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And The First One Now Will Later Be Last!                                                22 April 2022

For the past week, ending 22 April 2022, Dubai Land Department recorded a total of 2,145 real estate and properties transactions, with a gross value of US$ 1.72 billion. A total of 225 plots were sold for US$ 305 million, with 1,436 apartments and villas selling for US$ 872 million. The two top transaction sales were for two plots of land – one in Hadaeq Sheikh Mohammed Bin Rashid for US$ 26 million, and another sold for US$ 14 million in Palm Jumeirah. The three leading locations for sales transactions were Al Hebiah Fifth with 114 sales worth US$ 69 million, followed by Jabal Ali First, with 33 sales transactions worth US$ 39 million, and Wadi Al Safa 5, with 11 sales transactions worth US$ 13 million. The top three apartment sales were an apartment sold for US$ 126 million in Marsa Dubai, another for US$ 96 million in Burj Khalifa, and third at US$ 77 million in Palm Jumeirah. The sum of the amount of mortgaged properties for the week was US$ 474 billion, with the highest being for a plot of land in Nad Al Shiba Third, mortgaged for US$ 47 million.

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Latest figures from March’s ValuStrat Price Index reported property prices surging 18.8%, year-on-year, and 1.2% month-on-month. When split between villas/townhouses and apartments, the profits were up 34.1% and 2.1% and 8.4% and 0.4% for apartments respectively.  In the villa sector, the four leading locations, with the highest price rises, were Jumeirah Islands (40.3%), Arabian Ranches (40.3%), The Lakes (37.1%) and Jumeirah Village (35.5%). Some areas such as Mudon and Green Community West, performed better and recorded above average price growth of 0.5% and 0.8%, respectively. The index, which measures Dubai’s residential capital value performance, also reported that the leading locations for apartment price rises were Palm Jumeirah (21.9%), Jumeirah Beach Residence (16.0%), Burj Khalifa (15.3%), The Views (10.9 per cent), and The Greens (9.7%). The study also noted that “the villa capital values index reached 94.1 points last month, just 5.9 points below the price index base of January 2014.’ as the weighted average capital value for villas grew 6.3% quarterly and 34.1% annually. Meanwhile apartment capital values index reached 69.5 points in March, 30.5 lower than the price index base of January 2014. As Dubai’s global popularity grows, there is no doubt that Dubai’s property sector will benefit from the fact that its property prices are very cheap, when compared to those of their international rivals. The outlook for both segments remains positive, with villa prices moving faster and are expected to cross 2014 peak levels by the end of 2022.

CBRE noted that Dubai’s total Q1 transaction volumes reached 19k, the highest ever recorded in any first quarter of the year. Total transactions volumes recorded 75.1%, year-on-year growth, with off-plan and ready transactions increasing by 114.9% and 52.9% respectively. Secondary market transactions accounted for 56.1% of total transactions, with off-plan transactions accounting for the 43.9% balance, but that 68.6% of total Q1 sales were initial sales from the developer, and 31.4% of sales were for subsequent sales of properties. Over the remainder of 2022, an additional 42k units are expected to be completed to meet rising demand for residential units.

According to Luxhabitat Sotheby – utilising data from the Dubai Land Department – Dubai luxury property prices dipped 6.0% in Q1, with an average price of prime property at US$ 1.23 million. In this sector, it estimated that 5.3k apartments and 742 villas were sold, with the three leading locations, in terms of sales volume, being Mohammed Bin Rashid City at US$ 869 million, Palm Jumeirah at US$ 845 million and Downtown Dubai at US$ 708 million. In the prime residential market, the Jumeirah Islands area sales more than doubled to US$ 55 million, followed by Mohammed Bin Rashid City and Al Barari. During Q1, there was a 32.3%, quarter on quarter, jump in the prime villa market, with total sales of US$ 1.12 billion at an average villa price of US$ 2.89 million. The most popular areas for villa transactions in Q1 were Mohammed bin Rashid City, followed by Palm Jumeirah and Emirates Living. Sales volume of apartments decreased by 10% to US$ 2.97 billion with the average prime apartment selling at US$ 654k, equating to an average price of US$ 390 per sq ft. The three most popular ‘apartment areas’ were Downtown Dubai, Business Bay and Palm Jumeirah. The top six villa transactions in Q1 were Palm Jumeirah – Frond N (US$ 76 million), Jumeirah Bay Island (US$ 24 million), Palm Jumeirah Frond J (US$ 24 million), Emirates Hills – Sector L (US$ 20 million), Burj Khalifa apartment (US$ 20 million) and Business Bay Dorchester Collection (US$ 19 million).

Having invested US$ 272 million in a plot of land in Dubai South, and signing an exclusive agreement with the local authority, Discovery Land is planning to build an ultra-luxury golf community. The US-based developer indicated that the project will consist of a two sq mt golf community with mansions, villas, an 18-hole golf course and other premier amenities. This will become the fifth golf community in the emirate, following Emirates Hills, Arabian ranches Jumeirah Golf Estates and Dubai Hills.

Launched in 2006, Dubai South was planned to be an emerging 145 sq km, master-planned city which also includes Al Maktoum International Airport and the Expo 2020 site, which is currently being transformed into District 2020. This will become the country’s first fifteen-minute city, a cycle-friendly, traffic-free suburb of the growing metropolis, and will include an autonomous-vehicle route, a 10 km cycling track, interconnected, wide pedestrian pathways and a 5 km jogging track. The former Expo village will house fifteen mid-rise residential buildings, in four clusters, which will open “in different phases between now and October”.

HH Sheikh bin Mohammed announced further changes in the government’s residency visa law, making it easier, for skilled professionals, earning more than US$ 100k a year, as well as those purchasing a property worth more than US$ 545k, to apply for a ten-year ‘Golden Visa’. Undoubtedly, Dubai property sector will be a beneficiary of the ten changes made this week, as the initial introduction of the scheme in 2020, (which saw 44k visas issued in Dubai), was one of the main drivers in the sector’s post-Covid bounce back.Most analysts agree that the new changes are a further step in opening up Dubai to foreign investors and will likely lead to a significant influx in property buyers in both the residential and commercial sectors. Another change was that off-plan investors can also apply for residency, with buyers no longer restricted having to have a title deed of a ready property in hand.

The latest Knight Frank report indicates that, in Q1, Dubai office rents, in five out of the twenty-seven locations, have returned to pre-pandemic levels. The best performing location was Business Bay where rents were 33.0% higher, on the year, at US$ 28 per sq ft, with the major sector being technology business, many of which are set-ups, which seem to be filling in the space left by the likes of global international entities – professional services, banks and blue-chip companies – that have been shrinking their occupancy footprint in a move to hybrid working models. Average Grade A rents in the CBD were up 9.0%, year-on-year, to US$ 500 per sq mt per annum in Q1 2022; financial and technology firms remain the main drivers of demand for Grade A office space. There is no doubt that the local booming economy is helping growth in this sector – it is estimated that Q4 GDP growth came in at 7.8%. The Federal Competitiveness and Statistics Centre confirmed that the country’s non-oil sector contribution to the 2021 GDP equated to 72.3% – 1.0% higher than in 2020, and 3.8% at constant prices. The hotels & restaurants, wholesale & retail and health & social services sectors contributed 21.3%, 14.1% and 13.8% respectively. JLL’s Q1 2002 market review confirmed that the UAE’s hotel market performed strongly, driven by Expo 2020 Dubai and returning international visitors, with both upper-upscale and midscale hotels witnessing higher average daily rates.

This month saw Dubai’s population top the 3.5 million mark, according to Dubai Statistics Centre’s latest data and that despite the pandemic, it has increased by over 100k since 2020, driven, of late, by an influx of foreigners, especially the high net worth individuals. 69.2% of the population, 2.4 million, is male. The quicker than expected economic recovery has resulted in the labour-intensive industries, such as retail, hospitality, aviation, tourism and real estate increasing their payroll numbers. Despite the population continuing to grow, the DSC estimates the unemployment rate in Dubai stood at just 0.5%, resulting in the emirate having one of the world’s lowest unemployment rates.

With the NFT market booming, (with some exceptions as noted later), Emirates is hoping to cash in by planning to launch collectible and utility-based non-fungible tokens, with a launch expected in the coming months; it will also build brand experiences in the metaverse. Five years ago, Emirates Introduced Virtual Reality technology on its website and app, and last year, it became the first airline to launch its own VR app on the Oculus store, offering users cabin interior experiences on board the carrier’s A380 and Boeing 777-300ER aircraft. The airline’s chairman, Sheikh Ahmed bin Saeed, noted that “Dubai and the UAE are blazing the way in the digital economy, having a clear vision supported by practical policies and regulatory frameworks in areas such as virtual assets, artificial intelligence and data protection.”

With global trade picking up, the resultant higher volumes in the Asia Pacific – 1.2% up at 8.5k TEUs (twenty-foot equivalent units), Middle East, Europe and Africa (1.4% higher to 8.0k TEUs), and Americas regions, (up 4.0% to 2.8k TEUs) – pushed DP World’s gross container shipping volumes 1.7% higher in Q1 to 19.3 million TEUs. In Q1, the company signed two important deals in Africa – one acquiring South Africa’s Imperial Logistics, an integrated logistics and market access company, for US$ 890 million, and a preliminary agreement with the Angolan government to develop the country’s trade and logistics sector. DP World is “looking ahead, the near-term outlook is mixed given the geopolitical environment, but we remain positive on the medium to long-term fundamentals of the industry,”

This week, the Ministry of Finance, the Issuer, in collaboration with the Central Bank of the UAE, as the issuing and paying agent, launched conventional AED denominated Treasury Bonds of the Government of the UAE (T-Bonds), with a benchmark auction size of US$ 409 million; the first auction date is scheduled next month, followed by a raft of periodical auctions. Initially the securities will be in 2/3/5-year tenures; followed later by a ten-year bond. The main purpose for the issuance of T-Bonds is to assist in the building of a local currency bond market, diversifying financing resources, and boosting the local financial and banking sector. Apart from the issuance providing a pricing reference for other UAE markets (bond and equity), it enhances the ability to cover future funding needs in UAE dirham and provides opportunities for foreign investors to invest in UAE dirham-denominated bonds (in local currency). It will also help in the development of a Dirham local market for securities issued by the public sector in the country.

