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Charity Begins At Home!                                                         04 October 2024

fäm Properties posted that Q3 overall sales transactions topped 50.4k, (37.9% higher on the year and 16.6% to the good on the quarter). Volume wise, the 39.1k apartment sales accounted for 77.0% of the Q3 total, (and 43.9% higher on the year), with a value of US$ 19.21 billion, whilst 8.2k villas were sold, with a value of US$ 10.68 billion – 16.6%  higher on the year and 18.4% on the quarter. The surge in the sector can be gleaned from the various median prices over recent times – US$ 277, US$ 321, US$ 383 and US$ 412 (all in per sq ft) in 2021, 2022, 2023 and 2024. For plot sales, there were 42.3% and 45.9% rises in volumes. on the year and the quarter, at 2.1k plots, valued at US$ 8.15 billion. Commercial real estate posted a 12.1% annual rise to 1.11k sales, valued at US$ 627 million.

It is interesting to note Q3 property sales over the past five Q3s, to 2024, read US$ 4.93 billion, US$ 11.55 billion, US$ 18.94 billion, US$ 29.75 billion and US$ 38.66 billion; transactions over that period were 8.6k, 15.9k, 25.5k, 36.7k and 50.4k. Over the period, the top five performing locations were Jumeirah Village Circle, Dubai South, Business Bay,, Wadi Al Safa and Dubai Hills, with 4.5k, 2.9k, 2.7k, 2.4k and 2.3k sales, valued at US$ 1.45 billion, US$ 2.25 billion,  US$ 1.97 billion,  US$ 1.44 billion and US$ 2.01 billion. In Q3, the most expensive sale, at US$ 749 million, was for an apartment at the One at Palm Jumeirah. A breakdown by value – below US$ 272k,  US$ 272k-US$ 545k,  US$ 545k-US$ 817k, US$ 817k-US$ 1.36 million and US$ 1.36 million plus – with 29%, 31%, 18%, 14% and 8% of sales. When it comes to primary versus secondary sales, the volume ratio was 68:32 and by value 67:33.

The latest Cavendish Maxwell report indicates that in the eight months YTD, new project launches neared 86k units, with an aggregate sales value of US$ 58.23 billion which augurs well for the year end figures beating last year’s record of US$ 74.11 million; a further 40k is expected by year-end, bringing the total to some 126k.  Sales transaction volumes in August reached 16.15k with Oqood, (off-plan), registrations accounting for 64.8% of all transactions, up by 6.5% month-on-month. The consultancy anticipated “that new launches will maintain their historically high levels throughout the remainder of 2024 and for a further 35k-40k units to enter the off-plan market.” The more popular areas for apartments are Dubai Islands, Jumeirah Garden City, Dubai Maritime City, Motor City, and Dubai Land Residence Complex, and for villas – The Valley, The Acres, The Oasis, and The Height Country Club. August witnessed the total volume of sales transactions increasing 0.28%, at 16.15k transactions – the second-highest month on record overall. Seven of the eight months of 2024, (with the exception of April), were record-setting months.

Property prices continued climbing to all-time highs, reaching US$ 390 per sq ft – 82.4% above April 2009’s nadir and 16.0% above the peak of September 2014. With the usual caveats, Cavendish Maxwell noted that, on an annual basis, prices have increased by 17.7% in August and now marks forty-two straight months of year-on-year increases.

With demand outstripping supply, it was no surprise to witness an 18.2% decline to four hundred deals registered in Dubai’s four prime areas. Over Q3, the number of home listings in the four prime areas declined by 52% – an obvious indicator that supply is failing to keep pace with the rapidity of sales. The number of US$ 10 million-plus home listings more than halved to 3.3k, whilst the number of sales rose 8.2% to ninety-two – a rise of 8.2%. Over the nine-month period to 30 September, home sales of over US$ 10 million nudged 1.8% higher to two hundred and eighty-two, valued at US$ 4.50 billion. The leading location continues to be Palm Jumeirah, with nineteen Q3 deals, totalling US$ 344 million, followed by Dubai Silicon Oasis and Dubai Hills Estate. Knight Frank’s data showed that nine sales worth more than US$ 10 million were recorded on the Palm Jebel Ali, totalling US$ 97 million in Q3 2024, and US$ 1.1 billion YTD, equating to 24.4% of Dubai’s total value of luxury home sales. As the demand for such homes heads north, there is a knock-on short-term impact that sees US$ 10 million plus listings slumping – YTD figure are 51% lower compared to 2023. However, despite this, the ratio of US$ 10-million-plus home sales to listings has climbed from 2023’s 10.7% to 17.1% this year.

In Q3, the average transacted price for a home in Dubai’s prime neighbourhoods stood at US$ 3.5 million, with Palm Jumeirah accounting for 90.4% of Q3 prime deals, followed by Jumeirah Islands (6.1%), Emirates Hills (2.2%) and Jumeirah Bay Island (1.4%).

Buoyed by the success of its initial entrée into Dubai’s residential market sector, Franck Muller Aeternitas Tower, London Gate, the leading Swiss luxury watch manufacturer, has now unveiled Franck Muller Vanguard Tower. Located in the heart of Dubai Marina, the US$ 436 million luxury thirty-four floor development will house seven hundred and twenty-two units – ranging from studio, (with sizes of between 414 sq ft– 674 sq ft) to three bedrooms, (spanning between 1.77k sq ft – 1.86k sq ft). Prices will start at US$ 341k, with handover expected within three years. According to Morgan’s 2024 report on Dubai’s Branded Residences, the number of units built in 2024 has risen by 50% from 2022 – equating to 7.2% of all property transactions in Dubai.

A new entrant to the burgeoning Dubai residential sector is Reef Luxury Developments, who will invest US$ 3.81 billion, to build thirty projects in the emirate – and 5k residential units – by the end of next year. It confirmed that is has already bagged a land bank across various places and will launch US$ 1.36 billion of projects by the end of 2024. All Reef apartments will have temperature-controlled sunken balconies, a developer-patented innovation that allows residents to enjoy year-round outdoor living. The developer has invested US$ 11 million in R&D to lead the real estate industry for innovation and provide more value to its customers focusing on technology and design.

This week saw the release of ‘Under Real Estate Strategy 2033’, with the aim of increasing the emirate’s real estate transactions by 57.7% to US$ 272.5 billion over the next decade. It also expects to raise the homeownership rate to 33% and implement programmes for affordable housing, whilst focusing on transparency and global marketing. New initiatives and policies will encourage people to buy more properties and turn to ownership, bring more transparency to the market, and enable developers to launch more affordable developments.

Although the sector has surged in recent years – and has now surpassed the record 2014 figures – it is hoped that the introduction of more affordable units as part of the Real Estate Strategy 2033 will open up opportunities for more people to own properties and help tenants transition to ownership. Ari Kesisoglu of Property Finder commented that the real estate market had seen a remarkable surge in property ownership over the past two years, and that this initiative “aligns perfectly with our long-held belief that strategic investments and cross-industry collaboration can enhance trust, technology, transparency, and talent in the real estate sector”. He also noted that the Dubai’s vast land availability presents a unique opportunity – a ‘blank canvas’ for real estate development.

Dubai’s September S&P Purchasing Managers’ Index Report saw the emirate’s overall activity rising at its fastest pace in four months, in contrast to the latest PMI Report for the country that showed the weakest expansion in business activity for three years; this was despite a slowdown in new business volume. The report noted that “the expansion led non-oil businesses to increase staffing and inventories to greater degrees than in August. Supplier performance also improved, though to a less extent amid reports of customs delays.” There was a marked jump in overall input costs, albeit with the rate of inflation easing to a five-month low, with the latest rise in charges being the quickest since the start of 2018.  Output prices also increased, as firms attempted to pass-through costs to customers.

More than eight years ago, the federal government liberalised fuel prices so that they could be aligned with market rates until the onset of the pandemic which saw prices frozen by the Fuel Price Committee, in 2020. The controls were removed in March 2021 to reflect the movement of the market once again. On Monday, retail prices saw declines, after average 8.6% September reductions for petrol. The breakdown of fuel prices for a litre for October is as follows:

• Super 98          US$ 0.725       from US$ 0.790           in Oct (down by 8.3%)
• Special 95        US$ 0.692       from US$ 0.757           in Oct (down by 8.6%)
• Diesel               US$ 0.673       from US$ 0.757           in Oct (down by 8.9%)
• E-plus 91         US$ 0.708       from US$ 0.738           in Oct (down by 6.5%)

Financial Times Ltd’s ‘fDi Markets’ has once again ranked Dubai as the world’s leading city, (for the sixth consecutive half-year period), for attracting Greenfield Foreign Direct Investment projects, ahead of London, Singapore and New York; in H1, Dubai’s five hundred and eight Greenfield FDI projects saw Dubai’s global share of the market 0.5% higher to 6.2%. Sheikh Hamdan bin Mohammed, Dubai’s Crown Prince, praised the city’s evolving economic policies and infrastructure as key factors in its appeal to investors and multinational corporations. India was the source country with the highest total estimated FDI capital into Dubai, accounting for 19.9%, followed by Switzerland (19.6%), US (12.0%), UK (8.3%) and France (7.4%).

A number of telemarketers in the UAE have been fined after authorities discovered over 2k violations. Under Cabinet Resolutions No. 56 and 57 of 2024, individuals are prohibited from using their personal numbers for marketing purposes, with penalties of US$ 1.36k, US$ 5.45k and US$ 13.62k for first, second and third violations respectively.

Because a takaful insurer failed to meet its legal minimum capital requirement, the Central Bank of the UAE has banned it operating in the UAE, from issuing or concluding new, or renewing, motor and health insurance contracts. The regulator, (which through its supervisory and regulatory mandates, works to ensure that all insurers, their owners and staff abide by the UAE laws), has given the unnamed institution six months to remediate the solvency position and comply with its directions.

The DFM opened the week, on Monday 30 September, three hundred and twenty-nine points (7.8%) higher the previous six weeks but, not surprisingly because of increased regional tensions, shed one hundred and fifteen points (2.5%), to close the trading week on 4,406 by Friday 04 October 2024. Emaar Properties, US$ 0.01 lower the previous week, lost US$ 0.14, closing on US$ 2.23 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.69, US$ 5.65 US$ 1.73 and US$ 0.37 and closed on US$ 0.68, US$ 5.44, US$ 1.66 and US$ 0.35. On 04 October, trading was at one hundred and fifty-seven million shares, with a value of US$ 100 million, compared to one hundred and fifty million shares, with a value of US$ 191 million, on 27 September.  

The bourse had opened the year on 4,063 and, having closed on 30 September at 4,503 was 440 points (10.8%) higher YTD. Emaar started the year with a 01 January 2024 opening figure of US$ 2.16, and has gained US$ 0.22, to close YTD at US$ 2.38. Four other bellwether stocks, DEWA, Emirates NBD, DIB and DFM started the year on US$ 0.67, US$ 4.70, US$ 1.56 and US$ 0.38 and closed YTD at US$ 0.70, US$ 5.53, US$ 1.71 and US$ 0. 36.

By Friday, 04 October 2024, Brent, US$ 2.71 lower (3.6%) the previous week, gained US$ 6.07 (8.4%) to close on US$ 78.05. Gold, US$ 179 (5.8%) higher the previous four weeks, shed US$ 13 (0.5%) to end the week’s trading at a record US$ 2,668 on 04 October 2024.

Brent started the year on US$ 77.23 and shed US$ 5.47 (271%), to close 30 September 2024 on US$ 71.76. Meanwhile, the yellow metal opened 2024 trading at US$ 2,074 and gained US$ 576 (27.8%) to close YTD on US$ 2,650.

As with most luxury carmakers, Aston Martin has been impacted by supply chain issues, falling sales in China and increased competition in the sector, after warning that its 2024 revenue and profits will be lower than expected; last year sales were at 6.6k vehicles, with about 20% of that total bound for SE Asia. This year, it expects production levels at round 1k less than originally planned. Monday’s announcement sent its shares tumbling by as much as 14%. Stellantis, the owner of brands such as Peugeot, Citroen, Fiat and Jeep, also saw its share price plummet on Monday, after a profits warning, noting that its profit margins would be significantly lower than previously thought this year. Other European carmakers are facing similar problems including Volkswagen, Mercedes-Benz and BMW having already downgraded their profit forecasts. The problems at Stellantis and Aston Martin reflect a wider malaise in the European car industry. According to data from the European Automobile Manufacturers Association, August sales of battery-powered cars were down nearly 44% on the year, while their share of the market dropped from 21.9% to 14.4%.

Despite its like for like sales growth slowing, Tesco posted a 4.0% hike in total Q2 sales, excluding fuel, at US$ 41.33 billion – with its adjusted operating profit at US$ 2.05 billion. The country’s biggest supermarket put this improvement down to its focus on value amid the continuing squeeze on shoppers’ budgets, and higher demand for its Finest premium ranges, which were almost 15% higher on the year

Liverpool-based Applied Nutrition has posted plans for a US$ 669 million, (GBP 500 million), flotation on the LSE, with a retail offering to private investors being coordinated by RetailBook, enabling them to acquire millions of pounds of stock at the IPO price. Issuing its Emerging Issues Task Force’s document will enable shares in Applied Nutrition to begin trading before the Budget in late October. There are reports that the company wanted the IPO before the budget because of the possibility that existing shareholders could incur a higher rate of capital gains tax post budget. Applied Nutrition’s largest brands include ABE – All Black Everything – which is a pre-workout range now stocked by Walmart, and BodyFuel, a hydration drink. The company formulates and makes premium nutrition supplements for professional athletes and gym enthusiasts and is the official nutrition partner of a range of English football clubs, including Premier League side Fulham, and the Scottish Premiership side Glasgow Rangers; it also has partnerships with professional boxers, MMA stars and in sports including basketball, cycling and rugby league. It sells its products in over sixty countries.

Although Harland & Wolff Group Holdings, with fifty-nine employees, has formally entered administration, for the second time in five years, its four operational companies, which run the yards, will continue to trade; their main yard is in Belfast with two more in Scotland, Methil and Arnish, and Appledore in England.  The shipbuilder said, “the Administrators will unfortunately be required to reduce the headcount upon appointment. The company has also reconfirmed that the administration process means that shareholders in Harland and Wolff will see the value of their investment wiped out. It does seem that, in 2020, the previous Norwegian owners had withdrawn support, and the business fell into insolvency, having not built a ship in a generation, with the business then taken over by Infrastrata. It was a small London-based energy firm which did not have significant experience in marine engineering, but then changed the name back to Harland and Wolff and in 2022 won a major Royal Navy contract as part of a consortium led by Navantia, Spain’s state-owned shipbuilder. However, finances did not improve – the 2021 accounts, covering a seventeen-month period, posted a US$ 33 million loss, in 2022 a US$ 37 million turnover, with a US$ 93 million deficit, (with the auditor’s opinion of “material uncertainty” about the firm’s ability to continue as a going concern), and last year a yet to be audited US$ 57 million loss. The nail in the company’s coffin came in July when the Sunak government confirmed there would be no support as there was “a very substantial risk that taxpayer money would be lost”.

A former owner of Misguided, Alteri Investors, the youth fashion brand, is in talks to buy Kurt Geiger, the upmarket shoe and accessories retailer. Several other parties are also considering bids for the sixty-one-year-old footwear and accessories brand, which has been owned by Cinven, the private equity firm, since 2015. Kurt Geiger, which could raise US$ 535 million in any sale, has around seventy stores, and multiple concessions within department stores, including Harrods and Selfridges.

A US$ 110 million proposed takeover bid, by Mike Ashley’s Frasers Group, has been rejected by the struggling UK luxury brand, Mulberry whose main shareholder is Singapore-based Challice; the potential buyer is already a 37% shareholder, but the bid was turned down because it did not recognise the company’s “substantial future potential value”. It claimed to be acting to prevent “another Debenhams situation” after apparently being kept in the dark over a move by Mulberry, last Friday, to raise cash. It has become a casualty of the global slump for luxury goods, such as handbags, which has also badly impacted the whole industry. Its latest accounts indicated that a “material uncertainty which may cast significant doubt on the group and parent company’s ability to continue as a going concern.” Mulberry shares were trading 3% lower on Tuesday morning.

Recent Chinese measures, to kickstart its economy, will not be helped by news that its largest EV market, the EU, has decided to implement measures, first introduced in summer, for the next five years. The charges were calculated based on estimates of how much Chinese state aid each manufacturer has received following an EU investigation. The EC set individual duties on three major Chinese EV brands – SAIC, BYD and Geely. Although German carmakers opposed the new tariffs, (with Volkswagen saying it was “the wrong approach”), and several member states abstained, the likes of France, Italy, the Netherlands and Poland backed the import taxes. The proposal was approved because it could only be rejected if a qualified majority of fifteen members voted against the motion.

Figures show that in August this year, EU registrations of battery-electric cars fell by 43.9% on the year, in the UK, demand for new EVs hit a new record in September, but orders were mostly driven by commercial deals and by big manufacturer discounts. The Society of Motor Manufacturers and Traders expressed concern that firms had “serious concerns as the market is not growing quickly enough to meet mandated targets”. It is obvious that improved incentives are required to help the domestic industry, as the Starmer administration has pledged to ban the sales of new petrol and diesel vehicles by 2030, after the former government had moved the timetable back to 2035.  Under the Zero Emission Vehicle mandate, at least 22% of vehicles sold this year must be zero-emission, with that target expected to hit 80% by 2030 and 100% by 2035; any manufacturer not meeting the target could be hit with a US$ 19.7k fine per car. BMW, Ford and Nissan have already advised Chancellor Rachel Reeves that they were likely to miss these targets, claiming that higher energy/material costs and interest rates had meant electric cars remained “stubbornly more expensive and consumers are wary of investing”; the average cost to buy an electric car is UK 63.0k.

43% of Zambia’s population of twenty million are connected to the national electricity grid and now the country is facing its worst-ever blackout, sometimes for three days at a time; a national disaster was called last February. This is the country home to the Zambezi, Africa’s fourth largest river, and the massive hydro-powered Kariba Dam. Because of the drought, that has led to parts of the river drying up, only one of the six turbines at Zambia’s power station is operating, resulting in the generation of a paltry 7% of the 1,080 MW installed at Kariba. But this year, it has been hit by one of the severest droughts in decades – caused by the El Niño weather phenomenon – which has decimated the country’s power-generation capacity. Only 13% of Zambia’s electricity emanates from coal, 3% from solar, diesel and heavy fuel oil are even lower, accounting for 3%, with 84% from water reservoirs such as lakes and rivers. Lack of finances has seen the country unable to pay for imported energy since suppliers insisted on advance payment. A financial crunch also severely restricted the government’s ability to import power, as suppliers wanted payment upfront. On Wednesday, its only coal-fired power plant, Maamba Energy, returned to maximum capacity after several weeks of maintenance and now Zambians will have at least three hours of electricity a day.

Today, the Labor Department posted that the US jobless rate dipped 0.1% to 4.1%, with employers adding a further 254k jobs – almost more than 70% of the 150k estimate some analysts had forecast; these figures give comfort that the economy will not be heading into decline. This was also good news for the Biden administration, which has created sixteen million in its almost four-year tenure to date, with the presidential election edging nearer. However, surveys indicate that the public is still wary about the state of the US economy as a 20% price hike in prices since 2021 still impact consumer sentiment. Furthermore, since October 2023, job growth has slowed and unemployment rate has been edging higher, though it remains at historically low levels. A triple whammy of the impact of Hurricane Helene, the Boeing labour strike and the start of a new school year could easily move the October figures downwards, which could be to Biden’s detriment.

Under new legislation, and starting at the end of this month, UK banks will have the power to pause payments for up to four days, replacing the old law that transfers must be processed or declined by the end of the next business day. This will give financial institutions more time to investigate fraud. It is no secret that bank fraud is on the rise and it is estimated that it accounts for a third of all crime in England and Wales, from various means such as by impersonating a genuine trader to trick victims into transferring money, or through the increasingly popular romance scams.

The former chairman of the Post Office, who was sacked after fourteen months in the job, told the public inquiry on Tuesday that the institution was in a “mess”, run by executives and government appointees who “dragged their feet” in efforts to compensate and exonerate sub-postmasters. Henry Staunton also claimed that the organisation had a “huge cultural problem” with a lack of ethnic and gender diversity – and had overseen “vindictive” investigations into two sub-postmasters who served on the company board. After taking the position in December 2022, he said he found a culture of chaos in senior management that immediately required more than the two days a week he had been told was required. He also indicated that he thought that executives did not fully accept the findings of the High Court judgment that established the role of the Horizon computer system in hundreds of flawed prosecutions. He also commented that initially a “ridiculous” amount of his time was taken up with requests for a pay rise from chief executive Nick Read, who he previously told a Parliamentary inquiry was unhappy and threatening to resign.

I am sure that Lord Mervyn King does not read this blog, but if he had maybe he would have come up earlier with the idea that the BoE (and several other central banks) had been too slow to press the button to push rates higher. Lost in France – 22 July 2022, was but one of many blogs that criticised the BoE of being too dilatory and their vacillating attitude has probably cost the UK taxpayers billions.

At the beginning of H1, UK interest rates stood at 1.25%, having risen by only 0.1% in H1, but many analysts consider that rate rises have still some distance to go before they will have any control over inflation which currently stands at 9.1% – a forty-year high. This observer has espoused that the Bank of England has left it too late so if, and when, it takes more positive action, and pushes rates higher, it, like the ECB, will be a case of too little too late. Economics 101 teaches that when rates move higher, it becomes more expensive for consumers and businesses to borrow, so that businesses and consumers start spending less, which in turn slows demand for goods and services and then the pace of price rises slows. The problem this time is the cost of soaring energy prices – and any rise in rates will have little impact on prices and must be gauged against the backdrop that the economy earlier this year was in excess demand. In fact, the real economy is slowing when inflation erodes real income and real spending,

The good Lord noted that record high inflation was caused by the Bank of England keeping interest rates too low for too long, and whilst noting that inflation had been tamed, he criticised all central banks for failing to act fast enough initially. Additionally, when he was asked if the Bank of England kept rates “too low for too long”, replied “Yes, and that’s why we had inflation.” He concluded that “they raised interest rates like all other central banks – it wasn’t just the Bank of England – and inflation is now back under control.”

He suggested that the BoE could be a “bit more aggressive” on cutting interest rates, but that the speed at which borrowing costs are reduced will depend on the rate of inflation, and it was “vital” it remained low. He also cautioned that if the latest ME crisis could be a catalyst, in particular any movement in oil prices which could fuel inflation. His remarks on Tuesday saw the pound dip over 1.0% to US$ 1.317.

On Tuesday, a new law, benefitting three million service workers in England, Scotland and Wales, but not N Ireland, will see all tips, whether by cash or card, from customers should be paid to the workers and not to the establishment owners. It applies across industries, but is expected to benefit those working in restaurants, cafes, bars, pubs, hairdressers, or as taxi drivers the most; if not applied, staff will be able to bring claims to an employment tribunal. Staff can now request a breakdown of how tips are being distributed every three months. Unfortunately, the tax law remains – workers will still have to include tips on their tax returns.

In 2005, the then thirty-five-year-old supermodel Naomi Campbell founded Fashion for Relief; this week, she was disqualified from being a trustee for five years by the Charity Commission. The inquiry found that between April 2016 and July 2022, it was found that between April 2016 and July 2022, the charity, merging fashion and philanthropy, raised just 8.5% of the its overall expenditure. Fashion For Relief had been dissolved and removed from the register of charities earlier this year. The charity’s mission was to make grants to other organisations and give resources towards global disasters in a bid to relieve poverty and advance health and education, by generating income from hosting fundraising events to generate income, including in Cannes and London. The Charity Commission recovered US$ 456k, as well as protecting a further US$ 130k  of charitable funds, whilst finding serious mismanagement of funds; this included using charity funds to pay for Campbell’s stay at a five-star hotel in Cannes, France, as well as spa treatments, room service and cigarettes. The model said she was “extremely concerned” by the findings and an investigation on her part was under way.

There is no doubt that most charities are well managed and most of the funds raised will go to benevolent causes; however, there are some where too much money is paid to the senior “management”. One recent example was The Captain Tom Foundation, set up in 2022, which raised over US$ 51 million but, in 2022 was the subject of a Statutory Inquiry, launched by the Charity Commission. There were concerns about several seemingly dubious arrangements between the family and the Foundation, along with the issue of a ‘spa building’ constructed at the family home. For some it seems that Charity Begins At Home!

History Repeats Itself?                                         20 September 2024   Reports indicate that Emaar is to build a new super tower and that it could be on par to compete with its sister tower, Burj Khalifa, to become the world’s biggest building – if it is to top 828 mts. Early design concepts reportedly include bold and futuristic visions — ranging from glass tube-style structures to rocket-inspired forms — further cementing Dubai’s ambition to stay at the forefront of global architectural innovation. Location details have yet to be released.  ( Rumour-mongers are out in force indicating that this news could be a precursor of a pending recession, as coincidentally happened around the time of the building of the Burj Khalifa and the GFC). Danube Developers recently introduced Bayz 102, a new project. Situated in Business Bay, this towering structure will rise one hundred and two levels and will come with a helipad for air taxis. It will provide residents with over forty amenities, such as a health club, swimming pool, sky bar, sports arena and outdoor cinema – features that are becoming increasingly popular with developers.   Dutco Construction Co LLC has been awarded a US$ 232 million contract by Meraas, to construct the twenty-seven-storey residential Bvlgari Lighthouse on Jumeirah Bay Island; construction is soon expected to start, with marine works now completed, and completion is slated for Q2 2027. Designed by the renowned architecture firm Antonio Citterio Patricia Viel, Bvlgari Lighthouse is poised to become one of Dubai’s most prestigious addresses, adding a touch of elegance to the island. Inspired by the Italian jeweller’s legacy, the Bvlgari Lighthouse will feature opulent four- and five-bedroom penthouses, along with a unique eight-bedroom Sky Villa on the top three levels, which will include expansive private rooftop gardens, a private pool, and stylish lounge areas.   Over the next six months, SOL Properties, the real estate development arm of the Bhatia Group, will launch of a series of high-end projects, with an anticipated Gross Development Value of US$ 3.27 billion. It has acquired four million sq ft of prime land for ultra-luxury projects and affordable luxury projects, with two ultra-luxury developments, valued at US$ 2.23 billion, in the West Crescent of Palm Jumeirah and the Fairmont Residences Solara Tower Downtown Dubai. Two million sq ft of land has been bought for affordable luxury projects in Jumeirah Village Circle, Jumeirah Village Triangle, along with a 500k sq ft plot in Abu Kadra. Recently, the developer has completed and handed over the affordable luxury project, Oakley Square Residences in JVC, which has been fully sold.   Having launched a new development company – Beyond – Omniyat Group has unveiled an eleven million sq feet strategic project on the Jumeirah coastline, of which eight million square feet will be dedicated to Beyond, a development company focused on the wider luxury real estate market. Mahdi Amjad, founder and executive chairman of Omniyat, commented that, “Omniyat is proud to partner with Dubai Maritime City to bring this visionary development to life”.   Recent studies show that property owners are opting for short-term rentals in prime locations because of strong occupancy and higher returns, and that there is growing demand in the emirate, attributable mainly to digital nomads and visitors from European and Asian countries. Anna Skigin, CEO of Frank Porter, noted, “listings are growing across the UAE as more and more guests come to experience the region.” Although rates continue to remain stable, with a slight increase due to more listings coming into the market and competitive rates from hotels, they are still higher, at a nightly average of around US$ 136, compared to many other global locations. However, rates in Dubai are still significantly higher than in the rest of the world, averaging around US$ 136 per night, but ranging from US$ 54 to US$ 27k. The fact that Dubai is a tourist, financial and global hub makes the emirate even more appealing to a raft of international visitors; add to that, the allure of staycations among residents, also boosting the popularity of this sector. It is estimated that UAE, Indian, Bangladeshi, Pakistani and GCC residents make up about 70% of visitors and business owners. According to Frank Porter, the most popular areas for short-term rentals are Dubai Marina, Jumeirah Beach Residence, Downtown, Jumeirah Village Circle, and Palm Jumeirah. Owners can earn a nightly average of US$ 1.22k per night, with Dubai Marina, Jumeirah Beach Residence, Palm Jumeirah, and Downtown Dubai providing the highest rate per night for short-term rentals. Frank Porter also estimates that the short-term rental market provides a 20% higher return than long-term rentals, noting that “long-term lets, and other types of investment such as bonds and stocks tend to be more rigid and have a lower level of flexibility.”   In an attempt to double the group’s turnover to US$ 10 billion over the next five years, Sobha Group’s founder, PNC Menon, has announced that it will be is venturing into jewellery and furniture sectors, setting up Sobha Jewels and Sobha Furniture. The seventy-six-year-old entrepreneur has turned Sobha Realty into a US$ 5.0 billion realty business and has recently announced that he would be stepping down as chairman of the US$ 5 billion Sobha Realty. Meanwhile, his son Ravi has taken over the reins of Sobha Realty, with projects in Dubai, Muscat and India, and plans to expand further across the US and Australia. Over the next few years it expects to expand its workforce by 40% to 35k; it also has a lighting fixture business and a ‘design studio’ in Dubai where it employs over five hundred architects and engineers, as well as a contracting company and a pod manufacturing business.

The RTA has confirmed that electric air taxis will be operational in the emirate as from Q1 2026, operating from four vertiports – at Dubai International Airport, Palm Jumeirah, Dubai Marina and Dubai Downtown. The vehicles, designed to carry a pilot and four passengers at 320 kph, will be considerably less noisy than normal helicopters with a sound level of no more than forty-five decibels, which is said to be less than the sound of rain. A further benefit is said to be the reduction in the level of traffic across Dubai., (but that would need a raft of such vehicles that could snarl air traffic). The new heliports will be designed and developed in collaboration with air mobility infrastructure firm Skyports and will include dedicated take-off and landing areas, electric charging facilities, a dedicated passenger area. It is reported that the RTA has given Joby Aviation six years exclusive rights to operate air taxis.

The first-ever Aviation Future Week will take place next month, sponsored by Emirates and the Museum of the Future which will be the three-day event’s venue. The meeting will include keynotes, panels and workshops and be attended by UAE ministers, senior government officials and industry leaders from across the aviation and aerospace, airfreight, Maintenance, Overhaul & Repair (MRO) and logistics ecosystem. Day one will address air travel demand and airport infrastructure, day two will be dedicated to developments within airfreight and logistics, and the third day will navigate the boundary-breaking potential of Web3, AI and XR infused solutions to drive workflow efficiencies and service delivery.

The latest report from the Baltic Exchange and Xinhua News Agency has confirmed Dubai’s fifth position, as a global maritime leader, in its 2024 International Shipping Centre Development Index. This is the fifth year in a row that it has achieved this placing behind Singapore, London, Shanghai, and Hong Kong, whilst it still remains the only Arab city in the top twenty. It also notes the emirate’s efforts to enhance transparency in local container fees, through the Dubai Maritime Authority’s new directive, which requires service providers to list fees on the unified Dubai Trade portal.

Under the soon to be signed comprehensive economic partnership agreement, Australia will export more than 99% of its products to the UAE without tariffs. The bilateral deal is expected to boost trade and investment ties and will “streamline trade processes, eliminate tariffs on a wide range of goods and services, create new opportunities for investment, and encourage private-sector collaboration in priority sectors”. The treaty is expected to be signed later this year. Australia exports many products to the UAE, including alumina, coal, steel, meat, dairy, oil seeds, seafood, canola seeds, nuts and honey, whilst, on the flip side, the antipodeans will cut import tariffs on UAE-produced furniture, copper wire, glass containers and plastic.

