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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.

Pay It Back!                                                                            29 January 2022

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Pay It Back!                                                                            29 January 2022

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

It’s Not Over ‘Til It’s Over!                                                                21 January 2022

Valustrat confirmed that the real estate sector continued its impressive recovery into Q4, as the Valustrat Price Index – covering thirteen villa communities and twenty-one apartment areas – jumped 5.1% and 16.6% in the fourth quarter and for the year. Capital values for villas and apartments in Dubai surged in Q4 2021, as the UAE economy charted a strong recovery from the Covid-19 pandemic. The index tracks change in capital values for a representative fixed basket of properties, with villas accounting for 13% of the “basket”, apartments – 87%. The highest capital gains were seen in the older gated communities – Arabian Ranches (34.1%), Jumeirah Islands (33.9%), The Lakes (31.2%) and Palm Jumeirah (27.6%). For apartments, the top three communities were Palm Jumeirah (17.3%), Jumeirah Beach Residence (14.6%) and Burj Khalifa (8.7%). Total estimated completions of residential properties, as of the final quarter, stood at 24.2k apartments and 5.8k villas in Dubai, equivalent to nearly 53% of the preliminary estimates for this year. The report begs the question – why do the leading consultancies consistently overestimate this figure at the beginning of every year?

It is interesting to note how average areas of living space have grown over the past three years, expanding from 142 sq mt in 2019, to 177 sq mt in 2020 and 191 sq mt last year. The property recovery is the result of a combination of many factors, including timely fiscal/monetary measures, pent up demand, improved investor sentiment and new government initiatives, such as visas for expatriate retirees and the expansion of the ten-year golden visa scheme. Residential occupancy in Dubai was estimated at 83% at the end of the year. On average, Dubai average asking rents posted an 18.3% hike on the year, with average annual rents for a 2 B/R, 3 B/R and 4 B/R villas of US$ 32k, US$ 45k and US$ 64k. Meanwhile for apartments, average prices for studio, 1 B/R, 2 B/R and 3 B/R ended on US$ 10k, US$ 16k, US$ 22k and US$ 34k.

Valustrat also posted that Dubai office capital values increased 17.3% year-on-year in Q4, with the VPI climbing to 69.7, now more than at pre-pandemic levels, but still 30.3% lower than in 2015. JLT and DIFC posted the highest annual gains at 19.1% and 18.9%, respectively.

Savills posted that Dubai recorded the third highest price growth, in the luxury property sector, among global cities last year, and expects 2022 expansion levels to soften to between 4.0% – 5.9%, but that the emirate would continue to be a safe haven for investment. Last year, average prices were up 17.4%, according to Savills World Cities Prime Residential Index, with H2 growth at levels not seen since before the 2008 GFC; this was down to “strong demand which outstripped supply, a successful vaccination programme, opening of international borders, and other national government measures.” Both Miami (at 21%) and LA (20%) were above Dubai which was ahead of Hangzhou, Moscow, Guangzhou, Seoul and Shanghai recording growth levels of 17.1%, 15.0%, 14.5%, 12.0% and 11.0% respectively.

Nakheel has sold the last remaining beachfront land plot on the Crescent of the Palm Jumeirah for US$ 65 million to Arada, a Sharjah-based company. The 20.5k sq mt plot – the developer’s first foray in the Dubai property market – faces the Burj Al Arab on The Palm’s East Crescent, and will be a mixed-use project comprising residential, leisure and F&B components, with further details being revealed at the Q3 sales launch. Prince Khaled bin Alwaleed bin Talal, Vice Chairman of Arada, commented that it has “a reputation for delivering beautifully designed projects to an exceptionally high standard, and we look forward to bringing that capability to Dubai”. To date, Arada has delivered 2.2k homes and has ongoing projects including Aljada, Sharjah’s largest ever mixed-use megaproject, where 5k units are currently under construction, and Masaar, an upscale forested community with 4k villas and townhouses.

An investigation by the Khaleej Times has unravelled a major property scam that seems to have netted the perpetrators more than US$ 8 million, in advance payments, from over 230 renters. Notwithstanding the amount lost, homeowners, who signed contracts with the fraudulent Evernest Holiday Homes Rental LLC, have also been denied access to their own homes. Having sent a mass email, entitled ‘Happy Holidays’, to their staff, the four scammers downed shutters, and vanished without a trace. The deception, not the first to be seen in the emirate, was that the company approached homeowners in upscale Dubai neighbourhoods; one team offered to sublease their properties above prevailing rents, backed up by four post-dated rental cheques, whilst the other reached out to prospective tenants, who were offered the same properties way below market rates – but they had to pay the entire year’s rent upfront.

The scam came to light when the post-dated cheques issued to homeowners bounced, due to insufficient funds and then they found that their properties were occupied by people who had paid full year’s rent to Evernest and had contracts to show they were rightful tenants; they, in turn, had separate contracts with the agency, and could be in danger of eviction, with many already having had their utilities disconnected. Former employees were unaware of the fraud and blamed the South Asian owner, who has already fled the country, and his three cohorts, who executed the scam with such meticulous planning, working in two teams – one hoodwinking unsuspecting homeowners and the other seeking potential tenants. Evernest Holiday Homes has a tourism licence, that actually expires tomorrow, 22 January, which was modified last September to change the company ownership. This is not the first major scam to hit the local real estate sector. In 2013, Jamal Al Mutarreb allegedly fled to Lebanon after he had carried out a major fraud on numerous victims centred on The Greens area, and in 2019, some two hundred Dubai residents were hit by a similar scam after two holiday home firms — Don Holiday and Place Holidays — had shut shop and disappeared.

Latest reports indicate that Dubai’s mortgage market, topping 19.5k transactions, posted its best ever year – 26% higher than the previous highest, and up by 575, compared to pre-Covid 2019. It was reported that Q4 deals were 10% and 21% higher than the returns in 2020 and 2019.

This week, Property Finder reported that it had fully integrated Homevalue’s solutions, insights and technology into its ecosystem which will enhance its capabilities to buyers, tenants and to the overall home-owners experience. The move will also see Property Finder benefitting from the data available, and improving the analytical capabilities for customers, traders, and brokers. The founder and CEO of Homevalue, Fouad Bekkar, becomes vice president of Property Finder.

Driven by the influx of Expo 2020 international visitors, and the comparatively long holiday season, last month saw Dubai’s hotel room rates climb to their highest level in six years. STR estimates that the December average daily rate topped US$ 260, with the ADR for News Year’s Eve reaching US$ 535. The monthly RevPAR (revenue per available room) stood at US$ 203 – its highest level since March 2015. 

A new Money.co.uk survey, compiled using Instagram data of more than ten million Instagram hashtags, has revealed that the Burj Al Arab is the most beautiful five-star hotel in the world, ahead of Soneva Jani (Maldives), Bellagio (Nevada), The Plaza (New York) and the Beverly Hills Hotel (California). The only other Dubai hotel, in the top twenty listing, was the Palazzo Versace. On a regional basis, six other Dubai properties were included in the list of the most beautiful hotels in the Middle East – Jumeirah Al Naseem, Taj Dubai, Park Hyatt Dubai, Le Royal Meridien Beach Resort, Waldorf Astoria Dubai and W Dubai – The Palm.

H.H. Sheikh Hamdan, Crown Prince of Dubai, issued Executive Council Resolution No. (6) of 2022 appointing Khalid bin Touq as CEO of Tourism Activities Sector and Classifications at the Department of Economy and Tourism in Dubai.

Dubai’s Department of Economy and Tourism saw new business licences issued, 68.9% higher, at 72.2k, in 2021, compared to the previous year. As usual, Bur Dubai and Deira topped the list with 48.6k and 23.5k of the new licences, with 59% and 41% being recorded as ‘professional’ and ‘commercial’. Sole establishment companies accounted for 37% of new licences, 26% were for limited liability companies and 13% were civil companies.

A survey by Boston Consulting Group placed Dubai second, to New York, among the world’s sixteen ‘megacities’, standing out as a leader in two key areas. The first pertains to economic opportunities, which includes living standards and platforms for professional realisation, with 72 points, behind only New York. The other ranked the emirate third, behind Singapore and Toronto, amongst megacities in the relationship with authorities’ segment – open and trusted dialogue with authorities a central enabler for widespread satisfaction.

MEASA’s first e-commerce free zone is to introduce exclusive incentive packages toencourage new companies, and potential investors. Dubai CommerCity announced the launch of a business setup stimulus scheme for company registrations, and office space reservation at its facilities, which will only apply for this month and only if lease contracts have been signed; it does not apply to smart desks. Part of the incentive is that fees can be paid on a monthly basis. The free zone, which covers an area of 2.1 million sq ft and has invested US$ 872 million in world class infrastructure, aims to target new and existing e-ecommerce companies in the region.

Dubai’s Infinity Bridge, an arch shaped structure resembling the infinity symbol which symbolises Dubai’s unlimited ambitions, and first announced in 2018, was opened to traffic on Sunday, 16 January. The 300 mt long and 22 mt wide bridge, which traverses Dubai Creek, is part of the U$ 1.44 billion Al Shindagha Corridor Project; its twelve lanes can accommodate 24k vehicles an hour in both directions and also features a combined 3 mt track for pedestrians and cyclists. With the link between the Infinity Bridge, and the new bridges to Al Shindagha Tunnel, in the direction from Deira to Bur Dubai, still to be completed, the latter will be temporarily closed for the next two months.

The DFM opened on Monday, 17 January, 18 points (0.6%) lower on the previous week, gained 8 points (0.2%) to close the week, on Friday 21 January, on 3,210. Emaar Properties, US$ 0.16 higher the previous three weeks, shed US$ 0.03 to close on US$ 1.32. Emirates NBD, DIB and DFM started the previous week on US$ 3.58, US$ 1.50 and US$ 0.71 and closed on US$ 3.68, US$ 1.50 and US$ 0.68. On 21 January, slightly improved trading saw 61 million shares change hands, with a value of US$ 54 million, compared to 36 million shares, with a value of only US$ 30 million, on 14 January 2022.

By Friday 21 January 2022, Brent, US$ 9.96 (13.4%) higher the previous four weeks, continued its mega run and gained a further US$ 3.50 (4.2%), to close on US$ 87.78. Gold, down US$ 48 (2.6%) the previous fortnight, gained US$ 5 (0.3%), to close Friday 21 January on US$ 1,836. 

An indicator that the region is fast recovering from the negative economic impact of the pandemic can be seen from the value of M&A deals jumping 57% to US$ 109.1 billion, and the number of deals by 40% to over 1.1k, last year; this was the first year that deals surpassed the 1k mark. The latest Refinitiv report noted that the largest deal in the Mena region was Aramco’s US$ 15.5 billion lease and leaseback agreement for its gas pipeline network; energy and power was the most active sector, with deals valued at US$ 38.8 billion. Inbound and outbound deals were 88% higher at US$ 45.4 billion and 198% up ,to US$ 30.2 billion respectively. Reflecting the strong recovery, proceeds from equity capital markets came in 193% higher at US$ 14.5 billion, (including KSA’s US$ 8.9 billion and UAE’s 4.3 billion), and a record US$ 66.0 billion from investment-grade corporate debt. With this major improvement, it was no surprise to see investment banks benefit, with a 3.0% hike in fees to US$ 1.4 billion.