Following the success of the initial fifty-dirham polymer note, enhanced by advanced technical characteristics and security features. the Central Bank of the UAE has launched two new banknotes, The ten-dirham banknote entered circulation yesterday 21 April and the five dirham note is out next Tuesday 26 April. Current banknotes of both denominations will remain in circulation, along with the new polymer notes which are more durable and sustainable which will last two or more times longer in circulation.

This week, HH Sheikh Mohammed bin Rashid Al Maktoum issued Decrees No. (15) forming the Supreme Committee to Supervise the Expo 2020 Dubai District, and No. (16) of 2022 extending the terms of the Expo 2020 Dubai Preparatory Committee, and the Expo 2020 Dubai Bureau and its Director General by six months. The new Committee will be chaired by Sheikh Ahmed bin Saeed Al Maktoum, with members of the Supreme Committee to Supervise the Expo 2020 Dubai District being Mohammed Ibrahim Al Shaibani, Reem bint Ebrahim Al Hashimy, Abdul Rahman Saleh Al Saleh and Helal Saeed Al Marri. Their main roles and functions include general policy for the Expo 2020 Dubai District’s development and supervising the implementation, governance and development of all projects, initiatives, programmes and activities within the District. It will supervise the rehabilitation of the Expo 2020 Dubai District’s infrastructure and the provision of investment opportunities in the area in partnership with the private sector.

Sheikh Maktoum bin Mohammed, Deputy Ruler of Dubai, chaired the second meeting of the year of the Board of Directors of the Federal Tax Authority (FTA) which adopted the FTA’s financial statements for 2021. It noted the number of VAT registrants grew 2.4%, on the quarter, to 367.2k by the end of Q1, with the number of Excise Tax registrants 3.0% higher at 1.4k, and the number of Tax Agents increasing 3.0% to 446.  It also discussed new applications from UAE citizens to recover VAT (that came in 56.1% higher in Q1 to over US$ 50 million), incurred on building their new residences. The FTA board also examined the progress made on developing the draft corporate tax law, due to be implemented in 2023. Sheikh Maktoum also commented that “the Federal Tax Authority is committed to strengthening its relations with all entities involved in implementing the tax system in the government and private sectors, and to fulfilling its role in driving nationwide economic diversification policies through the administration and collection of federal taxes, in line with best practices.”

In December 2021, there were increases in M1 M2 and M3 Money Supply by 2.3% to US$ 186.9 billion, 3.0% to US$ 425.9 billion and 1.5% to US$ 505.9 billion respectively. The rise in M1 was due to an AED 16.6 billion increase in Monetary Deposits, with the increase in M2 down to the rise in M1, and an US$ 8.2 billion uptick in Quasi-Monetary Deposits. Although Government Deposits shed US$ 5.3 billion, M3 headed north because of the increases seen in M1 and M2. Gross banks’ assets, including bankers’ acceptances, increased by 0.8%, to US$ 905.0 billion at the end of December 2021. Gross banks’ assets, including bankers’ acceptances, increased by 0.8%, US$ 905.0 billion. Gross credit increased by 0.3% to US$ 488.8 billion due to 0.1% and 2.6% increases in Domestic Credit and Foreign Credit, respectively. Total Bank Deposits increased by 1.5% to US$ 544.0 billion because of 1.6% and 0.6% rises in both Resident Deposits and Non-Resident Deposits.

Saeed Al Tayer, MD of Empower and Chief Executive of Dewa, confirmed that Dubai’s leading district cooling provider – a nineteen-year old JV between Dewa and Tecom Investments – will probably go public by the end of the year; it seems likely that Salik and Tecom Investments may be at the front of the queue.  The company, which has a 79.5% share of Dubai’s district cooling market, serving 1.4k residential, commercial, healthcare, hospitality, education, retail and entertainment buildings. Empower posted a 4.0% increase in its 2021 profit to US$ 255 million, driven by a 9.0% revenue growth to US$ 682 million, resulting in a US$ 136 million dividend.

According to its MD, Saeed Al Tayer, Dewa is set to announce its Q1 results next month and has recorded a “strong performance”, and that “Dewa has strong cash flows and will not need to take on debt … We have no issues for the next five years and we will not seek loans”. It expects 2022 profits to be in the region of US$ 2.0 billion. Based on today’s close of trading figures, the utility has a market value of US$ 39 billion. It has projects valued at US$ 23.4 billion over the next five years, that will help it meet the increase in demand for electricity and water as the emirate’s population continues to boom; last year alone, energy demand rose 11%, nearly triple the company’s estimates.

At this week’s AGM, Emaar shareholders approved the dividend distribution proposal from the board of directors representing 15% of the share capital, along with the board of directors’ 2021 report on the company’s activities and financial position and the auditor’s report. Last year, it recorded total revenue of US$ 7.7 billion, with an EBITDA of US$ 2.5 billion. In 2021, the company posted real estate sales of US$ 9.2 billion – its highest on record – and an impressive sales backlog totalling more than US$ 12.5 billion.

Emirates NBD posted an 18.0% hike in Q1 net profit to US$ 735 million, as revenue came in 3.0% higher at US$ 1.74 billion, driven by stronger non-interest income, 4.0% higher to US$ 1.17 billion and declining impairment allowances, by 20%, to US$ 381 million. Expenses rose 5.0%, year on year, to US$ 545 million, driven by staff costs, Dubai’s biggest lender by assets also recorded its customer loan balance was 1.0% higher at US$ 115.8 billion and deposits 2.0% higher at US$ 127.8 billion; total assets remained flat at US$ 189.1 billion. The bank raised its interest rate by 15bp because of a similar decision by the Central Bank of the UAE, following the Fed’s move last month; it is expected that rates could be raised five more times this year. Despite rates moving higher, it is felt that local lending growth is likely to accelerate, underpinned by the UAE’s economic growth.

Emirates Islamic recorded a 62% increase in net profit to US$ 93 million, driven by a 14% growth in income and a 72% improvement in provisions; operating expenses surged by 10% on the year. There were increases across the board, with operating profit 17% higher, total assets up 8% to US$ 19.1 billion, customer financing rising 66% to US$ 12.3 billion and customer deposits 9% to the good at US$ 14.0 billion.

The DFM opened on Monday, 18 April, 252 points (7.5%) up on the previous five weeks, moved 81 points (2.2%) higher to close on Friday 22 April, at 3,683. Emaar Properties, US$ 0.31 higher the previous seven weeks, nudged US$ 0.06 higher to US$ 1.72. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.78, US$ 4.03, US$ 1.71 and US$ 0.71 and closed on US$ 0.78, 4.14, US$ 1.71 and US$ 0.73. On 22 April, trading was at 115 million shares, with a value of US$ 83 million, compared to 170 million shares, with a value of US$ 142 million, on 15 April 2022.

By Friday 22 April 2022, Brent, US$ 12.28 (3.4%) higher the previous fortnight, had shed US$ 9.95 (8.9%), to close on US$ 111.70. Gold, US$ 48 (2.5%) higher the previous fortnight, lost most of that gain, losing US$ 42 (2.1%), to close Friday 22 April on US$ 1,933.

Yesterday, Elon Musk confirmed that he has secured a funding commitment of US$ 46.5 billion to finance his bid to buy Twitter, of which US$ 33.5 billion has been personally committed by means of US$ 21 billion of equity and another US$ 12.5 billion coming from margin loans Furthermore, banks, including Morgan Stanley and “certain other financial institutions”, have committed to offer a further US$ 13 billion in debt secured against Twitter. Last week the Tesla founder offered to buy Twitter for US$ 43 billion.

Tesla shares jumped 5.2%, to US$ 1,028, when the electric vehicle maker posted a record US$ 3.3 billion Q1 profit, driven by an increased delivery of cars, despite Covid-induced supply disruptions and a global shortage of semiconductors; the profit figure dwarfed the 2021 comparative figure of US$ 500 million. This is the eleventh straight profitable quarter and the fourth consecutive three-month period with more than US$ 1 billion profit. Revenue was 81% higher at US$ 18.7 billion and a record 310k vehicles were delivered – 68% up on an annual basis; of that total, 295k were either Model 3 or Model Y, with the 15k balance being its more expensive Model S and Model Y. Tesla commented that  its cash and cash equivalents “increased sequentially by US$ 300 million to US$ 18 billion”, driven mainly by free cash flow of US$ 2.2 billion, partly offset by debt repayments of US$ 2.1 billion, with its total debt of less than US$ 100 million, excluding vehicle and energy product financing. It has ambitious expectations and is looking at a 50% average annual growth in vehicle deliveries, although they could be scuppered by external factors such as continuing supply chain problems, chip shortages and further lockdowns.

With French prosecutors investigating claims that fugitive former head of Nissan, Carlos Ghosn, had syphoned millions of euros from Renault through Suhail Bahwan Automobiles., there was no surprise to hear that French authorities have eventually issued an international warrant for his arrest. Ghosn fled Japan in 2019, when facing charges for financial misconduct and is now holed up in Lebanon from where he is unable to leave, as he is the subject of an Interpol Red Notice issued by Japan. It is thought that he would prefer a trial in Lebanon, on any charges brought against him by the French and Japanese courts – and was “totally confident” he could prove his innocence.

