaction volumes came in 24% lower, “mainly due to an exceptionally high land activity in the comparable month”; off-plan sales surged more than fourfold, as the residential market activity dipped about 13%. The best performing areas in terms of prices were Jumeirah, Mohammed Bin Rashid City and Palm Jumeirah, as positive impactors, such as pent-up demand and improved investor sentiment, along with rising inflation, continued to move prices higher.

The Asteco report was very similar to that of EFG Hermes, but with slightly different numbers, recording a significant surge in Q4 prices for villas, (sales up 40% and rentals by 24%), and apartments, by 20% and 10%. Sales price growth is expected to ease in 2022, in line with increased supply and new project launches. “Villas will continue to be the predominant focus of buyer demand and the limited number of new handovers in quality communities should translate into higher sales prices,” according to the report.

In a survey of Dubai 4 B/R villa rentals, it studied twelve locations. The average annual rental in 2012 was US$ 60k, reaching its peak in 2014 at US$ 74k and then declining every year to 2020 to US$ 42k, before rising to US$ 53k by 31 December 2021. For a 5 B/R villa, the figures were US$ 71k, US$ 86k, US$ 53k and US$ 69k. For a Meadows 4 B/R, the figures were US$ 61k, US$ 75k, US$ 50k and US$ 64k. The report sees rents, across all major asset classes, increasing further for “good quality” properties, although at a lower rate.

Last month another report put the number of new units at 37k, but interestingly, the consultancy estimated that some 17k residential units (15k apartments and 2k villas) were handed over last year but expects that about double that amount – 30k apartments and 3.5k villas – will be handed over in 2022, but that “some of this is expected to be delayed and will eventually spill over into 2023”.

The former bank clerk, Majid Al Futtaim who, in his lifetime, created one of UAE’s biggest private conglomerates, (MAF), with global assets valued at US$ 16 billion, passed away last December. Since then, it appears that there has been speculation relating to the company and its operations. This week, the company clarified the situation by posting that it will continue to operate normally, as a special judicial committee looks into potential inheritance issues among the ten heirs, but also noting that “there is a special judicial committee whose role is to adjudicate potential legal disputes related to Mr Majid’s estate and inheritance issues, not to oversee the company or its business,” and that “as we work through this transition, our businesses are continuing their operations as normal.” However, following Sunday’s report in the FT, there was renewed interest about the future of the company but one observer put any misconceptions to bed by noting that, “unfortunately, the news took on a more [bigger] dimension than the reality because it was published in a foreign newspaper,” and that “so far there are no disputes between the heirs. Appointment of the Judicial Committee [is] due to the presence of inheritance (personal assets) that must be counted, evaluated and distributed to the heirs.” The group also commented that, “with a transparent governance structure and robust processes, we assure all our stakeholders that business at Majid Al Futtaim continues to operate normally and in line with our strategic plans”.

Majid Al Futtaim established his retailing and entertainment giant Majid Al Futtaim Holding (known as MAF) in 1992, and by the time of his death, MAF owned and operated thirteen hotels and twenty-nine malls, including Mall of the Emirates in Dubai and the Mall of Egypt in Cairo. The group also had the exclusive license agreement to operate hypermarkets for French company Carrefour across MENA and Central Asia. In the 2000s, the MAF portfolio expanded, with Vox Cinemas, the UAE’s first multiplex cinema, opening in 2000; it is now found in five of the GCC countries, Egypt and Lebanon. The company currently owns and operates 29 shopping malls, 13 hotels across the ME, 378 Carrefour hypermarkets and supermarkets, operated through franchise agreements, as well as entertainment and leisure assets.

The world’s largest food and beverage sourcing event was opened on Sunday by HH Sheikh Ahmed bin Saeed Al Maktoum. The five-day 27th edition of Gulfood has hosted 4k companies from 120 countries. Dubai was one of the first locations in the world able to safely hold such big events, post pandemic lockdowns, and Gulfood 2022 is no exception, being held under stringent safety and hygiene protocols, with the DWTC having already proved its capability to safely manage world-class events. Some of the more important topics to be discussed at Gulfood include sustainability, the rising role of e-commerce in F&B, disruptive technology and impactful innovation. Networking continues to be an important part of Gulfood as buyers, importers and distributors meet to extend their business opportunities at the world’s largest annual F&B sourcing meeting. Two new features this year were the introduction of Gulfood Zero Waste – a new movement to create a sustainable event and inspire people in the food business, to take action – and Gulfood YouthX, a brand-new platform set to empower young Emiratis and to enhance the food and beverage industry’s future.

A new analysis from Dubai Chamber of Commerce shows that UAE’s food and beverage trade topped US$ 25 billion in the first nine months of 2021, driven by growing demand and expanded efforts to enhance food security and diversify food. Of that total, imports; accounted for US$ 12.8 billion, exports – US$ 4.1 billion – and re-exports – US$ 8.3 billion. It is estimated that in the decade to 2020, the CAGR for imports, exports and re-exports were 0.6%, 7.5% and 6.0% respectively. The top six ‘F&B’ trading partners were India, US, Brazil, Australia, Canada and Saudi Arabia, accounting for 12%, 7%, 6%, 5%, 5% and 5% of total trade. The leading six ‘F&B’ imports were fruits & nuts (13%), meat (11%), dairy products (10%), oilseeds (7%), cereals (7%) and other edible food products (6%). Ten markets accounted for about 66% of the UAE’s total exports of food and beverages, with the leading four being Saudi Arabia, with a share of 17%, followed by Oman (9%), Kuwait (8%) and China (5%).

With the UAE and India signing a Comprehensive Economic Partnership Agreement, it is expected that bilateral non-oil trade will jump 66.7% over the next five years to top US$ 100 billion. HE Abdullah bin Touq, UAE Minister of Economy, estimates that the deal will add US$ 8.9 billion, or 1.7%, to the UAE’s GDP and boost exports by 1.5%, or US$ 7.6 billion, by 2030. The 881-page agreement lifts 80% of tariffs on UAE and Indian goods, while all tariffs will be removed within ten years. Currently, India accounts for 9% of the country’s total foreign trade, and 13% of non-oil exports, with bilateral trade having grown by more than 70%, to US$ 21 billion, in H1 2021. UAE’s aluminium, copper and petrochemicals industries will be major beneficiaries from the lifting of tariffs.

In 2021, DIFC reported its highest ever annual revenue – up 15.9% to US$ 244 million on the year, and 7.0% higher, compared to its 2019 pre-pandemic figure. Operating profit, at US$ 156 million, was 25.4% higher on the year, and up 12.4% on the 2019 return. For the first time, total assets topped the US$ 4.0 billion mark, reflecting the ever-growing financial strength of DIFC, and its position as a significant player in the global financial industry. There was a 24.8% rise in the number of active registered firms to 3.6k, including 1.1k financial and innovation related entities. During the year, DIFC saw company registrations 36.0% higher, at 1k, which is more than triple the average number over the past ten years, as employment grew by 11.0% to 29.7k. Amongst its 3,644 entities, DIFC is home to seventeen of the world’s top twenty banks, twenty-five of the world’s top thirty global systemically important banks, five of the top ten insurance companies, five of the top ten asset managers and many leading global law and consulting firms. During the year, an additional 350k sq. ft. of commercial space was leased across DIFC, up 73.4% on the year. The DIFC now boasts some of the emirate’s best eateries and continues its quest to become not only Dubai’s leading business hub but also its premier vibrant leisure community; last year, it added a further eighty retail and dining outlets, bringing its portfolio total to 367. Despite the pandemic, it also managed to meet its 2024 growth strategy three years ahead of schedule.

Along with 220 new factories, opening in the UAE last year, industrial exports posted a ‘historic rise’ to US$ 32.6 billion last year. According to the UN’s annual Competitive Industrial Performance Index, the UAE moved five places higher to be ranked 30th in the world – and the most competitive in the Arab world. Led by the Ministry for Industry and Advanced Technology, its National Strategy has achieved “several outstanding results within one year of its establishment”, by supporting “the growth of the UAE’s industrial sector by contributing to its capabilities, competitiveness and attractiveness”.

Its ‘Operation 300bn’ has a target of boosting the industrial sector’s contribution, to the national GDP, by 226%, to US$ 81.74 billion (AED 300 billion), over the next decade, as well as supporting 13.5k SMEs by 2031. The Ministry also launched a US$ 2.72 billion financing initiative for priority sectors, 50% of which is to help deploy advanced technology in the industrial sector.

It is estimated that the country’s ICV (In-Country Value) programme has already circulated some US$ 11.28 billion back into the local market and that, last year, 45 public entities and 13 major national institutions and companies joined the programme. The programme also saw 1k high-quality job opportunities for nationals, being created, as well as various training programmes to upskill Emiratis. The Fourth Industrial Revolution Programme (UAE Industry 4.0), an initiative to support manufacturers in the adoption of 4IR technologies, was also launched in 2021, along with the Emirates Research and Development Council being established to further support the industrial sector’s growth.

As part of its US$ 7.5 billion programme. DIB listed a five-year US$ 750 million Sukuk on Nasdaq Dubai this week, priced at an annual profit rate of 2.74% per annum – 95 bp over the five-year US Treasury; this issuance, 2.5 times oversubscribed, represents the lowest-ever credit spread on any of DIB’s previous fixed-rate senior Sukuk issuances. Following this listing, Dubai capital markets have a Sukuk listings’ total value of US$ 79.19 billion, ensuring its position as one of the leading such financial centres on the global stage.

It is reported that Dubai’s Trukker, now headquartered in Saudi Arabia, has raised US$ 96 million, via a Series B equity and a debt funding round, with a range of regional and global backing. The money raised will be spent on further expansion in the ME and Central Asia for adding new products and features to enhance the start up as a leading regional transport and logistics player. The digital freight network also noted that, as part of the financing round, the company also raised US$ 50 million in venture debt from Mars Growth and San Francisco-based Partners for Growth, backed by the Silicon Valley Bank. The company started in 2018 also managed to raise US$ 23 million in its Series A funding round a year later. As an online marketplace, that connects transporters with consumers and businesses to provide logistics services, it operates with a network of more than 40k trucks and 700+ enterprise customers across eight countries.

Dubai-based Micropolis has raised US$ 4 million in a new investment round, led by San Francisco-based venture capital firm Mindrock Capital, with the funding raised advancing its core technology and expanding its product range; it will also enhance its portfolio of projects designed to develop autonomous vehicles. Micropolis specialises in designing, developing and manufacturing autonomous utility robots. The robotics and autonomous technology start-up aims to be a major contributor to the UAE government’s technology-driven initiatives, specifically AI and robotics. Last November, the UAE cabinet approved a temporary licence to test self-driving vehicles on the country’s roads and has a 2030 target to make 25% of the country’s transport autonomous.

Soon to be launched Zand, the country’s first digital bank, for both retail and corporate clients, has unveiled new international and local shareholders including India’s Aditya Birla Group (Solfrid Investments), global investment manager Franklin Templeton, UAE’s Al Hail Holding, Dubai-based Al Sayyah and Sons Investments, Abu Dhabi holding company Global Development Group and Yussuf Ali, chairman of Lulu Group. Chairman Mohamed Alabbar, and chief executive, along with co-founder Olivier Crespin, are also investors. With the buoyancy of the local FinTech sector, and a young digitally aware population, Dubai seems a natural base for digital-only financial institutions. Zand is currently awaiting final regulatory approval from the UAE Central Bank and regulator and will be a “digital economic accelerator”, serving as a platform for wider digital services that focus on businesses and people.

It is reported that Dubai’s Dragon Oil, a subsidiary of state-owned Emirates National Oil Company, has made its first oil discovery in Egypt’s Gulf of Suez, that could contain about 100 million barrels in reserves. In 2019, it committed to a five-year US$ 1 billion investment in upstream assets in Egypt, after acquiring BP’s stake in the Gulf of Suez. The upstream oil and gas exploration, development and production company, with concessions in Turkmenistan, Algeria, Egypt, Afghanistan, Tunisia and the Philippines, expects production rates will be in the region of 70k bpd this year, compared to 60k in 2021.

With net fee and commission income 21% higher, at US$ 72 million, Shuaa Capital posted an annual record 2021 net profit, before one-off impairments, of US$ 62 million, while net profit after impairments fell 69.0% from US$ 34 million in 2020 to US$ 11 million; EBITDA declined from US$ 413 million, in financial year 2020, to US$ 63 million in 2021, and stood at US$ 415 million adjusted for net one-off items The one-off charges included a net US$ 51 million mainly relating to valuation impairments following the decision to accelerate the restructuring of a legacy, illiquid investment portfolio; on a like-for-like basis, its net profit would have been US$ 62 million. During the year, the investment bank shored up its real estate investment and client coverage, that saw core headcount numbers 33% higher on the year.

Amanat Holdings quintupled 2021 total income to US$ 100 million and posted a massive twenty-eight fold jump in profit to US$ 77 million. On the back of this major improvement, the Board has recommended a dividend of US$ 41 million. It also made a US$ 55 million profit, and cash proceeds of US$ 213 million on the divestment of minority stakes in Taaleem Holdings and Saudi Arabia’s International Medical Center. It also posted a non-cash impairment charge of US$ 5 million against goodwill due to the Covid-driven delayed ramp-up of the Royal Hospital for Women and Children. Amanat has two profit-making units – health and education. The former – comprising its wholly owned Middlesex University in Dubai, Abu Dhabi University Holding Company and the real estate assets of NLCS Dubai – posted a 4.0% hike in income to US$ 7 million, driven by strong enrolments and increased market share. Meanwhile, healthcare turned a US$ 13 million 2020 deficit to an US$ 11 million profit last year. The Dubai-listed company recently acquired Cambridge Medical and Rehabilitation Center so that it ended 2021 with a strong portfolio of assets – an impressive base for its 2022 value creation strategy.

Driven by a higher revenue stream, the National Central Cooling Company posted a 12% rise in 2021 turnover to US$ 531 million, resulting in a US$ 159 million total profit attributable to equity holders. Tabreed’s board recommended a US$ 0.033 dividend. During the year, Tabreed formed a partnership with the World’s Bank IFC to boost operations in India – now Tabreed India will be transferred to a new, Singapore incorporated company, 75% owned by Tabreed and 25% by IFC. Over the next five years, it will invest US$ 400 million with the target being a 100k refrigeration tonnes figure across India. The company is looking for a 9%+ growth in 2022, driven by a combination of greenfield projects, mergers and acquisitions and international expansion; it also sees the recovering UAE property market being a source of increased funds, “especially in our concessions areas, be it in Saadiyat, Downtown Dubai, Al Maryah Island or Yas Island”.

Etisalat reported a 3.0% increase in revenue to US$ 14.52 billion, driven by growth in international operations, as well as steady improvement in domestic operations, with net profit attributable to equity holders, nudging 3.3% higher to US$ 2.62 billion; earnings per share rose 63.4% to US$ 0.29. Total assets of the company fell 4.0% to US$ 34.93 billion, with operating profit declining 1.7% to US$ 3.49 billion. Last month, the company bought elGrocer, an online, country-wide marketplace for groceries, in a deal that includes US$ 8.17 billion for the 100% share acquisition. This complements the telecom’s existing marketplace services under the Smiles brand, with 2.7 million members, that includes online food delivery, lifestyle offers and the ability to earn and redeem points at more than 7k outlets across the UAE. Last October, it boosted its AI portfolio, by merging its data centre services with that of Abu Dhabi’s G42, creating the UAE’s largest data centre provider. In August, it purchased a further 4.6% in Maroc Telecom group, bringing its effective ownership to 53.0%.

