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Land Of Hope And  Glory                                                   04 April 2019

Damac Properties reported a record number of homes handed over last year, with many of the 4.1k total in its Damac Hills community. The developer posted revenues of US$ 1.7 billion, whilst net profits came in at US$ 331 million, with booked sales totalling US$ 1.2 billion.

Last year, Danube Properties sold nearly 1.9k residential units, a 78.5% increase, which the developer estimates to be 10.6% of the total market share of off-plan sales, compared to just 5.0% a year earlier. Over the year, Danube recorded a 19.3% hike in revenue to US$ 266 million. The company continues to be confident in the local realty sector and to date has awarded contracts valued at US$ 436 million, covering twelve projects.

The RTA have extended the Serco contract to operate and maintain the metro transit system for a further two years in a US$ 185 million agreement. The UK company has been with the RTA since the Metro opened and has performed well, with a train service availability of 99.9% and punctuality of 99.8%: last year, there was a record 204 million journeys. Under the new contract, Serco will recruit and train Emirati employees. A recent study has shown that over the first eight years of the rail system to 2016, it had added an estimated US$ 18.0 billion to the economy.

This week sees the hosting of the second annual Future Blockchain Summit, a meeting that will bring together all the sector’s stakeholders from governments, industry and academia. The two-day event will see a global pool of technology visionaries, government bodies, the world’s biggest brands and industry first-movers pushing blockchain forward and championing its adoption on a global scale. It is expected that over 8k interested parties will attend the meeting. Smart Dubai has been working on over twenty citywide blockchain use cases in partnership with the government and private sectors, as it strives to become the world’s first government to execute all applicable transactions using blockchain technology by next year. If this venture succeeds, it will result in savings totalling US$ 1.5 billion and eliminate 100 million annual paper transactions.

The UAE administration is carrying out a joint study with its Saudi neighbours to discuss the “addition of new goods to the selective tax list”. It was only in October 2017 that both governments implemented an excise tax of 100% on tobacco and energy drinks, and a 50% tax on carbonated drinks. The impact of this excise duty has had a detrimental impact for some businesses, with sales of energy drinks plunging by as much as 65%. Whether such companies have taken enough “punishment” remains to be seen but if they have, it is a good bet that the likes of sweets, fast food and crisps could be on the taxman’s menu.

As noted last week, the country’s GDP expanded by 1.7% to US$ 393.0 billion, over the year, driven by growth in oil revenues (because of increased energy prices towards the end of 2018) and a strong performance in non-oil activities. The energy sector, which accounts for 25.9% of GDP, grew an impressive 35.1% over the year. The non-oil sector was 2.9% higher at US$ 307.2 billion, with major contributions from retail/wholesale accounting for 11.2% of GDP, financial services (9.2%), manufacturing (8.9%) and construction (8.3%).

Tristar is interested in a London IPO later this year, as it seeks to raise US$ 250 million. The Dubai liquid logistics provider, co-owned by its chief executive and founder Eugene Mayne, Agility and Kuwait’s Gulf Investment Corporation, has the likes of ADNOC, ENOC, Shell and BP amongst its customers.

Emaar Economic City in Saudi Arabia incurred a net loss after zakat and tax of US$ 37 million last year, compared to a  2017 net profit of US$ 67 million, driven by lower backlogs of residential and industrial projects. `The results were not helped by higher administrative, selling and marketing expenses.

It seems that Network International could be valued as high as US$ 3 billion, based on the pricing range issued ahead of its London IPO. The Dubai payment processor is 49% owned by Emirates NBD, with the balance by Warburg Pincus and General Atlantic. This is a welcome boost for Europe’s lacklustre IPO market, where recent volumes have been at their lowest level since the GFC.

Emirates NBD revised its deal to acquire 99.85% of Denizbank. Although the deal was arranged mid-2018, because of the 17% fall in the Turkish lire, the value of the deal is US$ 2.75 billion instead of the earlier announced US$ 3.2 billion. It is expected that the Turkish bank will contribute up to 15% of Emirates NBD’s 2019 profit. At the end of 2018, the asset value of the combined banks was US$ 173 billion, with the Dubai financial institution accounting for US$ 136 billion.

The bourse opened for trading on Sunday 31 Mar, at 2631, and having gained 57 points (2.1%) the previous fortnight, had an impressive 145 points (5.5%) weekly gain to close by Thursday, 04 April, on 2776. Emaar Properties, having closed US$ 0.03 lower last week, was up US$ 0.11 to close at US$ 1.25, with Arabtec, flat for the previous four weeks, nudged US$ 0.01 higher to US$ 0.59. Thursday 04 April saw increased trades of 124 million shares, valued at US$ 64 million, compared to a week earlier of 208 million shares at US$ 98 million. For Q1, the index was 4.1% to the good at 2635, with corresponding rises for both Emaar and `Arabtec – US$ 0.24 and US$ 0.07 respectively

By Thursday, 04 April, Brent traded US$ 1.90 higher to close on US$ 69.72; gold continued its recent weeks of ups and downs, gaining US$ 2 to US$ 1,297. For Q1, Brent was US$ 14 .30 (28.5%) to the good at US$ 68.10, with the yellow metal US$ 14 higher (1.0%) at US$ 1,298.

