Breakin’ Up Is Hard To Do!

Breakin’ Up Is Hard To Do!                                                               18 November 2021

Ahead of the Dubai Air Show, HH Sheikh Mohammed bin Rashid Al Maktoum tweeted that “Dubai is back again, and the global aviation sector is returning through Dubai and the UAE. The world gathers with us in the Emirates to talk about its economy, future and culture. Welcome everybody”. The country has returned to ‘a new normalcy’, as daily cases, at the beginning of the week, reached only sixty-six, with 8.81 million (out of a total population of around ten million) having been vaccinated; total doses administered are 21.5 million, the equivalent of 218 doses per 100 people. The Dubai Ruler noted that “today, I witnessed part of the activities of Dubai Air Show where 148 countries, 1.2k companies, and 85k visitors are expected this year.”  The beginning of the week saw cricket’s T20 World Cup Final take place, with Australia coming out on top, and by mid-November, the greatest show in earth, Dubai Expo 2020, had welcomed 3.58 million individual visits. All three events show the world that Dubai is well and truly open for visitors. With oil prices nearing US$ 85 a barrel, and the emirate’s property prices skyrocketing, there are many reasons for Dubai to be reasonably happy with its post-Covid progress.

At the world’s first major global aerospace exhibition in two years, dozens of multibillion-dollar commercial and military deals were signed. Today, 18 November, at the close of the five-day event, deals had topped US$ 78 billion, surpassing the pre-pandemic contracts in 2019 by US$ 27 billion. Airbus received orders and commitments for 408 aircraft, comprising 269 firm orders and 139 provisional orders, including a firm order for 255 A321 Neo family aircraft, valued at $32 billion at 2018 list prices. US rival Boeing scored an order for 72 737 Max jets valued at nearly US$ 9 billion at list prices. UAE’s Ministry of Defence announced 22 deals, worth US$ 6.17 billion awarded to local and international companies.

At Dubai Airshow 2021, Emirates announced that it will retrofit 105 of its wide-body aircraft, (fifty-two A-380s and fifty-three Boeing 777s), with its Premium Economy product, in addition to other cabin enhancements. The eighteen-month programme will start late next year. It is also considering installing a brand-new Business Class product on its Boeing 777 aircraft, with customised seats in a 1-2-1 layout, with details to be made known later. The entire retrofit project will be conducted in Dubai. Premium configuration on both types of aircraft will be 2-4-2. Five rows located just behind Business Class in the 777 will be removed to install twenty-four Premium Economy and on the A380, fifty-six Premium Economy seats will be installed at the front of the main deck.

Emirates signed an agreement with GE Aviation committing to develop a programme under which an Emirates Boeing 777-300ER, powered by GE90 engines, will conduct a test flight using 100% sustainable aviation fuel by the end of next year. Emirates SkyCargo announced that it will introduce two new Boeing 777 freighters into its fleet in 2022 and signed an agreement with Israel Aerospace Industries for the conversion of four Boeing 777-300ER passenger aircraft into full freighters, starting in early 2023. Emirates was also engaged in “positive” talks with Boeing regarding the delivery time and supply chain for the 777X programme.

Having been cash-positive since November 2020, flydubai expects to return to annual profitability by the end of the year, driven by ramping up its operations, keeping its costs in check and deferring some payments. Interestingly, last month witnessed the airline exceeding pre-Covid levels in terms of the number of flights, passenger traffic and number of destinations, compared with the same month in 2019. So far this year, it has opened twenty-two destinations, as global travel restrictions are lifted. Over the next fourteen months, it plans to take delivery of thirty-three 33 Boeing 737 Max 8 jets, (whilst retiring seven Boeing 737 Next-Generation planes) and hire a further 900 employees; this will bring the fleet to eighty-one planes – fifty-one Max 8s, twenty-seven NGs and three Max 9s.

Although still some way off pre-pandemic numbers, passenger traffic numbers at DXB continue to head north, with YTD figures of 20.7 million, including a 20% growth over the last four weeks. With the recent uptick, it is expected that numbers will be 28.7 million by year end – two million higher than initially forecast. Over the nine months to September, flight numbers were up 17.1%, at 155.7k, with 56.3k movements in Q3. After twenty months’ inactivity, Concourse A will reopen by the end of this month, returning the airport to 100% capacity. The airport’s five leading countries are India, Pakistan, Egypt, US and Turkey,  with passenger traffic numbers of 2.8 million, 1.0 million, 753k, 710k and 598k respectively.

According to YouGov’s latest survey, which measures the likes of the average impression, quality, value, satisfaction, recommendation and reputation, Emirates Airlines has managed to retain its top position, as the best brand in the UAE for the fifth consecutive year. Not surprising, because of the Covid impact, the airline posted a 1.8 decline and recorded 58.1 this year to retain its position, followed by Adidas, 50.6, Samsung, 47.7, Almarai, 47.6 and You Tube, 47.3. Nike, Apple, iPhone, Google and WhatsApp made up the top ten, with scores ranging from 43.1 to 46.3. was the most improved brand of the year, with a +6.2 change in score, as KFC, Expo 2020, Share and Red Bull came in behind, improving by 4.7, 4.6, 3.0 and 2.9 respectively.

The UAE has been selected as the host country for the 28th Conference of the Parties in 2023, with the UN Framework Convention on Climate Change (UNFCCC) having officially announced that the country will host COP28. Even before the announcement, HH Sheikh Mohammed bin Rashid Al Maktoum said the UAE would be fully prepared if selected and that “the UAE has submitted a request to host the COP28 conference in 2023, the largest global conference of heads of state and government on climate and environmental issues.” The current COP26 meeting concluded last Saturday in Glasgow, with COP27 scheduled to take place in Cairo next November.

With the aim of assisting the establishment of 1k digital companies in Dubai, over the next five years, the government is to invest US$ 272k in its Future District Fund. The target is to support and encourage tech companies, to enhance the emirate’s digital economy and projects to eventually list on the local bourses.

Effective 02 February, Federal Decree Law no. 33 of 2021 will enhance the current labour legislation and will introduce three-year contracts and conditions while employing teenagers over fifteen years. The new legislation, speeded up because of the Covid impact, will regulate labour relations in the private sector across different work models, including part-time and temporary work, along with safeguarding employee rights and introducing new leaves policy. New forms of working – including part-time work, temporary work and flexible work – are covered under the new law which also encompasses freelancing, condensed working weeks, shared job models and self-employment. The new law defines one type of contract, namely a limited (or fixed term) contract, which may not exceed three years and is renewable for a similar or lesser period upon the agreement of both parties.

Other interesting features of Federal Decree Law no. 33 include:

  • employees can choose to finish their forty hours in three days instead of one week as per the contract signed by both parties
  • two people able to share the same job and split the pay based on an agreement with the employer
  • workers are exempted from judicial fees at all stages of litigation, enforcement and petitions filed by workers or their heirs with a value that does not exceed US$ 27.2k (AED 100k)
  • employers cannot confiscate employees’ official documents. Workers also should not be forced to leave the country after the end of the work term
  • the provisions of the law shall apply to unlimited contracts enclosed in the Federal Law No. (8) of 1980
  • the employer shall bear the fees and expenses of recruitment and employment and shall not recover them directly or indirectly from the employee
  • employees are entitled one paid day off with the possibility of increasing weekly rest days at the discretion of the company
  • workers are entitled to a ten-day study leave per year provided that they are enrolled in an accredited institution within the UAE, following two years of work with an employer
  • maternity leave in the private sector can extend to sixty days – forty-five days with full wage, followed by fifteen days on half wage
  • employees are to be protected against sexual harassment, bullying, or the use of verbal, physical, or psychological violence by their employers, superiors, and colleagues
  • employers may not use any means of force, threaten to penalize employees or coerce them to perform an action or provide a service against their will
  • discrimination on the basis of race, colour, sex, religion, nationality or disability is not allowed
  • teenagers are not allowed to work more than six hours a day with one-hour break and should be allowed to work only after submitting a written consent of a guardian and a medical fitness report
  • it is prohibited for employees to work over five consecutive hours without at least one-hour break. No more than two hours of overtime are allowed in one day for workers
  • should the nature of the job require more than two hours overtime, employees must receive an overtime wage equivalent to regular hour pay, with a 25% increase. If conditions required employees to work overtime between 10pm and 4am, they are entitled to an overtime wage equivalent to regular hour pay with a 50% increase. People on a shift basis are exempted from this rule
  • If workers were asked to work on a day off, they must receive a one-day leave or an overtime wage equivalent to the regular day pay with a 50% increase

The National Central Cooling Company, better known as Tabreed, reported a 5.8% increase in Q3 profit to US$ 42 million on the back of higher revenue, up 8.7% at US$ 162 million. During the period, it took full ownership of the operator of the district cooling unit that serves Al Maryah Island in Abu Dhabi, after it bought an additional 50% stake in Al Wajeez Development Company from its JV partner, Mubadala Infrastructure Partners. Tabreed is keen to expand operations regionally and is looking at brownfield or greenfield projects in both in India and Egypt, as well GCC markets, especially Saudi Arabia.

Excluding fair value losses on investment properties, Amlak’s Q3 income increased by 367% to US$ 340 million, on the back of the settlement of the arbitration, which included both plots and cash to the value of US$ 238 million, and gains resulting from its debt settlement arrangements. Quarterly revenue, from financing activities, dipped 2.3% to US$ 34 million, whilst rental income almost halved to US$ 5 million. Both operating costs and amortisation came in higher – by 46.7% to US$ 30 million and 56.2% to US$ 34 million respectively. By the end of September, Amlak’s total assets were at US$ 1.09 billion. For the nine-month period, net profit reached US$ 294 million, compared to a US$ 7 million loss posted last year.

Deyaar Development, majority owned by Dubai Islamic Bank, reported an 80.6% hike in Q3 profit to US$ 2 million, on the back of a 6.3% rise in revenue at US$ 33 million. YTD, to 30 September, the Dubai company saw a doubling of its profit to US$ 8 million, with revenue 45% higher at US$ 114 million. The developer noted that it made “noticeable progress” in the construction of phases three and four of its Midtown mega-project at Dubai Production City, as well as sales at its newly launched Regalia project in Business Bay topping US$ 272 million (AED 1 billion).

Emaar Development recorded a more than sixfold increase in Q3 property sales, worth US$ 1.94 billion, with impressive increases in both revenue and profit – up 66% and 170% to US$ 1.05 billion and US$ 238 million. The developer, majority owned by Emaar Properties, posted its highest ever nine-month figure, with sales at US$ 5.70 billion, 382% higher on the year. YTD, the company reported a 63% hike in net profit to US$ 649 million and revenue, 75% higher at US$ 3.159 billion. It now has a sales backlog of US$ 7.75 billion, which will be recognised in the future as revenue for the business. Emaar Development has delivered over 3.7k residential units YTD 2021, across locations such as Dubai Hills Estate, Dubai Creek Harbour, Downtown Dubai, Dubai Marina and Emaar South. To date, it has delivered more than 51k residential units, with over 25k residences currently under development in the country.

Driven by strong Dubai property sales, Emaar Properties saw its Q3 net profit almost trebling to US$ 277 million, year on year, with revenue 64.6% higher at US$ 1.85 billion. In the first nine months of the year, Dubai’s leading developer posted a doubling of property sales to US$ 7.13 billion, with domestic property sales accounting for US$ 5.72 billion. Revenue rose 59.0% during the first nine months to US$ 5.26 billion, as profit came in 25% higher at US$ 703 million.

Hamad Ali has done a lot since his appointment as chief executive of the DFM and Nasdaq Dubai earlier in the month. This week, the DFM unveiled an incentives programme to encourage new IPOs and listings from private sector companies in key economic sectors that contribute to the country’s GDP. Such incentives include financial support towards the cost of setting up an IPO, as well as post-listing support through participation in its international roadshows regionally and globally; it will also include a three-year waiver on listing fees, AGM fees and dividend distribution fees. The new incumbent noted that “Dubai is home to an unparalleled portfolio of regional and international private companies. Attracting new IPOs will provide DFM’s global network of investors from over 208 nationalities with new investment opportunities.” To encourage smaller investors, in August, the DFM waived the minimum commission fee on the trade of all listed securities, in a move that will boost trading, add liquidity and increase volumes. The ultimate objective is to see Dubai a global capital hub, with the government launching a US$ 544 million project to attract listings from sectors such as energy, logistics and retail.

At the beginning of the month, it was announced that the Dubai government planned to list ten state-owned companies on the Dubai bourses, in a bid to double the size of the capital market, with DEWA being chosen to be first off the block. This week, the Dubai Financial Markets and Exchanges Development Committee approved the future listing of the Salik road toll system, which the RTA introduced in 2007. There are three million vehicles registered in the system and eight Salik toll gates throughout the emirate.

The DFM opened on Sunday, 14 November, 365 points (13.1%) higher the previous four weeks, gained a further 124 points (3.9%) to close the week at 3,265. Emaar Properties, US$ 0.25 higher the previous three weeks, closed US$ 0.07 higher at US$ 1.39. Emirates NBD and Damac started the previous week on US$ 3.88 and US$ 0.39 and closed on US$ 3.87 and US$ 0.38. On Thursday, 18 November, 582 million shares changed hands, with a value of US$ 225 million, compared to 538 million shares, with a value of US$ 173 million, on 11 November.

By Thursday, 18 November, Brent, US$ 0.87 (1.1%) higher the previous week, shed US$ 0.62 (0.7%), to close on US$ 82.05. Gold, US$ 74 (4.1%) higher the previous week, nudged US$ 4 (0.2%), to close Thursday 18 November on US$ 1,870. 

In October, the Australian Foreign Investment Review Board approved the August takeover of Tasmania’ s Huon Aquaculture by Brazilian meat processing giant JBS, in a US$ 403 million deal including debt. This will be their first foray into aquaculture, but the company is foreshadowing more investment in the sector, with Huon Aquaculture currently making up about 2% of JBS’s global operations. The Brazilian newcomer is among the world’s biggest meat processors in beef, chicken and pork., and it is confident that “there are areas in their business that we can add good expertise and help.”

Confidence in the Indian stock market was dented by the fact that its largest digital-payments provider, Paytm, lost 27.4% in value on its first day of trading – one of the worst-ever debuts by a major technology company. Such a fall in One 97 Communications, operator of Paytm, shocked even those sceptics, who had questioned the company’s valuation, and left the many retail investors wondering what happened as they nursed heavy losses. Even some of the big players, including BlackRock and the Canada Pension Plan Investment Board, were involved and may have damaged Mumbai’s efforts to become a global capital centre, particularly for technology investors looking for alternatives to China. This IPO raised US$ 2.5 billion and was nearly twice over subscribed.

On Thursday, the Turkish lira tumbled to a record low, falling by 6% to 11.3118 to the US dollar, after the central bank cut borrowing costs for a third consecutive month; the official one-week repo rate was reduced by 100 bp to 15%, at a time when October consumer inflation neared 20%. A further lowering of the rate – which has fallen 400bp since September – is a political move, influenced by President Recep Tayyip Erdogan, and has manged to cut any investor confidence in the market to zero. The lira has lost 20% in value since the rate cuts started in September and is a third lower YTD. Other emerging markets have reacted differently – both South Africa and Mexico raising rates during this week.

Although just beaten by its German rival, Aldi, to be the UK’s cheapest supermarket chain, Lidl will become the country’s highest-paying, as it increases its minimum pay for employees outside London to US$ 13.62 (GBP 10.10) an hour, with rates of up to US$ 15.37, (GBP 11.40) for more experienced workers. It added that the increase recognised “the hard work and dedication of frontline colleagues during the last 18 months of the pandemic”. Earlier in the year, Morrisons had become the first UK supermarket with pay grades above US$ 13.48 (GBP 10.00). The fact that official data shows that employers are continuing to struggle to fill roles, affecting the hospitality and retail sectors, could be another reason for the latest supermarket rate hikes.

Amazon will stop accepting UK Visa credit cards, (but not debit cards) from 19 January, due to high credit card transaction fees, indicating that the dispute was to do with “pretty egregious” price rises from Visa over a number of years, with no additional value to its service.

Visa retaliated saying that it was “very disappointed that Amazon is threatening to restrict consumer choice in the future”. The tech giant is offering US$ 27, (GBP 20), for Prime customers to switch from using Visa, to an alternative payment method, and US$ 13.50 for other customers. Although Amazon declines to confirm Visa charges, the credit company claimed that on average it takes less than 0.1% of the value of a purchase.

Last Friday, Alibaba confirmed that, sales during its annual Singles’ Day shopping extravaganza, grew 8.5%, the slowest rate ever, with revenue figures of US$ 84.5 billion. The event, started in 2009, had always returned double digit growth, (2020 – 26% growth), but this year, the event was low profile because of the tech giants’ wariness of upsetting the Chinese administration which, over the past twelve months, has been cracking down on platforms such as Alibaba. It seems that the regulators have two problems with the tech giants – an alleged abuse of user data by them, and wider concerns that big tech had become too powerful and unregulated. Before the event, some analysts were forecasting poorer revenue because of slowing retail sales, supply shortages, power disruptions and Covid lockdowns.

Today, Alibaba shares have slumped by more than 10% in Hong Kong trade after it forecast that its annual revenue would grow at the slowest pace since its 2014 stock market debut in 2014, driven by a slowdown in consumer spending; this despite its Q3 revenue jumping 29% to US$ 31.4 billion. Further factors such as increasing competition and Beijing’s regulatory crackdown saw its shares on the New York bourse trading 11% lower on the news.

China’s property sector posted its biggest month-on-month decline since 2015, as new construction starts in January to October dipped 7.7%; new home prices declined 0.2% last month – the first decline in new home prices since March 2015. The country’s property slump has deepened over the year, as illustrated by the financial woes of Evergrande continuing to struggle to keep up interest payments on its huge debts. Only last week, Evergrande, which is saddled with around US$ 300 billion of debt, avoided defaulting on overdue interest payments of US$ 148 million. The sector, which accounts for about 25% of the country’s economic activity, will experience a further battering, as major power cuts are forecast towards the end of the year and a new Covid wave has hit certain parts of the country.

Badly hit by the ongoing – and seemingly never-ending – global supply disruptions, Japan’s economy contracted 3.0% in Q3, year on year, (and 0.8% on the quarter), having risen at a revised 1.5% a quarter earlier; this figure was much worse, and more damaging, than the expected 0.8%. Another factor that came into play to further disrupt supply, with a negative impact on both exports and business spending, was a rise in new Covid cases. It is likely that Q4 will return to growth but at a lesser pace than most would forecast. Compared to other major countries, the world’s third largest economy fared badly, with the USA 2.0% higher, driven by pent up demand. Most of Japan’s economic indicators pointed south in Q3, as the country’s over-dependence on the auto industry meant its economy was more vulnerable to trade disruptions than other countries. Consumption, capital expenditure and exports were all down by 1.1%, 3.8% and 2.1%, compared to Q2 growth of 0.9%, 2.2% and exports lower for the first time in five quarters. To try and speed up a recovery, Prime Minister Fumio Kishida is planning to introduce a large-scale economic stimulus package worth “several tens of trillion yen”, with details soon to be made public.

More than 300k people, working for the 9k employers, (including 50% of the FTSE 100 and the likes of Nationwide Everton FC and Burberry), who have voluntarily signed up to the Real Living Wage, are getting a pay boost of US$ 0.60 to US$ 13.30 an hour and US$ 0.27 to US$ 14.85 in London. Although this rate is different to- and slightly higher than – the Minimum Wage, which measures what wage should be earned to meet the real cost of living and everyday needs, it is estimated that 17.1% employees, equating to 4.8 million jobs, are still not receiving the Real Living Wage in the UK. Northern Ireland had the highest proportion of jobs paying below the Living Wage at 21.3%, while SE England had the lowest at 12.8%. (From 01 April 2021, the National Living Wage was increased to US$ 12.00 per hour, with a range starting from US$ 5.80, depending on age and if the person employed is an apprentice).

Because of higher fuel and energy prices, (gas and electric prices climbing 28.1% and 18.8% on the year), UK’s October cost of living has hit 4.2% – its fastest pace in almost ten years and up 1.1% on the month; other drivers included the cost of second-hand vehicles, (27.4% higher over the past six months), as well as higher fuel and energy prices. Having sat on their backsides for too long, the Bank of England may have to reluctantly raise interest rates in the “coming months”  – and perhaps even sooner than that – to tackle rising prices and to deflate the bubble before too much damage is done to the country’s economy.

Another reason why the BoE should act sooner rather than later, when it comes to raising interest rates, is the strength of the UK labour market, with latest data showing that there are 1.3 million job vacancies. UK’s unemployment rate dropped to 4.3% in Q3, as 160k people were added to payrolls. Even its governor confirms he is becoming uneasy about rising inflation and the latest jobs figures, with payrolls 235k higher than pre-pandemic levels of February 2020, not helped by underlying wage growth of around 3% before the pandemic. It is estimated that the country has a current workforce shortage of an estimated 950k, including over 500k of which are older workers. There are concerns that ongoing supply chain problems, not improving as quickly as initially thought, labour shortages in certain sectors and record high vacancies will have a negative effect on short-term growth.

Embarrassing news for the UK economy was the decision by Johnson Matthey to stop developing electric vehicle batteries, a niche segment of the market that the UK could have been a global leader. It was perhaps unfortunate that the decision was made the same week of the Cop 26 summit, where the company had a prominent presence, with its branding being posted on the side of the world’s first electric two-seater race car, manufactured in conjunction with Envision Virgin Racing. The company indicated that potential reruns could not justify the sizeable investments in a fast-moving industry, especially dealing with larger European peers who were already producing batteries on a mass scale. More attractive returns can be made by investing in hydrogen technologies, circularity and the decarbonisation of the chemicals value chain which Johnson Matthey already has leadership positions. News of the closure saw shares in the 204-year-old company tank 20%.

The UK government has introduced its twelve-point ‘Made in the UK, Sold To The World’ plan to boost the country’s annual exports by 67% to US$ 1.35 billion, (GBP 1.00 trillion), by the end of the decade. Part of the plan will see government agencies, such as UK Export Finance, offering new services to help UK exporters secure business; currently it is estimated that only one in ten UK firms trade overseas. To help companies exhibiting their products at international exhibitions, a new UK trade show programme will be established. UK exports, which have not recovered as quickly as other rich countries post-Covid, will need all the help they can get just to catch up. No doubt exports to the EU have suffered, with estimates that trade with its former partners may fall by some 15% in the longer run – despite this, the EU still remains the UK’s largest export market.

Official data from the Labor Department indicated that a staggering 4.4 million Americans had quit their jobs in September, highlighting how, even though there are a near record 10.4 million available positions, many sectors are having problems filling vacancies. It seems that many Americans are seeking other jobs because of record wage gains and other attractive terms offered by desperate employers wanting to ensure they have the available employees. This then has an economic impact, as higher wages increase cost of goods/services and pushes up the inflationary cycle. The quits rate, or the number of quits in the month as a per cent of total employment, increased to 3% in September, a figure not seen since 2000; sectors such as leisure, hospitality, manufacturing and healthcare have been badly hit and posted record quits. The hire rate was flat at 4.4%, while layoffs and discharges were little changed at 1.4 million. For every unemployed American in September, there were 1.4 openings.

The UN Food and Agriculture Organisation has estimated that the global food trade will hit a record high by the end of this year – 14% higher at US$ 1.75 trillion on the year and 12% higher than first forecast. The report noted that trade had shown “remarkable resilience” to disruptions throughout the pandemic, but rapidly rising prices, will badly impact poorer countries and consumers. Developing regions account for 40% of the total and they have been scarred by the double whammy of rising food prices and a threefold increase in freight costs, pushing up their food import bill by 20%. The situation will be even worse in Low-Income Food Deficit Countries. Product-wise, developing regions are facing sharp increases in basic staples such as cereals, animal fats, vegetable oils and oilseeds. The study uses the Food Price Index which has seen prices 34% higher on the year to August.

Australian Prime Minister Scott Morrison continues to upset many Australian voters – and other international onlookers – with his attitude towards combatting climate change. Although adopting a target of net-zero carbon emissions by 2050, he does not want to legislate that goal instead of relying on consumers and companies to drive emission reductions. This week he has urged MNCs to offer cheaper and more sustainable solutions to combat climate change and indicated that companies should change their “corporate mindset”, drive down costs to help stop climate change and stop relying on taxpayer subsidies. He also announced financial aid to support electric vehicles. Furthermore, the leader of one of the world’s top coal and gas producers, also rejected a global pledge, led by the EU and the USA, to cut methane emissions by 30% by 2030, arguing that governments cannot solve the emissions reduction issue through imposing mandates or through the pricing of carbon.

This month has witnessed three major global groups announcing a simplification of their corporate structures. Johnson & Johnson, founded in 1886, is splitting into two companies, separating its division selling Band-Aids and Listerine from its medical device and prescription drug business. The latter will keep its traditional name, whilst the new consumer health company, which has yet to be named, will house brands including Neutrogena, Aveeno, Tylenol, Listerine, Johnson’s and Band-Aid; this division will have an estimated US$ 20.1 billion revenue stream, a lot lower than the US$ 107.3 billion turnover from its other new business unit. The world’s biggest maker of health care products posted that the split would help improve the focus and speed of each company to address trends in their different industries. Currently, J&J is facing at least 38k lawsuits in the US over its talc-based baby powder, causing ovarian cancer, and last month, it settled most suits it faced from thousands of men who claimed its anti-psychotic drug Risperdal caused them to develop excessive breast tissue.

This week, US conglomerate General Electric announced that it would split into three separate companies, retaining only its jet engine maker GE Aviation. Founded by Thomas Edison, what used to be the world’s most valuable company will divest its healthcare business in early 2023 and combine its renewable energy, fossil-fuel power and digital units into one company that will be spun off the following year.

Toshiba has confirmed plans to split the company into three separate businesses., viz., energy/infrastructure, semiconductors and devices/storage. The move comes after increased shareholder and activist pressure to make changes, particularly since its 2015 accounting scandal, which rocked the Japanese corporate world, and huge losses linked to its US nuclear unit; it is expected that the reorganisation will be finalised by H2 2023, which to some observers is too long a process. The plans see semiconductors remaining, (with Toshiba continuing to own 40.6% of memory chipmaker Kioxia and other assets), but the other two being spun off. The aim of the exercise seems to be to increase the market cap of different businesses after facing pressure from shareholders. Splitting up conglomerates is never an easy exercise, and often falls short of the mark, and for Japan, it is a very rare occurrence, so it remains to be seen whether it will be successful, and more crucially if it is enough to please activist investors. Breakin’ Up Is Hard To Do!

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If You Can’t Beat Them, Join Them!

”If You Can’t Beat Them, Join Them”!                                             11 November 2021

Tuesday was another stellar day for the Dubai realty sector, as it recorded US$ 463 million worth of transactions, including 267 sales valued at US$ 199 million. Land sales amounted to US$ 59 million, while US$ 139 million apartment and villa sales deals were conducted. Dubai Marine was the best performing location on the day with 33 apartment and villas sales deals, valued at US$ 23 million, followed by Business Bay and Al Barsha. This is in addition to mortgage deals of US$ 263 million and 23 gift transactions amounting to US$ 11 million.