Emaar Properties announced a trebling of property sales, on the year, to US$ 9.19 billion – its highest ever level since its 1997 incorporation. Over the year, both revenue and net profit moved significantly higher – by 57.0% to US$ 7.70 billion and 80.0% to US$ 1.04 billion. Dubai’s leading developer posted a sales backlog of US$ 12.54 billion, indicating that it has strong future revenue and profit streams. Since building its first housing units in 2002, it has 35.2k units under construction of which 24.5k are in the UAE and the balance in global markets.

Tuesday was the last day for Damac’s share trading on the DFM, after a notice period to take the company fully private ended a day earlier, following Maple Invest, owned by the developer’s founder Hussain Sajwani, having submitted a mandatory acquisition notice to the bourse last December. As from 20 February, all shares, not yet held by Maple, will be re-registered in the name of Maple in Damac’s share register. Meanwhile, the company is still trading in the red, announcing that it had narrowed its 2021 annual loss from US$ 176 million in 2020 to US$ 145 million, with revenue 36.2% lower at US$ 817 million. Booked sales more than trebled from US$ 627 million to US$ 2.12 billion, as Damac launched two development projects – Cavalli Tower, a 70-storey skyscraper overlooking Palm Jumeirah, and a new master community development, Damac Lagoons.

Yesterday, the UAE Cabinet approved a decision to let co-operative associations, which are primarily supermarkets and retail businesses, trade their shares on the local financial markets. This will allow such entities raise funds for expansion which in turn will benefit the national economy. This is another step by the government to double the size of the DFM to US$ 816.7 billion, (AED 3 trillion) and follows last year’s announcement that ten state-owned companies will be listed on the local bourse; maybe any of DEWA, Empower, Tecom or Salik could be first off the block? It is also reported that two funds, totalling US$ 817 million, will be launched to boost trading on the stock markets and encourage SMEs to list on its financial markets. Furthermore, to increase activities of market makers on DFM, last month, Dubai launched xCube to help the bourse attract more capital.

The DFM opened on Monday, 14 February, 86 points (2.7%) higher on the previous week, gained 69 points (2.1%) to close the week, on Friday 18 February, at 3,327. Emaar Properties, US$ 0.05 lower the previous week, gained US$ 0.15 to close on US$ 1.39. Emirates NBD, DIB and DFM started the previous week on US$ 3.69, US$ 1.55 and US$ 0.65 and closed on US$ 3.76, US$ 1.61 and US$ 0.65. On 18 February, trading was at 91 million shares, with a value of US$ 57 million, compared to 159 million shares, with a value of US$ 66 million, on 11 February 2022.

By Friday 18 February 2022, Brent, US$ 19.41 (25.7%) higher the previous eight weeks, shed US$ 1.22 (1.3%), to close on US$ 93.77. Gold, US$ 71 (4.0%) higher the previous fortnight, gained a further US$ 40 (2.1%), to close Friday 18 February on US$ 1,901.

With some UK expats complaining that Dubai petrol prices had risen to US$ 0.77 per litre this month, they should note that prices back home hit a record high of US$ 2.05 this week. It is inevitable that with Brent, currently at an eight-year high, and climbing quickly to the US$ 100 a barrel level, retailers will not be slow in passing on price hikes, sending UK prices even higher. Prices in energy-rich Australia were much lower. CommSec’s figures show that prices there were also skyrocketing to record highs, with Brisbane prices at a high of US$ 1.36 per litre, although the highest pump price noted was US$ 1.43 per litre in Sydney for standard unleaded.

When the cargo ship Felicity Ace caught fire in the Atlantic Ocean on Wednesday, it resulted in almost 4k luxury cars, including 1.1k Porsches and 189 Bentleys, as well as VWs, Audis and Lamborghinis, being abandoned. It is reported that the owner of the vessel is in contact with the logistic agent in order to draw up a plan for the towing of the ship back to Europe. The ship was sailing to a Volkswagen factory in Davisville, Rhode Island from Emden in Germany, before it caught ablaze off the coast of Portugal’s Azores islands. The insurance claim will be large if all 4k vehicles are write offs; assuming each was worth US$ 100k, the claim for loss of vehicles will be at least US$ 400 million. Faring better than its cargo, all 23 crew were rescued unharmed.

Some consumers are accusing Qantas of price gouging especially in relation to its credit redemption scheme, which was amended as from 01 October 2021, describing it in terms such as “deceptive” and “dishonest”. There are records showing that the airline has jacked up prices for the same flight when a consumer has used a flight credit or voucher; there were price gaps ranging from 50% to 300%, depending on the credit value, compared to when people made fresh bookings, with the airline restricting all the cheaper options for seats and only making available tickets that were equal to or more than the credit amount available. A global problem faced by many, not only by Qantas customers, is that when information or a simple answer are required, there is usually the automated reply – “our operators are busy at the moment, please. . . . .” The changes made last year meant that the flight credit could only be used on an equivalent or more expensive seat; before that, there were fewer limitations and the credit could be used for multiple bookings. The airline has advised that it has started to wind back some of the rules since last September and is now offering “more flexibility with booking than pre-COVID, but we still have some rules in place.” Maybe it is time for Qantas, and other airlines, to start treating a travel credit just like cash – no extra fees, restrictions or limits – and not eke out more revenue from many unsuspecting customers.

Troubled Crown Resorts – savaged by a recent Royal commission – has agreed to a US$ 6.36 billion takeover by private equity firm Blackstone, valuing its shares at US$ 9.36 – some 11% higher than the price offered in its initial approach in 2021. Noting that it was a “compelling offer”, chief executive Steve McCann also commented that it highlighted “the strength of the Crown brand and confidence in our future, as we emerge from some challenging times”. The agreement has still to be ratified by the Foreign Investment Review Board and by the gaming regulatory authorities in the states where the casino operates in Australia. It is reported that James Murdoch, via Consolidated Press Holdings, holds about 37% of Crown.

Whilst posting a record Q4 profit of US$ 55 million, Airbnb noted that bookings over the period were on par with pre-pandemic levels, and that there were fewer cancellations during the wave of Omicron infections than during previous surges. Q4 revenue rose 75%, year-on-year, to US$ 1.5 billion, driven in part by higher rates, which jumped 20% compared to last year. Airbnb said it expected revenue of up to US$ 1.48 billion in Q1 2022 which is higher than analysts had forecast. Reservations for this summer at the end of January were up 25% compared to 2019. The online accommodation booking platform Airbnb estimated that US urban bookings have fully rebounded but indicated that during the pandemic, non-urban areas had proven more popular. Of the total nights registered, bookings in urban areas accounted for 49% of the total, but the lodging website noted that it was seeing signs of improvement in travel to top cities which have yet to recover to 2019 levels. An interesting fact was that 25% of nights booked in Q4 were for four weeks or longer, perhaps indicating the continuation of remote working and its importance to platforms such as Airbnb.

With a landmark ruling by the New South Wales Industrial Relations Commission confirming that it is possible for all workers to have access to enforceable rights and protections, regardless of employment status, it makes the state the first place where Amazon must pay wages to contractors that are set by law. The ruling seems to assert that it is possible for all workers to have access to enforceable rights and protections, regardless of their employment status. The Transport Workers’ Union noted that, “for too long the likes of Amazon have been able to exploit independent contractor loopholes to sidestep rights and rip workers off fair rates of pay.” Since Flex launched in Australia in 2020, drivers, who use their own vehicles to deliver by deadline packages picked up from Amazon distribution centres, have received varying amounts set by the company as they are not technically employees. This is now about to change in a major blow to the behemoth.

Last year, Amazon threated Visa that it would stop using its credit cards in the UK because of high fees but now both partners have reached an amicable agreement; Amazon customers in Australia and Singapore were also subject to Visa surcharges, which were removed yesterday, 17 February. The tech giant confirmed that, “we’ve recently reached a global agreement with Visa that allows all customers to continue using their Visa credit cards in our stores.” Following Brexit, an EU cap on fees charged by card issuers was no longer in place. Last October, Visa began to charge 1.5%, (up from 0.3%) of the value of a transaction for credit card payments made online between the UK and the EU.

Ericsson’s chief executive, Borje Ekholm, has said he could not rule out ISIS payments, made to gain access to transport routes in Iraq, following an internal investigation which found “serious breaches of compliance rules”. The probe had identified “unusual expenses dating back to 2018”, but the final beneficiary remains unknown. An internal investigation carried out by the Swedish firm, one of the world’s biggest makers of mobile network equipment, found “serious breaches of compliance rules”. Whilst insisting that the company did not tolerate “financial terrorism”, the company noted that it will continue to “invest significantly” into an investigation regarding compliance concerns in its Iraq-based operations. This is not the first such incident involving Ericsson – in 2019, it agreed to pay US$ 1 billion to resolve allegations of bribery, with the firm having “admitted to a years-long campaign of corruption in five countries to solidify its grip on telecommunications business”; they were Kuwait, Djibouti, China, Vietnam and Indonesia.

Although she ended her tenure as head of India’s largest bourse, the National Stock Exchange, in 2016, citing “personal reasons”, Chitra Ramkrishna, is back in the news. It is reported that the former chief executive made crucial decisions by consulting and sending confidential information to a yogi, sharing business plans, board meeting agendas and financial projections with the unnamed spiritual guru. The Securities and Exchange Board of India claimed that their evidence “clearly showed” that the yogi was running the NSE, and Ms Ramkrishna was “merely a puppet in his hands” until the end of her time in the role. The regulator added that “the sharing of financial and business plans of NSE… is a glaring, if not unimaginable, act that could shake the very foundations of the stock exchange”. She has been banned for three years, from working with any bourse or any firm registered with the regulator as an intermediary, and fined almost US$ 400k.

Green banking group, ShareAction, claims that big banks, including HSBC, Barclays, and Deutsche Bank, already signed up for net zero pledges, as part of the Net Zero Banking Alliance, are still continuing to pump in billions of dollars into new oil and gas production; last year, these three accounted for 55.9% of the US$ 33 billion that the twenty-four big banks had loaned. The campaign group alleges that the three listed banks above have funded, US$ 8.7 billion, US$ 4.6 billion and US$ 5.7 billion, into new oil and gas projects last year. According to a study by Profundo, Exxon Mobil, Shell, BP, and Saudi Aramco are among the energy giants receiving bank finance. However, it reckons that 2021 funding was well down, compared to a year earlier, because of banks focussing on providing pandemic-related loans to keep fossil fuel firms afloat during the pandemic. ShareAction urged big investors to demand that banks restrict finance for oil and gas expansion, indicating that “banks say that they want to help their clients to transition away from fossil fuels, but there is little evidence for this claim.”

US prosecutors have alleged that a former Goldman Sachs banker, Roger Ng – in cahoots with his former boss Timothy Leissner and Chinese-Malaysian financier Jho Low – embezzled millions of dollars of funds from 1MDB, Malaysia’s scandal-hit sovereign wealth fund; Goldman’s ex-head of investment banking in Malaysia is also accused of conspiring to launder money and violate anti-bribery law. Prosecutors allege that he used some of the stolen money to bribe Malaysian officials to get more business for Goldman Sachs and that he received US$ 35 million from Mr Leissner for his role in the alleged scheme. Goldman Sachs helped to raise US$ 6.5 billion for 1MDB, through bond sales to investors, between 2009 – 2014. Investigations have showed that the proceeds from the bonds had subsequently been largely stolen. After years of investigations in several countries, the Wall Street investment bank reached settlements of US$ 3.9 billion, with the Malaysian government for its role in the multi-billion-dollar corruption scheme, and a further US$ 3.0 billion with authorities in four countries – US, UK, Singapore and Hong Kong – to end an investigation into work it performed for 1MDB.

Last week, Unilever, the firm behind brands such as Marmite, Ben & Jerry’s, Hellemann’s mayonnaise and Dove Soap, posted that it would put up its prices again this year as its overheads continued to rise, noting that it was facing US$ 4.0 billion of extra costs in 2022 alone. This week, it was the turn of two other major conglomerates – Nestle and Reckitt Benckiser – posting that price increases were inevitable. The maker of KitKat, Cheerios, Smarties and Nescafe said price increases were down to growing cost of producing its goods and it had already lifted prices by 3.1% in Q4 to offset rising operating costs. It also commented that “it is a safe assumption that our input cost increases for 2022 will be higher than 2021, that is something that we have to reflect in our pricing.” Nestle posted a 3.3% rise in 2021 revenue to US$ 94.7 billion, with net profit 38.2% higher at US$ 18.3 billion.

Meanwhile, Reckitt Benckiser, the consumer goods company behind Dettol, Durex, Veet, Air Wick, Finish and Vanish also said prices would rise, but added it hoped to absorb most of the increases. Its costs jumped 11% last year but that would not mean their prices rising by that amount, as the company had ways to “mitigate and manage pricing”. Whilst the firm’s costs had increased “across the board”, ranging from crude oil and plastic, to shipping and wages, “we care about the competitiveness of our brands,” and that the company was “absorbing a significant part” of higher operating costs through “efficiency” and “better buying”.

Blaming higher ingredient and energy costs, Heineken, which also sells Strongbow cider, and Amstel, is set to increase the price of its beers, driven by rising inflation levels. The world’s second largest brewer expects putting up prices could lead to “softer beer consumption”, as drinkers reined in their spending due to soaring living costs. Heineken said its input costs were now set to rise by a mid-teens percentage, due to the doubling in the price of barley over the year, along with aluminium surging around 50%, as transport and energy costs have also moved higher. However, the good news for the brewer was that 2021 net revenues were up 11.3% to US$ 24.9 billion and profits 80% higher.

The latest report from the UN Conference on Trade and Development reported global trade increasing an annual 2021 25% to a record US$ 28.5 trillion, after being battered by the Covid-19 pandemic; the figure was also 13% up on the 2019 pre-pandemic returns. During Q4, trade in goods reached a new quarterly record of about US$ 5.8 trillion, with trade in services touching US$ 1.6 trillion, slightly above pre-pandemic levels. The main reason for the impressive return was the result of an increase in “commodity prices, subsiding pandemic restrictions and a strong recovery in demand due to economic stimulus packages”. High fuel prices are also behind the strong increase in the value of trade of the energy sector. There are several warning flags that could upset global trade in 2022, including slower than expected economic growth, continued supply chain disruptions, rising concerns about debt sustainability, transition towards a greener global economy, trade agreements and trade regionalisation. In the past months, the Covid-19 crisis has exacerbated supply chain bottlenecks and highlighted significant challenges in the logistics sector, with many cargo customers struggling to find shipping containers and overcome labour disruptions.

There is life after being a high-profile politician and yet another, a la Tony Blair, and David Cameron, is lining up at the trough. This week saw the promotion of the former UK deputy prime minister, Sir Nicholas William Peter Clegg, being promoted by Meta Platforms chief executive, Mark Zuckerberg, from policy chief to a larger role in all policy matters. After losing his Sheffield Hallam seat in the 2017 election, he joined Facebook in 2018 to run its global policy organisation. The newly appointed President, Global Affairs “will now lead our company on all our policy matters, including how we interact with governments as they consider adopting new policies and regulations, as well as how we make the case publicly for our products and our work.” According to the Times, he was earning US$ 2.9 million per year as a salary with the tech giant before his latest promotion – a far cry from the reported US$ 183k as UK’s deputy PM.