According to RedSeer, the Menat, (Middle East, North Africa and Turkey), gaming market is booming, with 2021 revenue 15% higher, at US$ 6.5 billion. The growth is expected to continue, with the region gaining a bigger share of the global market, which currently stands at US$ 175.8 billion, estimated to grow to US$ 218.7 billion by 2024. There are an estimated three billion global players, with regional players at 434 million – 15% of the total – behind only the Asia-Pacific’s 1.61 billion players. The UAE and Saudi Arabia are the two biggest regional players, generating US$ 0.48 billion and US$ 1.1 billion in 2021 revenue. One interesting fact, highlighting the impact of the gaming segment, is that the top fifteen VC funds dedicated to gaming now have almost US$ 2.8 billion in assets under management.

The US Fed finally issued its discussion paper on establishing an official digital version of the US dollar that would result in US citizens having a wider choice, speedier payment options and a safe, digital payment option for households and businesses.  However, the paper made no recommendations and any hints on whether or not it should launch a central bank digital currency, but it did post that it would not proceed with creating one “without clear support from the executive branch and from Congress, ideally in the form of a specific authorising law”. The downside of such a currency is privacy concerns and financial stability risks. The central bank aims to collect public feedback, via an online form, within 120 days, on the potential costs and benefits of a CBDC. It is estimated that some ninety countries are exploring or launching their own CBDCs.

The world’s biggest carmaker has warned its domestic customers that they will have to wait for up to four years to take delivery of its new Land Cruiser SUV. No reasons were given for this delay, but Toyota indicated that the delay was not related to the global chip shortage or the supply chain crisis. Because of the current increased cases of Covid infections, the car maker will be slowing production at up to eleven plants in Japan. After seventy years in production, the Land Cruiser is Toyota’s longest-selling vehicle and there has been reports that, because of its global appeal, there had been plans to ramp up production in the medium and long-term.

Driven by a legal dispute involving grounded A350 wide-body jets, Airbus has terminated a contract with Qatar Airways for an order of 50 A321 aircraft. The ME carrier is claiming  US$ 600 million in compensation over A350 flaws which were discovered last year when it sent one of its A350 aircraft to be repainted with the World Cup livery. The dispute worsened when the two parties disagreed over the causes of and solutions to flaws on the surface paint of the twin-aisle A350 jets. The defects led Qatar’s aviation regulator to ground 21 of the A350s, that is 40% of its current fleet of A350s, for which it was the launch customer with the biggest order. Airbus acknowledged the issue, conducted studies and offered remedies but insisted that the flaws did not represent a safety issue. Other airlines including Air France, Cathay Pacific, Finnair, Lufthansa and Delta have also raised concerns over surface flaws on the A350 jet. However, the European Union Aviation Safety Agency (EASA), which is responsible for the overall design but not the locally regulated airworthiness of individual planes in service, has said it has not so far found safety problems with the A350s it has inspected. The case is likely to end up in the High Court of London.

Shares in Netflix sank almost 20%, equating to about US$ 45 billion, after it had added just 2.5 million subscribers in Q4 – and a total of 18.2 million for the year – as investors became wary of a continuing slow down. There are no dominant factors attributable to this decline, but a tough economy, especially in Latin America, as well as lingering fallout from the pandemic, do not help. The strong greenback is costing Netflix money in many of its international markets, with estimates that the dollar’s appreciation will reduce 2022 sales by about US$ 1 billion. Management also acknowledged the potential impact from rival streaming services but is confident in the long-term prospects for the business.

The man who, in 2015, raised the price of Daraprim, a long-established medicine used to treat toxoplasmosis, from US$ 13.50 to US$ 750 – around 4,000% – overnight, has been ordered to repay US$ 65 million in profits he made from the scheme. The New York court found that the drug firm executive, Martin Shkreli, had violated laws against monopolies, noting that he had designed supply agreements to block competitors from offering a generic version of the unpatented medicine, which is used to treat the parasitic disease in pregnant women and patients with Aids. The man, nick-named “Pharma Boy”, who had been banned from working in the pharmaceutical sector for life, has been serving a prison sentence for a separate offence, that of defrauding investors.

The death of the former chairman and chief executive of supermarket chain Sainsbury’s, Lord Sainsbury of Preston Candover, was announced earlier in the week.  The 94-year old spent forty-two years with the retailer and, having been appointed a director in 1958, became its chief executive in 1969 until his 1992 retirement. John Davan Sainsbury started working in his family’s business in 1950, initially as the biscuit buyer and then bacon buyer in 1955. During his time, the family business grew from a regional, middle-sized grocery chain to a national household name. He was responsible for developing Sainsbury’s own range of products, and led the company through other significant changes, including conversion to scanning, the introduction of debit and credit cards, and energy management.

Primark, which employs 29k staff across 191 UK stores, is to cut 400 jobs to “provide clearer accountability, greater flexibility and more management support on the shop floor”. AB Foods, Primark’s parent company, (along with Ovaltine and Twinings as well as other ingredients and agricultural subsidiaries), noted, that despite higher inflation and Omicron impacting the retailer’s sales, the Group had witnessed strong trading. However, it did warn that higher energy and transport costs may push up future prices, but that “Primark prices for the consumer will remain where they are,” despite sales yet to make their way back to pre-pandemic levels.

A BBC Scotland investigation points to Brewdog exporting multiple shipments of beer to the US, between 2016-2017, in contravention of US federal laws; it is alleged that the Scottish beer giant shipped beer with ingredients that had not been legally approved. This week, its CEO, James Watt, admitted to “taking shortcuts” with the process, and that two of its flagship products, Elvis Juice and Jet Black Heart, contained extracts which would not be approved in the US. It seemed that many of the Brewdog staff knew of this problem amid a culture of ‘just make it happen’. It is reported that US treasury officials from the Alcohol and Tobacco Tax and Trade Bureau were given false information. In 2016, James Watt wrote ‘Business for Punks: Break All the Rules – the Brewdog Way’ and the title says much about his modus operandi – but his beer is good!

Despite their US$ 50 billion offer for GlaxoSmithKline’s consumer health business being rejected, being “fundamentally undervalued”, Unilever is considering a higher offer, noting that GSK’s consumer healthcare unit – which produces Sensodyne toothpaste, Advil painkiller and Emergen-C vitamin supplement – was a “strong strategic fit” for its brand, which makes Lifebuoy and Dove soap. GSK said, at the weekend, that it had rejected three offers from Unilever for a bundle of brands. It also noted that “the acquisition would create scale and a growth platform for the combined portfolio in the US, China and India, with further opportunities in other emerging markets.” Unilever is to undergo a much-needed restructure, and plans to sell slow-growth brands, but is still interested in acquiring GlaxoSmithKline’s consumer unit, whilst GSK announced that it would stick to its plan of listing the business this year.

Activision Blizzard has been acquired in a mega US$ 68.7 billion all-cash deal by Microsoft which now becomes the third largest gaming company in the world, behind China’s Tencent and Japan’s Sony. This latest acquisition is the tech company’s largest to date, easily surpassing its 2016 US$ 26.2 billion purchase of LinkedIn. There is no doubt that this latest addition will accelerate the growth in Microsoft’s gaming business across mobile, personal computer, console and cloud, and, according to the company “will provide building blocks for the metaverse”. The acquisition will bolster Microsoft’s Xbox Game Pass, as it will be able to integrate Activision Blizzard games into the portfolio, including ‘’Warcraft,’ ‘Diablo’, ‘Overwatch’, ‘Call of Duty’ and ‘Candy Crush’, in addition to global esports activities through Major League Gaming. Prior to this deal, Microsoft had been strengthening its gaming portfolio, buying ‘Minecraft’ maker Mojang for US$ 2.5 billion in 2014 and last year, US$ 7.5 billion for game maker Bethesda. There was no surprise to see Activision Blizzard’s share value jump 27.1%, to US$ 83.10, on the news.

On Monday, Emirates suspended flights to nine US cities — Boston, Chicago, Dallas Fort Worth, Houston, Miami, Newark, Orlando, San Francisco and Seattle — until further notice due to operational concerns, associated with the planned deployment of 5G mobile network. However, Emirates flights to New York JFK, Los Angeles and Washington DC continue to operate as scheduled. The US Federal Aviation Administration posted a warning that the deployment of new 5G technology could affect sensitive airplane instrument, such as altimeters, and significantly hamper low-visibility operations. Other international carriers have taken similar action. Japan’s All Nippon Airways and Japan Airlines, said they would curtail their Boeing 777 flights, as have Lufthansa and Korean Airlines, whilst Air India has curtailed its operations to the US from India. By yesterday, Thursday 20 January, the situation returned to normality, after the US Federal Aviation Administration and Boeing issued formal notifications that lifted the previous restriction on aircraft operations.

A ruling by the UK High Court, against the fugitive Kingfisher tycoon Vijay Mallya, could see him being evicted from his luxury Central London home. He had held a mortgage with UBS on this multi-million-pound property, located along Cornwall Terrace, and the judge refused a request by Mallya’s lawyers for a stay on repaying the UBS loan after Mallya had failed to meet a previous repayment deadline in April 2020; at that time, the Swiss bank was unable to carry out an eviction order because of the then Covid regulations. He has been living in London, with his son and 95-year old mother, since he fled his home country after being accused of a US$ 24.5 million fraud, relating to the collapse of Kingfisher Airlines. He was ordered to be extradited by the UK High Court, after hearings lasting three years, but remains on bail while the UK government considers what is thought to be an asylum application. It is reported that Mallya and his family own numerous other properties in the UK and elsewhere, including a sprawling country home in Hertfordshire.

According to Oxfam, the world’s ten richest men have seen their collective fortunes more than double since the onset of Covid-19 in March 2019, whilst on the other side of the coin, more than 160 million people have been pushed into poverty. Elon Musk, Jeff Bezos, Bernard Arnault and family, Bill Gates, Larry Ellison, Larry Page, Sergey Brin, Mark Zuckerberg, Steve Ballmer and Warren Buffet have seen their combined wealth increase from US$ 700 billion to US$ 1.5 trillion. It was noted that among the ten, there was significant variation between them, with the Tesla founder’s fortune growing by more than 1,000%, whilst that of Bill Gates rose by a more modest 30%. More strikingly, it estimated that a new billionaire had been created almost every day during the pandemic, with 99% of the world’s population worse off because of lockdowns, lower international trade and less international tourism.

No doubt the report’s contents will be discussed at this week’s World Economic Forum meeting in Davos; for the second year in a row, it will be online and will also see the likes of the future path of the pandemic, vaccine equity and the energy transition on the agenda. Oxfam noted that 160 million more people were living on less than US$ 5.50 a day and that lower incomes for the world’s poorest contributed to the death of 21k people each day. The World Bank has estimated that because of a lack of access to healthcare, hunger, gender-based violence and climate breakdown contributed to one death every four seconds. The World Economic Forum will hold its annual meeting in-person from 22 – 26 May, in the Swiss ski resort of Davos-Klosters.

A warning that the volatile start to the global markets may be a precursor of what is on the horizon. There is no doubt that many global stock markets – and probably most other assets – are in a massive bubble that will inevitably burst and maybe this has already started. When the bubble does burst, not only will real estate, stocks, commodities, bond markets and cryptocurrencies join the global bourses, but all asset classes could lose up to 40% in value quicker than they gained those levels. Take note the words of Bob Dylan, – “and the first one now. will later be last” – because when the bubble does burst, and burst it will, fortunes will be lost. Take action now before it is too late – the sell-off is well under way!