Chestertons’ latest research noted that the value of Dubai’s Q3 residential property transactions was 10% higher, quarter on quarter, exceeding US$ 9.3 billion, driven by Dubai’s pandemic response, overall quality of life and recent visa reforms. Over the period, average villa and apartment prices were up 6.4% and 2.0%. Completed property sales accounted for more than 60% (US$ 5.62 billion) of the total with notable growth in the luxury segment, posting sales of US$ 545 million in Q3 and US$ 1.25 billion YTD to September. It posted that the best performing locations were Palm Jumeirah, Arabian Ranches and Jumeirah Park, up 8.8%, 8.2% and 7.7%, while Downtown Dubai and Business Bay, at 5.1% and 5.0%, witnessed the biggest quarterly uptick in prices in the apartments sector. Villa rents were 5.2% higher on the quarter, and 12.6% over the twelve months; in Q3, apartment rents were 0.6% higher.

According to a senior manager at Dubai Holding Real Estate, the UAE property market is undergoing a “true rebound and there are very good fundamentals underlying it.” It is expected that the current market momentum is sustainable for up to the next eighteen months, as the ongoing government initiatives continue to drive the sector forward that will encourage more residents to buy homes. Over the past year, the federal government has introduced a number of such measures, including visas for retirees and professionals working remotely, as well as expanding the ten-year golden visa initiative; it has also overhauled the country’s commercial companies’ law and annulled the requirement for onshore companies to have an Emirati shareholder. Earlier this year, the Dubai Ruler announced his 2040 urban plan to overhaul the emirate’s urban landscape, increasing community, economic and recreational areas, as well as nature reserves, by 2040; this will expand recreational areas by 150% and its beaches by an impressive 400%, with 60%of Dubai’s total area being nature reserves and rural areas.

According to Valustrat, Dubai’s October capital values for villas and apartments either “stabilised or improved”. In a sample of 13 villa communities and 21 apartment areas, the Valustrat Price Index jumped 12.6% on an annual basis in October, growing 1.8% on the month. The study noted that prices in some Dubai villa communities increased 30% on a yearly basis and “most of the apartment submarket continues to improve, albeit at a slower pace”. The villa segment, accounting for 13% of the residential market, saw some impressive annual gains in locations such as Arabian Ranches, Jumeirah Islands, The Lakes and The Meadows of 31.0%, 30.9%, 27.9% and 26.7% respectively. Palm Jumeirah (14.6%) and JBR (12.1%) were the best performers in the apartment sector, with negative returns being seen in Jumeirah Village (-6.3%), Dubai Production City (-2.6%) and Dubai Sports City (-2.8%). In the month, nineteen property transactions were sold at a price of over US$ 8.2 million, (AED 30 million) in the obvious locations such as Dubai Hills Estate, Downtown Dubai, Business Bay, District One, Jumeirah Golf Estates, Emirates Hills and Palm Jumeirah communities. Sales wise in October, four developers – Emaar, Damac, Nakheel and Dubai Properties at 30.2%, 11.5%, 5.4% and 4.3% – accounted for 51.4% of the month’s total. The top locations for off-plan transactions in October were in The Valley, Business Bay, Dubai Harbour and Arabian Ranches phase 3; for ready homes, Dubai Marina, Business Bay, Jumeirah Village, Akoya Oxygen and Jumeirah Lakes Towers, led the field.

Dubai-listed developer Deyaar “did exceedingly well” in terms of sales this year and plans to launch several projects in different locations next year, as it takes advantage of a strong rebound in the emirate’s property market. Financing via a mix of equity, debt and proceeds from sales, the company will start new projects in JVC, Al Furjan and at its Midtown master development in Dubai Production City. The developer, majority-owned by Dubai Islamic Bank, launched its Business Bay US$ 272 million, seventy-storey Regalia Tower, which is “almost sold out” , to both local buyers and international investors; prices for 1 B/R, 2 B/R and 3 B/R apartments start at US$ 267k, US$ 463k and US$  654k.

Danube Properties has announced plans that, over the next five years, it will launch two to three projects every year, worth as much as US$ 272 million every year, as it tries to bridge supply gaps in the emirate’s cheaper housing segment. Last month, it launched its US$ 129 million Skyz residential project, (which is 40% sold), and expects a similar US$ 109 million launch early next year. The developer already has vacant plots available for future residential developments in Arjan, Furjan and Warsan areas in Dubai. The company, with a US$ 1.36 billion portfolio in the emirate, is also looking at plots in Abu Dhabi which it considers to be a bullish market. Its chairman, Rizwan Sajan, noted that “the market has recovered so well that we are now extra bullish,” and “I personally feel that the boom is now coming to the UAE market, especially if you look at the prices that have gone up in the last six months to one year.”

Next July, Sobha Realty plans to launch a US$ 4 billion, eleven million sq ft mixed-use project, Hartland Sanctuary, adjacent to its current project Sobha Hartland in the MBR City; it is estimated that the project will be finished by 2030. The new development will be three million sq ft bigger than Sobha Hartland which is scheduled to be completed by 2025, having first been announced in 2014. Financing of the new launch will be via a mix of debt and equity with the developer also considering the bond market. The company is expecting net sales to total US$ 1 billion by the end of the year andhas a target of more than US$ 1 billion in sales next year. Sobha is also keen to enter both the Saudi and UK markets and has plans in place to start a new residential project in the UK in 2024.

Meanwhile, Azizi Developments has plans to spend US$ 1.9 billion on up to fifty new projects next year, encouraged by a market rebound in the wake of a successful Covid-19 vaccine programme and the bounce from Expo 2020.The developer will launch projects in several locations including MBR City, Healthcare City, Al Furjan and Studio City, expecting to raise over US$ 4.0 billion in sales. This year, it has already launched three projects with two more expected before the end of December. The Fitch BB- rated company, with only US$ 272 million bank debt on its balance sheet, will finance projects through equity, off-plan sales and commercial loans; it is also in the throes of a planned US$ 300 million sukuk issuance which may be amended upwards.

DMCC has announced that the construction of its iconic 340 mt high Uptown Tower is currently standing at 260 mt, with 68 of the 81 floors completed. The building will feature 188 luxury hotel rooms and suites, exclusive restaurants, extensive conference facilities, Grade A offices and 229 uniquely designed branded residences. The tower will be at the heart of the Uptown Dubai District which will be a 24-hour neighbourhood brimming with world-class dining, unique high-end retail outlets, a central entertainment plaza and several five-star hotels. It will also serve as a hub for leading global businesses.

According to Savills’ ‘Spotlight on Branded Residences’ report, the UAE, (with 39 completed schemes), has emerged as the third largest country market for branded residences globally, behind the US, (with almost 200 branded homes) and Thailand’s 42. Dubai took the top place among world cities, ahead of Miami and New York, with all three cities having established luxury property markets. It noted that Dubai benefits from a healthy mix of projects from global brands, along with a sizeable number of projects from domestic players such as Emaar. Over the past decade, the global branded residences sector has expanded by 230%, with 580 schemes open and operating with almost 100k units between them; it is expected to see schemes grow to 900 and up to 200k units by 2025, led by the US, Mexico and the UAE. The branded residences space has diversified significantly over the past decade, shifting from a market dominated entirely by hotel brands to a combination of hotel and non-hotel or lifestyle brands. Marriott has been the leader in this sector since 2002, but there have been new entrants into the market, as well as expansion of established players both in terms of type of brand and the location of the parent brand. Non-US brands, such as Emaar and Banyan Tree, have risen to become global contenders.

According to Mattar Mohammed Al Tayer, Chairman of the Roads and Transport Authority, Dubai’s transport agency, has invested US$ 40 billion, in enhancing the infrastructure of roads and transport, over the past fifteen years; this has saved about US$ 60 billion in time and fuel wasted through traffic congestions from 2006 to 2020. Speaking at the 18th IRF (International Road Federation) World Meeting and Exhibition, he noted how the RTA had achieved two of its mega projects – Dubai Metro project, in four years, and the Dubai Water Canal project in less than three years. Furthermore, over that period, its roadwork had doubled from 8.7k lane km to 18.3k, vehicle bridges/tunnels fivefold from 26 to 125, and cycling track network from nine km to 463 km. Interestingly, road accident fatalities have declined from 22 cases to 1.8 cases per 100k, and reduced pedestrian fatalities per 100k population from 9.5 to 0.5; carbon dioxide emissions have been reduced by 400k tons over the fifteen year period, with plans to zero-emissions public transport by 2050. Under the Dubai Urban Plan 2040, with the aim is to improve the wellbeing of people and make Dubai the best city for living in the world, 55% of the expected population will live within 800 mt of metro stations, with the plan to adopt a “20-minute city” concept to allow residents to access 80% of daily services, within twenty minutes by walking and cycling

An agreement with the European Tour group sees DP World becoming the new title sponsor of the group’s main tour from the start of the 2022 season. The Dubai port operator will target three key areas – elevating the Tour in every way, growing the game of golf globally, and driving positive community impact. Next year, the DP World Tour will have a record total prize money of over US$ 271 million, with a new minimum prize fund of US$ 2.71 million for all tournaments solely sanctioned by the DP World Tour. Over the year, the season will feature more than forty-seven tournaments in twenty-seven countries.

Although still in a loss position, H1 sees Emirates’ performance improving, posting a US$ 1.6 billion deficit, compared to US$ 3.4 billion loss in H1 2020. The airline’s revenue was 86% higher, at US$ 5.9 billion, with passenger numbers more than quadrupling to 6.1 million. With cargo 39% higher, to 1.1 million tonnes, it now stands at 90% of pre-pandemic levels. HH Sheikh Ahmed bin Saeed, the carrier’s chairman, noted that “while there is still some way to go before we restore our operations to pre-pandemic levels and return to profitability, we are well on the recovery path, with healthy revenue and a solid cash balance at the end of our first half of 2021-2022.”

The Emirates group narrowed its net loss to US$ 1.6 billion, compared with a US$ 3.8 billion loss in the same period last year, as revenue jumped 81% higher to US$ 6.7 billion and its cash position US$ 0.3 billion down at US$ 5.4 billion. It also received additional state support during the fiscal period, with a further injection of US$ 681 million by way of an equity investment. Dnata reported a US$ 23 million profit, (cf a US$ 396 million loss last year), whilst its revenue increased 55% to US$ 1 billion.

A Memorandum of Understanding, to set up a codeshare partnership, has been signed between Emirates and Garuda which covers seamless travel on both airlines’ routes, and frequent flyer programmes, across the Americas, Middle East, Africa and Europe; travel can be made on a single ticket. Subject to required regulatory approvals, the codeshare agreement is expected to come into effect in January. Emirates currently has codeshare cooperation agreements in place with twenty-one airline partners.

HH Sheikh Mohammed bin Rashid Al Maktoum has issued a decision to merge Dubai Economy and Dubai Tourism into one entity, under the name, ‘Dubai’s Department of Economy and Tourism’, with Helal Al Marri appointed as Director General. The Department is tasked with meeting seven targets to further strengthen Dubai’s leading position in tourism and economy and making it the world’s best city in which to live and work. These include increasing the added value of the industrial sector by 150% in the next five years, expanding export markets for local products by 50% and increasing the number of inbound tourists by 40% to 25 million, by 2025. Other responsibilities for the new set-up include ensuring that Dubai becomes one of the top five global cities, attracts 100k companies before the end of 2024, holds at least two hundred global economic events annually by 2025 and encourages private and family-owned businesses to get listed on the Dubai bourse. Furthermore, it will be in charge of other sectors, including attracting foreign investments and supporting SMEs.

Another directive by HH Sheikh Mohammed sees Dubai Courts announce the formation of a law enforcement committee for the emirate’s financial markets and the establishment of two new courts, within its Commercial Court, to expedite the resolution of disputes related to securities, shares, bonds, and other such financial instruments.  The aims of the exercise are twofold – to reinforce mechanisms to ensure the speedy delivery of justice in the financial sector, and to assist the emirate’s judicial system further raise its stature in the global commercial judicial community. The new courts will feature a remote litigation system that supports Dubai Courts’ aim of transforming itself into a smart judicial system, along with an interactive technology-based system that can be easily used by all parties including judges, advocates, experts and litigants.

At Tuesday’s cabinet meeting, held at the Expo 2020 site, HH Sheikh Mohammed announced “today, we decided to approve the requirements needed to grant residency visas for retired expatriates. This will allow retired foreigners to continue their stay in the UAE. We welcome everyone in our country.” This comes after the government recently introduced ‘Green’ and ‘Freelance’ visas.

In directing them to establish Dubai as a leading global centre for alternative dispute resolution, as per the highest standards of efficiency and transparency, the Dubai Ruler has formed the Board of Directors of the Dubai International Arbitration Centre. Under the chairmanship of Dr Tarik Humaid Al Tayer, and six other members, it is expected that the Centre will become one of the world’s top five arbitration centres in the next three years. Only last month, Sheikh Mohammed issued a Decree dissolving the Emirates Maritime Arbitration Centre and the Dubai International Financial Centre Arbitration Institute and merged their operations and assets into DIAC.

National Bonds has increased its stake in Taaleem Holdings by 3.4% to become a 23.0% shareholder in a global education provider that educates approximately 9.8k students across nine different schools. The investment company, owned by The Investment Corporation of Dubai, is now the largest shareholder in Taaleem and, as 30 September 2021, had an investment portfolio, valued at US$ 2.72 billion.

Boosted by a strong rebound in new orders and the first month of Expo 2020, the seasonally adjusted IHS Markit PMI was 3.0 higher on the month in October to 54.5 – its highest level in two years, and third highest in a decade. The marked increase in client demand and tourist numbers, as flights resumed, contributed to a sharp expansion in activity, with 75% of respondents expecting the Expo factor to be the main driver to benefit business in Q4. Indeed, firms’ output expanded to its strongest levels since July, whilst client orders, both domestically and abroad, headed north. All the emirate’s sectors, including construction, travel, tourism and wholesale/retail, witnessed growth; the latter recorded the biggest of the rises, as construction continued to see the strongest overall speed of recovery; furthermore, the easing of travel restrictions was another factor  helping the hospitality sector, driving September average occupancy rate higher to 67.2% in the month – up 51%, compared to the same month in 2020., and 9.2% higher than the August return. However, once again employment disappointed which only nudged up slightly, as staff hiring was partly linked to a rise in backlogs of work.

Shuaa Capital saw nine-month net profit, to 30 September, jump 39% to US$ 25 million, as its Q3 profit was 19% higher at almost US$ 10 million; the quarterly EBITDA, (earnings before interest, taxes, depreciation and amortisation) grew 5% to US$ 23 million. The improvement was attributable to stable recurring revenues and strong performance in its public markets fund. The Dubai-based investment bank, which has assets of nearly US$ 14 billion under management, led the funding round for music-streaming service Anghami late last year. Shuaa Capital merged with the Abu Dhabi Financial Group two years ago to create a business, with an asset management and investment banking platform that offers diversified revenue streams across different countries.

Driven by a strong capital and liquidity position, Mashreq posted a US$ 50 million Q3 net profit, (compared to a loss of US$ 51 million in the same period last year), helped by a marked improvement in the local economy and a rise in business confidence. However, the nine-month profit to 30 September declined almost 25% to US$ 72 million, largely attributable to an almost 25% hike on impairment provisions to US$ 564 million. Its operating profit came in 44% higher at US$ 201 million (US$ 654 million for the nine months), generated mainly from a 26.2% increase in fee and commission income. Both the bank’s customer deposits and total assets grew – by 7.4% to US$ 26.0 billion and 7.0% to US$ 46.2 billion respectively.

Emaar Malls posted an 86% leap in Q3 net profit to US$ 122 million, driven by a 36% hike in revenue to US$ 311 million, as Dubai’s retail sector improved in line with the emirate’s economy returning to pre-pandemic levels; its nine-month profit was 83% higher at US$ 272 million. Occupancy levels across Emaar Malls’ establishments remained flat at 91%. The unit of Dubai’s biggest developer, Emaar Properties, also reported that its e-commerce platform Namshi recorded quarterly sales of US$ 87 million. Official estimates are that Dubai’s wholesale and retail trade sector is on track to achieve 4.7% growth in 2021, whilst the local economy will be 3.1% higher this year and up 3.4% in 2022.

The DFM opened on Sunday, 07 November, 332 points (12.0%) higher the previous three weeks, gained a further 33 points (1.1%) to close the week at 3,141. Emaar Properties, US$ 0.23 higher the previous fortnight, closed US$ 0.02 higher at US$ 1.32. Emirates NBD and Damac started the previous week on US$ 3.83 and US$ 0.38 and closed on US$ 3.88 and US$ 0.39. On Thursday, 11 November, 538 million shares changed hands, with a value of US$ 173 million, compared to 821 million shares, with a value of US$ 251 million, on 04 November.

By Thursday, 11 November, Brent, US$ 2.78 (3.4%) lower the previous fortnight, regained US$ 0.87 (1.1%), to close on US$ 82.67. Gold, US$ 16 (0.5%) lower the previous fortnight, had a stellar week, (as the greenback strengthened), gaining US$ 74 (4.1%), to close Thursday 11 November on US$ 1,866. 

A US court has ordered the current and former company directors of Boeing to pay a US$ 238 million settlement with shareholders, over the safety oversight of the 737 MAX; the payment amount will be paid by the plane maker’s insurers. Furthermore, the agreement sees the need for the appointment of an additional board director, with aviation safety oversight expertise, and the creation of an ombudsperson programme. Boeing has reached an agreement with the families of the 157 people who died in the Ethiopia 737 Max crash in 2019 and importantly accepts liability for the fatalities; this deal is subject to families of the victims not seeking punitive damages from the company. Lawyers for the victims’ families said Boeing would still be held “fully accountable”. Last month, a former chief technical pilot for Boeing was charged with deceiving federal regulators who were evaluating the company’s 737 Max plane, with a lawyer claiming that he did not act alone. He was accused of “scheming to defraud Boeing’s US‑based airline customers to obtain tens of millions of dollars” for the company. (Interestingly, its new 777X will make its international debut at the Dubai Air show later this month – both in the air, with a 777-9 flight test aircraft, and on a static display).

In what would be one of the country’s biggest ever buyouts, Sydney Airport has agreed to accept a US$ 17.5 billion takeover bid from Sydney Aviation Alliance, comprising Australian firms IFM Investors, QSuper and AustralianSuper, as well as US-based Global Infrastructure Partners. Before this becomes reality, there are several obstacles to clear, including an independent report on the takeover, 75% shareholder approval and the green light from Australian regulators.

Evergrande is back in the news again as it managed to pay a US$ 148 million interest payment just before a deadline for payment; it has managed so far avoided defaulting on its debts by making overdue payments just before thirty-day grace periods expired. Earlier in the year, the cash-strapped Chinese real estate giant managed to sell a 5.7% stake in HengTen Networks Group. Evergrande owned a majority stake in the media firm but has since made a number of share sales, as it tries to raise money to meet its financial commitments. (Tencent, which in July, acquired a 7% stake for US$ 266 million from Evergrande, is now HengTen major shareholder, with a 24% stake). Last week, it also sold its UK-based electric motor making business Protean, which it bought in 2019 for US$ 58 million. However, as it has struggled to sell some of its other assets, it will continue to have problems repaying interest charges, (let alone winding down its massive US$ 300 billion debt); last month, a US$ 2.6 billion deal fell through after seventeen days of negotiations.

Shares in M&S skyrocketed yesterday, 10 November, by 18% – and its highest level since January 2020 – as it raised its profit forecast for the second time in less than three months; it now has upped its full year’s profit estimate to US$ 675 million, compared to its earlier expectation of US$ 472 million. For the six months to 02 October, it made a profit before tax and adjusting items of US$ 364 million, compared to a US$ 23 million loss over the same period in 2020. The main driver behind the improved results was a 10.4% increase in food sales, (and its deal with Ocado), offsetting a 1% decline in clothing caused by shop closures. The retailer had gone through a turbulent ten-year period but seems to have managed to turn around its ageing brand, with management focusing on transforming the company’s outdated culture, improving the quality and value of its clothing and food products, reshaping its stores and investing in technology and e-commerce. It also entered into an arrangement with online supermarket Ocado. It may have also benefitted from the fact that the UK has lost a staggering 83% of its rival department stores since 2016; it is estimated that 67% of closed shops remain unoccupied, with about 237 large shops yet to be taken over by a new business.

AB Foods, the parent company of Primark posted that the discount retail chain had lost one-third of its trading days in the 53 weeks to 18 September – which resulted in a 12% slump in sales, compared to pre-Covid, and lost sales totalling over US$ 2.7 billion – a massive blow for a retailer which has no online retail operations. AB Foods posted that its pre-tax profits dipped 1.0% to US$ 908 million for the year. Although Primark estimates that it could face disruption from global supply chain issues into 2023, it has assured customers that “we are getting the goods we need”. The retailer is bullish about its future, announcing a 33.2% increase in the number of shops to 530 over the next five years, with the number of US outlets rising more than fivefold to sixty. Although not ruling out introducing on-line sales, it still considers that it should focus on traditional shopping, but it does plan to overhaul its website to give more details of in-store ranges, so customers can “browse online, before they come into our stores”.

Google’s parent company Alphabet became the third tech giant to reach a market cap of over US$ 2 trillion, joining peers, Apple (US$ 2.47 billion) and Microsoft (US$ 2.53 billion); it only took the California-based company less than two years, after hitting US$ 1 trillion in January last year. The world’s largest provider of search and video advertisement posted a Q3 68.4% jump in net profit to US$ 18.9 billion, driven by the strong performance of Google Services business, which includes advertisements, Android, Chrome, hardware, Maps, Search, Google Play and YouTube. Since its 1998 formation, the company has diversified and has made some canny investments including paying US$ 50 million for the Android operating system, which is currently used by more than 2.5 billion people, and a year later, in 2006, US$ 1.65 billion for YouTube, whose revenue jumped 43% and added more than US$ 7.2 billion to Alphabet’s revenue.

Following a Twitter vote, arranged by the man himself, Elon Musk looks as if he is in the market to sell 10% of his Tesla stake as 58% of the 3.5 million Twitter users, who took part, were in favour of him trading US$ 21 billion worth of his stock. He has undertaken to keep to his promise, in response to a “billionaires’ tax” proposed by US Democrats, but should he go ahead with the sale, it could leave him with a huge tax bill. As he has apparently not taken any salary or bonuses from any of his companies, he has no earnings on which to pay income tax, but he has made billions of dollars through a compensation package, which gives him power to exercise large amounts of stock options when the company meets performance targets and its shares hit certain prices. His option, expiring next August, to buy 22.86 million Tesla shares at US$ 6.24 per share – on the day, 7.2% lower but still valued at US$ 1,222.00. Senate Democrats are proposing billionaires could be taxed on “unrealised gains” when the price of their shares goes up – even if they do not sell any of their stock. Yesterday, Elon Musk sold about US$ 5.1 billion in shares, with his trust selling nearly 3.6 million shares, worth around US$ 4 billion, while he also sold another 934,000 shares for US$ 1.1 billion after exercising options to acquire nearly 2.2 million shares; this equates to about 3% of his holdings in Tesla.

At Wednesday’s IPO on the New York bourse, shares in electric vehicle firm Rivian, having raised more than US$ 11.9 billion from investors, started above the company’s target range of US$ 78 each. Although the flotation is among the top ten US IPOs of all time, the company has made losses of over US$ 2 billion over the past two years and only started delivering its first electric trucks in September. It will roll out its SUVs next month and delivery vans in 2023. Despite this, it has been backed by Amazon and Ford (with a 13% stake), as well as hitting the market for small trucks, pick-ups and SUVs before its rivals such as GM. Not only is Amazon a 20% shareholder, it will also buy 100k electric delivery vans once they start production. Obviously, some investors are hoping that Rivian will emulate Tesla which went public in 2009, with a share value of US$ 17 – now they are trading at over US$ 1k. It was the world’s biggest initial public offering (IPO) this year and made Rivian the second most valuable car manufacturer behind Tesla (US$ 1 trillion), and ahead of GM (US$ 86 billion) and Ford (US$ 66 billion).   

Rolls-Royce Small Modular Reactor (SMR) business, backed by a consortium of private investors and the UK government, has been created to develop small nuclear reactors to generate cleaner energy. A US$ 285 million UK government grant and a US$ 265 million investor cash injection will fund the development of Rolls-Royce’s SMR design and take it through regulatory processes to assess whether it is suitable to be deployed in the UK. If successful, it could create 40k jobs by 2050 and result in this nuclear power contributing more than its current level of 16% to UKs electricity generation. At an expected cost of US$ 2.7 billion each, SMRs would cost less than the US$ 27 billion each for the larger plant under construction at Hinkley Point and a further possible plant at Sizewell in Suffolk. RR estimates a plant would have the capacity to generate 470MW of power, equating to the same amount of power produced by more than 150 onshore wind turbines.

At the Glasgow COP26 summit, the UAE indicated its intention to become a global leader in low carbon hydrogen, unveiling the Hydrogen Leadership Roadmap, a comprehensive national blueprint to support domestic, low-carbon industries. Its two aims are to contribute to the UAE’s net-zero ambition and establish the country as a competitive exporter of hydrogen. The country’s Minister of Energy and Infrastructure, Suhail bin Mohammed Al Mazrouei, told the summit that seven projects are currently underway, and the UAE is on-track to capture 25% market share in key export markets, including Japan, South Korea, Germany, and India initially along with additional high-potential markets in Europe and East Asia.

The FAO Food Price Index rose for the third month in a row, with October increasing on the month by 3.9% – its highest level since July 2011. The UN barometer for global food prices, which tracks the international prices of a basket of food commodities, saw marked rises in cereal, wheat, dairy and vegetable oil, of 3.2%, 5.0%, 2.6% and 9.6% respectively; with cheese prices remaining stable, the meat index declined, as did sugar prices dipping 1.8%. It is estimated that the production, distribution and consumption of all this food uses about a third of the world’s total energy, and that feeding the world is responsible for about a third of global greenhouse gas emissions.

Despite theGerman and French antitrust watchdogs, and their counterparts in the other twenty-five EU countries, having lobbied for a bigger role in enforcing the upcoming Digital Markets Act, representatives from EU countries have agreed that the EC will be the sole enforcer of new tech rules. Notwithstanding, there will be a more limited role for the national regulators, who may have more practical expertise in digital cases. An EU documents cites that “the Commission is the sole authority empowered to enforce this regulation.,” but noted that “member states may empower competent authorities enforcing competition rules to conduct investigative measures into possible infringements of obligations for gatekeepers,”

Labour Department data posts the October consumer price index at 6.2% on the year, and 0.9% on the month, driven by higher prices for energy, shelter, food and vehicles. Year on year, prices paid by US consumers rose by the most since 1990, reflecting broad-based increases and pushing up prices, as more often than not the consumer ends up paying for the inflationary increase. With the US returning to almost pre-pandemic normalcy, there is pent up demand for services and consumer goods, with certain sectors facing the double whammy of supply chain bottlenecks and a shortage of qualified workers which have been driving up costs. It seems that maybe the Fed, along with the BoE and many other global central banks, have underestimated the inflation impact on two counts – the percentage is higher than many had forecast and there was a feeling that the rise would be more transient than it has turned out.

After a depressed summer, caused by the spread of the Delta variant and sluggish economic growth, US October employment numbers rose by 531k, with the unemployment rate dipping to 4.6%. With an apparent reluctance from parts of the workforce to return to work, many employers seem to have problems acquiring staff to meet the growing demand and have had to increase remuneration levels to attract and retain staff. Although average private sector wages only grew by US$ 0.11 to US$ 30.96, it does follow six months of strong wage increases; over the past twelve months, average earnings are 4.9% higher but this figure is still short of the 5.4% annual inflation over the same period. Despite the positive news, it must be remembered that the country has more than four million fewer jobs than it did before the pandemic and that the participation rate, which shows what proportion of potential workers are in jobs or looking for one, remained worryingly flat at 61.6%.