The UAE’s energy and infrastructure minister, Suhail Al Mazrouei, posted that clean energy production now accounts for 27.83% of the country’s total energy mix last year; these figures show that the UAE is well on its way to meet its 30% target of its energy requirements through clean sources by the end of the decade. In the four years to 2022, the country succeeded in doubling its renewable energy capacity as part of the UAE Energy Strategy 2050 to triple the installed capacity by 2030. The minister noted that in 2023, the UAE achieved a remarkable growth of 70% in installed renewable energy capacity, which reached 6.1 gigawatts. The Arab world’s second largest economy has invested heavily in clean energy projects, ranging from nuclear to solar, to achieve net-zero emissions by 2050; in 2021, its Net Zero 2050 Strategic Initiative launched a US$ 163.49 billion plan to invest in clean and renewable energy sources over the next three decades.

Following the Fed’s decision to cut rates, the Central Bank of the UAE has followed suit and decided to cut the Base Rate applicable to the Overnight Deposit Facility (ODF) by fifty basis points, from 5.40% to 4.90% effective from yesterday. The central bank has also decided to maintain the interest rate applicable to borrowing short-term liquidity from the CBUAE at fifty basis points above the Base Rate for all standing credit facilities.

The Central Bank (CBUAE) on Monday imposed a fine of US$ 1.36 million on an unnamed bank operating in the UAE for violating anti-money laundering laws and for funding illegal organisations. The sanction was in line with articles 89 and 137 of the Federal Decree Law No. (14) of 2018 regarding the Central Bank & Organisation of Financial Institutions and Activities and its amendments, and article 14 of the Federal Decree Law No. (20) of 2018 on Anti-money Laundering and Combating the Financing of Terrorism and Illegal Organisations. It directed the bank to present the Central Bank’s action to the board of directors of its overseas headquarters.

The DFM opened the week, on Monday 16 September, one hundred and eighty-eight points (1.9%) higher the previous five weeks and gained fifty-six points (1.3%), to close the trading week on 4,436 by Friday 20 September 2024. Emaar Properties, US$ 0.02 lower the previous week, gained US$ 0.03, closing on US$ 2.38 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.65, US$ 5.45 US$ 1.68 and US$ 0.35 and closed on US$ 0.68, US$ 5.54, US$ 1.71 and US$ 0.35. On 20 September, trading was at three hundred and nine million shares, with a value of US$ 191 million, compared to, eighty-five million shares, with a value of US$ 54 million, on 13 September.  

By Friday, 20 September 2024, Brent, US$ 0.55 higher (11.0%) the previous week, gained US$ 3.08 (3.4%) to close on US$ 74.69. Gold, US$ 109 (5.8%) higher the previous fortnight, gained US$ 36 (1.4%) to end the week’s trading at a record US$ 2,647 on 20 September 2024.

Qantas has revealed it will pay former CEO Alan Joyce an extra US$ 2.3 million for his last two months in the role, which will partly offset the US$ 6.03 million, he ‘lost’ because, on his shift, there were several scandals including Qantas illegally sacking 1.7k workers during the pandemic period, and the ACCC suing the airline for cancelled “ghost flights”. He resigned earlier than expected last September and two weeks later, the airline made its first ever apology to the 1.7k ground staff it illegally sacked, asking the case to be heard in the Federal Court and High Court. The disgraced former supremo could also receive a further US$ 1.6 million from the airline, as he is still part of a long-term incentive plan scheme, which is valid until 2026. This is on top of the US$ 10.0 million received in 2022-23, his last full year as chief executive.

Amazon is the latest major international group to ordering its 1.5 million global staff back to the office five days a week as it ends its hybrid work policy; the move starts on 01 January 2025. Other global companies, such as JP Morgan, UPS and Dell, seem to agree and are liklely to demand full-time office attendance. Amazon’s chief executive, Andy Jassy, posted that “we’ve decided that we’re going to return to being in the office the way we were before the onset of Covid,” to be “better set up to invent, collaborate, and be connected enough to each other”. He is also concerned that its corporate culture is being diluted by flexible work and too many bureaucratic layers. HO staff staged a protest last year as the company tightened the full remote work allowance that was put in place during the pandemic. Amazon said it would end hot-desking in the US, although that will continue in most of Europe. Amazon’s stance contrasts with the UK government’s approach, which has promised, (for what it is worth), to make flexible working a default right from day one as part of a new employment rights bill due to be published next month, with Business Secretary, Jonathan Reynolds, wanting to end the “culture of presenteeism”, noting there were “real economic benefits” to people working from home. A US summer report indicated that about 12% of full-time employees were fully remote and a further 27% reported having hybrid work policies in place.

In H1, data from PwC showed the fragility of the UK economy, with their estimate that every week, eighteen chemists, sixteen pubs and nine banks closed over the period. The latest high profile casualty could be TGI Fridays, with Hostmore saying the sales process was in an “advanced stage”, but added it was unlikely to “recover any meaningful value” of its assets, as bids to date have failed to meet the chain’s liabilities. The hospitality group added that “the sale process remains ongoing, with no decisions having been made to close any existing stores, and TGI Fridays continues to operate normally across the country”. It had tried to buy the US operator of TGI Fridays for US$ 236 million but that deal collapsed.

Regular coffee drinkers will know that Robusta and Arabica beans are now trading at near-record highs but may not know why this is so. The fact that the cost of unroasted beans traded in global markets is now at a “historically high level” attributable to a 2021 freak frost that wiped out coffee crops in Brazil, (the world’s largest producer of Arabica beans – those commonly used in barista-made coffee). The resulting deficit resulted in buyers searching for Robusta beans, that are used to make instant coffee blends, in countries such as Vietnam which subsequently was impacted by the region’s worst drought in nearly a decade. Now it appears that because of falling yields (and loss of revenue for coffee producers), many are turning to a smelly yellow fruit – durian – that is banned on public transport in in Thailand, Japan, Singapore and Hong Kong because of its odour. Stocks of Vietnamese coffee is “near depleted”; in contrast, Vietnam’s durian market share in China almost doubled between 2023 and 2024, and some estimate the crop is five times more lucrative than coffee. Furthermore, June Robusta coffee exports were down 50% on the year. Although exporters in Colombia, Ethiopia, Peru and Uganda have raised production, it is still not enough to ease a tight market. The end result is that end users can expect further price increases when they visit their local coffee outlet, even though it is estimated that beans contribute less than 10% of the price of a cup of coffee.

With China facing an ageing and shrinking population, along with a dwindling pension fund, China has introduced new regulations including that retiring before the statutory age will not be allowed and that the country will “gradually raise” its retirement age for the first time since the 1950s – from fifty to fifty-five for women in blue-collar jobs, from fifty-five to fifty-eight for females in white-collar jobs, and for men an increase from sixty to sixty-three; the change will take place from 01 January 2025. Starting 2030, employees will also have to make more contributions to the social security system in order to receive pensions, and by 2039, they would have to clock twenty years of contributions to access their pensions. A population slowdown, (as its birth rate continues to decline for a second consecutive year), and a weakening economy, are disturbing news and have been brought about by a decades-long one-child policy; to add to their woes its average life expectancy  has risen to 78.2 years, and that by 2040,  33% of the population, (some 402 million), will be above the age of sixty by 2040 – 58.3% higher since 2019’s 254 million. It is estimated that over the next decade, about three hundred million people, who are currently aged fifty to sixty, are set to leave the Chinese workforce.

August data from the US Commerce Department indicated that consumers spent 0.1% more than a month earlier, after surging the most in eighteen months in June; sporting goods stores, online retailers, (1.4% higher), health/personal care, (up 0.7%), and home/garden stores all reported higher sales. This is in contrast to gas sales, dipping 1.2%, and auto sales declining, whilst being flat for restaurants and bars. Despite all the financial problems, (including soaring inflation and higher interest rates), for the average US household, it seems that it had not any direct bearing on consumer demand.

A report from the National Association of Realtors showed existing home sales fell 2.5% in August to a seasonally adjusted annual rate of 3.86 million units, the lowest in ten months. The median existing home price increased 3.1% from a year earlier to US$ 416.7k, the highest on record for any August. Maybe the latest rate cut may see more homeowners putting their homes on the market, as most homeowners have mortgage rates below 4% and when rates start to head south, this could stimulate demand that has been largely dormant.  However, as Jerome Powell pointed out. “the real issue with housing is that we have had and are on track to continue to have not enough housing,” adding “this is not something that the Fed can really fix, but I think as we normalise rates, you will see the housing market normalise.”

The US central bank has lowered interest rates, by 0.50% to the range of 4.75%-5.00%, for the first time in more than four years. Fed’s Jerome Powell commented that the move was needed as price rises ease and job market concerns grow. He also added that the cut was intended to make sure that high borrowing costs, put in place to fight inflation, would not end up hurting the US economy. The Dow Jones Industrial Average, the S&P 500 and the Nasdaq jumped after the initial announcement but ended the day modestly lower.

In contrast, the BoE Interest rates did nothing – exactly what happened some three years ago when they probably too slow at not pushing rates higher. Andrew Bailey, the BoE governor, noted that they are “now gradually on the path down”, adding that inflation had “come down a long way” but warned the Bank would need to see more evidence that it will remain low before cutting rates further. With inflation, at 2.2%, nearing the BoE 2.0% target, it is highly likely that there could be two 0.25% cuts in Q4. Has the BoE got it right this time or will History Repeats Itself?

What A Shambles!                                                                         13 September 2024

Knight Frank’s Q2 Dubai Residential Market Review confirms that average residential prices increased by 21.3% over the past twelve months and again villa prices surpassed those of apartments. Over that period, villa sale prices grew by 24.3%, reaching US$ 516.62 per sq ft, equating to being 28% over the 2014 peak. Dubai’s luxury residential sector has also witnessed strong growth., with ‘Prime Dubai’, (covering The Palm Jumeirah, Jumeirah Islands, Jumeirah Bay Island, and Emirates Hills), accounting for  89.3% – eight hundred and fifty three homes – 5.0%, 3.6% and 1.1% respectively); there was a 7.0% rise in average transacted prices, which stood at US$ 1,009 per sq ft at the end of H1.

The study noted that the number of residential listings in Q2 fell by 22.8% on the year, and for the first time in over two years, the number of unique home listings in a single quarter has fallen below 100k. This trend was more marked in in ‘Prime Dubai’, with a 47% decrease in the supply of luxury homes in those four locations to 2.85k properties. Some of shortage is down to in an increase in ‘buy to stay’ and ‘buy to hold’, with purchasers increasingly focussing on buying for their own use, or as a second home, as opposed to being purely investment-driven to those looking to purchase for personal reasons.

Knight Frank has indicated that the total number of homes planned or under construction now stands at 308.1k and expects that to translate to some 51.4k homes a year up to 2029. Of these, 82% will be apartments, with the remainder being villas. This translates into an average of approximately 51.4k homes per year for the next six years, higher than the long-term completion rate of around 30k homes per year. The figure still falls short of the annual 73k homes the consultancy estimates will be required for the next sixteen years to accommodate Dubai’s vision of a population of 7.8 million by 2040

Yesterday, Dubai’s population was at 3.774 million – a 3.28% increase YTD on 01 January, when the population was clocked at 3.654 million. Extrapolating, the population at the end of the year could be 3.806 million, with an annual population increase of 4.16%. At that rate, the emirate’s population could well be 4.666 million – a 22.60%, (860k), rise over the next five years. This blog estimates that the apartment to villa ratio is 82:18; the latest official figures, in 2022, showed that there were 783.6k units – 639.0k apartments and 144.6k villas in Dubai – and assuming 50k unit increases in the seven years to 2029, that would give a 2029 year-end total of 1,133.6k, comprising 926k apartments and 207.6k villas. Further surmising that the average villa and apartment has 4.85 and 4.25 occupants, and the 2029 population grows 860k (27.66%) from 3.655 million to 4.666 million, then the updated units will accommodate 4.942 million – 3.935 million living in apartments (926k units*4.25 persons) and 1.007 million in villas/townhouses ( 207.6k units*4.85 persons).This figure, 4.942 million, is 5.9% higher than the expected 2029 population of 4.666 million but there are several caveats:

• it is highly unlikely that 50k units will be built every year
• the number of empty properties could be as high as 10%
• some properties are used as second homes
• some properties are being renovated
• an increasing number of properties are being used for Airbnb

When these factors are added to the equation, there may be a tight residential market come 2029, but in the meantime, demand will continue to outstrip supply. This cycle will not continue forever and it is almost certain that an “adjustment” will occur this decade – but it will not be as severe as those of 2008 and 2015.

Binghatti Ghost becomes the developer’s first project in Al Jaddaf this year, and its first at this location in over two years. Binghatti Development’s latest project, valued at US$ 1.09 billion, features seven hundred and seventy residential units. In addition to these sought-after living spaces, Binghatti Ghost will also include six premium retail shops, enhancing the community’s commercial appeal. The project features a hotel-style swimming pool and amenity floor as well as a children’s pool and play area. It will also feature a fully equipped gym, multi-purpose lawn, scenic jogging lane, and a viewing deck, offering panoramic views of the city. It will also include six premium retail shops, enhancing the community’s commercial appeal.

A new entrant to the Dubai property sector is Majid Developments, who plan to invest US$ 136 million in five new projects by 2025, to cash in on the rising demand for new units. Its first project will be Mayfair Gardens in Jumeirah Garden City, with a further two slated for same location and the other two in Jumeirah Village Circle and Arjan. Thereafter, it is looking “to launch at least twenty projects in Dubai and then move to the other emirates”, according to Mansoor Majid, CEO of Majid Developments.

One Beverly, located in Arjan, is offering three hundred and eighty-one apartments which include studio, one-bedroom, and two-bedroom units, with prices starting from US$ 177k, along with eight commercial shops. HMB Homes’ flagship project will also have the usual array of leisure activities including a state-of-the-art gym, an infinity swimming pool and a landscaped jogging track, with other features including a residents’ lounge, an open-air cinema for entertainment and a multi-purpose court.

Following the successful launch of the Como Residence on the Palm, the architectural firm of Benjelloun Piper is launching the Fairmont Residences Solara Tower in Downtown Dubai.

Al Aseel Contracting has been appointed by Dubai South Properties for a US$ 41 million contract towards the construction of its latest luxury apartment development, South Living Tower; the project is located at The Residential District in Dubai South. The project, which comprises two hundred and nine units, including studios, one, two, and three-bedroom apartments, is expected to be completed by Q1 2027.

HH Sheikh Mohammed bin Rashid, Ruler of Dubai, has announced the establishment of Dubai National University, with an investment of US$ 1.2 billion, (AED 4.5 billion). The plan is to establish the university as one of the top two hundred global education centres by 2044.

Furthermore, this week, Sheikh Hamdan bin Mohammed, Crown Prince of Dubai, issued Executive Council Resolution No. (49) of 2024 regulating healthcare activities and professions in Dubai. It  will license healthcare establishments for periods of one renewable year at a time and can close down establishments and suspend professionals violating guidelines.

Emirates is expecting to receive five Airbus A350s in Q4, with the first due for delivery next month, but confirmed that they have yet to receive any Boeing jets so far this year and that  ”due to delays in aircraft deliveries, we have had to extend the service of some of our current aircraft.” It earlier announced a US$ 3.0 billion aircraft retrofit programme that has now been extended to cover one hundred and ninety planes, following an increase in the number of aircraft targeted for modernisation. Some of the problems can be put down to the pandemic, when aircraft manufacturing cut back on production, (because nobody was flying), and laying off a percentage of workforce. When some sort of normality returned to the sector, and air travel literally took off again, then the supply chain could not keep up with demand – and that problem still continues and will continue for some time.

Reports indicate that Malaysia could possibly reach a free trade agreement with the UAE by the end of 2024, perhaps leading to a CEPA sometime later; since last year, several rounds of discussions have been held relating to a comprehensive economic partnership agreement.  Its Minister of Investment, Trade and Industry, Tengku Zafrul Aziz, commented “we are continuing discussions with the GCC for an FTA, and we are on track to conclude an FTA with the UAE by end of the year on a wider scale.” Last year, bilateral non-oil trade topped US$ 4.7 billion, maintaining the record levels achieved in 2022. The UAE has already signed two CEPAs with Asean countries – Indonesia and Cambodia – and continuing trade discussions with other Asean members, including the Philippines and Vietnam. Earlier in the week, Hong Kong confirmed that it was exploring options, including FTAs with the UAE and the Gulf to boost trade and investment ties .

To meet its growing demand for large-scale offshore projects, Drydocks World has signed a contract with Shanghai Zhenhua Heavy Industries Co Ltd to purchase a new generation 5k-tonne Floating Sheerleg Crane. The design, construction, testing, and commissioning phase is expected to be completed by Q2 2026, and then the crane will boost Drydocks World’s heavy-lifting capabilities, allowing it to meet the growing demands of large-scale projects, such as high-voltage offshore converter platforms and Floating Production Storage and Offloading (FPSO) vessel topsides. The crane features a 160 mt-long A-frame, allowing heavy loads of up to 5k tonnes to be lifted 120 mt above the water, and a six hundred-tonne fly jib that can extend its reach to 180 mt. This capability enables the installation of larger vessel modules constructed in the yard and lifted onto the vessel for assembly, both nearshore and offshore. It can also accommodate up to fifty personnel offshore, thereby reducing the need for support vessels.

Initially starting in North India, Carrefour and Dubai-based Apparel Group have signed a franchise partnership agreement, in the sub-continent, with the first store openings expected in 2025. Although many foreign entrees have failed in the past, both parties have had Indian exposure and will be confident of success in a country, with a population of about 1.4 billion people, and being one of the world’s largest food markets, with the additional attraction of rising consumer spending power. Over a decade ago, Carrefour had attempted to enter the country, with a local retailer, but later withdrew, saying the market was underperforming. Both parties are exuding confidence, with the French conglomerate posting that “the arrival of Carrefour in India marks an important step in our strategy of expanding our franchise in more than ten new countries by 2026,” whilst Nilesh Ved, owner of Apparel Group, adding that “our goal is clear: to offer the best products at very attractive prices to all Indian customers and make Carrefour their favourite brand to shop.” The country is having major problems, with severe food price inflation, which accounts for almost 50% of the overall consumer price basket.

Preliminary figures by the Federal Competitiveness and Statistics Centre indicate robust Q1 growth in the country’s economy. UAE’s real GDP increased by 3.4% to US$ 117.17 billion, (AED 430 billion). Over the period, non-oil GDP came in 4.0% higher on the year.

At the end of trading last Friday, 06 September, helped by a robust economy, the country’s bourses showed a market cap, of all companies listed, reaching US$ 97.82 billion as it moves to its target of US$ 1.63 trillion by 2030. The twenty  largest companies listed on the local stock exchanges by market value reached US$ 76.02 billion, accounting for 77.6% of the total market cap. International Holding Company was in first place, with a market cap of US$ 248.58 billion, equivalent to 25.4% of the market cap of the local markets, followed by Abu Dhabi National Energy Company (US$ 80.87 billion – 8.25%), ADNOC Gas, (US$ 65.40 billion – 6.7%), Etisalat by e&, (US$ 44.00 billion – 4.5%), First Abu Dhabi Bank, (US$ 40.22 billion – 4.1%), Emirates NBD (US$ 34.85 billion – 3.6%), and Dubai Electricity and Water Authority – DEWA, (US$ 32.43 billion – 3.3%). Three other Dubai-listed companies made the top twenty – Emaar (US$ 21.14 billion), Dubai Islamic Bank (US$ 12.18 billion) and Mashreq (US$ 11.63 billion).

The DFM opened the week, on Monday 02 September, one hundred and eighty-one points (1.7%) higher the previous four weeks and gained seven points (0.2%), to close the trading week on 4,380 by Friday 13 September 2024. Emaar Properties, US$ 0.15 higher the previous three weeks, shed US$ 0.02, closing on US$ 2.35 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.64, US$ 5.53 US$ 1.67 and US$ 0.35 and closed on US$ 0.65, US$ 5.45, US$ 1.68 and US$ 0.35. On 13 September, trading was at eighty-five million shares, with a value of US$ 54 million, compared to one hundred and nineteen million shares, with a value of US$ 73 million, on 06 September.  

By Friday, 13 September 2024, Brent, US$ 8.71 lower (11.0%) the previous three weeks, gained US$ 0.55 (0.7%) to close on US$ 71.61. Gold, US$ 25 (1.7%) higher the previous week, gained US$ 84 (4.1%) to end the week’s trading at US$ 2,611 on 13 September 2024.

On Tuesday, for the first time since December 2021, the oil price dipped below the US$ 70 level, as it lost 3.7% in value, following Opec reducing its forecast for global oil demand growth; this was for the second consecutive month, amid signs of slowing consumption in major economies. The revised 2024 and 2025 forecasts posted expected growth of 2.0 million bpd and 1.74 million bpd – only 40k and 80k bpd lower than an earlier forecast. Opec accounts for 79.5% of the global output – equating to 1,243.5 billion barrels annually – with the six major contributors, (accounting for 91.7% of the total), being Venezuela, Saudi Arabia, Iran, Iraq, UAE and Kuwait with 24.4%, 21.5%, 16.8%, 11.7%, 9.1% and 8.2% of the total.  Q4 forecasts indicate global oil production of 102.47 million bpd in Q4, while consumption is expected to be 103.72 million bpd; that being the case, global oil reserves will begin to decline plus the fact that the Opec+ production cuts will also add to reserves declining. Meanwhile, the US Energy Information Administration expects Brent crude to rise above US$ 80 a barrel and average US$ 82 a barrel in Q4. Other factors that could impact the oil prices include any possible flare up in the region, whether or not growth in the Chinese economy expands or contracts, and any further contagion from the Ukraine crisis.

In a bid to avoid a strike that could potentially shut down its assembly lines within days, Boeing had tried to entice its employees with a 25% pay offer over a four-year contract, with the union urging the workers to support the proposal, describing it as the best contract they had ever negotiated; the union’s initial target was a 40% pay rise. Also added into the mix, include improved healthcare/ retirement benefits, increased employee representation on safety and quality issues and a commitment by Boeing to build its next commercial airplane in the Seattle area. If the deal had been endorsed by the union, it would have been the first full labour agreement between the firm and the unions in sixteen years. But that was no to be, with an overwhelming rejection by the 30k workers resulting in a downing of tools, by the workers in Seattle and Portland, as from midnight Pacific Time (07:00 GMT) on Friday. Undoubtedly this is another body blow for a  much-troubled company looking down the barrel of massive financial losses and further loss of business confidence.

After lowering its annual revenue and profit forecasts, Accenture announced plans to cut its global payroll by 19k, (2.5%), to 719k, including in the UK; it also confirmed more than 50% of the redundancies will come from its human resources, IT, finance and marketing departments over the next eighteen months. In the UK, it employs 11k. It expects the severance costs will top US$ 1.2 billion but that it will save around US$ 1.5 billion by closing offices globally. The company noted that “we initiated actions to streamline our operations and transform our non-billable corporate functions to reduce costs”. Previously, in 2020, it said that it was cutting up to nine hundred jobs because of the “additional strain” on the business caused by the coronavirus pandemic. It is not the first major tech giant to cut staff numbers – driven by a fall in demand amid high inflation and rising interest rates – and follows the likes of Amazon, Meta and Just Eat who have posted recent job losses.

Two of the biggest retail winners benefitting from the cost-of-living crisis have been the German interlopers – discounters Aldi and Lidl. Last year, Aldi’s revenue surged by US$ 3.14 billion, as its pre-tax profits more than tripled to a record US$ 702 million in the year; three factors behind the improvement in the figures were price rises, new store openings driving much of the rise in earnings, and new customers. This year, growth has slowed, and its market share is being eroded by its rivals, and it is no longer the fastest growing retailer it was in 2023. Two of its biggest rivals, Sainsbury’s and Tesco, have adopted “Aldi price match” campaigns, and all its rivals have their own loyalty card schemes, except Aldi, with its CEO, Giles Hurley noting, “I would view loyalty as keeping your commitments around your promises and we offer simple, straightforward pricing and our customers know that.” The budget chain has a long-term target of 1.5k UK shops with another one hundred stores being refurbished.

Having acquired Caprice Holdings in 2005, in a deal which included many of London’s most prominent restaurants, there are reports that Richard Caring is in the throes of selling the business, including his collection of Ivy restaurants, to Si Advisers, a little-known London-based firm; the deal, that could see the billionaire businessman US$ 1.30 billion richer, will cover almost all of his stake in The Ivy Collection, and its dozens of restaurants across the country (Other shareholders, including a Qatari fund, are also expected to sell – in 2019, he sold a 25% stake in Caprice Holdings to Hamad bin Jassim bin Jaber Al Thani, the former prime minister of Qatar, in a deal reportedly worth US$ 460 million). However, he will still retain his other restaurants, which include London’s Scott’s, Sexy Fish and J Sheekey, or clubs such as Annabel’s and Mark’s Club in Mayfair.

The investment firm, Aurea has managed to save the remaining one hundred and thirteen Body Shop outlets in the UK, along with outposts in Australia and the US. The retailer was bought out of administration by a consortium led by “Cosmetics King”, Mike Jatania, who along with Charles Denton, former chief executive of beauty brand Molton Brown, will head the new leadership team. The millionaire tycoon’s investment firm said the deal would “steer the Body Shop’s revival and reclaim its global leadership in the ethical beauty sector it pioneered”, adding, “with the Body Shop, we have acquired a truly iconic brand, with highly engaged consumers in over seventy markets around the world.

Another blow for a Big Four audit firm sees PwC’s Chinese auditing arm  being suspended from the country for six months. In addition, it has been fined more than US$ 62 million over its work on the collapsed Chinese property giant Evergrande, with authorities claiming that it had covered up fraud at the property monolith. It was also penalised by the security watchdog which confiscated the revenue PwC earned auditing Evergrande and has also issued a fine. In apologising for the impact on its clients, the firm admitted that its work had fallen “unacceptably below the standards” expected within the firm and apologised for the impact on its clients. It is reported that PwC has sacked six partners and has launched a process to fine responsible team leaders. The Chinese authorities have accused Evergrande and its founder, Hui Ka Yan, of falsely inflating revenues at the firm to the tune of US$ 78 billion, and imposed fines and bans on him personally as well as on the business.

This has been a bad week for tech giants, starting with Apple being ordered, by the EC, to pay Ireland US$ 14.0 billion in unpaid taxes; in 2016,, the watchdog blamed the Irish government for giving the US conglomerate illegal tax advantages – and for the past eight years, it has consistently argued against the need for the tax to be paid, but now has said it would respect the ruling, whilst Apple said it was disappointed with the decision and accused the EC of “trying to retroactively change the rules”. The court concluded that Ireland granted Apple unlawful aid which Ireland is required to recover. The original decision covered the period from 1991 to 2014 and related to the way in which profits generated by two Apple subsidiaries, based in Ireland, were treated for tax purposes. Those tax arrangements were deemed to be illegal because other companies were unable to obtain the same advantages.

In contrast, Google seem to have got off lightly, with a European Court of Justice (ECJ) ruling  that the company has to pay US$ 2.62 billion for market dominance abuse, of its shopping comparison service, ending a long-running case from 2017.  At the time, it was the largest penalty the Commission had ever levied – though a year later it issued Google with an even bigger fine of US$ 4.74 billion over claims it used Android software to unfairly promote its own apps. The court ordered Google, and owner Alphabet, to bear their own costs and pay the costs incurred by the EC. On Monday, Google was taken to court by the US government over its ad tech business – it has been accused of illegally operating a monopoly. Last week, UK regulators provisionally concluded Google used anti-competitive practices to dominate the market for online advertising technology. The EU is also currently investigating the firm over whether it preferences its own goods and services over others in search results, as part of its Digital Markets Act. If found guilty, the firm could face a fine of up to 10% of its annual turnover.

The search giant has amassed fines of US$ 9.09 billionn from the Commission, which has repeatedly alleged it abused its dominant market position. These are:

• 2017    US 2.64 billion fine       over shopping results
• 2018    US$ 4.74 billion fine     over claims it used Android software to unfairly promote its own apps
• 2019    US$ 1.65 billion fine     for blocking adverts from rival search engines

Industry insiders have been keeping a close eye on the EU case, with suggestions that its outcome may illuminate the direction of travel of the many other antitrust cases Google is currently facing from the EC.

The Food and Agriculture Organisation of the United Nations trimmed its 2024 forecast for global cereal production to 2,851 million tonnes – nudging 0.2% higher from 2023 – attributable to hot and dry weather conditions in the EU, Mexico and Ukraine. However, it did lift its 2024 forecast for both global wheat output and for rice, with the latter expected to top a record high of five hundred and thirty-seven tonnes. World cereal stocks are forecast to expand by 1.2%, at the end of the 2025 season, as international trade in total cereals is now pegged at 485.6 million tonnes, down 3.3%, on the year, led mostly by lower traded volumes in coarse grains.

Last year, Greece had the second worst performing economy in the EU which its Prime Minister, Kyriakos Mitsotakis, has vowed to improve, starting with a new set of policies aimed at boosting citizens’ purchasing power and tackling the country’s housing crisis. Among the measures to be introduced include a 14.0% increase in the minimum wage, to US$ 1.05k by 2027, a 2.5% rise in pensions, a new tourist tax, a green transition using cheaper energy and the mitigation of the effects of the runaway growth in tourism, by the introduction of a new fee for passengers disembarking from cruise ships in Greek ports. He also announced new incentives to boost the birth rate and tax benefits to galvanise the rental market, as well as a Golden Visa scheme for foreigners investing at least US$ 276k in start-ups. The US$ 243 million revenue from a windfall tax on energy companies will be distributed to vulnerable citizens. Average annual income in the country was half the European average last year, with the minimum monthly wage of US$ 916 – less than half that of France.

After five consecutive months of deceleration, Egypt’s inflation rate quickened last month, to 26.2%, as the Sisi’s government’s reduction in fuel subsidies took its toll on consumer prices. The 0.5% monthly rise, which surprised market analysts, was mainly down to a 1.9%, month-on-month, increase in consumer prices – the largest since February. The main factor behind the rise was a monthly 10.7% hike in transportation prices – and 29.8% on an annual basis – (following the decision to raise energy prices in July ahead of an IMF review). Other rises were seen in food and beverage prices – 1.8% higher on the month and up 28.1% on the year – clothing/footwear, housing/utilities, furniture/household equipment and health care, all moving higher by 1.1%, 0.7%, 1.7% and 3.4%. In June, there had been a 300% increase in subsidised bread costs, with the government having also implemented a new wave of subsidy cuts, including price hikes of up to 15% for a range of fuel products and increases of between 15% – 40% in electricity tariffs. It is highly likely that the country’s central bank will maintain interest rates at a record 27.25%. Despite all this, it seems that the country has finally made progress in implementing long-awaited economic reforms and has been a recipient of consecutive bailout deals, worth more than US$ 60 billion, from international partners.

August data sees China’s inflation rising at its quickest pace in six months, attributable to increased food costs due to weather disruptions, while deflation in producer prices deepened. The world’s second-largest economy, and top crude importer, posted a 0.6% hike in its consumer price index, 0.1% higher than in July. Q2 GDP growth slowed to 4.7%, on an annual basis, compared to Q1’s 5.3%.