There is no doubt that during the next six months of France’s presidency of the EU, its president, Emmanuel Macron, will use his position as a springboard towards a re-election bid in April, with critics already accusing him of doing so. This week, he has been detailing his country’s priorities for the six-month rotating presidency of the bloc, pledging to make the EU more powerful and to add changes to the charter of fundamental rights of the EU to make it “more explicit about environment protection and the recognition of the right to abortion”. Although he is the front-runner to win a second term, he has been attacked on both fronts – one from French MEPs, claiming that he is promoting his candidacy, rather than caring about EU issues, and the other asking “how can you claim you’ll bring Europe together when you have been until the end the one widening divisions in France?” Another criticised Macron’s presidential actions as reflecting “arrogance, powerlessness and scheming.”

To the surprise of many, China cut a key interest rate for the first time in almost two years, after Q4 figures has indicated that the economy had slowed to 4.0%, compared to a year earlier, with retail sales growth weakening 1.7%. The People’s Bank of China lowered both the interest rate on US$ 110 billion worth of one-year medium-term lending facility loans to 2.85%, and the seven-day reverse repurchase rate, while the bank pumped another US$ 31.4 billion of medium-term cash into the financial system. Official data also shows an 8.1% annual growth but that does not reflect the impact of the recent coronavirus outbreaks of late December which badly hit the service industry. China joins Turkey in lowering interest rates, whilst the likes of the US Federal Reserve, which signalled a possible three rate hike this year, and last month, the Bank of England which raised interest rates for the first time in three years. However, there are concerns that the country’s future growth could be stymied by the government’s crackdown on some of its major businesses, the well-publicised liquidity and debt problems of its mega property developers, (that account for 25% of China’s GDP), and the recent spread of the Omicron variant.

Consequently, shares on Hong Kong’s benchmark Hang Seng index traded 3.4% higher on Thursday, despite the worries around China’s economic slowdown and recent Omicron outbreaks. Share prices of Hong Kong-listed Chinese property developers rose sharply, reversing some of the losses they have seen in recent months, and despite major Chinese property firms, like crisis-hit Evergrande, up 4.6% on the day, struggling to make debt repayments. Sunac China closed 15.2% higher, while Shimao Group and Logan Group both posted gains of over 10%, amid reports that Chinese regulators may ease restrictions on their access to pre-sale funds.

Savills announced that it recorded total sales of US$ 2.7 billion for 522 London homes valued at US$ 6.8 million or more last year – its highest number since 2013 – as the wealthy went looking to upsize their residences, as the pandemic continued; 31.2% of the total sales occurred in Q4 – the strongest ever quarter for houses valued at more than US$ 13.6 million. Although more than 50% of sales took place in the well-heeled London boroughs of Kensington, Chelsea, Belgravia, Notting Hill and Knightsbridge, demand for locations outside the city, in Wimbledon, Battersea, East Sheen and Wandsworth, also headed north. Prices will remain strong even though demand will soften because of the shortage in suitable supply.

At last, US and UK have begun formal negotiations on UK steel and aluminium exports, after the former Trump administration levied a 25% duty on steel and 15% tax on foreign aluminium in 2018. Following a virtual meeting between the UK Secretary of State for International Trade, Anne-Marie Trevelyan, and United States Secretary of Commerce, Gina Raimondo, a statement noted that “both parties are committed to working towards an expeditious outcome that ensures the viability of steel and aluminium industries in both markets against the continuing shared challenge of global excess capacity and strengthens their democratic alliance”. The Biden administration was quick to reach a deal to remove border taxes on European metals shipments last year, whilst the UK exporters were left to face these taxes. The UK steel lobby welcomed the news, noting that the existing tariffs had reduced UK exports by nearly 50%. UK steel companies are also desperately keen to get the 25% tariffs on their exports removed as soon as possible, as it puts them at a significant competitive disadvantage, compared to their EU counterparts.

Driven by the rapid spread of the Omicron variant, UK retail sales, of which over 25% were online, declined 3.7% last month, after a 1.0% rise in November. The good news was that despite the fall in December figures, they are still well up on pre-Covid figures of almost two years ago. The main falls were fuel sales dropping 4.7%, and non-food stores 7.1% in December, on the previous month, and were 6.6% lower compared to the pre-pandemic level. UK sales could recoup previous deficits possibly in Q4, as government continues to lift restrictions. The 3.8% increases in average earnings in the quarter ending 30 November have been erased by the 5.4% jump in in inflation.

With job vacancies surging to a record 1.25 million in December, UK’s unemployment rate dipped to 4.1% in the quarter ending 30 November – its lowest level since the onset of Covid – whilst the number of people on company payrolls rose by 184k in the month. Jumping on the bandwagon, future prime minister Rishi Sunak noted that the latest figures were “proof that the jobs market is thriving, with employee numbers rising to record levels, and redundancy notifications at their lowest levels since 2006.” In December, the improvement was more marked, when in September, the last month of the government’s furlough scheme, it was supporting more than a million workers.  These figures indicate that, despite the current spate of Omicron, the economy will continue its upward trend and that the main problem facing the BoE will be to rein in inflation which will be over 6% come the end of Q1; the next rate increase could be as early as 03 February.

Although wage growth is the real conundrum facing regulators, because of the soaring inflation rates, wages actually fell in November for the first time since July 2020. Although that month saw quarterly wages 4.2% higher on the year, fast-rising inflation is eroding the benefit of higher pay, with pay excluding bonuses flat in inflation-adjusted terms. Surging wage growth and a booming jobs market this month may nudge the BoE to increase rates again in February for the same reason why rates were moved higher last month.

Even though UK prices have risen at their fastest rate since March 1992, it is inevitable that there is worse to come. Surging energy and food costs are the main drivers behind the current crisis that has seen the December inflation rate top 5.4%. Energy costs have been kept in some sort of check by a government price cap; when this is lifted, in April, there are some forecasting energy costs surging by up to 50%. With limited cash available, an increasing number of UK households are having to choose between “heating or eating”. In an environment, where real wages are declining, factors such as Universal Credit top-up withdrawal, food inflation and April tax rises, will only make matters worse. One immediate solution would be for the BoE, still sticking to its laughable 2% inflation target, to raise rates sooner than they seem to want to do.

Dr Tedros Adhanom Ghebreyesus has issued a warning to world leaders that the coronavirus pandemic “is nowhere near over”, as many believe, because the new Omicron variant is significantly milder and has eliminated the threat posed by the virus. He warned global leaders that “with the incredible growth of Omicron globally, new variants are likely to emerge, which is why tracking and assessment remain critical”. The head of the World Health Organisation noted that, over the past week, there were eighteen million new infections and that “the narrative that it is a mild disease is misleading”. On Tuesday, France posted nearly half a million new daily cases and next day, more than a record 100k new infections were posted in Germany. However, some countries are seeing case numbers starting to drop, including in the UK, Ireland and Spain, with the Johnson administration, (maybe for other political reasons0, confident enough to lift all coronavirus restrictions on Wednesday. Maybe It’s Not Over ‘Til It’s Over!

I Fought The Law (And The Law Won)                                      14 January 2022

For the past week, ending 14 January 2022, Dubai Land Department recorded a total of 1,559 real estate and properties transactions, with a gross value of US$ 1.23 billion. It confirmed that 1,022 villas/apartments were sold for US$ 613 million, and 219 plots for US$ 305 million over the week. The top three transfers for apartments and villas were all apartments – one was sold for US$ 104 million in Marsa Dubai, a second sold for US$ 74 million in Business Bay, and the third sold for US$ 51 million in Burj Khalifa. The top land transaction was for a plot of land in Island 2, worth US$ 20 million. The most popular locations in terms of volume and value were Jebel Ali First, with 99 transactions, totalling US$ 62 million, followed by Al Hebiah Fifth, with 44 sales transactions, worth US$ 23 million, and Wadi Al Safa 5 with 8 sales transactions, worth US$ 910 million. Mortgaged properties for the week totalled US$ 447 million and 48 properties were granted between first-degree relatives worth US$ 60 million.

Just as in the case of real estate sales, experts indicate that the rental market has had a strong 2021, with more of the same this year, but at a slower rate. The two main factors attributable to 2021 figures were the successful vaccination programme and gradual opening of international borders. ValuStrat reported that “2021 was a year of recovery from pandemic challenges and a beginning of the new normal. Prices and rents mostly recovered to pre-pandemic levels, with record-breaking sales volumes and values.” `The ValuStrat Price Index closed the year on 67.3 – 6.7% and 18.9% higher on the quarter and the year. It also indicated that although the median rents, at the end of 2021, stood at US$ 16.0k and US$ 64.5k, for apartments and villas respectively, average rents are still 4.9% lower than pre-pandemic levels. There was no surprise that annual villa rentals outpaced those for apartments– 26.8% higher cf 14.3%; however, on a quarterly basis, apartment rents performed better – 6.9% v 6.3%. This year, average villa rents will increase by just over 10%, whilst apartments may squeeze 6%.

HH Sheikh Mohammed bin Rashid Al Maktoum issued a new law to regulate the procedures for expropriating property for public use in Dubai. The law covers all areas across Dubai, including special development zones and free zones. The legislation seeks to protect the rights of owners whose properties are expropriated (taken over by an authority from an owner for public use or for social benefit), that they receive a full and fair compensation, as per a decision issued by the chairman of the Ruler’s Court, which will also establish ‘The Expropriation Committee’ to oversee all matters related to the expropriation of properties. The chairman of the Court of the Ruler of Dubai will issue a decision on the formation of the committee, its members, decision-making processes and expropriation procedures.

HH Sheikh Mohammed has also approved six new laws to create a new legal framework for Dubai Chambers and their Boards of Directors. Its two main targets are to further strengthen the emirate’s position as a global economic hub and to support the business community in the emirate. Three of the decrees see the Dubai Chamber of Commerce & Industry being replaced by Dubai Chambers and that HE Juma Al Majid being appointed its Honorary Chairman, with HE Abdul Aziz Al Ghurair as its Chairman. Members of the Board include Faisal Juma Khalfan Belhoul, the Vice Chairman; HE Khalid Juma Al Majid Al Muhairi; HE Omar Sultan Al Olama; Omar Abdullah Al Futtaim; Sultan Ahmed bin Sulayem; HE Helal Saeed Al Marri; Buti Saeed Mohammed Al Ghandi; Dr. Raja Easa Al Gurg; Dr. Amina Abdul Wahed Al Rostamani; Tariq Hussain Khansaheb; Raji Patrick Chalhoub; and Ghassan Ahmed Yahya Al Kibsi. Three other devreees establish the Board of Directors for Dubai Chamber of Trade, the Board of Directors for Dubai Chamber of International Trade , with Sultan Ahmed bin Sulayem as Chairman, and the Board of Directors for Dubai Chamber of Digital Economy, with HE Omar Sultan Al Olama as Chairman.

Under the directives of Dubai’s Crown Prince, HH Sheikh Hamdan bin Mohammed, the ‘Talent Pass’ licence was launched for freelance work (self-employment)., available to people with special skills and expertise from around the world. It will target global talent and professionals in the fields of media, education, technology, art, marketing and consultancy, with two aims of doubling the contribution of the creative sector to Dubai’s GDP and increasing Dubai’s ability to attract creative individuals, investors, and entrepreneurs, as well as local, regional, and international investments.  The MoU, signed between the Dubai Airport Freezone, with Dubai Culture and the General Directorate of Residency and Foreigners Affairs, will create the framework for cooperation and coordination to process licenses, visas and other services that support innovators in establishing, operating and growing their business in Dubai. The ‘Talent Pass’ qualifies its holder to obtain a residence visa for three years, in addition to renting office space through a wide range of modern office solutions provided by DAFZ. ‘Talent Pass’ is part of a portfolio of six licences offered by DAFZ, which includes the Commerce Licence, for commercial activities such as import, export and re-export, and the General Commerce Licence.