Today, 11 November, the US dollar rose to 16-month highs against the euro and other currencies, as the yen sank towards four-year lows of US$ 114.5, after the latest US inflation readings saw the rate climb to a generation high and the growing possibility of a hike in interest rates. With seeming inactivity by the ECB, the euro took a battering, sinking to US$ 1.1459, its lowest level since July 2020. Better than expected economic data from the UK saw the BoE doing little to support sterling which dipped to an eleven-month low at US$ 1.3388. Another factor driving behind the dollar’s surge was the sharp rise in US government bond yields, including the 30-year Treasury passing 1.5%. To some observers, it is inevitable that the Fed will end near zero-rate interest rates and to speed up the pace of tapering its QE program before the end of 2021.

President Joe Biden has welcomed the House of Representatives finally passing his US$ 1 trillion infrastructure spending package, which includes a US$ 550 billion investment in infrastructure, over the next eight years, to upgrade highways, roads and bridges, and to modernise city transit systems and passenger rail networks. The balance will be spent on funding clean drinking water, high speed internet, and a nationwide network of electric vehicle charging points. This largest federal investment in the country’s infrastructure for decades, and seen by many to be a major domestic win for the US president, did not please all legislators, with some complaining that key liberal policies had been dropped in exchange for the bipartisan House victory. Members of the Congressional Progressive Caucus pledged they would not support the infrastructure bill until they had voted on a separate social welfare bill that allocates a massive US$ 1.75 trillion for healthcare, education and climate change initiatives.

China’s annual Singles Day is the world’s biggest shopping festival but this year, it has been a low-profile event, as the tech giants are wary of upsetting the Chinese administration which, over the past twelve months, has been cracking down on platforms such as Alibaba. Normally more money is spent on this extravaganza than the combined totals of Black Friday and Cyber Monday. It seems that the regulators have two problems with the tech giants – an alleged abuse of user data by online giants, and wider concerns that big tech had become too powerful and unregulated. Singles’ Day — so called for its 11.11 date — began more than a decade ago and was a 24-hour event for some time before Alibaba and its rivals began milking its success and then extended the promotion from 01 November to 11 November. Last year, the combined sales of Alibaba and came in at a mouth-watering US$ 158 billion. In prior years, most platforms had a running total of sales, but this has changed with the likes of Alibaba not releasing figures until after the event closes.

The UK economy seems to be faltering, as latest Q3 figures show only a 1.3% expansion, with one of the main drivers for this disappointing figure being the supply chain problems; this is well down on Q2’s 5.5% which rebounded because of coronavirus restrictions being lifted. During the quarter, the service sector grew 1.6%, with accommodation and food services expanding 30% and the arts and entertainment by 19.6%, but production and construction output fell. Despite the latest figure, and the fact that the economy is still 2.1% smaller than it was in Q4 2019, it is expected that the UK’s economy will have the fastest growth in the G7 this year. Things may not get better in the coming months, as household spending could be slowed, by higher taxes and rising utility prices, and the ongoing supply problem could see shortages continue; this could result in a phenomenon known as stagflation when the economy has slowing growth mixing with rising inflation.

It is reported that the Bank of England and the Treasury are to evaluate the possibility of a UK central bank digital currency. The consultation next year will form part of a “research and exploration” phase and will help the Bank and government develop the plans over the following few years. If the process were to be taken further, the new currency would not replace cash and bank but would be used in tandem – at least for the short-term because there is no doubt that cash is on its way out for good. Some central banks have warned that widespread use of CBDCs could deprive banks of a cheap and stable source of funding from consumer deposits. The success of Bitcoin, and some other cryptocurrencies, has caused great concern among most global central banks and there is a feeling that If You Can’t Beat Them, Join Them!

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It’s All Over Now! 28 October 2021

For the past week, ending 28 October, Dubai Land Department recorded a total of 1,254 real estate and properties transactions, with a gross value of US$ 1.34 billion. It confirmed that 1,080 villas/apartments were sold for US$ 590 million, and 174 plots for US$ 251 million over the week. The top three transfers for apartments and villas were all apartments – one sold for US$ 19 million in Nad Hessa, followed by two transactions in Burj Khalifa worth US$ 14 million and US$ 12 million. The top three land transactions were for a plot of land in Business Bay, worth US$ 19 million, followed by two for US$ 13 million each in Mohammad Bin Rashid Gardens. The most popular location in terms of volume and value was Business Bay, with 155 transactions totalling US$ 46 million. Mortgaged properties for the week totalled US$ 447 million and 79 properties were granted…

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Just Friends

Just Friends                                                                                       04 November 2021

For the past week, ending 04 November, Dubai Land Department recorded a total of 1,966 real estate and properties transactions, with a gross value of US$ 1.31 billion. It confirmed that 1,328 villas/apartments were sold for US$ 670 million, and 174 plots for US$ 272 million over the week. The top three transfers for apartments and villas were a Marsa Dubai apartment selling for US$ 89 million, followed by an apartment in Burj Khalifa, worth US$ 71 million, and a villa in Al Hebiah Fourth for US$ 55 million. The top two land transactions were for a plot of land in Island 2, worth US$ 19 million, and the other in  Hadaeq Sheikh Mohammed Bin Rashid for US$ 8 million. The three most popular locations in terms of volume were Al Hebiah Fourth, (67 transactions valued at US$ 91 million), Al Hebiah Third, (20 – US$ 16 million) and Al Yufrah 3 (18 – US$ 8 million). Mortgaged properties for the week totalled US$ 283 million, with the highest being a plot in Al Qusais Industrial Fifth, mortgaged for US$ 15 million. 91 properties were granted between first-degree relatives worth US$ 80 million.

ASGC has been appointed main contractor by Majid Al Futtaim Communities, for the first phase of its three-part Harmony at Tilal Al Ghaf project.; the US$ 297 million contract, comprising 755 villas, is the largest contract ever awarded by the MAF subsidiary. Buyers will be able to customise their villa layouts and create space that complements their personal needs.

In June, HH Sheikh Mohammed bin Rashid issued directives to raise the emirate’s role as a key player in the global investment landscape and to streamline processes, related to conducting business. This week, the Executive Council reviewed what progress had been made, in the ensuing four months, to enhance the Dubai’s economic environment and attract quality inward investments. Dubai’s Crown Prince, Sheikh Hamden bin Mohammed, noted that the government will work to accelerate the full completion of its business enhancement initiatives, focused on creating promising new opportunities for investors by Q1 2021. To date, targets have been exceeded and there have been reductions in both government procedures for doing business, by 95%, and in licensing requirements through the Invest in Dubai platform; it was also estimated that 11k requirements have been eliminated to enhance ease of doing business in Dubai. There is no doubt that the emirate will become a more attractive and more competitive investment environment for global entrepreneurs and investors, many of whom will move to Dubai with their families – another fillip for the local economy and real estate sector.

From Monday, retail fuel prices nudged higher for the month of November. Special 95 will be 8.0% (US$ 0.0545) higher at US$ 0.763 per litre, as diesel sees an increase of US$ 0.0874 (7.7%) to US$ 0.766.

According to OAG’s latest rankings, Dubai International has reclaimed its number one position as the world’s busiest international airport, The rankings were compared to October2019 figures and was based on airlines’ international seat capacity and flight frequency; Dubai claimed 2.7 million seats overtaking Amsterdam Schiphol, (2.5 million), into the second position, followed by Frankfurt, (2.2 million), London Heathrow, (2.2 million) and Istanbul (2.1 million).

In a thirty-year deal, with an estimated value of US$ 7.5 billion, DP World and Indonesia’s sovereign wealth fund signed an agreement to develop the SE Asian country’s logistics and seaports; this will include capacity building and integrated seaport management. The agreement, the first of a series of bilateral investment and business deals, was agreed as its President, Joko Widodo, visited the UAE earlier in the week. Earlier in the year, the UAE invested US$ 10 billion with the Indonesia Investment Authority to spend on projects in sectors such as road and port infrastructure, tourism and agriculture. Also in March, DP World and Canada’s Caisse de dépôt et placement du Québec (CDPQ) signed a long-term agreement with the Indonesian conglomerate Maspion Group to build a port and industrial logistics park in East Java. Other recent deals include a preliminary agreement between Abu Dhabi National Oil Company and Indonesia’s Pertamina and Chandra Asri to explore the possibility of developing a crude-to-petrochemicals complex in Indonesia, whilst Masdar signed a power-purchase agreement with Indonesia’s state electricity company, Perusahaan Listrik Negara, to develop the country’s first floating solar photovoltaic plant.

Etisalat Group posted a year-on-year growth as its Q3 revenue and consolidated net profit (after Federal Royalty) came in 2.0% higher at US$ 3.62 billion and 1.0% to US$ 654 million respectively; over that period, its aggregate subscriber base expanded 4.0% to 155.4 million and topped twelve million in the UAE. It noted that its consolidated earnings before interest, taxes, depreciation and amortisation amounted to US$ 1.83 billion – a 51.0% EBITDA margin. Etisalat, which was named the world’s fastest mobile network by Ookla, for the second consecutive year, also agreed with G42 to establish the country’s largest data centre provider. It also increased its effective ownership in Maroc Telecom Group by 4.6% to own a 53.0% shareholding.

The Dubai Financial Services Authority has fined former Abraaj managing partner Mustafa Abdel-Wadood US$ 1.9 million for breaching its rules and deceiving investors, as well as banning him from conducting business in the DIFC. The disgraced financier is currently out on US$ 10 million bail, as he awaits sentencing in New York. DFSA also noted that “Abdel-Wadood was involved in the misuse of investor funds, the withholding of sale proceeds and reports from investors, providing false explanations to investors and the cover [up] of a US$ 200 million shortfall in a fund at its financial reporting date.” Abdel-Wadood could be sentenced to 125 years in a New York prison if all the terms for each of his charges are served consecutively.

His sentencing has been postponed pending the outcome of a request for the extradition of the company’s founder, Arif Naqvi, who is on US$ 20 million bail in London. Abraaj was said to have managed US$ 14 billion of assets and was seen as the ME’s biggest private equity firm and one of the world’s most active emerging market investors. It went into liquidation in 2018 after an alleged mismanagement of money in its US$ 1 billion healthcare fund and that investigation resulted in further enquiries into other areas of misappropriation of funds secured from US investors.

In April 2020, NMC Healthcare went into administration, after a US$ 4.4 billion fraud was discovered, as the company had been inflating its assets and understating its debt, following which it went into administration. This week, its UAE and Oman business reported a 12.1% hike in gross revenue to US$ 915 million. YTD patient visits across the group medical facilities were 81.1% higher, on the year, at 6.7 million. Having secured approval for its restructuring proposal from 95% of its creditors, owed more than US$ 6.4 billion by NMC Healthcare, it is now working on securing the final approvals for the completion of the restructuring and the group’s exit from administration by 16 December; this would result in US$ 4 billion of its debts being ‘cleared’ in return for equity instruments under the Doca process. Once the group companies exit administration, they will be owned by its creditors.

Dubai Investments PJSC posted a 9.0% hike in nine-month profit of US$ 124 million on the back of a 37% rise in revenue to 30 September of US$ 708 million. Its CEO, Khalid Bin Kalban, noted that “after careful evaluation and in line with the market trends, the Group is channelising resources towards strengthening its foothold in the real estate market, especially with the improved sentiment and demand within the sector from both local and international markets.” Last month, it announced a US$ 272 million beachfront and residential investment in Ras Al Khaimah.

HH Sheikh Maktoum bin Mohammed bin Rashid has announced the appointment of the new board of directors of the Dubai Financial Market (DFM), to be chaired by Helal Saeed Al Marri. He also thanked the outgoing chairman, noting “Essa Kazim contributed to the establishment and management of the Dubai Financial Market for many years, and his efforts will always be appreciated.” The five appointed board members include Abdulqader Obaid Ali, Yuvraj Narayan, Wesam Lootah, Abdulwahid Alulama, Moaza Al Marri and Mohammed Humaid Al Mari. Sheikh Maktoum – recently appointed by his father HH Sheikh Mohammed to supervise the financial markets and stock exchanges in Dubai and oversee the comprehensive development of the financial markets – also directed the board to spur growth and double the size of Dubai’s financial markets to US$ 817 billion, (AED 3 trillion) in the near future.

This week, during the first meeting of the Securities and Exchange Higher Committee, he announced that the Dubai Electricity and Water Authority (DEWA) will be listed on the DFM in the coming months; this is the first of ten Dubai public enterprises that will soon debut on the local bourses, with the aim of raising their competitiveness. The move is part of accelerating new listings in various sectors including energy, logistics and retail. Sheikh Maktoum also announced the formation of a Dubai Markets Supervisory Committee and specialised courts for capital markets in Dubai. The Committee approved the establishment of a market-making fund worth up to US$ 545 million (AED 2 billion) to increase liquidity in the markets. It will also launch a US$ 272 million (AED 1 billion) fund to support tech company IPOs and encourage innovative financial products and solutions.

The DFM opened on Sunday, 31 October, 85 points (3.1%) higher the previous fortnight, gained a further 247 points (8.6%) to close the week at 3,108. Emaar Properties, US$ 0.02 higher the previous week, closed US$ 0.21 higher at US$ 1.30. Emirates NBD and Damac started the previous week on US$ 3.80 and US$ 0.34 and closed on US$ 3.83 and US$ 0.38. On Thursday, 04 November, 821 million shares changed hands, with a value of US$ 251 million, compared to 135 million shares, with a value of US$ 49 million, on 28 October.

For the month of October, the bourse had opened on 2,845 and, having closed the month on 2,864 was 19 points (0.7%) higher. Emaar traded flat from its 01 October 2021 opening figure of US$ 1.11 to close October on the same figure US$ 1.11. Two other bellwether stocks, Emirates NBD and Damac, started the month on US$ 3.87 and US$ 0.34 and closed on 31 October on US$ 3.75 and US$ 0.38 respectively. YTD, the bourse had opened the year on 2,492 and gained 372 points (14.9%) to close the ten months on 2,864. NBD and Damac started the year on US$ 3.33 and US$ 0.35 and closed 31 October at US$ 3.75 and US$ 0.38.

By Thursday, 28 October, Brent, US$ 0.49 (0.6%) lower the previous week, shed US$ 2.39 (2.8%), to close on US$ 81.80. Gold, US$ 9 (0.5%) lower the previous week, lost US$ 7 (0.3%) to close Thursday 04 November on US$ 1,792. 

Brent started October on US$ 78.17 and gained US$ 5.47 (7.0%) during the month, to close on US$ 83.64. YTD, it started the year trading at US$ 51.80 and has gained US$ 31.84 (61.5%) to close on US$ 83.64 during the first ten months of the year. Meanwhile, the yellow metal opened October trading at US$ 1,757 and gained US$ 28 (1.6%), during the month, to close on US$ 1,785. Over the year it has lost US$ 110 (5.8%) from its opening year balance of US$ 1,895.

Last Friday, shares in Volvo jumped 22.6%, on its Stockholm stock exchange IPO, valuing the company at more than US$ 22 billion; this comes after the car company, majority-owned by Chinese firm Geely, offered up part of the company’s shares to the public. Money raised will be used to help Volvo meet its goal to be fully electric by 2030. Geely, which bought the Swedish company from Ford for US$ 1.8 billion in 2010, remains the largest single shareholder.

Australian prosecutors have abandoned a long-running criminal cartel case, (also involving Deutsche Bank, JP Morgan and Citigroup), against ANZ and one of its senior executives, Rick Moscati, after the Federal Court described the matter as a “complete shemozzle”. Despite the Commonwealth Director of Public Prosecutions (CDPP) being ordered to refile its indictment, for a third time, because it was “deficient and defective”, it has been decided to continue with the criminal prosecution. Instead of trying again, the CDPP decided to abandon its case against ANZ and Mr Moscati but is pressing ahead with its prosecution of Deutsche and Citi for being “knowingly concerned in alleged cartel conduct”. This case arose from ANZ’s decision to raise extra cash from institutional investors, by issuing US$ 1.8 billion worth of new shares in August 2015. It seems that the three banks – and JP Morgan, through some of their most senior executives – allegedly came to an understanding on what to do with the US$ 585 million worth of shares that were unable to be sold. JP Morgan is not facing charges because it blew the whistle and was granted immunity.

If you are a fan of the new hit Korean Netflix show Squid Game, and if you invested in the new cryptocurrency on the block, on Tuesday 26 October, you will be a happy gamer. On that day, shares in the new cryptocurrency Squid were trading at US$ 0.01 and exploded to be trading at US$ 2.34 three days later on 29 October, with a market cap of US$ 184 million. The game, which cost just US$ 21 million to make, is a story of a group of people forced to play deadly children’s games for money – in this case, Squid which is known as a “play-to-earn” cryptocurrency, where people buy tokens to play in online games where they can earn more tokens, which can then be exchanged for other cryptocurrencies or fiat money. In the case of Squid Game, gamers play an online game in which the developers will take 10% of the “purse” and the 90% to the game’s winner. Individuals have to pay to enter with a round 1 fee of 456 Squid. Within a week of opening, the “currency” had topped US$ 2.856 but then tanked to just US$ 0.01 in probably one of the boldest scams in history. Known as a rug-pull, this scam occurs when the promoter of a digital token draws in buyers, stops trading activity and makes off with the money raised from sales.

Ether, riding the wave of the latest bitcoin rally and rising interest of a wider blockchain adoption, reached an all-time high of US$ 4,642 on Wednesday. The world’s second-largest      cryptocurrency, which underpins the ethereum blockchain network, has witnessed a six-fold increase YTD, compared to Bitcoin’s 117%. Analysts see a longer-term bull market for the sector and that ethereum, (along with BTC and other “currencies”), will continue to play a major role in the NFT and metaverse ecosystem build out. CryptoCompare reports a 45.5% jump in assets under management (AUM) in digital investment products in October to a record high of US$ 74.7 billion, with bitcoin-based products 52.2% higher at US$ 55.2 billion, and ethereum-based funds up 30% to US$ 15.9 billion – both record highs. A sign of the times is that the Commonwealth Bank of Australia, the country’s largest financial institution, becomes the first bank there to offer retail clients crypto services.

Following Apple posting fiscal Q4 – and calendar Q3 – revenues and profits at US$ 83.4 billion and US$ 1.24 per share, it calculated that the global supply chain problems, along with pandemic-related manufacturing disruptions in SE Asia, had cost the tech giant US$ 6.0 billion in Q3 lost sales, with Tim Cook noting that the impact will be even worse during this current holiday sales quarter. iPhone sales were at US$ 38.9 billion, US$ 2.6 billion short of market expectations. The estimate for Q4 is 7.4% growth in revenue to US$ 119.7 billion, as the tech giant strives to source more chips, but the chief executive is “predicting that we’re going to be short of demand by larger than US$ 6 billion.” At the end of last week, its shares dipped 3.4% on the news.

In a bid to break into the games subscription market, Netflix has launched its first games worldwide, rolling out updates to its Netflix app on Android smartphones, showing what games are available for download. Initially five mobile games, (Stranger Things 1984, Stranger Things 3: The Game, Card Blast, Teeter Up and Shooting Hoops), will be available to Netflix subscribers – with no adverts in the game and no in-app purchases. These releases are only available on Android phones and tablets but “in the coming months”, would be available for iOS devices.

The EC has announced that it is has opened a competition investigation into Nvidia’s US$ 40 billion acquisition of British chip-design company Arm. Despite Nvidia promising it will maintain Arm’s open-licensing model, their concern is that the US “predator” could use the move to restrict access to Arm’s technology, which powers the vast majority of the world’s smartphones. But despite the US tech giant, the world’s largest graphic and artificial-intelligence chipmaker, offering concessions in an attempt to address its concerns, the EC still had “serious doubts” about the deal, which it believes could result in less choice, reduced innovation and higher prices for consumers – and they may be right for a change.

The nineteen-bloc eurozone saw annual October inflation equal its all-time 2008 high of 4.1%, as economic growth beat expectations in Q3 to approach pre-pandemic levels. ECB President Christine Lagarde reiterated her stance that supply disruptions would last longer than she previously anticipated which, in turn, will keep consumer prices nudging north for a longer time span and putting pressure on wage hikes to compensate for the reduction in available consumer spending. With the eurozone economy expanding by 2.2% in Q3, it is now only 0.5% lower than pre-pandemic levels and should reach that point by the end of the year, and this despite drag factors including climbing energy prices, supply chain disruptions, slowing global demand and labour shortages in some major sectors.

This week’s G20 meeting in Rome approved a global agreement that will see the profits of large businesses taxed at least 15%, in a bid to thwart MNCs rerouting profits through lower tax jurisdictions; it is scheduled to be enforced by 2023.The bloc comprises nineteen countries and the EU and this was the first in-person meeting since the onset of Covid. US Treasury Secretary Janet Yellen noted that this was a “critical moment” for the global economy and will “end the damaging race to the bottom on corporate taxation”; she added that although some US-based mega-companies would have to pay more tax, US businesses and workers would benefit from the agreement.

To some observers, it seems that France has benefited more than most other members from its membership of the EU and now it is reported that Emmanuel Macron’s government is asking the central government “for Britain to be punished for leaving the EU”; and it seems ‘il avait vraiment les boules’ about the recently struck security pact with the United States and Australia. Both parties have a different interpretation on their attitude to their post-Brexit fishing row – London is maintaining that it had not shifted its position, as agreed in the original deal, with Paris insisting it was now up to the UK to resolve a dispute that could ultimately hurt trade. Boris Johnson commented that “I don’t believe that is compatible either with the spirit or the letter of the Withdrawal Agreement of the Trade and Cooperation Agreement and that’s probably all I’ll say about that.” Manu retaliated saying that “I don’t want to have to use retaliation measures, because that wouldn’t help our fishermen.” This largely political dispute will drag on but will probably be eventually patched up by the EU.

According to Nationwide, a typical UK home costs more than US$ 352k, (GBP 250k) for the first time after prices rose by 9.9% over the past twelve months, and 0.7% higher than in September. Since the onset of the pandemic, prices have risen by US$ 42k (GBP 30.7k). With stamp duty reimposed from last month, and rate hikes on the horizon, there is some inevitability that the pace of house price rises will slow but continue to head northwards for at least until the end of H1. The Office for Budget Responsibility estimates prices rises of 8.6% this year, followed by increases of 3.2%, 0.9%, 1.9%, 2.9% and 3.5% over the following five years.

The Monetary Policy Committee surprised the market by voting both to maintain the interest rate, at 0.1%, and sticking with its US$ 1.2 trillion, (GBP 895 billion), stimulus measures. No action was taken despite the risk of inflation rising above 5%, the highest forecast since 2011 and well above the lender’s long-standing target of 2%. The spike has been driven by global economies, reopening after the pandemic, as well as soaring energy costs and it appears that any monetary policy would have little impact at this time. The pound dipped 0.87% on the news to trade at US$ 1.3568. The BoE argued that “near-term uncertainties remain, especially around the outlook for the labour market, and the extent to which domestic cost and price pressures persist into the medium term”.

The UK has been “left behind” according to steel makers after the US agreed to end a trade war over items that also included whiskey, power boats and Harley-Davidsons. Tariffs on steel European steel imports were introduced by the previous Donald Trump administration, but these have been ended by President Joe Biden; however, the UK were not included. This move puts the UK industry at a massive competitive disadvantage, compared to its European rivals, bearing in mind that when the tariffs were introduced in 2018, it nearly halved UK exports to the US which had been their second biggest export market until then. UK’s International Trade Secretary Anne-Marie Trevelyan commented that the UK and US were in talks to remove “damaging tariffs” from British steel exports. It is hoped that this new pact will limit the amount of so-called “dirty” steel from countries such as China, which produces more than 50% of global steel and steel production accounts for as much as 20% of all CO2 emissions.

The G20 summit came ahead of the much-anticipated COP26 summit on climate change which began on Monday What happened in Rome set the tone for the summit, with sharp divisions remaining between countries on their commitments to tackling climate change. There was very little chance that Italy’s Prime Minister Mario Draghi’s imploring world leaders that “going it alone is simply not an option. We must do all we can to overcome our differences” – and so it proved. Even before the Glasgow conference opened, Boris Johnson had commented that climate change was “the biggest threat to humanity”, and that it posed a “risk to civilisation basically going backwards”. There is no doubt that if G20 leaders want to curb global warming, end vaccine inequity, and sort an economic recovery, they have to start thinking and acting more multilaterally, instead of worrying about their own agenda and getting re-elected. The last few years have seen many countries looking after themselves at the expense of poorer nations, whilst continuing to put economic growth ahead of fixing the climate crisis.

A court case in Miami, that started on Monday, could decide who is the true creator of Bitcoin—and who has the rights to Satoshi Nakamoto’s 1.1 million BTC wallet, equating to US$ 67.6 billion at today’s prices. The civil trial, between Ira Kleiman versus Craig Wright, is trying to discover who is (or was) Satoshi Nakamoto. Kleiman alleges that his late brother David collaborated with Wright, on the creation and early development of Bitcoin, making his heirs entitled to half of the wallet’s contents. There are some who do not think that Wright is actually Nakamato and if Kleiman wins, he will be unable to access the disputed Bitcoin. The court will have to decide whether the two protagonists were indeed business partners or Just Friends.

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It’s All Over Now! 28 October 2021

For the past week, ending 28 October, Dubai Land Department recorded a total of 1,254 real estate and properties transactions, with a gross value of US$ 1.34 billion. It confirmed that 1,080 villas/apartments were sold for US$ 590 million, and 174 plots for US$ 251 million over the week. The top three transfers for apartments and villas were all apartments – one sold for US$ 19 million in Nad Hessa, followed by two transactions in Burj Khalifa worth US$ 14 million and US$ 12 million. The top three land transactions were for a plot of land in Business Bay, worth US$ 19 million, followed by two for US$ 13 million each in Mohammad Bin Rashid Gardens. The most popular location in terms of volume and value was Business Bay, with 155 transactions totalling US$ 46 million. Mortgaged properties for the week totalled US$ 447 million and 79 properties were granted between first-degree relatives worth US$ 49 million.

As with other recent realty reports, Zoom Properties considers that Dubai rental market is likely to sustain an upward price trend over the near-term future, as Expo 2020 has generated property demand. It estimates that the emirate’s rental market has seen a 14% Q3 rise in affordable housing, and up to 30% in the luxury housing sector. Zoom also predicts growth both in terms of rental prices and demand in areas close to the Expo site. This comes after property market reports of increased activity for apartments located in the affordable sector, including JVC, Al Nahda, Bur Dubai, Dubai Silicon Oasis and Deira; and in Dubai Marina, Downtown Dubai, JBR, Palm Jumeirah and City Walk leading the field in the luxury apartment sector. Jumeirah, Al Barsha, Umm Suqeim, Arabian Ranches and Dubai Hills Estate continued to be the more popular locations for luxury villas and Mirdif, Damac Hills 2, JVC, Reem and Dubai South for affordable rental villas. Zoom also noted that the increase in demand and property prices was down to several factors such as Expo, the demand shift towards large homes, return of foreign investors to Dubai, and expatriate-friendly policies.

At a meeting with Hatta entrepreneurs earlier in the week, HH Sheikh Hamdan bin Mohammed, issued directives to establish the ‘Hatta Traders Council’ to support the implementation of the Hatta Master Development Plan, which forms an integral part of the Dubai 2040 Urban Master Plan. He commented that “the Hatta Master Development Plan seeks to enhance the sustainable development of the area and transform Hatta into an attractive local and international destination for business, investment and tourism. It also aims to generate investment opportunities for its people and encourage youth to set up new businesses in various fields,” which will help accelerate economic growth and support local tourism in the area.