Having reported a Q1 loss of 200k subscribers, (against its forecast of a 2.5 million growth in numbers), and quarterly profit down 6.4% to US$ 1.5 billion, Netflix share value plunged 35%, and lost more than US$ 50 billion off its market value, in after-hours trading on Tuesday, making it the worst performer in the S&P 500 this year; YTD, the stock is down 62%. This was the first time in over a decade that the global streaming giant reported losing subscribers, whilst it predicted more contraction in Q2. The Ukraine crisis has seen it suspend service in Russia, resulting in a loss of 700k members. Netflix attributed some of the declineto “relatively high household penetration — when including the large number of households sharing accounts — combined with competition, is creating revenue growth headwinds;” it also noted that other drivers included various macro-economic factors such as sluggish economic growth, increasing inflation, geopolitical events and some continued disruption from the Covid-19 pandemic have affected its growth. Its global paid subscribers stood at 221.64 million at the end of Q1, with the company forecasting a Q2 1% fall in numbers to 219.6 million. It also announced the purchase of Helsinki-based gaming company Next Games. It does indeed face a major struggle to get back on track.

Bill Ackman’s Pershing Square Capital Management, one of the company’s twenty largest shareholders, has ditched his stake in troubled Netflix. The US billionaire investor and hedge fund manager disclosed that, in January, his firm had acquired a US$ 1.1 billion stake in Netflix, just after it had fallen 30% following a disappointing Q1 outlook. At the time, he praised Netflix’s “best-in-class management team” and said he long admired Netflix CEO Reed Hastings and the “remarkable company he and his team have built.” It is estimated that this investment, comprising 3.1 million shares, has lost him US$ 430 million in less than three months.

It is reported that Next has acquired a 46% stake in baby goods retailer JoJo Maman Bebe, with the majority 56% taken by companies managed or advised by hedge fund Davidson Kempner.  Its founder, Laura Tenison, will leave the business that she founded nearly thirty years ago. No financial details were made available but there will be no immediate job losses at the retailer, with 950 employees, which has eighty-seven brick-and-mortar shops across the UK. Next will also spend US$ 21 million in the brand, using its own cash, and plans to keep the JoJo brand distinct and grow the business globally using its online shopping infrastructure.

Workers at Apple’s Grand Central Station store in New York could become the first union at one of the tech giant’s US stores – and if successful it will follow the “union trend” started by Starbucks and Amazon. To qualify for a union election, the so-called Fruit Stand Workers United need to obtain signatures of support from 30% of colleagues at the store to qualify for a union election. The group is looking at a US$ 30 minimum hourly wage for all workers, additional holiday time and information on more robust safety protocols at the Grand Central location. Employees working in at least three other Apple stores are also attempting to organise a union.

Last year, Sina Estavi, invested US$ 2.9 million when purchasing a non-fungible token of the first tweet posted on Twitter by co-founder Jack Dorsey. Last month, the Malaysian entrepreneur decided he would sell the NFT, (and was expecting to receive at least US$ 25 million for the sale), with half of the proceeds earmarked for the charity GiveDirectly. By the beginning of the week the highest bid was at 10.1 Ether, equal to about US$ 29k.

In Australia, global hotel booking giant Trivago has been fined US$ 33 million (AUD $45 million), plus legal costs, for misleading customers with advertising that claimed it made it easy to find “the best price” for rooms. The case was brought against the company by the Australian Competition and Consumer Commission, which was pushing for a penalty twice that amount. It was estimated that consumers, who have yet to receive any compensation to date, lost around US$ 22 million. The Federal Court found the company had breached Australian Consumer Law over a “lengthy period of time”, and noted that “the television advertising conducted by Trivago during the early part of the relevant period was highly misleading,” It was noted that the firm did not make clear that it was being paid by the online booking sites and that more often or not the hotels listed at the top of the search results were not the best or cheapest deal., with Trivago promoting hotels that paid it the biggest fees.

Laying the blame at the doors of Covid lockdowns in China, shortages of materials and sky-high shipping costs, Appliances Direct warned that even though the prices of fridges, freezers and dishwashers are up by a third since last year, they are set to climb higher, as wholesale prices have jumped a further 9% in Q1.The company also noted that the cost of shipping  a fridge used to cost US$ 16, with a six-month lead time; now the cost has skyrocketed to US$ 104, with a led time of up to fourteen months. The sector does not see any improvement over the rest of the year and that factors such as shipping costs, material input prices and consumer price will continue to push prices higher, with consumer spending set to decline. Indeed, the price comparison site, Price Runner, found that prices of white goods and gadgets had soared by nearly 50% in just two years.

Not helped by yet another lockdown – this time in Shanghai – China’s March consumer spending fell, (with retail sales down 3.5% on the year), and unemployment rose, to 5.8%, (the highest level since May 2020), as Covid lockdowns confined millions of people to their homes. Meanwhile, the Q1 country’s economy grew at a faster pace than expected, with GDP up by 4.8%, compared to a year earlier. The impact of the latest lockdown measures, which started in mid-March, was initially limited but will result in a significant drag on economic growth for at least the next three months, not helped by the war in Ukraine. Analysts estimate that technology, industrial and automobile supply chains “will come to a complete halt” if Shanghai does not resume production by early May.  It is safe to report that some of the city’s residents are not happy with the situation.

Since the start of the Ukraine war, the EU has paid US$ 37.8 billion for Russian energy but any embargo on oil and gas seems a long way off, at a time when European ministers have been discussing a potential sixth round of sanctions against Russia; last year, the EU imported roughly 40% of its gas and 25% of its oil from Russia. The countries that would suffer most from a full embargo would be Germany, Italy, Austria and Hungary in particular, with their dependence on Russian gas – one thing is certain is that the EU will not throw Germany under the bus. Ukraine’s President Zelenskyy has urged the EU to impose sanctions on Russian oil and to set a deadline for ending gas imports from the country, but in reality, this is some time off. What seems likely is that coal may be banned by the end of Q3.

With pressure mounting at home, Prime Minister Boris Johnson may have found some relief in his two-day visit to India where he met with Narendra Modi to discuss a free trade deal. In recent weeks, the Indian government has signed such deals with both the UAE and Australia. However, there is every chance that this will take time and much discussion between the two parties but if it comes to fruition, it could double total trade between the UK and India to US$ 73 billion by 2035. Strangely, it seems that the UK currently sells less to India, with a population of 1.4 billion, than it does to Belgium and its 11.5 million people. Bargaining chips will include the likes of the UK wanting increased access to India’s manufacturing and services sector, areas in which India has traditionally resisted foreign involvement, as well as doing away with the protection that trade barriers have provided for Indian industries and workers. On the other side, there may be more Indian visas being allowed for Indian workers and pressure to allow Indian products, such as medicines into its market. If a free deal went through, two UK industries would benefit – Scotch whiskey, which currently attracts a 150% tariff – and the motor vehicle makers, as foreign cars attract tariffs of up to 100%. A trade deal with India would add just 0.2% to the UK’s GDP – and that’s over the course of a decade, and only if there is a substantial reduction in trade barriers. Is it worth all the bother?

As the rise in the cost of living begins to hit home in the UK, March retail sales dropped 1.4%, with online sales falling sharply, as consumers cut back on non-essentials because of lower levels of discretionary spending, and fuel sales were reduced, as people cut travel amid record petrol prices. Food sales dipped for the fifth consecutive month, as rises across the board have seen inflation rising above 7.0% and at its highest level in over thirty years. It is to be noted that although the current Ukraine crisis is a major inflationary driver, energy and fuel prices had been rising even before the onset of the war. The situation is likely to worsen, as the data was collected before April’s 54% hike in gas and electricity bills and the fact that consumer confidence continues to tank – now at its lowest level in fourteen years and the GFC.

Known for constantly changing its economic forecasts, the IMF has lowered its 2022 forecast from its January’s estimated 4.4% to its much amended 3.6%, driven by the triple whammy of surging inflation, war in Ukraine and a lingering pandemic. (The World Bank also said it was lowering its growth forecast from 4.1% to 3.2%). Global inflation pressures continue unabated and most central banks have been behind the eight ball for too long and future drastic action could weigh down on output and economic activity. Inflation is higher in most countries and is expected to persist longer; there is the possibility of social unrest as energy and food prices head inexorably higher. Meanwhile the Ukraine crisis, (which will see  the embattled nation hit with a massive 35% contraction this year), has led to increasing energy and commodity prices around the world and is resulting in less output and more inflation. On top of this comes yet another slowdown of the Chinese economy with more frequent lockdowns due to Omicron, with the latest being Shanghai in lock down further exacerbating the ongoing supply chain problems.

The IMF has not only cut global forecasts but has also cut that for the UK by 1.0% to 3.7% this year, noting that the war in Ukraine will “severely set back” the global economic recovery, with the UK hit harder than most.; a direct consequence of the conflict is that prices for energy and food have moved markedly higher. In 2021, the IMF placed the UK as the fastest growing G7 economy – a year later it is marked as the second fastest growing economy, whilst in 2023, it is slated to be the slowest growing member of the G7, at 1.2%, (down from the initial 2.3%), driven by price pressures forcing households to cut spending, while rising interest rates are expected to “cool investment”. Although part of the reason was that the UK rebounded quicker from the pandemic than its G7 peers, a bigger problem seems to be the fact that inflation could top 9% later this year – don’t forget that the BoE still had a 2.0% target as late as last month. UK inflation is expected to be 5.3% next year – the highest in the G7, and higher than all EU members, and only exceeded in the G20 by crisis-ridden Argentina, Turkey and Russia. Another dampener for consumer confidence is the inevitable rise of interest rates that will slow economic progress in the UK. Sixty-one years later, Bob Dylan’s words come to mind – And The First One Now Will Later Be Last!