Having dipped 2.5% a month earlier, January US retail sales surged a seasonally adjusted 3.8%, perhaps with a little help from rising inflation, and nearly double what most economists had expected. Consumer prices soared 7.5%, compared with January 2021, the steepest year-over-year increase since February 1982. US Commerce Department figures also showed that increases were across the board and that online sales came in 14.5% higher. However, possibly because of the presence of the Omicron variant, restaurant sales dipped 0.9% and petrol sales by 1.3%. It does appear that US households are purchasing larger volumes of goods and services, not just paying higher prices, and that there are no signs of consumer spending reducing in the short-term.

HM Revenue and Customs has become the first UK law enforcement to seize Non-Fungible Tokens, forming part of its probe into a VAT fraud. (NFTs are assets that can be traded in the digital universe, but have no tangible form of their own, and that have a unique digital signature of their own that can be bought and sold. A record of who owns what is kept on a shared ledger known as the blockchain). The UK tax authority has seized three NFTs as part of a probe into a suspected a US$ 2 million VAT fraud, carried out by three individuals, involving 250 alleged fake companies. “Sophisticated methods” were used by the three defendants to try and hide their identities, including false and stolen identities, false addresses, pre-paid unregistered mobile phones, Virtual Private Networks (VPNs) and false invoices.

Latest Q4 official data serves to confirm that UK wage growth continued to lag behind the rising cost of living, with real wages, taking into account rising inflation throughout 2021, declining 0.8%. Employees’ regular pay, excluding bonuses, grew by 3.7%, compared to Q4 2020, this was offset by UK’s 2021 inflation figure of 5.4%. As the unemployment rate fell to 4.1%, allied with job vacancies hitting a fresh record high of 1.3 million, there is every chance that this will lead to faster wage growth this year. Latest figures show that median monthly wages were 6.3% higher on the year and 10.3% higher than before the pandemic in February 2020 – an indicator that wages are rising faster and higher than before. It was also found that in certain industries, such as science, finance/insurance, information/communication, and hotels, January payrolled wage rises outpaced inflation, as employers had to pay more because of a shortage of workers. In some cases, there are examples of businesses that are struggling to hire, and pay is failing to keep up with inflation, whilst material costs continue to head north – a double whammy that is presenting many businesses no other option but to increase prices. What’s Going On?

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What’s Going On?

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The Land of Make Believe

The Land of Make Believe!                                                               11 February 2022

Yesterday, Thursday 10 February 2022, Dubai Land Department recorded a total of 309 real estate and properties transactions, with a gross value of US$ 266 million. It confirmed that 259 villas/apartments were sold for US$ 168 million, and 50 plots for US$ 98 million, on the day. Mortgaged properties totalled US$ 125 million – including 77 villas and apartments, worth US$ 48 million, and 13 land plots, valued at US$ 77million, bringing the total realty transactions to over US$ 409 million. Fourteen properties were granted between first-degree relatives worth US$ 18 million.

Following the success of its two 2021 launches – Murooj Al Furjan and Murooj Al Furjan West – Nakheel has started the year releasing Tilal Al Furjan, a new collection of 220 luxury 4 B/R– 5 B/R villas. The developer noted that the villas were the best in quality materials and finishing for the ultimate in luxury living, and will include features such as solar water heaters, fresh air heat exchangers, that resist humidity, and an electric car charging point. Al Furjan has become home to over 30k residents and is already one of the emirate’s biggest and most popular mixed-use developments. Encompassing 560 hectares, and located close to Ibn Battuta Mall, Al Furjan has its own Dubai Metro station, two retail pavilions, a community club house and schools.

Spain’s loss may be Dubai’s gain, as many UK families have cancelled their mid-term Iberian break because their under twelve children need to be double vaccinated. Not surprising, the country’s hospitality sector is far from pleased,  with their potential loss running into millions of dollars. For example, Jorge Marichal, president of the Tenerife Hoteliers Association, estimated that “the loss could be nearly Eur 400 million in the Canary Islands. That’s only talking about the hotels – if we take into account the restaurant economy (too) it is a huge impact. For us the British market is the biggest one. We have more than 2.5 million British citizens coming to Tenerife every normal year. For us this part of the year is one of the most important. All these profits will be lost”. It is thought more than eighty global holiday destinations still require travellers from the UK to take a pre-departure PCR test before entering, and this presents Dubai a huge opportunity to take up the slack.

Citing the fact that ‘”in Europe, companies have been paying up to 51% corporate tax. With 9% corporate tax, the UAE will remain one of the most competitive markets of the world,” Swiss entrepreneur, Alaine Borle, is planning to move his 72-year old company headquarters to Dubai. Pac Team, known for designing and manufacturing exhibition booths, window display stands, settings, boutique interior designs and shop-in-shops for major international brands, will utilise its new location to boost its presence in the MENA and sub-continent markets. Pac Team has ten subsidiaries. The chief executive also noted that the move was also motivated because “Dubai has emerged as a global business hub because of its successful strategy to handle pandemic without closing its doors for businesses and compromising individual’s life”. The Swiss company will also benefit from the fact that it will garner a lot of new business because the emirate is forecasting that it will host 400 global economic events by 2025, compared to 2021’s 120 events. Currently, its international business turns over US$ 100 million. The Swiss company, which will invest millions of dollars in this venture, using the same business model it introduced in China at the turn of the century which has seen 1k jobs being created, is one of the first international entities to move to Dubai following the new tax regulations – it will not be the last. 

To support the country’s efforts to achieve carbon neutrality by 2050, the Dubai Supreme Council of Energy has approved updated plans to reduce carbon emissions by 30% before the end of 2030. Over the next thirty years, and to achieve Dubai Net Zero Carbon Emissions by 2050, the UAE will invest US$ 163.5 billion to ensure that the country’s energy needs will be serviced by 100% clean sources. The fifth phase of Dubai’s 5k megawatt Mohammed bin Rashid Al Maktoum Solar Park, the world’s largest single-site solar park, is 60% complete. At this week’s meeting, the Dubai Carbon Abatement Strategy 2030, in line with the UAE’s vision for carbon neutrality, was approved and last year’s successful launch of DEWA’s Space-D programme was discussed; DEWA is the first utility in the world to use satellites in its operations, with the aims of improving the operations, maintenance and planning of its networks.

Starting from 01 July, an US$ 0.068 (25 fils) tariff will be imposed on every single-use plastic bag used for carrying goods – and it will be implemented in all stores across the emirate.  The Executive Council of Dubai approved the measure this week, in line with enhancing environmental sustainability and encouraging individuals to reduce the excessive use of plastics. The ruling is not restricted to just supermarkets but covers all stores as well as online and e-commerce deliveries. It is just the start of a strategy that will see single-use carrier bags completely banned by 2024. The aim of the exercise is to strengthen Dubai’s sustainability objectives, in line with global best practices and to ensure the emirate as a place for a sustainable and high quality of life. To date, the tariff on single-use bags is currently in effect in over thirty countries, and a partial or complete ban has been implemented in more than ninety nations.

At a recent virtual meeting of the Dubai International Chamber’s board of directors, a new three-year strategy was approved, with targets of positioning Dubai’s as a global trade hub, attracting multinational companies to the emirate and supporting local companies with international expansion. The foci of the strategy include attracting fifty multinational companies to Dubai within three years, supporting the external overseas expansion of one hundred Dubai companies by 2024, and improving the business environment in the emirate. Furthermore, it will support and motivate multinational companies to list on the DFM, and also complement the five-year plan, announced by HH Sheikh Mohammed bin Rashid Al Maktoum, to boost Dubai’s non-oil foreign trade to US$ 545 billion.

The 13th 2022 Agility Emerging Markets Logistics Index placed the UAE third in its most competitive emerging markets, behind the two superpowers USA and China. The country led all fifty countries surveyed when it came to creating the best business conditions and in digital readiness; it also led the field in business fundamentals. The Index ranks countries for overall competitiveness based on their logistics strengths, business climates and, for the first time, their digital readiness – factors that make them attractive to logistics providers, freight forwarders, air and ocean carriers, distributors and investors. Most of the 756 industry professionals surveyed thought that cargo rates will be lower by year end, as port bottlenecks, air capacity shortages and trucking issues ease; in addition, they noted that they considered there was little chance of a recession this year and the industry will see moderate-to-strong economic growth; they could be wrong.

Having announced its intentions last July to set up three Spacs, (Spac being a vehicle, with no commercial operations, formed with the sole intention of raising funds through an IPO and then acquiring an existing company), Shuaa has filed a request with the US Securities and Exchange Commission to launch one, with a value of up to US$ 200 million. The Dubai-based investment bank, listed on the DFM and with nearly US$ 14 billion under management, confirmed that it is going through the final regulatory approvals, but it has not indicated when the IPO will be launched, or which sector the planned Spac will target. Last year, the number of Spacs on Nasdaq increased by 91%, to a record 613, raising US$ 145 billion. In 2010, only two SPACs came to the market. It is estimated, by Boardroom Alpha, that almost six hundred SPACs have been left with about US$ 160 billion in trust waiting for something to buy as the popularity for speculative stocks fades. Most SPACs have a lifespan of up to eighteen months, and once that time period expires, the money is returned to the initial investors; it is thought that eighty-eight SPACVs will expire this year, with a further 318 running out of time by H1 2023.  Over the past year, it is reported that just 20% of Spacs listed on the de-Spacs index were profitable and forecasts indicate only 28% will make money in the year ahead.

Mainly because of higher revenue and non-recurring income, as mobile services grow, Emirates Integrated Telecommunications Company, du, posted a Q4 sixfold rise, compared to a year earlier, to US$ 87 million, with revenue moving up 12.0% to US$ 817 million, of which US$ 381 million was from its mobile services. Last year, although du reported a 24.0% hike in revenueto US$ 3.18 billion, its profit slumped 24.0% to US$ 302 million. Over the year, its customer base rose 8.9% to 7.3 millionsubscribers, with post-paid customers ending the year with a total of 1.3 million, on the back of strong consumer and enterprise segments. With the board recommending a US$ 0.057 dividend, shares closed at  US$ 1.80  by the end of Friday’s trading session.

DP World posted that, in Q4, it handled 19.6 million TEUs (20’ equivalent units), up 2.6% year-on-year on a reported basis and up 2.3% on a like-for-like basis, and 77.9 million, and on an annual basis, figures were 9.4% higher on a reported basis and up 8.9% on a like-for-like basis; the return was above the global average of 6.5%. Growth was broadly based across its sectors, with key driving regions being India, Asia Pacific, MEA, Europe, Australia and Americas regions. Last year, home base Jebel Ali recorded a 1.9% increase to 13.7 million TEUs. Q4 growth levels were subdued because of the impact of the new Omicron variant, along with rising inflation and supply chain bottlenecks.

Deyaar Development, majority owned by the UAE’s biggest Sharia-compliant lender Dubai Islamic Bank, posted a US$ 14 million profit, compared to a US$ 59 million loss a year earlier, as revenue jumped 22.0% to US$ 138 million, driven by new project launches amid continuing recovery in Dubai’s property market. The Dubai-based developer, listed on the DFM, reported a doubling of operatingprofit to US$ 17 million and its improvement was also attributable to the fact that, last year, the value of property deals in Dubai more than doubled, breaking a 12-year record in terms of real estate sales transactions. Last year, the company sold all units in its Regalia project, a luxury residential tower in Business Bay, and is set to launch several projects this year in JVC, Al Furjan and at its Midtown master development in Dubai Production City. Financing of these will be via a mixof debt and equity, as well as proceeds from sales.

Dubai Islamic Bank closed a US$ 750 million, five-year Sukuk, at a 2.74% profit rate, which was 2.5 times oversubscribed; it will be listed on Euronext Dublin and Nasdaq Dubai, with the funds being used for expansion purposes. Despite the current volatile market, the final pricing was at 95 bp over the five-year US Treasury. The lender had posted a 33% hike in 2021 net profit to US$ 1.20 billion, driven by a marked 46% decline in impairment charges, to US$ 665 million, and income from investment properties more than doubling to US$ 61 million.

Commercial Bank of Dubai posted a 29.5% rise in 2021 net profit, to US$ 395 million, driven by improved net interest income, stable non-funded income and lower than expected credit losses. Annual operating income was 6.9% higher, at US$ 866 million, mainly from higher net interest income of 10.1%, and lower funding costs. Operating expenses headed north – up 7.2% to US$ 236 million, whilst the cost-to-income ratio remained at 27.2%. With loans jumping 17% on the year, CBD hit a record US$ 31.1 billion in assets.

DFM-listed Aramex recorded a 21% decline in Q4 net income to US$ 13 million, despite revenue nudging 1% higher to US$ 44 million, as higher operating costs and the continued negative impacts of Covid dented profitability. ME’s biggest courier company saw its operating profit fall 33% to US$ 16 million. Revenue at its courier business, which includes its domestic and international express operations as well as business-to-business and e-commerce offerings, dipped 12% to US$ 272 million in Q4., but grew 5% on the year to US$ 1.12 billion.  Although 2021 revenue jumped 10%, to a record US$ 1.65 billion, its annual net profit fell 15% on an annual basis to US$ 61 million, with higher costs dragging operating profit 23% lower to US$ 84 million. Its chief executive, Othman Aljeda, noted that “our margins remain under pressure,” and that the company is having to absorb a higher cost of doing business to maintain standards and its customer base.

The DFM opened on Monday, 07 February, 49 points (1.5%) lower on the previous week, gained 86 points (2.7%) to close the week, on Friday 11 February, at 3,258. Emaar Properties, US$ 0.05 lower the previous week, regained US$ 0.05 to close on US$ 1.24 Emirates NBD, DIB and DFM started the previous week on US$ 3.69, US$ 1.55 and US$ 0.60 and closed on US$ 3.69, US$ 1.55 and US$ 0.65. On 11 February, trading was at 159 million shares, with a value of US$ 66 million, compared to 44 million shares, with a value of US$ 23 million, on 04 February 2022.

By Friday 11 February 2022, Brent, US$ 16.36 (23.7%) higher the previous seven weeks, continued its mega run and gained a further US$ 3.05 (3.3%), to close on US$ 94.99. Gold, US$ 19 (1.1%) higher the previous week, gained a further US$ 52 (2.9%), to close Friday 11 February on US$ 1,861. 

The International Energy Agency is concerned that an oil supply shortfall could result in prices heading even higher, as demand continues to grow, whilst supply could become  an even bigger issue because of the inability of some Opec member countries to quickly ramp up production due to ongoing underinvestment in the industry, 23% lower last year at US$ 341 billion – and well short of the annual US$ 600 million needed to keep abreast of rising demand. Furthermore, rising geopolitical tensions over Ukraine have also boosted prices, with Brent, the global benchmark for over 66% of the world’s oil, was trading at $94.99 per barrel at close of trading on Friday. It would be no surprise to see prices rising more than 30%, to US$ 120 bpd, before 30 June.

According to a New Climate Institute report, covering Maersk, Apple, Sony, Vodafone, Amazon, Deutsche Telekom, Enel, GlaxoSmithKline, Google, Hitachi, Ikea, Vale, Volkswagen, Walmart, Accenture, BMW Group, Carrefour, CVS Health, Deutsche Post DHL, E.On SE, JBS, Nestle, Novartis, Saint-Gobain and Unilever, many of the twenty five listed companies are failing to meet their own targets on tackling climate change. It appears that some routinely exaggerate or misreport their progress, and that the headline climate pledges of these companies only commit to reduce their emissions by 40% on average, not 100% as suggested by their “net zero” and “carbon neutral” claims. Only one company’s net zero pledge was evaluated as having “reasonable integrity”; three with “moderate”, ten with “low” and the remaining twelve were rated as having “very low” integrity. For the minority of the evaluated twenty-five companies, their headline pledges serve as a useful long-term vision, and are substantiated by specific short term emission reduction targets. While none of the pledges have a high degree of integrity overall, Maersk came out on top, with reasonable integrity, followed by Apple, Sony and Vodafone with moderate integrity. However, most of the companies with net zero or carbon neutrality pledges fail to put forward ambitious targets. Many company pledges are undermined by contentious plans to reduce emissions elsewhere, hidden critical information and accounting tricks, with the headline pledges of the remaining companies having low (ten companies) or very low integrity (eleven). Thirteen of the twenty-five survey companies, that have backed their net zero headline pledges with explicit emission reduction commitments, commit, on average, to reduce their full value chain emissions from 2019 by only 40%, with the remainder having no specific emissions reduction commitments for their net zero target year. It is about time large corporations realise that setting vague targets and greenwashing are no longer acceptable and can only further mislead the public; the time for positive action is now and all companies should start scaling up and bringing in best practices.