A new report from the Grattan Institute posted that Australia has the highest gambling losses in the world because governments have taken “a lax approach to regulating gambling”, and “let the gambling industry run wild”.  It recommends limits on how much people can bet when at the pokies and via online betting platforms, as well as a complete ban on gambling ads – the latter move is in line with the intentions of the Albanese administration. It notes past reform pushes have failed “because of well-funded, coordinated attacks by vested interests” and that has led to big losses – in the 2020-21-year, gambling losses were estimated at US$ 16.01 billion, (AUD 24.0 billion). 50% of the losses were down to pokies along with 25% of the total down to betting, followed by lotteries, casinos and keno. About 8% of Australian adults placed a bet at least once a month in 2022 and overall losses on online betting grew from US$ 2.40 billion in 2008-09 to US$ 3.87 billion in 2020-21. The average annual loss per adult is US$ 1,091, well ahead of Hong Kong’s US$ 858, Singapore US$ 787, Ireland US$ 595, US US$ 540, Italy US$ 452, Bermuda US$ 430, Norway US$ 401, New Zealand US$ 390 and  Iceland US$ 371. The report noted that other countries have stronger regulation than Australia to limit gambling harm and added that it is time governments stand up to online betting and gambling operators “rebutting their self-interested claims”.

Australia’s economy is growing at its slowest pace since the 1990s recession, (Q2 – 0.2% and just 1.0% over the past year), as unemployment levels rise; the soaring cost of living, and high inflation/interest rates have led to an estimated 5.8 million Australians having to struggle to make debt repayments. It seems that Michele Bullock, the Reserve Bank Governor, does realise that high mortgage rates are placing the number of owner-occupiers, with variable-rate mortgages, in a “particularly challenging situation”, as well as being aware lower-income borrowers are over-represented in the group of people who are “really struggling” right now. However, she admits her main aims are to bring inflation down, re-balance the economy and return people’s lives to some kind of normality. She does acknowledge that “those with mortgages are feeling the squeeze on their cash flows not just from high inflation, but also from the increase in interest rates that has occurred in response to it, and “as labour market conditions ease, more households will experience a strain on their finances from unemployment or reduced working hours”. Since mid-2022, the RBA has lifted the interest rate thirteen times, whilst inflation is remaining at a sticky 3.8%, (above the bank’s 2.5% target), with the Governor forecasting that inflation will return to 2.5% by the end of 2026.

The European Central Bank has moved to cut borrowing costs again, as the inflation threat continues to abate while the twenty-nation bloc’s economies continue to dither. Whether there would be a further cut by the end of the year will be data dependent, as the rate of inflation was tipped to rise again during Q4 having eased back towards the 2% target. Bank president, Christine Lagarde, noted “we are not pre-committing to a particular rate path,” and “we are looking at a whole battery of indicators.” Just like the conundrum facing most global central banks, some are more concerned about recession risks and will argue for more rate cuts, while others see wage pressures weighing on the timing and frequency, and either maintain current rates or head in the other direction. Markets are leaning to at least one further cut – perhaps two – in Q4.

In Q2, there were 0.2% rises, on the quarter, in the seasonally adjusted GDPs for both the euro area and the EU, compared to 0.3% in Q1. A year earlier, Q2 2023 increases were 0.6%, (for the euro area), and 0.8% in the EU, compared to rises of 0.5% and 0.7% in Q1 2023. Over Q2, the three highest increases were seen in Poland, Greece and the Netherlands – with 1.5%, 1.1% and 1.0%; on the flip side were decreases of 1.0%, 0.9% and 0.4% in Ireland, Latvia and Austria. Employment-wise, the number of employed persons increased by 0.2% in the euro area and by 0.1% in the EU in Q2 compared to 0.3% rises for both blocs in Q1. Ireland, Lithuania and Estonia registered the highest growth in employment with growth levels of 1.1%, 1.1% and 0.8%, whilst the Romania and Finland posted decrease of 0.5% and 0.4%. Eurostat estimates that in Q2, 218.6 million people were employed in the EU, of which 170.1 million were in the euro area.

As US August inflation continued to cool last month, with consumer prices 2.5% higher, compared to 2.9% in July, it may push Fed officials to cut interest rates, by 0.25%, next Thursday; this was the slowest pace of growth since February 2021. Last month, prices for petrol, used cars and trucks, and some other items fell, whilst housing costs moved in the other direction. Grocery prices, which were surging just a few years ago, were up less than 1.0% on the year and unchanged on the month, whilst petrol costs have fallen more than 10% on the year. Excluding food and energy, prices were up 3.2% over the year, as airline tickets, car insurance, rent, and other housing costs grew more expensive.

For what it is worth, Labour’s manifesto promised a kitty of US$ 3.27 billion to revitalise the UK steel industry – and two months after their whitewash of the Tories in the General Election, the government is warning of a “grim” September, with up to 6k jobs set to be cut across the steel and oil refining industries; they include 3.0k, 2.8k and 0.4k job losses  at India’s Tata Port Talbot in Wales,  at China’s Jingye British Steel in Scunthorpe, (both companies claim they are each losing US$ 1.31 million every day), and at Scotland’s Grangemouth oil refinery. The Starmer administration is taking a similar stance to that of the previous Sunak government – indicating that public money is only available to invest in new greener steel production facilities, rather than to subsidise large ongoing losses at carbon-intensive plants. There are reports that Tata could receive a US$ 654 million government grant towards the cost of building a US$ 1.63 billion electric arc furnace which will eventually replace the last remaining blast furnace at Port Talbot; electric arc furnaces are mostly used to melt down and repurpose scrap steel, and cannot replicate all grades of steel that are produced in blast furnaces. It does appear that the closure of blast furnaces at both Port Talbot and Scunthorpe would leave the UK without the ability to make virgin steel.

At Port Talbot, here have been more than 2k expressions of interest in the redundancy and re-training package being offered which includes workers receiving 2.8 weeks of earnings for every year of service, up to a maximum of twenty-five years, as well as signing up to a one-year skills and re-training scheme during which they will be paid US$ 35.3k.

Economists were surprised to see that UK’s July economy flatlined for the second month of stagnation, when growth of 0.2% had been expected. However, there is a little glimmer of hope in that there’s “longer-term strength” in the services sector, as the quarter ending 31 July posted 0.3% growth and the fact that, in H1, the UK had the best growth rate among the G7 nations. Growth in the services sector – attributable to computer programmers and the end of NHS strikes – was offset by declines for advertising companies, architects and engineers, along with falls in manufacturing output and construction, due to “a particularly poor month for car and machinery firms”. These factors point to no change in interest rates at the BoE meeting next week.

Senior bankers, who for some years now have gorged themselves on record profits, (and probably record bonuses), on the back of higher interest rates, could be in for a wake-up call. There are rumours that the Starmer government may well raise an existing surcharge that banks already pay, and/or will cut the amount of interest UK banks earn on reserves parked at the Bank of England. (The bank levy was introduced in 2011 to curb excessive risk and reckless growth following the GFC). Although both the Prime Minister and Chancellor Rachel Reeves have yet to publicly declare that this would be the case, the former has referred to the “tax” burden falling on those with “broader shoulders” – and this has fuelled concerns. Consequently, UK banks are intensifying their lobbying against possible tax hikes in the new Labour government’s first budget next month. It does note that “banks based in the UK pay a significantly higher rate of tax than those in New York. And our analysis shows that they are expected to pay notably higher rates of tax in future years than in other European capitals.”

Yet another report has indicated the greed, cronyism, opaqueness and fraud prevalent in the previous Conservative government. Transparency International UK has identified significant concerns in contracts worth over US$ 20.0 billion, (GBP 15.3 billion), awarded by the Conservative government during the Covid pandemic, equivalent to a third of all relative expenditure. The anti-corruption charity discovered one hundred and thirty-five “high risk” contracts, with at least three red flags – warning signs of a risk of corruption; they included twenty-eight contracts worth US$ 5.37 billion going to firms with known political connections, while fifty-one, worth US$ 5.24 billion, went through a “VIP lane” for companies recommended by MPs and peers, a practice the High Court ruled was unlawful. (There was no surprise that a Conservative spokesperson commented that “government policy was in no way influenced by the donations the party received – they are entirely separate”). It also noted that over 66% of high-value contracts to supply items such as masks and protective medical equipment, totalling over US$ 40.0 billion, were awarded without any competition. A further eight contracts worth a total of US$ 654 million went to suppliers no more than one hundred days old – another red flag for corruption. Normal safeguards designed to protect the process of bidding for government contracts from corruption were suspended during the pandemic resulting in “the cost to the public purse has already become increasingly clear with huge sums lost to unusable PPE from ill-qualified suppliers,” with Transparency International adding “as far as we can ascertain, no other country used a system like the UK’s VIP lane in their Covid response”. After the dust had settled, it was estimated that the Department of Health & Social Care wrote off US$ 19.50 billion of the US$ 62.94 billion worth of public money spent on private sector contracts, related to the Covid-19 pandemic; a further US$ 1.31 billion was spent on PPE that was deemed unfit for use. What A Shambles!

Cover Up!                                                                         06 September 2024

Property Finder’s recent data points to a surge, by an increasing number of young families, to buy bigger apartments, (2 B/R apartments), and bigger villas, (4 B/R or larger villas). Demand is mostly driven by foreign investors and businessmen relocating to Dubai, with their families, and by current tenants to beat rising rents. In August, 41% of property buyers were looking for villas/ townhouses, (including 39% for a 3 B/R and 47% for 4 B/R or larger unit).  The 59% balance was in the market for apartments – 36% searched for 2 B/R units, 32% for 1 B/R and 14% for studios.  Most of the apartment buyers in Dubai wanted to buy in Jumeirah Village Circle, Dubai Marina, Downtown, Business Bay, and Palm Jumeirah, with villa buyers preferring units in Dubai Hills Estate, Al Furjan, Palm Jumeirah, Damac Hills 2 and Dubai South.

In the rental segment, 79% of tenants were seeking an apartment, with a 63:37 split between furnished and unfurnished. The remaining 21% were considering villas and townhouses, with 57% searching for unfurnished units. The top areas searched to rent apartments included Dubai Marina, Jumeirah Village Circle, Downtown Dubai, Business Bay and Jumeirah Lakes Tower. Dubai Hills Estate, Jumeirah, Damac Hills 2, Al Barsha and Umm Suqeim were popular among those looking to rent villas/townhouses.

According to Emirates NBD’s Residential Market Monthly, total Dubai residential units sold YTD have reached 104.3k, only 14k units shy of the total transactions recorded in 2023 and 31.5% higher on the year. The total value of YTD sales reached a record US$ 72.21 billion – 30.0% higher on the year, whilst August values of US$ 10.14 billion were 8.1% down on the month.

About two thirds of units sold in August 10.47k, were off plan properties, as that segment continues to increase its share of sales. To show how this has expanded, in 2017, there were 17.6k off plan sales – YTD 2024, the total is at 89k and could easily top 100k by year-end. JVC was the top performer in August with 1k sales, followed by 0.86k in Dubai South which recorded 1.3k sales in July and August but only 0.72k in H1. The third best performer in the month was Bu Kadra, located adjacent to Sobha Hartland, with 0.78k sales in the month and a total of over 1.9k YTD.

August villa transactions of 3k has followed the same trend it has all year, with stable demand continuing; 75.7% of sales, (2.27k units) were for off plan properties. It seems that transaction activity in this sector has slowed, as existing landlords are either holding on to their properties or are expecting a significant premium resulting in most buyers opting for off-plan projects.

The three favoured off-plan villa markets in August were the Athlon by Aldar project, Emaar’s The Valley and Dubai South – with the first two both posting sales of around 1k with the latter 0.67k. Damac Hills 2, Villanova and Al Furjan were the most active markets for ready villa transactions. YTD, it is estimated that a record 93k new units have been launched with two major differences – in 2024, the new launches had been focussed on existing master-planned communities or as stand-alone developments – and not concentrated across a few master-planned communities. The second point is that there has been an increase in supply from relatively smaller developers (in terms of past development track-record and completed stock).

Bigger asset price rises were seen in the villa market in August – at an average annual 23%, compared to 12% for apartments. It is reported that villa prices for new launches are at a premium of up to 30% when compared to the current average price points. The feeling is that when the new stock is handed over, there could be a knock-on impact on the older stock, with prices heading north in a catch-up exercise. For apartments, most of the price increases were witnessed across locations with limited new supply and negligible development potential.

Azizi Developments has finally announced the height of its Burj Azizi – at 725 mt, it will become the second tallest building in the world; estimated costs are in the region of US$ 1.63 billion. The project’s launch date is set for February 2025, with completion slated for 2028; the one hundred and thirty-one plus storey project will be located on SZR and will feature a one-of-a-kind all-suite seven-star hotel, inspired by seven cultural themes, along with a variety of residences including penthouses, apartments, and holiday homes. It will also offer a range of amenities, such as wellness centres, swimming pools, saunas, cinemas, gyms, mini markets, resident lounges and a children’s play area. The tower will include a vertical retail centre spread over seven floors, several high-end restaurants, a luxury ballroom, and a beach club, along with a one-of-a-kind observation deck and an adrenaline zone. Being Dubai, there has to be some world records broken and Burj Azizi will not disappoint by having the highest:

• nightclub (on level 126)
• observation deck (on level 130)
• restaurant in Dubai (on level 122,
• hotel room in Dubai (on level 118)

Dubai-based property brand Binghatti has launched is latest project ­— the forty-seven floor Binghatti Royale – featuring three hundred and fifty-four apartments, ranging from 1 B/R to 3 B/R units. Located in Jumeirah Village Circle, it will also include sixteen retail spaces, as well as an infinity pool, private suite pools, a kid’s pool, an outdoor gym, multi-purpose lawn, and padel/tennis courts. The project also features social spaces including a juice bar, an outdoor dining area and lush landscape areas. The launch comes in response to the soaring demand for Binghatti projects in the area following the rapid sell-out of back-to-back projects. Handover is expected in Q3 2025.

JP Morgan has been slow in following the footsteps of the likes of UBS, Deutsche Bank, and Lombard Odier who have already entered Dubai on the back of its growing importance as a global investment and innovation hub. These financial institutions have high hopes in the region’s potential as a haven for the world’s affluent population. The JP Morgan team is led by veterans Sebastian Botana de Beauvau and Carol Mushriqui, from Geneva and London, who will serve a diverse clientele, including individuals, family offices, charities, and family foundations in the GCC, with Dubai as its base. In June, UBS said it was strengthening its wealth management team in the ME with ten new hires, with other Western banks and Asian wealth managers following suit. The reasons that Dubai has become such an economic hotspot are manifold and there is no reason to believe that Dubai will not continue this upward trend. The current World Bank’s real GDP growth projections for the UAE for 2024 and 2025 are at 3.9% and 4.1%, respectively, as well as a ‘AA-’ Long-Term Foreign-Currency Issuer Default Rating by Fitch, which reflects the country’s moderate consolidated public debt level, strong net external asset position, and high GDP per capita.

There is every possibility that Primark could make a début in the ME after the Alshaya Group confirmed they were in talks with the retailer, known for its multinational fashion brands. Founded in Dublin, fifty-five years ago, it now operates over four hundred and fifty stores across seventeen markets. John Hadden, Alshaya Group’s CEO, commented that, “we are incredibly proud to partner with Primark to discuss potential opportunities to bring their stores to the region. For many years, shoppers across the region have asked for Primark and we are looking forward to the start of a successful partnership to help bring their exceptional in-store experience to the GCC.”

In H1, there was a 9.0% annual increase to 9.3 million tourists arriving in Dubai. Knight Frank noted that in the first five months of the year, the UAE’s 80% hotel occupancy was the highest recorded in the region.  The revenue per available room, (RevPAR) came in at US$ 155 by the end of H1. The country’s hotel stock, at 212k rooms, was also the largest in the region, with Knight Frank expecting this to rise 17% to 248k keys by 2026; on that premise, Dubai’s current stock of 154k rooms will reach 180k over the next three years.  Knight Frank estimates that the GCC’s total current stock of 464.5k will rise to over 544k.

The World Travel and Tourism Council has estimated that visitors to the UAE will spend an estimated US$ 52.2 billion this year, which ranks the country as the tenth biggest recipient of inbound tourism spending globally and the second largest in the ME, behind sixth-placed Saudi Arabia, with a US$ 68.3 billion spend.According toJulia Simpson, chief executive of the WTTC, the global travel and tourism sector’s contribution to the world economy is set to reach an all-time high of US$ 11.1 trillion, supporting a record three hundred and forty-eight million jobs.  However, she did warn of the possible impact of geopolitical threats, such as the with the Israel-Gaza war and the Russia-Ukraine conflict.

Euromonitor International also noted that Dubai was the third most visited city in the world, with 17.2 million visitors, behind Istanbul and London but ahead of Antalya, Paris, Hong Kong, Bangkok, New York, Cancún, and Mecca. It is estimated that the travel & tourism sector injected US$ 223.4 billion to the GCC’s GDP, underpinned by the 76.2 million tourist arrivals to the region, who together spent $135.5 billion – 43.5% higher on 2022. It also provides regional employment opportunities to 2.6 million people.  Latest figures indicate that the travel/tourism sector now accounting for around 11.7% of UAE’s GDP.

A fairly new arrival to the sector is the cruise industry, with the UAE, Oman, Qatar, and Saudi Arabia all inaugurating new cruise ship terminals. Total revenue topped US$ 200 million last year, with expectations that it could grow at an annual 9.9% rate over the next five years to reach over US$ 320 million. From 01 November, the Resorts World One will homeport in Dubai, via DP World’s Mina Port Rashid, to offer three weekly departures. Michael Goh, President, Resorts World Cruises said “our deployment in the Gulf will unlock new opportunities for Dubai and the Gulf as a premiere cruise region,” with Saud Mohammed Saeed Hareb, Cruise Tourism & Yachting Lead, Dubai Department of Economy and Tourism, commenting, that it “continues to play a pivotal role in the growth of Dubai’s tourism industry, aligning with the goals of the Dubai Economic Agenda, D33, to further consolidate Dubai’s position as a leading global city for business and leisure”.

After expanding at its slowest pace in thirty-four months in July, the UAE’s non-oil private sector growth regained momentum in August, nudging 0.5 to 54.2, supported by a pickup in new orders, output and sales growth, according to. the seasonally adjusted S&P Global UAE Purchasing Managers’ Index. Employment levels rose at a milder rate, as hiring growth weakened in August being the softest for seven months, with wage costs also increasing at the fastest pace since May. Furthermore, the output sub-index rose 1.0 on the month to 59.1, attributable to new business and project work; however, the rate of expansion was among the slowest in the past three years. Businesses surveyed remained confident about the outlook over the next twelve months.

Government data showed that last year, UAE non-oil trade reached a record high of US$ 954 million, (AED 3.5 trillion) – 12.6% higher on the year – whilst exports of goods and services also set a new record high of US$ 272 million, (AED 1.0 trillion). The S&P report noted that since there had been another sharp increase in input prices, it cautioned that ongoing price mark-ups have the potential to curb demand. Although the news was positive, and there had been a solid expansion, they were still weaker than the levels recorded earlier in the year, as fewer companies reported uplifts in activity.

Like most Gulf countries, Bahrain is keen to diversify its economy and reduce its dependence on oil by enhancing revenue in its non-oil sector, so as to support fiscal stability; the introduction of an international tax regime is one such means.  It also demonstrates Bahrain’s attempt to meet with global standards, aimed at curbing tax avoidance by MNCs and promoting a fairer global tax environment; this could make the kingdom a more attractive investment proposition on the global stage and can only enhance its international reputation. Furthermore, it is aligning more with recent tax decisions and initiatives seen in the other five GCC members.

It would seem that if Bahrain did not introduce the Minimum Top-Up Tax, MNCs would still be liable to pay it in their home jurisdiction which implements the income-inclusion rule. All this tax does is to ensure that an MNC’s profit, attributable from the operation of its Bahraini subsidiary, remains within the Bahraini tax net. The National Bureau for Revenue – a similar set up to the UAE’s FTA – has confirmed that the legislation is “fully aligned with the Organisation for Economic Co-operation and Development guidelines”, and that eligible businesses will need to register with it. The first filing of the global information return to report on the global minimum tax is not due until eighteen months after the first financial year, and will probably be based on the MNC’s consolidated financial statements.

To date, one hundred and forty jurisdictions have signed up for the OECD’s 2021 Pillar Two reform programme set up a global minimum corporate tax to ensure large MNCs pay a minimum 15% tax on profits in each country where they operate. The main raison d’être is to reduce the reason for profit-moving, whilst placing a floor under tax competition. The global minimum tax, which is based on Global Anti-Base Erosion (Globe) Model Rules, aims to reduce the incentive for profit shifting and places a floor under tax competition; the expectation is that this would bring an end to the race to the bottom on corporate tax rates. It remains to be seen what action is taken by the FTA here, and in the neighbouring states, as they try to align themselves with competing international markets and not seen as a tax pariah by the rest of the world. (There may be some reason why the UAE made recent amendments to its Federal Corporate Law to introduce a definition for top-up tax and multinational entities).

Having earlier been approved by the federal cabinet, and then by the Higher Committee Overseeing the National Strategy on AML and CFT, the new 2024-27 National Strategy for Anti-Money Laundering, Countering the Financing of Terrorism and Proliferation Financing has been released. The strategy, developed by the General Secretariat of the National Committee in collaboration with key stakeholders, has been built around eleven major goals, and introduces legislative and regulatory reforms aimed at mitigating the impact of illegal activities on society. Sheikh Abdullah bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Foreign Affairs, noted that “this initiative follows the Financial Action Task Force’s (FATF) decision to delist the UAE from its Grey List in February 2024, further underscoring the UAE’s unwavering commitment to upholding the highest international standard”. Key areas include risk-based compliance, national/international coordination, strengthening detection/investigation of illicit financial activities, optimising the use of resources, and addressing emerging risks from virtual assets and cybercrime. The strategy also emphasises improving transparency, data collection and analysis, as well as updating legal and regulatory frameworks to align with global standards. The General Secretariat of the National Committee will oversee its implementation and ensure adherence to UAE objectives.

Ducab Metals Business announced the doubling of its annual production capacity for aluminium to 110k tonnes and has increased its bare copper product capacity in response to surging global demand. The double benefit whammy is that it enhances Ducab Group’s subsidiary position, in the international metals market, and advances the UAE’s Operation 300bn industrial strategy. CEO Mohammad Almutawa, commented that “this expansion enhances our ability to meet international demand, elevates the ‘Made in the Emirates’ brand, and boosts our global competitiveness, all while supporting sustainable business growth and strengthening industrial resilience”. The expansion benefitted from the recent enlargement of DMB’s facilities by 51.0k sq mt, as well as the strategic acquisition of GIC Magnet — a leading global supplier of paper-insulated aluminium strips.

This week, DP World completed the purchase of Cargo Services Far East Ltd, a global supply chain provider headquartered in Hong Kong, that globally employs over 2.5k people. Founded in 1989, Cargo Services has established an extensive portfolio of solutions – such as origin purchase order management, ocean freight, air freight and warehousing for a diverse range of sectors. This includes sophisticated supply chain management services for global retail and high-fashion clients; it has also expanded its portfolio to provide specialised cruise logistics services globally. DP World now employs more than 115k, in eight hundred locations, and by the end of this year, it will operate more than two hundred freight forwarding offices, covering up to 95% of global trade flows. DP World’s Group Chairman, Sultan Ahmed bin Sulayem, commented, “Cargo Services’ logistics expertise and global network perfectly complement our own footprint, and will be yet another tool in our offering to customers. Together, we’ll create a powerful force propelling trade globally”.

More than eight years ago, the federal government liberalised fuel prices so that they could be aligned with market rates until the onset of the pandemic which saw prices frozen by the Fuel Price Committee, in 2020. The controls were removed in March 2021 to reflect the movement of the market once again. On Sunday, retail prices saw declines, hovering around 5%, after marginal price rises were registered in August. The breakdown of fuel prices for a litre for September is as follows:

Super 98          US$ 0.790       from US$ 0.831           in Sep (down by 4.9%)

Special 95        US$ 0.757       from US$ 0.798           in Sep (down by 5.1%)

Diesel               US$ 0.757       from US$ 0.804           in Sep (down by 5.8%)

E-plus 91         US$ 0.738       from US$ 0.779           in Sep (down by 5.3%)

One of China’s Big Four banks, the Agricultural Bank of China (DIFC Branch) has announced its second listing on Nasdaq Dubai – a US$ 400 million Floating Rate Notes, issued under the US$ 15 billion Medium Term Note Programme, due in 2027. Apart from this issue reflecting the bank’s strategic expansion into global markets, it also enhances the bourse’s fixed-income listing portfolio, which now stands at US$ 135.0 billion

Over the past five years, Emirates Central Cooling Systems Corporation PJSC has witnessed a 41% surge in the number of new customers, registered electronically from both public and private sectors. During H1, Empower posted an 11.0% rise in the number of bill payment transactions, via the electronic payment channels, to 427.1k transactions. As part of its efforts to facilitate business operations and enhance efficiency and productivity, Empower witnessed a 21.0% rise, to 19.7k applications, for No Objection Certificates during H1. Ahmad Bin Shafar, CEO of Empower, noted that the growth in Empower’s operations reflects “Dubai’s thriving economy and increasing demand for our services. Our customer base expanded to more than 138k in the first half of the year.”

The DFM opened the week, on Monday 02 September, one hundred and forty-eight points (1.0%) higher the previous three weeks and gained thirty-three points (0.7%), to close the trading week on 4,373 by Friday 06 September2024. Emaar Properties, US$ 0.08 higher the previous fortnight, gained US$ 0.07, closing on US$ 2.37 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.65, US$ 5.37 US$ 1.68 and US$ 0.35 and closed on US$ 0.64, US$ 5.53, US$ 1.67 and US$ 0.35. On 06 September, trading was at one hundred and nineteen hundred shares, with a value of US$ 73 million, compared to one hundred and fifty-one million shares, with a value of US$ 135 million, on 30 August.  

By Friday, 06 September 2024, Brent, US$ 0.94 lower (1.2%) the previous fortnight, tanked US$ 7.77 (9.9%) to close on US$ 71.06. Gold, US$ 44 (1.7%) lower the previous week, gained US$ (1.0%) to end the week’s trading at US$ 2,527 on 06 September 2024.

Another body blow for the aviation industry with reports that Cathay Pacific reported that one of its Airbus A350 planes had to turn back due to an “engine component failure”. Subsequently, forty-eight planes were inspected and, very worryingly, fifteen of them were found with faulty parts that needed to be replaced. The planes’ Trent XWB-97 engines were made by Rolls-Royce and all the carrier’s jets have been fitted with these engines, since Cathay received its first plane in 2016. The engineering giant has confirmed “it is committed to working closely with the airline, aircraft manufacturer and the relevant authorities to support their efforts,” and that it “will also keep other airlines that operate Trent XWB-97 engines fully informed of any relevant developments as appropriate.” Other major airlines, with A350s, include the likes of BA, Virgin Atlantic, Qatar Airways, Singapore Airlines and Japan Airlines. Earlier in the year, Rolls-Royce announced plans to invest heavily to improve its range of engines, including the Trent XWB-97.

The World Travel and Tourism Council has estimated that, this year, a record 10% of all money spent globally will be on travel – including on flights, cruises accommodation etc. It has forecast that the industry’s contribution to the global GDP will increase by 12.5%, on the year, equating to 10% of global GDP – a 7.5% rise since the previous record year of pre-Covid 2019. Travel spending in the US, Chinese and German economies is expected to contribute the most to GDP. In 2024, the sector is expected to support nearly three hundred and forty-eight million jobs in 2024, 4.1% or 13.6 million jobs more than in 2019.

Following events in France last week, Telegram has now been hit by South Korean police who have launched an investigation into messaging over deepfake crimes. It is reported that the probe will examine whether it had been abetting distribution of sexually explicit deepfake content, after South Korean authorities have called on Telegram and other social media platforms for cooperation in fighting sexually explicit deepfake content. Telegram has confirmed it was actively moderating harmful content on its platform, including illegal pornography, saying that “moderators use a combination of proactive monitoring of public parts of the platform, sophisticated AI tools and user reports in order to remove millions of pieces of harmful content each day.”

To make matters worse for exponents of free speech, Brazilian authorities have announced that it was suspending access to Elon Musk’s X social network in the country to comply with a judicial order, with the judge insisting that that social media needs hate speech regulations. It is obvious that the tech company has been struggling with dipping advertising revenue and that this decision will only exacerbate the problem. The judge has ordered that Twitter should be suspended in the country until it complied with all related court orders, including the payment of more than US$ 3 million in fines and the designation of a local representative, as required by Brazilian law. The dispute over X has its roots in a presidential order from earlier this year, which required the platform to block accounts implicated in probes into the alleged spreading of distorted news and hate. Although he closed X’s Brazilian offices, Elon Musk has ensured the platform was still available in the country “until this matter is resolved.”

In a further bid to increase the appeal of its best-selling yet aging EV, (first released in2020), Tesla announced that it is planning to launch a six-seat variant of its Model Y car in China from late 2025. There are reports that the company has already requested suppliers to prepare accordingly for a double-digit increase of Model Y output at its Shanghai factory; it has already seen an annual 6.0% increase in H1 domestic and overseas Model 3 deliveries. It is readily apparent that the EV-maker is facing increasing competition from its Chinese rivals which have already unveiled at least four Model Y competitors this year including the Onvo L60 from Nio and 7X from Zeekr, both with roomier interiors and at prices lower than those of flagship models. However, its Model Y crossover is still the best-selling EV in China, with H1 sales of 207.8k, with expectations that Q3 sales will be even higher; by year end, sales could also get a boost from the introduction of its Full Self-Driving feature.

Car company Volvo is not the first EV-maker to abandon a target to produce only fully electric cars by 2030, blaming changing market conditions for its decision to give up a target it had announced only three years ago; it now expects that at least 90% of its output will be made up of both electric cars and plug-in hybrids by 2030. After a flurry in activity in previous years, the industry is facing a slowdown in demand in some major markets and uncertainty due to the imposition of trade tariffs on EVs made in China. Whilst maintaining that “we are resolute in our belief that our future is electric,” but that “transition will not be linear, and customers and markets are moving at different speeds.” One delaying factor is that EVs are expensive and have become more so because of the end of many government subsidies, and the introduction of tariffs. Registrations of EVs across the EU dropped by nearly 11% in July.

A major blooper by Sony sees it pulling online shooter Concord from sale today, (06 September), just a fortnight after its launch, following its 23 August release exclusively for PlayStation 5 and PC that subsequently has reportedly struggled to attract players. Anyone, (and there were not that many) who paid US$ 52.50 (GBP 40) would be entitled to a full refund. It had taken eight years in its development stage, and now two weeks since its release, it has been withdrawn so that the Sony team can “determine the best path ahead” for its return. Very much like popular titles such as Overwatch and Valorant, Concord is a so-called hero shooter in the multiplayer market, where players are part of a team made up of characters with distinct abilities and can compete in straight-up death matches or other game modes that involve capturing an objective or controlling sections of the arena. On release, it was criticised for failing to offer a new take on the genre. The highest number of concurrent users playing Concord was only six hundred and sixty, whereas the most-played game, Counter-Strike 2, has consistently recorded more than one million players over the past two years.

In a tit for tat move following Canada setting a 100% tariff for imported Chinese EVs, (as well as steel and aluminium), Beijing has announced a probe of Canadian canola imports, escalating a trade fight between the two countries. Its minister of agriculture said plans for the canola investigation were “deeply concerning”, whilst the Chinese retorted that canola oil imports had jumped 170% since 2023, while prices had “continuously fallen”. It will also file a complaint with the World Trade Organisation over the EV tariffs, which it criticised as “discriminatory” and “unilateral”, with Canadian Prime Minister Justin Trudeau saying  China had “chosen to give themselves an unfair advantage in the global marketplace”. Canola, also known as rapeseed, is a major agricultural product in Canada, accounting for roughly 25% of all farm crop receipts, according to the Canola Council, an industry group. 90% of its canola is exported with the US being its main source market, followed by China; it is used for cooking, animal feed and some forms of energy.