And The First One Now Will Later Be Last!                                                22 April 2022

For the past week, ending 22 April 2022, Dubai Land Department recorded a total of 2,145 real estate and properties transactions, with a gross value of US$ 1.72 billion. A total of 225 plots were sold for US$ 305 million, with 1,436 apartments and villas selling for US$ 872 million. The two top transaction sales were for two plots of land – one in Hadaeq Sheikh Mohammed Bin Rashid for US$ 26 million, and another sold for US$ 14 million in Palm Jumeirah. The three leading locations for sales transactions were Al Hebiah Fifth with 114 sales worth US$ 69 million, followed by Jabal Ali First, with 33 sales transactions worth US$ 39 million, and Wadi Al Safa 5, with 11 sales transactions worth US$ 13 million. The top three apartment sales were an apartment sold for US$ 126 million in Marsa Dubai, another for US$ 96 million in Burj Khalifa, and third at US$ 77 million in Palm Jumeirah. The sum of the amount of mortgaged properties for the week was US$ 474 billion, with the highest being for a plot of land in Nad Al Shiba Third, mortgaged for US$ 47 million.

Latest figures from March’s ValuStrat Price Index reported property prices surging 18.8%, year-on-year, and 1.2% month-on-month. When split between villas/townhouses and apartments, the profits were up 34.1% and 2.1% and 8.4% and 0.4% for apartments respectively.  In the villa sector, the four leading locations, with the highest price rises, were Jumeirah Islands (40.3%), Arabian Ranches (40.3%), The Lakes (37.1%) and Jumeirah Village (35.5%). Some areas such as Mudon and Green Community West, performed better and recorded above average price growth of 0.5% and 0.8%, respectively. The index, which measures Dubai’s residential capital value performance, also reported that the leading locations for apartment price rises were Palm Jumeirah (21.9%), Jumeirah Beach Residence (16.0%), Burj Khalifa (15.3%), The Views (10.9 per cent), and The Greens (9.7%). The study also noted that “the villa capital values index reached 94.1 points last month, just 5.9 points below the price index base of January 2014.’ as the weighted average capital value for villas grew 6.3% quarterly and 34.1% annually. Meanwhile apartment capital values index reached 69.5 points in March, 30.5 lower than the price index base of January 2014. As Dubai’s global popularity grows, there is no doubt that Dubai’s property sector will benefit from the fact that its property prices are very cheap, when compared to those of their international rivals. The outlook for both segments remains positive, with villa prices moving faster and are expected to cross 2014 peak levels by the end of 2022.

CBRE noted that Dubai’s total Q1 transaction volumes reached 19k, the highest ever recorded in any first quarter of the year. Total transactions volumes recorded 75.1%, year-on-year growth, with off-plan and ready transactions increasing by 114.9% and 52.9% respectively. Secondary market transactions accounted for 56.1% of total transactions, with off-plan transactions accounting for the 43.9% balance, but that 68.6% of total Q1 sales were initial sales from the developer, and 31.4% of sales were for subsequent sales of properties. Over the remainder of 2022, an additional 42k units are expected to be completed to meet rising demand for residential units.

According to Luxhabitat Sotheby – utilising data from the Dubai Land Department – Dubai luxury property prices dipped 6.0% in Q1, with an average price of prime property at US$ 1.23 million. In this sector, it estimated that 5.3k apartments and 742 villas were sold, with the three leading locations, in terms of sales volume, being Mohammed Bin Rashid City at US$ 869 million, Palm Jumeirah at US$ 845 million and Downtown Dubai at US$ 708 million. In the prime residential market, the Jumeirah Islands area sales more than doubled to US$ 55 million, followed by Mohammed Bin Rashid City and Al Barari. During Q1, there was a 32.3%, quarter on quarter, jump in the prime villa market, with total sales of US$ 1.12 billion at an average villa price of US$ 2.89 million. The most popular areas for villa transactions in Q1 were Mohammed bin Rashid City, followed by Palm Jumeirah and Emirates Living. Sales volume of apartments decreased by 10% to US$ 2.97 billion with the average prime apartment selling at US$ 654k, equating to an average price of US$ 390 per sq ft. The three most popular ‘apartment areas’ were Downtown Dubai, Business Bay and Palm Jumeirah. The top six villa transactions in Q1 were Palm Jumeirah – Frond N (US$ 76 million), Jumeirah Bay Island (US$ 24 million), Palm Jumeirah Frond J (US$ 24 million), Emirates Hills – Sector L (US$ 20 million), Burj Khalifa apartment (US$ 20 million) and Business Bay Dorchester Collection (US$ 19 million).

Having invested US$ 272 million in a plot of land in Dubai South, and signing an exclusive agreement with the local authority, Discovery Land is planning to build an ultra-luxury golf community. The US-based developer indicated that the project will consist of a two sq mt golf community with mansions, villas, an 18-hole golf course and other premier amenities. This will become the fifth golf community in the emirate, following Emirates Hills, Arabian ranches Jumeirah Golf Estates and Dubai Hills.

Launched in 2006, Dubai South was planned to be an emerging 145 sq km, master-planned city which also includes Al Maktoum International Airport and the Expo 2020 site, which is currently being transformed into District 2020. This will become the country’s first fifteen-minute city, a cycle-friendly, traffic-free suburb of the growing metropolis, and will include an autonomous-vehicle route, a 10 km cycling track, interconnected, wide pedestrian pathways and a 5 km jogging track. The former Expo village will house fifteen mid-rise residential buildings, in four clusters, which will open “in different phases between now and October”.

HH Sheikh bin Mohammed announced further changes in the government’s residency visa law, making it easier, for skilled professionals, earning more than US$ 100k a year, as well as those purchasing a property worth more than US$ 545k, to apply for a ten-year ‘Golden Visa’. Undoubtedly, Dubai property sector will be a beneficiary of the ten changes made this week, as the initial introduction of the scheme in 2020, (which saw 44k visas issued in Dubai), was one of the main drivers in the sector’s post-Covid bounce back.Most analysts agree that the new changes are a further step in opening up Dubai to foreign investors and will likely lead to a significant influx in property buyers in both the residential and commercial sectors. Another change was that off-plan investors can also apply for residency, with buyers no longer restricted having to have a title deed of a ready property in hand.

The latest Knight Frank report indicates that, in Q1, Dubai office rents, in five out of the twenty-seven locations, have returned to pre-pandemic levels. The best performing location was Business Bay where rents were 33.0% higher, on the year, at US$ 28 per sq ft, with the major sector being technology business, many of which are set-ups, which seem to be filling in the space left by the likes of global international entities – professional services, banks and blue-chip companies – that have been shrinking their occupancy footprint in a move to hybrid working models. Average Grade A rents in the CBD were up 9.0%, year-on-year, to US$ 500 per sq mt per annum in Q1 2022; financial and technology firms remain the main drivers of demand for Grade A office space. There is no doubt that the local booming economy is helping growth in this sector – it is estimated that Q4 GDP growth came in at 7.8%. The Federal Competitiveness and Statistics Centre confirmed that the country’s non-oil sector contribution to the 2021 GDP equated to 72.3% – 1.0% higher than in 2020, and 3.8% at constant prices. The hotels & restaurants, wholesale & retail and health & social services sectors contributed 21.3%, 14.1% and 13.8% respectively. JLL’s Q1 2002 market review confirmed that the UAE’s hotel market performed strongly, driven by Expo 2020 Dubai and returning international visitors, with both upper-upscale and midscale hotels witnessing higher average daily rates.

This month saw Dubai’s population top the 3.5 million mark, according to Dubai Statistics Centre’s latest data and that despite the pandemic, it has increased by over 100k since 2020, driven, of late, by an influx of foreigners, especially the high net worth individuals. 69.2% of the population, 2.4 million, is male. The quicker than expected economic recovery has resulted in the labour-intensive industries, such as retail, hospitality, aviation, tourism and real estate increasing their payroll numbers. Despite the population continuing to grow, the DSC estimates the unemployment rate in Dubai stood at just 0.5%, resulting in the emirate having one of the world’s lowest unemployment rates.

With the NFT market booming, (with some exceptions as noted later), Emirates is hoping to cash in by planning to launch collectible and utility-based non-fungible tokens, with a launch expected in the coming months; it will also build brand experiences in the metaverse. Five years ago, Emirates Introduced Virtual Reality technology on its website and app, and last year, it became the first airline to launch its own VR app on the Oculus store, offering users cabin interior experiences on board the carrier’s A380 and Boeing 777-300ER aircraft. The airline’s chairman, Sheikh Ahmed bin Saeed, noted that “Dubai and the UAE are blazing the way in the digital economy, having a clear vision supported by practical policies and regulatory frameworks in areas such as virtual assets, artificial intelligence and data protection.”

With global trade picking up, the resultant higher volumes in the Asia Pacific – 1.2% up at 8.5k TEUs (twenty-foot equivalent units), Middle East, Europe and Africa (1.4% higher to 8.0k TEUs), and Americas regions, (up 4.0% to 2.8k TEUs) – pushed DP World’s gross container shipping volumes 1.7% higher in Q1 to 19.3 million TEUs. In Q1, the company signed two important deals in Africa – one acquiring South Africa’s Imperial Logistics, an integrated logistics and market access company, for US$ 890 million, and a preliminary agreement with the Angolan government to develop the country’s trade and logistics sector. DP World is “looking ahead, the near-term outlook is mixed given the geopolitical environment, but we remain positive on the medium to long-term fundamentals of the industry,”

This week, the Ministry of Finance, the Issuer, in collaboration with the Central Bank of the UAE, as the issuing and paying agent, launched conventional AED denominated Treasury Bonds of the Government of the UAE (T-Bonds), with a benchmark auction size of US$ 409 million; the first auction date is scheduled next month, followed by a raft of periodical auctions. Initially the securities will be in 2/3/5-year tenures; followed later by a ten-year bond. The main purpose for the issuance of T-Bonds is to assist in the building of a local currency bond market, diversifying financing resources, and boosting the local financial and banking sector. Apart from the issuance providing a pricing reference for other UAE markets (bond and equity), it enhances the ability to cover future funding needs in UAE dirham and provides opportunities for foreign investors to invest in UAE dirham-denominated bonds (in local currency). It will also help in the development of a Dirham local market for securities issued by the public sector in the country.