The portfolio also includes:

• the Industrial Licence for light manufacturing activities and packaging and assembly
• the E-Commerce Licence for online trading of goods and services
• the licence issued in partnership with the Department of Economic Development, which allows companies registered at the DAFZ to apply for the Department’s license, without the need for an office space for working outside the free zone
• the Services Licence for a range of service-based companies

Following the Executive Council’s endorsement of the shared mobility plan and the e-scooter policy, new rules have been introduced by the RTA that will allow residents to ride e-scooters in ten districts across the emirate. They are Sheikh Mohammed bin Rashid Boulevard, JLT, DIC, Al Rigga, 2nd of December Street (specified track and zone), The Palm Jumeirah, and City Walk, as well as safe roads in Al Qusais, Al Mankhool, and Al Karama. Cycling tracks, except those in Seih Al Salam, Al Qudra, and Meydan, can also be utilised. The RTA also added that it “plans to expand the use and tracks of e-scooters to include specific residential areas, and 23 new districts later on.”

The December IHS Markit PMI, up 0.8 on the month, confirmed what many already knew – that Dubai’s business conditions, in the non-oil private sector, were at their best in thirty months; this was driven by a “robust increase in new order volumes”, and an improvement in the tourism sector, as the emirate continued to ease restrictions. In addition, there was the impetus from Expo 2020 and an improvement in local sales, amid growing consumer confidence in the economic recovery. Output was also strong, expanding at the second-fastest pace since mid-2019. Last month, new work at construction companies also grew at its fastest pace since February but lagged the pace of growth seen in the other two sectors; backlog volumes continued to rise as companies struggled to complete orders, whilst there was no change in the quantity of inputs purchased by businesses in the month. Dubai’s employment in the emirate’s non-oil economy showed a modest rise in December, indicating a renewed push to improve staffing. The rate of overall input price inflation rose to its highest level since March, driven by higher energy and raw material costs. There is some concern that the recent Omicron coronavirus variant surge may have a negative economic impact in upcoming months, but if it remains under control, then the 2022 outlook is promising for Dubai.

DMCC has announced the completion of a range of enhancements made to Jumeirah Lakes Towers throughout 2021 and further upgrades in 2022. Infrastructure work includes a new road network, that will facilitate travel between JLT and the Jumeirah Island area, as well as the renovation of the various lakes across JLT, including enhancing the lake’s walls and improving the water quality. DMCC has made significant progress in the palm replacement project, which will go on throughout the year. To better serve JLT’s 100k population, several new sports and recreational facilities will also be added in 2022.

With the DMCC welcoming nearly 2.5k new companies, representing 146 geographies, the world’s flagship Free Zone has seen its member companies nudging above the 20k level. Over the past four years, over 8.3k new companies joined the DMCC. The year has seen strong international demand, including from China, US, UK and Russia, with the launch of the DMCC Crypto Centre and the expansion of its commodities centres. The Dubai Diamond Exchange, the largest global diamond tender facility, held 68 diamond and precious stone tenders, whilst the DMCC Tea Centre posted a 14% hike in 2021, handling over 35.6k metric tonnes of tea.  Meanwhile, the DMCC Coffee Centre, doubling its numbers in 2021, stored and processed more than 9k MT of both green and roasted coffee from a broad range of producing markets across Central and Southern America, Asia and Africa. CEO, Ahmed bin Sulayem is bullish on the prospects for 2022, noting that, “given the incredible momentum that the DMCC team has collectively achieved this year, I am convinced that 2022 will feature major milestones, including the completion of Uptown Tower”; the tower is now more than 270 mt high and the 340 mt structure is scheduled for delivery in Q3 2022.

2021 proved to be a record year for the Dubai Gold and Commodities Exchange, trading 7.1 million contracts, with a total value amounting to US$ 149.7 billion. Its best performing product during the year was again the Indian Rupee Options Futures Contract, which traded up on the year by 1,233%. It also signed agreements with the S & Royal Group Mongolia, to explore future business and trade opportunities, the Victoria Falls Stock Exchange, aimed at supporting with the development of a clearing and settlement commodities exchange in Zimbabwe, as well as the Financial Markets Regulatory in Sudan, to strengthen the gold market across Africa. DGCX ended the year on a strong note, with December trade volumes of over 727.8 million contracts.

Shorages becomes the latest Dubai-based start-up to raise money in a seed funding round. The e-commerce fulfilment company, whose chief executive is Rayan Osserian, raised US$ 700k, with money to be used to build more warehouses in the UAE and to increase hiring. The financing was led by London-based Mayfair Holdings, along with a number of other angel investors. Earlier, it had attracted US$ 1.6 million in an oversubscribed seed roundlast October.

Zone, the first GameFi ecosystem on the Algorand blockchain, raised US$ 2.35 million in new funds before its initial dex offering tomorrow, 15 January. (The IDO coin/token is distributed through a decentralized liquidity exchange that uses liquidity pools to allow traders to swap tokens). Zone’s founder, Adi Mishra, commented that “we see Zone as proof that Algorand is the future of GameFi. The market now has a GameFi ecosystem that supports everything, all without very high fees that discourage user adoption. Institutional investors can see where the market is shifting, and this proves that.” GameFi – or gaming finance – combines gaming, decentralised finance and the opportunity to earn, whether in cryptocurrency or cash, with players trading for non-fungible tokens. NFTs, (with the global market valued at US$ 41 billion), are unique virtual assets and cannot be replaced.

The Central Bank announced that the November Money Supply aggregate M1 increased, month on month, by 2.1%, to US$ 186.9 billion, M2 by 1.3% to US$ 413.4 billion and M3 by 0.6% to US$ 498.6 billion. The November increases in all three groups were attributable to a US$ 3.8 billion in Monetary Deposits (M1), the increased M1 as well as a US$ 1.2 billion rise in Quasi-Monetary Deposits (M2) and the increases in M1 and M2 less the US$ 2.3 billion decline in Government Deposits. (M3). During the month, gross banks’ assets, including bankers’ acceptances, increased by 0.8% to US$ 898 billion, whilst gross credit climbed 1.4% to US$ 487.3 billion. Total Bank Deposits decreased marginally by 0.03%, to US$ 535.9 billion.

The DFM opened on Monday, 10 January, up 75 points (2.4%) on the previous fortnight, shed 18 points (0.6%) to close the week, on Friday 14 January, at 3,202. Emaar Properties, US$ 0.16 higher the previous fortnight, ended the week flat on US$ 1.35. Emirates NBD, DIB and DFM started the previous week on US$ 3.65, US$ 1.50 and US$ 0.72 and closed on US$ 3.58, US$ 1.50 and US$ 0.71. On 14 January, lacklustre trading saw 36 million shares changed hands, with a value of US$ 30 million, compared to 165 million shares, with a value of US$ 61 million, on 07 January 2022.

By Friday 14 January 2022, Brent, US$ 7.58 (10.2%) higher the previous three weeks, gained US$ 2.38 (2.9%), to close on US$ 84.28. Gold, down US$ 34 (1.9%) the previous week lost US$ 14 (0.8%), to close Friday 14 January on US$ 1,831. 

Gold may have a rocky six months ahead and could feel the pinch from the double whammy of inevitable higher interest rates and a strengthening greenback; a stronger dollar makes bullion more expensive for buyers who hold other currencies. However, as a hedge against inflation, it may be able to ride on the back of continuing market volatility from ongoing Covid variants, ongoing high inflation as well as increased demand from central banks and the global jewellery sector.

Brent ended the year at US$ 77.78, with an average US$ 71 price during the year which showed a yearly US$ 31 rise on the close of the annus horribilis. Last year ended with Brent prices over 50% higher for the twelve months.  Over the past three years, Brent has climbed 12.4% to US$ 66.67 in 2019, fell 22.3% to US$ 51.80 (2020) and rose again by 50.1% to US$ 77.78. It only has to increase by 10.0% to reach US$ 85.58 and there is every chance of that happening in Q1; today 14 January, it was trading at US$ 84.28, as inventory levels continue to head south, whilst global demand heads north, nearing a daily consumption of 100 million bpd. Further in the year, circumstances may change, more so if shale rears its ugly head again which could have a negative impact on Brent.

Tech giant Samsung Electronics expects a 52% hike in Q4 profits, at US$ 11.5 billion, which would be its fourth highest quarterly return posted over the last four years. Despite the global chip shortage, the world’s biggest memory chip maker noted that its revenue figures were boosted by strong demand for server memory chips and higher profit margins in its chip contract manufacturing business, as well as from currency fluctuations, with the Korean won declining during the period, making Korea’s exports more attractive on the global market. However, over the same period, it has seen costs rise, including on employees’ bonuses and marketing for its smartphone business. A potential problem for Samsung relates to its chip manufacturing factory in Xi’an, and with the city being in lockdown since 23 December. The South Koreanconglomerate commented that it would “temporarily adjust operations” at its sites in Xi’an but gave no indication on its short-term plans.

It is reported that Tim Cook’s 2021 salary remuneration was six times higher on the year at US$ 99 million, comprising a salary of US$ 3 million, US$ 1 million in other monetary benefits, US$ 12 million based on incentives and US$ 82 million in stock awards. However, his 2020 US$ 15 million package did not include any stock benefits. When he took over from Steve Jobs in 2011, he struck a deal that gave him a tranche of more than five million shares after he had completed a decade in the top job; this was paid out in August 2021. Four other senior executives picked up compensation packages of between US$ 26 million to over US$ 27 million, whilst the median pay for employees rose from US$ 58k to US$ 68k.

As it expects to raise its UK payroll numbers by over 56% to 10k, Google is to spend US$ 1.0 billion, backing a return to the office and to “reinvigorate” the work environment. According to its UK boss, Ronan Harris, the investment in London reflects the firm’s faith in the office as a place of work; its new King’s Cross development is currently under construction., whilst it is also planning a multi-million-pound refurbishment of its offices

For the second time in four months, Pret A Manger is to raise 6.9k of its 8.5k of its workers’ pay to more than US$ 13.70 per hour. This is in line with several other retailers, including supermarkets Sainsbury’s, Aldi and Morrison’s, who have boosted staff pay already as they struggle to hire and retain workers. Pano Christou, Pret’s Chief Executive of the sandwich chain, which has 550 shops around the world, commented that, “we’ve said all along that as our business recovered, we wanted to invest back into our people”.

After Ikea had made similar changes at the beginning of the month, Next and Ocado have become the latest retail chain to amend their health and safety policies. They have cut sick pay for unvaccinated staff who must self-isolate because of Covid exposure, but any staff testing positive will still receive full sick pay. Unvaccinated workers at the retailers, who test positive, are still being paid in full for the time they need off but if they are required toisolate, having been identified as a close contact of someone with Covid, could now receive as little as US$ 132 a week – the Statutory Sick Pay minimum.  Next, in line with many other companies, faced labour shortages in 2021 and some are now seeing mass absences due to the more infectious Omicron Covid strain.

