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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!

What’s Going On? 18 February 2022

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Land of Make Believe!                                                               11 February 2022

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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