Following the success of the initial fifty-dirham polymer note, enhanced by advanced technical characteristics and security features. the Central Bank of the UAE has launched two new banknotes, The ten-dirham banknote entered circulation yesterday 21 April and the five dirham note is out next Tuesday 26 April. Current banknotes of both denominations will remain in circulation, along with the new polymer notes which are more durable and sustainable which will last two or more times longer in circulation.

This week, HH Sheikh Mohammed bin Rashid Al Maktoum issued Decrees No. (15) forming the Supreme Committee to Supervise the Expo 2020 Dubai District, and No. (16) of 2022 extending the terms of the Expo 2020 Dubai Preparatory Committee, and the Expo 2020 Dubai Bureau and its Director General by six months. The new Committee will be chaired by Sheikh Ahmed bin Saeed Al Maktoum, with members of the Supreme Committee to Supervise the Expo 2020 Dubai District being Mohammed Ibrahim Al Shaibani, Reem bint Ebrahim Al Hashimy, Abdul Rahman Saleh Al Saleh and Helal Saeed Al Marri. Their main roles and functions include general policy for the Expo 2020 Dubai District’s development and supervising the implementation, governance and development of all projects, initiatives, programmes and activities within the District. It will supervise the rehabilitation of the Expo 2020 Dubai District’s infrastructure and the provision of investment opportunities in the area in partnership with the private sector.

Sheikh Maktoum bin Mohammed, Deputy Ruler of Dubai, chaired the second meeting of the year of the Board of Directors of the Federal Tax Authority (FTA) which adopted the FTA’s financial statements for 2021. It noted the number of VAT registrants grew 2.4%, on the quarter, to 367.2k by the end of Q1, with the number of Excise Tax registrants 3.0% higher at 1.4k, and the number of Tax Agents increasing 3.0% to 446.  It also discussed new applications from UAE citizens to recover VAT (that came in 56.1% higher in Q1 to over US$ 50 million), incurred on building their new residences. The FTA board also examined the progress made on developing the draft corporate tax law, due to be implemented in 2023. Sheikh Maktoum also commented that “the Federal Tax Authority is committed to strengthening its relations with all entities involved in implementing the tax system in the government and private sectors, and to fulfilling its role in driving nationwide economic diversification policies through the administration and collection of federal taxes, in line with best practices.”

In December 2021, there were increases in M1 M2 and M3 Money Supply by 2.3% to US$ 186.9 billion, 3.0% to US$ 425.9 billion and 1.5% to US$ 505.9 billion respectively. The rise in M1 was due to an AED 16.6 billion increase in Monetary Deposits, with the increase in M2 down to the rise in M1, and an US$ 8.2 billion uptick in Quasi-Monetary Deposits. Although Government Deposits shed US$ 5.3 billion, M3 headed north because of the increases seen in M1 and M2. Gross banks’ assets, including bankers’ acceptances, increased by 0.8%, to US$ 905.0 billion at the end of December 2021. Gross banks’ assets, including bankers’ acceptances, increased by 0.8%, US$ 905.0 billion. Gross credit increased by 0.3% to US$ 488.8 billion due to 0.1% and 2.6% increases in Domestic Credit and Foreign Credit, respectively. Total Bank Deposits increased by 1.5% to US$ 544.0 billion because of 1.6% and 0.6% rises in both Resident Deposits and Non-Resident Deposits.

Saeed Al Tayer, MD of Empower and Chief Executive of Dewa, confirmed that Dubai’s leading district cooling provider – a nineteen-year old JV between Dewa and Tecom Investments – will probably go public by the end of the year; it seems likely that Salik and Tecom Investments may be at the front of the queue.  The company, which has a 79.5% share of Dubai’s district cooling market, serving 1.4k residential, commercial, healthcare, hospitality, education, retail and entertainment buildings. Empower posted a 4.0% increase in its 2021 profit to US$ 255 million, driven by a 9.0% revenue growth to US$ 682 million, resulting in a US$ 136 million dividend.

According to its MD, Saeed Al Tayer, Dewa is set to announce its Q1 results next month and has recorded a “strong performance”, and that “Dewa has strong cash flows and will not need to take on debt … We have no issues for the next five years and we will not seek loans”. It expects 2022 profits to be in the region of US$ 2.0 billion. Based on today’s close of trading figures, the utility has a market value of US$ 39 billion. It has projects valued at US$ 23.4 billion over the next five years, that will help it meet the increase in demand for electricity and water as the emirate’s population continues to boom; last year alone, energy demand rose 11%, nearly triple the company’s estimates.

At this week’s AGM, Emaar shareholders approved the dividend distribution proposal from the board of directors representing 15% of the share capital, along with the board of directors’ 2021 report on the company’s activities and financial position and the auditor’s report. Last year, it recorded total revenue of US$ 7.7 billion, with an EBITDA of US$ 2.5 billion. In 2021, the company posted real estate sales of US$ 9.2 billion – its highest on record – and an impressive sales backlog totalling more than US$ 12.5 billion.

Emirates NBD posted an 18.0% hike in Q1 net profit to US$ 735 million, as revenue came in 3.0% higher at US$ 1.74 billion, driven by stronger non-interest income, 4.0% higher to US$ 1.17 billion and declining impairment allowances, by 20%, to US$ 381 million. Expenses rose 5.0%, year on year, to US$ 545 million, driven by staff costs, Dubai’s biggest lender by assets also recorded its customer loan balance was 1.0% higher at US$ 115.8 billion and deposits 2.0% higher at US$ 127.8 billion; total assets remained flat at US$ 189.1 billion. The bank raised its interest rate by 15bp because of a similar decision by the Central Bank of the UAE, following the Fed’s move last month; it is expected that rates could be raised five more times this year. Despite rates moving higher, it is felt that local lending growth is likely to accelerate, underpinned by the UAE’s economic growth.

Emirates Islamic recorded a 62% increase in net profit to US$ 93 million, driven by a 14% growth in income and a 72% improvement in provisions; operating expenses surged by 10% on the year. There were increases across the board, with operating profit 17% higher, total assets up 8% to US$ 19.1 billion, customer financing rising 66% to US$ 12.3 billion and customer deposits 9% to the good at US$ 14.0 billion.

The DFM opened on Monday, 18 April, 252 points (7.5%) up on the previous five weeks, moved 81 points (2.2%) higher to close on Friday 22 April, at 3,683. Emaar Properties, US$ 0.31 higher the previous seven weeks, nudged US$ 0.06 higher to US$ 1.72. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.78, US$ 4.03, US$ 1.71 and US$ 0.71 and closed on US$ 0.78, 4.14, US$ 1.71 and US$ 0.73. On 22 April, trading was at 115 million shares, with a value of US$ 83 million, compared to 170 million shares, with a value of US$ 142 million, on 15 April 2022.

By Friday 22 April 2022, Brent, US$ 12.28 (3.4%) higher the previous fortnight, had shed US$ 9.95 (8.9%), to close on US$ 111.70. Gold, US$ 48 (2.5%) higher the previous fortnight, lost most of that gain, losing US$ 42 (2.1%), to close Friday 22 April on US$ 1,933.

Yesterday, Elon Musk confirmed that he has secured a funding commitment of US$ 46.5 billion to finance his bid to buy Twitter, of which US$ 33.5 billion has been personally committed by means of US$ 21 billion of equity and another US$ 12.5 billion coming from margin loans Furthermore, banks, including Morgan Stanley and “certain other financial institutions”, have committed to offer a further US$ 13 billion in debt secured against Twitter. Last week the Tesla founder offered to buy Twitter for US$ 43 billion.

Tesla shares jumped 5.2%, to US$ 1,028, when the electric vehicle maker posted a record US$ 3.3 billion Q1 profit, driven by an increased delivery of cars, despite Covid-induced supply disruptions and a global shortage of semiconductors; the profit figure dwarfed the 2021 comparative figure of US$ 500 million. This is the eleventh straight profitable quarter and the fourth consecutive three-month period with more than US$ 1 billion profit. Revenue was 81% higher at US$ 18.7 billion and a record 310k vehicles were delivered – 68% up on an annual basis; of that total, 295k were either Model 3 or Model Y, with the 15k balance being its more expensive Model S and Model Y. Tesla commented that  its cash and cash equivalents “increased sequentially by US$ 300 million to US$ 18 billion”, driven mainly by free cash flow of US$ 2.2 billion, partly offset by debt repayments of US$ 2.1 billion, with its total debt of less than US$ 100 million, excluding vehicle and energy product financing. It has ambitious expectations and is looking at a 50% average annual growth in vehicle deliveries, although they could be scuppered by external factors such as continuing supply chain problems, chip shortages and further lockdowns.

With French prosecutors investigating claims that fugitive former head of Nissan, Carlos Ghosn, had syphoned millions of euros from Renault through Suhail Bahwan Automobiles., there was no surprise to hear that French authorities have eventually issued an international warrant for his arrest. Ghosn fled Japan in 2019, when facing charges for financial misconduct and is now holed up in Lebanon from where he is unable to leave, as he is the subject of an Interpol Red Notice issued by Japan. It is thought that he would prefer a trial in Lebanon, on any charges brought against him by the French and Japanese courts – and was “totally confident” he could prove his innocence.