Coinciding with Expo 2020 and the UAE’s Golden Jubilee celebrations, Dubai Shopping Festival will return for its 27th 46-day edition from 15 December 2021 to 29 January 2022. The organisers, Dubai Festivals and Retail Establishment, said that the event will feature the usual mega raffles, fun fairs, community markets, promotions and offers across a range of homegrown and global brands, backed by concerts, drone shows, fireworks displays and global brand collaborations. It is thought to be the longest running and most successful shopping festival of its kind.

In this year’s Kearney’s Global Cities Index, Dubai has climbed four places to 23rd out of 156 urban centres, when it comes to global engagement levels. It measures the global engagement levels of cities across five dimensions – business activity, human capital, information exchange, cultural experience, (where it is ranked fourth in the world), and political engagement. It holds the top spot in the region in a survey which is led by New York, London, Paris, Tokyo, LA, Beijing and Hong Kong. Regionally, Abu Dhabi Qatar, (which jumped fifteen places this year), and Cairo are ranked behind Dubai.

Another indicator that some form of normalcy is returning to the economy – and the aviation sector in particular – was the declaration that Emirates Airline is planning to recruit 6k staff over the next six months amid  ongoing plans to ramp up operations across its global network. The airline has already restored 90%of its network and is on track to reaching 70% of its pre-pandemic capacity by the end of the year. Its chairman, HH Sheikh Ahmed bin Saeed Al Maktoum commented that “our requirement for 6k additional operational staff signifies the quick recovery Dubai’s economy is witnessing and will lead to opportunities and other positive developments across various other businesses, including those in the consumer, travel and tourism sectors.”

October is traditionally the opening of Dubai’s seven-month cruise season which will see 126 liners and over 500k visitors stopping in the emirate. Prior to the onset of the pandemic, which led to all trips being cancelled from March 2020, Dubai welcomed over 800k people to its shores during the 2018-2019 season; it will take another year before Dubai returns to such traffic levels. There are two terminals at Mina Rashid which have the capacity to serve seven mega-cruise ships simultaneously, whilst the new 120k sq mt Hamdan bin Mohammed Cruise Terminal, located close to the newly opened Ain Dubai observation wheel, and equipped to handle 3k passengers every hour, will soon start receiving visitors, after its 2020 proposed launch was delayed by the pandemic.

Driven by a marked spending recovery in the UK, Dubai-based Network International Holdings posted a 19% hike in Q3 revenue on the year. The firm is targeting “to deliver our medium-term target of 20% plus revenue growth”, driven by “our enhanced sales strategies, faster merchant onboarding and new capability launches; as well as improving underlying market dynamics.” The company also noted that consumer spending is improving, driven by the ongoing return of tourism and growing domestic consumer confidence. NI expects to launch in Saudi Arabia early next year.

For the nine months to 30 September, DP World Limited posted an 11.9%, year on year, hike on a like for like basis in volume, handling 58.4 million TEU (twenty-foot equivalent units), with Q3 seeing an 8.1% increase to 19.8 million TEUs. The main positive drivers were Asia Pacific, India, MEA and Australia with Qingdao (China), Mumbai and Sokhna (Egypt) showing marked improvement in Q3. Jebel Ali (UAE) handled 3.4 million TEU during this period, up 0.6% year-on-year. Ahmed Bin Sulayem, Group Chairman and Chief Executive Officer, commented, “the near-term outlook remains positive, but we do expect growth rates to moderate in the final quarter. Overall, we are pleased with the year-to-date performance and remain focused on growing profitability, while managing growth capex”.

The Islamic Development Bank celebrated the listing of a US$ 1.7 billion Sukuk on Nasdaq Dubai, making IsDB’s position as the largest supranational Sukuk issuer on the local bourse, with a total value of US$ 18.8 billion, via thirteen issuances listed on the exchange over the past five years; earlier in the year, it had listed its second Sustainability Sukuk issuance of US$ 2.5 billion. With a total value of US$ 80.1 billion, Nasdaq Dubai is one of the world’s largest Sukuk listing venues and with its latest IPO, it has also increased the total value of its fixed income listings to U$$ 108.8 billion.

Dubai Islamic Bank posted a 20% hike in Q3 net profit to US$ 329 million, driven by a strong local economic recovery, with a 325% surge in income from its investment property portfolio and an 83% increase in income from property held for development and sale. The country’s biggest Sharia-compliant lender also noted that, although impairment charges rose by 27% to US$ 184 million, its operating expenses were 5.4% down at US$ 171 million. Over the nine-month period to 30 September, its net profit dipped 2.0% to US$ 831 million, as impairment charges declined 18.0% to US$ 572 million. Customer deposits rose 4% to US$ 58.3 billion.

Union Properties’ shares tanked 9.67%, to US$ 0.0654, on Sunday after it was reported that the Securities and Commodities Authority was investigating claims of financial irregularities by executives; it closed the week on US$ 0.0717. The corporate watchdog filed a complaint against the developer’s chairman Khalifa Al Hammadi and six of the developer’s executives, with accusations of selling one of the company’s property assets at a price below its real value and attempting to conceal the name of the beneficiary, via forged documents. They have also been accused of abuse of authority, fraud and damage to the interests of the company and its shareholders as a result of investments entered into outside and inside the UAE, without proper studies being done, leading to financial losses for the company. The country’s UAE Attorney General Hamad Al Shamsi said prosecutors had begun to carry out investigations under his direct supervision and he had ordered the seizure of the property of some of the accused and barred them from leaving the country. It was also reported that he had issued orders “to deal firmly with anyone whoever attempts to defraud or tamper with the national economy”.

As expected, Damac’s board has finally approved that its minority shareholders accept its founder’s offer to buy them out and take the company private. The Dubai-based developer will be bought out by Maple, the BVI investment arm of Hussain Sajwani, and will pay US$ 0.381 for each Damac share. Initially, the 72% shareholder of the company, had offered US$ 0.354 per share that would have cost US$ 595 million. Damac, which has a market capitalisation of more than US$ 2 billion, reported booked sales of US$ 708 million for the first six months of the year and had delivered 2.7k units in Dubai over the period.

With a total revenue of US$ 50 million in the first nine months of the year, (US$ 74 million in 2020), Dubai Financial Market Company posted a net profit of US$ 10 million, compared to US$ 33 million in the same period last year. Its revenue stream was split between operating income, at US$ 32 million, and US$ 18 million from investment returns and other income. DFM’s expenses decreased 4.0% to US$ 39 million. The bourse’s market cap rose by 15% to US$ 106.9 billion, with the General Index up 14.2%, despite a 23.7% decline in trading value, to US$ 10.5 billion, year on year. Moreover, foreign investors maintained their strong presence, with a 47.5% market share of trading value.

The DFM opened on Sunday, 24 October, 85 points (3.1%) higher the previous fortnight, gained a further 4 points (0.1%) to close the week at 2,861. Emaar Properties, US$ 0.02 higher the previous week, closed flat at US$ 1.09. Emirates NBD and Damac started the previous week on US$ 3.76 and US$ 0.34 and closed on US$ 3.80 and US$ 0.34. On Thursday, 28 October, 135 million shares changed hands, with a value of US$ 49 million, compared to 458 million shares, with a value of US$ 468 million, on 20 October.

By Thursday, 28 October, Brent, US$ 0.49 (0.6%) lower the previous week, gained US$ 0.19 (0.2%), to close on US$ 84.19. Gold, US$ 9 (0.5%) lower the previous week, gained US$ 912 (0.7%) to close Thursday 28 October on US$ 1,799.  

Once again, UK unleaded petrol prices, at US$ 1.97 a litre, have reached their highest level since April 2012, (partly due to a doubling of global oil prices over the past twelve months), and retail unleaded fuel US$ 0.39 higher over the same period; another 10% price hike to over US$ 90 a barrel, before the end of the year, may be on the cards. It is estimated that, since April, retailers have increased their profit margins by US$ 0.025 to over US$ 0.10 per litre. Duty on fuel currently stands at US$ 0.798 a litre, with the cost of the combined bio and petrol components at US$ 0.701. On top of that, VAT comes in at US$ 0.326, and supply/delivery at US$ 0.024, leaving a US$ 0.118 profit margin for the retailer. (Unleaded 95 fuel in the UAE retails at US$ 0.675 per barrel).

Just as news that Hertz had ordered 100k Tesla vehicles, and that its model 3 became the first electric vehicle to top monthly sales of new cars in Europe, its share value jumped 4.5% on Monday to US$ 950.53;, by the end of the week,  the world’s most valuable carmaker joined an elite club that includes Apple,, Microsoft Corp and Alphabet, that are valued in excess of US$ 1 trillion, with its share value at US$ 1,087.27, by the end of Thursday trading – 3.8% higher on the day. Tesla vehicles will start being available at Hertz rental facilities, which already have about 450k vehicles in its portfolio, next month – this would see Tesla making up about 20% of the company’s fleet. This purchase comes a year after Hertz had filed for bankruptcy protection, as travel demand sank during the height of the pandemic and talks with creditors failed to provide relief; it was later rescued by a group of investors.

This week, Tesla increased the prices of its four main models, with US$ 5k increases in models X and S to US$ 105k and US$ 95k and US$ 2k rises in its Y and 3 types to US$ 57k and US$ 44k. This comes after the electric car maker posted an impressive 56.9% Q3 hike in revenue to US$ 13.76 billion generating net profit of US$ 1.6 billion; over the period, it sold 241.4k vehicles, despite ongoing supply chain issues, “rolling blackouts” and a global microchip shortage. Most of Tesla’s revenue derives from sales of its lower priced models 3 and Y cars, which rose 87% to 232.1k. Tesla expects to see a 50% hike in sales next year, as it expands its “manufacturing capacity as quickly as possible”.

The damaging impact on the car manufacture sector, due to the shortage of semiconductors, can be seen from Renault’s announcement that it would be slashing output by 500k units this year – more than double its 220k forecast of last month; however, it maintained its profit outlook, helped by higher car prices and cost cuts. The carmaker estimates that the knock-on effect will continue well into 2022, although the chip shortage should show some improvement towards the end of this year, as Malaysia, a major global chip supplier, eases its Covid restrictions. Like its peers in the industry, Renault will also be facing inflationary price increases for many of its parts and has tried to boost its falling margins by focussing on its more profitable models. Renault said Q3 revenue had fallen by 13.4%, to US$ 10.4 billion, with higher car prices helping offset some of the 22.3% drop in global sales. In Q3, fully electric, plug-in hybrid and hybrid models made up more than 31% of sales. Renault confirmed a fifteen-year high order book, equating to 2.8 months’ worth of sales, and that its inventory level had fallen, over the twelve months, by 130k to 340k at the end of September.

Microsoft posted impressive figures for its fiscal Q1, ending 30 September, with revenue surging 22.0% to US$ 45.3 billion, beating market expectations, as net profit was 48.0% higher at US$ 20.5 billion, driven by strong growth in its cloud business, up 31% to US$ 17 billion. This was the seventeenth straight quarter of double-digit growth for the tech giant. Its share value rose 1.5% on the news and has seen a 45% expansion over the past twelve months. Microsoft 365 Consumer subscribers increased to 54.1 million, whilst it also returned US$ 10.9 billion to shareholders, in the form of share repurchases and dividends over the three-month period.

Despite recent negative media reports over leaked internal documents, Facebook has posted better-than-expected Q3 profits of US$ 9.0 billion – 15.4% higher, year on year. Over the year, its monthly user-base grew 6% to 2.91 billion, whilst its revenue stream was marginally down on analysts’ expectations. On the news, its share value rose 1.3% which pushed its YTD increase to over 20%. The tech giant plans to invest US$ 10 billion on its metaverse division this year – known as Facebook Reality Labs – with the aim of creating augmented and virtual reality hardware, software and content. Late in the week, Facebook rebranded itself, and will be known as Meta forthwith, indicating that it would better “encompass” what it does, as it broadens its reach beyond social media into areas like virtual reality.

It was not the best quarter for Amazon, as it posted a Q3 net income sinking from its 2020 figure of US$ 8.69 billion to US$ 3.2 billion, although net sales were 15% higher at US$ 110.8 billion. This week, the tech giant has confirmed that it will invest several billion dollars in additional costs to manage labour shortages and supply chain issues in the run up to Christmas and would do “whatever it takes to minimise the impact” on customers and sellers.

HSBC posted a 76% jump in Q3 pre-tax profits to US$ 5.4 billion, driven by releasing US$ 700 million in impairment provisions, compared to providing an additional US$ 800 million a year earlier to cover possible Covid-related losses. HSBC UK reported a 50% hike in profit before tax of US$ 1.5 billion, with its Asian sector contributing US$ 3.3 billion. Revenue nudged 1% higher to US$ 12 billion, as fee income grew across the bank’s businesses and net interest income remaining stable, but expected to rise in the future as lending picks up and interest rates finally head north again. The bank expects to soon start its share buyback of US$ 2 billion.

In a move to counter China’s increasing presence and influence in the region, the Australian government, who will contribute US$ 1.43 billion, with Telstra has finalised a US$ 1.58 billion deal to buy and operate Digicel Pacific. China Mobile, the country’s largest telecommunications company, had shown interest in buying the Pacific arm of the telecommunications giant, which has operations in Papua New Guinea, Fiji, Samoa, Vanuatu and Tahiti. Overall, Telstra will provide US$ 270 million and own 100% of the ordinary share capital. According to the Department of Foreign Affairs and Trade, this deal is “consistent with Australia’s longstanding commitment to growing quality investment in regional infrastructure.” 

Q3 saw the US economy slow sharply at 2.0%, compared to the 6.7% figure recorded in Q2, driven by the fast-spreading Delta variant impacting on consumer spending, as well as supply chain issues, rising inflation and new Covid restrictions in some places. On a non-annualised basis, the growth figure was 0.5%. Worrying economic indicators see the sales of big-ticket manufactured goods dropping 26%, and a marked decline in the sales of new cars, as prices shoot up amid a shortage of semiconductors; growth in the US services sector decelerated to 7.9%, as consumers spent less on eating out and staying in hotels. Earlier figures had seen only 194k jobs added to the country’s September payroll, (with market expectations of around 500k), and the inflation rate hitting 5.4%. The Fed Reserve is still of the opinion that current high prices are transitory and will not raise rates in the short-term, (but circumstances may dictate otherwise), but will probably begin paring back its pandemic-era stimulus for the economy by year end.

First it was the BoE governor saying the bank” will have to act” on inflation, now it is Huw Pill, the Bank of England’s new chief economist commenting that UK inflation is likely to hit or surpass 5% by early next year; the current historic low rate of 0.1% was set in March 2020, at the onset of Covid, and was measured at 3.1% on the year to September. At last, the central bank has realised that inflation is more than transitory, and that short-term action should be taken because of rising energy costs, higher wages to fill record job vacancies and supply chain disruption which will still be present into 2022. The BoE has been holding off any rate hikes in the hope that inflation rate should drop to its long-maintained 2.0% target – this is not going to happen by it doing nothing.

Retail sales dipped 0.2% last month – and 0.6% a month in August – and fell for the fifth month in a row, with consumer spend less in shops, despite the recent easing of restrictions.  Although fuel sales were 2.9% higher, non-food sales posted another monthly decline as shoppers bought fewer household goods and furniture, with sales almost 10% lower. Retailers are also being badly hit by labour shortages across supply chains, warehouses, and factories, along with inflation-linked higher prices in fuel and products. However, there were increases noted in the month by the proportion of online shopping, up 0.2% to 28.1%, and department stores 4.3% higher. The trend is expected to continue as shortages will not go away and Covid cases are moving higher so that retail sales growth will continue to be dull. The trend is obvious when it comes to Covid, people are wrong to think that It’s All Over Now!

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Not All That Glitters Is Gold!

Not All That Glitters Is Gold!                                                20 October 2021

Last month, Dubai recorded the highest value of real estate sales in one month since December 2013, with a nine-month total of sales transactions of 5,762, valued at over US$ 4.4 billion, bringing the YTD total to 43,299 sales transactions, worth US$ 28.4 billion. In only nine months, the YTD total sales transactions are already the highest yearly sales figure since 2017 – and 45.2% higher than at this time in 2020. Q3 2021 had seen Dubai’s best quarter volume and value returns since 2009, after posting 15,927 sales transactions, worth US$ 11.54 billion. Compared to the same periods last year and in 2019, Q3 figures for volume and sales were 85.4% and 135.4% higher than 2020 and up 64.5% and 138.8%, compared to 2019.

Using January 2012 as a 1.000 base line, the Mo’asher September overall monthly index was at 1.115, and an index price of US$ 290k, and for the quarter at 1.128 and US$ 287k. The monthly indices for apartments and villas/townhouses stood at 1.140 and 1.098, with prices at US$ 260k and US$ 529k respectively; on a quarterly basis, the figures were 1.134/US$ 258k and 1.124/US$ 533k.

In the month, 56% of all sales transactions were for secondary/ready properties and the balance for off-plan properties, with the former posting 3,232 sales transactions worth US$ 3.02 billion, and the latter transacting 2,530 properties, valued at a total of US$ 1.39 billion – the highest value of off-plan sales transactions the Dubai Real estate market has seen in over eight years. In Q3 2021, 56.6% of all sales transactions were for secondary/ready properties and 43.38% were for off-plan properties. As for the volume of transactions, the off-plan market transacted 6,909 properties, worth a total of US$ 3.68 billion, and the secondary market transacted 9,017 properties valued at US$ 7.86 billion.

Property Monitor noted that residential property prices rose for the eleventh month in a row, but with the pace slowing; last month, there was a 1.2% increase in prices to an average of US$ 264 per sq ft. The consultancy estimated that prices were still 19% short of the 2014 peak, but the market is expected to continue its recovery process, driven by Expo 2020 and resurgent consumer, (and investor), confidence. It did warn that, with inventory slowing amid strong demand for villas, a widening buyer-seller expectation gap regarding pricing is appearing, leading to overpriced properties staying in the market, as buyers explore other options rather than paying higher prices. (Whether that is actually now the case is debateable, but it will become a drag factor sometime in this current cycle). There is every likelihood that a new market high will occur during this current cycle, assuming there is no resurgence with Covid, oil remains above the US$ 80 mark and interest rates remain flat.

Latest September figures from STR point to a major improvement in Dubai’s hospitality sector, ahead of the opening of Expo 2020, as the average occupancy rate jumped to 67.2% – 51% up on the same return last year- and higher than the 58.0% and 53.9% posted the previous two months. The improvement, which is expected to continue over the next six months, is attributed to several factors including improving local weather, Expo 2020 and travel restrictions being markedly eased across the world. Another indicator sees revenue per available room (RevPAR) 117% higher on the year at US$ 74. For the first seven months of the year, visitor numbers reached 2.85 million and the emirate will benefit from the fact that it was one of the first cities globally to re-open its markets and businesses in July 2020 and that it continues to stay open. Another positive sign saw the removal of the UAE from the UK’s red list in August, followed by the recognition of UAE-administered vaccines from October that allows travel between the two countries, with no need for home isolation. In addition, the loosening of restrictions with India and Saudi Arabia is bound to boost visitor numbers. There is hope that Expo 2020 will drive figures higher – in the first seventeen days of October, visitor numbers were at over 771k – 12% higher on the week ending 17 October. Whether its ambitious target of 25 million visitors will be reached come 31 March 2022 remains to be seen but being Dubai, it will give it a good shot.

Last Sunday, Dubai’s Crown Prince, Sheikh Hamdan bin Mohammed, officially opened the 41st edition of GITEX GLOBAL x Ai Everything, reaffirming the emirate’s commitment in supporting the global technology community, accelerating innovation, boosting resilience and driving its transformation agenda post-Covid. The world’s most influential technology sourcing and networking event of the year, exhibiting GITEX GLOBAL, Ai Everything, GITEX Future Stars, the Future Blockchain Summit, Fintech Surge and Marketing Mania, attracted more than 3.5k exhibitors from over 140 countries. On Wednesday, HH Sheikh Mohammed bin Rashid visited the global event and said Gitex represented the UAE’s “aspirations for its future economy”, whilst praising the high-profile trade show for bringing the world together to develop the technology of the future.

As the Dubai government continues to take firm steps to accelerate efforts to boost its digital economy, Dubai could add a further 600 new entities, bringing its total cryptocurrency businesses to 1k by the end of next year. Speaking at a Gitex conference, Dr Marwan Al Zahrouni, Dubai Blockchain Centre’s chief executive, commented that “five years ago you wouldn’t see people coming to Dubai to do the cryptocurrency business … we’re open-minded, and we’re willing to change regulations with reason.”  According to a recent Nickel Digital Asset Management survey, it was noted that many local institutional investors and wealth managers plan to increase their cryptocurrency exposure over the next two years. Although several cryptocurrency exchanges have been given permission to operate in free zones, they are not licensed by the UAE Central Bank. Launched only this May, the DMCC Crypto Centre already boasts 100 members, with a further 900 having applied for licences. Ralf Glabischnig, founder and board member of Swiss crypto hub CV Labs, said that the market in Dubai will “grow faster compared to anywhere else”.

Another indicator that some form of normalcy is returning to post-Covid Dubai is that, according to Dubai Municipality, over 1.5k new food establishments have opened in Dubai YTD, bringing the total portfolio to 20.4k; this equates to an impressive 5.5 new outlets every day. With Expo having started earlier in the month – and continuing until the end of March – there is every chance, with increased business, (and investor), confidence, that this number will top 2k by year end.

Dubai Internet City, currently home to 15k workers and 1.6k companies, expects staff numbers to jump to 40k by 2025. Ammar Al Malik, managing director of the free zone, noted that “there are a few industries that are going very fast such as e-commerce, logistics, digitalization, payment solution, fintech and agricultural technologies. The next unicorns are likely to come from these fields because they have very strong interests”, following earlier successes such as Careem, being acquired for US$ 3.1 billion by Uber, and the US$ 1.1billion merger of Bayut and Dubizzle. The MD also reckons that company digitalisation, that used to span up to four years, now has a probable six-month time period and that there could be at least three unicorns coming up in the country, within the next three years.

HSBC’s 14th annual Expat Explorer study, involving 20k expatriates, has ranked UAE fourth in the world for the best country to live and work in – ten places higher than last year. According to the survey, the top three reasons cited by expats for choosing to move to the UAE were to improve their earnings (56%), to progress their career (49%) and to improve their quality of life (43%). There is no surprise to see that 86% said their overall quality of life is better than their home country. Among the findings for the UAE were that 82% felt optimistic that life will be more stable and normal again in the next twelve months despite the global pandemic – compared to the global 75% average – with 53% expecting an increase in their income and 57% forecasting a better work/life balance. UAE was placed behind Switzerland, Australia and New Zealand but ahead of Guernsey, Jersey, Isle of Man, Bahrain, Singapore and Qatar – a strange eclectic of nations indeed.

For the seventh consecutive year, the Dubai Multi Commodities Centre has received the Global Free Zone of the Year 2021 award by the Financial Times’ fDi Magazine. It also won Global Free Zone of the Year and Middle East Free Zone of the Year- Large Tenants. During the year, DMCC opened international representative offices in Tel Aviv and Shenzhen, and launched both the DMCC Crypto Centre and DMCC Cacao Centre. In 2020, it welcomed over 2k new companies and looks set to bring its total number of entities to 20k by the end of this year.

With a US$ 272 million investment, Dubai Investments signed an agreement with Ras Al Khaimah-based master developer Marjan to acquire land to develop a mixed-use waterfront destination on Al Marjan Island. It will comprise a beachfront resort, serviced apartments and 170 villas, plus residential buildings, retail, food and beverage outlets. The latest foray is a continuation of the Dubai’s company strategy to add more high-end hospitality projects to its growing portfolio. RAK is fast becoming a global hub for both wellness and adventure holidays and the Dubai company, 11.54% owned by Dubai’s sovereign wealth fund, the Investment Corporation of Dubai, wants a piece of the action.

This week, GeoPost acquired 20.15% of Dubai-listed Aramex, purchasing 295 million shares for US$ 381 million. News of the sale to the French parcel group sent Aramex’s share 14.9% higher to US$ 1.34 – its biggest intraday gain since January 2009 and recovering all its 2021 losses, closing 0.2% higher YTD. GeoPost, a unit of the French government’s postal arm, delivers about 1.9 billion parcels a year through the brands DPD, Chronopost, SEUR and BRT, with its 2020 revenue at US$ 12.8 billion. It has had a fifteen-year relationship with Aramex in Europe and employs more than 15.5k in more than six hundred locations, across more than sixty-five countries.

Emirates NBD posted a 61% hike in Q3 revenue to US$ 681 million and a 29% increase in the nine months to US$ 1.99 million, driven by the continuing local (and global) economic recovery, record retail financing and impairment charges declining 42%; net profit, at US$ 653 million, beat market expectations. Although total income was 7.0% higher on the quarter, helped by a higher contribution from DenizBank and a more efficient funding base, year on year total income was 5.0% lower from record low interest rates. Customer deposits stood at US$ 106.1 billion at the end of Q3 – 3.0% higher than at the beginning of the year – with total assets remaining stable at US$ 1.90 billion.

Despite a 6.9% hike in revenue to US$ 786 million, du posted a 65.6% slide in Q3 net profit, to US$ 77 million, as operating expenses rose 6.9% to US$ 616 million, along with higher depreciation and amortisation charges. The company’s mobile customer base touched 6.5 million in Q3, with the company gaining 1.3 million post-paid customers, whilst the number of prepaid customers fell to 5.2 million subscribers.

The DFM opened on Sunday, 17 October, 17 points higher the previous week, gained a further 68 points (2.4%) to close the shortened week on Wednesday at 2,857. Emaar Properties, US$ 0.02 lower the previous week, regained the US$ 0.02 to close at US$ 1.09. Emirates NBD and Damac started the previous week on US$ 3.73 and US$ 0.34 and closed on US$ 3.76 and US$ 0.34. On Wednesday, 20 October, in much-improved trading, brought about by Aramex, 458 million shares changed hands, with a value of US$ 468 million, compared to 112 million shares, with a value of US$ 43 million, on 14 October.

By Thursday, 21 October, Brent, US$ 11.30 (15.4%) higher the previous three weeks, shed US$ 0.49 (0.6%), to close on US$ 84.00. Gold, US$ 37 (2.1%) higher the previous week, lost US$ 9 (0.5%) to close Thursday 21 October on US$ 1,787.  

The first US bitcoin futures-based exchange-traded fund (EFT) began trading on Tuesday, coinciding with Bitcoin increasing in value to a six-month high of US$ 63.3k and then on Wednesday reaching its all-time high of US$ 66,974, overtaking its previous record of US$ 64.9k set last April. Ten years earlier, in April 2011, it was valued at just US$ 1 and at the beginning of 2015 at US$ 315.