The value of global Sukuk issuances skyrocketed 36.1% last year to reach a grand value of US$ 252.3 billion and are expected to continue this growth trend in 2022, A new report from Fitch Ratings indicates that much of the improvement can be attributed to robust Islamic investor appetite, a diversification in funding goals and Islamic-finance development agendas, all three of which will be in play again in 2022. It does carry five caveats that could have a negative impact including a downside risk stemming from higher oil prices could reduce a number of sovereigns’ funding needs, AAOIFI [Accounting and Auditing Organisation for Islamic Financial Institutions] compliance complexities, traditional risks such as interest-rate rise, lower global investor appetite for emerging-market debt and political risk. Interestingly, the GCC countries, Malaysia, Indonesia, Turkey and Pakistan accounted for US$ 230.2 billion of total deals, equating to 91.2% of the total value in 2021.

Despite all the supply chain problems, labour shortages and the onset of Omicron, most of the UK’s big retailers posted bumper Christmas sales. It was another great Yuletide for the sector, with consumers prepared to spend both on food and non-food, and willing to pay full price, pushing up retailers’ margins. Whether the good times are coming to an end remain to be seen but there will be an inevitable squeeze on spending, with inflation and supply issues pushing up prices, along with tax and national insurance increases in April.

Both M&S and Tesco have been performing better than expected, with the former posting a Q4 18.6% jump in sales to US$ 4.0 billion; this figure was also 8.9% up on the same quarter in 2019. Although in-store clothing and home demand fell10.8%, total revenue from its clothing and home division rose, driven by online sales. M&S also noted that its shops at retail parks continued to outperform stores in city centres. Chief executive, Steve Rowe, reiterated the problems facing not only his brand but the sector in general. These factors, pushing up prices, included supply chain pressure, combined with pandemic supply interruptions, rising labour costs, EU border challenges and tax increases.

After reporting an “exceptional” festive period for sales, Tesco now expects annual income to hit the top end of forecasts at US$ 3.6 billion. Tesco’s chief executive Ken Murphy said that “once again, Covid-19 led to a greater focus on celebrating at home”, as Tesco’s Christmas sales in the UK rose 0.3% compared to the previous year and were 9.2% higher than the pre-pandemic festive period in 2019.

According to Euromonitor, since the onset of Covid, global online shopping has expanded 43.5% to US$ 2.87 trillion, with 50% of that total emanating from Asia. The end result is that warehouse space is close to capacity, with vacancy rates at record low levels as businesses, including retailers, run out of space for items bought online. The CBRE estimates that the current vacancy rate in Asia is a historic record 3% low and that in a recent survey, more than 75% of companies, using warehouses in the Asia-Pacific region, indicated their keenness to expand in the next three years. It is obvious that this increased demand for more space, allied with the ongoing supply chain disruptions, means that the requirement for companies is to hold the highest safety stock levels. to meet online demand. With a lack of space to build traditional warehouses, it is inevitable that they will become taller as well as becoming increasingly more automated.

With its third base rate increase in six months, South Korea’s new rate of 1.25%, (the same level it was pre-pandemic), is an attempt by the Bank of Korea’s to contain rising inflation, (with consumer inflation for 2021 as a whole jumping to 2.5%), and soaring household debt. In August, it was the first major Asian country to raise rates since the onset of the pandemic.

Since the beginning of 2020, central banks, governments and international financial bodies have pumped trillions of dollars into the global economy to help cushion the impact of Covid restrictions. Now these institutions have started to phase out these stimulus measures and use monetary policy tools such as rate hikes. The Bank of England raised rates last month for the first time in three years, whilst the Fed has signalled that up to three rate hikes are possible in 2022; latest figures show that inflation in the UK and US was at 5.1% and 7.0%.

A report by Chainalysis claims that 2021 was one of most successful years on record for North Korean hackers as they stole almost US$ 400 million worth of digital assets in at least seven attacks on cryptocurrency platforms. The cyber criminals mainly targeted investment firms and centralised exchanges. It seems their modus operandi involves various techniques including phishing lures, code exploits and malware to siphon funds. Chainalysis considers that the so-called Lazarus Group, a hacking group sanctioned by the US, is largely responsible for these attacks; it is thought that the group is controlled by North Korea’s primary intelligence bureau, the Reconnaissance General Bureau. The North Korean government continues to deny its involvement in any of these incidents. In February 2021, three North Korean computer programmers were indicted for a hacking spree, aimed at stealing more than US$ 1.3 billion in money and cryptocurrency.

Last week’s blog pointed to the fact that China had become the biggest global lender and that Sri Lanka was one of more than forty low and middle-income countries, whose debt exposure to Chinese lenders was more than 10% of the size of their GDPs. Over the past ten years, the country had received at least US$ 5 billion from the Chinese government for projects including roads, an airport and ports, but now, it is claimed that some of these loans were used for unnecessary schemes, with low returns. The current classic example is that of the massive Sri Lankan port project in Hambantota, a one billion dollar project financed by Chinese money; it did not live up to its promise and soon became unviable leaving the country mired in debt; the only way out was to hand the state-owned China Merchants a controlling 70% stake in the port on a 99-year lease in return for further Chinese investment. This week, President Gotabaya Rajapaksa made a request to Chinese foreign minister Wang Yi to restructure its debt repayments, as part of efforts to help the South Asian country navigate its worsening financial situation.

Malaysia has confirmed that the trust account, set up to collect recovered 1MDB funds, has only received US$ 6.58 billion, (including US$ 111 million from audit firm KPMG paid to settle a lawsuit filed against it by 1MDB), and that it has repaid US$ 4.58 billion of 1MDB’s debt so far, with US$ 13.37 billion still outstanding. The government noted that it had recovered enough funds linked to the scandal-tainted state fund 1 Malaysia Development Berhad to pay off only the principal amount of the bonds for 2022. It is estimated that at least US$ 4.5 billion was milked from the fund in an elaborate globe-spanning criminal scheme. Between 2009 – 2013, 1MDB raised billions of dollars in bonds, ostensibly for investment projects and joint ventures. The government confirmed that it would pay off all the debts of 1MDB, once all the trust account funds are utilised, but still remained committed to recover all outstanding balances created by the scandal. At least six countries have launched investigations into 1MDB, co-founded by former Prime Minister Najib Razak, who has already been sentenced to twelve years in prison and millions in fines over corruption and money laundering linked to funds misappropriated from a 1MDB unit.

According to a YouGov study, the UAE is ranked fifth globally for gaming influencers, with 13% of those polled, behind China and Indonesia (both with 20%), India (17%) and Hong Kong (12%). Out of that percentage, 34% are aged between 25 and 34 years, indicating that influencers appeal strongly to Generation Z. The study noted that, “gaming influencers attract a very loyal and distinctive fan base. This high level of appeal is significant: the stronger the connection between influencer and audience, the more likely fans are to develop a favourable opinion of the influencer and the content they create.” The global gaming market has over three billion users and is expected to grow at a CAGR of 8.7% from 2019 to 2024 to US$ 218.8 billion.  Meanwhile, the market for influencers is projected to more than double to US$ 374 million by 2028. Gaming influencers have created a massive community around themselves with a common interest in video gaming, mainly using their marketing platforms in search and discovery of clients, campaign management, influencer relationship management, analytics and reporting.

US venture capital deal making topped a record high of nearly US$ 330 billion, and over 17k deals, on the back of excess liquidity and a monetary policy that encouraged such spending; leading sectors were technology, biotech, healthcare and fintech sectors. VC fundraising also had a record year at US$ 128.3 billion, with the two standout performers being crypto firm FTX Trading, valued at US$ 25 billion, and AI platform Databricks, with a valuation of US$ 38 billion, both raising US$ 1 billion. More of the same is on the horizon this year mainly because of liquidity in the market and returns outpacing all other assets classes.

This week, the World Bank came out with some gloomy news, indicating that the global economy faces a “grim outlook”, with 2022 global growth at 4.2% – down 1.4% on the year – with poorer countries suffering more from widening global inequality. It noted that two other drivers behind this decline were government aid unwinding and an initial bounce in demand fading. Although it estimates that the advanced economies will have recovered to pre-pandemic levels, those of the poorer nations will fall further behind and be still 4% lower than when the pandemic first struck. A major problem facing most of the world, but more so for the weaker economies, is inflation. The World Bank points the blame for the recent surge in inflation on the stimulus packages, introduced by the richer countries, which now will have to be rolled in and phased out. While officials in many countries, including the US, are now expected to raise interest rates, to try to rein in price increases, higher borrowing costs could hurt economic activity – especially in weaker economies – as loan rates increase and local currencies devalue.

US December inflation topped 7.0%, with prices climbing at their fastest rate since 1982, driven by strong demand and scarce supply for key items.  It is a certainty that the Fed will soon start raising interest rates, which will pump up borrowing costs so as to reduce demand. The current rate, which is well ahead of policymakers’ 2.0% target, was caused by the likes of energy, groceries and housing surging at annual rates of nearly 30%, 6.5% and 4.1%. The US is not alone with the 30 nation OECD bloc posting its highest inflation rate in twenty-five years and the UK rate at a ten-year high, and the World Bank noting that inflation is rising at its fastest pace since 2008. The fact that the pandemic is not going away, and that supply and production problems continue, means that the price increases have been more persistent than expected. What is known is that Fed Chair was hopelessly wrong thinking that inflation pressures would be transitory and admitted to Congress this week that “it’s proving more difficult than we had hoped to end the pandemic.”

In her first interview of 2022, the IMF’s Managing Director Kristalina Georgieva told Abu Dhabi’s ‘The National’ that the latest surge of Covid-19 infections will slow the pace of the global economic recovery. It will have to downsize its October global 4.9% growth forecast “because the two big engines of growth of the world economy, the US and China, were slowing down, and then we got hit by Omicron”. The IMF supremo commented that the world will have to adapt to a “shock-prone world”, in addition to ensuring greater global co-operation. Noting that that the recovery is quite uneven, with different countries in different positions, the IMF will “use a great deal of our capacity to protect people and our economy”. Two major issues facing the world body were that divergence is “deepening” due to “unequal access to vaccines and countries’ access to finance. Since the onset of Covid, the IMF has provided nearly US$ 170 billion of financing to ninety countries”. The IMF supremo has concerns about global debt which had been a major problem even before the onset of the pandemic and has worsened since then; in 2020, the world debt level was estimated at over US$ 226 trillion. The MD said that some low-income countries are now in debt distress, and for some emerging markets raising money is becoming increasingly difficult, and that the issue of debt is “at the top of our agenda”.

She was “cautiously optimistic” that supply chain disruptions will be resolved to ease inflation and that the inflationary pressures will recede “by the end of 2022, early 2023.” She did warn that other developments, like “climate shocks”, could have an impact on food prices. Her advice to some global central banks, with high levels of debt was to “already now work on a rational response, meaning if you can stretch maturities, push payments down the road, do it, improve the transparency, look at ways where currency mismatches can be addressed”. A further message to central banks was that “Our view is central banks are now in a place where they have to use their instruments to push inflation, and more importantly inflation expectations, down. As they do that, we know there will be a spillover impact on the recovery, growth and on emerging markets in developing markets with lower denominating debt”.

Some of the major economies will see 2022 growth slow, compared to a year earlier; China will be 2.9% lower at 5.1%, the US 1.9% down at 3.7% and the eurozone 1.0% at 4.2%. The negative growth trend will be most felt in the poorer nations, such as those in Latin America/Caribbean, 4.1% lower at 2.6%. India is expected to buck the trend rising 0.4% to 8.7%.