Saudi Aramco became the most profitable company in the world when reporting an EBITDA (earnings before interest, tax, amortisation and depreciation) of US$ 224 billion; this figure easily surpasses Apple’s US$ 83 billion surplus. Even though Exxon Mobil pulls in a lot lower profit at US$ 40 billion, it does earn slightly more cash generated per barrel than Aramco which is stifled to some degree by relatively high tax payments; Aramco pays 50% of its profit on income tax, plus a sliding royalty scale that starts at 20% of its revenue.

Another Saudi company in the news this week was Prince Alwaleed bin Talal’s Kingdom Holding that received US$ 333 million from its stake sale in Dubai ride-hailing firm Careem, which was bought out by Uber in a US$ 3.1 billion deal. The investment company will utilise the funds in up to five businesses in Saudi and Europe, with 30% being targeted for technology and potential growth entities and the balance for income-generating, dividend-distributing investments. It has been estimated that it almost doubled its money on its Careem stake.

Tui has warned that the grounding of its 15 Boeing 737 Max planes could cost it up to US$ 340 million; the travel firm was also expecting delivery of a further eight before the end of next month. The tour company has had to use spare planes in its fleet, extend leases that were due to expire and hire in extra planes, many of which may be less fuel efficient and bigger than what is actually required. It seems that the company is not covered for this type of event – no wonder then that its shares fell 8% in Friday’s trading.

easyJet confirmed that it still expects to post a H2 US$ 360 million loss attributable to Brexit jitters and a slowdown in the regional economies. The British low-cost carrier also had concerns about a weakening consumer mood and softer ticket yields across the continent, along with higher fuel prices. Its shares sank 8% on the news, as it expects “the overall environment in Europe to get worse”.

As it tries to cut annual costs further (from US$ 1.0 billion to US$ 1.5 billion), and introduce “significant restructuring”, US-owned Boots has warned of possible closures of some of its 2.5k outlets in the UK. The pharmacy chain, which employs 60k, reported a 2.3% decline in like for like sales and profits 14.3% lower, in a “most difficult quarter”. In February, the pharmacy chain indicated that 350 jobs were at risk in its Nottingham head office, as it planned to reduce costs by 20%.

In a US$ 5.4 billion deal, that will create a technology and security giant employing 80k, French defence electronics group Thales acquired Dutch data security firm Gemalto, a global leader in digital identification and data protection. The deal will result in Thales’s seventh global division being known as Digital Identity and Security focussing on the group’s civil and defence customers. The French government has a 26% stake in Thales and is their biggest single investor.

Months after DSV walked away from a US$ 1.7 billion deal with Switzerland’s Ceva Logistics, it has now acquired Panalpina in a US$ 4.3 billion deal. The price is at a 43% premium, based on the market value on 15 January when the offer was made. The sale will not only boost DSV’s air-cargo volumes and ocean-going sector but also complement the Danish group’s strength in road shipments.

There are growing voices proposing that the UK’s Big Four accountancy firms – Deloitte, EY, KPMG and PwC – should not only be separated into audit and non-audit businesses but should also face a full structural break-up. The four firms carry out 97% of big companies’ audits and at the same time often provide them with other services. The Competition and Markets Authority Chair, Rachel Reeves, said: “For the big firms, audits seem too often to be the route to milking the cash-cow of consultancy business”. There have been concerns about the auditors’ modus operandi on the back of high-profile company collapses such as Carillion and Patisserie Valerie. Not surprisingly the Big 4 seem in agreement to many of the changes recommended and that “trust in audit is in urgent need of repair”. No need to watch this space because nothing major will change.

There is something wrong with the financial world when three world bodies have different opinions on global growth prospects over the coming two years.

The WTO reported that Q4 world trade fell by 0.3% but expanded by 3.0% last year. This year, growth is expected to come in lower at 2.6% and well a below a previous 3.7% forecast. The usual suspects were cited by the world body – new tariffs, slower economic growth, volatility in financial markets and tighter monetary conditions in developed countries. Whilst uncertainty is around the economic environment, trade will always suffer.

Meanwhile the World Bank expects annual MENA growth for this year and next to be 1.5% and 3.4% on the back of a weaker global economy and financial-market volatility. The 2020 improvement is expected to come about because of “ongoing policy reforms to diversify the economy and strengthen the business environment”. However, despite this recovery its long-standing low growth in per-capita GDP will be flat.

Three months on from its January forecast, the IMF has indicated that the global growth has lost momentum since the start of the year, leaving the world economy in a “precarious” position; however, the IMF chief, Christine Lagarde does not expect an immediate recession.  Next week, it will issue its new World Economic Outlook and it will be inevitable that the 3.5% global growth forecast made in January will be downgraded, although there could be an upturn by the end of this year.

At last, Malaysia’s ex-Prime Minister Najib Razak has gone on trial for his role in a financial scandal involving the country’s sovereign wealth fund 1MDB. He faces an initial seven charges, including pocketing US$ 681 million from the fund, out of a total of 42. The government has also filed criminal charges against Goldman Sachs for defrauding investors by raising money for 1MDB – a fund that was supposedly meant to boost Malaysia’s economy through strategic investments. However, some of the money was apparently used to fund lavish lifestyles, a Hollywood film and a super-yacht.

After being arrested last November and then released on US$ 9 million bail in March, disgraced former Nissan chief Carlos Ghosn has been re-arrested in Tokyo. Initially, he was charged with underreporting his pay package the five years to 2015 but a new case implicates him in suspicious payments to a dealership in Oman.