Investment bank Credit Suisse has been fined US$ 203 million by the UK’s Financial Conduct Authority and will write off a further US$ 200 million owed by the Mozambique government over a corruption scandal involving the country’s tuna fishing industry. The fine is part of a US$ 475 million settlement with UK, Swiss and US regulators. The Swiss bank’s staff allegedly took and paid bribes, as they arranged US$ 1.3 billion of industry loans and were accused by the FCA that it had “failed to properly manage the risk of financial crime”. It was also reported that a Mozambique government contractor secretly paid “significant kickbacks, estimated at over US$ 50 million, to members of Credit Suisse’s deal team”, including two managing directors, between 2012 and 2016 in order to secure loans at more favourable rates. Meanwhile, it seems that Mozambican officials fared slightly better receiving US$ 137 million in bribes. The bank also agreed to settle with the SEC in the US, paying a US$ 100 million fine, with the regulator indicting former Credit Suisse investment bankers and their intermediaries, whilst back in the African country, nineteen individuals – including the son of former President Armando Guebuza – have gone on trial charged with bribery, embezzlement and money laundering. It will be interesting to see who goes to jail, (and who does not), for their participation in this fraud.

To add further woes to Boeing’s catalogue of problems, it has confirmed that some titanium parts on its 787 Dreamliner were improperly manufactured over the past three years. The manufacturer noted that there were no issues to the safety of current flights but that all planes carrying passengers will undergo a review. The parts, provided by fellow aerospace company Leonardo, who purchased the items from an Italian-based company, Manufacturing Processes Specification, include fittings that help secure the floor beam in one fuselage section, as well as other fittings, spacers, brackets, and clips within other assemblies. Earlier problems started in September 2020 when the FAA said it was investigating manufacturing flaws; at the time, airlines using that model removed eight jets from service and Boeing was unable to resume deliveries of the 787 Dreamliner until five months later. Two months later in May 2021, the FAA raised concerns about its proposed inspection method and in July, the safety watchdog reported that some 787 Dreamliners had a manufacturing quality issue near the nose of the plane that must be fixed before Boeing can deliver to customers.

With its business booming in the UK, Amazon is in the throes of hiring 20k new positions and, as it is operating in a very tight employment sector, it is offering one-off payments of up to US$ 4k in order to attract staff in UK regions where there is high demand for labour. In August, the online retailer started offering a US$ 1.4k signing-on bonus to recruit permanent staff in some regions, including US$ 4k for locations such as its Exeter warehouse and US$ 2k for new temporary and permanent workers in Peterborough. The wage inflation instigated by Amazon will have a knock-on effect as the cost of higher pay rates and bonus payments will inevitably be borne by the end user. Last month, the tech giant announced that its sales had risen by 50% to US$ 28.3 billion, whilst its direct tax bill came in at a paltry US$ 676 million.

In a bid to construct the so-called metaverse – a nascent online world where people exist and communicate in shared virtual spaces – Facebook Inc is planning to hire 10k in the EU. Last month, the tech giant, founded by Mark Zuckerberg, committed US$ 50 million towards building the metaverse, as it tries to catch up with earlier entrants such as Roblox Corp (RBLX.N) and “Fortnite” maker Epic Games. Recently, it launched a test of a new virtual-reality remote work app, where users of the company’s Oculus Quest 2 headsets can hold meetings as avatar versions of themselves.

Today, 21 October, Evergrande shares tanked 14% in Hong Kong, as trading resumed after a seventeen-day hiatus because of an expected announcement that real estate firm Hopson Development was set to buy a 51% stake in its property services unit. Yesterday, the huge development company posted that the US$ 2.6 billion deal had fallen through which increased investors’ concerns about Evergrande’s US$ 300 billion debt mountain, with liabilities equal to about 2% of China’s GDP. Evergrande’s chairman and founder Hui Ka Yan says its plan is to try to secure extensions for its debts and “other alternative arrangements” with its creditors, but added, “there is no guarantee that the group will be able to meet its financial obligations”. If the crisis turned into an economic collapse of Evergrande, then the shockwaves will be felt around the world’s markets. Already battling the energy crisis and soaring raw material costs, the last thing Chinese authorities want to see is a meltdown from its property developers which are believed to be in debt of over US$ 5 trillion. The indebted property giant has reportedly missed two interest payments to overseas investors and has asked for several extensions for interest payments, but it is only a matter of time before it defaults. Before then, the company may receive a call from Beijing to fire sell some of their assets which would be sobering news for shareholders who have already lost 80% of their investment this year.

With the UK government confirming financial support to accelerate automotive electrification, Ford will invest up to US$ 316 million to produce components for electric cars at its existing plant in Merseyside. The plant is gradually phasing out the manufacture of combustion-engine transmissions and repurposing the Halewood plant to build electric power units within three years. It will become the first such factory in Europe to make electric vehicle parts for Ford, protecting 500 jobs at the site. Ford will produce about 250k electric power units at the plant, adding to a growing trend among car makers to manufacture electric car components themselves.

To add further woes to the already troubled UK supply network comes the news that Domino’s Pizza is intending to hire more than 8k drivers in the UK and Ireland in the run-up to Christmas; it had already taken thousands of extra staff, including 5k cooks and drivers in June, to meet increased demand and it also confirmed that most of these new positions will be permanent. The pizza chain reported that more than 90% of store managers had started in the kitchen or as delivery drivers. There is no doubt that this is a big ask considering that there is a massive nationwide shortage of heavy goods vehicle (HGV) drivers, backed up by a job site analysis that concluded that the share of searches being made for seasonal roles by jobseekers was 27% lower than in the same period in 2019 and down 33% on its 2018 level. The pizza chains latest quarterly revenue figures to 26 September were 8.8% higher at US$ 516 million, with orders up 40.3% to be at 82% of pre-pandemic levels.

With strong north winds blowing and temperatures falling by as much as sixteen degrees Celsius, China’s energy crisis deepened, as power plants clambered to stock up on coal, which in turn saw prices hitting record highs. Power shortages are expected to continue into Q1 2022, with analysts and traders forecasting a 12% decline in industrial power consumption in Q4, as coal supplies fall short and local governments give priority to residential users. The most-active January Zhengzhou thermal coal futures hit a record high US$ 259.42 per tonne last Friday, with the contract having already risen more than 200% YTD. Despite attempts by China to be “carbon neutral” by 2060, and it trying to reduce its reliance on polluting coal power in favour of cleaner wind, solar and hydro, it is inevitable that coal will provide the bulk of its electricity requirements for some time. The crisis has highlighted the difficulty in cutting the global economy’s dependency on fossil fuels, as world leaders seek to revive efforts to tackle climate change at COP26 UN climate conference starting next month in Glasgow.

Canada’s inflation rate hit the roof in September, reaching 4.4% – its highest level since February 2003 – driven by marked increases in the costs of transport, housing and food brought on by the global supply chain issues, surging pent up consumer demand, product shortages and rising energy prices. It is estimated that petrol pump prices are 32.8% higher on the year, with other prices including food, meat and housing up by 3.9%, 9.5% and 4.8% respectively. Last year, the Bank of Canada cut its baseline interest rate to 0.25%, so as to support the economy, by cutting the cost of borrowing for consumers and businesses. Inflation can be controlled by raising rates but any movement before the end of the year is highly unlikely because the central bank is of the opinion that the “inflationary surge is transitory.”

The UK has cut a free trade deal with New Zealand which, according to Prime Minister, Boris Johnson, will reduce costs for exporters and open up New Zealand’s job market to UK professionals, as well as benefitting consumers and businesses. Tariffs will be removed on UK goods including clothing, ships and bulldozers, and on New Zealand goods including wine, honey and kiwi fruits. Although the free trade agreement is unlikely to boost UK growth, it, (along with the recent similar agreement with Australia), will enhance its chances of joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. The eleven countries currently in the bloc – Australia, Brunei, Canada, Chile, Japan, Malaysia, New Zealand, Peru, Singapore and Vietnam – account for an estimated 13.4% of global GDP, equating to US$ 13.5 trillion.

There are more than mumblings from Threadneedle Street that the Bank of England is finally moving towards a move to bump up interest rates, from its current record low of 0.1%. The central bank has already intimated that UK inflation is set to top 4% – double that of its long-standing 2% target – with energy prices leading the drive. At the end of last month, figures showed prices rose by an average of 3.2% over the previous twelve months. The next Bank’s rate-setting Monetary Policy Committee (MPC) is due to meet on 4 November.

Unilever, with a 2020 US$ 5.93 billion turnover, and 400 household brands, including the likes of Axe, Dove, Omo, Wall’s ice cream, Magnum, Oxo, Magnum, Knorr, Lipton and Sunsilk, has increased prices on its products by 4.1% in Q3 – the biggest rise in almost a decade.  It also warned that it expects consumer inflation to accelerate next year. Mattel has also raised its prices driven by soaring shipping and raw materials costs. The Barbie toymaker announced an 8.0% hike in Q3 revenue, to US$ 1.8 billion, and interestingly posted that price hikes had not affected sales.

Last November, Boris Johnson launched an ambitious ten-point plan to prioritise green technology and climate goals in UK’s economic recovery from the pandemic, and to date it has raised a credible US$ 8.0 billion.  The event, with two hundred attendees, including ministers, industry leaders and British royals, was designed to drum up financing for projects to help the UK meet its climate goals and regenerate struggling post-industrial areas of the country left behind by a decades-long economic focus on the services sector. There is no doubt that the UK is aiming to be a front runner in the global race to capitalise on the demand for better green technology and the highly-skilled, highly-paid jobs that are expected to come with it.  Its target is US$ 57.5 billion of private investment by 2030 in energy, buildings, transport, innovation and the natural environment, alongside the creation of 250k ‘green jobs’.

Before Tuesday’s Global Investment Summit, at London’s Science Museum, the UK had already secured eighteen new trade and investment deals, totalling US$ 13.4 billion, that will support green growth and create over 20k jobs. The biggest, at over US$ 8 billion, was for a Spanish-backed offshore wind farm, with electric utility company Iberdrola planning to invest with Scottish Power in the East Anglia Hub offshore wind farms, creating 7k jobs, subject to securing planning consent and a contract for difference. Meanwhile, global logistics company Prologis will invest US$ 2.1 billion over the next three years to develop net-zero carbon warehouses across London, the SE and Midlands, supporting about 14k new jobs. The UK’s goal to be net zero by 2050 will be helped by this package of deals in various sectors, including wind and hydrogen energy and sustainable homes, as well as carbon capture and storage. Also at the summit, trade minister Anne-Marie Trevelyan, praised the recent expansion of the Strategic Investment Partnership with the UAE as an example of the “strategic and high-value deals” the UK is now forming with the world’s “largest and fastest growing economies”. In September, Abu Dhabi’s Mubadala Investment Company committed US$ 12.4 billion to Britain’s technology, infrastructure and energy transition.

This week, Goto Energy became the sixteenth provider to exit the UK energy market already this year; it provided energy supplies to some 22k households. The top six companies to fail so far in 2021 have been Avro Energy, People’s Energy, Green Supplier, Pure Planet, Utility Point and Igloo which supplied 580k, 350k, 255k, 235k, 220k and 179k homes respectively, accounting for 1.810 million of the over 2 million homes affected by bankrupt energy companies folding.  A 250% surge in energy prices already this year is the main cause behind these failures, as many have been caught between rising costs and the UK’s energy price cap, which limits what companies can charge consumers.

Scottish brewer Brewdog is in trouble with the authorities yet again because of a promotion saying that customers could win “solid gold” beer cans, which the advertising watchdog has found to be misleading. The company offered shoppers the chance to find a gold can hidden in cases sold from its online store but in fact they were gold-plated. The ruling comes amid heavy criticism of Brewdog in recent months, with ex-workers stating former staff had “suffered mental illness” as a result of working for the craft beer brewer and that it had fostered a culture where staff were afraid to speak out about concerns. As well as complaints over the prize’s authenticity, some winners questioned that the can was not worth the US$ 21k that Brewdog had claimed; it was estimated that a can made of 330 ml of pure gold would have cost around US$ 500k. Embattled chief executive, James Watt, will quickly recover from this latest setback whilst many of his customers will realise that Not All That Glitters Is Gold!

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Carry Me Home Down To Gasoline Alley!

Carry Me Home Down To Gasoline Alley!                                           15 October 2021

Q3 was the third best quarter, since 2009, in Dubai’s real estate transactions history when 15.9k transactions reaped US$ 11.54 billion. Property Finder estimated that 56.5% of the total was for secondary or ready properties, with 9.0k deals, worth US$ 7.86 billon, with off plan accounting for the 6.9k balance, valued at US$ 3.68 billion. The consultancy also noted that off-plan sales had the highest value of sales transactions since December 2013; the trend started to show a marked uptick earlier in the year, with the number of sales transactions between secondary and off-plan split almost evenly. Residential transaction volumes were 76.8% higher in the first eight months of the year, while secondary market transactions jumped 120.7% and off-plan transactions rose 39.0%. Quarter on quarter, the volume of off-plan transactions increased 14.7%, while the number of secondary market deals declined 6.0%. Over the period, the value of off-plan sales transactions jumped 47.1%, with the value of secondary sales deals marginally higher by 4.2%. The top areas for villa/townhouse secondary sales transactions were Damac Hills 2, Dubai Hills Estate, Arabian Ranches, Nad Al Sheba and The Springs. For off-plan sales transactions the leading locations were Arabian Ranches 3, Dubai Land, Tilal Al Ghaf, Dubai South and The Valley. The most popular areas for ready apartments were JLT, Dubai Marina, Meydan, JVC and Downtown Dubai.

Core’s latest Dubai Market Update estimates that a decade-record 37k residential units will be added to the emirate’s property portfolio in 2021; 24k, of which 86%, or 20.6k, comprised apartments – were delivered in the first nine months of the year, with the 13k balance expected in Q4. With investor confidence rocketing, the consultancy expects villa prices, which are already 16% higher YTD, to continue to rise due to limited stock available and end-users clamouring for villas, after the change in lifestyle and work requirements due to Covid-19. Major villa handovers were seen in Akoya Oxygen and Villanova, both in Dubailand, and Club Villas at Dubai Hills Estate, whilst Dubailand, JVC, MBR City and Business Bay are witnessing increasing delivery numbers. Apartment prices have only nudged 2% higher YTD, despite an increase in supply over the period. Major apartment projects handed over include Tiara United Towers in Business Bay, Artesia in Damac Hills, Bloom Heights in JVC and 52-42 in Dubai Marina. Core expects the recovery to be aided by fewer new launches, noting that YTD volumes are 47% lower than last year and 79% down on 2019’s returns. However, Q3 did witness transaction volumes up 108% on the year and 18% in 2019.

The UBS Global Real Estate Bubble Index 2021 notes that Dubai’s property sector is the only global market surveyed with the lowest price bubble risk among 25 leading cities and that the emirate’s real estate sector is an undervalued market. The study also commented that “improved affordability, easier mortgage regulations, higher oil prices, and an economic rebound now seem to have finally kick-started a recovery”. However, there was something of a caveat that “although construction has slowed, essentially limitless supply poses a risk for long-term appreciation prospects”. On a worldwide scale, the study indicated that, on average, the bubble risk had increased and there is a possibility of a severe price correction, with Frankfurt, Toronto, and Hong Kong exhibiting the most elevated risk levels on housing markets; it also elevated the bubble risk in Munich and Zurich, with Vancouver and Stockholm re-entering the bubble risk zone, joining Paris and Amsterdam already in the “zone”. It did conclude that a housing market recovery is likely to gain pace after the average house price jumped 6.0% over the past twelve months – its highest increase since 2014.

Azizi has launched three new fourteen-story properties to its master-planned Riviera community, located in MBR City. These will see a further 439 units (252 studios, 84 1 B/R, 84 2. B/R and nineteen retail units) added to the community’s portfolio. Each building will feature a swimming pool, vast landscaped areas, a fully equipped gym, a barbeque area, a children’s playground and a yoga space. The development will also have access to a 2.7km crystal lagoon, encompassing an area of over 130k sq mt, with the community boasting several basketball and tennis courts, an extensive jogging and cycling track, and other common facilities.

This week, Prescott announced the launch of Prime Residency III, their US$ 38 million contemporary residential development in Al Furjan. The G+2P+7 residential project will be a mixed-use development, with spacious studios and one B/R apartments, along with a swimming pool, kids’ pool, gym, residents’ lounge and a rooftop garden; prices start at US$ 100k. The developer has also introduced a payment plan, with a 10% down payment, 10% after three months, followed by four quarterly 5% instalments, 10% on handover, and 50% post-handover over 3 years.

As an indicator that the emirate’s property market continues to head north, wasl properties managed to lease 130 units of its residential portfolio in only forty-five minutes, as part of its promotional drive which coincides with the inauguration of Expo 2020. The developer’s campaign, which runs throughout the month, includes 2k units from its residential portfolio across Dubai, three hundred of which were leased on the first day. The current offer for a one-year lease includes a US$ 1.4k discount, with twelve monthly instalments, 0% commission fees and security deposits, as well as a one-month grace period.

Dubai’s largest foreign exchange company, Al Ansari Exchange, noted a surge in transactions made by non-residents during the first ten days of October 2021, which coincided with the start of Expo. It posted that all transactions at their branches were 69% higher than the first ten days of the previous month. Interestingly, the number of foreign currency purchase transactions by non-residents was 9% higher compared with the same period in 2019. Expo is the main driver behind this mini surge, but other factors such as the resumption of flights, especially from India and Saudi Arabia, return of in-person conferences and events and growing economic activities in the country also played their parts. By 10 October, more than 411k visitors had visited the exhibition, a third of whom were from overseas.

UAE’s H1 non-oil foreign trade jumped 27.0% to US$ 245.2 billion, with exports, 44% higher on the year at US$ 46.3 billion and imports up 24% to US$ 131.3 million. During the period, gold exports rose 48% to US$ 19.1 billion; it was estimated that 87% of the country’s non-oil exports were locally made, with the balance coming from free zones and customs warehouses.

September’s IHS Markit Dubai Purchasing Managers’ Index showed a 1.8 seasonal adjusted decline to 51.5, but was still in positive territory, as it continued its growth for the tenth consecutive month. Although new business declined in the month, output continued to expand, and with the start of Expo 2020, and the economic rebound from Covid restrictions, it is expected that sales will continue to rise in the services sector over the next six months. The marginal fall in new business was attributed to weaker demand and discounts at competing firms, with the construction sector leading the decline, as new work fell for the first time since June. Meanwhile, travel and tourism companies saw a sustained upturn in sales, as confidence in the sector reached a five-month high. Although business confidence continued to improve, hiring was dragged back by a decline in new orders but still managed to record its second strongest expansion in over a year.

According to the findings of the Dubai Chamber’s Q3 Business Leaders’ Outlook Survey, business confidence in Dubai reached its third highest level in a decade, with the main driver being the start of Expo 2020; the confidence level saw 76% of respondents looking forward to an improvement, compared to 66% and 48% in the previous two quarters. Two drag factors noted were global supply chain restrictions and a rise in global commodity prices. Meanwhile, the Chamber’s President and CEO, Hamad Buamin, commented that the growing optimism was down to increased government support for the private sector, success in overcoming Covid-related challenges, new business incentives, easing travel restrictions and higher oil prices. He also noted that trade, tourism, hospitality and logistics are the sectors that are expected to see the most business activity during Expo 2020 Dubai, with a knock-on effect felt in other market segments.

A record US$ 5.2 million tender for a 118.6 carat rough diamond was sold at the Dubai Diamond Exchange this week, hosted by Trans Atlantic Gems Sales, a world leading rough diamond tender and auction house. Last December, Stargems’ tender resulted in US$ 87 million worth of rough diamonds in one diamond tender event. Ahmed bin Sulayem, Executive Chairman and Chief Executive Officer, DMCC, commented that “this tender is yet another achievement that adds on another successful tender at the Dubai Diamond Exchange”. He also noted that “with the trade gap between Antwerp and Dubai now less than a billion dollars, our position as a transparent and highly-regulated market has made us the go-to for legitimate traders who are seeking a fair price for their diamonds, particularly those based in Africa.” Following the recent MoU with the Israel Diamond Exchange, the DDE is set to further boost regional trade and support the growth of the global diamond industry.

According to Dubai Economy’s latest report, over 6.9k new business licences, (of which 56% were professional and 43% commercial), were issued in September – 68% higher than a year earlier. 67.2% and 32.7% of the licences were issued for companies in Burj Dubai and Deira. By legal categories, sole establishments, LLCs and civil companies accounted for 36.0%, 25.5% and 22.0% of the trade licences issued.

As Dubai’s high-net-worth population surged 3.8% to 54k in the first half of 2021, and in a bid to encourage family businesses to establish Single and Multiple Family Office (SFO & MFO) licences, the Dubai World Centre Authority Trade has announced updated regulations for the free zone. It is hoped that these would address the needs of family-run entities and introduce a new platform for wealthy families to set up offshore holding companies to manage their private family global wealth, assets and investments from Dubai. It is felt that there is a need for a specialised legal and regulatory framework that offers distinct flexibility and fundamental benefits for setting up single and multiple family offices. Offshore entities, founded directly by members of a single-family, to own and manage their collective wealth, assets, businesses and investments through incorporating a new Free Zone Establishment (FZE) or Free Zone Company (FZCO), will be subsequently licensed to operate from the free zone.

At the Tuesday Cabinet meeting, held in the UAE pavilion at Expo 2020, HH Sheikh Mohammed bin Rashid adopted a five-year, US$ 79 billion federal budget. In a bid to unify federal and local housing efforts, co-ordinate on road and infrastructure projects, and build an urban and housing road map for the UAE, the Cabinet approved the establishment of the Emirates Infrastructure and Housing Council, headed by Suhail Al Mazrouei, Minister of Energy and Infrastructure. The meeting also discussed how to enable a faster-working government and the adoption of cyber security standards for government agencies and those proposed by the Emirates Cyber Security Council. HH Sheikh Mohammed noted that “our work will not be based on individual ministries, but on strategic sectors, and plans and agendas will not be the standard, but field projects and initiatives.”

HH Sheikh Mohammed bin Rashid Al Maktoum has reiterated that the UAE will remain “everyone’s country and everyone’s home”, after an Arab Youth Survey indicated that 46% of the sample said the UAE was the preferred country to live in for Arab youths, well ahead of the USA (19%) and Canada (15%). In his tweet, the Dubai Ruler also added that “our experience will remain available to everyone. .  .  .  . and our relations will remain positive with everyone.”

DP World has announced a partnership with UK’s CDC Group to create a long-term investment platform. The local ports operator will contribute its stakes in three existing ports initially and expects to invest a further US$ 1 billion over the next several years, whilst the development finance institution and impact investor is committing an initial US$ 320 million and a further US$ 400 million over the next several years. The transaction is subject to certain final regulatory approvals. The platform will be African focussed, investing in origin and destination ports, inland container depots and economic zones.

At the First Dubai International PPP Conference, held at the Expo’s regional tourism and business hub, almost US$ 7 billion worth of projects were announced. They included seven development projects, valued at US$ 6.158 billion, fourteen involving road/transport, worth US$ 654 million, and eight in the health/safety sector, totalling US$ 143 million.

At a court hearing, and following a case brought against it by creditors, Marka was declared bankrupt, and all of its assets brought into liquidation and the board members were required to pay up to US$ 122 million to outstanding creditors; the decision also applies to all the Marka subsidiaries. The ruling also confirmed that the company’s managers and directors were stripped of all rights to manage the company or its subsidiaries. Furthermore, they cannot manage or dispose of the company’s funds, pay out any claims or borrow any sums under its name. In addition, they will have to hand over to the court-appointed bankruptcy trustee all funds and documents of the company within five days of the date of the ruling. Formed in 2014, the US$ 75 million float offering was 360 times oversubscribed, and on its first trading day, its share value closed 59% higher. Marka was to be a holding enterprise for a range of global fashion and accessory brands, as well as F&B concepts, and, starting from scratch, it went on a buying spree. However, some of its investments failed to live up to their initial promise it and was hit by the sudden and steep drop in oil prices from mid-2014, racking up debts of over US$ 182 million and never having made a quarterly profit in its short history. The DFM suspended its trading in May 2018.

This week, Emaar Properties’ shareholders approved the developer’s mergerwith its retail and shopping mall unit – Emaar Malls – of which it already owned an 84.6% stake. The merger has already been approved by the industry watchdog – the Securities & Commodities Authority. At the meeting, it also won approval to boost its share capital to US$ $2.2 billion. Under the arrangement, shareholders will receive 0.51 Emaar Properties’ shares for each share held – equating to a 3.5% premium on the 01 September Emaar Malls’ share price. The existing Emaar Malls’ business will be reconstituted, within its wholly owned subsidiary, and will continue to develop and hold a portfolio of premium shopping malls and retail assets,

The DFM opened on Sunday, 10 October, 78 points lower the previous fortnight, gained 17 points (0.6%) to close the week on 2,789. Emaar Properties, US$ 0.02 higher the previous week, lost US$ 0.02 to close at US$ 1.07. Emirates NBD and Damac started the previous week on US$ 3.50 and US$ 0.34 and closed on US$ 3.73 and US$ 0.34. On Thursday, 14 October, 112 million shares changed hands, with a value of US$ 43 million, compared to 130 million shares, with a value of US$ 39 million, on 07 October.

By Thursday, 14 October, Brent, US$ 9.24 (6.7%) higher the previous fortnight, gained US$ 2.06 (2.5%), to close on US$ 84.49. Gold, US$ 19 (1.1%) lower the previous week, gained US$ 37 (2.1%) to close Thursday 14 October on US$ 1,796.

After years of negotiations, Air India has a new owner, with Tata Sons winning a US$ 2.4 billion bid, including equity and debt, finally privatising the troubled national carrier. Tata – which already manages Vistara, India’s only other full-service carrier, in a venture with Singapore Airlines as well as budget airline AirAsia India, a venture with Malaysia’s AirAsia Group – will take on US$ 2 billion of Air India’s US$ 8.2 billion total debt, resulting in an equity value of only about US$ 400 million which it will pay to the government. It is estimated that over the past decade, the loss-making airline has cost the Indian government the equivalent of US$ 3 million every day. It could be the forerunner of many state-owned entities to be sold to private companies that would push India into becoming a fully market-driven economy.

The English Premier League has finally approved the US$ 415 million takeover of Newcastle FC by a Saudi Arabian consortium, led by Public Investment Fund, (who will provide 80% of the funding), after receiving “legally binding assurances” that the Saudi state would not control the club. PCP Capital chief executive Amanda Staveley, a 10% owner, will take a seat on Newcastle’s board, while Yasir Al-Rumayyan, the governor of PIF, will be the non-executive chairman. To the relief of many of its legion of fans, it sees the end of the fourteen-year reign of Mike Ashley. With PIF’S assets totalling US$ 340 billion, it makes Newcastle a rich club and one with cash to boost its playing resources. A deal was initially agreed in April 2020 but was held up by several outstanding issues, but this seems to have been resolved after Saudi Arabia settled an alleged piracy dispute with Qatar-based broadcaster BeIN Sports, which own rights to show Premier League matches in the Middle East.

A McKinsey report noted that, in 2020, the global payments industry posted its first contraction in eleven years, declining 5.0% to US$ 1.9 trillion. However, the consultancy is confident that the industry will bounce back this year, to almost record levels seen in 2019 and could top US$ 2.5 trillion by 2025, driven by the digitisation of consumer and commercial transactions. Covid saw the sector undertake many changes, as consumers increasingly adopted digital platforms to shop, study and work online. Although the sector will also benefit from an improvement in the global economy, interest margins are likely to remain muted.

Reports indicate that Apple may slash Q4 production of its iPhone 13 by at least ten million, from an initial ninety million forecast, due to the ongoing global computer chip shortage; the news saw its share value fall 1.2% on Tuesday. Like other sectors, such as the car and video game console makers, Apple, one of the biggest chip purchasers in the world, has been badly impacted. It was only last month that the tech giant introduced four new iPhone 13 models – iPhone 13, iPhone 13 mini, iPhone 13 Pro and iPhone 13 Pro Max – and started shipping on 24 September. If consumer demand for the new iPhone continues, it is estimated that Apple will be running a shortage of more than five million iPhone 13 units for the festive season.