On what BP call underlying replacement cost profit, net earnings were up 31.5%, quarter on quarter, at US$ 4.1 billion, but would been even higher if it were not for weaker oil trading results and the impact of higher energy costs on operations such as refining. With Shell’s 2021 profit almost quadrupling to US$ 19.3 billion, there are many calling for a windfall tax on energy companies, as UK households, already battered by skyrocketing fuel prices, look forward, with some trepidation, to see their energy prices rise more than 50% in April.

Chief executive Guillaume Faury has indicated that Airbus may make its own engines for its hydrogen-fuelled planes, with plans to develop the world’s first zero-emission hydrogen-fuelled commercial aircraft by 2035.  For that to happen, the plane-maker will need government support and the back-up of regulators because hydrogen needs to be “at the right time, at the right place, at the right price and that is not something that aviation can manage alone.”  Sabine Klauke, Airbus’s CTO, warned that hydrogen, which has an energy density three times that of kerosene, needs to be liquefied and stored at -253°C, and that the double-skinned tanks required to contain the substance are four times the size of conventional fuel storage.

With the industry badly impacted by the global semiconductor shortage, Toyota pasted a 21% fall in Q4 profits to US$ 6.8 billion. The world’s leading carmaker has also had to cut annual production by 5.6%, from 9.0 million vehicles to 8.5 million, as manufacturers around the world struggle to find enough microprocessors for their products. Only last September, Toyota had cut production by 40%, mainly because of the chip shortage, and over recent months announced a number of production suspensions due to a lack of parts, as the pandemic hits supply chains. However, the Japanese car maker lags many of its rivals when it comes to EVs, as it has probably focussed too much on hybrids. It will have to invest a lot more in the new technology, and/or partner with an appropriate tech-related company, to maintain its number one position. 

With a current 9% share of the global market, the EV market saw sales more than double to 6.6 million last year, compared to 2020, 2019 and 2012 figures of 3 million, 2.2 million and 130k electric vehicles; research firm Gartner expects 2022 EV sales to be 35% higher on the year. This comes as an increasing number is opting for eco-friendly alternatives. The marked improvement in sales comes at a time when the sector faced several challenges including a semiconductor shortage and supply chain bottleneck problems. The increased popularity of EVs is driving legacy carmakers to invest more money into EVs and so ramping up competition in the sector. The leading EV manufacturer saw an 87.4% rise in production to 936k that resulted in Tesla’s profit jumping an incredible 760% to US$ 2.3 billion – US$ 700 million more than its 2020 turnover figure.

In Europe, Norway and Iceland lead the race to become the first nation to end petrol car sales. Last year, 62% of all cars on Norwegian roads were electric and it seems highly likely that by 2025, all vehicles will be powered by batteries. It is estimated that about 9% of new cars in the EU, which has a proposed 2035 cut-off, were electric and that  only eight other countries in the bloc have more than 10% of their cars, non-petrol – Iceland (33%), Netherlands (20%), Sweden (19%), Austria (14%), Germany (14%), Denmark (13%), Switzerland (13%) and Luxembourg (10%); 11% of UK cars are electric vehicles. Germany reported the most production of EVs, in the EU bloc, with a 2021 total of 350k. At the other end of the line are the likes of the Czech Republic and Slovakia, along with other fossil fuel-heavy countries in Eastern Europe, with very few registered EVs.

Uber reported Q4 net income of US$ 892 million, compared to a quarterly loss of US$ 968 million a year earlier, as it bounced back from the latest impact of the Omicron. Revenue climbed 83%, on the year, and 20%, on the quarter, to US$ 5.8 billion. The company’s annual net loss narrowed down by 93% to US$ 496 million, compared to its 2020 loss of US$ 6.7 billion, helped by a 57% hike in revenue to US$ 17.5 billion. Uber’s Q4 gross bookings surged 51% on the year to more than US$ 25.8 billion – US$ 2.8 billion (12%) higher on a quarterly basis. Last month, an addition to its portfolio came with the acquisition of Australia’s ‘Car Next Door’ – a peer to peer car sharing platform for an unknown sum.

In Q4, Twitter posted an 18.2% decline on the year in net profit, to US$ 182 million, as the company missed analysts’ estimates on sales and user growth; however, on the quarter, it was an improvement on Q3’s loss of US$ 537 million. Q4 revenue was 21.5% higher, at US$ 1.57 billion, with advertising contributing to 90% of the total turnover, equating to US$ 1.41 billion; data licensing and other revenue, 15% higher on the year, added US$ 154 million to the top line. In Q4, Twitter posted a 13.0% increase in the number of monetisable daily active users, with average numbers topping 217 million. It has also authorised a new US$ 4 billion share repurchase programme, effective immediately – US$ 2 billion will be repurchased by the company over the time along with a US$ 2 billion accelerated share repurchase scheme.

Last year, Sanjeev Gupta’s GFG Alliance, the owner of Liberty Steel, was forced into a financial restructuring because of the demise of Greensill Capital, its key lender. This week saw the issuance of a winding up petition, by HRMC, against Speciality Steel UK Limited, a division of Liberty Steel; the subsidiary, employing 2k, operates from sites in Stocksbridge and Rotherham and it is not yet clear whether one or both sites will be impacted. Like other steel firms, GFG Alliance noted it was operating against a “very challenging” backdrop, as record high energy prices drove up its overheads, but that it was in continuous dialogue with its creditors, including HMRC, to find an “amicable solution” that was in the best interests of all stakeholders. It seems that steel producers in the UK are hard done by, with little government help available. This is  in comparison to most of its European competitors such as France, where “the industry is supported with energy subsidies and trade protections, and Germany as “heavy energy users in industry get big rebates”.

Yesterday, the Financial Reporting Council announced it was investigating HW Fisher, the auditor to Liberty Commodities, which is another of Mr Gupta’s businesses, and more specifically its financial statements for the year to 31 March 2020. Meanwhile, since May 2020, the Senior Fraud Office has been investigating “suspected fraud, fraudulent trading and money laundering in relation to the financing and conduct of the business of companies within the Gupta Family Group Alliance”.

In September 2020, SoftBank announced it was planning to divest its UK microchip designer Arm to US technology group Nvidia in a US$ 40 billion deal. This week, the Japanese conglomerate called off the planned sale and indicated that it now wishes to float the shares, by the end of next month, on a global stock market, details of which have not been made public. Both parties agreed to end the agreement, but “because of significant regulatory challenges preventing the consummation of the transaction, despite good faith efforts by the parties;” the deal had faced numerous regulatory hurdles in the UK, USA and the EU.   In line with the initial 2020 agreement, SoftBank will keep the US$ 1.25 billion non-refundable deposit paid by Nvidia.

A New York couple, (Ilya “Dutch” Lichtenstein, a citizen of Russia and the United States, and his wife, Heather Morgan), who, in 2016, allegedly hacked 120 Bitcoins, then valued at US$ 71 million, and now worth more than five times as much, from the virtual currency exchange Bitfinex, are being charged, not for the hacking offence, but for conspiring to launder billions of dollars, utilising the stolen cryptocurrency. It is reported that much of the laundering occurred through accounts on AlphaBay, a dark web site, since shut down, with the laundered bitcoin being used to purchase gold, NFTS and gift cards. The Justice Department has seized US$ 3.6 billion of stolen funds – its largest ever financial seizure – and accused them of relying on various sophisticated techniques to launder the stolen money and conceal the transactions.

It has not been a good start to 2021 for Marc Zuckerberg’s Meta, the company formerly known as Facebook, with its shares plunging 12.2% on Monday, continuing last week’s declines and down 34% since the beginning of the year. The fall has been fuelled by concerns including privacy changes to Apple products, that make it harder for advertisers to see how their ads work on Facebook, concerns over data privacy and weaker than expected earnings; its Q4 net profit dipped 8% to US$ 10.2 billion, whilst it lost daily active users for the first time in its 18-year history. Meta, which also owns Instagram, is also involved with numerous altercations with various global regulatory authorities.

Pfizer more than quadrupled its Q4 net profit from US$ 847 million to US$ 4.4 billion on the back of US$ 12.5 billion worth of sales of its Covid-19 vaccine, as 2021 profit rose 140% to US$ 22.0 billion. Year on year, revenue more than doubled to US$ 23.8 billion, but down 58.3% on a quarterly basis, and by 95% to US$ 81.3 billion or the year. Having invested billions of dollars in research for manufacturing a vaccine against the Covid-19 virus, the pharmaceutical company has managed to deliver both the first FDA-authorised vaccine against Covid-19, with its partner, BioNTech, and the first FDA-authorised oral treatment for Covid-19, both within the period of just two years. In 2021, it manufactured three billion doses of Covid-19 vaccines. Higher earnings have prompted the drug maker to raise its 2022 revenue forecast to between US$ 98 billion and US$ 102 billion and adjusted diluted earnings per share of US$ 6.3 to US$ 6.5. Although its share value had risen 43.3%, over the past twelve months, it shed 6.2% to US$ 49.9 in Monday’s trading, following the earnings announcement.

Peloton was one company that benefitted from the pandemic which saw sales of its exercise bikes and treadmills soaring, as people started, by necessity, exercising from home. In 2020, the company market value was estimated at over US$ 50 billion but now that has slumped by around 80%, for a variety of reasons. They include people returning to work out in gyms, now that lockdowns gave been eased, and recent PR disasters, the most infamous being the television drama, ‘Sex and the City’ revival, ‘And Just Like That’, featuring a story line in which the leading character suffered a fatal heart attack while using a Peloton bike. In 2021, the US Department of Justice and the Department of Homeland Security said they were investigating the company after a child was pulled under one of its treadmills and killed, while other customers had reported injuries. Six months ago, Peloton announced that because revenue growth had slowed, it was slashing the price of its flagship bike by 20% to US$ 1.5k, and in November posted that it expected 2022 revenue to slow. It is highly likely that corporate vultures (including the likes of Amazon, Apple, Disney, Nike and Sony) are circling overhead knowing that Peloton would be a beneficial addition to boost their presence in the home, health and wellness and media spaces. Last Friday, its shares jumped 30% on news that Amazon is showing interest. Mainly because of investor-based criticism, co-founder and CEO John Foley will be immediately replaced by the former CFO of Spotify and Netflix, Barry McCarthy. Peloton will also cut about 2.8k jobs, as the exercise bike maker looks to revive sagging turnover numbers and to regain investor confidence.

Global markets will continue to be volatile for numerous reasons including the crisis in the Ukraine – even without this major incident, they were set for a correction which may now arrive a lot earlier. Today, it is reported that the Russians have all their troops, along with air and naval assets, in place, with many analysts now indicating that an invasion is all but inevitable. Some governments, including the US and the UK, have warned their nationals to leave Ukraine, with US National Security Adviser Jake Sullivan noting “we are in the window when an invasion could begin at any time, should President Vladimir Putin decide to order it.” If that were to happen over the weekend, Monday could prove to be an economic and financial St Valentine’s Day Massacre, as global indices crash.

Having slumped 9.4% in 2020, the UK economy turned from zero to hero, as last year its economy rebounded 7.5% – its fastest pace in eighty years and it is now the fastest growing economy in the G7 group of nations. However, it must be remembered that this rise comes from a low base and that the economy is still slightly smaller than it was at the end of December 2019. In December and January, the Omicron virus slowed growth somewhat but a bigger problem, notwithstanding a potential Ukraine catastrophe, is the energy crisis which could wreak economic havoc over the coming weeks.

There is no doubt that Andrew Bailey lives in ‘Cuckoo Land’. The BoE governor, with an annual emolument of US$ 779k, 18.4 times that of the median annual pay for full-time UK employees, has advised UK workers, “don’t ask for big pay rises”. This comes at a time when inflation is forecast to top 7.5% in April, (the BoE’s target remains unchanged at just 2%) the energy price cap has rocketed 54% and a tax rise is on the horizon; Assosia noted the average cost of food items, at the Big 4 UK supermarkets, had risen by more than 8% over the past twelve months, with more on the way. Most analysts see incomes falling 2% this year and that the UK populace is facing the biggest squeeze on their incomes in thirty years. With the ‘Spring of Discontent’ fast approaching and many facing major struggles to pay basic food bills, rising energy costs, rent/mortgage etc, the advice from Mr Bailey to workers is not to ask for big pay rises, to help stop prices rising out of control. His remarks show how much the BoE is out of touch particularly because he should have directed remedial action once his 2% inflation target was breached earlier last year. It is a worry that some of the banking mandarins in Threadneedle Street seem to be living in The Land of Make Believe.

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The Heat Is On!

The Heat Is On!                                                                                                          04 February 2022

The DLD confirmed that last year it had registered 84.2k property transactions, valued at US$ 81.7 billion – its highest ever annual value recorded. In 2021, there was a 66% hike in the volume of property transactions, and a 72% rise in the value. There is no doubt that the market benefitted from the rapid improvement in Dubai’s economy on the back of fiscal and monetary measures. Pent-up demand and improved investor sentiment have also helped to drive property sales higher, along with new initiatives, such as visas for expatriate retirees and the expansion of the 10-year golden visas. The regulator also noted that 60% of all 2021 transactions were for secondary/ready properties, (36.5k transactions, worth US$ 28.9 billion), and the balance for off plan, with its 24.8k properties, sold at a total of US$ 12.5 billion. In Q4, Dubai had its highest quarterly transactions for both volume and value – at 17.9k, valued at US$ 12.8 billion – since Q4 2013. The secondary/off plan mix was at 56:44, with volumes and value of 7.9k at US$ 4.6 billion and 10.0k, valued at US$ 8.2 billion; it also recorded a 64% hike in transaction volumes and a 115% uptick in value.

For the previous week, ending 28 January 2022, Dubai Land Department recorded a total of 1,724 real estate and properties transactions, with a gross value of US$ 1.34 billion. It confirmed that 1,172 villas/apartments were sold for US$ 744 million, and 139 plots for US$ 214 million over the week. The top three transfers for apartments and villas were all apartments – one was sold for US$ 104 million in Marsa Dubai, a second sold for US$ 74 million in Business Bay, and the third for US$ 69 million also in Business Bay. The top two land transactions were for a plot in Al Thanayah Fourth, worth US$ 14 million, and US$ 12 million for a plot in Hadaeq Sheikh Mohammed Bin Rashid. The most popular locations, in terms of volume and value, were Al Hebiah Fifth, with 62 transactions, totalling US$ 37 million, followed by Al Hebiah Fourth with 21 sales transactions, worth US$ 42 million, and Al Yufrah 2, with 15 sales transactions, worth US$ 4 million. Mortgaged properties for the week totalled US$ 341 million, with the highest being US$ 25 million for land in Mankhool; sixty properties were granted between first-degree relatives, worth US$ 39 million.