Two former Barclays swaps traders, convicted of manipulating a benchmark interest rate, were sentenced to as much as five years in prison by a London judge who warned those still working in the finance industry that misdeeds would bring jail time. The charges against the two men were in relation to manipulation of the Euro interbank offered rate, which is related to trillions of dollars’ worth of loans and derivatives. According to the judge, Michael Gledhill, the way the Euribor rate was calculated “was an open door for those involved in the conspiracy to manipulate, or attempt to manipulate, the Euribor rate for the advantage of their own bank’s trading positions.”

Latest figures indicate that global e-commerce sales surged 13.0% to US$ 29 trillion, driven by a 12.0% hike in online shoppers to a total of 1.3 billion. The US led the way, as the number of internet users buying goods online from abroad grew to 21.0%, as their cross-border business-to-consumer sales expanded 4.0% to US$ 412 billion, equating to 11% of total sales in this segment. The three largest markets were US (US$ 9.0 trillion), Japan (US$ 3.2 billion) and China (US$ 1.9 trillion). It seems strange and rather ironic that these figures issued by the United Nations Conference on Trade and Development are for 2017 – a little out of date!

According to the UK’s trade body, Ukie, the country’s gaming market is worth US$ 7.5 billion on the back of the very successful releases of games such as Fortnite and Player Unknown’s Battleground that only came out last year. Of that total, US$ 5.3 billion is spent on software, with a further US$ 2.1 billion on hardware; the remaining balance is from “game culture” which includes toys, merchandise and books.  The software can be further broken down into four segments – digital/online, mobile games, boxed software and pre-owned – accounting for 50.1%, 29.1%, 19.1% and 1.7% of the US$ 5.3 billion total. The sector is now worth more than the movies and music segments combined.

Latest figures from Saudi Arabia show that the Q4 unemployment rate has dropped 0.1% to 12.7%; the unemployment rate men stood at 6.6%, compared to 32.5% among Saudi women. There were 3.1 million males in employment, with a further 1.0 million actively seeking employment.

The country’s budget deficit is a little over US$ 150 billion which will rise to US$ 181 billion by the end of 2019, equating to 21.7% of GDP; 46% of the total debt is in US dollars. The further issue of US$ 31 billion this year will be used to help finance the national budget deficit.

It is a good time to go Turkey for a holiday as its lira sank 5% in just one day, and over last week the stock market shed 10% of its value. After several years of noticeable growth, the economy has done a complete turnaround and is now experiencing a recession, accompanied by high inflation at over 20%.

There is no doubt that its President Recep Tayyip Erdogan led the country through fifteen years of almost continuous growth of an 5.6% average (excluding just one year, 2009). Having doubled in size over that period, the economy has had two quarters of contraction, the unemployment rate stands at an unwieldy 13.5% (4.3 million). Things are bound to get better later in the year but do not expect much annual growth of over 2%.

President Abdel Fattah al-Sisi’s government has increased Egypt’s minimum wage level by 66.7% to US$ 116 a month, whilst pensions will rise by 15% to US$ 52, with immediate effect. Consumer spending has been impacted by recent government measures including the introduction of VAT, cutting energy subsidies and devaluing the currency that has left many of the 100 million population in dire straits.

Everybody’s favourite, Jean-Claude Juncker is now not happy with Italy wanting Giuseppe Conte’s populist government to do more to boost their flagging economy – some hope. The EC President’s warning came a day after the OECD highlighted Italy’s urgent need to take control of the fiscal situation and reduce its worryingly high public debt. Now in recession, the country’s output has never returned to its 2007 high.

The man who got all his post Brexit referendum forecasts wrong is again in the headlines warning that the risk of the country stumbling into a “disorderly” no-deal Brexit is now “alarmingly high”. Mark Carney, the Bank of England governor, is no stranger to controversy and some may see his latest remarks as once again pro-Remain political intervention.

There are signs that the Chinese economy may have turned the corner after following recent government intervention that has seen five cuts in bank reserve requirements over the past year along with other fiscal and monetary stimulus measures. China’s Caixin/Markit Manufacturing PMI moved back into positive territory recording a reading of 50.8, following the previous month’s 49.9.

US Commerce Department figures show that January business inventories rose at a quicker rate than expected, when climbing 0.8% – the same level as a month earlier and higher than the 0.5% market expectation. There were also increases in wholesale, retail and manufacturing invoices – up by 1.2%, 0.8% and 0.5% respectively. January sales saw increases for business (0.3%), retail (0.8%) and wholesale (0.5%), whilst manufacturing sales dipped 0.4% over the month.

Manufacturing improved in March with the ISM PMI 1.1 higher at 55.3, driven by gains in new orders (up 1.9 to 57.4) and employment with an impressive 5.2 hike to 57.5.

Construction spending came in 1.0% higher at an annualised rate of US$ 1.32 trillion, with the market expecting a slight downturn. There were increases in four construction segments – “public”, up 3.6% to US$ 325.8 trillion, highway – up 9.5% to US$ 111.1 billion, educational, 0.8% up at US$ 325.8 billion and private up 0.2% at US$ 994.5 billion.