To those who think the current disruption to global supply chains is a short-term problem, Ikea has issued a wakeup call. The Swedish furniture giant says, that despite some improvement having been noted, it expects the disruption to global supply chains to continue until at least the end of Q3 2022. Last month, Ikea said it was struggling to supply 10% of its stock, or around 1k product lines, to its twenty-two stores in the UK and Ireland, amid the continuing shortage of HGV drivers. The problem was partially solved by Ikea embracing its need to meet customer needs and take on “the new competition”, by ramping up online sales, resulting in a two-year strategy taking just two months to implement. Poundland has also predicted that pressure from supply chain problems will last into 2022, and noted that shipping costs had soared, and that “there are sometimes where we have had to pay ten times our normal rates”.

After four years of negotiation, agroup of 136 countries, accounting for over 90% of the global economy, has agreed to set a minimum global tax rate of 15%, (well below the average 23.5% rate levied in industrialised countries), for big companies. The aim of the exercise is to make it harder for them to avoid taxation which seems to finally end a four-decade-long “race to the bottom”. Since the eighties, several countries have stood out by introducing a lighter tax regime, with the aim of attracting international investment. The OECD estimated that an annual US$ 150 billion in new revenues could be collected, whilst taxing rights on more than US$ 125 billion of profit would be shifted to countries where big multinationals earn their income. The global minimum tax rate would initially apply to overseas profits of multinational firms with more than US$ 867 million in global sales. Governments could still set whatever local corporate tax rate they want, but if companies pay lower rates in a particular country, their home governments could “top up” their taxes to the 15% minimum, eliminating the advantage of shifting profits. The agreement calls for countries to bring it into law next year, so that it can take effect by 2023, with those countries that have already created national digital services taxes having to repeal them by then.

The World Bank has estimated that the pandemic has cost the sixteen countries in the Mena region US$ 200 billion, based on measuring the estimated GDP of each country, compared to what actually happened because of Covid; the forecast growth was 2.8% in 2021 but the actual was a 3.8% contraction. By the end of 2021, the region’s GDP per capita will still be below the 2019 level by 4.3%. The 2021 GDP growth rate across the region will be highly uneven ranging from Lebanon’s minus 9.8% to Morocco’s growth figure of 4.0%. It is also a sad reality check that Mena’s health systems, which were considered relatively developed, buckled and were unable to fully cope with the ramifications of the crisis; any recovery is dependent on the capabilities of each country’s health system and their exposure to rising commodity prices.

According to a World Bank report, the debt burden of the world’s low-income countries jumped to US$ 633.5 billion – 12.0% higher on the year – because of the impact of Covid. Global governments brought in fiscal, monetary and financial stimulus measures to soften the burden on their respective economies, but this obviously came with a price and for all countries, that price was a much-increased debt burden. Unfortunately, it was the world’s poorest countries which suffered the most and now the World Bank is calling for “a comprehensive approach to the debt problem, including debt reduction, swifter restructuring and improved transparency.” This stance is also in line with the UN Conference on Trade and Development statement that “sustainable debt levels are vital for economic recovery and poverty reduction.” In short, such economies are being hit by the double whammy of slowing economic growth and public and external debt at elevated levels. The World Bank estimated that low and middle-income countries’ external debt-to-GNI ratio, excluding China, rose 5% on the year to 42% in 2020. This problem is not going away.

Australia’s second largest bank saw its share value dip 1.3% on Monday on news that it would be taking a US$ 960 million hit, mainly attributable to a US$ 710 million write-down after it quit energy trading and lowered its outlook due to “subdued” financial markets. Westpac also noted that there were one-off charges, including provisions to pay out customers seeking remediation for wrongly charged fees and costs associated with the sale of its life insurance unit; furthermore, there were also legal costs, customer refunds and litigation provisions, totalling US$ 127 million, bearing in mind that the bank is currently being pursued by ASIC over consumer credit insurance.

Two years after its main adversary, Crown Resorts, was hit by allegations, that it enabled illegal activity at its casinos for years, Star Entertainment is now facing similar claims brought by three news outlets implicating the firm in suspected money laundering, organised crime and fraud. Star has since commented that “we will take the appropriate steps to address all allegations with relevant state and federal regulators and authorities.” According to the report by the Sydney Morning Herald, the Age and 60 Minutes, Star had been warned that its anti-money-laundering controls were inadequate, but that in the seven years to 2021, it had wooed high-rolling gamblers, who were allegedly linked to criminal or foreign-influence activities. The worry for the markets is that Star may go the same way as Crown which had to face a series of public investigations into the firm that has left its future in doubt; earlier in the year, the NSW state gaming authority said Crown was unfit to operate its casino in Sydney after an official inquiry found it had facilitated money laundering. It was a well-known fact that until recently the only way to make money from a casino was to buy its shares – with Star shares tanking 23% on Monday, playing the roulette wheel may be a better option.

An ABC report estimates that over US$ 600 million in political payments disclosed over twenty-two years is linked to entities with a stake in gambling. Since political donations are mired in murky territory, this estimate is at least double the amounts identified by previous analyses, and yet almost surely an underestimate. The true figure is impossible to calculate because loopholes in the laws governing political donations mean that more than a third of the money poured into the political system is “dark money”, whose source remains unknown.

Talking about gambling, Bonza, a new domestic budget airline, backed by the US investment firm 777 Partners, will be launched in Australia early next year. In a country that has seen strict Covid restrictions until recently, and that already has four national carriers – Qantas, Jetstar, Virgin and Rex – this seems to be a risky venture. It will launch with a fleet of new Boeing 737-8 aircraft and will possibly fly into some forty-five Australian airports, that are potentially capable of handling the new planes; it will not target the lucrative “Golden Triangle” of Sydney-Melbourne-Brisbane. Bonza is currently awaiting necessary regulatory approvals before it can take to Australia’s skies.

Although the Australian Treasury confirmed that it paid US$ 19.8 billion in its JobKeeper programme to businesses whose turnover either increased, or did not decline as much as required, it has dismissed calls to introduce a clawback mechanism; its argument centred on the fact that a different design of the scheme would have cost jobs and delayed economic recovery and that its introduction saved up to 700k positions. Without the government’s significant fiscal support, including JobKeeper, Treasury had estimated that the unemployment rate would have peaked at least 5% higher, and remained above 12% for two years. To qualify for government support, businesses with a turnover of less than US$ 730 million, (AUD1 billion) needed to forecast a 30% decline in revenue in any single month or quarter of the first six-month period; those with a higher threshold had to forecast a 50% decline. In the first three months of the scheme, internal analysis by the Treasury indicated that US$ 8.4 billion, (AUD 11.4 billion), went to entities that did not suffer their forecast 30% or 50% drop in turnover; the following three months saw a figure of US$ 11.4 billion, (AUD 15.6 billion) being paid out in September to businesses that did not suffer their forecast 30% or 50% drop in turnover. Of the total of US$ 27 billion, US$ 9.6 billion went to businesses whose fall in turnover was less than forecast in the first six months, whilst the balance of US$ 10.2 went to businesses that enjoyed higher than forecast turnover. 

Whilst apparently absolving itself from any blame or mismanagement, Treasury noted that its “report demonstrates that JobKeeper was more than just a wage subsidy. It was designed to ensure the strongest possible economic recovery and avoid the scarring impacts on the labour market, which were characteristic of previous recessions. JobKeeper was specifically designed, not as a furlough scheme, but as one that enabled businesses to adapt and stay open. It was this feature, combined with the six-month guaranteed support and the absence of a clawback mechanism, that allowed JobKeeper to not only save jobs, but to create them.” (There must have been some top Aussie Rules players helping with the report). Several federal politicians are calling for transparency register, (such as the one in New Zealand), which shows how much firms with more than US$ 730 million turnover received under the scheme.

JobMaker was a key announcement in the October 2020 federal budget, delivered by Treasurer Josh Frydenberg, and intended to boost the Covid recession recovery; at the time, he estimated that “this will support around 450k jobs for young people.” Reality was different and in the nine months to 06 July 2021, there were only 4.1k companies — described as ‘entities’ with an Australian Business Number (ABN) — that had a processed claim through the scheme. The hiring credit paid employers up to US$ 272 a week for creating new jobs for people aged 16 to 29 years who were on JobSeeker, Youth Allowance, or the Parenting Payment, and US$ 136 a week for 30- to 35-year-olds. At the time there were concerns that employers could sack older, more experienced employees, and replace them with young workers earning a third of the salary and get the taxpayer funded JobMaker credit to make it cost no more, as well as possible problems that the US$ 3.0 billion scheme could be illegal under laws that aimed to prevent age discrimination.

It does appear that hundreds of thousands of Australians may have given up on searching for a job. There were  reports that a further 138k  jobs were lost in September, as Australia’s two most populous states, NSW and Victoria, struggled through extended lockdowns, nudging the unemployment level 0.1% higher to 4.6%; this figure would have been higher if it were not for a marked weakening in the participation rate which hit a fifteen-month low of 64.5% of people aged 15 and over currently working or actively looking for work. There are now 111k fewer people employed than before the first lockdowns in March 2020. Over Q3, participation in the labour force declined by 333k, as employment dropped by 281k people. With statistics like these, it is all but inevitable that the labour market will not fully recover until Q3 next year.

Last Friday, the US Senate voted 50-48 to temporarily raise the nation’s debt limit, by US$ 480 billion, avoiding a historic default and keeping the country open until early December. Only the intervention of Republican senate leader, Mitch McConnell, saved the country being two weeks away from being unable to borrow money or pay off loans for the first time ever. The bill will now go to the House of Representatives for approval, before being signed into law by President Joe Biden. Senate Republicans have previously argued that raising the debt limit was the “sole responsibility” of Democrats because they hold power in the White House and both chambers of Congress; they are also frustrated by new spending proposals the Democrats are trying to push through without Republican support. Any future default could have major economic repercussions, including a cut in the country’s credit rating (and thus higher interest payments) and throwing the global economy into financial turmoil.

Although its September unemployment rate dipped 0.4% to 4.8%, (equating to 7.7 million) on the month, the US only managed to add a disappointing 194k jobs last month, to the national payroll, as the Delta variant of coronavirus continued to drag on the economy. The market was expecting a figure nearer to 500k, but it is noted that readings were taken on 13 September, when daily Covid rates still hovered around the 150k level but have since fallen by a third. Although positions in education dipped, there were marked gains seen in hospitality, retail and transportation. A largely unchanged 61.6% labour participation rate seems to indicate that people, who left the workforce during the crisis, have yet to return to employment. Recently Fed Chair, Jerome Powell, noted that “it would take a reasonably good” September employment report to meet the central bank’s threshold for reducing its massive bond buying programme; with these figures, and the fact that Q3 GDP growth, at 1.3% was well down on the previous quarter’s 6.7%, it seems that the Fed will delay any tapering move until consumer confidence notches higher and the leisure, hospitality, and retail sectors return to some form of normalcy.

The Pensions and Lifetime Savings Association has estimated that a single person in the UK requires a post-tax annual income of US$ 15k for a minimum standard of living in retirement, and a couple US$ 23k; for the first time,Netflix subscriptions and items such as haircuts were included on the assessment. These figures for a minimum standard have risen by around US$ 1k since 2019 and would normally comprise the US$ 13k state pension plus some workplace pension savings. The calculations for retirement living standards are pitched at three different levels – minimum, moderate and comfortable.  A moderate living standard, including a two-week holiday in Europe and more frequent eating out, requires US$ 28.5k for a single person and US$ 41.8k for a couple. For a comfortable retirement living standard, the annual budget rises to US$ 45.9k and US$ 67.9k; this includes items such as regular beauty treatments, theatre trips, and annual maintenance and servicing of a burglar alarm. Currently, housing costs are not included on the assumption that most pensioners have paid off mortgages and it is estimated that only one in six is projected to have an income between moderate and comfortable.

There is no doubt that food inflation is having a major impact on UK household spending, with prices for all major basic food commodities heading north. Much of these rises have been put down to various causes, including poor harvests in Brazil, (which is one of the world’s biggest agricultural exporters), drought in Russia, reduced planting in the US and stockpiling in China, allied with more expensive fertiliser, energy and shipping costs to push prices up. In the UK, there are the added problems of lack of HGV drivers, a shortage of labour in certain areas of the economy and a major energy crisis. The end result is that all food producers are facing the same tide of price hikes, most of which will have to be borne by the end consumer. According to the UN Food and Agriculture Organisation, the cost of ingredients, such as cereals and oils, has pushed global food prices to a 10-year high. With inflation “across the board”, people will just have to get used to increased food prices, as producers will inevitably pass a higher proportion of increased costs onto the end user.

There are several factors that have played an important role in pushing up UK and global energy prices this year; it is estimated that in the UK, Europe and Asia, YTD prices have jumped 250%, including 70% since August. There are various reasons, both nationally and globally, put forward for the price hikes including a global squeeze on gas and energy supplies, as countries emerged from lockdown and industry re-opened, a European cold winter put pressure on supplies, as did a colder than normal Asian winter and a shortage of UK gas storage facilities ensured that its “in-house” supplies soon emptied, and they were exposed to the increasing wholesale prices. Then there is the possibility that Russia, a major energy provider, may be playing politics and restricting output.

Much has been written about its impact on households and industry hit by soaring energy costs. Domestic energy consumers had a certain amount of protection from rising prices due to a price cap, which sets the maximum price suppliers could charge customers on a standard – or default – tariff. However, the cap was increased on 01 October, leaving some fifteen million households facing a 12% rise in energy bills.

Industry has no such cap, meaning they are open to the risk of an unlimited rise in prices. Certain sectors, including ceramics, paper and steel manufacturing, have petitioned the government for a price cap, otherwise many would have to close down.  For example, a large UK container glass plants has estimated that its “normal” annual energy cost would likely jump from US$ 54.50 million (GBP 40.0 million) to US$ 136.3 million, (GBP 100.0 million); the UK cost is more than a majority of its overseas competitors. Already manufacturers and services are warning they will have to pass on their rising costs to consumers, and as energy costs are a big driver of inflation, few consumers and households will escape the consequences of the current crisis.

As more people dined out, went on holiday and attended music festivals, the UK economy grew by 0.4% in August and is now only 0.8% smaller than it was pre-pandemic; July returns were amended from an earlier 0.1% growth to minus 0.1%. The services sector was the biggest contributor to the monthly improvement, as arts, entertainment and recreation grew 9%, boosted by sports clubs, amusement parks and festivals. Demand for hotels and campsites recorded a 22.9% growth, with activity in accommodation and food services rising 10.3% in August. Although air and rail travel benefitted because of the further easing of Covid restrictions, both sectors were trading far below pre-pandemic levels. Construction output dipped 0.2% and is still 1.5% lower than pre Covid but the manufacturing sector fared better being 0.5% higher, driven by an increase in vehicle production. With business confidence fading and supply chain disruptions continuing, it is highly unlikely that the UK will return to pre-pandemic levels until the end of Q1 next year. Rising inflation, driven by significant increases in energy prices, and the recent cut in Universal Credit, will continue to impact on consumer spending and will have a negative effect on UK’s GDP growth for the rest of 2021.

In September, the UK recorded a monthly rise of 207k new jobs to bring the total employment figure to a record 29.2 million, as the unemployment level came in at 4.5%, (compared to 5.2% at the end of 2020), but still down on the 4.0% pre-pandemic level. However, the country is facing a strange anomaly – even with another record high of job vacancies, at 1.2 million. The economy has a chronic labour shortage in certain sectors – and labour shortages invariably impact negatively on economic growth. They include retail and motor vehicle repair, reporting the largest increases, along with accommodation, food services, professional activities and manufacturing. A desperate shortage of HGV drivers has led to supply chain chaos and concerns of a spiral in wages and prices, with underlying wage growth at between 4.1% and 5.6% in the quarter to August, well above the 3% seen before the pandemic. Two weeks ago, the Treasury invested a further US$ 681 million in fresh job support funding aimed at getting people into new or better jobs. The Bank of England is notorious because it seems that it can never get its inflation forecast correct; for a long time, 2.0% was its target, (and if it went above that it would raise rates) but when it went higher to 3.0%, no action was taken and now it seems to be 4.0% that will force a tightening in monetary policy and an inevitable rate hike that could be as high as 0.5%.

As an aside, fuel shortage was one of the main drivers in September retail spending falling to its lowest level since January. It was only 0.6% higher on the year and much weaker than the 3.0% level recorded a month earlier. There is little doubt that consumer confidence will be hit further, as the fuel and product shortages, combined with colder weather, will leave its footprint in Q4. Carry Me Home Down To Gasoline Alley!

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Streets Paved With Gold!

Streets Paved With Gold                                                      07 October 2021

For the past week, ending 07 October, Dubai Land Department recorded a total of 1,959 real estate and properties transactions, with a gross value of US$ 1.93 billion. It confirmed that 1,307 villas/apartments were sold for US$ 839 million, and 158 plots for US$ 160 million over the week. The top three transfers for apartments and villas were for a US$ 148 million apartment in Marsa Dubai, US$ 93 million for a Burj Khalifa apartment and US$ 72 million for a villa in Wadi Al Safa 5. The top two land transactions were in Hadaeq Sheikh Mohammed Bin Rashid for US$ 9 million, and in Madinat Dubai Almelaheyah for US$ 8 million. The most popular locations were in Al Hebiah Third, with 52 sales transactions, worth US$ 34 million, Al Yufrah 2, with 21 sales at US$ 9 million, and Al Yufrah 3 with 13 sales transactions, valued at US$ 4 million. Mortgaged properties for the week totalled US$ 817 million, including a plot for US$ 272 million in Marsa Dubai. 125 properties were granted between first-degree relatives worth US$ 93 million.

According to the latest CBRE report, Dubai residential property prices climbed 4.4% during the first eight months of the year – its highest annual growth rate since February 2015 – with average villa prices 17.9% to the good and apartments at 2.5%. Overall average rents were 2.7% lower, with villas 15.5% higher but apartments heading 5.2% lower. The study noted that “while there are still headwinds which are tapering performance, we do expect price performance to begin to improve in the not-too-distant future.” Over the period, residential transactions volume came in an impressive 76.8% higher, split between the secondary market (up 120.7%) and off-plan transactions (39.5%); YTD figures are already higher than all but two total annual returns over the past decade. It is also estimated that in the first eight months, 24.6k units were added to Dubai’s property portfolio, with a further 24.7k expected before year-end.

According to Property Finder, last month, Dubai recorded 5,762 transactions worth US$ 4.4 billion – the best September monthly return in eight years, and also the highest value of real estate sold in a single month since December 2013. YTD returns showed 43.3k transactions, valued at US$ 28.4 billion – 45% higher than the whole twelve months of 2020. The report also noted that there has been a growing trend for end-users to renovate, upgrade or extend their current properties instead of entering a booming market of increased prices – with a welcome knock-on effect for local contractors. 56% of all September transactions were for secondary and ready properties, totalling US$ 3.0 billion – the balance, (US$ 1.4 billion), for off-plan properties. Other analysts see Expo 2020 giving the market a further boost, as potential short-term visitors for the event could potentially turn into residents in the long-run, with a potential 20% surge to the emirate’s real estate transactions. The median price for secondary apartments has increased by 41%, year on year – 20% for secondary villa and townhouses. For off-plan apartments and villas/townhouses by 15% and 10% respectively.

Dubai’s office market saw Q3 occupancy rates 1.7% higher at 78.8%, driven by an increasing number of new IT firms, FinTechs and Chinese companies, (that may include coders). On the retail side, Dubai was slightly higher at 0.3%, than its pre-pandemic level, but rents remain under pressure, down 16.4% YTD. Its hotel occupancy rates were 11.4% higher YTD, with rises in both daily rates and average RevPar (Revenue per Available Room) of 2.3% and 11.4%.

According to the first Finom ‘Innovation in Business Index’, Dubai is ranked at 30th, with 63.1 points out of one hundred, and for attracting venture capital was at 32nd, (with 54.1 points), in relation to the funding of start-ups. The initial list of one hundred was derived from a shortlist of two hundred global cites and uses various categories, including IT, AI, software, machine learning and FinTech innovation. Other metrics included the ability to drive innovation forward in the business world, their research capabilities and strong industrial presence. San Francisco topped the overall index, owing to its strength in company R&D spending and green technologies, while London dominated in FinTech and start-ups. Beijing was ranked the top city in the fields of AI/machine learning, and education/mobility. The emirate boasts some two hundred VC funds, which boosts Dubai’s economic activity, with UAE start-ups accounting for 61% of the US$ 1.2 billion raised in the region in H1; Telegram and Careem are the most well-known of the Dubai start-ups.

Emirates Airline and Qantas have announced they will extend their alliance for another five years so that both airlines’ passengers will continue to have access to an expansive joint network, and their loyalty programmes. The carriers have existing approvals from regulators to operate a joint business until March 2023 but hope to get clearance to operate the agreement until 2028.

It was reported that HH Sheikh Mohammed bin Rashid Al Maktoum issued Decree No. (40) of 2021, forming the new board of directors for the Dubai Multi Commodities Centre Authority. It will be chaired by Hamad Mubarak Buamim and Abdulwahid Abdulrahim Al Ulama as the vice-chairman. Other board members include Abdullah Saif Al Shamsi, Charles George Webb, Roger Alfred Pierreinstein and Thierry Jean Luis Gemount, in addition to the CEO of DMCC. The decree is effective from its date of issuance and will be published in the Official Gazette. 

YTD, DMCC recorded its best ever nine-month performance since its 2002 formation, with 1.8k new companies joining the free zone., including a record September number of 214 new entities. The increase in numbers was boosted by expanding the DMCC Tea and Coffee Centres, along with launching both the DMCC Cacao Centre and the DMCC Crypto Centre; the latter could well be home to one hundred crypto and blockchain companies by 31 December.

During September, the Dubai Gold and Commodities Exchange recorded a spike in trading activity, with increased interest in currencies as an alternative asset class. DGCX’s G6 Currencies Portfolio traded a combined total of 1,434 lots, valued at US$ 80 million, with the recently launched Pakistani Rupee (PKR) Futures Contract continuing to expand, with a combined value of US$ 108 million. DGCX also posted gains in its Hydrocarbons asset class, as its West Texas Intermediary (WTI) Futures Contract came in 37% higher, on the year. Its precious metals’ portfolio also moved higher, with its Sharia Compliant Spot Gold Contract trading a total of 20 lots. Over 2021, the DGCX has signed MoUs with Sudan’s Financial Markets Regulatory Authority and with Victoria Falls Stock Exchange (VFEX) – a subsidiary of the Zimbabwe Stock Exchange (ZSE) – to provide both technical support, knowledge, and skills.

Dubai Airport Freezone Authority reported that it contributes 11% (US$ 21.0 billion) to Dubai’s H1 non-oil foreign trade – 34% higher on the year – whilst posting a US$ 1.69 billion trade surplus.  Imports,  exports and reexports grew by 44.5%, 24.0% and 20.5% in H1. Imports, (at US$ 9.63 billion), account for 8.5% of the emirate’s total imports, whilst reexports, at US$ 11.11 billion, represents 20.5% of Dubai’s total non-oil foreign trade.

H1 saw Jebel Ali Free Zone saw a 40% increase, year on year, in new customer numbers including machinery/equipment, vehicle/transport and retail/general trading which witnessed increases of 188%, 100% and 78%. Jafza, home to over 8.7k multinational companies, generated US$ 104.2 billion of trade last year, equating to 32% of Dubai’s total trade value in 2020, and accounting for 23.9% of total foreign investment.

Oxford Economics noted that, driven by higher energy prices, GDP growth in the GCC will more than double from 2.2% to 5.1% in 2022, with the UAE leading the bloc’s uneven economic recovery, attributable to its proactive approach to attracting global talent. However, there was a warning that, although the bloc has benefitted from domestic and global reopening, it will continue to lag other emerging market regions in regaining pre-pandemic activity levels, which will not be reached until Q1 next year. The report also noted that oil prices have almost doubled in the previous twelve months to 01 October, with Brent rising from US$ 39.27 to US$ 78.20; it also upgraded its regional oil growth forecast from 3.8%, (three months ago), to 6.7%. What with higher prices and higher demand, it is time for local producers to utilise the extra revenue to close budget gaps and build up financial resources. However, if the local central banks continue to follow the US Fed, it might see the regional nations lifting rates, when local circumstances dictate otherwise, and this could stunt credit growth recovery.

For the first time in its fifty-year history, the UAE is planning to raise up to US$ 3.5 billion in a debut bond sale, comprising three tranches of senior unsecured bonds with maturities of ten, twenty and 40 years, subject to market conditions. After drawing more than US$ 20 billion in orders, the federal government tightened the price guidance for its debut bonds – by around 80bps over US Treasuries (UST) for a 10-year portion, about 110 bps over UST for a 20-year tranche and around 3.3 per cent for 40-year Formosa bonds. Earlier in the year, the cabinet approved a public debt strategy, aimed at developing the domestic market for local currency bonds, in a bid to “revitalise the financial and banking sector in the country.” Moody’s commented that the higher debt burden will be offset by a further accumulation of liquid assets and is unlikely to significantly affect the fiscal strength of the federal government.

YTD, Dubai Aerospace Enterprise reported it had acquired twenty-three new aircraft, (ten owned and thirteen managed), and signed 147 lease deals, whilst divesting the same number of planes; this brings the total fleet to 425 aircraft serving 114 customers from 54 countries. The Middle East’s biggest plane lessor also added three new managed customers during the period. DAE, owned by the Investment Corporation of Dubai, with 114 customers from 54 countries, has placed an order for twelve Boeing 737 Max 8 planes with a customer in the Americas. During the period, it raised US$ 2.55 billion through a 4.5-year, 2.31% unsecured debt deal, and it will pay a debt of US$ 2.19 billion, with a 5.0% interest rate.

The DFM opened on Sunday, 03 October, 5 points higher the previous week, shed 73 points (2.6%) to close the week on 2,772. Emaar Properties, US$ 0.02 higher the previous week, lost US$ 0.02 to close at US$ 1.09. Emirates NBD and Damac started the previous week on US$ 3.87 and US$ 0.34 and closed on US$ 3.50 and US$ 0.34. On Thursday, 07 October, 130 million shares changed hands, with a value of US$ 39 million, compared to 81 million shares, with a value of US$ 50 million, on 30 September.

By Thursday, 07 October, Brent, US$ 4.98 (6.7%) higher the previous week, gained US$ 4.26 (5.4%), to close on US$ 82.43. Gold, US$ 66 (4.3%) lower the previous three weeks, gained US$ 19 (1.1%) to close Thursday 07 October on US$ 1,759.

In the nine months to September, Tesla delivered 627k cars, (including  another quarterly record of 241k in Q3), compared to  499k in the whole of the year 2020.The California-based company is seen by many to be a gauge on how well the EV market is progressing, with consumer demand moving higher, urged on by  governments, including the US and China, mandating that a certain percentage of up to 50%, of new car sales be EVs in the next decade. In Q3, Model 3 sedan and Model Y SUV crossover accounted for 96% of deliveries, while the Model S and Model X made up the production balance of 237.8k units. It currently produces its vehicles in California and Shanghai, while new factories in Berlin and Texas, are nearing completion. The company is also currently accepting orders for its Cybertruck, with production slated to begin in 2022. Its Q3 financial results will be published later in the month.