Australian politicians are very much like politicians from anywhere else in the world and most of them like to court opinion and to win elections – Scott Morrison is no exception. It seems to an outsider that he saw an opportunity, in the case of Serb tennis champion, Novak Djokovic, to ensure a boost in his flagging popularity just before the federal May elections. However, it seems that the first set went to the non-vaccinated 34-year old, as a judge ordered that he be released from a five-day immigration detention after quashing his visa cancellation by the authorities over his vaccination status.

Notwithstanding his anti-vax stance, there is no doubt that Novak Djokovic has never been the most popular sportsman in Australia, and he would have faced an icy reception at the Australian Open, even before the legislators took over. Initially, it seemed that Prime Minister, Scott Morrison did not want to get involved accepting that the matter was a decision of the Victorian government who wanted their main drawcard to play tennis in Melbourne. Within twenty-four hours, the Prime Minister, who must have received advice that he could make political capital out of this, did a U-turn. With a federal election due, and already under pressure from his mishandling of the pandemic, this was a golden opportunity to garner public support by appearing to act tough on the country’s stringent border policies. The player’s visa was cancelled shortly after he arrived in Melbourne late on Wednesday because officials decided he did not meet the criteria for an exemption. Djokovic argued he did not need proof of vaccination because he had evidence that he had been infected with the coronavirus last month. Djokovic’s legal team ended up successfully challenging the decision to deport him in court on Monday, five days after his arrival in Melbourne. Judge Anthony Kelly ordered Djokovic’s release after the government acknowledged in court that he was not given enough time to respond following the notification to cancel his visa. By Friday, Australia’s Immigration Minister, Alex Hawke swung his axe and exercised his power to re-cancel the visa and deport the unvaccinated player. A final appeal will be heard this Sunday, but it could be game, set and match to ScoMo, and Novak’s last day in Australia will be in the wrong court. I Fought The Law (And The Law Won).

Don’t Play With Me, ‘Cause You’re Playing With Fire

2021 will go down as a stellar year for the Dubai real estate market, as the sector posted a mega jump in both the number of transactions, up 65% to 84.8k, and their value, 71% to the good at US$ 81.74 billion. 49.8k real estate units were registered in 2021 of which 41.0k units were sold, valued at US$ 18.66 billion, while 8.0 villas, worth over US$ 4.96 billion, were sold. The Dubai Land Department report noted that a total of 52.4k investors concluded 72.2k new investments, valued at US$ 40.32 billion, representing a 73.7% growth in the number of investments, a 65.6% rise in the number of investors, and a 100% increase in the value of investments compared to 2020. Of the 52.4k investors, 17.7k were women, with that number 72% higher than in 2020.; they totalled US$ 10.46 million of the US$ 40.32 annual investment. In the total, there were 6.1k Arab investors, 6.9k from the GCC and 38.3k foreign investors, with values of US$ 3.38 billion, US$ 4.60 billion and US$ 26.98 billion.

There is no doubt that the real estate sector represents a major catalyst for the growth of various other sectors and that the 2021 realty figures are an indicator that Dubai is fast becoming the preferred destination for many international investors and a leading candidate of being the world’s best city in which to live and work.  

The top ten locations for transaction numbers were Dubai Marina (8.0k transactions), Business Bay (5.7k), Al Thanyah Fifth (5.1k), Al Barsha South Fourth (4.8k), Hadaeq Sheikh Mohammed bin Rashid (4.4k), Burj Khalifa (4.3k), Wadi Al Safa 5 (3.5k), Al Hebiah Fourth (3.3k), Al Merkadh (3.2k), and Palm Jumeirah (2.8k). When it comes to locations with the highest value during 2021, Dubai Marina again headed the field with sales totalling US$ 7.79 billion, followed by Palm Jumeirah (US$ 7.25 billion), Hadaeq Sheikh Mohammed bin Rashid (US$ 4.31 billion), Burj Khalifa (US$ 3.87 billion), Business Bay (US$ 3.59 billion), Al Thanyah Fifth (US$ 2.23 billion). Wadi Al Safa 5 (US$ 2.18 billion), Al Yufrah 1 (US$ 1.99 billion), Al Thanyah Fourth (US$ 1.96 billion), and Al Hebiah Fourth (US$ 1.96 billion).

Dubai Marina was also the location with the highest number of real estate mortgages, (with 1,440), followed by Hadaeq Sheikh Mohammed bin Rashid (1,046), Al Thanyah Fifth (1,015), Burj Khalifa (922), Al Barsha South Fourth (875), Nad Al Sheba 3 (864), Al Yelayiss 2 (717), Al Thanyah Fourth (675), Me’aisem First (655), and Palm Jumeirah (618).

For such a relatively small market, there was a surprise to note that 3.2k new brokers had entered the sector in 2021, bringing the total number of registered real estate brokers to 8k, (33.9% of whom were women), operating from over 1.4k brokerage offices. Over the year, real estate brokers’ commissions in Dubai’s real estate market exceeded US$ 817 million through 12.1k transactions.

Data from the Dubai Land Department showed that the  emirate’s first ever working Friday included 173 sales transactions worth US$ 648 million— twelve of which were land plots, worth US$ 123 million, and 161 were apartments and villas for US$ 525 million. The top three areas that recorded the highest value of land sales transactions on Friday were Marsa Dubai, with land sales worth US$ 101 million; Al Thanya Fifth, where a plot of land was sold for US$ 8 million; and The Palm Jumeirah, where a plot of land went for US$ 5 million. Dubai’s Jebel Ali First area recorded the highest number of transactions, with three sales worth US$ 2 million. It was followed by Palm Jumeirah, with a US$ 5 million sales transaction, and Warsan First, with a US$ 1 million sale.

The three highest-valued sales transactions, featuring transfers of apartments and villas, included a US$ 136 million sales transaction in The Palm Jumeirah, followed by a US$ 135 million sales transaction in Marsa Dubai and a US$ 109 million sales deal, also in Marsa Dubai. Jebel Ali First recorded the most villa and apartment sales transactions on Friday, with 23 sales transactions worth US$ 5 million. Business Bay and Al Barsha South Fourth recorded 21 sales transactions (US$ 7 million) and 13 sales transactions (over US$ 4 million), respectively. The total value of mortgage transactions concluded on Friday was US$ 34 million, The biggest mortgage transaction was registered in Al Thanyah Fourth, featuring a value of US$ 10 million, followed by Nad Al Sheba Third (US$ 3 million). Five properties worth over US$ 5 million were granted to immediate family members. Among these, the highest value of Dh12m was registered in Al Merkadh.

According to the latest report by Knight Frank, Burj Khalifa apartment prices rose by a healthy 23% last year, to US$ 572 per sq ft, noting that the rest of Dubai saw an average 8% increase but that “2021 has been the exponential rebounding of Dubai’s luxury residential market.” All the usual drivers including:

• the movement to larger homes with outdoor amenities
• economic support measures
• government initiatives (introduction of flexible residency visas – ten-year golden visas, retired and remote workers)
• one of the best vaccine protocols in the world
• historically low mortgage rates
• attractive and flexible selling packages from developers
• Expo 2020
• a fast-growing non-oil economy
• ease of doing business
• security/safety
• year-round sunshine (except for this week)
• a cosmopolitan lifestyle

continue to enhance Dubai as one of the best places in the world in which to live and work.

HH Sheikh Mohammed bin Rashid Al Maktoum has approved the three-year 2022-2024 Dubai government general budget, with a US$ 50.7 billion spend, and also Law No. (28) for the General Budget for the fiscal Year 2022, with US$ 16.8 billion expenditure. Projected government revenues for 2022 are 10% higher, compared to 2021, at US$ 15.8 billion, as a result of the rapid economic recovery of Dubai and the effective measures taken to curb the pandemic, including not only cutting many government fees but also putting a freeze on fee increases until 2023. Non-tax revenues, tax revenues and government investment revenues, which come from fees, account for 57%, 31% and 6% of the total expected income – and do not include the 6% expected from oil revenue.

This year’s budget sees the emirate continuing to place a high emphasis on developing social services, and its healthcare, education and cultural sectors. It also includes US$ 272 million set aside for citizens’ housing sector, as well as allocating more than 4k plots and houses, with a total value of US$ 1.46 billion. As part of the government’s strategy to consolidate Dubai’s position as one of the best global cities in which to live and work, the budget also focuses on developing the Social Benefits Fund, by supporting families and people of determination. The budget reflects Dubai’s determination to accelerate post-pandemic economic recovery and achieve the Ruler’s wider aims to stimulate entrepreneurship, enhance society’s happiness and consolidate the emirate’s enviable position as a land of opportunities and innovation.

The two big ticket projected government expenditure items are salary and wages (34%), along with grant and social support (21%) to meet the requirements of human and community development and provide public services to the residents of the emirate. Other items include 9% of total spend on investments in infrastructure, 6% on public debt accounts, to follow a disciplined fiscal policy that ensures the budget fulfils all obligations, and 2% allocated to the private reserve to support emergency preparedness programmes. The budget allocates US$ 1.42 billion for post Expo construction projects.  Sector wise sees 30% being spent on the social development sector, in areas of health, education, housing and women and children’s care and a further 23% on security, justice and safety. A massive 42% of the spend will be invested in infrastructure and transportation and the remaining 5% on supporting the sectors of government excellence, creativity, innovation and scientific research.

Because of the double whammy of an exceptional year in the equity markets, helped by some shrewd financial advice, and a welcome recovery in the price of oil, the UAE sovereign wealth fund’s assets grew by over 18% to US$ 1.624 trillion; a barrel of oil more than quintupled from its April 2020 level of US$ 15.06 to US$ 82.00 in October 2021. Abu Dhabi manages around US$ 1.3 trillion through different SWFs, becoming the third-largest concentration of such funds after Beijing and Oslo. The UAE created this SWF to invest petrodollars in diverse sectors such as equities, bonds, commodities, real estate, automobiles, technology, pharmaceuticals and others to support local budgets. The largest SWF in the country is Abu Dhabi Investment Authority, with US$ 829 billion assets under management. Dubai-based entities include the Investment Corporation of Dubai (US$ 302 billion), Dubai Holding (US$ 35 billion) and Dubai World (US$ 15 billion).

Sheikh Ahmed bin Saeed Al Maktoum has appointed a new leadership team to manage the Dubai Integrated Economic Zones Authority free zones which include Dubai Airport Free Zone, Dubai Silicon Oasis, and Dubai CommerCity. Amna Lootah has been appointed director general of DAFZ and to head that free zone’s executive management team; Dr. Juma Al Matrooshi was appointed as director-general of Dubai Silicon Oasis. Muammar Al Kathiri was appointed as chief engineering & smart city officer in the authority to lead and direct engineering planning and make strategic planning, design, and construction decisions. At all central divisional functions. William Chapel will serve as Chief Financial Officer in DIEZ, where he will be responsible for financial management. Other appointments at DIEZ include Youssef Behzad as chief people & organizational development officer, Bader Buhannad as chief corporate support officer, (including managing and directing digital and IT activities), Saeed Al-Suwaidi as the new chief legal & regulatory affairs office and Abdul Rahman Basaeed, chief internal audit & enterprise risk management officer. The authority’s main aims are to boost economic growth, contribute to shaping the future economic map of Dubai, and create more diverse investment opportunities.

Worldometer estimates that over 5.4 million have died from Coronavirus since its onset, with the number of recorded cases exceeding 295 million. There is no doubt that the new Omicron variant, which has seen a massive increase in infections in many parts of the world, could put a dampener on expected demand growth in Q1 and slow the pace of the global economic recovery. Over recent days, UAE daily virus cases have moved from double digit numbers in early December to more than 2k. However, because of the high vaccination rates, and being the leading country in the world, (with the 91.3% of its people fully vaccinated and 7.7% partially vaccinated), with a relatively young population, there is every chance that it will escape the need for any further serious lockdowns.