With Brexit turmoil showing no indication of going away, the latest Markit’s services PMI showed that the country’s huge services sector shrank for the first time since mid-2016, with export demand noticeably weaker. In March, the reading of 48.9 (any number under 50 indicates contraction) was 2.4 lower than the 51.3 recorded in February. The construction sector is also decline, whilst manufacturing, with a 50.0 reading, would have been lower if not for stockpiling.

It is surprising to read that there are now 2.9 million UK children living in poverty after housing has been paid, with mortgages and rents continuing to spiral north. 70% of the total were in working families, compared to 67% a year earlier and more worryingly, 53% of children were under the age of five. Just like previous governments, this one has said that tackling poverty was its priority.

Two million UK workers on minimum wages are now receiving a pay rise (which may not be enough as other costs are rising), ranging from 4.9% to US$ 10.26 for 25-year-olds and over to a 3.6% rise for 16-17 year olds to US$ 5.50. Women represent an estimated 60% of those who are benefitting. It is estimated by the Living Wage Foundation that the wage level needed to “meet the costs of living” is US$ 13.75 (in London) and US$ 11.70 elsewhere. However, minimum wages in the UK are among the highest in the western world and of late pay rises are coming in at a higher pace than inflation resulting in a slight increase in consumer spend.

It seems an anomaly that the UK manufacturing sector was one of the few in the world that headed north this month, to a 13-month high, whilst the likes of France, Germany, Japan, Malaysia, South Korea and Taiwan went in the other direction; indeed, eurozone manufacturers posted one of their worst monthly figures since 2013. These returns seem to confirm that a global slowdown is on the cards.

Equally worrying for the eurozone was March’s PMI declining for the eighth straight month to a six year low of 47.5, down 1.8 month on month. With backlogs of work being run down at their fastest pace since late 2012 and new orders falling at their fastest rate in over six years, allied with the fact that both German and French manufacturing are in recession, there is no doubt that the bloc faces a turbulent period.

As Dubai’s winter comes to an end, summer is on the horizon and the same could be said of the local economy. Despite so much negativity in the air, there are signs that it may be picking up. Careem’s US$ 3.1 billion acquisition by Uber, Network’s US$ 3.0 billion IPO valuation, Emirates NBD’s US$ 2.8 billion purchase of Turkey’s Denizbank, Brent reaching the important US$ 70 threshold and the DFM up by over 10% this year are all portents that the worse may be over. Just weeks after Dubai Opera hosted the Proms, maybe it is time for the emirate to  become  yet again The Land of Hope and Glory!

Throwing it All Away                                                          

Because of the slowing construction and realty sectors, Moody’s expects that bank loan losses will inevitably grow, based on the fact that lending to real estate entities has increased to 20% of their total lending book (compared to 16% in 2015) but economic conditions have deteriorated. Because of falling demand and increased supply, Reidin have come out with some frightening data that Dubai prices are 23% lower since 2018. With the influx of lower paid workers entering Dubai, and employers reluctant to boost staff numbers, there are fears that the bottom of the market has still not been reached. However, it did estimate that Q4 annualised sales were 8.4%, up from the 7.3% recorded in Q3 – this comes as S&P forecasts a 5%-10% decline this year, due to oversupply and tepid demand; this follows a 25%-33% decline in the Dubai property sector since 2014.

However, a lot could (and will) change when the 25%-30% home buyer deposit is relaxed, and energy prices hover around US$ 70. More tinkering, such as cutting the 4% transfer fee and facilitating visa requirements, will further help the cause.

Emaar, the world’s largest property company outside China, will become one of the first in the world to offer its customers (and partners) referral and loyalty tokens that will give them access to an existing US$ 10 billion operational ecosystem. The plans to leverage blockchain technology, based on the Ethereum blockchain and the ERC20 token framework, could possibly see billions of internet users gain access to the Emaar experience. Furthermore, an initial coin offering in Europe (ICO) could be on the cards within a year.

Flydubai has had to cancel fifteen daily flights following the grounding of its thirteen Boeing 737 Max aircraft, following the global decision to take the model out of operation, as a precautionary safety measure. This comes after 157 passengers and crew were killed on Sunday when an Ethiopian Airlines Boeing 737 Max 8 aircraft crashed on its way to Kenya. The Dubai carrier currently has 237 Boeing 737 MAX aircraft on order, with 46 Next-Generation Boeing 737-800 in operation. (Because of new evidence, Boeing later grounded its  entire 371-global fleet of 737 Max aircraft, following the US Federal Aviation Administration’s much delayed closure decision because new evidence, “made it clear to all parties that the track of the Ethiopian Airlines [flight] was very close and behaved very similarly to the Lion Air flight”).

Package A of the Etihad Rail second stage tender has been awarded to a JV between China State Construction Engineering Corporation and South Korea’s SK Engineering and Construction. The US$ 410 million contract includes all design and build, civil and track works for 139 km of the track. Stage two, when complete, will run for a total of 605 km from Ghuweifat to Fujairah; the total length of the network will be over 1.2k km, linking all the country’s import/export points.

Sheikh Hamdan bin Mohammed Al Maktoum has approved a new strategy to create economic and creative free zones in universities. The aim of the exercise is to support students with education and research so that they can graduate not as students, but successful entrepreneurial employers. This is part of the 50-Year Charter to ensure that Dubai will become the best city in the world.