The UAE property technology start-up ‘Huspy’ estimated that the Dubai home mortgage market grew by 68% over the first nine months of 2021. According to Mortgage Finder, the number of completed mortgages recorded in Dubai doubled between H2 2020 and H1 2021, and that 40% of sales transactions H1 2021 were completed with a mortgage. The main area of concern facing new homebuyers is the possibility of interest rate hikes, and the impact it would have on future mortgage repayments. It would appear that over 90% of mortgage applicants are first time buyers and they have the choice of taking out a variable or fixed rate increase; the former group usually have shorter-term goals or are more flexible to opt for variable rates, which currently stand at between 1.8% to 2.0% plus the Eibor rate.

By the end of 2021, it was reported that the number of companies operating out of Dubai South had increased 17.9% over the year to 4.6k, employing over 20.8k. It also handed over all the units in its mixed-use development, ‘The Pulse’, comprising 1.4k apartments and 240 townhouses, following which it launched the ‘Pulse Villas’, with the first two phases of ‘The Pulse Beachfront’ already sold out. Master developer Dubai South Properties also sold out all the residential District Villa Plots (Baiti). The Residential District is home to 25k residents, whilst ‘Sakany’, its first leasehold staff accommodation, has a 99% occupancy rate. The largest single-urban master development focusing on aviation, logistics and real estate, also launched ‘The Avenue’, a limited number of commercial freehold plots that can be purchased on a payment plan and developed by investors for commercial use.

Last year, Dubai posted a 31% increase in international overnight visitor numbers to 7.28 million, including 3.4 million in Q4, equating to 74% of the total reached in pre-pandemic Q4 2019. The positive trend is expected to continue throughout 2022 and beyond. During the year, India, Saudi Arabia, Russia and the UK were the leading four visiting nations – with 910k, 491k, 444k and 420k respectively, with year on year increases of 5.3%, 22.8%, 50.3% and 7.1%. Region-wise, MENA/GCC contributed 26% of the total, followed by western Europe’s 22%, South Asia’s 18% and Russia, CIS and Eastern Europe together making a 15% contribution. Probably more important was the performance of the emirate’s hotel sector, with occupancy figures of 81.4%, above the Q4 2019 pre-pandemic level of 80.7% for the first time. Average occupancy, overall, reached 67% in 2021, compared to 54% in the previous year, which is among the highest occupancy rates internationally. Over the year, the number of hotel establishments and rooms rose by 6.2% to 755 and by 8.7% to 127k. Furthermore, the average length of stay rose on the year by 0.4 nights to 4.6, with the total of 31.47 million occupied room nights – 53.7%  higher than a year earlier and up 98% of the occupied room nights total for 2019.

To little surprise, the Ministry of Finance has announced that corporate federal tax, at a statutory 9% rate, will be introduced for financial years starting on or after 01 June 2023; there will beno tax levied on the first US$ 100k of profits.. It is expected that corporate tax will be payable on the profits of UAE businesses as reported in their financial statements prepared in accordance with internationally acceptable accounting standards, with minimal exceptions and adjustments. There will be no corporate tax on personal income from employment, real estate and other investments, or on any other income earned outside “normal” business interests. Younis Haji Al Khoori, Undersecretary of the Ministry of Finance, noted that “the certainty of a competitive and best in class corporate tax regime, together with the UAE’s extensive double tax treaty network, will cement the UAE’s position as a world-leading hub for business and investment”. Corporate tax will not apply to foreign investors who do not carry on business in the UAE and to free zone businesses that comply with all regulatory requirements and that do not conduct business with mainland UAE. Furthermore, businesses will be exempt from paying tax on capital gains and dividends received from its qualifying shareholdings, and foreign taxes will be allowed to be credited against UAE corporate tax payable.

Except for the “extraction of natural resources”, which will remain subject to taxation at the emirate level, the tax will apply to all corporations, as well as all commercial, industrial and professional activities in the country. All entities (or individuals who are licenced, including freelancing by individuals) are subject to the tax. All entities are exempted from paying taxes on capital gains and dividends received from shareholdings.

The UAE has been seen for some time as a tax-free haven and it is to be noted the new regulations only apply to companies and that individuals are exempt from income tax, on employment income, real estate, investments, capital gains, dividends, bank interest and other earnings that are not derived from a business. Corporate tax incentives, currently being offered to free zone businesses that comply with all regulatory requirements, and that do not conduct business with mainland UAE, will remain in place. However, such companies will still have to register and file annual returns.

There is no doubt that the move to the 9% tax regime is in line with the government’s aim to diversify budget revenues to reduce reliance on its energy sector. Two other reasons for the introduction of corporate tax are to align with international efforts to combat tax avoidance, and to address challenges arising from the digitalisation of the global economy. The Ministry added that the move would pave way for the introduction of a global minimum tax rate that would apply a different corporate tax rate to large multinationals that meet specific criteria. Last October, the OECD and 136 countries, including the UAE, agreed to new tax rules to ensure big companies pay a minimum 15% tax rate.

From an accounting viewpoint, the following points may be of interest:

  • the tax balance will be derived from the net profit, as per financial statements, prepared in line with IFRS (International Financial Reporting Standards), adjusted as per CT rules, yet to be specified
  • there will be no advance tax and there will only be one tax return every year, with the tax payable equating to the net profit shown in the audited accounts
  • although other details are yet unknown, losses can be carried forward and offsets allowed
  • tax credits are allowed, so that tax paid on any part of income in a foreign jurisdiction is permissible
  • tax grouping is allowed so that losses of an entity in a tax group will be allowed to be offset against profits of other group entities
  • there will be no Withholding Tax on domestic or cross border transactions
  • transfer pricing rules to be established in accordance with OECD guidelines

For the first nine months of 2021, and with the local economy quickly recovering from the pandemic impact, Dubai attracted US$ 4.3 billion in foreign direct investment, as the number of projects moved 16% higher to a total of 378. In the words of the Crown Prince, Sheikh Hamdan bin Mohammed, “Dubai has continued to introduce and implement initiatives that improve business confidence.” According to Dubai Investment Development Agency, one of the benefits from FDI includes a 36% hike in new jobs, totalling 16.4k, as well as FDI reinvestment projects accounting for 11% of the total FDI projects. A further breakdown sees 58% of the inbound FDI is in strategic sectors and 52% in greenfield projects, with high and medium technology investments comprising 64% of inbound FDI capital. The two main investing countries are the UK and the USA, accounting for 20% and 19% of the total, followed by France, Saudi Arabia and India adding a further 33% to the total.

A report by Standard Chartered expects that UAE export trade will have an annual expansion rate of over 6% for the next nine years, to 2030, bringing the total to US$ 299 billion. It also sees India and mainland China being the principal export markets, expected to account for 18.0% and 9.5% of total exports by then, whilst metals and minerals, gold, machinery and electricals will dominate UAE’s exports over the next decade. There is no doubt that the country is making great progress in its plans to diversify from hydrocarbons and enhance its position as a global hub. Over the past year, the government has introduced a myriad of initiatives, including a pandemic stimulus US$ 105.7 billion package, and a new industrial strategy to boost the contribution of the industrial sector by 226% to US$ 81.7 billion over the next nine years; it has also overhauled its commercial companies’ law.

With a US$ 223 million investment, Dnata Cargo City Amsterdam, at Schiphol South-East, will be a fully automated cargo centre and will have the capacity to handle more than 850k tonnes of cargo annually. The airline services arm of Emirates is confident that the 61k sq mt centre will “deliver significant commercial benefits for our partners, their customers and the local economy”; operations are set to start within two years. The development comes at a time when the air cargo market is booming post Covid – latest figures from IATA indicate that the 2020 global market expanded by 18.7%. Currently, Dnata handles over 580k tonnes of cargo annually. Its whole operation at Schiphol employs 1k – handling 29 airlines, assisting 1.5 million passengers, and overseeing operations of 8k flights.

Following two months of falling prices, February petrol costs jumped to seven-year highs as from last Tuesday, 01 February on the back of surging global oil rates, allied with tightening supply, with Brent at the start of Monday at US$ 80.00. Super 98, Special 95 and diesel rose by US$ 0.079 (10.94%) to US$ 0.801, (US$ 0.079) by US$ 0.079 (11.46%), to US$ 0.077, and by US$ 0.087 (12.50%) to US$ 0.784.

According to the Federal Competitiveness and Statistics Centre, December’s CPI reached 108.62 – only 2.65 higher than a year earlier; it was 0.09 higher on the month. The total inflation rate for the year is at 2.5%, with prices in the following “basket items” rising by:

  • food and beverage      – 3.71%
  • housing and utilities   – (2.58%)
  • education                    – (0.20%)
  • hotels/restaurants     – 1.60%
  • health services            – 0.45%
  • communications         – 0.13%
  • misc goods/services   – (1.02%)

Preliminary data from the Dubai Statistics Centre posted that the Dubai economy could grow by 4.5% this year and that in the first nine months of 2021, it had expanded by 6.3%, with quarterly figures of minus 3.7%, 17.8% and 6.3% in Q3; the main drivers were a strong rebound in hospitality, trade and real estate sectors. The figures point to a possible 2021 growth figure of 5.5%; in 2020, Dubai’s GDP slumped by 10.9%. Much of this growth was attributable to progressive government policies and initiatives, along with supportive fiscal measures and growing consumer confidence. The trading sector continued to be a major contributor, with a nine-month growth of 7.6%, accounting for 25.4% of the emirate’s economy. There were also improvements seen in:

  • the hospitality sector, as the number of Dubai hotel guest nights jumped 53%
  • accommodation and food activities up 34%, contributing 4.3% to the Dubai’s economy
  • real estate services, 23.3% higher
  • transportation/storage activities, including passenger and freight transport, by land, water and air and associated activities, growing 3%, contributing 9.6% to the economy
  • manufacturing activity grew 3.7% accounting for 5.9%
  • financial and insurance activities, which accounted for 10.8% of Dubai’s total GDP, and expanded by 4.4%

On the flip side, some sectors contracted, including oil and gas by more than 8.0%,information / communication contracted 1.9%, the government services sector 2.4% and construction 0.7%. Furthermore, by the end of 2021, business conditions in the non-oil private sector economy were at their strongest level in thirty months, driven by a sharp increase in new orders, due to an Expo demand boost and a marked pick up in the tourism sector. The expected lower growth of 4.5% this year is down to factors such as slower global growth, a stronger greenback and rising interest rates.

DP World has announced the start of construction of the new Banana Port in the Democratic Republic of Congo. This follows the signing of a collaboration agreement between the world’s leading provider of smart logistics, and the DRC Government last December. The project, initially a 600 mt quay, with a container handling capacity of about 450k TEUs, is along the country’s 37 km coastline on the Atlantic Ocean, and on completion, will not only benefit the Kongo Central Province but also boost the country’s trade, by enhancing the country’s access to international markets and global supply chains. Further south in the African continent, DP World and the Angolan signed a Memorandum of Understanding, with the aim of cooperating to further develop the country’s trade and logistics sector. Last March, the Dubai ports operator commenced operations at the Port of Luanda’s Multipurpose Terminal, having invested an initial US$ 190 million to transform the terminal into a major maritime hub.

The country’s first fully driverless taxi service has been trialled in Abu Dhabi, completing its initial phase, with more than 2.7k passengers booking the service. TXAI was tested on a public road in the capital, with over 16k km of autonomous driving accomplished during this phase The G42 subsidiary Bayanat is planning the second phase of its TXAI programme, which utilises only electric and hybrid vehicles, that is planned to start mid-year; the project will include ten driverless taxis. WeRide, the first start-up in the world to hold driverless test permits in both China and the US, launched China’s first robo-taxi service in 2019 in Guangzhou.

Dubai will host the world premiere of THE JET – the first ever clean-energy, hydrogen-powered flying boat. The agreement was signed between Swiss start-up, THE JET ZeroEmission, Zenith Marine Services LLC and DWYN LLC to manufacture and operate ‘THE JET in Dubai’. With a cruising speed of 40 knots, it will be the world’s first boat to sail without noise, waves, or emissions and have the capability of flying 80 cm above the water; it will have a capacity for 8 – 12 passengers. This contract is another indicator of the emirate’s leading position as a global hub for future industries.

Letswork has acquired Krow, a Portuguese competitor offering a growing network of remote work points in that country, for an undisclosed amount, as the three-year old Dubai-based co-working platform enters the European market for the first time. Krow’s founders, Paulo Palha and Joana Balaguer, will become country managers for Spain and Portugal respectively. The Dubai start-up enables users, via a single membership, to work from a global network of co-working spaces, hotels and cafes, and to date the platform has partnered with more than 150 spaces across the UAE and Bahrain, with more than 30k members; it hopes to add a further 1k spaces across its network by the end of this year.

As Dubai Investment’s 2021 revenue climbed 28% to US$ 929 million, total net profit, attributable to the owners of the company, rose 78% to US$ 169 million, driven by improved performances in its different business units, including a strong showing by its manufacturing, contracting and services segment, as well as gains on the fair valuation of financial investments and investment properties, and the acquisition of additional interest in an equity accounted investee.  With the Investment Corporation of Dubai holding an 11.54% stake, some of its portfolio includes Dubai Investments Park, venture capital company Masharie, Al Mal Capital and district cooling company Emicool. Last year, it signed an agreement with Ras Al Khaimah master developer Marjan to acquire land to develop a US$ 272 million mixed-use waterfront destination on Al Marjan Island and is also building a US$ 136 million project in Fujairah, as well as developing a US$ 817 million mixed-use project on Mirdif.

With impairment allowances declining 39.0% to US$ 572 million, Mashreq posted a 2021 net profit of US$ 278 million, compared to a US$ 430 million loss a year earlier. Its operating incoming rose 12.8% to US$ 1.58 billion, driven by “increased net interest income and income from Islamic financing coupled with improvements in fees and commission”; operating profit was 45.0% higher at US$ 872 million, also helped by lower operating expenses. By the end of the year, customer deposits were 15.0% higher at US$ 27.66 billion, whilst its liquid assets ratio stood at 29.0%, with cash due from banks at US$ 12.62 billion. Mashreq’s loan-to-deposit ratio remained stable at 80.3%, with its total provision for loans and advances touching US$ 1.82 billion.

Dubai Financial Market Company posted a 24.7% decline in annual 2021 profits to US$ 28 million but noted favourable Q4 results with profit jumping 269% to US$ 18 million, as total revenue rose 68.4% to US$ 30 million. Over the year the DFM index rose 28.2% – its highest since 2013 – with an additional 7.3k new investors, bringing its total to 852k, of which foreign investors accounted for 63% of the total.

The DFM opened on Monday, 31 January, 18 points (0.6%) to the good over the previous fortnight, shed 49 points (1.5%) to close the week, on Friday 04 February, on 3,171. Emaar Properties, US$ 0.02 higher the previous week, lost US$ 0.05 to close on US$ 1.29. Emirates NBD, DIB and DFM started the previous week on US$ 3.77, US$ 1.50 and US$ 0.65 and closed on US$ 3.69, US$ 1.50 and US$ 0.60. On 04 February, very low trading saw 44 million shares change hands, with a value of US$ 23 million, compared to 126 million shares, with a value of US$ 72 million, on 28 January 2022.

For the month of January, the bourse had opened on 3,196 and, having closed the month on 3,208, was 12 points (0.4%) higher. Emaar traded US$ 0.01 lower from its 01 January 2022 opening figure of US$ 1.33, to close January at US$ 1.32 Three other bellwether stocks, Emirates NBD, DIB and DFM started the month on US$ 3.69, US$ 1.47 and US$ 0.72 and closed on 31 January 2022 on US$ 3.64, US$ 1.50 and US$ 0.65 respectively.