Having reported a Q1 loss of 200k subscribers, (against its forecast of a 2.5 million growth in numbers), and quarterly profit down 6.4% to US$ 1.5 billion, Netflix share value plunged 35%, and lost more than US$ 50 billion off its market value, in after-hours trading on Tuesday, making it the worst performer in the S&P 500 this year; YTD, the stock is down 62%. This was the first time in over a decade that the global streaming giant reported losing subscribers, whilst it predicted more contraction in Q2. The Ukraine crisis has seen it suspend service in Russia, resulting in a loss of 700k members. Netflix attributed some of the decline to “relatively high household penetration — when including the large number of households sharing accounts — combined with competition, is creating revenue growth headwinds;” it also noted that other drivers included various macro-economic factors such as sluggish economic growth, increasing inflation, geopolitical events and some continued disruption from the Covid-19 pandemic have affected its growth. Its global paid subscribers stood at 221.64 million at the end of Q1, with the company forecasting a Q2 1% fall in numbers to 219.6 million. It also announced the purchase of Helsinki-based gaming company Next Games. It does indeed face a major struggle to get back on track.

Bill Ackman’s Pershing Square Capital Management, one of the company’s twenty largest shareholders, has ditched his stake in troubled Netflix. The US billionaire investor and hedge fund manager disclosed that, in January, his firm had acquired a US$ 1.1 billion stake in Netflix, just after it had fallen 30% following a disappointing Q1 outlook. At the time, he praised Netflix’s “best-in-class management team” and said he long admired Netflix CEO Reed Hastings and the “remarkable company he and his team have built.” It is estimated that this investment, comprising 3.1 million shares, has lost him US$ 430 million in less than three months.

It is reported that Next has acquired a 46% stake in baby goods retailer JoJo Maman Bebe, with the majority 56% taken by companies managed or advised by hedge fund Davidson Kempner.  Its founder, Laura Tenison, will leave the business that she founded nearly thirty years ago. No financial details were made available but there will be no immediate job losses at the retailer, with 950 employees, which has eighty-seven brick-and-mortar shops across the UK. Next will also spend US$ 21 million in the brand, using its own cash, and plans to keep the JoJo brand distinct and grow the business globally using its online shopping infrastructure.

Workers at Apple’s Grand Central Station store in New York could become the first union at one of the tech giant’s US stores – and if successful it will follow the “union trend” started by Starbucks and Amazon. To qualify for a union election, the so-called Fruit Stand Workers United need to obtain signatures of support from 30% of colleagues at the store to qualify for a union election. The group is looking at a US$ 30 minimum hourly wage for all workers, additional holiday time and information on more robust safety protocols at the Grand Central location. Employees working in at least three other Apple stores are also attempting to organise a union.

Last year, Sina Estavi, invested US$ 2.9 million when purchasing a non-fungible token of the first tweet posted on Twitter by co-founder Jack Dorsey. Last month, the Malaysian entrepreneur decided he would sell the NFT, (and was expecting to receive at least US$ 25 million for the sale), with half of the proceeds earmarked for the charity GiveDirectly. By the beginning of the week the highest bid was at 10.1 Ether, equal to about US$ 29k.

In Australia, global hotel booking giant Trivago has been fined US$ 33 million (AUD $45 million), plus legal costs, for misleading customers with advertising that claimed it made it easy to find “the best price” for rooms. The case was brought against the company by the Australian Competition and Consumer Commission, which was pushing for a penalty twice that amount. It was estimated that consumers, who have yet to receive any compensation to date, lost around US$ 22 million. The Federal Court found the company had breached Australian Consumer Law over a “lengthy period of time”, and noted that “the television advertising conducted by Trivago during the early part of the relevant period was highly misleading,” It was noted that the firm did not make clear that it was being paid by the online booking sites and that more often or not the hotels listed at the top of the search results were not the best or cheapest deal., with Trivago promoting hotels that paid it the biggest fees.

Laying the blame at the doors of Covid lockdowns in China, shortages of materials and sky-high shipping costs, Appliances Direct warned that even though the prices of fridges, freezers and dishwashers are up by a third since last year, they are set to climb higher, as wholesale prices have jumped a further 9% in Q1.The company also noted that the cost of shipping  a fridge used to cost US$ 16, with a six-month lead time; now the cost has skyrocketed to US$ 104, with a led time of up to fourteen months. The sector does not see any improvement over the rest of the year and that factors such as shipping costs, material input prices and consumer price will continue to push prices higher, with consumer spending set to decline. Indeed, the price comparison site, Price Runner, found that prices of white goods and gadgets had soared by nearly 50% in just two years.

Not helped by yet another lockdown – this time in Shanghai – China’s March consumer spending fell, (with retail sales down 3.5% on the year), and unemployment rose, to 5.8%, (the highest level since May 2020), as Covid lockdowns confined millions of people to their homes. Meanwhile, the Q1 country’s economy grew at a faster pace than expected, with GDP up by 4.8%, compared to a year earlier. The impact of the latest lockdown measures, which started in mid-March, was initially limited but will result in a significant drag on economic growth for at least the next three months, not helped by the war in Ukraine. Analysts estimate that technology, industrial and automobile supply chains “will come to a complete halt” if Shanghai does not resume production by early May.  It is safe to report that some of the city’s residents are not happy with the situation.

Since the start of the Ukraine war, the EU has paid US$ 37.8 billion for Russian energy but any embargo on oil and gas seems a long way off, at a time when European ministers have been discussing a potential sixth round of sanctions against Russia; last year, the EU imported roughly 40% of its gas and 25% of its oil from Russia. The countries that would suffer most from a full embargo would be Germany, Italy, Austria and Hungary in particular, with their dependence on Russian gas – one thing is certain is that the EU will not throw Germany under the bus. Ukraine’s President Zelenskyy has urged the EU to impose sanctions on Russian oil and to set a deadline for ending gas imports from the country, but in reality, this is some time off. What seems likely is that coal may be banned by the end of Q3.

With pressure mounting at home, Prime Minister Boris Johnson may have found some relief in his two-day visit to India where he met with Narendra Modi to discuss a free trade deal. In recent weeks, the Indian government has signed such deals with both the UAE and Australia. However, there is every chance that this will take time and much discussion between the two parties but if it comes to fruition, it could double total trade between the UK and India to US$ 73 billion by 2035. Strangely, it seems that the UK currently sells less to India, with a population of 1.4 billion, than it does to Belgium and its 11.5 million people. Bargaining chips will include the likes of the UK wanting increased access to India’s manufacturing and services sector, areas in which India has traditionally resisted foreign involvement, as well as doing away with the protection that trade barriers have provided for Indian industries and workers. On the other side, there may be more Indian visas being allowed for Indian workers and pressure to allow Indian products, such as medicines into its market. If a free deal went through, two UK industries would benefit – Scotch whiskey, which currently attracts a 150% tariff – and the motor vehicle makers, as foreign cars attract tariffs of up to 100%. A trade deal with India would add just 0.2% to the UK’s GDP – and that’s over the course of a decade, and only if there is a substantial reduction in trade barriers. Is it worth all the bother?

As the rise in the cost of living begins to hit home in the UK, March retail sales dropped 1.4%, with online sales falling sharply, as consumers cut back on non-essentials because of lower levels of discretionary spending, and fuel sales were reduced, as people cut travel amid record petrol prices. Food sales dipped for the fifth consecutive month, as rises across the board have seen inflation rising above 7.0% and at its highest level in over thirty years. It is to be noted that although the current Ukraine crisis is a major inflationary driver, energy and fuel prices had been rising even before the onset of the war. The situation is likely to worsen, as the data was collected before April’s 54% hike in gas and electricity bills and the fact that consumer confidence continues to tank – now at its lowest level in fourteen years and the GFC.

Known for constantly changing its economic forecasts, the IMF has lowered its 2022 forecast from its January’s estimated 4.4% to its much amended 3.6%, driven by the triple whammy of surging inflation, war in Ukraine and a lingering pandemic. (The World Bank also said it was lowering its growth forecast from 4.1% to 3.2%). Global inflation pressures continue unabated and most central banks have been behind the eight ball for too long and future drastic action could weigh down on output and economic activity. Inflation is higher in most countries and is expected to persist longer; there is the possibility of social unrest as energy and food prices head inexorably higher. Meanwhile the Ukraine crisis, (which will see  the embattled nation hit with a massive 35% contraction this year), has led to increasing energy and commodity prices around the world and is resulting in less output and more inflation. On top of this comes yet another slowdown of the Chinese economy with more frequent lockdowns due to Omicron, with the latest being Shanghai in lock down further exacerbating the ongoing supply chain problems.

The IMF has not only cut global forecasts but has also cut that for the UK by 1.0% to 3.7% this year, noting that the war in Ukraine will “severely set back” the global economic recovery, with the UK hit harder than most.; a direct consequence of the conflict is that prices for energy and food have moved markedly higher. In 2021, the IMF placed the UK as the fastest growing G7 economy – a year later it is marked as the second fastest growing economy, whilst in 2023, it is slated to be the slowest growing member of the G7, at 1.2%, (down from the initial 2.3%), driven by price pressures forcing households to cut spending, while rising interest rates are expected to “cool investment”. Although part of the reason was that the UK rebounded quicker from the pandemic than its G7 peers, a bigger problem seems to be the fact that inflation could top 9% later this year – don’t forget that the BoE still had a 2.0% target as late as last month. UK inflation is expected to be 5.3% next year – the highest in the G7, and higher than all EU members, and only exceeded in the G20 by crisis-ridden Argentina, Turkey and Russia. Another dampener for consumer confidence is the inevitable rise of interest rates that will slow economic progress in the UK. Sixty-one years later, Bob Dylan’s words come to mind – And The First One Now Will Later Be Last!