The UAE is rightly not happy with the EU for adding the country to a ten-country tax haven blacklist set up in 2017 to battle tax evasion. It was included in the first listing but was later removed. According to UAE officials “this inclusion was made despite the UAE’s close cooperation with the EU on this issue and ongoing efforts to fulfill all the EU’s requirements.” As can be seen from their past actions, the EU does not always follow its own rules and is not the easiest body to deal with.

The emirate’s 2018 external non-oil trade neared US$ $353 billion, despite a global growth slowdown, as direct trade reached US$ 206.3 billion and trade through free zones grew 23.0% to US$ 145.0 billion. Of that total, re-exports were 12.0% higher at US$ 109.5 billion, with imports and exports totalling US$ 209.8 billion and US$ 34.6 billion respectively. China still remains Dubai’s leading trading partner, followed by India and the US – with total trade values of US$ 37.8 billion, US$ 31.5 billion and US$ 22.0 billion. (When it comes to FDI, the US is Dubai’s foremost foreign investor with 121 deals totalling US$ 3.9 billion).

Meanwhile Moody’s indicated a 2.8% country forecast for 2019 and estimates that growth was 2.6% in 2018. The ratings agency predicted that non-oil growth would be 0.5% higher at 2.9% but that headline growth would be “constrained” because of previously agreed OPEC cuts.

The February Emirates NBD Dubai Economy Tracker Index sent out mixed signals, with employment in Dubai’s non-oil private sector falling at the fastest rate since January 2010, whilst business conditions maintained a seven-month high at 55.8. Although there has been growth in the volume of output and new work, this has been at the expense of continued price discounting, resulting in on-going lower margins; this has seen a tenth successive month of firms cutting their selling prices, even though input costs have increased over the same period. One of the obvious casualties has been employment, with no increased hiring and job growth in the private sector.

Probably because of the slowing economy, Q4 expat remittances were 7.7% lower at US$ 10.9 billion; 76.2% of the transfers were through money exchanges and the balances through the banking system. The top five destinations, accounting for 62.2% of the total, were India (34.2%), Pakistan (9.4%), Philippines (7.2%), USA (5.9%) and Egypt (5.5%).

Announcing that it will close up to 50% of its branches in 2019, Mashreq Bank, controlled by the Al Ghurair family, will spend US$ 136 million over the next five years replacing physical infrastructure with digital ‘branches’. It seems a logical move particularly when 97% of the bank’s transactions are on-line. Its Chief Executive, Abdul Aziz Al Ghurair, an early pioneer of digitisation, has warned that “the industry is changing, and the banks will have to come out of their comfort zone”.

Network International processed almost 680 million transactions whilst handling US$36 billion in transaction volume. The payments solutions provider, 51% owned by Emirates NBD, is active in over fifty markets in both the Middle East and Africa. Currently, it sees Saudi Arabia – where previously the market was restricted to locals – as a great potential and is ramping up its operations there. The company may well have a 25% IPO on the London market by the end of the year.

DP World posted a 10.2% hike in 2018 profit to US$ 354 million on the back of annual revenue climbing 19.1% to US$ 1.53 billion, driven by acquisitions such as Drydocks World and consolidation of its portfolio. The Dubai company saw the number of TEUs (20’ equivalent units) increase by 1.9% to 71.4 million. The world’s fourth-largest port operator’s capex reached US$ 908 million, lower than the expected US$ 1.4 billion, in 2018, as spending was contained because of the uncertain global trade environment; however, it has spent US$ 2.5 billion on new acquisitions.

Dubai Refreshment Company posted a 26% decline in revenue to US$ 176 million and a 54.0% slump in 2018 profit to US$ 12 million, some of which is attributable to the introduction of 5% VAT which impacted on 60% of the company’s net local revenue and higher prices. The situation was exacerbated because the tax was only applied to carbonated drinks and not to other sugary non-carbonated drinks.

Following the sale of its 10% stake (valued at US$ 164 million) in Aramex by Australia Post, Aramex’s shares jumped 9.1% on the DFM; this was its biggest increase since December 2014, as it opened up the market for overseas buyers. The delivery company is only allowed to have foreign ownership of 49% and its stock was almost at this regulatory limit.

The bourse opened for trading on Sunday 10 March, on 2595, and having shed 41 points (1.6%) the previous week ended 21 points (0.8%) lower by Thursday, 14 March, on 2574. Emaar Properties, having shed US$ 0.23 the previous fortnight lost a further US$ 0.04 to US$ 1.25, with Arabtec flat at US$ 0.58. Thursday 14 March saw increased trades of 342 million shares, valued at US$ 133 million, compared to a week earlier of 103 million shares at US$ 15 million.

By Thursday, 14 March, Brent traded US$ 1.20 (1.8%) higher to close on 67.23; gold also clawed back some of the previous week’s US$ 29 fall (2.2%) to end US$ 9 (0.8%) up at US$ 1,295.

There is no doubt that OPEC’s market presence will be hit by a double whammy – falling production in two of its members (Iran and Venezuela) and increased shale activity in the USA. It is ironic that what was the cartel’s biggest customer is now the world’s biggest crude producer.  The situation will not improve if one believes that the US could be producing 25 million bpd by 2030.