This week, Tesla is in the news for another reason, and this pertains to its founder, Elon Musk being in court for his role over the company’s US$ 2.6 billion acquisition of SolarCity. Investors, who are claiming that he received 2.4 million Tesla shares in exchange for his holdings in SolarCity, (an amount that subsequently rose to twelve million because of stock splits), calculate that the damages could be between US$ 1.4 billion to US$ 2.4 billion, to account for what they contend is SolarCity’s lower value. The judge has to ascertain whether the solar power provider’s chairman, Elon Musk, and largest shareholder at the time of the buyout, stood on both sides of the fence in the deal and wrongfully used his influence with the Tesla board to get the transaction done. His lawyers argue that the purchase was a “product of fair dealing” that was approved by 85% of Tesla’s shareholders. He is the last Tesla director left in the case, after his colleagues agreed to a US$ 60 million settlement of investors’ claims last year.

What a difference a day makes – following its largest monthly decline since May – on 01 October, Bitcoin jumped to its biggest daily gain since July, with a gain of around 10% to US$ 47.9k, dragging “lesser” digital currencies – Ethereum, Litecoin and EOS – with it. Two driving factors behind the surprise surge were comments by Federal Reserve chair Jerome Powell, that he had “no intention” on banning cryptocurrencies, and that crypto seems to be in its own bull cycle. There are reports that the US is considering enforcing bank-like regulations on cryptocurrency companies issuing so-called stablecoins, that are tied to another asset such as gold, and are less subject to valuation swings, a move mooted by the Fed. President Joe Biden’s administration is also looking at legislation to register such entities as banks. There is no doubt that the traditional banks are very concerned about cryptocurrencies and if – or rather when – they were to become an alternative to domestic bank deposits or even loans.

According to its President, the ECB is closely watching rising inflation expectations and wage developments, noting that “we should not overreact to supply shortages or rising energy prices, as our monetary policy cannot directly affect those phenomena.” Christine Lagarde also reiterated that predicting the length of disruptions, that has curbed the economy’s post-pandemic reopening, is difficult, but she still expected the “frictions” to be transitory. She still expected “that inflation expectations are anchored at 2%” and the current spike will abate in 2022.

The 2008 GFC proved to some that the IMF was incapable in preventing or even forecasting the worst financial crisis since the 1930s.  Currently, the world body, which has overseen national and international economic affairs for nearly eighty years, seems to be running scared when it comes to cryptocurrencies, with it calling for “robust and globally consistent” standards to govern the sector. Over the past year, the crypto market cap has more than doubled to over US$ 2 trillion. The IMF seems to be worried that the banking sector can also come under pressure if the crypto ecosystem becomes an alternative to domestic bank deposits or even loans. There is no surprise to see that global central banks have been reluctant to endorse cryptocurrencies because of their speculative nature and regulatory oversight. The fund also noted that users need to disclose only limited amounts of information and high levels of anonymity enable money laundering and terror financing.

Maybe the IMF should be spending more of its resources in cleaning up itself as well as the traditional global banking system, which has been more than tarnished by illegal activities especially since the GFC. In March 2017, CNBC reported that a Boston Consulting Group study had estimated that global banks had raked in nearly US$ 1 trillion in profits since the GFC but had paid a staggering US$ 321 billion in fines. It seems that 2020 was a comparatively quiet year but a report by indicating that banks paid US$ 12.8 billion in fines, with US financial institutions being fined a total of US$ 15.1 billion, with the US banks paying out 73.4% (US$ 11.1 billion) of the total. Central banks around the world have been reluctant to endorse cryptocurrencies because of their speculative nature and regulatory oversight.

According to a report in Switzerland’s ‘Le Temps’, the IMF deleted fourteen pages, (containing vital information), from a 1917 report on the state of Lebanon’s financial system, at the behest of the country’s central bank which wanted to omit data that highlighted risks to the country’s financial stability. Less than three years later, the economy collapse resulting in the currency tanking – losing 90% in value – and 50% of the population living below the poverty line. Whether this would have happened if the “full” report was made available is debateable but the new Prime Minister, Najib Mikati, confirmed he would reassess the scale of the country’s losses with Lazard and pursue a deal with the IMF. Financial services company, Lazard, estimate Lebanon’s loss at over US$ 80 billion, with the World Bank describing it as one of the most severe country financial services’ collapse since the 1850s.

With the World Bank reviewing Kristina Georgieva’s role into allegations that she pressured bank staff to adjust data that determined the ranking of certain countries in an index while she worked there, the executive board of the IMF met her to discuss the matter further. The Bulgarian economist is now head of the IMF, taking over the role formerly held by Christine Lagarde, but from 1993 to 2010, she served in a number of positions in the World Bank Group, eventually rising to become its vice president and corporate secretary in March 2008. In January 2017, the World Bank announced her new position as the first CEO of the International Bank for Reconstruction and Development. After data irregularities were reported in the 2018 and 2020 surveys, World Bank management discontinued the next Doing Business report and initiated a series of reviews and audits of the report and its methodology. Last year, an independent legal enquiry concluded that the World Bank’s Doing Business reports had been altered, on Ms Georgieva’s instructions, to inflate the rankings for countries such as Azerbaijan, China and Saudi Arabia. It is reported that the US, IMF’s largest shareholder, is debating whether to ask Ms Georgieva to resign as a result of the ethics scandal and there is every chance that her days are numbered.

Under new UK anti-money laundering legislation. NatWest has admitted three counts of failing to properly monitor US$ 496 million deposited into a customer’s account; the customer was a Bradford gold merchant, who is alleged to have received nearly US$ 3 million a day in bags of cash, as well as allegedly laundering US$ 495 million through its NatWest Bank accounts, over a five-year period from 2011 to 2016. The FCA said that the bank, facing a fine of up to US$ 360 million, had failed to adhere to the requirements of anti-money laundering legislation in relation to Fowler Oldfield Ltd’s account; when first opened, the figure the firm forecast for its annual turnover was US$ 20 million – but over five years, it was US$ 500 million – and it was agreed that the bank would not handle cash.

Almost twelve million documents have been leaked by a group of news organisations showing the confidential financial details, and revealing assets held offshore, by politicians and public officials worldwide. The news reports have been published by the International Consortium of Investigative Journalists (ICIJ) and its media partners in the Pandora investigation, including The Washington Post, the BBC, The Guardian, Radio France and the Indian Express. Initial reports noted that leaders of certain countries

Initial reports noted that leaders of certain countries, in Africa, Asia and Europe, had carried out suspicious financial transactions to better themselves or their families/associates. One African country’s president and family were allegedly linked to thirteen offshore companies, one of which had stocks and bonds to the value of US$ 30 billion.  Another allegation was that an Asian president and family had secretly been involved in seventeen UK property deals, valued at US$ 542 million, which included a US$ 45 million office block for his young son.  Indeed, the Crown Estate, after carrying out the checks required in law, bought another office block from the family for US$ 89 million in 2018. In another Asian country, it was alleged that its cabinet ministers have secretly owned companies and trusts, holding millions of dollars of hidden wealth, with the report also showing the personal wealth of its military leaders. The Pandora news reports said a European prime minister moved US$ 22 million, through offshore companies, to buy an estate on the French Riviera in 2009, while keeping his ownership secret. Other documents signalled out a US state that is now rivalling opaque jurisdictions in Europe and the Caribbean for financial secrecy, revealing almost US$ 360 billion in customer assets sitting in trusts in the state, some of it tied to offshore-based people and companies, accused of human rights abuses and other wrongdoing.

The Pandora papers also reported that several major Australian mining companies, including Rio Tinto and BHP Billiton, (now owned by Sanjeev Gupta), have continued to trade with a Chinese steel billionaire Du Shuanghua, even after he confessed to paying bribes to a Rio Tinto executive. more than a decade ago. The files also noted that since 2010, Rio had traded more than US$ 200 million with his steel companies — via a Singaporean intermediary. The Papers clearly show that Mr Du is the beneficiary of a company called Bright Ruby Resources, through six layers of trusts and holding structures, including four based in the BVI and another based in the Cayman Islands. The restructuring started in 2009, the year Mr Du was being investigated by Chinese authorities for the Rio Tinto case and since then he has stashed his massive amount of wealth — accumulated via political connections and briberies — in offshore tax havens and jurisdictions such as Singapore. In 2010, four Rio Tinto employees were charged for accepting millions of dollars from Chinese steel companies and stealing state (commercial) secrets. At the trial, he testified as a witness and admitted giving US$ 9 million in bribes to one of the Rio Tinto executives, Wang Yong — a claim Wang denied – and said “without Wang Yong’s help, my company could not grow to this size.” The four accused were given fourteen years’ jail whilst the elusive Du escaped prosecution.

Clayton, Dubilier & Rice, whose senior adviser, Terry Leahy, is the former chief executive of Tesco, has won an auction for the British supermarket Morrisons, with a US$ 9.5 billion bid. The US private equity group had offered US$ 3.89 per share, beating the Fortress offer by GBP 0.01. In July, the Bradford-born grocery had been proved right to reject CD&R’s initial offer of US$ 7.45 billion. The offer has to be approved by the shareholders at a 19 October meeting, following which CD&R will take over Morrisons next month.

Following an investigation into Leicester City and retailer JD Sports over the sale of merchandise, the Competition and Markets Authority confirmed it had “reasonable grounds to suspect one or more breaches of competition law.”  Furthermore, it indicated that the investigation relates to suspected infringements regarding anti-competitive agreements over the sale of club branded products in the UK. This comes less than a year after the watchdog launched an investigation into price fixing of replica Rangers football kits sold by JD Sports and other retailers.

UK September new car registrations slowed to their lowest level since the end of the last century, sinking to 214k, down 35% compared to the same month in 2020. One of the main drivers seems to be the global shortage of computer chips (semiconductors), when lockdowns forced car production lines to halt, resulting in microchip manufacturers diverting the chips, that would normally go into new cars, to the consumer electronics market, and supply is yet to fully recover. One bright light was that 32k electric vehicles were registered in the month – almost the same amount registered in the whole of 2019. Last year, new car registrations had fallen 29% on the year to 1.63 million. The main beneficiary of this decline is sales of second hand cars which have more than doubled in recent months due to a shortage of new models, with the Q2 market more than doubling on the year to 2.2 million vehicles.

At this week’s Conservative party conference, Chancellor Rishi Sunak has reiterated that there is no “magic wand” to solve the disruption to fuel and food supplies disappear overnight, noting that supply problems were global, as a result of lockdowns and the rapid re-opening of economies. He did note that “pragmatic controlled immigration” could be part of the short-term solution. The Chancellor is facing a myriad of other problems, that are eating into the populace’s spending, such as rising food and energy prices, cuts to universal credit benefits and tax rises to fund the NHS and social care.

France continues to show its displeasure with its neighbour – this time its irk is centred over post-Brexit fishing rights which is putting increased pressure on already strained bilateral relations. This time, the problem relates to the fact that the UK granted 12 licences out of 47 bids for smaller vessels to fish in its territorial waters, with prime minister, Jean Castex, accusing the Johnson administration of not respecting its Brexit deal commitments on fishing.

and warning that all bilateral agreements with the UK could be at risk if the EC did not take a tougher stance on the UK government. The UK has indicated that it would consider further evidence to support remaining bids for fishing rights, as this week the Macron government repeated its threat to cut the UK off from energy supplies, (it is estimated that 47% of the country’s electricity imports emanate from France).

New Zealand became one of the first (but definitely not the last) developed economies to reverse rate cuts put in place during the pandemic by doubling its cash rate to 0.5% this week – the first rate hike in seven years. Two of the main reasons for this early intervention were to rein in property prices and inflation, with the central bank advising that it plans to remove more stimulus measures, “contingent on the medium-term outlook for inflation and employment,” as the economy continues to recover. In August, South Korea became the first major Asian economy to raise interest rates since the coronavirus pandemic began, with Norway and the Czech Republic following suit last month.

On Monday, trading in Evergrande shares was suspended after the indebted property developer, with debts of over US$ 300 billion, allegedly missed interest payments to its bondholders; shares in its related property services businesses were also suspended on the Hong Kong Exchange. It is reported that a rival real estate firm Hopson Development, is reportedly set to buy a 51% stake in an Evergrande real estate unit for US$ 5.0 billion. Evergrande shares have fallen by almost 80% YTD.

The end of October will see the opening of the 2021 United Nations Climate Change Conference in Glasgow. Delegates, from over two hundred countries, heading to the COP26 UN climate summit agreed they must deliver on the US$ 100 billion (AED 367 billion) per year pledge to help vulnerable nations tackle climate change. Under the presidency of Alok Sharma, the pre-COP26 climate event in Milan last week agreed to the consensus to do more to keep the 1.5 degrees Celsius target within reach, adding more needed to be done collectively in terms of national climate plans.

Joe Biden has managed to keep the government going for a further two months, having signed a temporary measure to keep it funded and to avoid yet another federal shutdown, which would have resulted in the closure of federal agencies and hundreds of thousands of government employees having to take unpaid leave. The bill also includes money for hurricane relief and Afghan refugees. However, a further funding of US$ 1 trillion to finance infrastructure was postponed; the bill would have provided US$ 550 billion for roads, bridges, internet and other domestic priorities. There has been opposition from those who would like the legislation to encompass climate change and social welfare. One other problem facing Congress this month is that the US government is set to hit its borrowing limit, (the limit on how much the US government can borrow), within weeks. If this is not solved quickly, the ramifications will be felt globally, with a major economic downturn.

France is still reeling from the so-called Aukus security partnership which saw Canberra cancelling a US$ 27.5 billion deal with France to build a fleet of conventional submarines, to be replaced by at least eight nuclear-powered submarines, utilising US and UK technology. Now the EU has postponed a 12 October meeting with Australia for a month, with EC president, Ursula von der Leyen, questioning whether the EU would be able to strike a trade deal with Australia, in solidarity with France. The EU is Australia’s third-biggest trading partner, with trade in goods and services totalling over US$ 52 billion last year.

According to a Zoopla report, the number of UK streets where the average home is valued at more than US$ 1.36 million (£ 1 million) has risen by 18.0% over the past twelve months to 11.7k. Nearly 65% of the increase was seen in the South East, (with 942 “extra” streets)  and London’s 262, bringing their totals to 4.4k and 4.5k. Covid has seen people looking for bigger properties and the stamp duty holiday has helped house prices rocket. London remains home to the ten most expensive streets with Kensington Palace Gardens being the country’s most expensive street, with homes there priced at nearly US$ 41 million on average, followed by Courtenay Avenue in Highgate (US$ 26 million) and Grosvenor Crescent at US$ 23 million. The most expensive street outside London was Titlarks Hill in Ascot, with the average home price at US$ 11 million. Five suburbs – Guildford, Reading, Sevenoaks, Harpenden and Altrincham – had million-pound streets, with 176, 137, 133, 115 and 105 streets respectively. It would be interesting to find out how many such streets could be found in the emirate, but it will be a lot higher than Wales which has only nine £ 1 million streets. It is indeed true that Dubai beats Wales when it comes to Streets Paved With Gold!

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Looks Like A Cold, Cold Winter!

Looks Like A Cold, Cold Winter!                                                         30 September 2021

For the past week, ending 30 September, Dubai Land Department recorded a total of 1,592 real estate and properties transactions, with a gross value of US$ 1.63 billion. It confirmed that 1,080 villas/apartments were sold for US$ 747 million, and 73 plots for US$ 95 million over the week. The top three transfers for apartments and villas were for a US$ 102 million apartment in Marsa Dubai, US$ 72 million for a Palm Jumeirah villa and US$ 70 million for a villa in Wadi Al Safa 5. The top two land transactions were in Al Thanyah Fourth for US$ 16 million, and in Al Qusais First for US$ 9 million. The most popular locations were in Al Yufrah 3, with 17 sales transactions, worth US$ 4 million, Nad Al Shiba Third, with 10 sales at US$ 48 million, and Al Hebiah Third with 9 sales transactions, valued at US$ 5 million. Mortgaged properties for the week totalled US$ 545 million, including a plot for US$ 56 million in Me’Aisem First. 71 properties were granted between first-degree relatives worth US$ 272 million.

Knight Frank has confirmed what everyone knew – that Dubai property prices have jumped 16.5% over the twelve months to July. The global property consultancy also noted that Q3 villa prices are provisionally 5.0% higher, on the quarter, and 17.0% on the year, driven by the UAE’s lauded handling of the pandemic and the “buzz” around the much-anticipated World Expo. By the end of Q3, the number of US$ 10 million plus properties sold in the emirate YTD totalled 54 – well over the record twelve-month total of 31, established in 2015. Over 75% of these sales have occurred in two locations – Emirates Hills and Palm Jumeriah.

Last week a bullish Crown Prince, Sheikh Hamdan bin Mohammed expected Dubai’s economy to grow by 3.1%, this year, nudging 0.3% higher to 3.4% in 2022. He also noted, that “Dubai has successfully overcome the pandemic’s global shockwaves,” and that the emirate’s position, as a major economic capital, had been supported by clear goals, flexibility and speed in responding to changes. Now that Expo 2020 finally opened this evening, analysts are considering the economic benefits that will accrue from the six-month event, as business confidence heads north at an increased pace. Sheikh Hamdan’s realistic growth projections are in line with the revised forecast made by the International Monetary Fund which has upgraded the UAE’s growth forecast to 3.1% for 2021 in its latest World Economic Outlook, as compared to 1.3% predicted in October 2020.

According to the latest Global Financial Centres Index, Dubai moved up one place to 18th, with 694 points, among the top twenty vibrant financial centres, to become the only city in the Middle East, South Asia and Africa region to do so. New York and London maintained their top two positions, despite the latter exiting the EU at the start of 2020, and that the two cities’ financial services sectors managed to sustain their performance despite radical changes in working practices resulting from the pandemic. Playing a pivotal role in Dubai’s transition, over the past two decades, as a sought-after hub for financial companies and fintechs are world class financial zones, including Dubai International Financial Centre. Financial industry sources said the enhanced ranking further boosts Dubai’s position on the ladder and underscores the emirate’s economic potential and its position as the destination of choice for international organisations, including FinTech leaders. Dubai’s position as a major global centre has also benefitted from the government taking innovative initiatives and introducing a series of progressive regulatory reforms.

Indicating its position as one of the fastest growing global business hubs, Dubai’s H1 non-oil external trade surged 31.2% to reach US$ 196.8 billion, compared to a year earlier. Exports, imports and reexports were all higher – by 44.9% to US$ 29.9 billion, 29.3% to US$ 112.8 million, and 28.3% to US$ 54.1 billion; volume wise, the tonnage rises were up 10.0%, 30.8% and 4.3% to 48.0 million, 10.1 million and 7.0 million. The Crown Prince, Sheikh Hamdan, noted that “we will continue to build on our growth momentum to achieve our ambitious sustainable development projects and plans.”

China maintained its position as the emirate’s leading trading partner, 30.8% higher on the year at US$ 23.6 billion in H1, followed by India (up 74.5% to US$ 18.3 billion), the USA (US$ 8.7 billion, up 0.9%), Saudi Arabia, (US$ 8.3 billion, up 26.5%) and Switzerland, 2.5% higher at US$ 6.8 billion. The total share of the five biggest trade partners in H1 was 30.3% higher at US$ 65.7 billion. Gold topped the list of commodities in Dubai’s H1 external trade at US$ 37.8 billion (19.2% of Dubai trade), followed by telecoms, diamonds, jewellery and vehicle trade at US$ 25.6 billion, US$ 15.6 billion, US$ 9.3 billion and US$ 7.6 billion. Direct trade totalled US$ 121.4 billion, up 39.5%, while trade through free zones reached US$ 74.1 billion, up 19.8%.

After six months of rising prices, pump prices fell in September, but tomorrow, 01 October, prices will move higher again, as global energy prices touch three-year highs. The country’s fuel price committee announced that Super 98 would be US$ 0.0136 higher to US$ 0.7084 per litre, Special 95, up US$ 0.0136 to US$ 0.6648 and diesel US$ 0.0354 to US$ 0.6839.

It is reported that Package A of the country’s Etihad Rail project has been completed two months ahead of schedule. This part extends 139 km and is connected through Al Ghuwaifat, on the border of Saudi Arabia, with Stage One, which extends 264 km from Habshan to Al Ruwais.  When completed, Stage Two will extend 605 km from Ghuweifat on the border with Saudi Arabia to Fujairah on the UAE’s east coast, to be followed by future route additions.  It will eventually connect vital areas in the seven emirates, via a track extending over 1.2k km to enhance the country’s social and economic development, as well as its global positioning in line with the UAE Centennial 2071.

Prior to June 2022, Shuaa Capital, via its 100% subsidiary, Northacre, estimates that it will have built and delivered US$ 2.8 billion worth of property projects in London. In October, it will unveil its first show apartment in The Broadway and will bring 116k sq ft of commercial space to the market and by the end of H1 2022, it hopes to complete its two key projects – No 1 Palace Street, (bought in 2013 for US$ 417 million), and The Broadway, (acquired for US$ 498 million in 2014). Walid El-Hindi, chief executive of real estate at Shuaa, commented that “we look forward to exploring further opportunities in line with our strategy and investing in the UK.” Northacre has been involved in ten luxury London projects, encompassing one million sq ft, as well as managing US$ 2.7 billion worth of property projects in the UK.

The DFM opened on Sunday 26 September, 72 points (0.3%) lower the previous three weeks, nudged 5 points higher to close the week on 2,845. Emaar Properties, US$ 0.02 higher the previous week, remained flat at US$ 1.11. Emirates NBD and Damac started the previous week on US$ 3.81 and US$ 0.34 and closed on US$ 3.87 and US$ 0.34. On Thursday, 30 September, in another low trading environment, 81 million shares changed hands, with a value of US$ 50 million, compared to 55 million shares, with a value of US$ 30 million, on 23 September.

For the month of September, the bourse had opened on 2,903 and, having closed the month on 2,845, was 83 points (2.0%) lower. Emaar traded from its 01 September 2021 opening figure of US$ 1.14 – down US$ 0.03 – to close September on US$ 1.11. Two other bellwether stocks, Emirates NBD and Damac, started the month on US$ 3.57 and US$ 0.35 and closed on 30 September on US$ 3.87 and US$ 0.34 respectively. YTD, the bourse had opened the year on 2,492 and gained 353 points (14.2%) to close the nine months on 2,845. NBD and Damac started the year on US$ 3.33 and US$ 0.35 and closed 30 September at US$ 3.87 and US$ 0.34.

By Thursday, 30 September, Brent, US$ 2.43 (3.2%) lower the previous week, gained US$ 4.98 (6.7%), to close on US$ 78.17. Gold, US$ 54 (2.3%) lower the previous fortnight, lost US$ 12 (3.0%) to close Thursday 30 September on US$ 1,740.  Brent started September on US$ 71.82 and gained US$ 6.35 (8.8%) during the month, to close on US$ 78.17. YTD, it started the year trading at US$ 51.80 and has gained US$ 26.37 (50.9%) to close on US$ 78.17 during the first nine months of the year. Meanwhile, the yellow metal opened September trading at US$ 1,815 and shed US$ 58 (3.2%), during the month, to close on US$ 1,757. Over the year it has lost US$ 138 (7.3%) from its opening year balance of US$ 1,895.

Further good news for the local economy is that oil prices climbed above US$ 80 a barrel on Tuesday, with Brent hitting its highest level at US$ 80.69 since October 2018. There is no doubt that the current prime driver is the energy crisis in Europe and in an environment of surging demand and tight supplies, there is every chance of a further 10% hike occurring by the end of October. The last two months have seen major hurricanes, Ida and Nicholas, hit the US east coast and, in damaging oil infrastructure, led to a major fall in production which in turn helped push prices higher. Furthermore, a dramatic 400% surge in natural gas prices has increased the demand in oil, seen to be a relatively cheaper alternative for power generation. It now seems to be highly likely that global demand will increase by a further 500k bpd by year end – another driver to push prices higher.

Ford has announced a US$ 11.4 billion plan to build zero-emission cars and pickups “at scale” for American customers, with its biggest ever factory in Tennessee, and two battery parks in Kentucky; the expansion will add 11k jobs to its payroll. In line with its peers, such as GM and Stellantis, the car maker plans to have 50% of its vehicles to be zero emission by 2030; currently, the US only accounts for just 2% of new EV sales globally in 2020. It will also introduce a new agreement with South Korean batter maker, SK Innovation.

Next has announced that it foresees staff problems in the run up to Christmas which can only be solved by a government relaxation in immigration rules for overseas workers. The UK retailer noted that some of its operations were “beginning to come under pressure”, including warehouse and logistics staffing, and that the lorry driver crisis was “foreseen, and widely predicted”. The UK company commented that the retail bounce-back from the coronavirus pandemic was “far stronger than we anticipated”, and that “sales in retail stores have done better than planned, while online sales have fallen back less than we expected. It appears that the wider economy has not suffered the long-term damage many feared, for the moment at least. And, in particular, employment has held up well.”

Aldi UK’s chief executive Giles Hurley is confident the supermarket chain can weather any storms in the supply chain and does not see any customer disruption during the festive season. As with its competitors, the UK’s fifth largest supermarket has had to increase payments for its delivery drivers and is ramping up their supplies to reduce any chance of running out during Christmas trading. Aldi posted a 10.0% growth in revenue to US$ 18.2 billion, with a 2.5% dip in pre-tax profits to US$ 357 million, and announced that it would invest US$ 1.75 billion in expansion plans that will see one hundred new stores and 2k extra jobs. There was no doubt that 2020 was a challenging year for Aldi, along with Lidl and other discounters. Aldi lost market share during the year, as huge numbers of shoppers moved to online grocery shopping but it has since quickly made up for the lost ground, especially since the easing and subsequent lifting of lockdown restrictions.

All supermarkets will be impacted by the double whammy of many shoppers tightening their purse strings this year, (and less disposable income), whilst inflation and rising costs will see many prices heading higher; Tesco is warning about food prices being 5.0% higher by year-end. To add to these problems is the fact that this year, actual stock items will be reduced, leading to limited choice of products for the shopper.

The problem that many UK businesses are facing, and that is impacting on supply chain problems, is a chronic shortage of lorry drivers., estimated by some to be in the region of 100k. The recent announcement that the government will hand out 5k temporary visas to fuel tanker drivers, (valid until Christmas Eve and with pay starting at US$ 40k) and 5.5k poultry workers. However, the problem, initially attributable to the pandemic, may be a lot bigger than it first appears and includes other factors including tax changes, Brexit, and an ageing workforce.

Not many football fans would have heard of Forest Green Rovers but today the club is top of the Sky Bet League Two (the fourth tier of English Football), four points ahead of their nearest rival. Furthermore, it is not only the world’s first carbon neutral football club, (and it plays on organic turf), it has also been acknowledged by FIFA as the greenest team in the world. In 2010, the 120-year old football club was in danger of folding when green energy entrepreneur, Dale Vince, became interested, although he had never seen the team play. Since then, he has driven the club’s transformation and brought his environmental principles to the field in the hope of creating a new kind of football club. He started making environmentally focused changes from the start of his tenure, with the club putting solar panels on their roof, banning single-use plastics, like cups and water bottles, and installing charging points for electric cars; they also have their own electric vehicles in the fleet. All the food sold in the ground is vegan, despite initial opposition and scepticism. Even the club shirts are made from sustainable fabric – three years ago, bamboo was used – this year, they are made from coffee grounds, a better alternative because it uses recycled materials. Over the past decade, the club has transitioned from near collapse to a commercially successful entity, with the chairman reiterating that “the more prestigious the club is, the greater their ‘green influence’ will be”. 