According to a report issued by the Jet Airline Crash Data Evaluation Center, Emirates has retained its leading position as the world’s safest airline, ahead of KLM, JetBliue, Delta and easyJet. Due to its size, Etihad did not make the global list but topped the regional survey, whilst KLM, Finnair, Air Europa, Transavia and Norwegian were rated the safest airlines in Europe. IATA has projected that the global airline industry losses, due to the pandemic, will touch US$ 201 billion in the three years to 2022.

December’s adjusted PMI shedding 0.3 to 55.6, on the month, still showed a continued improvement in UAE business activity, driven by a sharp rise in new business and output, and a boost from Expo 2020 Dubai. The UAE’s non-oil private sector is a gauge designed to give a snapshot of operating conditions in the economy, with any figure above 50 indicating expansion. The improvement, especially noticeable in Q4, was also helped by an easing of restrictions in the country. Although the rate of growth dipped to a three-month low, new orders continued to rise, as new work volumes moved higher,  as business activity grew at its quickest rate since H2 2019. Despite the arrival of the Omicron variant, businesses are optimistic that the strong economic growth trend will continue into Q1, with sales growth driven by a substantial jump in travel due to Expo 2020 and strong demand from clients. The survey also noted that demand remained strong, as businesses reported a much sharper increase in input prices, driven by a rise in fuel and energy costs and higher raw material prices. There was a marginal increase in the workforce, indicating a slow recovery is taking place, but businesses still struggled to keep up with demand, leading to a sixth successive monthly increase in backlogs. With global inflation still moving higher, purchase costs rose at their fastest pace since March, resulting in businesses limiting their purchasing activity.

For what it is worth, the UAE’s oil GDP 2022 forecast growth is expected to come in at 5.0%, following a 2.0% contraction a year earlier, whilst in the non-oil sector, growth will remain flat at 4.2%, supported by rising oil prices. However, the UAE Central Bank added the caveat that, “economic projections are susceptible to uncertainties amidst Covid-19 repercussions”. Both the IMF and Emirates NBD are less bullish, with the former expecting the UAE economy to grow at just more than 3.0% this year and hover around the same levels into 2026 at least; Dubai’s biggest lender puts this year’s growth at 4.0 %, following 3.5% in 2021. Gulf countries, including the UAE, were dealt with a double whammy in 2020 as the spread of the coronavirus pandemic was accompanied by a drop in crude prices, the main source of income for the region. Last year, sentiment was better as travel restrictions eased and Dubai’s Expo 2020 was launched, attracting millions of visitors. 

In 2021, Dubai Duty Free posted a 40% increase, on the year, to US$ 976 million in sales, as annual passenger traffic, totalling 28.7 million, began to rebound from the coronavirus pandemic. It was estimated that there were over nine million sales transactions in 2021, equating to 25k a day, selling 26 million different items. DDF will also benefit from increased footfall going through DXB, as early estimates see an almost doubling of traffic to 57 million in 2022; Dubai World Central, the emirate’s second hub, will also reopen its passenger terminal in May.

The top five products sold in 2021 were perfumes, liquor, cigarettes/tobacco, gold, and electronics, worth US$ 190 million, US$ 168 million, US$ 95 million, US$ 79 million and US$ 76 million; they accounted for US$ 608 million worth of the sales, equating to 62.3% of the total revenue. Online sales, at US$ 48 million, represented 5% of the total, with sales in Departures and Arrivals making up 84%, (US$ 790 million), and 10% (US$ 102 million) of the annual sales. In November, Dubai Duty Free said it will rehire seven hundred staff who were laid off during the pandemic, as passenger numbers pick up.

On Tuesday, DP World and the Senegal government laid the first stone to mark the start of construction of the new Port of Ndayane, its biggest port investment in Africa; it will also boost Senegal’s position as a major trade hub and gateway to West Africa. The US$ 1 billion investment to develop the port will be carried out in two phases and follows a December 2020 concession agreement to build and operate a new port at Ndayane, about fifty kilometres from the existing Port of Dakar. The first phase of the port development will include a container terminal with 840 mt of quay and a new 5 km marine channel designed to handle two 336 mt vessels simultaneously, and capable of handling the largest container vessels in the world. Annual container capacity will increase by 1.2 million Twenty Foot Equivalent Units. The second phase will be the development of an additional 410 mt container quay, as well as an economic and industrial zone, adjacent to the port and near the Blaise Diagne International Airport, creating an integrated multi-modal transportation, logistics and industrial hub.

Dubai Internet City and Khazna Data Centres have teamed up to establish two data storage centres in Dubai. With the government strategy of turning the country into a smart nation, the demand for data storage across all industries, with a secure cloud infrastructure, is of major importance, bearing in mind the huge volume of digital data generated in the region. DIC is a leading supporter of widespread digital transformation which is required to increase Dubai’s  future economic competitiveness on the global stage. An Arizton Advisory and Intelligence report estimates that the data centre market in the Mena region will have an 8% CAGR (compound annual growth rate) to reach US$ 5 billion by the end of 2026.

This is not the only party in town. Last October, Etisalat and G42 agreed to merge their twelve data centre services to create the UAE’s largest data centre provider and operated under Khazna. Both Etisalat and du have data centres in Dubai, as have two global technology companies; Microsoft opened one in Dubai two years ago, whilst the world’s largest cloud storage service provider, Amazon Web Services, is set to open three centres in the country in H1. As Ammar Al Malik, DIC MD, commented, “building data centres and enhancing the overall technological infrastructure plays a key role in providing an investment-friendly environment;” and they will further support the UAE’s digital ecosystem.

Following an agreement signed between the governments of Dubai and Jammu and Kashmir, Emaar will develop a shopping mall in Srinagar. The 500k sq ft ‘Emaar Mall of Srinagar’ will be the first significant FDI investment in that northernmost region of northern India, since the Modi government revoked its special status given under Article 370 and brought the Union Territory under central administration. Emaar’s founder, Mohamed Alabbar commented that, “we wish to bring a world class mall experience to the residents of Jammu and Kashmir and the tourist inflows which are likely to increase exponentially” and that the Dubai developer “is also considering other investments into real estate, hospitality and mixed-use commercial and residential projects in the region”. It is expected that Dubai will deliver more than a billion-dollar worth of projects in Kashmir, including industrial parks, a medical college, a specialty hospital, logistic centres, IT towers and multi-purpose towers.

Dubai Aerospace Enterprise announced that at the end of 2021, it had a fleet of owned, managed, committed and mandated-to-manage aircraft of 425. During the year, it had divested thirty aircraft and acquired forty-one planes, as well as signing four new servicing agreements covering sevenaircraft. Its aircraft leasing division signed two hundred lease agreements, extensions and amendments in 2021. The average age of the fleet is 6.7 years and the ME’s biggest plane lessor served 112 customers in fifty-four countries. During the year, it issued US$ 2.5 billion in new unsecured notes and redeemed about US$ 2.2 billion in total unsecured notes.

The DFM opened on Monday, 03 January, up 51 points (1.6%) on the previous week, gained 24 points (0.7%) to close the week, on Friday 07 January, at 3,220. Emaar Properties, US$ 0.14 higher the previous week, gained US$ 0.02, at US$ 1.35. Emirates NBD, DIB and DFM started the previous week on US$ 3.69, US$ 1.47 and US$ 0.72 and closed on US$ 3.65, US$ 1.50 and US$ 0.72. On 07 January, 165 million shares changed hands, with a value of US$ 61 million, compared to 79 million shares, with a value of US$ 41 million, on 30 December.

By Friday 07 January 2022, Brent, US$ 3.43 (4.6%) higher the previous fortnight, gained US$ 4.15 (5.3%), to close on US$ 81.93. Gold, up US$ 53 (3.0%) the previous three weeks lost US$ 34 (1.9%), to close Friday 07 January on US$ 1,831. 

At an online meeting on Tuesday, the Opec+ group of oil producers agreed to bring an extra 400k bpd to the market, as from next month, despite demand concerns due to the increase in the Omicron variant. It is apparent that the oil bloc is confident that the market can take further increases in supply.  Although the news was widely expected, Brent jumped 1.62% to US$ 80.26 on the day, as demand for oil has continued to improve with the variant having only had a mild impact. It is expected that demand will average 99.13m bpd this quarter, up 1.11 million bpd from its November forecast, with global oil demand growth kept unchanged at an extra 4.2 million bpd for 2022 and total global consumption at 100.6 million bpd.

Bitcoin has slumped to its lowest level since its December flash crash, as growing expectations of rising borrowing rates weigh on some of the best performing assets over the past few years. The largest cryptocurrency by market value closed Friday trading at US$ 41.8k; its decline was followed by others such as Ether and Binance Coin along with. tokens of popular DeFi applications, including Uniswap and Aave. Bitcoin has surged by about 500% over the past two years, after stimulus measures were put in place during the Covid-19 pandemic. These recent declines run in tandem with what has been happening in the financial markets, at a time when inflation is running on its own speed and when global central banks have finally woken up to consider tightening monetary policy and lifting interest rates. There is no doubt that Bitcoin will bounce back but the market may have to wait until late Q2 to see that happen.

Following the latest US$ 300 million investment, it is estimated that the online marketplace OpenSea could be worth US$ 13.3 billion. The tech firm reports that trades’ in NFTs – unique pieces of digital code that can be associated with a digital asset such as a work of digital art.- on the platform have risen 600-fold in 2021. There are an increasing number of businesses, sports clubs and celebrities producing or purchasing NFTs including the rapper Eminem spending about US$ 450k on an image of a “Bored Ape” resembling him. According to the FT, the market in digital art and collectables is now approaching that of the global art trade and latest figures show that the total value of 2021 trade for NFTs was estimated to be worth US$ 40.9 billion.

This week, Blackberry advised that, as from Wednesday, 04 January, it will not operate correctly, stating that, “as of this date, devices running these legacy services and software through either carrier or Wi-Fi connections will no longer reliably function, including for data, phone calls, SMS and 9-1-1 (emergency) functionality.” This will see the end of BlackBerry 7.1 OS and earlier, BlackBerry 10 software, BlackBerry PlayBook OS 2.1 and earlier versions, whilst devices, using Google’s Android operating system, including the BlackBerry KEY2 released in 2018 would not be affected by the changes. Apple’s 2009 launch of its iPhone – and the introduction of smartphones – saw the beginning of the end for the once iconic Canadian tech company.

A lot has happened to the semiconductor industry after it had its worst ever recession in 2019, posting a 12% annual fall, followed by the onset of Covid-19 in the early part of 2020. Although global sales jumped 26% in 2021, to a record US$ 553 billion, the industry was beset by supply chain problems, but this year revenue is expected to be 9% higher, pushing industry revenue figures above the US$ 600 billion level. Covid saw a marked reduction in vehicle sales which would have been a major blow for the semiconductor sector but all the “lost” sales from the car industry were more than taken up by unusually strong demand for consumer electronics; personal computers, smartphones, and audio/video equipment accounted for 80% of semiconductor sales and were the three main factors driving the industry’s growth. 2021 saw prices on the up, as demand continued to outstrip supply. This unexpected demand growth led to a shortage in the industry, as has the US-China trade dispute which has seen both sides stopping their domestic tech companies from doing business with each other. The industry has a long lead time from drawing board to end user as the making of chips is a complex process that can take months.