By Friday 04 February 2022, Brent, US$ 16.36 (22.0%) higher the previous six weeks, continued its mega run and gained a further US$ 1.26 (1.4%), to close on US$ 90.68. Gold, down US$ 46 (2.5%) the previous week, gained US$ 19 (1.1%), to close Friday 04 February on US$ 1,809. Brent started January on US$ 77.68 and gained US$ 11.79 (15.2%), to close 31 January on US$ 89.47. Meanwhile, the yellow metal opened January trading at US$ 1,831 and shed US$ 31 (1.7%). during the month, to close on US$ 1,800.

Opec+ will continue their recent strategy and go ahead with pumping a further 400k bpd from next month, as global economies slowly get to grips with the aftermath of Covid-19, and the demand for crude oil moves higher. In addition, there are growing supply concerns because of increased geopolitical tensions in and around the Ukraine. As of today, Brent was trading at US$ 90.68 – at seven-year highs with more potential upside. Both the US and Russia are putting more troops on standby. The main reason for the high price is the fact that inventories are low mainly because the global economy has recovered at a faster pace than expected by oil producers which, in turn, has pushed the need for more oil. Further escalation in any of the global war zones would inevitably push oil prices into the three-digit territory.

Yesterday, there were reports that last weekend, IT systems of several oil transport and storage companies, including Oiltanking in Germany, SEA-Invest in Belgium and Evos in the Netherlands, were being hit by cyber-attacks; whether they were coordinated or not remains to be seen. It is reported that every port that DEA-SEA runs in Europe and Africa was targeted. Currently, nobody seems to know the cause, with some pointing to the possibility of ransomware, which also occurred to the Colonial Pipeline in the US, hacked in May 2021.  This is when a malware program accesses emails and contact lists which are then utilised to automatically spam malicious attachments or links.

A report by the European Environment Agency estimated that extreme weather conditions in the forty years since 1980 have killed 142k people in Europe and have cost the European economy more than US$ 574 billion. So-called ‘climate events’, including heat waves, cold spells, droughts, and forest fires, account for 93% of the total number of deaths and for 22% of financial damage; only 25% of cases were covered by insurance. Disasters, like earthquakes and volcanic eruptions, are not included in the figures, as they are not meteorological. Floods and storms have been the main problems, accounting for 44% and 34%, when it comes to the total financial costs. The report noted that 3% of the disasters were responsible for round 60% of the financial cost and that a 2003 heatwave was responsible for 80k deaths. The EEA were keen to point out that, “all the disasters that we describe as weather- and climate-related are influenced by climatic conditions. But that does not mean that they are all influenced by climate change.” However, there were warnings that climate models in Europe predict more frequent and more severe events, including storms, floods, landslides, droughts and forest fires. Germany has suffered the most with 42k deaths and financial losses amounting to US$ 123 billion, followed by France’s 26.7k death and US$ 113 billion in damages. Interestingly, only 23% of properties that suffered material damage across Europe were insured, with a very wide range of coverage ranging from 1% in both Romania and Lithuania as against 55% in the Netherlands or 56% in Denmark.

In 2013, UK software engineer, Josh Wardle developed ‘Wordle’, a simple word game, which was not well received by his friends. It took him a further eight years before he decided to release the game in October 2021, and now it is played by millions around the world. This week, the New York Times has purchased the popular word game for a price “in the low seven figures”, and it has indicated that the game would initially remain free to play. The game challenges players to find a five-letter word in six guesses, with a different puzzle every day. The game can be played in just a few minutes. Players begin by guessing any five-letter word:

  • If any of the letters are in that day’s word but in the wrong place, they turn gold
  • If they are in the word in the right place, they turn green
  • If they are not in the word, they turn grey

Meta revenues in the last three months of 2021 topped US$ 33.6 billion, up 20% year-on-year, whilst expenses rose almost twice as fast, to US$ 21 billion. However, Meta’s shares nosedived Wednesday, slumping by up to 26%, (equating to a massive US$ 200 billion) in after hours trade, following news that Q1 sales growth could be as low as only 3%, with previous customers moving to rivals such as TikTok, and the businesses that advertise on its platforms cutting marketing budgets. Mark Zuckerberg lost US$ 29 billion in net worth as Meta Platforms Inc’s stock marked a record one-day plunge, (while fellow billionaire Jeff Bezos was set to add $20 billion to his personal valuation after Amazon’s blockbuster earnings).It seems that Mark Zuckerberg maybe hoping that, just like his previous bets on mobile advertising and Instagram stories, his current investments in video and virtual reality may pay similar dividends.  After Google-owner Alphabet posted 30%+ increases in both revenue and profit, many considered that Meta would report much better results. Even though over 2.8 billion people used one of its apps daily in December, growth has slowed, with Meta Q1 forecast revenue of between 3% to 11%. Apart from the increased competition from the likes of TikTok, Meta is also faced with cost inflation and supply chain disruptions impacting advertiser budgets and their marketing spend. Furthermore, his Reality Labs unit, which focuses on virtual reality, posted a deficit of over US$ 10 billion last year – not a good start for his first foray into the new technology.

In 2019, Facebook launched its Libra, its new cryptocurrency venture which quickly ran into all sorts of problems with US regulators. Since then, names have changed – Facebook becoming Meta and Libra eventually becoming known as Diem. Now in a US$ 182 million agreement it has been sold to Silvergate Capital Corporation, with the Diem Association, (a separate organisation from Facebook, although its funding came from the firm), noting that it became clear from “dialogue with federal regulators” that the project could not move ahead.

To add to the tech company’s woes, Australian billionaire Andrew Forrest is to launch criminal proceedings against Meta Platform Inc’s (FB.O) Facebook in an Australian court, alleging that it breached anti-money laundering laws and its platform is used to scam Australians. The iron ore magnate is concerned that Australians are losing money to clickbait advertising scams, such as ones using his image to promote cryptocurrency schemes and his lawsuit claims that Facebook “failed to create controls or a corporate culture to prevent its systems being used to commit crime,” and also that it was criminally reckless by not taking sufficient steps to stop criminals from using its social media platform to send scam advertisements to defraud Australian users. Under Australian law, a private prosecution of a foreign corporation for alleged offences under the Commonwealth Criminal Code requires the consent of the country’s attorney general.

Q4 was eventful for Snap, as it reported its first ever quarterly profit of US$ 22 million, compared to a US$ 113 million deficit a year earlier, and a marked increase in users. Revenue was 42% higher, at US$ 1.3 billion, on an annual basis, and 21.5% on a quarterly basis; EBITDA came in 97% higher at US$ 327 million, with free cash flow standing at US$ 161 million, up 300%. Its annual loss almost halved on the year to US$ 487 million, whilst its turnover was 64.2% higher at US$ 4.1 billion. It is reported that over 319 million people engage with AR on Snapchat every day, a 20% rise in numbers compared to a year earlier. Its share value soared 57.1% yesterday to US$ 24.5 in after-hours trading.

Almost 500 jobs could be lost following Nestle’s announcement that it planned to close its Newcastle confectionary factory next year and move production to Halifax. Since its 1958 opening, the facility has made popular brands such as Rolos, Munchies and Matchmakers, with unions indicating that Fruit Pastilles will now be made in the Czech Republic and Toffee Crisps in Poland, as well as. noting that closing “a profit-making factory” was “unacceptable”. Nestle employs more than 8k in the UK and Ireland across eighteen sites, including fourteen factories.

With VAT rates about to go back up to 20%, as well as staff costs and coffee prices rising, Pret a Manger is set to raise its coffee subscription by 25% to US$ 34 (£25). The Pret coffee subscription, introduced in 2020, which allowed subscribers five “barista-prepared” drinks per day took, in a bid to win back business lost during lockdowns.  There was controversy on both sides of the fence, with some customers complaining that popular drinks were not always available whilst some Pret workers felt overwhelmed by their extra workload.

Sony has announced that it will invest US$ 3.6 billion in acquiring video game developer Bungie, noting that Bungie, best known for the Destiny and Halo games, will help it “reach billions of players”. Bungie will operate independently and continue to publish its own games, and is working on expanding its Destiny 2 universe, the first-person shooter video game which was released in 2017. In 2000, Microsoft bought Bungie and its game ‘Halo: Combat Evolved’ became a launch title for the Xbox, and sold millions of copies, helping to popularise the Xbox with gamers. Seven years later, Bungie split from Microsoft to become an independent business, although Microsoft kept the intellectual property of the Halo franchise. Last month, the Japanese tech conglomerate laid out US$ 68.7 billion to buy video games giant Activision Blizzard which was the industry’s largest ever deal, whilst Grand Theft Auto creator Take-Two Interactive is to acquire Zynga for US$ 12.7 billion. It is interesting to note that these three deals alone surpass the 2021 M&A deal value of US$ 85 billon, which had already been an annual record.

Despite posting record Q4 revenue and profit figures, with revenue 10% higher at US$ 137.4 billion Amazon is raising the price of its annual Prime service membership for US customers, by 17%, to US$ 139, after reporting record sales and profits. The price increase, its first since 2018, only applies in the US, with the tech giant citing increased wage and shipping costs, for the change. On a global stage, more than 200 million pay for the service which gives subscribers access to benefits like faster shipping. The revenue increase was attributable to the likes of its cloud computing division, its investments in electric vehicle company Rivian, Amazon Web Services and advertising, although its e-commerce sales dipped from 2020, which had seen extraordinary Covid-driven gains. Its share value jumped 15% in extended trading, whilst Jeff Bezos saw his net worth climb 57% to US$ 177 billion over the year.

In a major cock-up, a la Del Boy, a spelling mistake (“Platinum Jubbly” as opposed to “Platinum Jubilee”) on over 10k of pieces of merchandise, to celebrate the Queen’s seventy-year reign, has been discovered. The error will see the Chinese cups, mugs and commemorative plates being sold by souvenir sellers on the market, with a discount of up to 90%. Wholesale Clearance, which deals in bankrupt stock and discontinued lines, has stepped in to sell the commemorative items – with the products advertised as “Souvenir Stock with Slight Typo Mistake”, with its website posting “Become an Only Fools and Horses fan and wow your friends with your Lovely Jubbly set!”

In a bid to tackle the likes of Aldi and Lidl, Tesco launched Jack’s stores thirteen Jack’s stores in 2017 and this week announced that seven of them will be closed and the remaining six converted into Tesco superstores; 130 jobs will be affected, and Tesco will try and offer alternative staff roles.  When opened, it sold 2.6k products, (including 1.8k branded “Jack’s”), compared to the 35k+ products in a normal Tesco supermarket; at the time, it claimed that its prices would be cheaper than the two German interlopers. The supermarket giant also announced that meat, fish and deli counters at 317 store sites would also be shut down because of changes in customer demand, with the impacted staff being offered different roles. Tesco has warned 1.6k jobs are at risk, as it ends overnight restocking at some stores and converts some petrol sites to pay-at-pump during the night. It plans to switch overnight restocking to daytime in 36 big stores and 49 convenience stores, and to convert petrol stations in 36 stores to pay-at-pump only during overnight hours. UK Christmas sales were 0.3% higher on the year, and 9.2% up on the 2019 Christmas pre-Covid, and it now expects annual income to be on the top side of US$ 3.5 billion.

Having lost a multi-billion dollar fraud case in London, Mike Lynch, the founder of Autonomy, will be extradited to the US to face criminal fraud charges. In 2011, he managed to sell his firm to Hewlett Packard for US$ 11 billion – a year later HP announced a US$ 8.8 billion write-off in the value of its UK acquisition. The erstwhile chief of Autonomy was subsequently accused of manipulating his company’s accounts to inflate its value and was sued by the US tech giant for about US$ 5 billion, claiming that he, and his CFO, Sushovan Hussain, “artificially inflated Autonomy’s reported revenues, revenue growth and gross margins”. However, his legal team confirmed that “Dr Lynch firmly denies the charges brought against him in the US and will continue to fight to establish his innocence”.

Chan Weng Lin, the chief executive and controlling shareholder of Macau Legend Development, with three casinos in the autonomous region of China, has been arrested over alleged money laundering and illegal gambling. This comes two months after another high-profile Macau gambling executive, Alvin Chau, was arrested amid a crackdown in the world’s biggest gambling hub.  Macau Legend Development noted that “the Board does not expect the above incident to have a material adverse impact on the daily operations of the Group,” and that “the above incident relates to the personal affairs of Mr Chan and not related to the Group.” Last month, Macau’s Gaming Inspection and Coordination Bureau met with police to strengthen their collaboration on gambling-related crimes, with the regulator noting it would pay close attention to what happens in and outside casinos, which are expected to see an increase in visitors during this week’s Lunar New Year festival.

It is reported that Argentina and the IMF have reached an initial agreement, worth US$ 44.5 billion, in a bid to stabilise its economy and to refinance an earlier loan, of which US$ 40 billion is still outstanding. The agreement hinged on the South American country pledging to slowly reduce its deficit, and the central bank’s financing of the treasury, as well as to agree to terms and conditions of the agreed economic programme; the country will be given a four and half year grace period before it starts repaying the loan. With inflation running at over 50%, Argentina badly needs all the economic help it can get but it has a bad track record with IMF loans in the past, and this one, (its 22nd with the world body), will also be fraught with implementation risk. The deal still has to ratified by both parties.

According to the Australian Bureau of Statistics, country-wide retail sales plunged 4.4% in December – its largest dip in sales since the first full month of Covid in April 2020. The latest fall follows three successive rises of 1.3% in September, 4.9% (October) and 7.3% (November). Despite the latest fall, it was still the second highest turnover on record, and 4.8% higher than December 2020, with strong consumer spending continuing post the Delta Outbreak, With the exception of Northern Territory, all states posted falls, ranging from Queensland (-0.7%) to Victoria (-8.4%). Of the six retail industries, only food retailing rose, up 2.2%, whilst the other five headed south, including department stores, clothing/footwear and household goods, down 21.3%, 17.3% and 9.2% respectively. Another reason for the December declines is the ongoing shifts in household spending patterns, including the increasing popularity of Black Friday sales  pulling spending into November from December. Some analysts see retail sales improving into 2022, driven by the elevated saving rate and the strong labour market.

The Australian trade minister, Dan Tehan, has confirmed that his country has asked to be in included with the EU in consultations with the WTO over China’s alleged discriminatory trade practices against Lithuania; he noted that “Australia has a substantial interest in the issues raised in the dispute brought by the European Union against China”. The foreign ministry posted that Australia “welcomes” an invitation from France to take part in a February meeting of Indo-Pacific foreign ministers. The Xi Jinping administration has downgraded ties with Lithuania and “encouraged” firms to sever links with the Baltic state, after it allowed Taiwan to open a de facto embassy in Vilnius. Subsequently, it has refused to clear Lithuanian goods, through Chinese customs, rejected Lithuanian import applications and pressured EU firms to remove any of that country’s content from supply chains when exporting to China. It is no secret that bilateral relations, between China, (its top trade partner), and Australia, are at rock bottom.

Because of the much better-than-expected economic data and rising inflation, the Reserve Bank of Australia will end its US$ 250 billion bond-buying program on 10 February but will retain the official cash rate at an historic 0.1% low. The RBA governor, Philip Lowe noted that “ceasing purchases under the bond purchase program does not imply a near-term increase in interest rates,” and that “there are uncertainties about how persistent the pick-up in inflation will be as supply-side problems are resolved”. The Aussie dollar dipped US$ 0.04 to US$ 70.34, and it seems highly probable that rates will now move higher towards the end of this year which would be the first official cash rate since November 2010. However, there is concern that the country could face a cost-price spiral – higher prices leading to higher wages resulting in higher prices.