Following the rise of remote work, attributable to the pandemic, business travel declined which dampened the sector’s growth and led it to lag behind leisure travel. This year, total expenditure on global business travel is forecast to top US 1.5 trillion in 2024 – a 6.2% hike compared to pre-pandemic 2019.  The leading largest market for business travel, the US, is expected to reach US$ 472 billion – 13.4% higher than the 2019 record – whilst second place China  is expected to grow 13.1% above 2019 levels.

On Sunday, the C919 reached a milestone by surpassing the 500k passenger mark since commercial operations began on 28 May; over the past three months, the C919 has logged over 10k flight hours and completed more than 3.7k commercial flights. Nearly two years ago, in December 2022, China Eastern Airlines received its first of seven C919s and has expanded its C919 fleet, now with five regular routes that connect Shanghai with Chengdu, Beijing, Xi’an and Guangzhou, as well as Beijing with Xi’an.

In H1, China State Railway Group Co Ltd posted that its H1 total operating revenue and net profit reached US$ 81.46 billion and US$ 239 million. Over the period, railway passenger trips topped a record 2.1 billion during the period – 18.4% higher on the year – with an average of 10.26k passenger train journeys, (up 9.4% on the year), whilst more than 1.92 billion tonnes of goods were transported by railways.  In H1, China-Europe freight trains transported more than 1.04 million 20’ equivalent units of goods – up 11% on the year. Fixed-asset investment in the sector reached a record US$ 47.39 billion, increasing by 10.6% on the year.

There are many observers wary of China’s growing influence in Africa, which will expand even further after the country’s President Xi Jinping released plans to step up China’s support across debt-laden Africa. Xi, noting that China and Africa account for 33% of the global population, has pledged funding of US$ 50.7 billion, (but specified that US$ 21 billion would be disbursed through credit lines and at least US$ 70 billion in fresh investment by Chinese companies), over three years, backing for more infrastructure projects, and the creation of at least one million jobs. The Chinese leader also added that China would increase cooperation with Africa in various sectors including industry, agriculture, infrastructure, trade and investment, and that “without our modernisation, there will be no global modernisation”. The world’s biggest bilateral lender promised to carry out three times as many infrastructure projects across resource-rich Africa.

For its financial year, ending 30 June 2024, there was no surprise to see embattled Qantas posting a 26.5% slump in its post-tax profit to US$ 844 million (AUD 1.25 billion), with its new chief  executive Vanessa Hudson, (who replaced the disgraced Alan Joyce), noting that the airline’s focus this year has been getting the “balance right in delivering for customers, employees and shareholders”; revenue rose US$ 14.78 billion, (AUD 21.9 billion), while net debt is at US$ 2.77 billion, (AUD 4.1 billion). Whilst Jetstar, its lower cost airline, saw a 23.0% hike in its earnings of US$ 335 million, the airline’s domestic routes down by US$ 715 million – underlying EBIT), and international, falling by 39.0% to US$ 382 million. The revenue decline was attributable to several factors including fares moderating, increased spending on customer initiatives and reduced freight revenue. Expenses included US$ 134 million in legal provisions over the year, including a US$ 86 million settlement with the Australian Consumer and Competition over its court case. Capex over the year was at US$ 2.09 billion, with the carrier investing in new Airbus A220 jet aircraft to replace its ageing fleet of Boeing 717s. It also registered a US$ 47 million provision for “ground handling outsourcing” after the High Court ruled it had illegally sacked some staff during the pandemic.

As expected, the carrier did not declare a dividend, but it announced an up to US$ 270.05 million, (AUD 400 million) share buyback. Over the year, Qantas has spent money on regaining” “lost” customers, by investing in passenger promotions and in-flight services, after a turbulent year of headlines over its COVID-19 travel credits scheme and several legal battles. It is patently obvious that the airline has still a long way to go to “restore trust and pride in Qantas as the national carrier is our priority”.

There is an ACCC case against Qantas, claiming that it has sold seats on flights that had already been cancelled, with the carrier agreeing to institute a remediation program for affected passengers, but the full compensation bill has not yet been finalised. It is also involved in a separate class action for not refunding tickets for cancelled flights during the pandemic. Last December, the Albanese administration passed their “Same Job Same Pay” legislation, which has impacted Qantas which has confirmed it will support the union’s three Fair Work Commission (FWC) applications for its short-haul cabin crew and a separate in-principle agreement for its long-haul cabin crew workforce. This is expected to cost US$ 40 million, with 2.5k international and 800 Qantas short-haul cabin crew receiving pay increases, equating to an average 30% hike in remuneration.

Although the median price for Australian residences rose last month by an annual 2.8%, (and 0.5% on the month), to US$ 541k, (AUD 802k), the market is slowing. The annual rise comes at a time when homeowners have continued to face the high cost of living and higher interest rates; the current rate of 4.35% is expected to start declining by the end of the month. The CoreLogic’s Home Value Index indicates variances in capital cities’ house prices, with monthly increases seen in Sydney (0.3%), Brisbane (1.1%), Adelaide (1.4%) and Perth (2.0%), whilst declines were noted in Melbourne (-0.2%), Hobart (-0.1%), Darwin (-0.2%) and Canberra (-0.4%) in August. Interestingly, the latest quarterly data sees growth rate in home values being 1.3% down from the same period in 2023, when there was a 2.7% growth rate.

The major casualty seems to be Melbourne which has more sellers than buyers, with the city continuing to drop down the list of median house price values and is now the third-lowest among the capital city markets, slipping below Perth and Adelaide. Furthermore, the last time Perth prices were higher than those of Melbourne was in 2015 whilst the latest data sees Adelaide having higher prices for the first time ever. Meanwhile, the three most expensive cities are Sydney, Brisbane and Canberra, with prices of US$ 796k, US$ 590k and US$ 570k.

On the rental front, it appears that growth is “slowing to a halt”, with the rent index unchanged for a second consecutive month in August, whilst the annual rate of growth is still very high at 7.2%. One of the factors behind this seems to be a drop in net migration to Australia from March to December 2023, whilst the Reserve Bank of Australia point to a slight uptick in household size, suggesting share housing and multi-generational housing may be on the rise.

With ongoing worries that the US is stepping into recession, global financial markets do what they do under these circumstances – they run for cover. Global bourses, including those in Asia and the US, have seen company share values tumble, on Tuesday, including Nvidia, with the chip conglomerate falling by 9.5%, knocking off US$ 297.7 billion from its market cap. Financial markets in Asia and the US have tumbled on concerns that the world’s largest economy could be headed towards a recession, not helped by US manufacturing activity remaining subdued. In New York, the S&P 500 index closed more than 2% lower, while the tech-heavy Nasdaq fell by over 3%. On Wednesday morning, Japan’s Nikkei 225, South Korea’s Kospi and the Hang Seng in Hong Kong all fell by 3.3%, 2.7% and 0.7%. As in New York, tech companies took the brunt of losses.

August US job growth – at 142k – was weaker than expected and could point to high interest rates having their intended impact, with the economy beginning to slip. Data released shows that the unemployment rate fell back 0.1% to 4.2% on the month, whilst the job gains in the previous two months were lower than initially estimated. August figures will have a bearing on whether the Federal Reserve tinker with the current interest rate of 5.3%, later in the month, for the first time in four years; the odds point to a rate cut and whether this will be 0.25% or 0.50% remains to be seen. With inflation dipping lower by the month – now at 2.9% – the Fed can see the economy slowing which should result in rate cuts before the economy slows into a recession. It is now under pressure to cut rates and ward off the possibility of further economic slowing. Construction and health care firms led the hiring last month, while manufacturers and retailers cut payrolls.

The fall-out from the Oasis dynamic ticket pricing continues after the cost of tickets for their reunion tour more than doubled while on sale. It seems that Culture Secretary Lisa Nandy has posted that surge pricing would be included in a government review of the secondary gig sales market, with many thousands sitting in virtual queues for several hours hoping to buy a ticket. Even if successful, the end result was that ticket prices were more than their face value at US$ 466 (GBP 355) –and not at US$ 194 (GBP 148). Ticketmaster introduced this demand-based in 2022 to stop touts and ensure more money goes to the artists. The company claims it is artists, their teams, and promoters who set pricing and choose whether dynamic pricing is used for their shows.

UK’s Competition and Markets Authority has now launched an investigation into Ticketmaster over the sale of Oasis tickets, adding that it would cover how “dynamic pricing” may have been used, and whether the ticket sale “may have breached consumer protection law”. The watchdog said it would be engaging with Ticketmaster and “gathering evidence from various other sources”, including Oasis’s management and event organisers. The CMA investigation will also consider whether:

• Ticketmaster has “engaged in unfair commercial practices”
• Oasis fans were given “clear and timely information” explaining that tickets could be subject to “dynamic pricing”, how it would operate and how much they would have to pay
• people were “put under pressure to buy tickets within a short period of time – at a higher price than they understood they would have to pay, potentially impacting their purchasing decisions”

Halifax posted that August UK house prices were 4.3% higher on the year, and 0.3% on the month, at US$ 384k, (GBP 293.5k), as the recent 0.25% interest rate cut, to 5.0%, has evidently boosted confidence in the market. The UK’s largest mortgage lender expects that, “with market activity picking up and the possibility of further interest rate reductions to come, we expect house prices to continue their modest growth through the remainder of this year.”

More than seven years after a fire engulfed Grenfell Tower, the enquiry has finally released its findings in a 1.7k page damming report. In 2019, the first phase of the inquiry’s report confirmed that combustible cladding was the primary cause of the rapid spread of the fire. The second and last phase concluded that the tragedy was the culmination of those in charge failing for decades to properly consider the risks of combustible materials on high-rise buildings, while ignoring the mounting evidence before them. As far back as 1991, following a fire on Merseyside, the deadly risks of combustible cladding panels and insulation had been   identified. It noted that the government was “well aware” of the deadly risks posed by combustible cladding and insulation a year before the Grenfell Tower fire, but “failed to act on what it knew”, and that there had been “systematic dishonesty” from cladding and insulation companies as well as “toxic” relationship between the tower’s residents and the Tenant Management Organisation which was responsible for running services. It also reported that:

• government officials were “complacent, defensive and dismissive” on fire safety, while cutting red tape was prioritised and that successive governments missed opportunities to prevent the tragedy
• there was an “inappropriate relationship” between approved inspectors and those they were inspecting
• Grenfell residents who raised safety concerns were dismissed as “militant troublemakers” and were failed ‘by dishonesty and greed’; there was “a toxic atmosphere” with the TMO “fuelled by mistrust of both sides”
• The TMO and the Royal Borough of Kensington and Chelsea were jointly responsible for managing fire safety at Grenfell Tower – but the years between 2009 and 2017 were marked by a “persistent indifference to fire safety”
• cladding and insulation firms involved in this work engaged in “deliberate and sustained strategies to manipulate the testing processes, misrepresent test data and mislead the market”
• “systematic dishonesty” from the companies resulted in hazardous materials being applied to the block including
  • Cladding company Arconic, “deliberately concealed” the danger of the panels used on the tower
  • Celotex, which supplied most of the insulation, similarly “embarked on a dishonest scheme to mislead customers”
  • Kingspan knew its insulation product failed fire safety tests “disastrously” but continued to sell it to high-rise buildings
  • the firms got away with this because the various bodies designed to oversee and certify their products repeatedly failed to monitor and supervise them

All the above-mentioned stakeholders must share responsibility, to some degree, for their involvement in the disaster, with the Counsel noting that there had been a “merry-go-round of buck-passing” – largely blaming each other for the disaster. Unfortunately, the inquiry cannot make findings of civil and criminal liability, so it is up to the Met Police, (which has its own problems) to continue with their investigations and hopefully bring charges on many of the “villains” involved so that justice finally have its day in court; this could take another seven years. On the back of events such as the Hillsborough football disaster and the tainted blood scandal in the 1980s, Iraq – weapons of mass destruction, phone hacking, Windrush, Greensill, the Post Office scandal, Covidgate and now Grenfell, it is patently obvious that successive UK governments, on many occasions, have been lacking in honesty, integrity, transparency and governance but are masters of Cover Up!

1984!                                                                         30 August 2024

According to a Cushman and Wakefield Core report, Q4 saw a 14.0% annual hike in tenants renewing residential leases for the fourteenth consecutive quarter. In relation to rents, apartments were well ahead at an annual 22% to 13% ratio. One major problem, that will not go way, is the current economic environment that sees rising rents well ahead of household incomes, with a bigger percentage going on housing. In line with unit sales, rents in the mid-market segment -including Discovery Gardens, Dubai Sports City and Dubailand – are only going one way, upwards, whilst in more expensive property sector, they are slowing. Residential sales prices increased, by 21%, for the sixteenth consecutive quarter, with a 21% annual rise. However, it said prime districts saw a relative moderation in sales price increases, while mainstream and affordable districts were witnessing steep increases that are impacting their affordability. The ultra-prime market remains robust, increasing by 12%, with three hundred and five residences, each selling for more than US$ 5.45 million (AED 20 million) in Q2. However, there has been a marked slowdown in off-plan transactions, over the last two quarters, mainly because the pipeline is low. Official figures indicate that in H1, 13.7k units were delivered, with a further 24.3k anticipated in H2. It is interesting to note that while secondary market transactions recorded a moderate 5% growth, off-plan transactions surged 61%., and in Q2, off-plan transactions accounted for more than double the number of secondary market transactions.

Nearly seven hundred villas have been sold on Palm Jebel Ali since sales their launch late last year. On Monday, Nakheel awarded a two-year, US$ 220 million contract to Belgium’s Jan De Nul Dredging, (dredging, land reclamation, beach profiling and sand placement); on completion, this will not only finalise the marine works, but directly support the construction of villas across all fronds at the project The main road connecting the man-made island to Sheikh Zayed Road, is also under way. On completion, it will be double the size of Palm Jumeirah and will comprise sixteen fronds, along with other multiple islands, as well as spanning 13.4k km, with 91.0 km of beach front. Each villa is being sold at a price range between US$ 5.4 million and US$ 13.6 million. Prices have been rising steadily since launch days, with posting 31 December 2023 US$ 702.45 per sq ft, rising 5.39% on the quarter to US$ 740.32 by 31 March and by 2.83% to US$ 761.31 at the end of Q2. During H1, Palm Jebel Ali Palm accounted for 7.4%, (fourteen units), of the one hundred and ninety Dubai home sales of over US$ 10.0 million; it was second behind Palm Jumeirah’s sixty units.

The first eight fronds of the Palm Jebel Ali project are expected to be site-ready by Q1 2025, and once completed, this will allow for the commencement of villa building. On full completion, it is expected that Palm Jebel Ali will house 35k families and have more than eighty hotels.

In its latest Executive Nomad Index, Savills confirmed that Dubai has retained its top place out of twenty-five global cities surveyed, with Abu Dhabi moving two places higher to fourth. It considers the likes of internet speed, quality of life, climate, favourable tax regime, lifestyle, education, healthcare offerings, security business opportunities, global connectivity and prime rents It added that Dubai had ranked highly for connectivity because of its two major airports – DBX and DWC – and two airlines – Emirates and flydubai. Notwithstanding the prime rents and climate categories, Dubai scored well and will benefit in the future from launches of exciting real estate projects, residential and commercial, and government policies conducive to growth. Rounding off the top ten are Malaga, Miami, Lisbon, Barcelona, Palma, Barbados, Algarve and Saint Lucia.

By the end of 2023, UAE national carriers posted a 3.4% increase in the number of destinations served to six hundred and six, including joint and cargo routes, with Emirates and flydubai accounting for 44.4%, (Emirates – one hundred and forty-four destinations and flydubai, one hundred and twenty-five). Next month, EK is upgrading its Boeing 777 aircraft to Zurich and Riyadh and will add the same aircraft to its operations in Geneva and Brussels. The carrier is in the throes of investing US$ 3.0 billion in modernising eighty more planes. flydubai, with a current fleet of eighty-eight Boeing 737s, flies to fifty-eight countries, including a European network of twenty-nine destinations, including Budapest, Catania, Krakow, Milan-Bergamo, Prague, Salzburg and Zagreb.

Salik Company announced the valuations of the two new toll gates at Business Bay and Al Safa South – at US$ 617 million and US$ 128 million – for a combined value of US$ 745 million; they are expected to be in operation by this November and will bring the total toll gates to ten. Their introduction will further ease Dubai’s traffic congestion and optimise traffic flow. As per the Concession Agreement with RTA, Salik has the exclusive rights to construct, operate, and maintain the toll gates until the end of June 2071. The differences between the valuation by Salik, and the valuation by the RTA did not exceed the 5%. Accordingly, and as per the terms of the concession agreement, the average of the two valuations was adopted as the final value for the two new gates. Salik has agreed a six-year repayment schedule for the gates’ valuation, starting this November, with an annual instalment of US$ 124 million, paid bi-annually. Obviously, Salik is expecting to see the two new tollgates generate more revenue, with revenue-generating trips anow expected to increase in the range of 7% – 8 % in 2024 versus previous guidance of 4% – 6%, with a robust EBITDA margin of 67% – 68%, versus the previous guidance of 65% -66%.

It seems that there will soon be changes to the way Salik’s toll gate system collects its monies. Its CEO Ibrahim Al Haddad has indicated his thoughts that the current US$ 1.09 (AED 4.00) rate may have lost momentum and impact on traffic, and that there is a need to apply dynamic pricing, which will see the rate vary according to the time of the day – this may include some toll gates charging more and maybe all not charging anything at certain times of the day. Once a report, including financials, forecasts and details, is finalised, it will then be forwarded to the Dubai Executive Council for approval.

It is estimated that DMCC is home to more than 45% of the 1.5k US businesses, (around 0.7k) in the country, and is now looking at reinforcing that position to maintain the UAE’s status as home to the largest US foreign direct investment stock in the ME. A DMCC delegation recently made its second US trip this year, to San Francisco, California, and Denver, to extol US businesses on the myriad of benefits of establishing a presence in the emirate. Last year, bilateral trade was at a record US$ 31.4 billion – and growing – with the DMCC increasing its share by 4% to 15% of the emirate’s FDI of US$ 39.26 billion and 7.0% of Dubai’s GDP of US$ 430.0 billion.

A recent session, organised by Dubai Chambers in alliance with Dubai Future Foundation, hosted a workshop investigating new opportunities and growth prospects for the gaming sector. It was focussed on strategies for the Dubai Programme for Gaming 2033, with a target to place Dubai as one of the top ten global gaming hubs; it also envisions the sector to contribute over US$ 1.0 billion to the emirate’s GDP and, at the same time, create 30k new jobs, and provide opportunities for businesses and experts within the sector. Attendees at the session included key players in the gaming industry, such as developers, hardware experts and specialists in AI, sales and marketing. The upcoming Expand North Star will take place at Dubai Harbour from 13 – 16 October.

The Federal Tax Authority posted that the number of H1 transactions, processed through the digital Value Added Tax (VAT) refund system for tourists, rose 5.9% to 2.7 million; the figures are based on the number of refunds “Tax free Tag” issued by retail stores electronically linked to the system. The FTA revealed that a total of 19.67 million digital tax refund requests from tourists have been processed between the system’s initial launch and the end of H1, up 35.3% to the same period in 2023. According to Khalid Ali Al Bustani, Director-General of the FTA, “the significant increase in tax refund requests from tourists can be attributed to the substantial tourism boom the UAE is currently enjoying”. He also noted that the “the system is the most advanced of its kind in the world and offers 100% digital procedures to process digital invoices issued from retail outlets registered in the system, replacing traditional paper invoices, using an advanced electronic link between these outlets and the system.” By the end of H1, 16.9k stores were electronically linked to the Tax Refund for Tourists Scheme – up 8.1% on the year.

As part of the development process, a thorough assessment was conducted by globally recognised ESG which examined international and regional regulatory landscapes and reporting frameworks to identify critical factors in determining an organisation’s ESG maturity. All entities, that have been established for at least two years, are eligible to apply. Companies that are successful will benefit from alignment with ESG best practices, enhanced brand image/reputation, and added value for potential investors. 

e& has invested US$ 60 million to acquire the Turkish-based digital firm GlassHouse, which will boost its portfolio and see it enter three new markets in Turkey, Qatar and South Africa, bringing its operational presence to thirty-four markets, in which, the company provides the latest cloud and its associated managed services in key sectors, such as banking and finance backed by German software company SAP. Salvador Anglada, chief executive of e& enterprise, noted that “this acquisition is another bold step in our journey to becoming a regional leader in end-to-end digital transformation.” GlassHouse is a major player in Turkey’s cloud services sector, with more than 2k companies in multiple nations, including nine of the top ten banks in Turkey. Revenue in MEA transformation market is projected to surge almost sixfold, over the next six years, to US$ 217 billion by 2030 – a compound annual rate of 28.4%.

Jebel Ali Port reported that, in July, it handled 1.4 million twenty-foot equivalent units – its largest volume of containers handled in a month since 2015, as the benefits of recent Comprehensive Economic Partnership Agreements, with various nations, have begun to take hold, leading to a surge in non-oil foreign trade. DP World noted that H1 volumes were 2.9% higher, on the year. This follows a strong performance in H1, handling 7.3 million TEUs, driven by “strong inbound cargo movement, particularly from key Asian markets including China, Japan and the Republic of Korea.” In H1, UAE’s non-oil trade reached a record US$ 676 billion – up 11.2% on an annual basis, assisted by a 25% surge in non-oil exports from the new CEPAs; non-oil experts to its top ten trading partners rose by 28.7% and to the rest – 12.6%. To date, CEPAs have been signed with India, Turkey, Israel, Indonesia, Cambodia, Georgia, South Korea, Chile and Mauritius, with further discussions ongoing with Serbia, Vietnam, Philippines, New Zealand and Ecuador. The goal is to bring the number of CEPAs to twenty-six, in the coming months, and it is hoped that by 2030, they will add about 2.6% to the UAE’s GDP.

Next month, Dubai will host several major events including:

07-08 Sep       the second edition of the Binos Classic Bodybuilding Championship, with seven hundred athletes       

11-12 Sep       the inaugural edition of the Dubai AI & Web3 Festival – one hundred exhibitors and over 5k participants including industry leaders, policymakers and global innovators, who will lead discussions on the future of AI and Web3.

16-20 Sep       the thirtieth edition of the World Congress on Intelligent Transport Systems (ITS World Congress), with an expected turnout of 20k participants and eight hundred speakers. The congress will focus on key themes such as innovations in intelligent transport, sustainable mobility, smart city integration, data-driven decision-making, autonomous vehicles and enhancing international cooperation in this field

23-25 Sep       the tenth edition of the World Free Zones Organisation’s ninth Annual International Conference and Exhibition, with representatives from over one hundred countries and more than 2k global and regional business leaders and free zone officials

In H1, the Dubai Financial Services Authority authorised sixty-one new firms – a 22% annualised increase – bringing the total number of regulated entities to eight hundred and thirty-seven entities; the wealth management sector posted a 62% rise. The DFSA contributed to facilitating the growth of the capital markets in the DIFC, which remains the world’s largest ESG sukuk market and the second largest listed sukuk market after Dublin, with a value of US$ 16.6 billion and US$ 90.9 billion respectively. It also hosts one hundred and ninety-nine securities on its official list, valued at US$ 166.3 billion, including forty-three ESG securities – valued at US$ 28.6 billion – listed on Nasdaq Dubai. During the period, it issued six consultation papers, including on crypto regulation, the audit regime, crowdfunding, and credit funds. The Authority took one enforcement action and issued nine public alerts to consumers and the financial community about common and more sophisticated forms of scams, and published four key reports on firm disclosures, brokerage, private banking, and liquidity coverage ratios, providing valuable insights for the industry.

Peter Georgiou, an ex-private banker, working for his former employer, Mirabaud (Middle East) Limited has been fined US$ 980k, (for misleading conduct and his involvement in the violations of his former employer, Mirabaud (Middle East) Limited. Apart from the fine, he has also been banned from holding any office or working for a DFSA-authorised firm and is restricted from providing financial services in the Dubai International Financial Centre. The court noted the defendant lacked integrity and was unfit to work in the DIFC’s financial sector. Specifically, the authority discovered that the former banker:

• deliberately misled MMEL’s compliance team and withheld crucial information to bypass MMEL’s anti-money laundering (AML) systems and controls
• sent a forged, deceptive email to a client
• provided false information to the DFSA during an interview

In July 2023, MMEL was fined US$ 3 million for having inadequate AML systems and controls., with its employee found to have played a role in MMEL’s failure to:

• conduct proper due diligence on existing customers, especially when there were doubts about their documents or suspicions of money laundering
• assess clients’ financial markets experience adequately when classifying them as Professional Clients

Majid Al Futtaim reported a 6% decrease in H1 revenue to US$ 4.55 billion, EBITDA down 2% to US$ 572 million and a US$ 436 million profit; it noted that figures had been impacted by macroeconomic headwinds from geopolitical instability and regional currency devaluations. Retail registered an 11% annual decline in revenue to US$ 3.16 billion and a 47% year-on-year decline in EBITDA to US$ 76 million. Its property division registered a 9.0% increase in revenue to US$ 1.0 billion, primarily driven by the highly successful Tilal al Ghaf residential real estate development; (in June, it recently launched Ghaf Woods which saw its first phase of 1k units sell out). The group said it continued to drive sales across its residential community portfolio, booking US$ 1.61 billion. The cinemas portfolio registered a 3% year-on-year increase in admissions, contributing towards a strong EBITDA growth of 103%, as the lifestyle business reported an increase in revenue by 23% to US$ 159 million. Shopping malls registered an annual revenue growth of 8% and recorded 96% occupancy. Hotels reported an increase in revenue per available room (RevPAR) of 18% year-on-year, while average occupancy was down by 2%.  In March 2024, the group sold a number of non-core assets from its hospitality portfolio. Net borrowings decreased to US$ 3.98 billion, with most of its debt maturing post 2027.

Dubai Aerospace Enterprise has signed agreements with several parties to acquire a total of twenty-three planes, valued at US$ 1.1 billion; 90% of the order are for narrow-bodied planes. The Dubai-based company confirmed that the aircraft portfolio had a weighted average age of 3.4 years, an average lease term of 8.8 years and is on lease to thirteen airlines in nine countries. The deal will be financed by internal means. Because of this purchase, DAE has been able to add a further six new airline customers to its portfolio. In H1, profit came in 5.5% higher on the year to US$ 149 million, whilst total revenue nudged up 1.4% to US$ 679 million. Its available liquidity was 19.5% higher at US$ 4.9 billion, with a liquidity coverage ratio of 241% at 30 June, compared to 290%, six months earlier.

Equitativa (Dubai) Limited registered a 16% hike in H1 net property income to US$ 34 million for Emirates REIT, attributable to rising occupancy levels and continued improvement in lease rates, resulted in an annual 12% growth in total H1 property income to US$ 40 million. Continued cost rationalisation helped reduce property operating expenses by 3% to US$ 6 million, resulting in a 19% surge in operating profit to US$ 25 million. The manager of Emirates REIT PLC is still being impacted by high finance costs that resulted in negative funds from operations of US$ 1.5 million in H1 – an improvement from 2023’s negative US$ 3.6 million. As valuations continued to head north in the period, its fair value of investment properties jumped 18% to US$ 991 million, which then saw the financing to assets value decline to 40% as of 30 June 2024 – its lowest level since 2016. The H1 30% unrealised gain on revaluation of investment properties amounted to US$ 65 million.

Latest data shows that Q2 net profits for Dubai-listed companies rose 30.9% on the year to US$ 6.7 billion – a much better result than the aggregate 5.7% net profit posted by listed corporates across the GCC. Dubai’s results only lagged those on the Bahrain bourse because of accounting adjustments and restructuring implemented by DSI. Three of DFM’s sectors – banking, capital goods and telecoms – accounted for 83.1% of the total earnings. DFM trades are divided into thirteen sectors with seven ending the quarter in the black whilst six, including the insurance and diversified financial sectors, reported declines.

Over H1, annualised net profits increased by 20.0% to US$ 12.1 billion, with total Q2 net profits for the banking sector 12.0% higher to US$ 3.3 billion, up from $2.9 billion in Q2 2023, and in H1 by 13.9% to US$ 6.5 billion. Emirates NBD posted a record H1 profit, 13.6% higher to US$ 3.76 billion, whilst Q2 profits reached US$ 1.9 billion, driven by increased lending across the bank’s regional network, coupled with substantial impaired loan recoveries during the period.

Aggregate profits for the capital goods sector jumped nearly eleven times during Q2 2024 to reach US$ 1.2 billion, driven by Drake & Scull’s US$ 1.0 billion profit in Q2, compared to a US$ 12 million loss a year earlier. On the other hand, National Central Cooling and Dubai Investment Company posted 4.5% and 8.7% in net earnings at US$ 43 million and US$ 79 million, respectively.

Total Q2 net earnings for listed real estate stocks in Dubai increased by 29% on the year to US$1.1 billion after all the companies in the sector reported y-o-y growth. H1 net earnings for the sector were up 11.9% to US$ 2.4 billion. There was no surprise to see Emaar Properties being the main driver, with Q2 profits 39% higher at US$ 659 million and for H1 up 8.0% to US$ 1.5 billion.

It is reported that, in Q4, Delivery Hero, the German-based food delivery platform, is to list a share of its UAE subsidiary Talabat on the DFM; no details were available about the size of the float or how the funding raised is to be utilised. In a filing yesterday, the company noted that “a listing may be pursued through a secondary sale of shares by Delivery Hero which would retain the majority interest in the local listing entity after an IPO.” The IPO is still subject to regulatory approvals and market conditions.

Over the past three years, Dubai companies have raised US$ 9.40 billion, through IPOs, with aggregate investor demand for those listings reaching more than US$ 274.48 billion. Last year, the DFM was the fifth best global performer. In November 2021, Dubai said it would list ten state-owned companies and establish a US$ 545 million market maker fund to encourage listings from private companies in sectors such as energy, logistics and retail. It aims to expand the size of the emirate’s financial market to US$ 817 billion, with six state-owned enterprises having been listed on the bourse since 2022.

The DFM opened the week, on Monday 26 August, ninety eight points (2.3%) higher the previous fortnight and gained thirty-three points (0.7%), to close the trading week on 4,325 by Friday 30 August 2024. Emaar Properties, US$ 0.05 higher the previous week, gained US$ 0.03, closing on US$ 2.30 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.66, US$ 5.38, US$ 1.66 and US$ 0.34 and closed on US$ 0.65, US$ 5.37, US$ 1.68 and US$ 0.35. On 30 August, trading was at one hundred and fifty-one million shares, with a value of US$ 135 million, compared to one hundred and thirty-one million shares, with a value of US$ 72 million on 23 August.  

The bourse had opened the year on 4,063 and, having closed on 30 August at 4,325 was 262 points (6.4%) higher. Emaar started the year with a 01 January 2024 opening figure of US$ 2.16, to close YTD at US$ 2.30. Four other bellwether stocks, DEWA, Emirates NBD, DIB and DFM started the year on US$ 0.67, US$ 4.70, US$ 1.56 and US$ 0.38 and closed YTD at US$ 0.65, US$ 5.37, US$ 1.68 and US$ 0.35. 

By Friday, 30 August 2024, Brent, US$ 0.75 lower (1.0%) the previous week, shed US$ 0.19 (0.2%) to close on US$ 78.83. Gold, US$ 77 (4.7%) higher the previous fortnight, shed US$ 44 (1.7%) to end the week’s trading at US$ 2,502 on 30 August 2024.

Brent started the year on US$ 77.23 and gained US$ 1.60 (2.1%), to close 30 August 2024 on US$ 78.83. Meanwhile, the yellow metal opened 2024 trading at US$ 2,074 and gained US$ 428 (20.6%) to close YTD on US$ 2,502.