Volkswagen is to go ahead with payroll cuts totalling at least 7k this year, with the aims of achieving a US$ 6.6 billion profit by 2023 and shifting to electric and self-driving cars. The VW brand, which accounts for about 50% of the group’s total deliveries, employs 185k and have been actively reining in excessive expenses which have resulted in the carmaker’s margins being much lower than those of its competitors; last year, its return on sales fell to 3.8% from 4.2%. Over the past three years, the company has made US$ 2.7 billion in savings and has seen a reduction of more than 6.3k positions.

LK Bennett, the womenswear chain, which trades from 200 outlets across the UK and in overseas markets, has called in administrators after a failed attempt to partially sell the business to fashion new investment. Five stores have already closed and a number of staff have been laid off. This comes just eighteen months since the founder, Linda Bennett, regained full control of the 29-year old business after selling out in 2008.

With mounting debts of over US$ 850 million, it seems highly likely that Interserve will soon go into liquidation. Its directors were planning a debt swap for new shares but with the major 27% shareholder, US hedge fund Coltrane, against any such deal, the plan quickly lost traction. The private provider of public services, which employs 45k, will most likely sell the entire company to the current lenders for a nominal amount. This seems to be Carillion all over again.

Despite an annual 4.0% growth, air cargo contracted in January, posting its worst performance in the past three years – the eleventh straight month when growth in capacity has outstripped demand. The main driver behind the disappointing results was the trade tension caused by tariffs and other protectionist measures. Only two of the six global regions bucked the trend with growth seen in both North America (with a 3.3% increase in demand) and Africa. ME freight volumes contracted 4.5% in January, whilst capacity was 4.1% higher.

With a 2.4% contraction in Q4, following a 1.6% decline the previous quarter, Turkey has gone into a technical recession, driven by a trade war with the US which has sent the lire nosediving (falling 30% last year). The trade impasse has resulted from Turkey’s plan to buy Russian missile defence systems and the US not happy with the way that Turkey is fighting the Islamic State Syria and how the Erdogan government has dealt with plotters of a failed 2016 coup which attempted to topple the President. Although the economy did grow 2.6% in 2018, this was a lot lower than the previous year’s 7.4%. Analysts see little chance of any major improvement in 2019.

Germany’s economy continues to struggle with January industrial production down 0.8% on the previous month and 3.3% over the year. The non-adjusted trade surplus, at US$ 16.4 billion, was lower than market expectations, whilst the US$ 20.7 billion current account surplus was 20.8% lower than the December return. Imports grew by 1.5%, after a 0.7% rise in December, whilst exports remained flat

President Trump’s latest budget points to a 3.2% hike in GDP this year, with 3% plus growth over the next five years. December figures show that business inventories climbed 0.6%, whilst the same for wholesale and retail inventories were 1.1% and 0.9% higher.  There were falls in the three main sales sector, retail, wholesale and manufacturing – down by 1.8%, 1.0% and 0.2% respectively. The visible trade deficit climbed 20.1% to US$ 17.1 billion, compared to a year earlier.

The state of the UK economy surprised many by expanding at a faster-than-expected rate in January, driven by upward movements in the manufacturing, services and construction sectors – up by 0.8%, 0.3% and 2.8%.  Month on month GDP growth was at 0.5% (following December’s disappointing 0.4% decline) and up 0.2% quarter on quarter.

However, there is no doubt that the economy would be in a much better shape if politicians had managed to arrange a Brexit arrangement – one way or the other. The shenanigans at Westminster are an embarrassment to both the country and democracy. In the absence of any political leadership and statesmanship, it seems that the country is in danger of Throwing It All Away.

Despite all the doom and gloom around, a positive note was sounded by Bayut.com’s CEO Haider Ali Khan who noted that the start of the year has witnessed positive growth in a selection of key Dubai developments. Although agreeing that prices (for both rentals and sales) continue to head south, the rate of decline has slowed somewhat, with very few areas witnessing drastic decreases of over 10% – as had been the case in recent times. it was also noted that in some popular areas, including Downtown Dubai, Palm Jumeirah and Business Bay, there have even been marginal increases in some segments. has been appointed by Meraas to be the main contractor for the Address Harbour Point project in Dubai Creek Harbour. The project comprises two towers – 65 and 53 stories – and will feature 202 1-4 B/R luxury apartments.

In the wake of the property slowdown, it is reported that both Nakheel and MAF Properties cut staff numbers by 300 and 100 respectively. It seems that both developers are outsourcing more project management work – a cheaper option when the work load has been reduced. The questions are when will the market hit the bottom and will it start its inevitable upturn?

ASGC has been appointed by Meraas to be the main contractor for the Address Harbour Point project in Dubai Creek Harbour. The project comprises two towers – 65 and 53 stories – and will feature 202 1-4 B/R luxury apartments.

HH Sheikh Mohammed bin Rashid Al Maktoum announced the allocation of US$ 409 million to build the first tranche of a “new generation” of Emirati schools. He also approved a US$ 27 million fund to transform the Higher Colleges of Technology into economic zones in the hope that it would help support the career development of 65k students in the hospitality, retail, oil and gas and logistics sectors.

With the construction of the world’s largest single-site strategic solar park well under way, DEWA has requested tenders for developers to build and operate phase 5, with a 900 MW capacity, of the project. The Mohammed bin Rashid Al Maktoum Solar Park, at an estimated US$ 13.6 billion cost, will generate 5k MW by 2030 and will be a major contributor to the Dubai Clean Energy Strategy 2050 that aims to provide 75% of the emirate’s total power output from clean energy. Phase1, adding 13 MW, became operational in 2013, followed by phase 2, using photovoltaic solar panels and generating 200 MW, becoming active in 2017.The 800 MW photovoltaic third phase should come on line next year.