One casualty of higher rates will be those with mortgages. It would be the first official cash rate rise since November 2010. If the rates were to jump from 0.1% to say 2.0%, it is estimated that the average recent new borrower on a variable rate home loan could see their monthly repayment rising by over US$ 700, as the average new owner-occupier mortgage will rise from US$ 259k in November 2010 to more than US$ 428k. The end result will see a major correction in Australia’s burgeoning property market

Despite disruptions caused by the Omicron variant of coronavirus, US employers added 467k jobs in December – a figure much better than analysts expected. Because of more people looking for work, the jobless rate nudged up 0.1% to 4.0. A knock-on impact of a strong labour market is that it increases the pressure on Fed to move rates higher. Indeed, its chair, Jerome Powell, has confirmed the possibility of a rate hike in March, the first since 2018, as the central bank faces intense pressure to get to grips with inflation which is rising at its fastest rate in forty years. A lifting of rates is supposed to help curb price increases, by cooling demand with higher borrowing costs, at a time when higher payroll and material costs put US businesses under increased pressure.

UK house prices have risen at the fastest annual pace for a January in 17 years, at 11.2% for year and 0.8% on the month, attributable to “robust” demand and low supply. Nationwide noted that a typical 10% deposit, equating to 56% of total gross annual earnings, is at its highest ever price, with affordability, (which will be further reduced once rates start heading north), being a key issue, as wages rise at a much slower pace than house prices. Interestingly, despite the current historic record low interest rates, mortgage payment as a share of take-home pay is now above the long-run average; the average house price stands at US$ 347k. The total number of 2021 property transactions were the highest since 2007 and up 25%, compared to pre-pandemic 2019. It is expected the latest rate hike will only lead to a further monthly US$ 34 increase for a typical monthly repayment for people on a tracker mortgage – and just over US$ 20 for a standard variable rate mortgage. The BoE has a delicate act if rates are pushed higher too quickly, it will kill off any economic recovery, if too slowly, inflation will continue to head north.

According to the BRC-NielsenIQ price index, January shop price inflation jumped 0.7% to 1.5% on the month as shoppers are hit by the highest price rises in almost a decade. Non-food inflation, (including furniture and flooring which were in in high demand), rose 0.9% on the month, having declined 0.2% in December, whilst food inflation was at 2.7% in January, up 0.3% on the month. Non-food inflation was driven by rising energy costs that saw shipping costs skyrocket, whilst food prices were driven higher by numerous factors including poor harvests, labour shortages, and rising global food prices. The index confirmed that shop price rises were the highest since December 2012, whilst the latest official figures showed inflation at its highest rate for thirty years. Indeed, there are some reports indicating that shipping container costs have jumped tenfold over the past year, with one UK company reporting that it used to pay US$ 1k for one but now was having to pay “north of US$ 10k”.

As the BoE tries to get a grip on rampant inflation, it pushes interest rate 0.5% higher to 0.75%, its second-rate hike in three months; even after this hike, the central bank warned that price rises could speed up, probably to around 7.25% by April, which could result in the biggest squeeze on household spending since the 1950s; this would be the fastest price growth since 1991 and is well above the Bank’s 2% target. The main driver pushing up prices is the fact that rising gas and electricity costs are out of control and have already jumped 54%. It is now evident that pay increases are not expected to keep pace with rising prices, and that real post-tax incomes are forecast to fall 2% this year – the biggest fall in take-home pay since records began in 1990. There are also increasing signs of broader price pressures including the likes of fridges, climbing almost 10% over the past twelve mirrors, as the BoE issues warnings of food prices and rents nudging higher in the short term.

When it comes to consumer spending, there are two sectors that are considered non-discretionary – food and energy – with many facing the harrowing choice of ‘heat or eat’. 2019 statistics from the Scottish government note that 613k households (almost 25% of the country’s total) experienced fuel poverty – that is a spend of more than 10% of their disposable income on energy. Even more alarming was that 311k homes were living in extreme fuel poverty, spending more than 20% of disposable income on energy. These statistics will mirror what is happening in the rest of the UK and it is accepted that poverty figures will show wide fluctuations on an annual basis, mainly dependent on the varying cost of fuel.  With the wholesale cost of natural gas for delivery this winter soaring from below US$ 0.67 a therm last summer, to highs of US$ 4.06 in October and rising well above US$ 5.42 in December, fuel poverty is going through the roof.The price of gas depends on the global economics of supply and demand, with the possibility of the former being severely disrupted by a possible war between Ukraine and Russia. European storage of gas is at record lows, and Britain has little storage. With prices set to rise again in April, The Heat Is On!

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Pay It Back

Pay It Back!                                                                            29 January 2022

In 2000, Dubai’s population stood at 862k – ten years later it had more than doubled to 1.321 million and then by 2020 had surged a further 79.1% to 3.411 million; in twenty years, the number of people living in the emirate had quadrupled. Because of Covid, the numbers initially dropped but, by the end of 2021, was at 3.456 million. The government’s Dubai Plan forecasts a more than doubling of the current population by 2040 to 7.0 million, with an annual growth rate of 3.75%.  In the period from 2000 to 2021, the annual growth rate was 6.85%, so there are arguments to indicate that the population could grow at a faster rate and assuming this was at 5.75%, the population could top ten million by then.

When it comes to real estate, it is obvious that there will be a huge demand for housing  and the problem facing the government and contractors is to estimate  the actual number of new units needed to satisfy demand. In the four-year period to 2019, the population increased 36.1%, whilst the number of housing units rose by 42.0% to 686k, which included a 10.5% hike in 2019, equating to 65k units. According to the latest Dubai Annual Market Report by Core, 37k units were delivered last year, of which 5.9k were villas and the balance apartments.

Assuming that on average, 3.5 persons live in an apartment and 4.5 in a villa, and labourers comprise between 26% – 30% of the population, the following tables show the number of housing units that will have to be built over the next twenty years. It must also be remembered that, with an increased population, the rest of the economy benefits – more offices, more hotels, more roads, more schools, more leisure facilities etc. It is highly probable that the socio-economic mix will see the percentage of unskilled migrant workers  declining, whilst the number of entrepreneurs will increase, as Dubai aims to become the world’s smartest city.

The following tables indicate Dubai’s actual population and number of ‘housing units’ in 2015, 2019 and 2021 and estimated figures for 2040, if the population were either 7 million or 10 million.  The current number of housing units is 700.1k (126.4k villas and 573.7k apartments), whilst the estimates for the number of housing units in 2040 are estimated at 1.4 million – 252k villas and 1.148 million apartments – (if the population were to be 7 million) and 2.0 million, (360k villas and 1.640 million apartments), if the population were to grow to 10 million.

Actual Popn2,447,000    
Persons3.5 4.5 8
Total Popn1,392,300 382,950 1,775,250
Dubai Popn    2,509,350
Actual Popn3,331,000    
Persons3.5 4.5 8
Total Popn1,899,100 542,250 2,441,350
Dubai Popn    3,374,030
Actual Popn3,456,000    
Persons3.5 4.5 8
Total Popn2,007,950 568,800 2,576,750
Dubai Popn    3,475,310
 Est Popn7,000,000     
 2040Apartments Villas Total 
Persons3.5 4.5 8
Total Popn4,018,000 1,134,000 5,152,000
Dubai Popn    6,972,000
Est Popn10,000,000     
Persons3.5 4.5 8
Total Popn5,740,000 1,620,000 7,360,000
Dubai Popn    9,960,000

For the previous week, ending 21 January 2022, Dubai Land Department recorded a total of 1,559 real estate and properties transactions, with a gross value of US$ 1.12 billion. It confirmed that 1,059 villas/apartments were sold for US$ 613 million, and 287 plots for US$ 294 million over the week. The top three transfers for apartments and villas were all apartments – one was sold for US$ 80 million in Marsa Dubai, a second sold for US$ 64 million in Burj Khalifa, and the third for US$ 47 million in Palm Jumeriah. The top two land transactions were for a plot in Al Hebiah Fifth, worth US$ 52 million, and US$ 12 million for a plot in Al Thanyah First. The most popular locations, in terms of volume and value, were Al Hebiah Fifth, with 222 transactions, totalling US$ 171 million, followed by Jebal Ali First with eleven sales transactions, worth US$ 8 million, and Hadaeq Sheikh Mohammed Bin Rashid with nine sales transactions, worth US$ 29 million. Mortgaged properties for the week totalled US$ 190 million, with the highest being for land in Mankhool for US$ 25 million; sixty properties were granted between first-degree relatives, worth US$ 39 million.

According to Savills, this year will see residential and industrial property becoming the strongest real estate investment asset class globally. The international research firm also noted that for the twelve months to November 2021, volumes rose 38% to US$ 1.3 trillion, as an increasing number of funds looked to invest in the asset class. It forecast that, as regional population growth picks up again, especially in the UAE, residential development will continue to remain a key focus area and that Dubai property prices will continue to rise, driven by continuing government economic reforms. Savills noted that residential – including multi-family, student and senior housing – was the largest sector for investment globally in 2021, overtaking offices for the first time. Dubai prime residential properties will continue to attract investor demand, while other segments of the residential market play catch up.

The top five areas, with the highest volumes of luxury home sales, were Palm Jumeirah with US$ 900 million, Downtown Dubai at US$ 872 million, Business Bay at US$ 746 million, Mohammed bin Rashid City – US$ 477 million – and Dubai Marina, with total sales of US$ 346 million. In the prime residential market, Al Barari area recorded the highest Q4 growth in sales to US$ 102 million, up on the quarter from US$ 33 million, followed by Jumeirah, with sales of US$ 101 million from US$ 33 million, and Arabian Ranches 1, where sales rose to US$ 123 million from US$ 48 million.

As there was a surge in demand for apartments, Dubai’s prime villa market posted a Q4 33.8% contraction to US$ 1.12 billion of sales, with an average price of US$ 2.89 million for a villa. Luxhabitat Sotheby’s indicated that the number of top-end apartments sold increased 35% to US$ 3.02 billion, with the average prime apartment costing US$ 654k, with an average price per sq ft at US$ 450. The company expects to see this year being the best ever year for Dubai’s luxury property market, but noted that there was a shortage “in stock of premium and luxury properties, specifically larger apartments, penthouses and luxury beachfront or golf course-view villas.”

In a bid to further enhance Dubai Land Department’s position as a major global real estate destination, it has signed three memoranda of understanding with Bayut,, and Property Finder, all Dubai firms that provide the market with smart and advanced real estate solutions. Under the agreements, DLD will receive up to date, reliable, interactive and comprehensive details of the many facets of the industry including regional buying and selling prices, and the changing data that takes place in the real estate market during price changes. It will not only help government, with updating relative legislation, it will also ensure that consumers have all the requiredinformation to make a real estate decision, whether it be for sale, purchase or renting

On Monday, Dubai’s Crown Prince, Sheikh Hamdan bin Mohammed, officially opened the Arab Health and Medlab Middle East Exhibition and Congress 2022. Held under the banners, ‘United by business, driving the industry forward’ and ‘Connect with innovation that’s changing the face of diagnostics’, it is the largest in person event for healthcare and laboratory companies, technology and products in the MENA region. The four-day event, with 3.5k exhibitors from sixty countries, hosted 60k attendees.

After hosting 120 ‘economic events’ last year, Dubai has plans to more than triple that number to 400 by 2025. These ‘events’ include the likes of conferences, meetings and incentive travel programmes, and will add economic benefits, as Dubai becomes an even more popular global hub of choice for businesses, associations and talent across a wide range of sectors and professions. There is no doubt that Dubai’s rapid economic recovery, and its handling of the pandemic, have helped the emirate stand out as a preferred destination for events of all sizes. In recent months, Dubai became one of the first global centres to host large-scale in-person events, including Expo 2020 Dubai, (with ten million visits to date), The Big 5, Gitex, Arab Health and Arabian Travel Market. Some of the major events that Dubai won last year were the 27th International Council of Museums general conference in 2025, the BIR World Recycling Convention & Exhibition in 2022, Asian Congress in Paediatric Nephrology in 2023 and the Congress of the International Society for Peritoneal Dialysis in 2024. This year, it has added the likes of McDonald’s Russia Convention, AIA Star Convention and Oriflame Anniversary Gold Conference to its portfolio of corporate meetings and incentive travel programmes. During this year, Dubai Business Events will lead nine sales missions in traditional strongholds such as India, Europe and China, as well as markets, where it sees strong opportunities for growth, including Israel and Latin America.

Despite it forecasting a 40% hike in 2021 revenue to US$ 1.4 billion, 40% higher on the year, Dubai Duty Free has still some way to go to top its record 2019 record return of US$ 2.0 billion. However, the airport retailer is planning to recall more of its staff,  laid off during the pandemic, as passenger traffic begins to rebound, with marked increases in numbers from the nationals of Russia and Saudi Arabia, as well as the relatively new Israeli market. It is expected that theoverall average spending per passenger will exceed pre-pandemic levels of US$ 40 in 2019 and could top US$ 55 this year. DXB is expected an almost doubling, of passengers from 28.7 million to 57.0 million in 2022.

Last year, DEWA invested US$ 790 million in opening sixteen new substations, comprising 14 132kV stations, with a conversion capacity of 2.1k megavolt amperes, and two 400kV stations, to keep up with increasing demand; these two are located in Mohammed bin Rashid Al Maktoum Solar Park and Al Quoz 2, with a conversion capacity of 4k megavolt amperes. The plan is to see Dubai’s energy needs being met from clean sources by 2050, whilst by 2030, it is hoped that the Mohammed bin Rashid Al Maktoum Solar Park will have a capacity of 5k megawatt upon completion. It is estimated that the authority invested US$ 2.6 billion last year on existing and completed electricity transmission projects, including US$ 0.6 billion for 400 kV transmission projects and US$ 2.0 billion for 132 kV projects. Dewa plans to list on the DFM, becoming one of ten state-backed companies to be floated, as part of government plans to boost activity on the local bourse.

DEWA posted that last year saw a 9.8% hike in energy demand to 50.2k gigawatt-hours. On a daily basis, this equates to 13.4k megawatts of electricity and 490 million imperial gallons of desalinated water. In 2020, it managed to reduce electricity transmission and distribution networks losses to 3.3%, compared to 6% – 7% recorded in Europe and the USA; water network losses decreased to 5.1%, compared to around 15% in North America. It also achieved a new world record in electricity Customer Minutes Lost (CML) per year, recording 1.66 minutes in Dubai, compared to around 15 minutes recorded by leading electricity companies in the EU.

Last year, the country’s industrial exports reached US$ 33 billion, with the help of an increase of 220 new factories that commenced production in 2021. Many of these new production units benefited from the UAE’s national strategy for industry and advanced technology, whose main target is to more than double the sector’s contribution to the country’s GDP, from US$ 36.2 billion to US$ 82.0 billion, (AED 300 billion), over the next decade; the main aims of the recently national strategy, ‘Operation 300 bn’, is to ensure that the UAE becomes a global industrial centre within ten years and to support 13.5k SMEs over that period.  Its recently launched its In-Country Value programme and expects to increase, by 50%, the redirection rate of government spending towards local companies by 2031.