IATA data show ongoing robust annual demand growth for global air cargo markets in July – up 13.6% when measured in cargo tonne-kilometres, and at levels not seen since the record highs of 2021. It was the eighth consecutive month of double-digit annual growth. Capacity, as measured by available capacity tonne-kilometres, rose 8.3%, mainly down to growth in international belly capacity, which increased 12.8% on the strength of passenger markets, (with the increase the lowest in forty months), offsetting the 6.9% increase in international freighter capacity.  Willie Walsh, IATA’s Director General, noted, “air cargo demand hit record highs year-to-date in July with strong growth across all regions. The air cargo business continues to benefit from growth in global trade, booming e-commerce and capacity constraints on maritime shipping. With the peak season still to come, it is shaping to be a very strong year for air cargo.”

In June, on its maiden manned flight to the International Space Station, Boeing’s Starliner was supposed to take Butch Wilmore and Suni Williams there for an eight-day trip and then return them to earth. However – and probably no surprise following their catalogue of recent disasters – the craft also suffered several failures of its thrusters, as well as leaking helium, and NASA has indicated that the safest decision is for the two to return as part of SpaceX’s Dragon Crew-9 mission in February 2025. Another humiliating episode in the Boeing serial of ‘how not to do things right’ and a huge embarrassment that the rescue craft is to be Elon Musk’s upstart rival SpaceX, whilst what was a manned space craft will return with no crew on board.

Last week ended badly for Boeing when it was reported that a US campaign group has accused the plane maker of concealing information about electrical problems on the Ethiopian plane that crashed in 2019, with a number of issues including an “uncommanded roll” at low altitude. It estimated that more than 1k planes currently flying could potentially be at risk of electrical failures as a result of production problems. Both crashes were primarily attributed to a poorly designed flight control system, which activated at the wrong time due to a sensor failure. The organisation has published a number of documents on its website, which it says are build records for the aircraft involved in the Ethiopian accident, leaked by Boeing employees, that set out problems encountered during the construction process.

There is no surprise when Michael O’Leary posted that Ryanair had witnessed a “notable rise” in trouble caused by drunken and drugged behaviour, noting that it has to deal with assault cases on a weekly basis. Europe’s largest airline noted that Ryanair is not the only carrier to experience this behaviour and it seems that flights to beach resorts, such as Ibiza, (“by far and away the worst destination for it”), and the Greek islands are prime locations for such behaviour, adding that flights from Edinburgh, Glasgow, Liverpool and Manchester are “notably bad”, and that there were problems on flights to and from Ireland and Germany.  Interestingly, the culprits are often the people “you least expect” and fit no particular profile. As an aside, the supremo commented that after two years of increases – around the 20% level – he expects them to dip by up to 5% and that, by Q3 2025, prices will be in line with those of 2023.

In July 2023, following some shareholder dissatisfaction at its recent performance, Hein Schumacher was appointed as CEO of Unilever. Almost immediately, it announced that it would demerge its vast ice cream division, which owns Magnum, Wall’s and Ben & Jerry’s. A year later, there are reports that it is trying to slim its portfolio of personal care brands by putting two of them up for sale – Kate Somerville, (an upscale skincare product, acquired in 2015), and another skincare brand, REN.

Alarm bells started ringing at the world’s largest sports retailer when in late June it reported an expected sale drop in early 2025 resulting in its market cap shedding US$ 28.0 billion overnight. Nike still remains the largest sports retailer in the world, with the biggest slice of market share, but the problems probably started four years ago, with the appointment of eBay’s John Donahoe as CEO, with the immediate aim to grow Nike’s online operation and to bring in more digital revenue. With the arrival of Covid, the retailer saw a marked increase in digital sales, and away from its brick-and-mortar revenue stream. During the lockdown, consumers could not go to work – and there was no need to dress smart – and they could not go physical shopping and were forced online whether they liked it or not. So, the new guy got off to an unbelievable start and Nike’s profits surged past projections and the CEO accelerated the digital strategy and before long, he had severed a third of its relationships with ‘bricks and mortar’ sales partners, commenting that “the consumer today is digitally grounded and simply will not revert back.” With a smack of ignorance and arrogance, Nike believed they were the ones best able to deliver their vision straight to consumers, and they did not need retailers like FootLocker and JD Sports diluting that as middlemen. However, the tide turned, and as global lockdowns ended, shoppers returned to stores and online sales slowed, and the decisions that had been made started to be questioned. Nike’s rivals – including Asics, Deckers Outdoor’s HOKA and Roger Federer-backed On – were now filling the spaces that Nike used to dominate in pre-Covid days. Furthermore, they were biting into Nike’s market share, particularly in performance running, as well as introducing new ideas and new products. There is no doubt that Nike had become a laggard in the sports lifestyle scene, with the likes of Adidas’s Samba and Gazelle lines, and New Balance’s 990s, growing in popularity.

Even though on Wednesday, Nvidia posted record Q2 revenue of US$ 30.0 billion, 122% higher on the year, its shares fell 6.0% in after-hours trading; earlier in the year, the tech company saw its market cap top US$ 3.0 billion on the New York bourse, but the market cap is still a very impressive 150% higher, YTD. Of all major tech companies, Nvidia has benefitted most from the AI boom, and even though these figures are “spectacular”, they do point to a slowdown in the rate of growth. Its chief executive, Jensen Huang, remains upbeat, commenting that “generative AI will revolutionise every industry.” One of the reasons has been that the next generation Blackwell chip has faced some production delays and if it fails to deliver, its valuation could be impacted, with investors, having already financed billions, pulling out. Although the Nasdaq was impacted, the Dow hit a record high of 41,335, 0.59% higher on the day, following robust economic data indicating that Q2 GDP grew by 3.0%, attributable to enhanced consumer spending and an uptick in business investment.

The Indian watchdog has provisionally approved a US$ 8.5 billion JV between Disney and Reliance Industries, with the latter having majority stake status. The new entity, which will have broadcasting rights for a majority of Indian sports events, will be the country’s biggest entertainment player, competing with Sony, Netflix and Amazon.  Over three years, the two companies have invested US$ 9.5 billion on TV and streaming rights for the Indian Premier League, T20 World Cups and matches held by the International Cricket Council. With the merger, the two companies will also have Indian broadcast rights for Wimbledon, MotoGP and the English Premier League.

The week started with news that Oasis was planning a major reunion tour and by yesterday, details had been released with seventeen concerts from 04 July to 17 August 2035. The first two concerts will be at the Cardiff’ Principality Stadium, followed by five at Manchester’s Heaton Park, five more at Wembley Stadium, two at Edinburgh’s Murrayfield Stadium and closing with the final two concerts at Dublin’s Croke Park. Ticket prices range hover around US$ 98, (GBP 75), for seated tickets and US$ 198, (GBP 150), for standing tickets. Recent tickets for Taylor Swift’s Eras Tour were averaging around US$ 78 (GBP 59) and US$ 145 (GBP 110) for standing tickets., and for Bruce Springsteen US$ 86 (GBP 65) and US$ 158 (GBP 120). A quick estimate sees a revenue stream of some US$ 1.496 billion (seventeen concerts, with an average 80k attendance and an average ticket price of US$ 110).

The Dutch Data Protection Authority has smacked Uber with a US$ 324 million fine for transferring the personal data of European drivers to US servers, in violation of EU rules; the watchdog noted that the transfers were a “serious violation” of the EU’s General Data Protection Regulation, as they failed to appropriately protect driver information, alleging that it sent information – including ID documents, taxi licences and location data, (“and in some cases even criminal and medical data of drivers”) –  to its US headquarters over a two-year period. The riding hailing app said it would appeal the fine, which it called “unjustified”, adding that “Uber’s cross-border data transfer process was compliant with GDPR during a three-year period of immense uncertainty between the EU and US.” It is the DPA’s third fine against Uber following fines of US$ 670k in 2018 and US$ 11.2 million last year. The investigation was initially started after more than one hundred and seventy French drivers complained to a French human rights group, which then filed a complaint to France’s data protection watchdog; EU regulations indicate, that in such an event, the case must be brought by the nation in which the company has its headquarters – , Uber’s HQ is in Amsterdam.

Having trialled its own second-hand online marketplace successfully in Oslo and Madrid, Ikea plans to take on the likes of eBay, and is set to roll out the site globally by December. The app, Ikea Preowned, will allow visitors to sell to each other, rather than relying on other buy-and-sell websites. Research indicates that there is a steadily growing market for second-hand furniture, clothes and equipment. Furthermore, it could improve Ikea’s margins, with the Swedish company making more profit from the resale of its own goods, whilst taking business away from the likes of eBay, Gumtree, Craiglist, Shpock and Facebook Marketplace.

Featurespace, (backed by the late Mike Lynch, via his investment firm, Invoke Capital), is negotiating a possible US$ 920 million sale to Visa, the US payments giant. The UK company, founded in 2008, specialises in fraud detection and counts HSBC, NatWest Group and Worldpay among its customers.  Invoke owns a small stake in Featurespace, while he served as a non-executive director of the company for eleven years, and it is thought that he reduced its interest in recent years to help finance his legal case which ultimately saw him acquitted of fraud over the US$ 11 billion sale of Autonomy to HP. On its website, Featurespace noted that it was “devastated by the loss of Mike Lynch”, and that “it is a high statistical probability that Featurespace wouldn’t be a thriving technology company without Mike,” and that “Mike was a true champion of the UK technology sector, including the need for greater diversity, and advocated for many female leaders – including our CEO Martina King.” Mr Lynch also played a key role in setting up Darktrace, the cybersecurity company which recently agreed to be taken over by Thoma Bravo, the private equity firm, in a US$ 5.61 billion deal.

Staff at retailer Next have finally won a six-year legal battle for equal pay, after an employment tribunal said store staff, who are predominantly female, should not have been paid at lower rates than employees in warehouses, where just over half the staff are male. Next is going to appeal the decision but if it fails, it will cost US$ 40 million in back-pay to some 3.5k staff. According to the tribunal’s ruling, between 2012 and 2023, 77.5% of Next’s retail consultants were female, while 52.75% of warehouse operators were male. It accepted that the difference in pay rates between the jobs was not down to “direct discrimination”, including the “conscious or subconscious influence of gender” on pay decisions, but was caused by efforts to “reduce cost and enhance profit”. Workers at five of the UK’s largest supermarkets, Asda, Tesco, Morrisons, Sainsbury’s and the Co-op, are also pursuing equal pay cases, with the firms using the same arguments as Next around market pay rates to counter them, whilst the same judgment could prompt further cases, for example in the care sector, hospitality or construction.

A deal has evolved that will result in Authentic, re-establishing an online presence for the vanquished Ted Baker; very recently, the retailer had permanently closed its thirty-one remaining UK shops, with the loss of some five hundred jobs, with a further fifteen outlets and two hundred retrenchments having been closed by NODL’s administrator, Teneo, earlier in the year. The US company, (which is already Authentic’s operating partner for Ted Baker in the US and Canada), has owned Ted Baker since 2022, has struck a deal with United Legwear and Apparel Co, to operate an e-commerce presence for the brand in Britain and mainline Europe. A week earlier, discussions with Mike Ashley’s Fraser Group had broken down.

Last month, the Royal Australian Mint announced the successful launch of AUD 1 ‘Bluey’ coins to celebrate the global success of the TV cartoon; they were being sold for AUD 20, (US$ 13.58), with on-line sites now asking in the region of AUD 600, (US$ 407.38). Now the Royal Mint is getting in on the act again by releasing the Gruffalo’s Child which will appear on a new commemorative 50p, coin, (US$ 0.66) to mark twenty years since the story was first published; (the Gruffalo first appeared on similar coins in 2019). The new coins will not enter general circulation but will be available to buy in precious metal finishes, starting at £12, (US$ 15.79) – and a gold one for US$ 99, (US$ 130.28). In the past, it has minted similar coins for the likes of Paddington, The Snowman, and Beatrix Potter favourites, many of which have seen attractive price rises.

Not for the first time in recent times, Qantas finds itself in the news for all the wrong reasons. Last week, about three hundred people thought they had beaten the system when the Australian carrier put up first-class prices at 15% of market prices. Qantas soon recognised their blunder and will refund or downgrade hundreds of passengers who were sold cheap first-class flights because of a coding error. However, it did confirm that it will switch passengers, who bought the bargain tickets, into business class – “at no additional cost” – or give a full refund.

When John Minns was appointed by the NSW government in November 2021 as the state’s Strata and Property Services Commissioner, he confirmed publicly that he had “sold his interest in Independent Property Group in mid-2021”. Now it has been discovered that his family trust continued to hold shares in the company worth more than U$$ 780k and it appears that the man responsible for overseeing strata governance and assisting in the regulation of the state’s property sector — has failed to publicly disclose more than 558k shares in a major real estate and strata services company. On ABC’s Four Corners, he was asked whether his family trust “continues to own more than 500k shares” in the company, and he replied, “that is correct”. Recently, it appeared that he admitted that while this was not disclosed to the public, the NSW government was fully aware of his shareholding. Following the recent publicity, it seems that IPG has called for an EGM, to discuss the buyback of Minns’ remaining shares. Evidently, IPG’s most recent financial statement, obtained by Four Corners, showed the company had earned more than US$ 5 million from strata and facilities management work across 2022 and 2023. No wonder that the Minister for Fair Trading, Anoulack Chanthivong, has asked for an urgent review of the matter.

Earlier in the year, Minns was overseeing an investigation into a high-profile strata management company, Netstrata which was found to have been charging exorbitant insurance fees as well as taking kickbacks. Although the company operated primarily in the ACT; (a typical brokerage fee is about 20% of an insurance policy’s base premium, whilst Netstrata’s insurance arm was charging in excess of 60%, without disclosing that fee to owners). It held a NSW real estate licence until June last year, with several of its employees continuing to operate in NSW and hold NSW licences.

There is no doubt that there would be a conflict of interest whenever a person charged with a public duty of growing good public policy in the public interest for those living in the strata space but also has a commercial interest in the trading of apartments. The fact that the Commissioner had failed to publicly disclose his shareholding is self-evident that a conflict of interest had occurred. It seems that Minns confirmed that his published pledge, relating to the 2021 sale of shares had been mirrored by a formal pecuniary declaration to the government, with him saying “I’ve made it very, very clear at all stages with the NSW government, and it was accepted by the secretary [of the department] at the time.”; the secretary was Emma Hogan. In July 2022, with a restructure of his department, his role as Property Commissioner was terminated, eight months into a two-year contract. Three weeks later, Ms Hogan reinstated Mr Minns to his position, with an annual remuneration package of US$ 271k. Last October, his remit was expanded to also take responsibility for overseeing the strata industry.

Australia has become one of the first developed countries to introduce a law that does not ban employers from contacting workers after hours but gives staff the right not to reply unless their refusal is deemed unreasonable. If any dispute cannot be settled amicably, then its Fair Work Commission can step in; the employer may be ordered to stop contacting the employee after hours, or on the other hand, it can find an employee’s refusal to respond unreasonable and order them to reply. Failure to comply with FWC orders can result in fines of up to US$ 13k for an employee or up to US$ 64k for a company.

This week, Canadian Prime Minister Justin Trudeau announced that the country will impose a 100% tariff on imports of Chinese EVs, (on 01 October), following on similar decisions by the US and the EU; all parties have accused China of subsidising its EV industry, giving its car makers an unfair advantage. Furthermore, it also plans to impose a 25% duty on Chinese steel and aluminium, as from 15 October. China has reacted posting that the move is “trade protectionism” which “violates World Trade Organisation rules”, and that Canada’s actions “seriously undermine the global economic system, and economic and trade rules”. China is Canada’s second-largest trading partner, behind the US. One problem with the decision involves Tesla which manufactures EVs in Shanghai; Elon Musk has already received reductions from the EU and would hope for something similar from Canadian regulators. The country is Tesla’s sixth largest market.

For the week ending 24 August, the number of Americans filing new applications for jobless benefits dipped 2k, to a seasonally adjusted 231k, whilst re-employment opportunities for laid-off workers are becoming more scarce –  an indicator that the August unemployment rate still remains on the high side. The latest figures point to a steadily cooling labour market, which should help to allay fears of a rapid deterioration. The Labor Department’s Bureau of Labor Statistics last week estimated that employment growth was overstated by 68k jobs per month in the twelve months through March.  Last Friday, Fed supremo Jerome Powell noted that concerns over the labour market is a reason to start cutting interest rates. There was a 13k increase in the number of people receiving benefits after an initial week of aid, a proxy for hiring to a seasonally adjusted 1.868 million during the week ending 17 August. The figures, almost at post pandemic rates of late 2021, indicate longer spells of unemployment. It is expected that the August unemployment level – which has risen for the past four months – could remain at a three-year high of 4.3%.

Following the usual annual Jackson Hole symposium’s speech by the Chairman of the Federal Reserve, energy prices moved higher. There, its Chair, Jerome Powell, indicated that interest rates would soon be cut, as geopolitical tensions were easing a little, with demand growing. Factors such as a weakening Chinese economy, growing recession risks, and signs that a ceasefire between Israel and Hamas could be on the cards, all impact on the Fed’s decision. The Chair also noted that he thinks inflation had eased enough to allow for an interest rate cut next month, and further cooling in the job market would be unwelcome. Furthermore, he expressed confidence that inflation was within reach of the US central bank’s 2.0% target, whilst noting that “the upside risks to inflation have diminished. And the downside risks to employment have increased.” Brent has lost about 12.5% of its value after breaching the US$ 90 a barrel mark in April.

The British Retail Commission posted that August shop prices fell 0.3% – their first annual fall since October 2021 – because of retailers trying to clear stock, (particularly fashion and household goods), with summer sales after wet weather and ongoing cost of living pressures had impacted sales. Food prices continued to rise, albeit at a slower pace, whilst fresh food inflation, such as fruit, meat and fish, had seen the biggest monthly decrease since December 2020 – thanks to falling costs from suppliers. Non-food goods were 1.5% lower in August, on the year, with food prices 2.0% higher on the year but down 0.3%, on the month. The most recent official inflation figures – which indicate how fast prices are rising overall – showed the rate rose to 2.2% in July, the first increase this year; the BoE has predicted the inflation rate will rise to about 2.75% in the coming months, before falling below 2.0% in 2025.

According to the Office for National Statistics, the average price of takeaway fish and chips, at the end of last month, was 52.5% higher at US$ 13.03 than it was five years earlier in July 2019; this was the biggest price increase when compared to several other of the UK’s most popular takeaways. They include kebabs, chicken & chips, pizza, Indian (main course) and Chinese (main dish) US$ 6.92 – up 44%, US$ 6.24 – 42%, US$ 10.63 – 30%, US$ 9.92 – 29% and US$ 7.28 – 29%. Chip shop owners have been hit by a triple whammy of 35% tariffs on Russian seafood imports, surging energy costs and the recent potato harvest being impacted by extreme weather.

As widely expected, Kier Starmer finally confirmed that Labour’s first budget will be painful, and the government will have to make “big asks” of the public, and “accept short-term pain for long-term good”. In true Labour fashion, he reiterated that those with the “broadest shoulders should bear the heavier burden”. As he continued blaming the former Conservative government, saying that he had inherited “not just an economic black hole but a societal black hole”, the former incumbent, Rishi Sunak retorted that the speech was “the clearest indication of what Labour has been planning to do all along – raise your taxes”. However, the PM repeated his pledge, made during the election campaign, that the government would not raise National Insurance, income tax or VAT. His Chancellor, Rachel Reeves, has made similar promises but said some taxes will rise and has not ruled out an increase in inheritance tax, capital gains tax, or reforming tax relief on pensions. Whilst saying he was determined to “restore honest and integrity” to government, he had already given a No 10 pass to one Labour donor Lord Alli and appointed another donor, Ian Corfield, to a temporary job in the Treasury. Cronyism is alive and well.

This week, Mark Zuckerberg admitted that he had cowed to Biden administration pressure and now regrets that he took down some material – including humour and satire – on Facebook and Instagram in 2021. He also confirmed that his firm briefly “demoted” content relating to Joe Biden’s son, Hunter, ahead of the 2020 election, after the FBI warned of “a potential Russian disinformation” operation and admitted that this was not true and now says it should not have been temporarily taken down. (The Biden incident is centred on his laptop being abandoned at a Delaware repair shop, with the New York Post reporting that emails found on the computer suggested his business abroad had influenced US foreign policy, while his father was vice-president). During the pandemic, his apps removed posts for a myriad of business reasons, but that the “government pressure was wrong”, adding that “we made some choices that, with the benefit of hindsight and new information, we wouldn’t make today.”  He said he and Meta would be ready to “push back” if something similar happened in the future.

Having always insisted that his Telegram app should remain a “neutral platform” and not a “player in geopolitics”, its founder Pavel Durov, was arrested in Paris last Saturday, as part of a preliminary police investigation. It seems that French authorities will focus their enquiries into a lack of moderators on Telegram, which the police consider could be a platform allowing criminal activity to go on undeterred on the messaging app. The firm, which is now headquartered in Dubai, insists that its moderation tools meet industry standards and that the tech company abides by EU laws. The encrypted Telegram, with close to one billion users, is particularly influential in Russia, Ukraine and the republics of the former Soviet Union. It is ranked as one of the major social media platforms after Facebook, YouTube, WhatsApp, Instagram, TikTok and Wechat. He founded Telegram in 2013, but left Russia a year later when he refused government orders to shut down opposition communities on his VKontakte social media platform, which he sold. Since then, he has become a French citizen and has lived in Berlin, London, Singapore and San Francisco. Telegram came to the forefront after the Russian invasion of Ukraine and has become the main source of unfiltered news from both sides, despite Russia’s 2018 attempts to block the app, after a refusal to comply with a court order to grant state security services access to its users’ encrypted messages. Strangely, the Russian government, (the same administration that tried to ban the app in 2014 and 2018 – but lifted it in 2021) has accused France of acting as a dictatorship and called on Western non-governmental organisations to demand his release, it has also asked the Macron administration for further clarification. The app has always attracted scrutiny from several European nations because of security and data breach worries. Elon Musk noted that “it’s 2030 in Europe and you’re being executed for liking a meme,” whilst Robert F Kennedy commenting that the need to protect free speech, “has never been more urgent.”

By Wednesday, Pavel Durov had not been remanded in custody, but placed under judicial supervision, and ordered to pay a US$ 5.6 million deposit, as part of a probe into organised crime on the messaging app, Paris prosecutors say. Apart from being a passport holder in St Kitts & Nevis and the UAE, the Russian-born entrepreneur is a French national and has to show up at a French police station twice a week and is not allowed to leave French territory. He was put under formal investigation over alleged offences that included:

• complicity in the administration of an online platform to enable illicit transactions by an organised gang
• refusal to communicate with authorities
• complicity in organised criminal distribution of sexual images of children

The argument made by Telegram is that the app complies in every respect with European digital regulations, and it was “absurd” to suggest he could be involved “in criminal acts that don’t concern him either directly or indirectly”. The firm, which is now headquartered in Dubai, insists that its moderation tools meet industry standards. It seems ironic that Mr Durov, who also founded the popular Russian social media company VKontakte, left Russia in 2014 after refusing to comply with government demands to shut down opposition communities on the platform, and a decade later France pulls this one on him. This is the first occasion ever that the owner of a social media platform has been arrested because of the way in which that platform is being used; this has resulted in a fierce debate online about freedom of speech and accountability – and how Macron thinks that France was deeply committed to freedom of expression, and that the decision to hold Mr Durov was “in no way… political”. A quoi diable est-ce qu’il pense? Elon Musk has defended the Telegram supremo arguing that moderation is a “propaganda word” for censorship, whilst Chris Pavlovski, the founder of a controversial video-sharing app called Rumble, said he had fled Europe following Durov’s arrest. Even Russia has weighed into the argument warning Macron’s France not to turn this episode into a “political persecution”, having previously said that, without serious evidence, the charges could be construed as an act of “intimidation”, whilst another Russian legislator saying that Durov was a “hostage of the dictatorship of democracy of the collective West”. 

George Orwell introduced the word “doublethink”, (belief in contradictory ideas simultaneously) which was reflected in the Party’s slogans: “War is peace,” “Freedom is slavery,” and “Ignorance is strength.” The Party maintains control through the Thought Police and continual surveillance. It seems that in 2024, the political world is not going forward when it starts to ‘bottle’ free speech – and openly lies to hide the truth. In fact, it is going back forty years to 1984!

Black Swan                                                                          23 August 2024

In July, the top three developers in the off-plan market were Emaar Properties, Danube Properties and Sobha Group, with 23.0%, (2.08k transactions), 6.9%, (0.27k transactions), and 6.5%. ValuStrat noted that Emaar (20.3%), Damac (7.2%), Danube (5.2%) and Nakheel (4.8%) led the sales charts overall last month. In H1, Dubai posted delivery of 12.90k apartments and 3.93k villas; it is estimated that a further 20k apartments and 5k villas in H2.

Properties with a value of over US$ 545k continue to see significant demand in 2024 from investors and end-users looking for the ten-year Golden Visa. Property investors looking for long-term residency in the UAE are required to buy assets worth US$ 545k or more and this is but one reason why such a property sector has seen a 30% hike in H1. According to Property Monitor, properties valued at below US$ 272k (AED 1 million) account for 29.6% of the market, between US$ 272k – US$ 817k, 48.5%, and over US$ 817k – 21.9%; July prices were down 1.0%, up 4.2% and down 3.2% respectively.

Cushman and Wakefield Core expects that the emirate’s office market will remain under-supplied until 2027-28, which is not good news for new tenants who will be facing higher rents. They have noted several new launches to cater for the increased demand, especially in the Grade-A office space category, including Immersive Tower in DIFC, offices in D3 Phase 2, and the mixed-use development by Aldar on SZR. Furthermore, multiple developments are under discussion in DIFC. However, these will only become available in 2027, at the earliest. There is no doubt that Dubai is the prime location in the region for many international firms, with the usual array of advantages such as security, lifestyle, safety, zero personal tax, location as a global hub, excellent infrastructure, progressive government and a positive environment.

Asteco reports that 0.37 million sq ft of office space was added in Q2, with a similar amount expected to be added in H2. Meanwhile, Cushman & Wakefield Core posted that, in Q2, around 260k sq ft of gross leasable area was released to the market in Dubai CommerCity. Over 1.63 million sq ft is expected to be handed over in H2, mainly from Expo City Dubai, Innovation Hub in Dubai Internet City, office component in Wasl Tower, and Millennium Plaza Downtown (renovated Crowne Plaza), both on SZR. Much of the development work is to be found in central areas – such as DIFC and SZR – followed by JLT, Expo City and the Tecom free zones. Of the new stock coming online, 78% will be located in the free zones, with the remaining 22% in on-shore areas. City-wide office occupancy topped a record 90%, with Grade A offices at 93% and expected to increase further. In terms of average rentals, Asteco revealed that Bur Dubai, Jumeirah Lake Tower, Barsha Heights (Tecom), Business Bay, SZR and DIFC were the most expensive areas. According to Cushman & Wakefield Core, the three areas showing the biggest rental growth, post pandemic, are Business Bay, JLT and SZR with increases of 160%, 153% and 121% primarily down to a significantly lower rental base and occupancy rate.

Dubai Land Department has signed an agreement, with seven of Dubai’s leading developers – Emaar Properties, Damac, Binghatti Properties, Aldar Properties, Sobha Realty, Azizi Developments and Danube Properties. Whilst empowering developers and substantially increasing the registration capacity, this deal will result in them utilising its registration system to manage all real estate transactions. Furthermore, the authority has given them complete authority to use the systems to register and audit all real estate transactions for both developers and investors. Majid Al Marri, CEO of the Real Estate Registration Sector at DLD said this agreement will provide “greater protection for investor rights and expedite and simplify procedures” as well as ensure transparency in the sector. The authority also noted that it will improve its supervision and regulation by tracking all transactions.

Following inspections carried out by its partners, Dubai Land Department has banned ten property owners from leasing their properties, due to overcrowding and safety standards. The pertinent property owners will be unable to let their property until their status is resolved and they comply with the regulations. DLD has urged property owners and tenants to comply with laws and regulations to avoid any violations.

In a strategic move, Dubai-based Meteora Developers has announced the multi-million dollar acquisition deal of Maisour, a DIFC-based property crowdfunding platform. Maisour had introduced a model of digital fractional ownership, so that an investment of US$ 136, (AED 500) could allow people from around the world to invest in Dubai properties. This acquisition aligns with both companies’ visions to democratise real estate investment and capitalise on Dubai’s booming property market. It will allow the developer to integrate its expertise in the real estate market with Maisour’s tech-driven platform, offering a broader and more diverse range of real estate investment opportunities. With Meteora’s support, Maisour will be able to rapidly scale and introduce new features such as a secondary market, AI-driven reinvestment strategies, and even explore expansion into other regional markets like Saudi Arabia, Egypt, India, and Pakistan.

In H1, Dubai World Trade Centre Authority Free Zone posted a 21.1% surge in the number of new tenants to 2.74k, whilst the number of registered companies in DWTCA also rose by 19.1% to 2.82k. Over the period, the number of direct jobs within the free zone also grew 4.9% to 8.22k, whilst it officially extended its Free Zone jurisdiction to include the Investment Corporation of Dubai’s One Za’abeel. The many advantages afforded entities in the freezone include 100% foreign ownership, exemption from customs duties, dual-licensing opportunities, zero Corporate Tax, and simplified procedures for visas and permits.

At this week’s meeting of the Emirati Talent Competitiveness Council, also known as Nafis, it was announced that the number of Emiratis working in the private sector has now reached 113k. When the organisation was set up almost three years ago, in September 2021, there were 32k Emiratis working in the private sector; one of its current main aims is to see that by 2026, “locals” account for 10% of skilled private sector jobs. Under the initial nationwide Emiratisation scheme, companies must increase their Emirati workforce by 1% every six months, and employers, with at least fifty members of staff, must have at least one citizen on the payroll; over the next three years, the requirement will be that in 2024, 2025 and 2026, the rate will be 6%, 8% and 10% of the total workforce.  Last year, the government directed that businesses employing between twenty and forty-nine staff must have at least one Emirati staff member by the end of 2024, and two by the end of 2025. Last March the federal government approved a US$ 1.74 billion budget to boost Emiratisation in the private sector.

H2 has witnessed a significant boost for local businesses, as the Mohammed Bin Rashid Establishment for Small and Medium Enterprises Development (Dubai SME), has greatly expanded its support for entrepreneurs in H1. Since its launch in 2002, Dubai SME has provided guidance and training services to 48.92k entrepreneurs and mentoring services to 51.50k Emirati entrepreneurs, as well as having supported the creation of 18.43k local enterprises. During H1, it  provided guidance and training to 2.71k entrepreneurs – a 164% increase on the year – whilst there has been an impressive 190% surge to 1.37k Emirati entrepreneurs benefitting from mentoring services; in the six-month period, it supported the establishment of almost 2k new enterprises in H1 – a 57% increase from last year. It has also doubled its financial support, to US$ 5 million, over the period, and has assisted members in securing contracts worth US$ 106 million, from both the public and private sectors, bringing the total contract value since its inception to US$ 3.08 billion. It also has sixteen partnerships with private sector entities, having added four more in H1. The Hamdan Innovation Incubator (Hi2) also continued to support technological innovation, assisting one hundred and nine Emirati tech startups, and expanding its network to twenty-three incubators.

Under the patronage of HH Sheikh Mohammed bin Rashid, Dubai is to host the tenth edition of the annual World Free Zones Organisation World Congress at Madinat Jumeirah from 23-25 September, under the theme ‘Zones and the Shifting Global Economic Structures – Unlocking New Investment Avenues’; the emirate hosted the event last year and this will be the fifth time since its inception. The event is expected to welcome over 2k global and regional business leaders, free zone officials, and a diverse group of experts, specialists, and decision-makers in the free zone, logistics services, and multilateral organisation sectors; the organisation’s main aim is to promote growth and prosperity for global economies through the free zone model. Economic zones are responsible for more than a third of global trade flows.