The Carnival Is Over!                                                                         01 April 2022

For the past week, ending 01 April 2022, Dubai Land Department recorded a total of 2,135 real estate and properties transactions, with a gross value of US$ 2.23 billion. A total of 247plots were sold for US$ 395 million, with 1,423 apartments and villas selling for US$ 842 million. The top three transfers for apartments and villas were all apartments – one was sold for US$ 120 million in Marsa Dubai, a second sold for US$ 83 million in Burj Khalifa, and the third sold for US$ 75 million in Business Bay. The top three land transactions were for a plot of land in Palm Jumeirah, worth US$ 76 million, a plot in Hadaeq Sheikh Mohammed bin Rashid for US$ 8 million, and land for US$ 8 million in Al Warqaa 3.  The most popular locations in terms of volume and value were Al Hebiah Fifth, with 121 transactions, totalling US$ 72 million, followed by Al Merkadh, with 29 sales transactions, worth US$ 19 million, and Hadaeq Sheikh Mohammed bin Rashid, with 15 sales transactions, worth US$ 61 million. Mortgaged properties for the week totalled US$ 921 million, with the highest being for land in Nad Al Shiba First at US$ 87 million. 79 properties were granted between first-degree relatives worth US$ 79 million.

Danube Properties managed to sell 100% of the 300-unit inventory of Pearlz, along with a number of retail and recreational facilities, with a development value exceeding US$ 82 million in one day. It had also recently delivered its ambitious project ‘Lawnz’ to 1k plus property buyers.

This week saw the launch of the Elysian Mansions development, part of the four-year Tilal Al Ghaf project, which will include more than 6.5k freehold homes, ranging from apartments and town houses to larger, luxury villas. At the centre of the development – which will comprise four walkable neighbourhoods, with about 355k sq mt of landscaped open areas, 18 km of walkable trails and 11 km of cycling paths – will be Lagoon Al Ghaf, a 70k sq mt swimmable lagoon with a 120 mt private beach accessible to mansion owners only.. Developed by Majid Al Futtaim, and located close to Dubai Sports City, this initial project comprise ninety-two 5 B/R – 6 B/R “organic-luxe homes inspired by nature”,  with prices ranging from US$ 4.9 million to US$ 9.5 million. These ultra-prime villas come with multiple entertaining areas, spa and wellness spaces, a sky suite with roof terrace, an internal lift and an underground glass-encased car gallery, with a capacity for six to eight vehicles.

On 24 February, STR estimate that record 132k hotel rooms were sold in the emirate and that Expo 2020 was the main driver behind the figure; this could well be broken again this week as the global event closes after a successful six-month season. It is expected that occupancy during the summer months will return to their pre-pandemic levels, whilst the FIFA World Cup in Qatar will inevitably boost demand as many fans will use Dubai as a base (despite the high transport prices). As long as global travel restrictions continue to ease, there is no doubt that Dubai tourism outlook is optimistic and will continue to be one of the busiest global tourist locations.

Following double-digit price rises over the past two months, there is more of the same for April. From today, 01 April, petrol costs jumped to new seven-year highs, on the back of surging global oil prices, allied with tightening supply, as Brent started the week on US$ 100. Super 98, Special 95 and diesel rose by US$ 0.051 (15.79%) to US$ 1.019, by US$ 0.079 (16.02%), to US$ 0.986, and by US$ 0.226 (15.78%) to US$ 1.095. This is the first time that Super 98 and diesel have exceeded the US$ 1.00 mark.

Tributes to the late Easa Saleh Al Gurg, who died on Thursday, have been led by HH Sheikh Mohammed bin Rashid who noted that Al Gurg “was one of the most important men of our national economy.”  He was among the group of visionary people who helped to oversee the rise of Dubai and the modern-day UAE and founded a huge conglomerate spanning twenty-seven companies in retail, building and construction, industrial and property. He started his adult life in the 1950s, with the British Bank in Dubai, before building up his business interests; he was appointed UAE’s ambassador to the UK from 1991 to 2009, and was awarded the Order of Zayed II, by the late Sheikh Zayed bin Sultan Al Nahyan, in 1997.  Apart from his major business and diplomatic works, he also created the Al Gurg Charity Foundation which, inter alia, awarded numerous foundation scholarships to help young students.

The UAE and Israel have now agreed on a Comprehensive Economic Partnership Agreement that it hopes will deepen trade and investment ties, accelerate growth and lead to a new era of peace, stability, and prosperity in the ME. Only six months after the signing of the Abraham Accords last September, talks have been concluded and the agreed text is now being finalised ahead of an expected formal signing, probably after the holy month of Ramadan which is expected to start on Sunday. The benefits of the UAE-Israel CEPA will substantially reduce or remove tariffs on a wide range of goods, enhance market access for services, promote investment flows, create jobs, promote new skills, enhance climate action and deepen cooperation on strategic projects.

It seems that Grant Shapps is no stranger to controversy and has previous form, having to step down, in 2015, as minister of state due to allegations of bullying within the Conservative Party. It had been claimed that, in his previous role as party co-chairman, he had ignored repeated allegations of bullying, involving a party youth organiser, who later took his own life; his father noted the day before Shapps resigned that whoever else is involved in this – clearly these senior members of the party have been telling lies … If they had behaved responsibly … none of these events would have happened; my son would still be alive and many activists wouldn’t have been intimidated and harassed”.

In May 2008, Shapps was cited as one of several shadow ministers who had received cash from firms linked to their portfolios.; all donors had been introduced by Michael Gove. The Commissioner exonerated all shadow ministers indicating that they were permitted to receive donations from organisations covered by their briefs as long as the person has a company in the UK or lives in the UK! He also founded a web publishing business, How To Corp Limited, involved in business publications and software, and allegedly appeared to use at least three people, under the names of Michael Green, Corinne Stockheath and Sebastian Fox, for testimonials. In 2012. He denied having used any pseudonym after entering parliament and, in 2014, threatened legal action against a constituent who had stated that he had. In February 2015 he told LBC Radio “Let me get this absolutely clear … I don’t have a second job and have never had a second job while being an MP. End of story.” However, in March 2015, he admitted to having had a second job while being an MP and practising business under a pseudonym. In his admission, he stated that he had “over-firmly denied” having a second job.  Under the name Michael Green, Shapps had offered customers a “a get-rich-scheme” costing US$ 497 and promised them a “toolkit” that would earn them US$ 20k in twenty days, provided they followed its instructions in an e-book; they included advising the user to create their own toolkit and recruit 100 “Joint Venture Partners” to resell it for a share of the profits.

In August 2018, the FT reported a “secret pay deal” between Shapps and OpenBrix, a British blockchain property portal company, alleging that he would have received a payment in cryptocurrency tokens with a future value of up to US$ 920k. The then chairman of the all-party parliamentary group on blockchain, which he actually had initiated, resigned from OpenBrix as well as his chairmanship from the group. Shapps maintained that he had confirmed with the standards commissioner that he was not required to register the interest. Then in September 2019, the now Secretary of State for Transport oversaw Thomas Cook Group fell into administration, leaving more than 150k UK tourists in need of repatriation.

This week, the same Grant Shapps has given the boss of P&O Ferries “one final opportunity” to reemploy sacked staff on their previous salaries. With his past history, it is laughable that he had the gall to post that “a reversal at this point may also go some way in starting to repair your firm’s reputation”.

Dubai Municipality estimated that the emirate imported 7.9 million tonnes of food last year, with nearly 287k food shipments and over 1.7 million food products, driven by various measures to ensure strong quality control of foodstuff and to enhance the stability of food imports; on a quarterly basis the total weights imported were 1.9 million tonnes, (Q1), 2.3m, 1.81m and 1.83m. The municipality closely monitors the internal and external conditions that impact food safety in Dubai, ensuring the emirate’s leading position in the food safety map at regional and international levels. The municipality networks closely with both federal and local entities to support local and national goals to strengthen food supply chains.

Dubai Electricity and Water Authority’s Initial Public Offering opened for subscription on Thursday, with the subscription period running until 02 April for retail investors and until 05 April for qualified investors. A price range has been set at between US$ 0.61 and US$ 0.67, equitable to a market value of US$ 30.6 billion and US$ 33.8 billion. Initially a total of 3.25 billion shares, or 6.5% of the utility’s existing shares, was offered, but due to such demand this was subsequently increased to 17.0% of its share capital, (8.5 billion ordinary shares); this would see DEWA raising between US$ 5.2 billion to US$ 5.7 billion from the IPO. It does seem that the retail sector will be hugely oversubscribed and could have done with a bigger share than the 325 million of the 8.5 billion shares on offer., DEWA’s debut on the DFM is slated for 12 April.

The M Glory Group has invested US$ 409 million in its new electric vehicle manufacturing hub, located in Dubai Industrial City. When at full capacity, it will be rolling out 55k vehicles annually, to meet an increasing rising demand for green mobility to reduce global carbon emissions. It will be one of the largest such facilities in the region and provide employment for more than 1k and will export not only to the GCC but also to the likes of Egypt, Kenya, Mali, Senegal and Tanzania.

in 2020, Gulf Navigation made a loss of US$ 77 million but managed to make a US$ 17 million profit last year, driven by lower operating and finance costs. The Dubai-based maritime and shipping company posted declines in operating costs by 31.5% to US$ 27 million and finance costs, 13.0% lower at US$ 11 million. Last year, the company restructured its debt which “reflected positively on the company’s results by benefitting from the reduction of debt provisions”, with loans of US$ 82 million being restructured and refinanced under “new and flexible term.

Following a 2020 profit of US$ 55 million, Union Properties sank to a net loss of US$ 263 million, despite a 6.0% rise in revenue to US$ 109 million, after it rectified the value of its property portfolio that “had been inflated in prior years”; there was no surprise to see that the new board changed the company’s independent valuer. The Dubai developer, now in the throes of a major restructuring process, booked a US$ 302 million loss in 2021 following a US$ 203 million gain the previous year. The accounts also showed a US$ 42 million impairment charge, relating to investments in quoted funds and quoted equities, which are “suspected to have been misappropriated by the company’s former officials”. UP shares fell 4.12% on the news to US$ 0.063 and have fallen 28.0% YTD.