The auto industry was one of the main users of semiconductors but when Covid first arrived, car production ground to a halt and all car makers cancelled forward orders for semiconductors. Even then, demand was greater than the supply, leading to long waiting times and increased prices and now Gartner expects that half of the major ten carmakers will be designing and producing their own chips by 2025 in order to reduce their reliance on traditional chip makers. Furthermore, the industry is modernising at break-neck speed to introduce electric and autonomous vehicles and need to have more control on what goes into their products. Because of shortages, manufacturers, such as Volkswagen, Ford, Fiat Chrysler, Toyota and Nissan, have had to delay production of some models in order to keep other factories running. Tesla got round the problem by using their own new chip designs and rewriting the software it uses on its vehicles.

In Monday’s premarket trading, Tesla shares jumped 7.0% to US$ 1,126 on the back of posting stronger-than-expected Q4 deliveries, easing any fears of supply chain problems that had beset the industry for most of last year. For the quarter, Models 3 and Y production rose 79%, whilst Models S and X fell 19%, largely due to a slowdown in production as new equipment was being installed. Analysts expect the world’s most valuable carmaker to report quarterly revenue of over US$ 2.3 billion, having seen the number of vehicles delivered being 17.3% higher than the market had expected – at 309k units. With new factories opening in Texas and Germany this year – and the fact that Tesla has managed to overcome much of the problems caused by the scarcity of semiconductors by reprogramming software to use less scarce chips – production is bound to be ramped up in 2022.

Ever since 1931, General Motors has held the mantle as America’s top car seller but it has lost that title as its domestic sales were down 13%, (impacted by the widespread shortage of semiconductors), with Toyota climbing to the number one position, with a 10% jump in sales to 2.3 million vehicles. It is estimated that car sales were 2% higher on the year in 2021 but remain depressed compared to pre-pandemic figures. Like all new car buyers around the world, US purchasers have had to make do with a reduced choice, because of the semiconductor shortage, supply chain problems and higher costs for new vehicles. GM’s profit would have been worse if it were not for the improved performance of its profitable pick-up trucks and SUVs. Toyota’s Camry has been the top-selling passenger car in the US fortwo decades, while its Rav4 has ranked as the best-selling SUV for five years.

One of the greatest hoaxers in history has been found guilty in a New York court of duping some very savvy investors into believing that her company had developed a revolutionary medical device that could detect a multitude of diseases and conditions from a few drops of blood. After a week of deliberation, the court found that 37-year old Elizabeth Holmes was guilty, on two counts of wire fraud and two counts of conspiracy to commit fraud, and now faces a maximum of twenty years in jail for each of the four offences; she was acquitted on four other counts involving patient fraud. Holmes had started Theranos in 2003 and went from an unknown to a Silicon Valley sensation, and an apparent visionary trailblazer, who amassed a US$ 4.5 billion on a tissue of lies. Her simple idea was to create a less painful, more convenient and cheaper way to scan for hundreds of diseases and other health problems by taking just a few drops of blood with a finger prick instead of inserting a needle in a vein. Her disruptive tactics were to upend an industry dominated by giant testing companies such as Quest Diagnostics and Labcorp and introduce “mini-labs” in Walgreens and Safeway stores across the US that would use a small device, called the Edison, to run faster, less intrusive blood tests. The likes of Rupert Murdoch, Larry Ellison as well as the Walton and DeVos families, were investors that helped her raise US$ 900 million in the early stages

Most people were unaware at the time that the Theranos’ blood-testing technology kept producing misleading results, and that blood tests were secretly being undertaken using conventional machines in a traditional laboratory setting and not by the simple Edison protocol. This façade could not go on forever and it was inevitable that she would be caught out even though she never stopped believing that Theranos was on the verge of refining its technology. It all ended in 2015 when the ruse was uncovered in a series of Wall Street Journal articles and a regulatory audit of the firm uncovered potentially dangerous flaws in its technology.

Asda has managed to anger UK farmers by backing out of its October commitment to stock exclusively British beef because of the rise in local beef prices. However, Asda has committed, (at least for the time being), that all fresh beef in its premium Extra Special tier will remain 100% British and all of their fresh beef will be sourced from farms in the UK and Republic of Ireland. Other UK supermarkets, including Lidl, Aldi, Morrisons and the Co-operative, also have commitments to source 100% British beef. The National Beef Association noted that farmers are struggling with feed, fertilizer and energy costs escalating at rates “never seen before”, whilst Republic of Ireland beef is currently around 20% less expensive than British.

Major UK retailers, Next and Greggs, have both indicated that they intend to raise prices this year to offset higher wage, supply and manufacturing costs at a time when inflation in the country could top 6% by the end of Q1. The fashion store intends to raise prices for its spring and summer clothing and homeware ranges by 3.7% and a 6% increase for autumn and winter goods. Shoppers at Greggs’ 2k stores will have to pay between US$ 0.07 to US$ 0.13 extra on items across its range of sausage rolls and cakes. There will be a lot more of the same from other major High Street stores as they get to grips with soaring inflation, higher costs and the Omicron variant.

It seems incongruous that bookmaker Ladbrokes could claim US$ 138 million from the furlough scheme, including US$ 60 million in 2021, despite rapid growth in online betting making up for all losses from the closure of stores. Its parent company, Entain, which actually saw revenues rise since the onset of the pandemic, said the matter is “under review” but that the money had protected 14k jobs. Although Entain was legally entitled to claim the money, others either returned the furlough money such William Hill, repaying US$ 33 million to the government, or did not claim it in the first place., such as Flutter, the owner of the Paddy Power betting shops. It is estimated that Ladbrokes was one of the twenty biggest furlough claims last year.

The latest Halifax House Price Index shows that the December average house price had risen 1.1%, on the month, 3.5% in Q4 and 9.8% for the year to US$ 374k – its largest annual gain since 2003. Despite the UK being under lockdown for some six months during 2021, the average house price reached record highs on eight occasions. Two main drivers behind these improved figures were the ongoing stamp duty holiday and a surge in demand for out of city locations, with gardens and more space. Wales registered the strongest growth of any part of the UK last year, at 14.5%, with London at the other end of the scale with tepid growth of just 2.1%. There is every chance that growth rates will slow, driven by factors such as rising inflation, higher cost of living, burgeoning interest rates, increased taxation and surging energy bills. With the end of the stamp duty holiday, the number of mortgage approvals continued to decline, with November numbers of mortgage approvals, at 67k, at their lowest level since June 2020. November also witnessed a decline in new listings, although new buyer enquiries rose by 13%.

With the cost of transport, food and other staples skyrocketing, Turkey’s annual inflation rate has soared to a 19-year high, at over 36% last month. In 2021, the currency tanked 44%, which made the country’s exports cheaper, and they became even cheaper this week when the lira lost a further 5% in value; since September, the central bank has cut rates from 19% to 14%, (instead of the other way round). However, the flipside of the coin sees imports become increasingly more expensive – bad news not only for the general population but also for manufacturers who have to pay more for energy, raw materials and other costs which in turn increase the cost of their exports. If there is no change in the economic attitude and change of monetary policy of Tayyip Erdogan, inflation could top 50% by April, with the lira in the monetary gutter; recently, the price of electricity and gas bills have jumped 50% and 25%.

Despite many other countries thinking to the contrary, China claims that “not a single country has fallen into [a] so-called ‘debt trap’ as a result of borrowing from China.” The criticism is that the country lends to poorer countries which often leaves then struggling to repay debts and therefore vulnerable to pressure from Beijing. (This practice is reminiscent of similar US aid in the 1970s to countries mainly in South America and SE Asia which often left them beholden on the goodwill of Uncle Sam). China is one of the world’s largest single creditor nations, with its loans to lower and middle-income nations tripling since 2010 to top US$ 170 billion by the end of 2020. The main beneficiaries of their “largesse” are nations in SE Asia and Africa. However, some analysts believe that this represents only about half of China’s commitment, as the other half of China’s lending to developing countries is not reported in official debt statistics, as funds originate from state-owned companies and banks, joint ventures or private institutions, rather than directly from government to government.

According to AidData, there are now more than forty low and middle-income countries, whose debt exposure to Chinese lenders is more than 10% of the size of their GDP, as a result of this “hidden debt”, with Djibouti, Laos, Zambia and Kyrgyzstan having Chinese-related debts equivalent to at least 20% of their annual GDP. Much of the debt owed to China relates to large infrastructure projects like roads, railways and ports, and also to the mining and energy industry, under President Xi Jinping’s Belt & Road Initiative. The current classic example is that of the massive Sri Lankan port project in Hambantota, a one billon dollar project financed by Chinese money. But it did not live up to its promise and soon became unviable leaving the country mired in debt; the only way out was to hand the state-owned China Merchants a controlling 70% stake in the port on a 99-year lease in return for further Chinese investment.

According to the World Bank statistics, China is the leading global lender, at over US$ 350 billion, followed by the World Bank (US$ 300 million), the Paris Club governments (US$ 200 billion) and the IMF some way back at UDS$ 80 billion. At the turn of the century China had no public debt commitments. There are major differences in the terms and conditions of a typical Chinese loan compared to others. They include a higher interest rate of around 4%, compared to say 1% on a loan from the World Bank or an individual country such as France or Germany, a shorter loan term of around ten years, (compared to around 28 years) and the requirement of borrowers maintaining a minimum cash balance as some form of collateral, often not needed for loans from other institutions.

After a nine-month suspension from trading on the Hong Kong Stock Exchange, shares in scandal-hit China Huarong Asset Management resumed trading on Wednesday only to see its value tank 50% on the day. This followed a state-backed bailout of almost US$ 6.6 billion after the distressed debt manager posted a record US$ 16 billion loss in 2020. However, H1 figures for Huarong, whose main shareholder is China’s finance ministry, had shown improvement with a US$ 25 million profit. This follows the execution of its former chairman Lai Xiaomin, after being found guilty of corruption; he had been arrested in 2018 on charges of taking US$ 280 million in bribes over a ten-year period. The company, established in 1999 to take bad debts off the country’s largest state-owned banks, expanded beyond its original remit.

Evergrande, with debts of over US$ 300 billion, has suspended trade in its shares in Hong Kong at a time when the Chinese real estate giant is scrambling to raise cash by selling assets and shares to repay suppliers and creditors, as part of its restructuring plan. Over the weekend, it was reported that the troubled company was ordered to demolish its thirty-nine residential buildings on the island of Hainan, within ten days, as they were built illegally. Last week, it did not make any interest payments on any of its US$ 19 billion worth of international bonds, after missing a payment deadline earlier in December. It also indicated that each investor in its wealth management product could only expect to receive US$ 1.3k each month, as principal payment for three months, irrespective of when the investment matures; a month earlier, Evergrande had agreed to repay 10% of the investment by the end of the month when the product matures. The developer advised investors that the situation was not “ideal” and that it would “actively raise funds” and update the repayment plan in late March.

To make matters worse, it seems that the company will not receive any assistance from the Chinese government because it was the Communist Party that changed its rules to limit how much money the country’s property developers could borrow, knowing that the likes of Evergrande, and other heavily indebted real estate firms, would face mega cash problems. A government bailout is out of the question as it has succeeded in sending a message that it was unhappy with the reckless spending behaviour of the sector and that it had to stop. Although the signs are that the government will not let it fail, but will allow it time to restructure, this appears to be a final warning from President Xi – Don’t Play With Me, ‘Cause You’re Playing With Fire.