It is reported that part of TECOM’s strategy of investing US$ 470 million to acquire commercial and industrial assets has been carried out. The plan raises the Group’s portfolio of high-quality commercial assets to exceed ten million sq ft of gross leasable area and its land leasing portfolio to one hundred and seventy-nine million sq ft. It will also develop premium Grade-A office spaces, worth US$ 93 million, at Dubai Internet City, with the launch of Innovation Hub Phase 3, bringing the total value of the Group’s 2024 investments to more than US$ 618 million. It has also started developing six Grade-A office buildings within Phase 2 of Dubai Design District (d3), with a gross floor area of 629k sq ft, and a US$ 255 million investment. It has also spent US$ 114 million for two operational Grade-A office buildings at Dubai Internet City, which has added 334k sq ft of GLA to its commercial portfolio. It now has a land bank encompassing 179 million sq ft, having invested US$ 112 million for 13.9 million sq ft for industrial leasing at Dubai Industrial City

Data indicates that by the end of H1, the number of active Chinese companies, registered with the Dubai Chamber of Commerce, had risen about 16% to 5.4k, and that Dubai-based Emirati companies had invested a total of US$ 1.4 billion in the Chinese market in the nine years to 2023.  Its President, Mohammad Ali Rashed Lootah, commented that these entities are expanding their presence in China, driven by enhanced trade exchanges and the growing potential for mutual investments between the UAE and China. He noted that “both nations are working closely to boost cooperation across various sectors, particularly in the new economy, technology, entrepreneurship, tourism, small and medium enterprises, energy, renewable energy, agriculture, aviation, logistics, infrastructure, and industry”. He also added that the Dubai Business Forum held in China was the first international edition of this forum, which highlights Dubai’s role in offering attractive investment opportunities to Chinese companies and fostering stronger economic ties between the two sides.

‘Brands for Less’ has divested 35% of its shares to TJX Companies for US$ 360 million, valuing the local off-price retail business at over US$ 1.0 billion. The new US partner is a global value seller of clothing and home fashions and will enable BFL, which already services seven markets in the region, to leverage TJX’s extensive international experience and market presence across the US, Canada, Europe and Australia, with over 4.9k outlets in nine countries. The first store was opened in Lebanon by Toufic Kreidieh and Yasser Beydoun in 1996, before moving its headquarters to Dubai four years later – now it has more than one hundred stores selling designer brands, homeware and toys at up to 80% off the original retail price. These goods typically consist of surplus inventory, clearance items or production overruns sourced from many retailers and manufacturers. A report by Coherent Market Insights estimates that the off-price retail market is expected to top US$ 342 billion this year, with projections to jump to US$ 606 billion by 2031.The group has also acquired exclusive rights to the Tchibo franchise in the MENA ,selling the German brand’s homeware and clothing at competitive prices in the region.

With a US$ 35 million investment, The British International Investment has joined forces with DP World to develop the initial phase of the Democratic Republic of Congo’s first deepwater container port, (the Port of Banana), making it a minority investor. This project is in line with similar bi-lateral arrangements in other African countries – including Somaliland, Egypt and Senegal – where BII, the UK government’s development finance arm, joins as a minority shareholder. This particular project will result in 85k new jobs, enable an additional US$ 1.12 billion in additional trade and cut the cost of trade in DRC by 12%. It will involve a 600 mt quay, with an 18 mt draft, capable of handling the largest vessels in operation and 450k units and is located along the country’s 37 km Atlantic coastline. Interestingly, the African continent is home to over 16% of the world’s population, but accounts for just 4% of global containerised shipping volumes.

The Central Bank of the UAE revoked the licence of Muthoot Exchange and struck its name off the register. The decision came pursuant to Article 137 (1) of the Decretal Federal Law No. (14) of 2018 regarding the Central Bank and Organisation of Financial Institutions and Activities, and its amendments. Following investigations, it was found that the exchange house failed to maintain its paid-up capital and equity to the level required by the applicable standards and regulations.

In an agreement with the DFM, eToro’s thirty-eight million registered users are now allowed to invest in ten listed companies – Dubai Electricity & Water Authority, Emaar Properties, Dubai Islamic Bank, Emirates NBD, Emaar Development, Gulf Navigation Holding, Ajman Bank, Commercial Bank of Dubai, Salik, and Air Arabia. They are from different sectors, but all are considered to have among the highest market caps on the index – totalling some US$ 124 billion. The addition of DFM stocks onto the eToro platform has been facilitated by Dubai-based emerging markets specialist Arqaam Capital.

The DFM opened the week on Monday 19 August 39 points (0.9%) higher the previous week and gained 59 points (1.4%), to close the trading week on 4,293 by Friday 23 August 2024. Emaar Properties, US$ 0.16 lower the previous four weeks, gained US$ 0.05, closing on US$ 2.27 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.66, US$ 5.40, US$ 1.61 and US$ 0.34 and closed on US$ 0.66, US$ 5.38, US$ 1.66 and US$ 0.34. On 23 August, trading was at one hundred and thirty-one million shares, with a value of US$ 72 million, compared to eighty-one million shares, with a value of US$ 49 million, on 16 August.  

By Friday, 23 August 2024, Brent, US$ 2.67 higher (3.4%) the previous fortnight, shed US$ 0.75 (1.0%) to close on US$ 79.02. Gold, US$ 77 (3.2%) higher the previous week, gained US$ 38 (1.5%) to end the week’s trading at US$ 2,546 on 23 August 2024.

In response to what it claims to be “pricing and margin compression”, Ford has announced that it was scrapping plans for a large, three-row, all-electric SUV and postponing the launch of its next electric pickup truck – a sure indicator that growth in EV demand has slowed, leading to price wars and other pressures; it will also reduce capex dedicated to “pure” electric vehicles from 40% to 30%, which it is expecting  to cost US$ 1.9 billion in write-downs and new spending. The car maker will use the new schedule to take advantage of technological advances in batteries and other areas that are expected to lower costs and expand how far the cars can go without charging. Figures show how Ford had fared; in the first seven months of 2024, Ford sold more than 50k EVs – up more than 60% – but its electric business also lost nearly US$ 2.5 billion. Just a few years ago, it was aiming to produce more than two million vehicles by 2026. Like its main rival, GM, the EV maker had already confirmed it would scale back its investments and ambitions because of signs of weaker than expected consumer demand and enhanced preference for hybrids; in a bid to lower costs, it also plans to move some battery production to the US from Poland, thus allowing the firm to access government incentives from the Inflation Reduction Act.

Waitrose plans to invest US$ 1.31 billion to open one hundred new convenience shops, over the next five years, as it responds to changing consumer habits and demand; it currently has about forty-five Little Waitrose stores, which are largely located in the south of England. Some of the main reasons, behind this move to smaller outlets, include less robust planning, easier permission constraints, less affordability, with smaller outlets being cheaper and quicker to develop. Smaller outlets have also been introduced by Asda, (who revealed plans to open three hundred convenience stores over the next two years), with both retailers aiming to slow “gains” made by the discounters such as Aldi and Lidl. GlobalData predicts that online shopping will see a 6% increase in sales in 2024, and smaller stores may be at an advantage for rapid-delivery capabilities to expand.

Another bad week for embattled Boeing – following an inspection indicating the failure of a structure that mounts the GE engines to the 777X aircraft’s wings; it is suspending further testing, after a cracked thrust link was found on a 777-9 aircraft during routine maintenance. This is the latest setback to the new plane’s long-delayed programme, which is now running five years behind schedule. Boeing noted that “our team is replacing the part and capturing any learnings from the component and will resume flight testing when ready,” and that it would be keeping the Federal Aviation Administration “fully informed” on the issue and had shared information with its customers. The plane maker began flight tests with US aviation regulators on board in July. Both Emirates and Qatar have more than a passing interest because the former was expecting the first of their 205 Boeing 777X aircraft to enter service by 2026, after attaining full certification at the end of 2025; Qatar has an order book of ninety-four 777X planes, with sixty 777-9s on order. To make matters worse for Boeing, on Monday, the FAA issued an airworthiness directive requiring operators of Boeing 787 Dreamliners to inspect the aircraft’s cockpit seats, following reports that their inadvertent movement had disrupted flights.

Boeing’s manufacturing and supply chain problems, have had the expected negative impact for many of the local carriers. Flydubai has announced that it has had to cancel the launch of routes planned for H2 and reduce capacity on some others. Apart from there being no further route launches this year, after the carrier cancelled routes to Riga in Latvia, Tallinn in Estonia and Vilnius in Lithuania that were scheduled to start in October, it also temporarily suspended its flight schedule to Pisa in Italy from October 2024 to March 2025 to mitigate the impact on busy travel periods.

Last month, the all-Boeing fleet operator  commented that its growth plans had been “stunted”, after it received an update from the US manufacturer that it would not receive any more planes this year, creating a capacity shortage during a period of strong demand. Patience must be wearing thin at flydubai – last December it was told that twelve new planes would be delivered in 2024, (which included four that were delayed from 2023); in March, it received advice that only eight of the twelve would be delivered this year, only to be told last month it will not receive any additional aircraft beyond the four already delivered earlier in the year.

In what could be the country’s record foreign takeover., Canada’s Circle K owner, Alimentation Couche-Tard, has made a US$ 38 billion bid for the Japanese-owned 7-Eleven; the offer price values 7-Eleven at 20% more than its pre-bid price on the Japanese stock market. If successful, ACT’s footprint in the US and Canada would more than double to more than 22k sites.  On a global scale, the Japanese company has 85k outlets and the potential buyer 17k. ACT commented that “the company is focused on reaching a mutually agreeable transaction that benefits both companies’ customers, employees, franchisees and shareholders”. Meanwhile, Tokyo-based Seven & i Holdings, which owns 7-Eleven, said it had formed a special committee to consider the offer, having confirmed it had “received a confidential, non-binding and preliminary proposal by ACT to acquire all [of its] outstanding shares”. In 1974, 7-Eleven was introduced to the Japanese market from the US, by retail tycoon Masatoshi Ito. Quebec-based ACT is listed on the Toronto Stock Exchange and is valued at US$ 58.2 billion.

McDonald’s plans to open over two hundred “Drive-to” restaurants across the UK and Ireland over the next four years in a US$ 1.31 billion expansion drive that will enhance its footprint by 10% to 1.7k sites  in the UK and Ireland; they will not have a drive-in facility but will have a car park and a small seating area – with “other smaller formats” being tested as part of the new offer. The company has had several problems lately, that have eaten into margins, including boycotts arising in response to the Israel-Gaza conflict, (and its perceived support for Israel), pulling out of Russia after its invasion of Ukraine, and a recent BBC investigation over a culture of sexual abuse and harassment. It seems that expanding its UK base market because it is considered a “stable” market. McDonald’s pointed to a “renewed focus” on High Street restaurants and estimated that this expansion will create 24k new jobs. These moves come at a time when High Street rents have almost collapsed due to a swag of eateries closing, so that rents are comparatively low, allied with an apparent recovering economy and lower interest rates on the horizon. Furthermore, Meaningful Vision, which tracks the sector, indicated that fast food promotions have risen by 33% on the year.

There are reports that Hobbycraft may be sold to Modella Capital – a specialist investor whose executives have backed chains including Paperchase and Tie Rack; Modella is affiliated to the turnaround firm Rcapital, a former owner of Little Chef. One of Britain’s leading arts and crafts retailers, Hobbycraft, founded in 1995 and owned by Bridgepoint since 2010, has more than eighty-five stores. Financial arrangements have yet to be made public.

Modella also has interests in a number of other investments including No Ordinary Designer Label, the licensing partner of Ted Baker in the UK, which went into administration earlier this year. This week, the retailer’s remaining thirty-one stores have closed, with the possibility of five hundred retrenchments.

Shein has been in the news for a variety of reasons including the use of child labour. Since it is now readying itself for an IPO, and wants no negative publicity to negate the process, the fast fashion retailer has stepped up audits of manufacturers in China. It reports that it found only two cases and took immediate action, suspending orders from the guilty suppliers and only restating business with them after they had strengthened their processes, including checking workers’ identity documents. Shein also added that both cases had been “resolved swiftly”, with remediation steps, including ending underage employees’ contracts, arranging medical checkups, and facilitating repatriation to parents or guardians as necessary. Last October, the retailer also introduced an “Immediate Termination Violations” supplier policy meaning that any severe breaches would result in the business relationship being terminated immediately – previously thirty days’ notice to resolve the problem was given.

July saw Chinese youth unemployment, (those between sixteen and twenty-four), move 3.9% higher on the month, to 17.1% – the second highest monthly return in 2024. This is but one major obstacle that the economy is facing, along with a heavily indebted property sector and intensifying trade issues with the West. Premier Li Qiang, who is responsible for economic policy, called for struggling companies to be “heard” and “their difficulties truly addressed”. Earlier in May, he stated that countering youth unemployment must be regarded as a “top priority”. After this index, which only measures statistics in urban areas, had peaked at 21.3% in June 2023, the authorities suspended publication of the figures and later changed their methodology to exclude students – one year later, in June 2024, twelve million students graduated most of whom will be looking for jobs. In the next bracket, (twenty-five – twenty-nine), the unemployment rate was 0.1% higher on the month to 6.4% and for the total workforce – 5.2%. These figures come on the back of earlier disappointing returns – including industrial production at 5.1%, (down from June’s 5.3%), a further decline in real estate prices and demand for bank loans contracting for the first time in twenty years. To make matters even worse for the economy, there are increasing tariffs being applied by the US and the EU to protect their markets from low-cost Chinese products and perceived unfair competition.

The latest figures from the Labor Department indicated that the number of initial claims for state unemployment benefits rose 4k to a seasonally adjusted 232k for the week ended 17 August. The figures show that the economy is slowing, along with a levelling off of filing new applications for unemployment benefits and a gradual cooling of the US labour market that should set the stage for the Federal Reserve to kick off interest rate cuts next month. July also saw the unemployment rate rise to a post-pandemic high of 4.3%, after the number of people receiving benefits, (after an initial week of aid), rose 4k to a seasonally adjusted 1.863 million during the week ending 10 August.

It seems inevitable that the Fed will move rates lower next month – the question is whether it will be 0.25% or 0.50%. Reports show that interest rates on home loans have already started to dip, resulting in a larger-than-expected rebound in July existing home sales. The S&P Global Composite PMI Output Index, which tracks the manufacturing and services sectors, is still at a healthy 54.1, (with any reading above 50 indicating expansion in the private sector). A slight pick-up in the services sector was outpaced by an easing in the manufacturing industry. In Q2, the GDP increased at 2.8%, compared to 1.4% the previous quarter. New orders received by private businesses nudged up 0.1 to 52.3 in July, whilst the measure of prices paid by businesses for inputs was unchanged at 58.0, but the survey’s gauge of prices charged slipped 0.3 to 52.8.

After four consecutive months of declines, US existing home sales rose 1.3% in July, (to a seasonal adjusted annual rate of 3.95 million units), attributable to improving supply and declining mortgage rates. Meanwhile, resales, which account for a large portion of US housing sales, declined 2.5% on the year, as the median existing home price rose 4.2% on the year to US$ 422.6k. Inventory rose 0.8% to 1.33 million units last month, with supply moving 19.8% higher compared to July 2023.

August’s HCOB German flash composite Purchasing Managers’ Index, compiled by S&P Global, remained in negative territory slipping 0.6 to 49.1 on the month – any reading under 50.0 signifies contraction. The composite index tracks the services, (which dipped 1.1 to 51.4), and manufacturing (deep in negative territory, having fallen 1.1 to 42.1), sectors together account for more than 67% of the euro zone’s largest economy. The contagion fear is that the continuing weakening in the manufacturing sector is beginning to impact the services sector, and that Q3 may follow Q2 by registering an 0.1% GDP decline.

The number of firms in England and Wales going bust last month rose by 16%, year-on-year, according to official figures. Many businesses still have yet to recover fully from the impact of the pandemic, with the situation further exacerbated by continuing high inflation and borrowing costs; the latest figure for July showed 2.2k businesses went to the wall – 16% higher than the figure in July 2023, but only 7% lower on the month. Although the economy is moving in the right direction, growth is still at almost snail’s pace, and if the pace is not stepped up, an increasing number of businesses will be heading into insolvency.

The August preliminary “flash” estimate of the UK S&P Global Composite Purchasing Managers’ Index saw a monthly rise of 1.6 to 53.4, as business activity quickened, and cost pressures were the weakest in over three and a half years; this was its highest monthly reading since April. (Another indicator that Rishi Sunak may have jumped the gun, by calling an early election, just when the economy started to improve). The figures, which could indicate that Q3 GDP may hit 0.3%, were better than similar data posted in France and Germany figures and was a major factor in sterling rising to its highest level, against the greenback, in twelve months. However, the likelihood of another rate cut next month has diminished somewhat, but with services inflation cooling, inflation dropping, a further 0.5% to 4.5%, by the end of 2024, is on the cards. The PMI for the services sector, which dominates Britain’s economy, rose 0.8 to 53.3, whilst the manufacturing PMI was up 0.4 to 52.5 – its highest level since June 2022, as the sector added jobs at the fastest pace in more than two years.

On a visit to the Principality, Prime Minister Starmer Sir Keir Starmer has been in discussions to save jobs at Tata Steel’s Port Talbot plant but reiterated that he cannot give “false hope” to the steel workers ahead of the planned closure of the town’s last blast furnace next month. In true fashion, the PM claimed that he had “turbocharged” the party’s action on steel since he has been in power.  Both opposition parties seemed to disagree with Plain Cymru noting that Labour was on the “backfoot” in responding to Tata, with the Welsh Conservatives claiming that Labour ministers had led Port Talbot “up the garden path”. Since the closure was announced, at the beginning of the year, only minor changes have been made to the overall plan to cut 2.8k jobs and shut the heavy end of Port Talbot’s operation by the beginning of Q4.

Weeks after coming to power, the Starmer government has advised almost ten million pensioners that they will no longer get winter fuel payments to help them with bills, at the coldest time of year; in 2023, more than 11.3 million received the winter payment. Even though energy prices are now at their lowest for more than two years, they are still US$ 520 higher than they were in 2021. Now Chancellor Rachel Reeves has announced that from winter 2024, they will only go to pensioners who get pension credit or other means-tested benefits; the policy applies in England and Wales. Cornwall Insight has issued a report that it expects average annual energy prices to rise 9.3% to US$ 2,234 from October, noting that wholesale costs, paid by suppliers, had risen by about 20% over the past few months, and that this shows up in consumer bills, accounting for about 50% of what customers pay.

The Office for National Statistics confirmed July borrowing – the difference between spending and tax receipts – reached US$ 4.1 billion, (US$ 2.38  billion on the year); this was more than the market expected, and the highest July level since 2021. These figures could impact on whether the Chancellor will increase tax, reduce public service expenditure or borrow money in her autumn October Budget – Rachel Reeves faces some “tough choices”. Previously, she is on record saying that some taxes will be increased but has reconfirmed she would not raise VAT, national insurance or income tax. However, it seems that she will have no other option but to raise taxes and increase borrowing in the medium term to cover spending more on public services, with the latter presenting further problems on how any extra money is distributed between sectors such as the NHS, education, transport and security.

Early Monday morning, a luxury yacht sank off coast of the Italian island of Sicily, after encountering a heavy overnight storm that caused waterspouts; the 56 mt super yacht, Bayesian, was carrying twenty-two people.  Fifteen were rescued and brought to port but among the seven deceased were
British tech tycoon Mike Lynch and his eighteen-year-old daughter, Hannah. Only two months earlier, the man, known as the “British Bill Gates”, had finally been acquitted in a US court, after a ten-year battle to clear his name and escape what would have been a long incarceration in a US prison cell. Lynch had co-founded a UK software company Autonomy which was sold to US tech giant Hewlett-Packard for some US$ 11.0 billion in 2011; within eighteen months, that investment was written off by HP who accused Lynch of fraud and took legal action against him in the UK in 2019. Last year he was extradited to the US to face criminal charges.

The sinking of the yacht came on the same day that Mr Lynch’s co-defendant in the fraud case, Stephen Chamberlain, was confirmed by his lawyer as having died, after being hit by a car in Cambridgeshire on Saturday.  Some may hypothesise – was this something else or a strange coincidence or just a Black Swan?

Heads You Win, Tails I Lose!                                                      16 August 2024

Latest data released by ValuStrat will stagger some readers. It estimates that villa prices in the following ten Dubai communities have more than doubled over the past four years.

Location                         AED million	2020-2021	July 2024	%age
Arabian Ranches	2.7	6.6	144.4
Dubai Hills Estate	5.2	12.3	136.5
Emirates Hills	28.8	69.2	140.0
Green Community West	4.4	9.1	107.0
Jumeirah Islands	4.6	12.9	180.4
Jumeirah Park	3.7	8.2	121.6
Palm Jumeirah	10.7	27.3	155.0
The Lakes	2.7	6.0	122.2
The Meadows	3.5	8.2	134.2
Victory Heights	4.5	9.9	1.20.0

Source: ValuStrat, KT Research

Prices at   the start of the pandemic were already heading south and started to dip even further but then, with the introduction of working from home and the fact that population movement had been severely curtailed, the demand  for villas, townhouses and bigger apartments jumped, as residents started moving into larger units; the demand for bigger units, (both villas and apartments) rocketed with many looking for extra space for home schooling and remote working, along with a stand-alone outside garden Throw into the mix the successful handling of the pandemic which began a marked influx of overseas high-net-worth individuals, attracted by many positive factors that have already been extolled many times. Then when life started to return to some form of normality, the influx of talented entrepreneurs and HNWIs saw demand, and then prices, move rapidly higher. The global real estate consultancy commented that “given the current market conditions, we anticipate an additional 10% increase in villa values during the second half of the year”.

The latest Real Estate Regulatory Authority’s Rental Index, updated in March, indicates that Dubai rents had increased on the year in the range of 8% to 15%. Average rents have surged 64%, compared to pre-pandemic figures, and 16% in Q2. It is a fact that recent times have seen a higher number of renewals, compared to new leases, as tenants look at renewing in existing premises since new leases continue to be higher than renewals; indeed, there was a 14% increase in the number of renewals in Q2.  According to a study by Cushman & Wakefield Core, Q2 rents for villas and apartments in the affordable, mainstream and luxury sectors have risen by 21%, 12% and 1% and 27%, 19% and 14%; these increases show the benefit of renewing. The consultancy posted that the highest annual rental increases for villas were in Jumeirah Village Circle (40%), Jumeirah Park (22%), The Springs (14%) and The Meadows (14%), and for apartments – Discovery Gardens (32%), Dubai Sports City (28%) and Dubailand (24%). Lately, there have been signs that transaction volumes may have plateaued in both villa rentals and secondary residential sales; city-wide villa rents, at 13%, lag behind the 22% rise seen for apartment rents. It is evident that there is a catch-up at the lower end of the market, recovering from historically lower bases, as the big prime market increases were seen in mid-cycle, (2022-2023), and are now stabilising. With such rental increases, one thing is certain – household income is not keeping up with soaring rents. Many tenants, who will be spending more of their income on rents, will have to sacrifice purchases of other household items, (or eat into their savings) but there is only such much they can afford – and there has to be an inevitable tipping point sometime in the future.

JLL’s Global Real Estate Perspective has ranked Dubai among the few global cities – including Bangkok, Berlin, Stockholm, Hong Kong, Jakarta, Paris and Warsaw – with accelerating property market growth. The real estate consultancy notes that the emirate’s real estate has been consistently outperforming its global peers in terms of capital appreciation and rental returns over the past three and a half years, driven by the huge interest from foreign investors and residents since 2021; over the period, it has witnessed double-digit increases in property prices. Some of the factors behind Dubai’s popularity include the fact that it is still much more affordable than other major locations, (such as New York, Hong Kong, London and Paris), has higher returns than most of its competitors, offers a world-class quality of life/safety/security, with excellent infrastructure and global connections. The study noted that property market growth is slowing in Brussels, Sydney, London, Amsterdam, Madrid, Milan and Kuala Lumpur, whilst rental declines have been noted in Beijing, Boston, Chicago and Washington DC while rents in New York, Singapore, Manila, Shanghai, San Francisco and some other cities are bottoming out. Earlier, a Knight Frank report indicated that only Manila luxury property prices last year were higher than Dubai’s average 15.9% returns.

H1 saw DMCC welcome 1k new members bringing its portfolio to almost 25k, as the world’s leading free zone for commodities trade and enterprise now represents 15% of all the emirate’s foreign direct investment, (11% higher on the year), and accounts for 7% of the emirate’s GDP. The strategy going forward is to consolidate its major real estate projects in Uptown Dubai and Jumeirah Lakes Towers, while expanding its network in high-value sectors like AI and Web3.

The growth of DMCC’s business district has been driven by strong performance across several sectors, including:

Technology                            two hundred and twenty-six new companies, including fourteen in gaming and nine in AI

DMCC Crypto Centre              11% increase to sixty-four new companies, including seven Virtual Asset Service Providers

Energy                                     one hundred and fifty new companies, bringing the total to over 3.26k – the largest for any single industry within DMCC

Financial                                  grew by 8.5%, with one hundred and forty new companies

Others                                     there were solid additions in agriculture, precious stones, and metals.

The Dubai Integrated Economic Zones Authority had another successful year, with 2023 posting record-breaking results, with total trade across its economic zones 33.0% higher at US$ 76.84 billion. DIEZ’s economic zones, including Dubai Airport Free Zone, Dubai Silicon Oasis and Dubai CommerCity, contributed 13.5% in 2023, (2022 – 11.4%), to Dubai’s non-oil trade. Imports and exports both recorded solid growth – up 48% to US$ 42.94 billion and more than sevenfold to US$ 2.13 billion; re-exports through DIEZ reached US$ 31.63 billion. Key trading partners included:

China               with US$ 24.50 billion in trade, equating to a 32.8% growth rate

India                with US$ 4.33 billion, marking a 51.7% increase

Iraq                  with US$ 4.22 billion, showing a growth rate of 7.7%

Vietnam          with US$ 4.20 billion and a growth rate of 172% 

United States with US$ 3.35 billion (110% growth)

Turkey             with US$ 2.86 billion (83.6% growth).

In the year, DIEZ saw a 15.3% increase in the number of registered companies, with total employment across its zones exceeding 70k.

Dubai Statistics Centre reported that the emirate’s July inflation rate dipped to 3.32% – its lowest level this year. However, housing/utilities/fuels, which account for more than 40% of the consumer price index, rose 6.76%, on the year – its highest so far in 2024; transport prices also rose by an annual 0.18%, compared with 3.32% in June. Other increases were noted in the prices of furnishings/household equipment/routine household maintenance, (0.35% – 0.68% in June), food/beverage (2.46% – 2.35% June), and education (3.7% – 3.7% in June). There were annual declines recorded in the prices of restaurants/accommodation services, (0.31% – 0.79% in June), recreation/sports/culture, and  information/communication.

Next Monday, 19 August, will see a Central Bank of the UAE auction of Monetary Bills (M-Bills), comprising four issues of M-Bills Treasury bonds– twenty-eight days up to AED 2,500 million (US$ 681 million), fifty-six days up to AED 2,000 million (US$ 545 million), one hundred and forty days up to AED 3,000 million (US$ 817 million) and three hundred and eight days up to AED 12,000 million (US$ 3,270 million).The Issue Date is next Wednesday (21 August), with the four maturity dates being 18 September, 16 October, 08 January 2025 and 25 June 2025. During 2024, theCBUAE announced twenty-six Monetary Bills(M-Bills) tenders.

The Central Bank of the UAE (CBUAE) imposed an administrative sanction on an unnamed insurance company operating in the UAE, pursuant to Article 33 (2) (a) of the Federal Decree-Law No. (48) of 2023 regarding the Regulation of Insurance Activities. Following a central bank inspection, it was found that the insurance company had deficiencies in its regulatory policies and procedures, in violation of the Guidance on the Personal Data that can be collected for Insurance Policies dated 18th April 2022. Accordingly, the CBUAE has imposed a warning on the insurance company, in relation to the activity and a direction that the insurance company refrain from such activity.

DP World Limited posted H1 financials showing, on a reported basis, revenue 3.3% higher, at US$ 9.34 billion, adjusted EBITDA down 4.3%, to US$ 2.50 billion, with an adjusted EBITDA margin of 26.8%. Robust expansion in its Americas, Europe, Asia Pacific, and Jebel Ali markets ensured that like-for-like gross container volumes grew by 6.1%. Capex was 9.2% higher at US$ 994 million, with investments of US$ 593 million, US$ 278 million, US$ 122 million and US$ 1 million in Ports/Terminals, Logistics/Parks/EconomicZones, Marine Services and Head Office. 2024 capex guidance sees US$ 2.0 billion set aside for expenditure in Drydocks World, London Gateway, inland logistics (India), Dakar (Senegal), East Java, Callao (Peru), Jeddah, Dar Es Salam, DP World Logistics (Africa) and Fraser Surrey Docks (Canada).  There is no doubt that this year has been topsy turvy for the industry and DP World, marked by a deteriorating geopolitical environment and disruptions to global supply chains due to the Red Sea crisis.

Salik posted impressive H1 figures with increases across the board – revenue 4.9% higher on the year, at US$ 300 million, (with toll usage contributing 87.1% of total revenue at 4.9% higher at US$ 260 million), EBITDA, up 6.5% to US$ 201 million, profit before tax 9.2% to US$ 163 million and net profit at US$ 148 million. Revenue-generating trips came in 4.9% higher at 238.5 million. A US$ 148 million dividend – equating to US$ 0.0198 per share – was approved, to be paid on 05 September.

Parkin posted a 6.0% hike in H1 net profit to US$ 54 million, with revenue, helped by 743k parking penalties, 10.0% higher, at US$ 115 million. Over the six-month period, public parking spaces increased by 1.7% (2.9k) to 177k spaces, compared to a year earlier.

Amanat Holdings posted a 17.0% hike in H1 revenue to US$ 118 million, attributable to a 26.0% rise from a strong performance in its education sector, (with a 3k student register), as EBITDA nudged 1.0% higher, to US$ 42 million, with an 18% increase in education partially offset by a decline at healthcare due to a one-time prior year gain and near-term revenue pressure in the UAE. Excluding the prior year one-time gain, both adjusted EBITDA and net profit before Tax and Zakat increased by 8% and by 13% to US$ 28 million. Its closing cash balance at 30 June was at a healthy US$ 131 million. An interim US$ 20 million dividend, equating to US$ 0.0082 a share, was endorsed by the Board.

Union Co-op’s H1 results see an improvement in both revenue and net profit – by 5.0% to US$ 545 million, (driven by sales growth across Dubai branches), and by 32.3% to US$ 54 million. Net profit after tax increased by 20.6% to US$ 44 million, factoring in new corporate taxes, amounting to US$ 5 million, and 32.3% to US$ 54 million. This growth is attributed to strategic initiatives that enhanced profitability and revenue; its loyalty program now has 990.1k cardholders. Additionally, Union Co-op opened a new branch in Silicon Oasis, enhancing its footprint and service capabilities. The retailer saw spend on community initiatives 33.3% higher, on the year, at US$ 3 million.

The DFM opened the week on Monday 12 August 85 points (2.0%) lower the previous fortnight and gained 39 points (0.9%), to close the trading week on 4,234 by Friday 16 August 2024. Emaar Properties, US$ 0.16 lower the previous three weeks, was flat, closing on US$ 2.22 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.65, US$ 5.27, US$ 1.59 and US$ 0.34 and closed on US$ 0.66, US$ 5.40, US$ 1.61 and US$ 0.34. On 16 August, trading was at eighty-one million shares, with a value of US$ 49 million, compared to one hundred and nine million shares, with a value of US$ 66 million, on 09 August.  