The RTA estimates that since its September 2009 opening, Dubai Metro has eliminated over one billion private vehicle journeys and that it has reduced carbon dioxide emissions by 2.6 million tons, as well as having saved the economy over US$ 31 billion. The authority’s chairman, Mattar Mohammed Al Tayer, noted that it “has launched numerous projects and initiatives to boost the public and sustainable transport to increase the proportion of journeys made by sustainable modes and walk from 30% in 2020 to more than 43% by 2030”. In his address to the main session of the Dubai International Project Management Forum, he also noted that it was HH Sheikh Mohammed’s aim to make Dubai the best city for living and doing business in the world, and thus he established the Dubai Master Urban Plan 2040 to focus on serving its inhabitants and achieving sustainable urban development. The Strategy aims to encourage innovation in waste management, recycling and energy conversion, and complements a range of projects that will strengthen the city’s position as a leading global destination for investors, entrepreneurs and visitors.

With its recently announced partnership, with US blockchain company Ripple, Al Fardan’s customers will now be able to remit money internationally in real time. The Dubai money transfer company will be able to negate the ageing and expensive legacy infrastructure, replacing it with a more flexible, speedier and cheaper cloud-based system, as it joins RippleNet Cloud. Chief Executive, Hasan Al Fardan commented that “this partnership underscores our commitment to offer new channels and opportunities for people to remit money more securely, with more flexibility and convenience.” Customers are becoming more tech-savvy and more reliant on the ease and convenience of mobile apps to send money home, rather than visiting physical branches. According to the World Bank, remittances to poor and middle-income countries are projected to have grown 7.3% to $589 billion in 2021 and are projected to grow a further 2.6% this year.

The disgraced founder of the now closed Abraaj Group, Arif Naqvi, has been fined more than US$ 135 million by the Dubai Financial Services Authority and was also banned from conducting business in the Dubai International Financial Centre “for serious failings” in respect to the company; a much smaller fine of just over US$ 1 million, along with same ban, was levied on former managing director, Waqar Siddique. Both men dispute the findings and have referred the Decision Notices to the Financial Markets Tribunal. At its peak, it was the region’s biggest private equity firm, managing assets of over US$ 14 billion.

It got into deep trouble in 2018, when an investigation was launched by a group of investors, including the Bill & Melinda Gates Foundation, into alleged mismanagement of money in Abraaj’s US$ 1 billion healthcare fund. It was also alleged that Mr Naqvi “attempted to appeal to more senior members of staff at the investors’ organisations to quash their queries [and] was central to the cover-up of a US$ 400 million shortfall across two funds by temporarily borrowing monies for the purpose of producing bank balance confirmations and financial statements to mislead auditors and investors”, as well as approving “the change of a fund’s financial year end to avoid disclosing a US$ 200 million shortfall; and personally arranged to borrow US$ 350 million from an individual in an attempt to make the Abraaj Group appear solvent and appease the demands of investors”, according to the DFSA notice”.

Both men have been charged in the US for fraud and money laundering. The founder of Abraaj, currently in the UK on bail of US$ 20 million, is facing extradition charges to the US to face the courts in New York. His former managing director is one of six former Abraaj executives facing extortion and securities fraud charges, following an investigation by US prosecutors into the collapse of Abraaj. Only one, Mustafa Abdel-Wadood, has faced the court and he pleaded guilty to seven counts of an indictment against him and is co-operating with the US authorities.

Emirates NBD posted a 53.0% Q4 increase in profit to US$ 544 million, as both net interest income and non-funded income headed north – by 7.0% to US$ 1.17 billion and doubling to US$ 600 million. On an annual basis, profit was 34.0% higher, at US$ 2.53 billion, as non-funded income  was up 21.0% to US$ 1.88 billion, with impairment allowances 26.0% lower at US$ 1.61 billion. A much improved US$ 0.136 per dividend has been proposed. The improvement came as the local economy continued to make a strong recovery from the impact of the pandemic, greatly helped by the government’s US$ 106 billion economic stimulus, including the central bank’s US$ 13.6 billion Targeted Economic Support Scheme to boost liquidity in the financial and banking sector. Last month, there was a six-month extension, to 30 June 2022, for relief measures relating to banks’ capital buffers, liquidity and stable funding requirements.

Its sister bank, Emirates Islamic, reported a 15.0% hike in total income to US$ 651 million, resulting in a 271% jump in net profit to US$ 224 million, driven by higher non-funded income and a significant reduction in the cost of risk. By year end, assets were at US$ 17.7 billion, customer deposits had moved 1.0% up, to US$ 12.9 billion, and customer financing increased 4.0% to US$ 1.2 billion.

The DFM opened on Monday, 24 January, 8 points (0.2%) to the good on the previous week, nudged a further 10 points (0.3%) higher to close the week, on Friday 28 January, on 3,220. Emaar Properties, US$ 0.03 lower the previous three weeks, gained US$ 0.02 to close on US$ 1.34. Emirates NBD, DIB and DFM started the previous week on US$ 3.68, US$ 1.50 and US$ 0.68 and closed on US$ 3.77, US$ 1.50 and US$ 0.65. On 28 January, slightly improved trading saw 126 million shares change hands, with a value of US$ 72 million, compared to 61 million shares, with a value of US$ 54 million, on 21 January 2022.

By Friday 28 January 2022, Brent, US$ 13.46 (18.0%) higher the previous five weeks, continued its mega run and gained a further US$ 2.90 (3.3%), to close on US$ 90.68. Gold, up US$ 5 (0.3%) the previous week, lost US$ 46 (2.5%), to close Friday 28 January on US$ 1,790. 

Apple posted record quarterly sales and net profit in Q1, of its 2022 financial year, despite supply chain challenges, with revenue 11.2% to the good at US$ 123.9 billion and net profit 20.0% higher on the year (but 68% up on the preceding quarter) at US$ 35.0 billion. All its product ranges posted growth, including smartphones, (which account for 57.7% of the total sales), 4.0% higher, with sales of US$ 71.6 billion, services, 23.8% higher at US$ 19.5 billion, wearables, home and accessories products up 13.3% to US$ 14.7billion, and 4.0% up to US$ 18.1 billion. Area-wise, the US contributed US$ 51.5 billion (41.5%) to the total followed by Europe and the Greater China market (China, Hong Kong and Taiwan), which added US$ 29.7 billion and US$ 25.8 billion. Apple is targeting a net cash neutral position in the future and declared a US$ 0.22 cash dividend, having already returned some US$ 27 billion to its shareholders. The tech giant’s share price rose more than 4.0%, to US$ 159 a share, in after-hours trading.

MasterCard posted a 27% hike in Q4 revenue to US$ 5.2 billion, as net profit rose by 33% to US$ 2.4 billion, driven by a recovery in global spending and surge in cross-border transactions, increasing 53% over the quarter, and now returning to pre-pandemic levels. Its operating income rose 37%, on an annual basis to US$ 2.8 billion, while operating expenses were up 16% to US$ 2.4 billion. During the quarter, it repurchased 3.7 million shares, costing US$ 1.3 billion, and paid out US$ 434 million in dividends. Purchase transactions totalled US$ 38.9 billion – 25.6% higher than in Q4 2020. Over the year, it posted a 23% rise in revenue to US$ 18.9 billion, whilst net profit came in 35% higher at US$ 8.7 billion. Last month, MasterCard agreed to acquire McDonald’s personalisation platform and decision engine company, Dynamic Yield. 

Visa delivered very strong results with revenue, net income and EPS all growing at 24% or higher, as total quarterly transactions rose 21%, over the year to reach 47.6 billion, payments volume was up 20%. Revenue, at US$ 7.1 billion, topped US$ 7.0 billion for the first time, helped by a quicker-than-expected resumption in travel spending and sustained growth in categories like e-commerce. Net income in fiscal Q1 was 29% higher at US$ 4.0 billion, equating to US$ 1.83 per share. In fiscal Q1, Visa rebought 19.4 million shares for a total of US$ 4.1 billion, at an average price of US$ 210, and it authorised a new US$ 12 billion common stock share repurchase programme. By 31 December, Visa’s cash, cash equivalents and investment securities stood at US$ 18 billion. Last month, it acquired Currencycloud – a global platform that enables banks and FinTechs to provide innovative foreign exchange solutions for cross-border payments.

Samsung Electronics posted a 24% hike in Q4 revenue to US$ 63.5 billion, resulting in a 53% surge in Q4 operating profit to US$ 11.5 billion, as record sales helped the company quickly rebound despite supply chain disruptions. The world’s biggest mobile phone manufacturer also posted an 18.0% rise in annual revenue to US$ 191.7 billion, driving profit 43.4% higher to US$ 42.8 billion attributed to a marked improvement in the sales of premium smartphones, including foldable phones, as well as TVs and home appliances. With a market cap of US$ 400 billion, Samsung is the world’s third-largest chip manufacturer behind Taiwan Semiconductor Manufacturing Company and California-based Nvidia, but ahead of Intel, Qualcomm and Advanced Micro Devices. In Q4, its semiconductor business had revenue of US$ 17.9 billion, producing a US$ 7.3 billion profit, accounting for 64% of its quarterly profit; for the year, it accounted for 57% of the company’s operating profit and over a third to revenue. In the last quarter, Samsung lost its top position, in the smartphone market to Apple, having 20% of the global market to its rival’s 22%. Quarterly revenue came in at US$ 23.9 billion, with an operating profit of US$ 2.2 billion. Despite its impressive 2021 results strong earnings, its share price dipped 2.73% on Thursday.

A miserable Q4 for Boeing saw the US plane maker posting a massive US$ 4.1 billion deficit, attributable to factors mainly involving its troubled wide-body 787. Revenue was 3.3% lower at US$ 14.8 billion. In the quarter, it accounted for a total of US$ 3.8 billion in one-time expenses, associated with compensating airlines for delayed deliveries and more costly production processes. It has also suspended deliveries of the 787 due to quality problems, but some good news for the troubled manufacturer was the resumption of 737 MAX planes which had been on hold for twenty months following two fatal crashes.

After a record 2021, with revenue up 71% to US$ 53.8 billion, and profit at US$ 5.5 billion, Elon Musk is confident that Tesla sales will be more than 50% higher in 2022; he did note that its supply chain was “the main limiting factor” to growth, “which is likely to continue through 2022”. In 2021, “a breakthrough year for Tesla, and for electric vehicles in general”, it delivered an almost 90% increase in the number of electric vehicles to 936k units.. Tesla has an added advantage, compared to many of its major competitors, because it uses microchips that are less scarce and is able to quickly re-write software, while competitors continue to suffer, with supply chain problems and slow production, causing a shortage of microchips, among other production and supply chain snarls, though Tesla has been seen to be faring better than most. Increased production is more likely now that its two latest factories in China and Texas are operational and that a new Berlin factory is under construction. He does not seem too perturbed with increased investment from legacy carmakers entering the electric car market with intent, noting that companies like GM have “some room for improvement”. He also expected fully self-driving cars “will become the most important source of profitability for Tesla”.

Bentley is planning to pump in US$ 2.5 billion into its electric vehicles division in Crewe and is on record that its first electric car will roll of the assembly line by 2025, and it will only be producing electric models by 2030. The luxury car manufacturer, which employs 4k, “aims to become the benchmark not just for luxury cars or sustainable credentials but the entire scope of our operations.” It also plans to make its Crewe plant carbon neutral, including becoming net-zero with waste and water-use. Sales of new cars and vans, powered wholly by petrol and diesel, are set to be banned in the UK from 2030.

Even before the onset of Covid-19 in Q1 2020, and the uncertainty that followed the Brexit vote, UK car production was on the decline and because of this, investment in the sector had been slowly drying up. Latest figures from the Society of Motor Manufacturers and Traders saw UK vehicle production of under 860k units,  its lowest level since 1956, mainly attributable to the ongoing disruption caused by the Covid pandemic and a severe shortage of semiconductors; (it is estimated that a modern vehicle may utilise between 1.5k and 3k chips to operate engine management systems). This figure was 6.7% lower than a year earlier and a marked 34% down on pre-Covid 2019 figures. Although there is some hope that the impact of Covid may dissipate this year, the industry will face another disruptor – soaring energy costs that see the UK paying more for energy than any other European nation. Even though other car-making countries have had a head start on the UK industry, in the electric vehicle segment, the recent US$ 6.6 billion of new investment may result in the start of the UK becoming a global player.

New Zealand’s annual inflation rate, at 5.9%, is the highest recorded in the country since the mid-1990s, and because it was much higher than expected, it is inevitable that the RBNZ will take further action to negate its impact; it had already raised rates at its last two meetings and could do it again on 23 February. Petrol prices have jumped 30%, over the past twelve months, whilst prices for construction and rentals for housing have also increased. The problem is not unique to New Zealand, as other economies are taking steps to clamp down on the rising cost of living.

Christine Lagarde and the ECB seem to have a different approach, to the Federal Reserve and the BoE, when it comes to tackling soaring inflation. Whilst the latter two are in the throes of raising rates, as early as next month, she stands steadfastly against pressing the button, warning the bank had “every reason not to act as quickly or as ruthlessly”. The French banker indicated that raising interest rates too soon risked “putting the brakes on growth”, arguing that she wanted its monetary policy to act as “a shock absorber” instead. Echoing what she has been preaching for too long now, she has reiterated that inflation in the bloc would stabilise and “gradually fall” over the course of this year. By the end of last year, inflation was at a record 5%, well above the ECB’s 2% target.  Not only will there be no 2022 rate hikes, according to the ECB’s mantra, it will also continue buying large amounts of bonds for most of this year, raising its longstanding asset purchase programme, from US$ 23 billion a month to US$ 45 billion, to partly offset the ending of new purchases under its US$ 2.10 trillion pandemic emergency purchase programme (PEPP) in March. Maybe the main reason for what seems an illogical policy is political – leading European governments have been borrowing significantly during the pandemic, and any tightening of monetary policy could create serious problems for highly indebted eurozone members, as borrowing costs will head north.

Following a 5.9% hike in worldwide GDP, the IMF has lowered its global economic 2022 growth forecast, by 0.5% to 4.4%, driven by the continuing threat of Omicron and the supply chain disruptions, which do not appear to be going away, both stoking inflation amid higher energy prices. The recent markdown in both the US and Chinese markets also dragged the annual forecast south. For the major economies, the biggest growth last year was in India (9.0% with 2022 expansion forecast at 9.0%), China (8.1%: 4.8%), the UK (7.2%: 4.7%), the US (5.6%: 4.0%), Germany (4.6%: 3.8%), France (3.9%: 3.5%), and Japan (1.6%: 3.3%). In 2021, advanced economies grew 5.0% in 2021, and is expected to expand 3.9% this year and 2.6% in 2023. The IMF has “revised up our 2022 inflation forecasts for both advanced and emerging market and developing economies, with elevated price pressures expected to persist for longer.” It also noted that higher inflation should fade as supply chain disruptions ease, monetary policy tightens and demand rebalances away from goods-intensive consumption towards services. Not known for accurate forecasts, the world body anticipates that in 2023, the global economy growth will be 3.8%, conditional on the Covid impact dissipating and that vaccination rates become more global.

With surging inflation – now touching 30-year highs of 7.5% – increasing the cost of debt, Interest payments on UK government borrowing hit a record high last month – at US$ 11.2 billion, triple the balance of just a year earlier. Meanwhile, December’s official borrowing – the gap between spending and tax receipts – was a lower-than-forecast US$ 22.7billion, 31.1% down from the figure in December 2020; this was attributable to increased income from housing stamp duty and fuel taxes. With three months to go until the end of the fiscal year, borrowing stands at US$ 198.3 billion. With further rate hikes almost certain this year, it is interesting to note that every 1% rate increase will add US$ 27.0 billion to the cost of public debt repayments – another headache for the Chancellor who has to find ways to Pay It Back!

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