The week Kuwait raised the number of leave days of its private sector to 35 days, the UAE government announces that the country’s private sector will now have the same number of public holidays as the public sector.

According to Dubai Municipality, there was a 6% hike in Dubai’s urban construction sector last year, with 29k building permits approved and 6.0k buildings completed in 2018, encompassing 100 million sq ft. Surprisingly, there were 802 new contracting companies registered last year, bringing the total to 9.1k.

The February Emirates NBD UAE PMI figures indicate that the rate of employment in the country’s non-oil economy fell at its sharpest level in almost a decade to 47.5; any reading under 50 indicates contraction. Although still in growth territory, the overall index of 53.4 is the lowest since late 2016 and 2.9 lower than January’s return. There were major falls in both business confidence and seasonally-adjusted selling prices.

There was good news for many SMEs with the government’s announcement that it will expedite payments which should improve the current “awkward” liquidity problems facing many sectors within Dubai. It is expected that US$ 435 million of additional liquidity to companies will become available. As well as cutting current payment terms from 90 to 30 days, there will also be a reduction in insurance costs for SMEs which will not impact their eligibility for government tenders. The ripple effect of such a positive initiative will be felt throughout the local economy.

As it continues to expand its product offerings, the Dubai Gold & Commodities Exchange has launched two new products, aluminium and zinc futures; it already offers futures and options contracts, covering the precious metals, energy, equities and currency sectors, to more than 175 global members. Last month, the DGCX traded over 1.6 million contracts and in 2018 22.3 million contracts totalling US$ 475 billion.

Beehive has secured US$ 4 million in funding from Riyad Taqnia Fund (RTF) as part of a Series B funding round, with the money being used for expansion plans in the GCC and South East Asia. The five-year old peer to peer lending platform has facilitated funding of almost US$ 100 million to more than 450 businesses.

ITP Media Group has launched a new division – ITP Gaming – as it enters the ever-expanding US$ 138 billion global gaming market, with a myriad of games being played by 2.3 billion worldwide players. The leading sector is mobile gaming, growing at a phenomenal 25% annual rate and accounting for 51% of the total revenue. The new entrant will focus on managing large-scale gaming events, representing gaming publishers and creating new games.

It is reported that Uber Technologies Inc is in advanced discussions to acquire Careem in a possible US$ 3 billion cash and share deal. It was less than three years ago that the Dubai-based ride-hailing entity, with more than one million drivers and operations in more than 100 ME cities, was valued at a much lower US$ 1 billion in a 2016 funding round.

The UAE’s inflation rate decreased by 2.39% year-on-year and 0.12% month-on-month in January, according to a recent report by the Federal Competitiveness and Statistics Authority. The UAE Consumer Price Index (CPI) recorded 109.61 points in January, driven by price declines of 5.08% in the housing/utilities segment and food/beverage of 1.09%.

DIFC posted an impressive 11.0% hike in 2018 profit to US$ 88 million, as consolidated revenue moved 5.0% higher at US$ 199 million. At the end of the year, assets under management stood at US$ 99 billion. Over the year, the number of new companies, new arrivals and leased space all headed upwards – by 25.7% to 2.1k, 5.5% to 23.6k and 8.9% to 4.2 million sq ft. Earlier in the year, HH Sheikh Mohammed bin Rashid Al Maktoum approved a plan to triple the size of DIFC that will see 50k employees and US$ 250 billion under management by 2024.

Troubled Union Properties has received official approval to raise its foreign ownership ceiling to 49%; its share value dipped over 1% to US$ 0.104 on the news. In February, the developer posted a US$ 17 million 2018 profit – a major move forward compared to the US$ 740 million loss the previous year.

The bourse opened for trading on Sunday 03 Mar, on 2636, and having risen by 3.7% the previous fortnight ended the week 41 points (1.6%) lower by Thursday, 07 March, on 2595. Emaar Properties, having jumped $ 0.23 the previous fortnight, shed US$ 0.05 to US$ 1.29, with Arabtec down US$ 0.01 at US$ 0.58. Thursday 28 February saw trades of 103 million shares, valued at US$ 15 million, compared to a week earlier of 201 million shares at US$ 77 million.

By Thursday, 07 March, Brent, having jumped US$ 5.31 (8.6%) the previous fortnight had a lacklustre trading week, dipping US$ 0.27 (0.4%) to close on US$ 66.03; gold’s recent good run came to an abrupt halt slumping US$ 29 (2.2%) to end the week on US$ 1,286.

Mining giant Rio Tinto has posted full year underlying earnings of US$ 8.8 billion, (2017 – US$ 8.6 billion). The company also posted a final dividend of US$ 1.80 per share, plus a special dividend of US$ 2.43 per share.

To mark its 110^th anniversary, Bugatti has launched a one-off celebration vehicle – La Voiture Noire. At over US$ 12 million, it will become the most expensive sports car ever made and is built along the lines of the Bugatti Type 57 SC Atlantic – with only four vehicles made between 1936 and 1938. It will also have a unique 1.5k horse power 16-cylinder engine.