By Friday, 16 August 2024, Brent, US$ 2.40 higher (3.1%) the previous week, gained US$ 0.27 (0.3%) to close on US$ 79.77. Gold, US$ 45 (1.8%) lower the previous week, gained US$ 77 (3.2%) to end the week’s trading at US$ 2,508 on 16 August 2024 – the first time its has closed any week above the US$ 2.5k level.

The International Energy Agency has lowered its global oil demand growth forecast by 30k to 950k bpd, citing weakness in Chinese crude imports, where oil demand contracted for a third consecutive month, driven by a slump in industrial inputs, including for the petrochemical sector; crude oil imports sank to their lowest level since the stringent lockdowns of September 2022. It expects Chinese oil demand to grow by 300k bpd this year, and 330k bpd in 2025, but with the “risk skewed to the downside”. The IEA noted that “Chinese oil demand growth has gone into reverse due to a slowdown in construction and manufacturing, rapidly accelerating deployment of vehicles powered by alternative fuels and comparison to a stronger post-reopening baseline.” Even with a seemingly never-ending real estate crisis, near-flat sluggish consumer spending and a manufacturing slowdown, Q2 GDP jumped by 4.7% on an annual basis.

However, the agency noted that the weakening demand in China has been offset by “demand in advanced economies, especially for US gasoline, has shown signs of strength in recent months,” and “the US economy, where one-third of global gasoline is consumed, has outperformed peers, with a resilient service sector buttressing miles driven.” There is the danger that the oil market may be oversupplied next year, by an average 860k bpd, even if Opec+ does not go ahead unwinding some production cuts. (Currently the plan is to gradually lift voluntary production curbs of 2.2 million bpd on a monthly basis from October 2024 to September 2025). This week, Opec’s latest oil demand forecast sees a reduction of 135k bpd to an increase of 2.1 million bpd from its earlier July 2023 forecast for this year, and a reduction of 65k bpd to 1.8 million bpd in 2025.

LHR, one of the world’s busiest airports, is concerned that following the introduction of the government’s GBP 10 per person electronic travel authorisation system, it has seen passenger numbers dip by 90k. The ETA scheme, launched in November last year, is aimed at passengers entering or transiting through the UK without legal residence or a visa. Currently, the ETA scheme applies to passport holders from the six GCC countries, (UAE, Qatar, Bahrain, Kuwait, Oman, Saudi Arabia), and Jordan, but it is scheduled to be rolled out to the rest of the world later in the year. LHR, describing the situation as “devastating for our hub competitiveness”, has complained that passengers, from the seven countries, currently included in the scheme, are choosing alternative routes and/or bypassing the UK altogether. Last month, about eight million people passed through LHR, outperforming other European airports, including Amsterdam’s Schiphol and Charles de Gaulle in Paris.

Ryanair is planning to buy back up to US$ 872 million more of its shares over the next nine months due to a stronger than expected cash position, driven partly by the delayed delivery of new Boeing aircraft. In May, it posted a US$ 763-million share buyback, (its first since the pandemic), that should be completed by the end of this month. Even though air fares had softened somewhat, the Irish-based carrier, Europe’s largest carrier by passenger numbers, is going ahead with the follow-on buyback because of its current strong cash flow, brought on by strong traffic growth and the delivery delays which “considerably delayed planned capital expenditure.” Furthermore, no new aircraft are expected to be delivered before late 2027. On the news, Ryanair shares moved up 4.4%, by the end of the day’s trading.

A relatively new concept to the industry is Wizz Air launching an ‘all you can fly’ subscription, which offers customers unlimited flights for an annual fee of US$ 549. The discounted price for the annual pass, which is limited to the first 10k applicants, will be available until today – 16 August – and then rise to US$ 600. From next month, subscribers will be able to travel to destinations in Europe, North Africa, the Middle East and Asia by booking an available flight at least three days in advance and pay a flat fee of US$ 11. It seems that at some “airports of preference”, the offer has been sold out with a message, “in the case that you are unable to select your preferred airport, please note that the limit has been reached and Wizz Air is unfortunately unable to offer you a Wizz All You Can Fly membership at this time.” On its website, it also warns that seat availability was not guaranteed to membership holders and would depend on “several external and internal factors.” The past year has been anything but smooth for the Hungarian carrier. In the UK it has faced heavy criticism for its customer service and flight delays, with the consumer group ‘Which’ naming it the worst airline for UK flight delays, for the third consecutive year, and also as the worst performing carrier for its customer service. This month, Hungary’s competition authority imposed a US$ 850k fine on Wizz Air for misleading communications, including for how it encouraged customers to purchase more expensive travel packages. The budget airline also posted a 44% decline in Q1 profit, whilst cutting its profit forecast for the entire 2024 year.

Notwithstanding concerns – such as rising jet fuel prices, global economic turbulence and plane delivery delays – Tui posted a record-breaking Q2, amid “strong demand” for holidays, with total revenue 9.0% higher, at a record US$ 6.40 billion; underlying earnings before interest and tax was up 37% to US$ 254 million. Europe’s largest tour operator TUI said all its divisions had performed well, including its hotels, tours and cruise businesses, with nearly six million holidaymakers travelling with the firm in Q2 – and noted that summer bookings were up 6%, while prices were 3% higher. It also posted that “destinations with Spain, Greece and Turkey again proving to be most popular”. TUI acknowledged it had also benefited from the collapse of its German rival FTI in June.

EasyHotel, backed by easyJet founder, Stelios Haji-Ioannou, is reportedly for sale at US$ 520 million and is attracting wide interest, including from private equity firm TPG. The chain, founded in 2004, which trades from fifty sites in eleven countries, including nineteen in the UK, employs about three hundred and thirty staff; it has a 4k room portfolio and plans a further one hundred and twenty hotels over the next four years, with financing through Santander UK. No longer a listed company, it is 79.1% owned by ICAMAP Investments and Ivanhoé Cambridge, with Stelios’s easyGroup thought to own the vast majority of the remaining shares.

Just as grocery price inflation rises, latest data from Kantar Worldpanel spells good news for Tesco and Sainsbury’s, (who in the twelve weeks to 04 August saw their market share rise 0.5% to 15.3%); both seem to be taking business away from the other two major retailers – Asda and Morrisons. However, with the former struggling, the latter is back to sales growth and looks to have stabilised its market share attributable to the performance of its French chief executive who used to run the domestic operations of French grocery giant Carrefour. Asda is indeed heading towards becoming a basket case, as its market share slumps 1.1% to 12.6%. In 2003, it overtook Sainsbury’s to become the market’s second-biggest player, with a market share of 17.0% to 16.1%. Ten years later, Sainsbury’s regained its second position, with Asda in a downward spiral from 2020. That year, Walmart sold a majority stake in Asda, then valued at US$ 8.77 billion, to the private equity company TDR Capital and to brothers Mohsin and Zuber Issa; Walmart retained a 10% stake which allowed the retailer access to its buying power. From the start, Asda was too highly geared, with the two brothers raising US$ 3.55 billion by selling a bond secured against Asda’s property assets and injected just US$ 1.0 billion of their own capital at risk. Within a year, a reported falling out over strategy between the Issas and Roger Burley, saw Asda seeking a new chief executive. A search for a new incumbent proved fruitless and, in early 2022, the search was suspended – but is now back on for the right candidate who could be in line for a US$ 12.9 million annual salary. Last year, the Competition and Markets Authority investigated why fuel sold at Asda outlets was on the expensive side, noting that the previous leader, when it came to cutting petrol and diesel prices, had lost its competitiveness. Additionally, in July 2023, at a meeting with the Business Select Committee, the brothers were criticised for their opaque accounting, with Mohsin Issa failing to answer several questions on whether Asda had increased its profit margins on fuel since the takeover. At the same time, stability was further undermined by constant speculation that the brothers had fallen out, which was denied at the time, but come June 2024, Zuber Issa agreed a deal with Asda to sell his take his 22.5% shareholding to TDR – giving the latter a controlling 67.5% stake. He steps down from EG’s board but pays US$ 293 million to EG Group for its remaining UK forecourts. Asda is managed by Mohsin, who lacks experience in the supermarket sector, but has ex M&S supremo, Lord Rose of Monewden as chairman since 2021 and the experienced Michael Gleeson as CFO. Declaring that Mohsin needed to relinquish day-to-day running of Asda, Lord Rose added: “We need a full-time fully experienced retail executive to come in… we always said Mohsin was a particular horse for a particular course. He is a disrupter, an entrepreneur, he is an agitator. We’ve added a significant number of stores, and we’ve changed a lot, but it now needs a different animal”. It seems that Asda should appoint a seasoned sector veteran as a full-time chief executive to drive the retailer to improve results quickly – otherwise, we may be seeing another Wilko in its final months.

The board of Hargreaves Lansdown has recommended to shareholders that they should accept a US$ 6.88 billion bid by a consortium, consisting of CVC, Nordic Capital and Platinum Ivy, which is owned by the Abu Dhabi Investment Authority. UK’s largest investment platform, based in Bristol, (which the consortium has agreed to keep their head office there), employs some 2.4k staff. The company’s founders, Peter Hargreaves and Stephen Lansdown, own 26% of the shares in the firm they founded in 1981 which has grown to a customer base totalling some 1.8 million. The two recognise that the company now requires substantial investment in an “extensive technology-led transformation”, in order to drive the next phase of growth and development.

A survey by UK’s Competition and Markets Authority, polling 17k personal current account customers, ranked Monzo the best bank in the UK for customer satisfaction, followed by Starling Bank and JP Morgan’s Chase. Account holders were requested to rate the quality of the services provided by their bank, including online banking, overdraft arrangements and their “in-branch” experience. There was probably little surprise to see the Royal Bank of Scotland, owned by NatWest, holding all the others up in seventeenth position behind Virgin Money and the Co-operative Bank in fifteenth place. The survey also asked how likely customers were to recommend them to friends and family, with the digital banks – including Monzo, Starling and Chase – dominating the top positions. Monzo was also placed in top spot in a separate CMA survey of more than 19k business current account customers, with HSBC coming last. Interestingly, the regulator has made it compulsory for large banks to take part in the rolling survey, which has its results updated every six months, and they must display the findings “prominently online and in-branch”.

French billionaire, Patrick Drahi’s telecoms company Altice first acquired a 12.1% shareholding in the BT Group in June 2021 and since then has built his stake to 24.5% which he has now sold to India’s Bharti Enterprises for a reported US$ 4.11 billion. There had been speculation for some time that he had been trying to divest this investment to pay down some of the estimated US$ 60 billion worth of debt that Altice has accumulated. Over recent months, BT’s share price has suffered because of speculation that he was going to sell and when the news did eventually arrive, BT’s shares rose by as much as 7.5%. The Starmer government will also be relieved because there was concern that when Altice lifted its shareholding to 18% in December 2021, the then Johnson administration indicated it would intervene in the event of him making a full takeover bid. Now it is wait and see time what the Indian company’s true intentions are, which may include building synergies between the UK and India in areas such as AI, engineering and research and development on 5G networks.

In what would be the year’s biggest snacking buyout, Mars is to invest US$ 36.0 billion to acquire Kellanova – makers of Pringles and Pop-Tart. Prior to this deal, the largest take over by Mars was in 2008, when it acquired Wrigley for US$ 23.0 billion. The mega-size and family-owned confectioner already has brands including Twix, Bounty, Milky Way, M&Ms and Skittles. Market experts have noticed that with the cost-of-living crisis still on-going, consumers have been leaning towards cheaper own-brand junk food, along with the move towards healthier snacks. Kellanova was spun off from Kellogg’s in 2023 and sells snacks along with cereal outside North America.

A move that shocked the market saw the sudden demise of Starbucks’ chief executive after only two years in the position, to be replaced by Brian Niccol, the head of Mexican grill chain Chipotle. This comes after the coffee chain has suffered from flagging sales, allied with a backlash to sharp price increases and long waits for drinks, as well as boycotts sparked by the Israel-Gaza war and staff disputes in the US, where thousands of whom have voted to join a union, tarnishing its progressive reputation. Q2 sales fell 3% annually amid weakness in the US and China. Activist investors such as Elliott Investment Management, a firm known for taking stakes in companies and pushing for leadership and other changes, have also been piling on pressure for a change. The new incumbent has led Chipotle since 2018, helping the brand recover from a crisis, after food poisoning outbreaks, and overseeing a doubling of sales during his six-year tenure; furthermore, the burrito-maker’s share price skyrocketed from US$ 7 to more than US$ 50, whist 1k new stores were opened, along with the introduction of robotic grills and automated processors to make guacamole. Shares in Starbucks jumped more than 20%, following the announcement, whilst Chipotle stock lost more than 9% after his departure was announced.

It appears that with Air China finalising the new C919 test flights, by the end of August, having successfully completed its first test flight on 03 August, the time for the country’s three main carriers to start commercial operation is fast approaching. The test model had a two-class configuration – eight in business and one hundred and fifty in economy. In July, China Eastern Airlines, the world’s first operator of the plane, received its seventh C919, with maiden commercial flights beginning in May 2023. With the C919 also reportedly receiving positive feedback from the European Union Aviation Safety Agency (EASA), this will inevitably help the aircraft gain a larger share of the European market and attract more international customers. As an increasing number of C919s enter commercial service and add flight hours, it will inject more confidence and win more orders from users and potential customers, and it could soon join Boeing and Airbus as a global player in the sector dominated by the current duopoly; prior to the C919’s entering the international market, it will have to obtain all the  airworthiness certifications and approval by respective civilian aviation administration authorities of overseas countries.

With EY still working on its books, following last month’s administration, it is reported that Rex’s debts totalled US$ 329k, owed to 4.8k creditors. The Australian airline, also known as Regional Express, was placed into voluntary administration on 30 July, after grounding its services between major cities. (It is known that the business had trouble accessing materials – including parts – and had been affected by a pilot shortage).  By 02 August, the airline had sacked five hundred and ninety-four staff, including three hundred and forty-three employees from its capital city routes, serviced by its Boeing 737 aircraft, and two hundred and fifty-one from across other parts of the business, including its regional division, which is still continuing to operate. Administrators also told creditors that the capital city services were not viable and would not resume, even if a buyer for that division of the business is found, with all of its Boeing 737 aircraft having been returned to their lessors. However, the administrators have already seen keen interest from several parties about purchasing the business and they are confident that Rex’s regional business days will continue.

The NSW government is establishing a task force to crack down on offences in the property sector, including underquoting, with over one hundred complaints YTD. An example of the practice involves a newly renovated trendy Sydney two-bedroom home was recently put on the market, with a buyer’s guide of US$ 1.0 million, netting many potential buyers with a budget south of US$ 1.1 million. At the subsequent auction, bidding had started at US$ 1.2 million, before being sold for US$ 1.4 million. This underquoting is against the law if the agent issues a buyer’s guide that is well below their reasonable estimate of the property’s likely selling price. Not all cases are being reported and it appears that the practice has become so common that many do not even realise its illegality, and those who do, do not bother to complain because the consequences are inadequate. The government watchdog has issued fifty-five fines so far this year, totalling US$ 75k – equating to just US$ 1.5k per fine – a miserly figure when the average commission earned by a real estate agent, from a US$ 1.32 million property sale, is usually more than US$ 26.3k. The problem for potential buyers is that they spend money on paying a conveyancer to look through the contracts, to carry out all the checks needed, spending thousands of dollars for no reason which also costs them time and causes an enormous amount of stress over properties they were never in the running for through no fault of their own. NSW Strata and Property Services Commissioner John Minns acknowledged underquoting was “happening more often than the complaints we’re receiving”. The Victorian state government launched a task force in 2022 to stamp out underquoting, which has since handed out more than US$ 660k in fines for those not complying. However, until the watchdogs bare their teeth, and start handing out bigger fines and suspending errant agents, this problem will not go away. (In Dubai something similar seems to be happening on some occasions – when selling a property, an agent may advise that a higher price could be obtained so as to obtain exclusive selling rights, but then it is sold at a lower price).

It seems that New Zealanders, frustrated by the cost of living, high interest rates and fewer job opportunities, are leaving in ever increasing numbers, as the country experiences slow economic growth, (Q1 – 0.2%), sticky inflation (3.3%), rising unemployment (4.7%) and high interest rates; this week, its central bank cut interest rates for the first time in over four years, but rates are still at 5.5% – a sixteen-year high. Latest statistics show that a record 131.2k left the country, (with a population of 5.3 million), in the year ended 30 June 2024, with a third heading for Australia; 80.2k of the departees were citizens – almost double the numbers seen leaving prior to the pandemic.

Norway’s sovereign wealth fund made a tidy 8.16% (US$ 138 billion) profit in H1 bringing its total value to US$ 1.70 trillion, driven by rising stock markets, especially in the tech sector. It is estimated that the fund owns an average 1.5% of all listed global stocks. It invests the country’s oil and gas production profits, in inter alia bonds, real estate and renewable energy projects.

China’s July retail sales of consumer goods went up 2.7% year-on-year, and 0.7% on the month, to US$ 528.8 billion. The National Bureau of Statistics also noted increases in other sectors, including retail sales in urban areas – up 2.4% to US$ 457.8 billion – with the corresponding figure for rural areas reaching US$ 70.92 billion, up 4.6% on the year, the country’s catering revenue at US$ 61.64 billion, 3.0% higher, and retail sales for the seven months’ YTD, rising 3.5% to US$ 3.83 trillion.

Driven by booming new growth drivers and strong exports, China’s July industrial output expanded 5.1% on the year and 0.35%, compared to June. This index, which measures the activity of enterprises each with an annual main business turnover of at least US$ 2.8 million saw 80% of industries and nearly 60% of products registering year-on-year increases. The equipment manufacturing sector contributed 2.4% to the entire industrial output growth, with H1 figures for the combined profits of major industrial enterprises up 3.5%, on the year, to US$ 491.4 billion.

The chances of the Fed cutting rates next month improved when the Labor Department posted that July US consumer prices rose at the slowest pace since March 2021 – with prices 2.9% higher on the year, and 0.1% on the month. This report was closely watched after last month’s weaker-than-expected jobs spooked the market and led to a mini stock crash and fears of an early recession. The three major stock indicies in the US were little changed after the report. With inflation continuing its downward trek, allied with the rise in the unemployment rate and a slowdown in other labour market indicators, it is all but certain that rates will come down next month. Although pressure is mounting for a September rate cut, as inflation nudges slowly to its 2.0% target, the central bank still has to exercise caution about signalling the path ahead, pointing to last month’s uptick in UK inflation, after the BoE had recently cut rates.

Over the twelve months, prices for appliances, cars, petrol (down 2.2%), airline tickets and furniture have fallen, offset by rising prices for household staples, housing (which accounts for 70% of inflation over the past year, with rents 5.0% higher), grocery – up 1.1% and car insurance soaring by 18.0%. Such rises will be an important issue in the upcoming presidential election and will be the main reason why the Fed may well decide to slash rate by 0.5%.

This week, Nationwide, (reducing rates by up to 0.2% across its two, three and five-year fixed rate offers), and Halifax, (reducing its three-year remortgage products by up to 0.37%), have become the latest lenders to announce further mortgage rate cuts.  The former’s lowest rate – 3.83% – is part of a five-year fix at 60% LTV deal, which comes with a £1,499 fee. Nationwide offers first-time buyers 4.19% for a five-year fixed rate at 60% LTV with a £999 fee along with selected two, three and five-year switcher rates up to 95% LTV will also be cut by up to 0.20% with rates starting from 4.06%. However, it seems that the leading lenders are more reliant on those who can afford a big deposit, as people with low, or no, deposits miss out on lower rates.

The Office for National Statistics indicated that Q2 UK unemployment was O.2% lower on the quarter at 4.2% and that annual age growth was at its lowest rate in two years at 5.4% – with public sector pay growth, at 6%, higher than the private sector’s 5.2%; estimated vacancies fell by 26k to 884k in Q2. The percentage of people who are out of work and looking for a job dropped to 4.2% in July. The worrying statistic is that 22.2% of the population, known as being economically inactive, are out of work and not looking for a job. When price rises (measured by inflation) are factored in, wages rose 3.2%. However, the indicators show that despite these figures, there were other signs that the jobs market was “cooling”, due to high numbers of vacancies, redundancies and those not actively seeking work. Commenting on the labour market, Chancellor Rachel Reeves noted that there was “more to do in supporting people into employment”. Moreover, the figures could pave the way for more interest rate cuts by the end of 2024, as declining pay growth shows that “domestic inflationary pressures are subsiding.”  

The UK’s inflation rate has risen for the first time this year – by 0.2% to 2.2% – and slightly above the BoE’s long-standing 2.0% target, driven by energy prices declining by less than they did a year ago, whilst services inflation figure, although falling, could still remain above 5% due to air fares, package holidays, hotel prices and wage growth. It is obvious, to many observers, that the fight against inflation is a battle yet to be won. It is widely expected that inflation will continue to nudge higher, peaking at 2.75%, by year-end, before falling below 2.0% sometime next year. Meanwhile, with interest rates having been cut by 0.25% last month, to 5.0%, there is every possibility that there could be a further 0.25% reduction announced at the next rate-setting meeting on 19 September.

July retail sales grew by 0.5%, following a “mixed picture” across sectors, with the Office for National Statistics indicating it was a “poor month for clothing and furniture shops and falling fuel sales despite prices at the pump falling”. The increase, following a marked decline the previous month, when sales volumes were impacted by poor weather, was helped by strong sales in department stores and non-food shops, but Euro 2024 failed to lift spending at food stores. In June, petrol and diesel sales jumped by 2.2%, and despite petrol and diesel easing by US$ 0.018 and US$ 0.014, sales of motor fuel showed dipped by 1.9%. It appears that many are delaying purchases of big-ticket items, as the cost of living crisis is still a major factor squeezing consumer budgets; there was a 0.6% decline in shops selling household goods such as furniture.

Continuing its recovery from last year’s mini-recession, UK’s Q2 economy grew by 0.6%, having expanded by 0.7% the previous quarter, and driven by the services sector, specifically in the IT industry, legal services and scientific research; both the manufacturing, (although growth was noted in June), and construction, (down 0.1%), sectors witnessed Q2 output falls.  Although GDP grew in Q2, growth was flat in June, not helped by strike action by junior doctors. However, most areas of the economy are still being impacted by almost static high interest rates, with many businesses reporting modest activity for the summer months “no doubt affected by still high interest rates”. The country needs the incoming Starmer government to keep its manifesto commitment of introducing long-term infrastructure investment plans, and for the prime minister to “take the brakes off Britain”, including changes to the planning system to build houses and infrastructure. There are some positive signs of economic improvement and maybe, Rishi Sunak threw in the towel too soon but whenever he would have called the election it would have been a case of Heads You Win, Tails I Lose!

Dress Rehearsal Rag!                                                        09 August 2024

This blog estimates that the apartment to villa ratio is 82:18; the latest official figures, in 2022, showed that there were 639.0k apartments and 144.6k villas in Dubai – and assuming a 50k unit increase in 2023, that would give a 2023 year-end total of 680k apartments and 153.6k villas, a total of 833.6k units. Further surmising that the average villa and apartment has 4.85 and 4.25 occupants, and the 2024 population grows 165k (4.51%) from 3.655 million to 3.820 million, and if the number of new 2024 units comes in at 40k, then the property portfolio would rise to 873.6k units; with the 82:18 ratio, that would result in 716.4k apartments and 157.2k villas. 4.25 occupants in 716.4k apartments would house 3.045 million and 4.85 occupants in 157.2k villas a further 762k; this gives a “housing population” of 3.807million, almost in tandem to the forecast 3.820 million by the end of 2024. All well so far with the new supply in line with the demand from the rising population. But add to the equation the number of Airbnb’s, the number of existing residents moving from renting to buying, the number of second homes empty for most of the year and investment properties waiting to sell for capital appreciation, then it can be seen that this cycle has some way to go before running out of steam.

By the end of 2022, according to official data, Dubai’s property portfolio was 736k units, and if you add say an additional 50k added in 2023, this year started with some 786k units. Residential properties in Dubai witnessed growth with the completion of about 6.6k new units in H1, bringing the total number of units to 792.6k. Let us say that a further 27.4k are handed over in H2, the total property numbers, at the end of 2024, will be 820k, and assuming this blog’s formula of 18:82, that would assume 147.6k villa/townhouses and 672.4k apartments. In the first seven months, Dubai’s population has grown 100k to 3.755 million and assume it expands by another 75k, it will end the year with 3.830 million. Using this blog’s formula of villa/townhouse – 18% and 4.85 occupants per unit – and apartments 82% and 4.25 occupants, the “housing population” will be 0.716 million in villas/townhouses and 2.858 million in apartments – a total of 3.574 million, and some 254k lower than the 3.830 million detailed above. But add to the equation the number of Airbnb’s, the number of existing residents moving from renting to buying, the number of second homes empty for most of the year, the number of unoccupied units could be as high as 12% of total units, and investment properties waiting to sell for capital appreciation.  Then it can be observed that demand is not being currently met by supply.

Property Finder notes impressive July property returns, with 17.7k real estate transactions worth US$ 15.10 billion – 59% and 57% higher compared to July 2023; ten locations, including Al Barsha South Fourth, Business Bay, Marsa Dubai, Jebel Ali First, Wadi Al Safa and Al Thanyah Fifth, accounted for 51% of all July transactions. The split saw the off-plan market with 9.3k transactions, (77% higher on the month), valued at US$ 5.29 million, (up 23%); the secondary market witnessed 8.4k transactions, (27.2% higher), valued at US$ 9.81 billion.

Further segregation sees that 59% of property seekers with an interest in ownership were looking for an apartment, while 41% were searching for villas/townhouses. For the apartment sector, 13.7%, 33.6% and 35.2% were looking for studios, 1 B/R and 2 B/R units. In the villa/townhouse sector, 39.8% and 44.9% were searching for 3 B/R and 4 B/R units. Popular areas for apartment ownership were Dubai Marina, Jumeirah Village Circle, Downtown Dubai, Business Bay, and for villas/townhouses Palm Jumeirah. Dubai Hills Estate, Al Furjan, Palm Jumeirah, Akoya by Damac.

When it comes to rentals, 80% of tenants were seeking an apartment, with the remaining 20% villas/townhouses. 61% were looking for furnished apartments, with the balance for unfurnished and for villas/townhouses the split was 57:43. Top rental locations for apartments included Dubai Marina, Jumeirah Village Circle, Downtown Dubai, Business Bay and Deira, and for villa/townhouses Jumeirah, Al Barsha, Dubai Hills Estate, Akoya Damac Hills, and Umm Suqeim.

As the demand for Dubai property continues unabated, driven by many factors, such as the country’s ongoing economic and financial stability, there have been at least a dozen residential projects launched in H1, including from the likes of Emaar, Deyaar, and Dubai Investments. Furthermore, there have been several other commercial complexes and towers, as well as office/warehouse spaces to keep up with the increase in the rising number of companies and projects. There seems to be no immediate end to the current positive market trend which has seen the bull market surging for the past thirty months.

Samana Developers has launched the “Samana Avenue” project in Dubailand, where the buyers will have the option of getting tailored investment advice on how to acquire the ten-year residency visa. The project, with a built-up area of 254.7k sq ft, features sixteen floors with one hundred and sixty-five studios, 1 B/R and 2 B/R units, with most of the apartments coming with private swimming pools; prices start at US$ 178k. The developer has introduced a flexible payment plan – eight and a half years of 1% monthly payments and 0.5% post-handover. Completion is slated for December 2027. The developer expects to launch a further seventeen new projects this year.

It is reported that the construction of The Pulse Beachfront, a luxury master-planned community in Dubai South’s Residential District, is 90% complete. Dubai South Properties indicated that phase 1, which comprises two hundred and fifty-one units, is expected to be finished this year.

With an annual 8.0% increase, Dubai International welcomed a record 44.9 million guests in H1, as the emirate attracted 9.31 million international visitors over the same period; DXB is on track to end the year with a record 91.8 million. Its four biggest destination nations, accounting for 33.4% of traffic were India, Saudi Arabia, UK and Pakistan, with numbers of 6.1 million, 3.7 million, 2.9 million and 2.3 million; they were followed by US and Russia, with 1.7 million and 1.3 million guests. China’s numbers exceeded 1.0 million – an 80% annual growth and a 90% recovery compared to pre-pandemic 2019 levels. The top three city destinations were London with 1.8 million guests, Riyadh (1.6 million), and Mumbai (1.2 million). The airport is connected to two hundred and sixty-nine destinations, across one hundred and six countries, served by one hundred and one international airlines; totlal flight number were 7.2% higher at 216k.

The Dubai government has introduced a plan that may revolutionise the emirate’s future working hours. Over the next seven weeks, employees at fifteen government entities will work a four-day a week, with a seven-hour shift, ie a twenty-eight-hour week. This is in line with Dubai’s strategy to improve people’s living conditions and follows Sharjah’s successful implementation of a four-day working week in 2022. The reasoning espousing a four-day week is that it can improve employees’ mental health, increase job satisfaction, boost productivity and help organisations to retain talent. Obviously, there are many sectors – including aviation, hospitality and medical – where it cannot happen for obvious reasons. This innovative pilot scheme will provide valuable evidence so that a reasoned decision can be made. Abdullah Al Falasi, director general of the Dubai Government Human Resources Department said, “we aim to improve the quality of life of employees and enhance the sustainability of government resources,” adding that “ultimately contributes to consolidating Dubai’s global position as a preferred city for living and working by providing a new model experience that integrates the elements of quality of life”.

Other countries are either studying the possibility of moving to such a working week or have already introduced it. A 2023 six-month study of forty-one Portuguese companies revealed that a shortened working week led to work exhaustion falling by 19% and challenges to maintaining a work-life balance dropping from 46% to 8%. A year earlier, nearly 3k employees across sixty-one UK companies, that trialled a shorter working week, reported lower stress and better health.

The UAE Cabinet has come up with a new fee structure for EV charging facilities at public places – express charging service will now be a minimum of US$ 0.327 (AED 1.20) + VAT per kWh, while slow charging service will be a minimum of US$ 0.191 (AED 0.70) + VAT per kWh. Presently, the rates at charging stations vary widely, with some being offered for free, such as Tesla’s free supercharging services. This new regulation will become effective as from 06 September. Since 01 June 2023, the cost of charging electric vehicles at public charging stations has been US$ 0.104, AED (0.38) per kWh + fuel Surcharge per kWh + VAT for commercial and non-commercial EV Green Charger registered users.

The UAE Central Bank posted that it dealt with 9.33 million cheques, in the first five months of the year, valued at US$ 148.34 billion. The value of cash deposits at the Central Bank over the period topped US$ 20.46 billion, while cash withdrawals stood at US$ 24.02 billion. Transactions included US$ 1.354 trillion for interbank transfers and US$ 798.36 billion for transfers between bank customers.

Following inspections by the Ministry of Economy, thirty-two local gold refineries have been suspended for three months for failing to follow anti-money laundering laws; each company was charged with eight violations. Focussing on the trade and manufacture of precious metals and gemstones, the investigations were to ensure compliance with all the pertinent regulations, relating to the gold sector. The alleged violations include failing to take proper measures to identify money laundering risks, not making required notifications of suspicious transactions to the Financial Information Unit and not examining customer and transaction databases against names on terrorism watch lists. The three month suspensions started on 24 July. None of the thirty-two companies, which account for about 5% of UAE’s gold sector, were identified. Dubai has become one of the largest gold trading hubs in the world, where the country is presently the fourth biggest country in the world for gold imports. The value of fines, imposed by regulatory authorities in the field of AML/CFT, between January and October last year, was more than triple the 2022 comparative figure. It is estimated that the 2023 number of suspicious activity reports, relating to the gold sector, increased to 6,432 from 223 in 2021.  No doubt this episode serves as a warning for all UAE businesses to strengthen their AML and CFT practices, as the government continues to enhance measures to enforce the highest international standards, following its sterling efforts to be taken off the FATF grey list earlier in the year.