The UK furlough scheme closes today, 30 September, with uncertainty ahead for the onemillion who have not yet fully returned to work. According to a report by the Resolution Foundation, about half that number, at the end of July, had been able to work some of the time. The jury is out whether the US$ 92 billion was money well spent with the Chancellor, Rishi Sunak saying he was “immensely proud” of the scheme but now was the right time to close it. In the past eighteen months, since the onset of Covid, it has helped pay the wages of over 11.6 million workers; under the scheme, it paid 80% of their usual wage, but in August and September it paid 60%, with employers paying the balance. Some consider that there will be a small rise in unemployment as furlough ends and that there will be an increase in under-employment where employees return to work but possibly not on a full-time basis. Inevitably, there will be a big mismatch of skills and experience between those leaving the furlough scheme and the jobs on offer which will see job vacancies still around the one million level, at the same time unemployment remaining higher than it theoretically should be.

In Australia, there are reports that the local coffee industry is being hit by global price hikes that have risen YTD by 21.6% to US$ 2.63 per kg, with speciality beans from Brazil 40% higher. The “world price of coffee” comprise the average of monthly prices of arabica and robusta green, or raw, coffee beans, with such high prices last seen in 2014. The two main drivers behind the price rises are climate change and global supply chain issues. Drought and severe frost are estimated to have destroyed about 25% of Brazil’s, and some Central American countries’, coffee plants, with drought also affecting producers in North Africa. Brazil is the world’s largest coffee producer and accounts for about 50% of global supply and is Australia’s second biggest import source for coffee after Sweden.  In short, there will be less Brazilian coffee available to Australian drinkers and because of the law of supply/demand, prices will inevitably move higher. It seems that Australian coffee roasters are paying up to US$ 0.75 per kg extra and are being impacted by higher delivery prices. Some of these extra expenses need to be passed on to their clients, the coffee shops, already reeling from continuous lockdowns imposed by the various governments in the country over the past eighteen months.

China’s administration has continued to display its displeasure at cryptocurrency, by issuing a blanket ban on all crypto transactions and mining, hitting bitcoin and other major coins. The central bank, along with nine other government agencies, as well as banking, securities and foreign exchange regulators, will root out “illegal” cryptocurrency activity.  The reason for this stance, not to support cryptocurrency market development, is that it goes against its policies of tightening up control over capital flow and big tech.

The People’s Bank of China has banned overseas exchanges from providing services to mainland investors via the internet, cutting off the likes of Coinbase and Binance from the world’s second-largest economy; it also barred financial institutions, payment companies and internet firms from facilitating cryptocurrency trading nationally. Claiming  it was “imperative” to cut out crypto mining because it contributed little to China’s economic growth, consumed a huge amount of energy and hampered carbon neutrality goals, the National Development and Reform Commission confirmed it would work closely with other government agencies to make sure financial support and electricity supply will be cut off for mining use.  On the news, Bitcoin dipped 6% to US$ 42.2k, whilst smaller coins, such as Ether and XRP fell 10%.

Last week, China’s central bank injected US$ 71 billion of short-term cash into the banking system, as it sought to avoid contagion stemming from the China Evergrande Group spreading to domestic markets. The cost of borrowing overnight fell 0.60% on the week to 1.68%, the lowest level since late July. This move helped calm China’s financial markets after deepening concern, over Evergrande, sparked a global selloff on Monday and is in direct contrast to the central government’s apparent standoff approach to the fate of the embattled developer. Furthermore, seven banks assured investors that they had collateral cover on the risks emanating from Evergrande. Regulators continue to encourage the company to take all measures possible to avoid a near-term default on dollar bonds while focusing on completing unfinished properties and repaying individual investors.

The EU has another problem to face caused by surging use. energy prices as its leaders have been pushing their expansive climate plan – “Fit for 55” – to cut carbon emissions by 55% by 2030. Even without the current energy minefield, the EU plans would have resulted in higher prices and that even proponents of the greener economy strategy were warning of increased costs. Spain becomes the first member nation to call for the energy crisis to be discussed at the next leaders’ summit and with its past history of last-minute compromise and policy changes, it is inevitable there will be a dilution of “Fit for 55” to accommodate financial requirements. As the current crisis intensifies, the greater the backlash may be over the EU’s climate plans, having highlighted the difficulty for Europeans in funding the move to renewable energy. For many, it Looks Like A Cold, Cold Winter!

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We Are Never Ever Getting Back Together!

We Are Never Ever Getting Back Together!                                         23 September 2021

For the past week, ending 23 September, Dubai Land Department recorded a total of 1,835 real estate and properties transactions, with a gross value of US$ 1.85 billion. It confirmed that 1,249 villas/apartments were sold for US$ 708 million, and 157 plots for US$ 327 million over the week. The top three transfers for apartments and villas were all for apartments –  US$ 86 million in Burj Khalifa, US$ 73 million in Marsa Dubai, and US$ 52 million in Palm Jumeirah. The top two land transactions were in Al Hebiah Fifth for US$ 52 million, and in Um Suqaim First for US$ 14 million. The most popular locations were in Al Yufrah 2, with 36 sales transactions, worth US$ 8 million, Al Hebiah Third, with 31 sales at US$ 21 million, and Hadaeq Sheikh Mohammed bin Rashid, with 19 sales transactions valued at US$ 90 million. Mortgaged properties for the week totalled US$ 817 million, including a plot for US$ 187 million in Wadi Al Safa 5. 76 properties were granted between first-degree relatives worth US$ 56 million.

Yesterday, 22 September, was a hectic day for the Dubai Land Department, with 266 sales transactions, worth US$ 232 million, and mortgage deals of US$ 91 million; there were also 21 gift transactions, amounting to US$ 7 million. The daily total of realty transactions was US$ 327 million, covering 227 villas/apartments, and 39 land plots, while the mortgages included 51 villas/apartments and 17 land plots. Chesterton’s latest UAE Q2 2021 Market Report, showed that, on the quarter, total Dubai residential transaction value increased by 49.4% to US$ 8.5 billion.

An indicator that the property market is returning to some form of normalcy, and that investors, including a marked increase in those from overseas, are back in force can be gleaned from the fact that off-plan sales are now almost the same as secondary sales, compared to a 30:70 ratio seen in recent times. Another interesting feature is that the average August transaction, at US$ 339k, was 52.9% higher on the year, with villa/town house up 12.1% to US$ 495k, and the median price for off-plan apartments 47.6% higher at US$ 300k. The overall average August sales transaction value increased 1.57% higher to US$ 705 million, with secondary average transaction value 5.91% higher at US$ 858 million and off-plan average transaction value down 1.3% to US$ 519 million. According to Property Finder, the five leading locations for villas/townhouses last month were Dubai Hills Estate, Arabian Ranches, Palm Jumeirah, Damac Hills 2 and Mohammed bin Rashid City. For apartments, the top five were Dubai Marina, Downtown Dubai, Palm Jumeirah, Business Bay and Jumeirah Village Circle. YTD, it is estimated that about 32k units have been completed of which 26k (81%) were apartments, well short of earlier estimates by so-called experts.

The latest report by Zoom Property Insights expects the Dubai villa segment to be 50% higher in Q4, based on trends from the previous three quarters, with one of the main drivers being investors and end-users looking for best options in areas near to the Expo 2020 site. The Dubai-based real estate portal listed Arabian Ranches, Dubailand, Dubai South, Palm Jumeirah, MBR City, Dubai Hills Estate and Damac Hills 2 as prime areas for increased sales in Q4. Sales in the ultra-luxury sector has seen the likes of Palm Jumeirah and MBR City posting price hikes of 18.5% and 10.5%, over the past six months; growth levels in Arabian  Ranches and Jumeriah Park were higher at 21.2% and 19.3%. Zoom expects the market, especially for villas, to continue its recent strong performance, noting the low inventory may result in price increases. The report concluded that Q4 villa prices could be as high as 10%, and, with the economy opening up next year, a sharper up-trend in 2022.

Dubai Holding Real Estate announced plans to sell about 6k units over the next fifteen months, (1.5k this year and 4.5k in 2022) to capitalise on the continued recovery of the UAE property market; it will also start new phases of master developments. The developer is an amalgam of the consolidation of Dubai Properties and Meraas as well as two other entities – North25 and Ejadah – last year. It has several master developments under construction, including Port de la Mer, City Walk Central Park, Mudon, Villanova and Madinat Jumeirah Living. In the first eight months of 2021, Dubai saw sales transactions totalling 37.5k, (35.4k in the whole of 2020), worth US$ 24.0 billion, up 22.6%, compared to last year’s twelve-month total.

HH Sheikh Mohammed bin Rashid Al Maktoum has created the Dubai Integrated Economic Zones Authority, an independent legal entity, with financial and administrative autonomy, which will take over the supervision of Dubai Airport Free Zone, Dubai Silicon Oasis and Dubai Commerce City. Effective from 10 January 2022, the law will take effect with HH Sheikh Ahmed bin Saeed Al Maktoum as Chairman and Dr Mohammed Ahmed Al Zarouni as CEO. The aim of the exercise is to introduce new frameworks for further improving services provided to businesses and investors, which in turn will help accelerate economic growth, with objectives of making Dubai the destination of choice for global investors and a major focal point for global commerce. Under the new DIEZA, with a company base in excess of 5k employing 30k, those with licences will be exempt from all taxes, including income tax, for fifty years, and will not be subject to the regulations of Dubai Municipality or Dubai Economy, with minor exceptions.

The Dubai Ruler also issued Law No. (18) of 2021, regulating the services related to the mediation of disputes applicable to anyone involved in the business of settling civil and commercial disputes through mediation. The new law seeks to encourage the adoption of alternative dispute resolution methods and enhance the speed and efficiency of mediation procedures. The law also outlines the procedures followed by the ‘Centre for Amicable Settlement of Disputes’, with the centre hearing and adjudicating disputes referred to it by a decision issued by the President of Dubai Courts. The court will delegate one or more judges to supervise mediation procedures and hearings and approve settlement and agreements.

The Dubai Chamber of Commerce and Industry estimates that the retail e-commerce market will reach US$ 8.0 billion, by 2025, from its current balance of US$ 3.9 billion, a year on year 53% rise; in 2020, the sector accounted for 8.0% of the country’s GDP, driven by a change in consumer shopping habits, arising from the impact of Covid and subsequent restrictions. The forecast growth will be aided by numerous other factors, including high incomes, government support, a more enhanced digital payment protocol, higher internet penetration and a young IT-knowledgeable generation.

The Department of Economic Development expects Dubai’s economy to grow by 3.1%, this year, nudging 0.3% higher to 3.4% in 2022. HH Sheikh Hamdan, Dubai’s Crown Prince, noted that “Dubai has successfully overcome the pandemic’s global shockwaves,” and that Dubai’s position as a major economic capital has been supported by clear goals, flexibility and speed in responding to changes.

In line with the recently announced federal government’s NAFIS programme, Majid Al Futtaim is planning to employ up to 3k Emiratis across its group companies in the ME, Africa and Asia. The programme is that private companies will have to employ more Emiratis in their workforce so that within five years, ‘locals’ will make up 10% of every private company’s payroll, employing 2% a year until the figure is reached. The government initiative is expected to see up to 75k Emiratis joining the private sector.

Following an agreement between Empower and Mitsubishi Heavy Industries Thermal Systems, the Dubai district cooling company will double the number of its centrifugal chillers, equivalent to a cooling capacity of 200k RT, over the next two years. The new units will be located in plants being built in Zabeel, Business Bay, Madinat Jumeirah and Dubailand.

There is no doubt that the UAE is positioning itself to become a global leader in blue hydrogen, with Adnoc already producing 300k tonnes of hydrogen a year, as it looks to achieve self-sufficiency in natural gas and tap the growing market for low-carbon fuel. Dr. Sultan Ahmed Al Jaber, the federal Minister of Industry and Advanced Technology as well as the MD and Group CEO of Adnoc, noted that “by leveraging our existing gas infrastructure and commercial-scale CCUS [carbon capture utilisation and storage] capabilities, the UAE can and will become a major player in the emerging blue hydrogen market”. In 2020, eighty trillion cu ft of shallow gas reserves were discovered in an area between Abu Dhabi and Dubai – the biggest discovery in fifteen years. With a global Covid recovery gaining traction, LNG and broader gas markets are tightening and prices moving north at an alarming rate – 36% higher on the month and 96% YTD. Almost 25% of the global energy supply is down to gas and this will continue to grow in the future.

To boost sustainability and achieve its water security goals, the country is developing three new water desalination projects in Dubai, Abu Dhabi and Umm Al Quwain; they will have a combined daily capacity of 420 million imperial gallons of water per day. All three will be commissioned within two years and will increase the country’s daily water desalination capacity to 1.69 million imperial gallons, in line with the UAE Water Security Strategy 2036. Three main aims of the strategy are to reduce total demand for water resources by 21%, increase national water storage capacity by up to two days and increase the reuse of treated water to 95%.

In a bid to speed up its expansion plans, the Gargash Group has acquired Deem Finance for an undisclosed amount. Its MD, Shehab M Gargash, commented that “this is a transformational transaction that will allow us to reimagine financial services in a way that the success of our brands is aligned with the financial success of our customers.” The Abu Dhabi-based digital financial services supplier provides a range of financing solutions, including personal loans, credit cards as well as wholesale deposit products to UAE corporate clients. The acquisition will complement Gargash subsidiary, Daman Investments, which also provides investment management and advisory services, including asset management, securities brokerage and wealth management.

As part of its strategy to support the SME sector in the UAE, the Emirates Development Bank is joining with UAE-based fintech, YAP, and has indicated that it will extend US$ 8.2 billion (AED 30 billion) in financial support to SMEs over the next five years. The EDB Business Banking app, launched earlier in the year, offers SMEs access to 24×7 secure, convenient, on-the-go digital banking services. The account, with no minimum balance criteria, is free to all, without paying additional fees.

Amazon announced that it would be adding 1.5k new jobs in the UAE, where it currently has two fulfilment centres, eight delivery stations, three sorting centres and a network of delivery service partners. The US tech giant did not disclose the value of the investment but did note that its latest expansion plan includes creating a “pipeline of new openings” and “closure of older buildings and upgrades, designed to deliver a better experience for customers”.

In June, Dubai developer, Hussain Sajwani announced plans for his investment company, Maple Invest, to take over Damac Properties, the listed company that he launched in 2002 and was the principal shareholder. At the time, it was stated that the offer would remain at US$ 0.354 (Dhs 1.30) per share, and that Maple Invest “plans to own a minimum of 90% and up to 100% of Damac”. This week, it confirmed that was relaunching a bid to take Damac private and at close of Thursday trading one share was worth US$ 0.338 (Dhs 1.24). The company has a market value in excess of US$ 2.0 billion and that in H1, it had delivered 2.7k units and had booked sales of US$ 708 million; revenue was 35.5% lower at   US$ 200 million.

In a US$ 114 million deal, Union Properties has signed an MoU with an unnamed real estate developer to take over the ownership of a shopping centre under construction in Motor City in Dubai.

The DFM opened on Sunday 19 September, 11 points (0.3%) lower the previous fortnight, shed a further 61 points (2.1%) to close the week on 2,840. Emaar Properties, US$ 0.06 lower the previous fortnight, gained US$ 0.02 to close on US$ 1.11. Emirates NBD and Damac started the previous week on US$ 3.88 and US$ 0.34 and closed on US$ 3.81 and US$ 0.34. On Thursday, 23 September, in a very low trading environment, 55 million shares changed hands, with a value of US$ 30 million, compared to 192 million shares, with a value of US$ 127 million, on 16 September.

By Thursday, 23 September, Brent, US$ 5.18 (7.3%) higher the previous fortnight, gave back US$ 2.43 (3.2%), to close on US$ 73.25. Gold, US$ 42 (2.3%) lower the previous week, lost US$ 12 (0.7%) to close Thursday 23 September on US$ 1,740.  

Partly funded by the German government, BMW has developed a hydrogen prototype car based on its X5 SUV and will build a test fleet of up to one hundred vehicles by next year. Furthermore, Audi has assembled a team of more than one hundred mechanics and engineers to research hydrogen fuel cells on behalf of the whole Volkswagen group and has already built a few prototype cars. There is no doubt that hydrogen is currently far too costly and is so far behind battery-powered vehicles, but it must be remembered that not so long ago, diesel was the future until the 2015 Dieselgate emissions scandal put it on the back burner and into virtual extinction. Battery power may be the current frontrunner to become the car technology of the future, but do not rule out the underdog hydrogen.

The latest report from the OECD forecast that prices in the G20 bloc of developed nations will rise quicker than pre-pandemic levels for at least two years, driven by higher commodity prices and shipping costs, constraints on the supply of goods and stronger consumer demand. It is expected that the UK will have the fastest rate of the advanced economies – at 3% – whilst there will be declines expected in the US, France, and Germany.

Following its latest US$ 1.5 billion funding round, including Abu Dhabi’s Mubadala Investment Company, Goldman Sachs-backed CityFibre, will use the funds to support and accelerate the rollout of full fibre to a third of the UK market by 2025. (Full fibre networks run fibre optic connections directly from an exchange to the home, allowing much faster transmission speeds). CityFibre, now the UK’s third largest national digital infrastructure platform, behind BT and Virgin Media, provides broadband to 650k UK homes and is aiming to hit a million by the end of 2021.

A JV between Next, (51%) and struggling Gap (49%), sees the US fashion giant’s UK website being managed by the UK retailer. Last July, Gap announced that it would close all its UK outlets but now Next will manage some of their concessions in several stores, keeping some sort of physical presence in the country. Next will expand its ‘Total’ platform where it will run

 other fashion brands’ e-commerce operations, including customer service, payment systems and logistics. Victoria’s Secret and Childsplay are two brands already on board.

During the first lockdown, Pret A Manger Pret had to make 33% of its 9k staff redundant and now eighteen months later, with the economy almost at pre-pandemic levels, the coffee and sandwich chain has announced that it will open two hundred outlets, with many located in train stations, bus stations and motorway services, over the next two years and recruit 3k by the end of 2022. Furthermore, it is planning to expand into five overseas markets over the next two years. Last year, it posted a 57.8% fall in revenue to US$ 407 million. To finance this latest growth strategy, Pret has received a US$ 137 million funding from JAB and Pret founder Sinclair Beecham. Earlier in the month, it announced that café workers would receive at least a 5% pay rise, which will raise their hourly rate from the legal minimum of US$ 12.14 to US$ 12.91, and that all team members, including managers, will get a raise.

August was the fourth consecutive month that UK retail sales fell, this time at the slower rate of 0.9%, compared to a much higher 2.8% in July. One of the main reasons proffered for the 1.2% decline in food store sales was that with the lifting of restrictions, people spent more time eating and drinking in bars and restaurants, but other drivers were ongoing labour shortages, (mainly lorry drivers and fruit pickers), and supply chain problems which will be a sector disruptor for some time. Pre-pandemic online sales in February 2020 were at 19.7% and since then, have risen to 27.7% last month, (27.1% in July). Department and clothing stores were the two more badly hit by the disruption, down 18.2% and 11.1% respectively.

Last week’s blog indicated that the ‘Just in Time model’ was struggling to remain a viable management tool for many companies, amid disrupted supply chains that leave the end user with little or no stock. A similar problem is rattling the UK energy sector with the classic law of supply and demand – a theory that explains the interaction between the sellers of a resource and the buyers for that resource. There has been a surge in UK gas prices, exacerbated by the fact that the UK has scant storage facilities amid surging demand. How dramatic the shortfall in supply can be seen when comparing UK’s gas storage of 8.9 terawatt/hours with Spain, Germany and Italy storing 166.2 TWh, 147.1 TWh and 113.7 TWh respectively. The UK imports more than 50% of its pipeline gas and LNG, with the four main providers being Norway, Qatar, US and Russia, with totals of 266k Gigawatt hours, 97k GWh, 53k GWh and 25k GWh.

The demand surge for gas is not unique to the UK and is seen all over Europe, where demand is also rising. Last winter was one of the coldest on record which resulted in increased demand which in turn depleted supplies; these have not been replenished because suppliers had to carry out major maintenance that had been curbed because of earlier lockdowns. The situation was worsened because calmer weather reduced the amount of electricity generated by wind power and the deteriorating situation just became worse. Consequently, wholesale gas prices have more than quadrupled over the last year and with the UK being one of Europe’s biggest users of natural gas, with 85% of homes using gas central heating, the country has been badly impacted. It is expected that there will be no let up until Q2 next year because prices will not fall until storage facilities fill up again. Any effect from Brexit – and the UK leaving the bloc’s Internal Energy market – has been minimal. It so happens that the country will be hit by more than a double whammy, with gas prices skyrocketing, labour shortages in certain key sectors, higher food prices, empty supermarket shelves and inflation topping 4.0%, this could turn into a winter of discontent.

With real estate accounting for 10% of its GDP, Chinese administrators and global economists are closely monitoring the fallout from Evergrande, failing to repay US$ 84 million in interest payments, exacerbating the possibility of a default. If this were to occur, its impact would have global implications affecting foreign direct investment. However, it seems that analysts have been premature to announce the demise of China’s second-biggest property developer by sales, and despite all its financial woes, and being on the brink of default with a huge US$ 300 billion debt, it is unlikely to spread globally. S&P considers this to be a domestic Chinese problem and is more than likely to be settled locally. Property has always been a problem in China, with lax regulations, loan sharks, dodgy building standards and a host of other illegal activities associated with a massive property bubble.

Even before the announcement, earlier in the month, that warned that it may default on debt repayments if its efforts to refinance and sell assets fall short, the company was already talking with creditors and stakeholders trying unsuccessfully to sell their debt by up to 70%. The fear is that in a fire sale, Evergrande may have to sell its vast portfolio of apartments, at heavy discounts, which in turn could really damage the industry by undermining prices and putting smaller competitors out of business.

Last year, Beijing introduced what it called the Three Red Lines Policy for property developers, so as to reduce debt within the industry, curb runaway property prices and lift standards. This was a belated government attempt to take more control over a sector that was running wild as the government were more concerned with economic growth at all costs and turning a blind eye to the excesses seen in relation to the building industry.  It is apparent that the housing boom in China is in the throes of an implosion and the hope is that the property bubble is deflated slowly and methodically so as not to leave its debris scarring the rest of the economy. Considering Evergrande owns more than 1.3k projects in 280 or more cities in China, serving about 12 million homeowners, with its property services arm, which listed on Hong Kong Exchanges and Clearing in December 2020, having about 2.8k projects in more than 310 Chinese cities, this will not be an easy exercise.

It appears that most banks have limited exposure to the troubled developer except for the affiliated Shengjing Bank and national Minsheng Bank, which may go under without government support. Other stakeholders impacted include home buyers, investors, bondholders, suppliers and contractors. There is a belief that if a contagion effect were to occur, the government would get involved if that were to cause a systemic risk to the economy; it would also look at reducing the risk to home buyers and minimising economic losses. However, the high-net-worth individuals, and institutional investors, may see a bigger percentage of their investment disappearing.

According to its Chair, Jerome Powell, the Federal Reserve could start tapering its asset purchasing programme as early as November, with complete closure by mid-2022, whilst emphasising that this was not meant to be a direct signal on the timing of the beginning of interest rate hikes. At this week’s meeting, their updated quarterly projections were released indicating that officials are now evenly split on whether or not it will be appropriate to begin raising the federal funds rate as soon as next year; their previous forecast in June had indicated no rate increases until 2023; their projected median rates rose by 0.4% to 1.0% for 2023 and to 1.8% the following year. It also unanimously voted to maintain the target range for its benchmark policy rate at zero to 0.25% and continue purchases of Treasuries and mortgage-backed securities at a pace of US$ 120 billion per month.

From early next month, the UK government will scrap its controversial traffic lights system, seeing the end of the green and amber lights, whilst retaining the red-light list, in England. People who have had double jabs will not need to take a pre-departure test before leaving any country not on the red list and will also be able to replace the day two PCR test with a cheaper, rapid lateral flow test. The change in policy has been a “shot in the arm” for the sector and mostly welcome in the travel industry, with Airlines UK noting that it “moves us much closer to the reopening of UK aviation”. The acid test for Dubai is to see how many UK travellers visit for the next school half-term in October now travel restrictions have largely been lifted by the Johnson administration.

The day after the announcement of the so-called Aukus pact, between Australia, UK and US, that rattled the Chinese administration, the country has applied to join CPTPP, a key Asia-Pacific trade pact, as it attempts to strengthen its position in the region. The focus of the tri-nation pact is for Australia to build nuclear-powered submarines for the first time, using technology provided by its two partners, with China describing it as “extremely irresponsible” and “narrow-minded”. The Chinese foreign ministry commented that the alliance risked “severely damaging regional peace… and intensifying the arms race”.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership was signed in 2018 by eleven countries, including Australia, Canada, Chile, Japan and New Zealand; since then, both the UK and Thailand have expressed their desires to join, with China now indicating its wish to be added. It started life as the Trans-Pacific Partnership, promoted by the then US president, Barrack Obama, in a move by the US to challenge/counteract China’s growing economic influence in the region. If the Chinese application is accepted by the current members, it will be a significant boost for China’s position on the world stage and comes less a year after it joined the Regional Comprehensive Economic Partnership – the world’s largest free trade agreement, with fourteen regional nations, including seven members of the CPTPP, Australia, Brunei, Japan, Malaysia, NZ, Singapore and Vietnam.

In 2016, Naval Group, a global and major French contractor, and an industrial group that specialises in naval-based defence, was awarded a contract by the Australian government for the design of twelve future submarines for the Royal Australian Navy; the contract was cancelled last week, and the decision was not well received by the Macron government who were set to lose a US$ 90 billion deal.  The French company issued a statement “taking note of the decision of the Australian authorities to acquire a fleet of nuclear submarines in collaboration with the United States and the United Kingdom”. Meanwhile, French Armed Forces’, Florence Parly, indicated that the government would look to ensure any financial hit to Naval Group from a cancelled Australia submarine deal is limited.

To the outside observer, it does make sense that a nuclear submarine is more preferable to diesel and Australia has made the right decision, even though the decision is bad news for some Australian companies who were lining up for contracts worth over US$ 1 billion from Naval Group – and employing 500 – in Q4. Even though the design phase of the project had not yet started, some work was already being contracted and hundreds of people employed in Adelaide. There is a warning of a ‘valley of death’ relating to these companies and how they will survive until work starts in 2024. Questions are being asked why the French contractor was not asked to switch to the existing nuclear version of the Barracuda design, especially because there were lots of companies that already had Naval Group’s contracts. Furthermore, France will not be in the mood to be offering any contracts to the UK and this may have repercussions for the UK defence sector.

It is reported that the EU is contemplating the postponement of a major cooperation summit with the US on trade next month. The reason behind this comes on the back of the US entering a new alliance involving the UK that would deliver Australia at least eight nuclear-powered submarines which led to Canberra cancelling an existing contract with France for twelve diesel-powered submarines. The EU-US Trade and Technology Council (TTC) was announced in June and was meant to signify a new era of cooperation between the two sides. So much for the EC then stating that the TTC “will serve as a forum for the United States and European Union to coordinate approaches to key global trade, economic, and technology issues and to deepen transatlantic trade and economic relations based on shared democratic values.” It seems to the outsider that the other 26 members are bowing to the whims of a furious, upset and bitter French administration. An irate Emmanuel Macron seems to be of the opinion that We Are Never  Ever Getting Back Together!


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