After three months of incarceration, former Nissan boss, Carlos Ghosn has been released on US$ 9 million bail. Numerous charges against him include financial misconduct and aggravated breach of trust and if found guilty he could face up to ten years in prison. As a French citizen, it will be interesting to see how far the government of that country gets involved in the case.

Despite Elon Musk promising to deliver a US$ 35k Model 3, Tesla woes continue as it posts a Q1 loss that saw its shares sink 4.1% to US$ 307 on the news. He has now promised to go in the black in Q2 by “significantly reducing” its spending on sales and marketing, as it focuses on direct-to-consumer sales and reducing the number of outlets to 130; it is estimated that concentring on on-line sales could save 6% in costs. Furthermore, any car delivered before 01 July will be eligible for a US$ 3.75k government incentive. Although he promised, it is unlikely that car sales will top 500k this year.

Debenhams has issued a profits warning saying its turnaround plan is likely to prove “disruptive” as trading conditions remain tough. In H1, to 02 March, the retailer announced that its like-for-like sales in its core UK market were 6% lower but noted that the rate of decline had moderated. The news did little for the company’s market value which dipped below US$ 53 million, as it fell 8% in early morning trading. Watch out for the much-maligned Mike Ashley who already owns almost 30% of the battered retailer. Having acquired House of Fraser last year, he could be in the market for a bigger share and considering a merger of the two famous retail brands.

Following a surprise 9.1% January jump, Chinese exports will probably show a 4.8% decline, year on year, in February, whilst imports fell for the third straight month as the impact of US trade tariffs begin to take their toll. The need for an amicable settlement between the world’s two superpowers is imperative for world trade to get back on track. For that to happen, Beijing will have to agree to certain structural economic changes and see that its bilateral trade surplus continues to head south. In the week when its overall trade surplus fell by a third to US$ 26.4 billion, China announced that it expects the economy to grow at between 6.0%-6.5% – its slowest pace in almost thirty years.

Australia is not happy with China’s apparent decision to ban its coal exports to five ports due to additional environment checks. Some in Australia thinks this could be a retaliatory move for Australia ‘picking on’ their high-tech company Huawei. However, the IMF is happy with the ‘robust and resilient.’ Australian economy, whilst extolling the virtues of its infrastructure and labour market; the organisation did voice some concern about the downturn in the housing sector and stagnant wage growth.

Worrying news for secret bankers, with the Italian government demanding that Swiss lenders disclose the names of bankers working in Italy, along with details of how their clients’ assets are managed. The letter, sent in January, came three weeks before UBS was hit by a French court fine of US$ 5 billion for helping French clients to launder their assets. On the surface, it seems that the Italians want to ensure that Swiss banks pay Italian taxes, but it is not inconceivable that this information could be used in future prosecutions.

The UK government has agreed to pay US$ 43 million to Eurotunnel in an agreement to settle a lawsuit over extra ferry services, in the event of a no-deal Brexit. It is claimed that the May administration handed out three contracts in a “secretive” way and that one of the firms awarded a ferry contract, Seaborne Freight in a US$ 18 million deal, despite the company having never run a ferry service and having had its deal already cancelled. Eurotunnel wrote to the error-ridden Transport Secretary Chris Grayling pointing out this anomaly and that it should have been considered. The fact that he is still in a job speaks volumes of the way the government moves from one self-made crisis to another.

On an annualised basis, the Indian unemployment rate climbed 1.3% to 7.2% in February – its highest level in almost three years – whilst the number of employed persons dropped 6 million to 400 million. This was probably not what Prime Minister Narendra Modi wanted to hear two months before an early May general election that could easily lead to a change in government for the world’s largest democracy.

Another blow for the Indian Prime Minister came with news that Donald Trump will end India’s preferential trade treatment under a program that allows US$ 5.6 billion worth of Indian exports to enter the United States duty free. The US President is concerned that it “has not been assured the United States has been provided equitable and reasonable access to the markets of India,” Even his most ardent critic must agree that he has a point, as the goods and trade deficit with India stands at US$ 27.3 billion.

Following a massive 9.1% jump in November new home sales to 599k, December witnessed another climb – this time by 3.7% to 621k. This was even more impressive as the general consensus pointed to an 8.7% decline. A 15.3% slump in Midwest sales was more than offset by a 44.8% spike in the Northeast. Median sales were 5.0% higher, month on month, to US$ 318.6k but 7.3% lower than the December 2017 price of US$ 343.5k.

Meanwhile the ISM non-manufacturing index for February rebounded to 59.7 after falling to 56.7 a month earlier and this despite concerns about the uncertainty of tariffs, capacity constraints and employment resources. The main driver was the pace of new orders growth, climbing 7.5 to 65.2, month on month.

There will be one unhappy US President hearing the news that, last year, his country’s trade gap ballooned to US$ 621 billion – a decade long high. The deficit is bound to continue to head north if trade continues as is – last year’s export totals slumped 1.9% to US$ 205.1 billion, whilst imports headed in the other direction, up 2.1% to US$ 264.9 billion. Of that total, the situation worsened in locales such as China, up US$ 43.6 billion to US$ 419.2 billion, and the EU which saw a US$ 17.9 billion widening to US$ 169.3 billion (as EU exports rose to US$ 487.9 billion). Certain governments will soon be heeding Donald Trump’s warning – Don’t Play With Me.