UAE telecom operators e& (Etisalat)and Emirates Integrated Telecommunications Company PJSC (du) have paid a H1 royalty to the federal government of US$ 965 million – 5.1% lower than that paid in the corresponding period in 2023. Of that figure, e& paid US$ 749 million and du US$ 216 million, under the Ministry of Finance’s Royalty Guidelines.  In the eleven years to 2023, the two telecom operators’ royalty payments has been US$ 24.60 billion (US$ 19.24 billion by e& and US$ 5.37 billion by du). Last November, both firms announced that they had received the Royalty Guidelines for the local telecom sector issued by the Ministry of Finance for January 2024 through December 2026. The 2024 royalty payment formula does not extend to what is generated from its international operations. The excluded items include:

• Profits generated from international controlled entities
• Profits of international noncontrolled entities (associates and JVs)
• Dividends or other profit distributions received from international investments already subject to local corporate or other similar tax in the respective jurisdiction at 9% or above
• Profit attributable to non-controlling interest holders of the UAE controlled entities

The federal royalty rate of 38% will be applied to the sum of regulated and non-regulated UAE net profit for both e& and du, as well as the royalty and corporate tax rate of 9% on profit. For e&, the aggregate annual amount of royalty and corporate tax shall not be lower than US$ 1.55 billion. On the other hand, the aggregate amount of royalty and corporate tax payable by du shall not be lower than US$ 499 million per year.

Sidara, (also known as Dar Al Handasah), has confirmed that it will not be making an offer for the UK oilfield services and engineering firm John Wood Group, “in light of rising geopolitical risks and financial market uncertainty at this time”. In May, it had increased its offer to US$ 2.93 – 52% higher than Wood’s pre-bid share price. Last year, private investment firm Apollo Global Management ended its own pursuit of Wood, having made five proposals to take over the company, including an offer of up US$ 3.06 per share. On Monday, Wood shares were trading 36% lower.

The Central Bank of the United Arab Emirates confirmed that in the first five months of 2024, credit facilities provided by the UAE national banks to the business and industrial sectors amounted to US$ 70.03 billion. Figures also indicated that the two sectors saw a 3.5% rise in cumulative credit balance to US$ 209.05 billion, expanding by US$ 1.85 billion or 0.9%, on the month, and US$ 5.91 billion (2.9%) over the past twelve months. National banks provide the most credit to the two sectors, totalling US$ 232.12 billion, or 90.1%, of the combined credit balance of the two sectors, with foreign banks having the balance equating to US$ 23.08 billion. The credit balance for the sectors from banks in Abu Dhabi was around US$ 104.85 billion, in Dubai US$ 98.69 billion, and in other emirates lent US$ 28.58 billion to these sectors. Conventional banks accounted for approximately US$ 191.20 billion, or 82.4%, of the credit financing provided to the trade and industry sectors by the end of last May, while the share of Islamic banks reached approximately US$ 40.93 billion, equivalent to 17.6%.

The market cap of Arab stock exchanges exceeded US$ 174 trillion at the end of H1, according to the Arab Monetary Fund. The AMF’s monthly bulletin data said that the market value of the Abu Dhabi Securities Exchange reached US$ 761.54 billion, that of the Dubai Financial Market was US$ 184.8 billion, and that of the Saudi Exchange ‘Tadawul’ was US$ 2.68 trillion. The market value of the Qatar Stock Exchange was US$ 157.9 billion, the Boursa Kuwait was US$ 134.06 billion, and the Muscat Stock Exchange was US$ 63 billion.

Aramex posted a 15.0% hike in H1 net profit to US$ 13 million, driven by a 20% growth in EBIT and an improved EBIT margin, whilst revenue was 8.0% higher on the year, attributable to new customer wins and an increased focus on sales specialism. The company posted an annual 5.0% increase in gross profit to US$ 202 million, with a 24% GP margin. The global provider of comprehensive logistics and transportation solutions also noted a 32% growth in International Express and 5% in Domestic Express, along with strong growth in freight volumes in H1. Its cash position at 30 June stood at US$ 125 million, with a Net Debt-to-EBITDA ratio of 0.9x.

Emirates Central Cooling Systems Corporation PJSC posted a 10.3% rise in H1 revenue to US$ 368 million, with EBITDA growing 6.0%, on the year, to US$ 189 million, and profit before tax 6.3% higher at US$ 117 million; net profit after tax amounted to US$ 106 million. The two main drivers behind the increased demand are real estate developers and building owners who have been increasingly adopting environmentally friendly practices, and the increasing occupancy rates in real estate projects of various uses, led by the residential segment, and the continuous addition of new projects to the company’s portfolio. In H1, there was a significant increase in Empower’s business, with fifty-six new contracts signed to provide more than 58.3k refrigeration tonnes to reach a total contracted capacity of more than 1.72 million RT. Some of the contracts include 19k RT in Jumeirah Village, 7.2k RT on Sheikh Zayed Road, 6.9k RT in Meydan and 6.3k RT in Jumeirah Lakes Towers. Empower is the world’s largest district cooling services provider.

Amlak Finance reported an H1 net profit of US$ 8 million on the back of a 10.0% hike in revenue, from financing and investing activities, to US$ 18 million; the firm’s total revenue, excluding a one-off gain of US$ 42 million, increased by 14.3% to US$ 39 million, compared to US$ 34 million in H1 2023.The company’s operating costs increased by 4.3%, to US$ 13 million, mainly attributable to ongoing restructuring efforts to streamline operations and enhance efficiency. In H1, it repaid more than US$ 12 million to financiers and since 2014, has managed to settle 84% of its Islamic deposit liabilities, including Mudaraba instruments.

Q2 results from Union Properties PJSC see a US$ 5.0 million profit, as revenue moved 7.6% higher to US$ 35 million, attributable to high property sales and Dubai’s real estate market uptrend. In H1, profit almost doubled to US$ 9 million, as revenue rose 15%.
The group’s subsidiaries also contributed significantly, achieving an accumulated gross profit of US$ 14 million, which reflects a 15% increase in H1, compared to US$ 12 million during the same period in 2023. In a bid to solidify its position in the UAE’s real estate sector, UP expects to launch projects worth US$ 1.36 billion in the short to medium term.

Dubai Electricity and Water Authority registered record H1 results with revenue, (mainly driven by an increase in demand for electricity, water and cooling services), and operating profit both moving higher on the year by 7.3% to US$ 3.73 billion and by 6.3% to US$ 899 million; EBITDA came in at US$ 1.80 billion – up 8.9%. Consolidated first half net profit was down 6.7% to US$ 708 million mainly due to higher depreciation and the first time application of corporate tax in 2024. DEWA has approved a significant dividend payout of US$ 845 million to shareholders, set for October 2024.The demand for power and water in 2024 grew by 6.7% and 4.3% respectively. By 2030, installed capacity for power will reach 20 GW and 735 MIGD for water, with 5.3 GW being from renewable sources, representing 27%. DEWA’s Q2 consolidated revenue increased by 7.8% to US$ 2.15 billion, EBITDA by 8.8% to US$ 1.09 billion, and profit before tax was up by 5.9% to US$ 572 million.

H1 gross power generation was up 6.7%, on the year, to 25.5 TWh (terawatt hours), with green energy of 3.3 TWh, representing 12.9% of total generation. Electricity and water customer accounts were 4.2% higher, on the year, at 1.237 million. Meanwhile, total desalinated water production in H1 rose 4.3% to 71.3 billion Imperial Gallons.

Emaar Properties has posted its H1 results, noting that there were marked increases in both annual revenue and net profit before tax by 17% to US$ 3.92 billion and 33% to US$ 2.12 billion; EBITDA was 24% higher at US$ 2.18 billion. The improved figures were driven by sustained investors’ confidence and robust demand in Dubai’s real estate market, strong project execution capability, as well as continued growth in tourism and retail sales. Property sales grew 56% to a record US$ 8.58 billion whilst its revenue backlog stood at US$ 24.55 billion – up 43% on the year and 15% on the quarter – which represents future revenue from property sales that will be recognised over the next five years, indicating sustained profitability.

Emaar Development, a majority-owned subsidiary, successfully launched twenty-five projects, in H1, and saw record property sales 56% higher at US$ 8.09 billion, on the year. The consolidated revenue of Emaar Properties, from its UAE property development business, reached US$ 2.45 billion, including Dubai Creek Harbour. With an ongoing uptick in real estate sales, Emaar’s backlog from property sales in the UAE has reached US$ 22.43 billion, 33% higher than December 2023, which will be recognised as revenue in the coming years.

Its Malls and Commercial Leasing operations posted H1 revenue of US$ 763 million, with an EBITDA of US$ 627 million. Tenants’ retail sales performance of tenants was over 7% on the year, with its prime assets boasting occupancy of almost 99%. Recently, Emaar Malls announced a US$ 405 million investment to expand Dubai Mall, introducing two hundred and forty new shops. It has tied up with Salik to introduce a paid parking system designed to enhance the guest experience.

During H1 2024, Emaar’s International Real Estate operations reported property sales 50% higher at US$ 490 million, and US$ 218 million in revenue, equating to 6.0% of Emaar’s total revenue, attributable to operations in Egypt and India. In H1, its hospitality, leisure and entertainment divisions generated US$ 490 million in revenue – a 9% increase on the year -driven by the steady growth in the tourism industry and strong domestic spending. Emaar’s UAE hotels, including those under management, added four other properties to its portfolio, and reported an average occupancy of 78%. Emaar’s recurring revenue-generating portfolio, including malls, hospitality, leisure, entertainment and commercial leasing, collectively generated revenue US$ 1.25 billion – equating to 32% of Emaar’s total revenue.

Spinneys posted an annual 9.9% jump in H1 revenue, to US$ 436 million, along with a 12.3% rise in gross profit to US$ 180 million and a US$ 40 million net profit; both gross and net margins improved by 90 bp to 41.3% and by 50 bp to 9.2%. Adjusted EBITDA was 9.4% higher at US$ 83 million, with a margin of 19%, despite the impact of one-off IPO-related costs and pre-store opening expenses in Saudi Arabia. Spinneys confirmed its IPO interim dividend of US$ 28.0 million, equivalent to US$ 0.777 per share and 70% of distributable profits.

The DFM opened the week on Monday 05 August 43 points (1.0%) lower the previous  week, and shed 42 points (1.0%) to close the trading week on 4,195 by Friday 09 August 2024. Emaar Properties, US$ 0.09 lower the previous seven weeks, shed US$ 0.07, closing on US$ 2.22 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.65, US$ 5.19, US$ 1.61 and US$ 0.35 and closed on US$ 0.65, US$ 5.27, US$ 1.59 and US$ 0.34. On 09 August, trading was one hundred and nine million shares, with a value of US$ 66 million, compared to two hundred and forty million shares, with a value of US$ 108 million, on 02 August.  

By Friday, 09 August 2024, Brent, US$ 0.49 lower (11.3%) the previous four weeks, gained US$ 2.40 (3.1%) to close on US$ 79.50 Gold, US$ 90 (3.8%) higher the previous week, shed US$ 45 (1.8%) to end the week’s trading at US$ 2,431 on 09 August 2024.

In 2020, Google was sued by the US Department of Justice over its control of about 90% of the online search market, and this week a US judge has ruled that the tech giant acted illegally to crush its competition and maintain a monopoly on online search and related advertising.  Any penalties or fines have yet to be levied by the regulator, but the government has asked for “structural relief” – which could, in theory at least, mean the break-up of the company. The US District Judge Amit Mehta noted that Google had paid billions to ensure it is the default search engine on smartphones and browsers, and that “Google is a monopolist, and it has acted as one to maintain its monopoly”. Meanwhile, US Attorney General, Merrick Garland, commented that “no company – no matter how large or influential – is above the law,” and that “The Justice Department will continue to vigorously enforce our antitrust laws.” Prosecutors accused Google of spending more than US$ 10.0 billion annually to Apple, Samsung, Mozilla and others to be pre-installed as the default search engine across platforms.

Recession fears also hit the crypto market with Bitcoin and ether plunging to multi-month lows of under US$ 50k and US$ 2.46k which led to a panic in the global stock markets; at the end of July, Bitcoin was trading at over US$ 68k. Bitcoin had started the year at  US$ 45.0k and received a major boost when the US Securities and Exchange Commission approved exchange-traded funds to track the spot prices of bitcoin and ether.

Intel’s finances are struggling mainly because of two factors – a noticeable decline in consumer spending on traditional data centre semi-conductors and the fact that it lags behind its rivals in the burgeoning AI sector. Consequently, it has cut back on its initial Q3 revenue figures, slashed 15% of its payroll numbers, (17.5k employees) and suspended dividend payments as from Q4.

Although not admitting to their findings, Glencore has paid US$ 152 million as a fine and compensation claim, after the Office of the Attorney General of Switzerland found it liable for failing to prevent the bribery of a Congolese public official by a business partner in 2011. The mining giant was fined US$ 2.4 million, with the regulator imposing a compensation claim of about US$ 150 million. The OAG noted that it did not identify that any Glencore employees had any knowledge of the bribery by the business partner, nor did Glencore benefit financially from the conduct of the business partner.

Having almost doubled it H1 profits to US$ 1.1 billion, Rolls Royce has decided to reward their 42k employees with each of them to receive a bonus of one hundred and fifty shares worth US$ 896; UK workers, (totalling 21k), will not be able to sell the shares for three years, after which they will be taxable, unless they are held for five years. This is expected to cost US$ 38.4 million. The pandemic did no favours for the UK company as it was impacted by global air travel being almost closed down, which triggered a sharp decline in business, heavily impacting the firm’s commercial aerospace sector which sells and services jet engines.

Partly because of the success of its mega film release, Deadpool & Wolverine, made in the UK, Disney plans to invest US$ 1 billion per annum on making films and TV shows, (for its firm’s streaming platform Disney+ and National Geographic network), in the EMA region; however, it is expected that most of the expenditure will be in the UK and mainland Europe. Disney reportedly already has four films either in production or scheduled to be made at UK’s Pinewood studios, including Snow White, The Fantastic Four: First Steps, The Roses, and The Amateur. Disney has reportedly spent US$ 4.45 billion in the UK since 2020, making twenty-nine films and twenty-three TV series whilst supporting 32k jobs.

Last month, flooring retailer Carpetright went into administration, with the loss of two hundred and seventy-three stores and 1.5k staff. Within weeks, its rival, Tapi, had acquired Carpetright’s brand, intellectual property, fifty-four of its stores and two warehouses. This week, furniture chain Bensons for Beds bought 19 Carpetright stores, indicating that it would try to create job opportunities for former Carpetright staff when the shops reopen under the Bensons brand. Despite highlighting “challenging” conditions for the sale of more expensive furniture items, its chief executive, Nick Collard, said one of his priorities was to increase from its current number of one hundred and sixty-two outlets to more than two hundred over the next few years. However, having gained market share, the firm returned to profitability in 2023.

Arguing that its 19 July global outage had minimal potential liability, CrowdStrike rejected Delta’s claim that it should be blamed; the carrier thinks otherwise and is planning to take legal action for compensation, that could be as high as US$ 500 million, from the cybersecurity firm. Over a six-day period, the carrier had to cancel six thousand flights. The tech company noted that it was “highly disappointed by Delta’s suggestion that CrowdStrike acted inappropriately and strongly rejects any allegation that it was grossly negligent or committed misconduct.” The carrier is also facing a US Transportation Department investigation into why it took so much longer for it to recover from the outage than other airlines. Delta has since been hit by a class-action lawsuit filed on behalf of affected passengers.

In line with other western airlines, BA has been banned from flying over Russia since 2022 and this has meant that it has had to fly longer routes to certain destinations, resulting in longer flight times and higher costs, including for fuel and crew. Consequently, it has now decided to suspend its flights to Beijing from this October, until November 2025, as it feels the economic impact of being banned from Russian airspace after resuming flights last year; it had paused during the pandemic, commenting then it was “one of our most important routes”. BA is also dropping one of its two daily flights to Hong Kong but will continue flying to Shanghai. Chinese airlines are still able to fly over Russia, giving them a commercial advantage, and not surprisingly taking a large market share. Last month, Virgin Atlantic also announced plans to cancel its only flights to China, (to Shanghai), from October, saying flight times were approximately one hour longer to Shanghai, and two hours longer on the way back to London.

Finally, the Qantas board has realised that all was not well with the management of the airline in the final years of Alan Joyce’s reign, with the supremo departing suddenly in September 2023, noting that “events of the past” made it clear this is “the best thing” he could do. The board has slashed his terminal pay by more than 43% to around US$ 8.0 million; it also cut short-term incentives for current and former senior executives by more than a third. To an observer, it seems that senior management were more interested in making profits, (which in turn will result in bigger bonuses), than running the airline in the interest of all stakeholders, especially staff and passengers. Following a series of scandals and costly legal cases, growing public anger over high fares, mass delays and cancellations, as well as its problematic treatment of workers, the carrier’s reputation hit rock bottom. Last year, Qantas lost a High Court case over the sacking of staff during the pandemic, and, in May, it also agreed to pay US$ 79 million to settle a lawsuit over the sale of thousands of tickets for flights that had already been cancelled. The report also added that “the events that damaged Qantas and its reputation and caused considerable harm to relationships with customers, employees and other stakeholders were due to a number of factors,” and “while there were no findings of deliberate wrongdoing, the review found that mistakes were made by the board and management”.

A forty-seven year old Australian man has been arrested for the alleged theft of more than 63k unreleased, limited-edition AUD 1 coins from a warehouse worth US$ 390k, (AUD 600k), linked to the popular children’s television show “Bluey”. The commemorative issues, produced by the Australian Mint, look like AUD 1 coins and sell for AUD 20 each on its official website. Police say the man worked at the warehouse and allegedly stole the coins from the back of a truck, before selling them online within hours. One eBay seller was charging almost US$ 390, (AUD 600) for a pack of three. The Australian animated show was one of last year’s most streamed television shows in the US and was the fourteenth highest rated show of all time.

HM Revenue & Customs has noted that its tax schemes, designed to encourage research and development in business, has lost US$ 5.25 billion since its 2020 introduction. Some companies have been claiming the tax breaks even if they are not doing any R&D, with the authorities saying that the levels of error and fraud were “unacceptable”. Two schemes – the Corporation Tax Research and Development tax relief scheme, for SMEs and the Research and Development Expenditure Credit, for larger businesses – were designed to reward companies investing in innovation and new ideas – such as tech or drug businesses; they have subsequently been merged into one, allowing companies to offset the money they spent on R&D against what they owed in corporation tax so that they could lower their overall tax bill. An “enhanced” scheme, which allows businesses to pay even less tax, was introduced in April 2023 specifically for small businesses making a loss. In 2020-21 and 2021-22, HMRC says over a sixth of the money spent on the schemes was lost to error and fraud but has since fallen as the number of compliance officers more than doubled to eight hundred.

The UK’s competition regulator has launched an inquiry into Amazon’s investment of over US$ 3.80 billion into an AI startup as regulators ramp up their scrutiny of mergers involving the fast-growing technology sector. The March 2024 deal included a US$ 4 billion investment into Anthropic and its commitment to use Amazon Web Services as its “primary cloud provider” for essential functions. The CMA noted that it is “considering whether it is or may be the case that Amazon’s partnership with Anthropic has resulted in the creation of a relevant merger situation” and, if so, whether that has “resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.” The CMA is also looking at Google’s partnership with Anthropic, as well as investigating Microsoft’s involvement in Inflection, the AI lab, and Open AI.

Deliveroo posted its first ever profit in H1 at US$ 1 million, following a US$ 97 million loss in the same 2023 period. Total orders grew by 2% to US$ 172 million, and after registering a US$ 3.5 million cash flow, it announced a US$ 175 million share buyback programme. Its Gross Transaction Value per order – the average cost of a customer’s basket including delivery fees – was 3.3% higher at US$ 29.22, mainly due to restaurants and shops raising their prices. (Rival delivery firm Just Eat last week posted results showing a 9% rise in sales by GTV). The company is expanding into adding grocery and retail deliveries to its portfolio, noting that it was “early days” for its retail delivery side, there had been “strong growth” in grocery deliveries. The company was embroiled in union problems last year when The Supreme Court ruled that Deliveroo riders could not legally be considered employees, partly because they did not have specified hours and could also work for rival firms. Recently, it confirmed that it had struck a deal with the GMB union which had “increased the guaranteed minimum pay for the estimated period riders are on an order to GBP 12, (US$ 14.03), an hour, plus vehicle costs for all vehicle types”. On Thursday, Deliveroo shares rose by more than 10%.

The latest Numbeo Cost of Living Index rates Geneva as the most expensive city to live in, (with a rating of 101.7), followed by Zurich (100.4) and New York (100.0); six other US cities – San Francisco (90.5), Boston (85.8), Washington (82.5), Seattle (81.5), Los Angeles (80.9) and Chicago (80.2) made up the top ten, with Reykjavik (83.9) in sixth place. Dubai (60.0 – 78th), Abu Dhabi (54.1 – 87th), Doha (52.2 – 94th) and Riyadh (49.8 98th) were the top placed ME cities. The database company looked at factors such as the cost of groceries, eating in restaurants, rental costs and how far local currency goes to formulate its results.

Kenya’s President William Ruto has been hit by a double whammy. Only after his plans to raise taxes for his cash-strapped, debt-burdened government were thwarted by widespread protests did he withdraw his finance bill for the coming year. Then he discovered that three judges unanimously ruled the 2023 legislation that had raised taxes on salaries, fuel and mobile money transactions was “fundamentally flawed” and “unconstitutional”, as it had not followed laid down procedures. This means that the Kenyan exchequer has “lost” up to US$ 3.8 billion in revenue. It seems unlikely that he will find ways to fund the national budget and service its US$ 78 billion public debt and there is every likelihood that the current situation might lead to a paralysis of some government services. To pay for public services, the government has two options – either raise taxes or borrow more. Both have their problems – the former will probably lead to further civil disorder and the latter may be difficult following the country’s debt levels and the recent downgrading of its rating by international credit rating agencies Moody’s and Fitch.

Last week, the number of Americans filing new applications for unemployment benefits fell 17k to a seasonally adjusted 233k – its largest drop in about eleven months and was a welcome change from last week when the figures then spooked the global bourse and brought pandemonium to the market.

Whilst most global central banks seem to be dithering whether to twist or stick when it comes to interest rates, kudos to the Reserve Bank of Australia and its Governor, Michele Bullock. At Tuesday’s monthly meeting, rates were put on hold again, at 4.35%, with the governor seemingly ruling out a rate cut in the next six months; she also added that the board seriously considered an August rate hike, and “the judgement of the board was that keeping the interest rate where it is and making sure that people understand that a rate cut is not on the agenda in the near term, given what we know that continued pressure will help to keep demand coming back into line with supply”. The RBA is seeing that inflation will not hit its target range of between 2-3% until late 2025, and it seems to some observers that it is inflation running the economy – not the Albanese government.

By the end of Monday, the Australian share market had tumbled 3.7% in what was the index’s worst two-day performance since 2022. The sell-off followed weak jobs data in the US, which sparked fears a recession could be around the corner. By the end of trading on Monday, the markets had been stunned with all sectors in red including:

• ASX 200                     -3.7%             to 7,650 points
• Nikkei                          -12.9%           to 31,287 points
• Hang Seng                  -2.2%              to 16,577 points
• Shanghai                     -0.6%             to 3,363 points
• S&P 500                     -3.0%             to 5,186 points
• Nasdaq                        -3.4%             to 16,200 points
• Dow Jones Industrial  -2.6%             to 38,703 points
• FTSE 100                     -2.0%             to 8,008 points
• Spot gold                     -1.4%             to US$ 2,408
• Brent crude                 -0.4%              to US$ 77.25
• Bitcoin                         -8.0%              to US$ 54,043

There are many factors in play that led to what some say left conditions ready for a perfect storm. There was no doubt that stock markets have been pushing their luck and a correction of some sorts should not have been such a surprise. With other factors, such as the equity market index concentration, which was the highest in ninety years, AI profit taking and a blow up in the Japanese yen, (making funding more expensive), that seem to be pointing to a recession of sorts, as other economic indicators were pointing to a downturn not only in the US economy but the rest of the world.

Last Friday, the world’s five hundred richest people managed to lose a combined US$ 134 billion, following the stock market meltdown, driven by concerns of a possible US recession, on the back of worrying jobs data and weak global manufacturing activity around the world. Leading the pack was Jeff Bezos ending the day losing US$ 15.0 billion, with Amazon leaking 8.8%. In comparison, Larry Ellison got off lightly shedding US$ 5.0 billion, as Oracle ended the day 3.0% lower. The world’s wealthiest person lost US$ 6.6 billion as Tesla tanked 4.2%, costing Elon Musk US$ 6.6 billion. Alphabet’s co-founders saw its market cap 2.4% light and the individual wealth of both Sergey Brin and Larry Page down US$ 3.0 billion. Meta Platforms boss Mark Zuckerberg lost around US$ 3 billion, as the Facebook owner’s stock slid nearly 2.0%. Dell Technologies founder Michael Dell also lost around $3 billion as his company plunged 5.7%. LVMH chief executive Bernard Arnault, former Microsoft chief executives Bill Gates and Steve Ballmer, and Berkshire Hathaway chairman Warren Buffet, who make up the rest of the world’s ten wealthiest, collectively lost more than US$ 7 billion.

The long-awaited sell-off was attributable to a number of factors with the final straw beinginvestor concerns over weak jobs data and manufacturing activity, not helped by the failing health of manufacturing activity across Asia, Europe, the US and, in particular, China. The US Labor Department started the ball rolling, posting that last month, only 114k jobs were added to the economy, following a weak June return of 179k; to compound the problem, the unemployment rate unexpectedly rose 4.3%, its highest level since October 2021 – and above the 3.5% mark last year. This triggered something known as the “Sahm rule”, which states if the average unemployment rate over three months is 0.5% higher than the lowest level over the past twelve months, then the country is at the beginning of a recession.

On top of that, a report has shown that US manufacturing had dropped to an eight-month low – an indicator to some that the Fed may have missed the boat by not lowering rates earlier. Jitters returned to the financial markets, as investor sentiment and the global bourses start their inevitable slump. Last Friday saw both the Nasdaq Composite and S&P 500 down from their 10 July record close – by 10.0% and 6.0% – and by 2.4% and 1.8% on the day. The Dow Jones Industrial Average fell more than 1.5%. As the BoJ lifted rates to their highest level in fifteen years on Wednesday, two days later, the Nikkei 225 had tanked 5.8%, the Hang Seng Index 2.1%, and later European banks followed suit – the DAX, CAC 40 and FTSE 100 down 2.3%, 1.6% and 1.3%.

On 31 July, financial markets in the US and Asia fell sharply, as investors sold off tech shares, with AI stocks taking the brunt of the hit. On Wednesday, two major New York bourses – the S&P 500 and the tech-heavy Nasdaq – shed 2.3% and 3.6%, in their biggest one-day falls since 2022; the Dow Jones Industrial Average dropped by 1.2%. The major losses were seen in major firms including Nvidia, (down 6.8%, and 15.0% over the fortnight), Alphabet, (minus 5.0%), Microsoft, Apple and Tesla (12.0%). It seems that investors have finally woken up to the fact that there has been little revenue (and profits) to date, in relation to the huge amounts of expenditure, and were now looking for some sort of operating return. They are also concerned about two other factors – the presidential election and the timing of any US rate cuts.

Bloomberg estimates that US$ 6.4 trillion was wiped from stocks during the recent financial markets panic, with the trinity of key assumptions pushing markets upwards unfolding almost simultaneously. The first being that AI would quickly and fundamentally change the business world, the US market would continue its upward trend and Japan would never hike interest rates. As the 26 July blog – Somethin’ Stupid – indicated:

Mid-week, financial markets in the US and Asia fell sharply, as investors sold off tech shares, with AI stocks taking the brunt of the hit. On Wednesday, two major New York bourses – the S&P 500 and the tech-heavy Nasdaq – shed 2.3% and 3.6%, in their biggest one-day falls since 2022; the Dow Jones Industrial Average dropped by 1.2%. The major losses were seen in major firms including Nvidia, (down 6.8%, and 15.0% over the fortnight), Alphabet, (minus 5.0%), Microsoft, Apple and Tesla (12.0%). It seems that investors have finally woken up to the fact that there has been little revenue (and profits) to date, in relation to the huge amounts of expenditure, and are now looking for some sort of operating return. They are also concerned about two other factors – the presidential election and the timing of any US rate cuts.

Mid-week, financial markets in the US and Asia fell sharply, as investors sold off tech shares, with AI stocks taking the brunt of the hit. On Wednesday, two major New York bourses – the S&P 500 and the tech-heavy Nasdaq – shed 2.3% and 3.6%, in their biggest one-day falls since 2022; the Dow Jones Industrial Average dropped by 1.2%. The major losses were seen in major firms including Nvidia, (down 6.8%, and 15.0% over the fortnight), Alphabet, (minus 5.0%), Microsoft, Apple and Tesla (12.0%). It seems that investors have finally woken up to the fact that there has been little revenue (and profits) to date, in relation to the huge amounts of expenditure, and are now looking for some sort of operating return. They are also concerned about two other factors – the presidential election and the timing of any US rate cuts.

Mid-week, financial markets in the US and Asia fell sharply, as investors sold off tech shares, with AI stocks taking the brunt of the hit. On Wednesday, two major New York bourses – the S&P 500 and the tech-heavy Nasdaq – shed 2.3% and 3.6%, in their biggest one-day falls since 2022; the Dow Jones Industrial Average dropped by 1.2%. The major losses were seen in major firms including Nvidia, (down 6.8%, and 15.0% over the fortnight), Alphabet, (minus 5.0%), Microsoft, Apple and Tesla (12.0%). It seems that investors have finally woken up to the fact that there has been little revenue (and profits) to date, in relation to the huge amounts of expenditure, and are now looking for some sort of operating return. They are also concerned about two other factors – the presidential election and the timing of any US rate cuts.

It was only a matter of time before the tech market showed its concern following warning signs such as laying off staff, insane valuations, falling margins and ongoing shortage of chips. The second was as a result of US economic data at the end of last week which seemed to point to the fact that there was a distinct possibility of the US going into recession. But it was the unravelling of the “Japan will never hike interest rates” idea that really spooked markets, which it did just that last week, from 0.1% to 0.25% – its largest rate hike since 2007. In the carry trade, many investors were making money taking on the Japanese yen – at very low and, for many years, static rates – and then investing that money in high growth tech stock. Alarm bells had been ringing louder over recent weeks, as the carry trade grew to an estimated US$ 4 trillion and on 31 July the “impossible” happened – the BoJ moved on rates.

It is clear share markets have settled down for now, as US stocks had their best ever day on Thursday since November 2022, with the benchmark S&P 500 index ending the day 2.3% higher, The Dow Jones Industrial Average 1.8%, and the Nasdaq jumped 2.9%. This came in tandem with the release of the latest weekly labour figures, showing much lower unemployment claims easing concerns about a waning economy. However, it is inevitable that the turbulence in the market will not go away and add civil unrest in Europe, rising ME tensions, a weakening Chinese economy and a global slowdown to the equation, there will be a major stock market collapse before the end of October. Last Friday was only a Dress Rehearsal Rag!