The DFM opened on Monday, 28 March 62 points (1.8%) higher on the previous week gained 125 points (3.7%) to close on Friday 01 April, at 3,537. Emaar Properties, US$ 0.17 higher the previous four weeks, was US$ 0.11 higher at US$ 1.63. Emirates NBD, DIB and DFM started the previous week on US$ 3.92, US$ 1.65 and US$ 0.64 and closed on US$ 4.09, US$ 1.69 and US$ 0.67. On 01 April, trading was at 92 million shares, with a value of US$ 60 million, compared to 127 million shares, with a value of US$ 92 million, on 25 March 2022.

For the month of March, the bourse had opened on 3,208 and, having closed the month on 3527, was 319 points (9.9%) higher. Emaar traded US$ 0.25 higher from its 01 March 2022 opening figure of US$ 1.38, to close the month at US$ 1.63. Three other bellwether stocks, Emirates NBD, DIB and DFM started the month on US$ 3.90, US$ 1.66 and US$ 0.63 and closed on 31 March 2022 on US$ 4.09, US$ 1.68 and US$ 0.66 respectively. The bourse had opened the year on 3,196 and, having closed March on 3,527, was 331 points (10.4%) higher, YTD. Emaar traded US$ 0.30 higher from its 01 January 2022 opening figure of US$ 1.33, to close March at US$ 1.63. Three other bellwether stocks, Emirates NBD, DIB and DFM started the year on US$ 3.69, US$ 1.47 and US$ 0.72 and closed on 31 March on US$ 4.09, US$ 1.68 and US$ 0.66 respectively.

By Friday 01 April 2022, Brent, US$ 4.75 (9.3%) higher the previous week, had lost US$ 13.26 (11.8%), to close on US$ 99.42 Gold, US$ 39 (3.7%) higher the previous week, shed US$ 29 (1.5%), to close Friday 01 April on US$ 1,929.  

Brent started the year on US$ 77.68 and gained US$ 22.37 (28.8%), to close 31 March on US$ 100.05. Meanwhile, the yellow metal opened January trading at US$ 1,831 and has gained US$ 112 (6.1%) during 2022, to close on US$ 1,943. For the month, Brent opened at US$ 99.23 and closed on 31 March, US$ 0.82 (0.8%) higher, on US$ 100.05. Meanwhile, gold opened March on US$ 1,921 and gained US$ 22 (1.1%) to close at US$ 1,943 on 31 March.

According to Dr Sultan Al Jaber, the UAE’s Minister of Industry and Advanced Technology, global oil markets face tighter supply in the short term, because of several factors including the long-term underinvestment into the oil and gas sector has left markets more exposed. Although geopolitical situations are in play, in a highly sensitive energy market, at the base of the current volatility in oil prices is a deeper, underlying structural issue. He reiterated that “we have a responsibility to inject a dose of realism into the planning for energy transition,” and ““let’s invest in new and future energies but let’s not defund the current energy system … before a new one can take its place.” The minister noted that annual energy investment into oil and gas was up to US$ 200 billion below where it needs to be and that is just to keep up with demand over the next eight years; last year, sector investment, at US$ 341 billion, was 23% lower than pre-pandemic levels He also warned that “put simply, we can’t, and must not unplug the current energy system before we have built a new one.”

Further to Opec+ announcing earlier in the week that it would be adding another 432k bpd of crude to the market in May, the Biden administration announced yesterday that it would be releasing a further one million bpd for the next six months from its strategic petroleum reserve to tackle soaring inflation and gasoline prices. This is the third time the country has tapped into its SPR in the past six months, with the last time being  60 million barrels in November.

The International Energy Agency said its members have agreed to release more oil from emergency reserves to offset the market turmoil caused by Russia’s war in Ukraine. Details of the new emergency stock release will be announced early next week. The agreement follows last month’s action, taken by IEA members, where they pledged to release 62.7 million barrels of oil from emergency stocks. The IEA commented that Russia’s war in Ukraine continues to put significant strain on global oil markets, which continues to raise concerns about the global energy security.

With Ronin Network, owned by Vietnamese parent company Sky Mavis, announcing that it had US$ 615 million stolen, there could be a million people having lost in the second largest crypto hack in history. It says a hacker transferred US$ 540 million (now valued at US$ 615 million) worth of cryptocurrency to themselves six days ago, but the company only noticed on Tuesday when a customer was unable to withdraw their funds. The platform, which powers the popular mobile game Axie Infinity, with players fighting cartoon pets called Axies to earn cryptocurrency, like Ethereum, and collect the game’s non-fungible tokens (NFTs). It is thought that some may have lost their “life savings” after saving up digital coins from playing the game. Over the past twelve months, it has been estimated that a raft of mass crypto heists has netted over US$ 2 billion.

After fourteen years of being the majority shareholder in the NatWest Group, the UK government’s stake in the troubled bank has fallen below 50%, to 48.1%, as it divested US$ 1.58 billion worth of shares to NatWest. Since the government bailed out the bank at the height of GFC, for US$ 59.3 billion, the plan was always to return the bank to private ownership; initially it held 57% but this was extended to top 84%. During the crisis, the government also bailed out Lloyds Bank, acquiring a 43% stake, and managed to divest this by 2017.

As the rouble continues to struggle, Vladimir Putin has announced that “unfriendly” foreign countries must start paying for gas in roubles or supplies will be cut as from today, 01 April. Foreign buyers of Russian gas will need to open an account at Russia’s Gazprombank and transfer euros or US dollars into it in order to pay for gas exported from Friday onwards. However, it appears that the payments for that gas will not be paid by European buyers until mid-May. As the EU relies heavily on Russia – 40% of its gas and 30% of its coal emanates from there – it has not placed bans on oil or gas, unlike US and Canada. It has been estimated that Russia currently gets US$ 443 million per day from gas sales to the bloc and it has no way of rerouting this supply to other markets.

With a general election just weeks ahead, there is no wonder that the Morrison government gave money back to the voters in this week’s Australian budget Those six million Ozzies, on some form of government payments, will receive a one-off US$ 187 (AUD 250) “cost of living payment” this month; it will be exempt from taxation and will not count as income support for the purposes of any income-support payment. Another cost-of-living tax offset sees the phasing out the so-called Low and Middle Income Tax Offset, first introduced in 2019, but it will increase the payment for everyone, by US$ 315 (AUD 420), for its last year, (2021-2022), of operation. LMITO has resulted in annual tax cuts worth between US$ 191, (AUD 255) and US$ 809, (US$ 1,080), depending on taxable income, to people earning below US$ 94k, (US$ 126k)a year. Much-larger tax cuts are still planned to go ahead from July 2024, which will clearly benefit higher-income earners, and which will be permanent. Many thought that LMITO had a longer shelf life but the fact that it was costing the government over US$ 5.2 billion (AUD 7 billion) a year saw its early demise.

Whilst lower paid Australians will be paying more tax next fiscal year (July 2022 to June 2023), high-income earners will be preparing to receive large and permanent income tax cuts because a few years ago, the government legislated large changes for personal income taxes in the then future. From July 1, 2024,  the government’s so-called “stage three” tax cuts will:

• increase the income at which the top 45% tax bracket begins from US$ 135k, (AUD 180k), to US$ AUD 150k)
• abolish the 37% marginal tax rate
• lower the 32.5% marginal tax rate to 30%, leaving all earnings between US$ 34k, (AUD 45k) and US$ 150k, (AUD 200k), facing a marginal tax rate of 30%

It is estimated that the changes will see around 95% of taxpayers facing a marginal tax rate of no more than 30% from 2024-25, but the Liberal government has no qualms at giving the largest tax cuts to the highest-income earners– those earning more than US$ 150k, (which will include federal politicians), who will be eligible to a permanent tax cut of US$ 7k (AUD 9k). Meanwhile, people earning less than US$ 34k, (AUD 45k), will get nothing at all from the stage three tax cuts, and middle-income earners will get little. It seems that ScotMo must be confident that this move will not cost him his job at next month’s election.

The budget also saw a 50% cut in fuel excise from US$ 0.33, (AUD 0.44), to US$ 0.17 (AUD 0.22), on every litre of petrol or fuel, which will run for the next six months; this will save the average family with two cars US$ 525 (AUD 700) over the next half year but cost the government US$ 2.3 billion (AUD 3.0 billion).

As widely expected, Expo 2020 proved a welcome lifeline for Dubai’s tourism, aviation and hospitality sectors recovering from the pandemic, as it was one of the main drivers enhancing visitor numbers. Consequently, leisure and business travel, hotel occupancy rates, room revenue and footfall at shopping malls all moved higher. According to Sheikh Ahmed bin Saeed Al Maktoum, Emirates group chairman, the airline posted improved load factors and strong travel demand “due to a combination of factors, including the UAE’s successful management of Covid-19, which was critical to many countries quickly easing travel restrictions to and from Dubai and building traveller confidence”. He also noted that the airline had seen “an increase in first-time visitors to Dubai among our customers during the past months, which shows the pull of Expo 2020 and strong traveller interest in Dubai.” Expo 2020 was a key factor in DXB recording its busiest fourth quarter since the onset of the pandemic, with 11.8 million passenger traffic. STR estimates that the hotel occupancy, for the week ending 12 March, at 85%, was the highest in the world for a fourth consecutive week; the average global rate stood at 50.8%. The pandemic-delayed Expo 2020 in the United Arab Emirates closed yesterday after eight years of anticipation, over US$ 7 billion in investment, 240 million labour hours and one hundred and eighty-three days of festivities. By last Saturday, the world fair had attracted 21 million visitors, about 70% of which have been from the UAE, and 2.8 million were children under the age of 18. Even though the Expo 2020 site will soon welcome back visitors, (as early as by October), and  will be transformed into a futuristic city, under the guise of District 2020, where people will live, work and play, for now The Carnival Is Over!

A World Without Love                                                                     18 March 2022

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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