June Fourth Week Middle East Finance Newsletter
Dubai’s Latest Property Spree Has Rich Buyers Taking More Risk, Brevan Howard Co-Founder Natsis Moves to UAE in Middle East Push, Abu Dhabi Scours for Global Banking Deal Armed With $1 Trillion.
Dubai’s Latest Property Spree Has Rich Buyers Taking More Risk
Key Takeaways
Dubai is experiencing a new construction boom with developers demanding upfront payments which reduces the need for debt while increasing the risk for buyers.
Despite the risks, the influx of expat arrivals and foreign investors have caused Dubai's real estate prices to soar 15% over the past year and fueled this latest building boom.
The government's introduction of reforms has made property firms pay the full cost of the land before selling ahead of construction, and money collected from buyers must be deposited in government escrow accounts, reducing the risk of developers absconding with buyer's money.
Airbus Agrees $6.7 Billion Helicopter Pact With Saudi Arabia
Key Takeaways
Airbus has signed an investment agreement worth over $6.7 billion to build military and commercial helicopters in Saudi Arabia with Scopa Industries Corp.
The plant is expected to produce up to 100 military and commercial helicopters by the end of the decade and will be Airbus's first in the region.
Building up the domestic defense industry is part of Crown Prince Mohammed Bin Salman's plan to diversify the oil-dependent Saudi economy.
China Signs 27-Year Qatar LNG Deal to Boost Energy Security
Key Takeaways
China has signed a 27-year LNG purchase agreement with QatarEnergy for 4 million tons annually to meet rising energy demand.
CNPC will take a 5% equity stake in a production train at Qatar’s North Field East expansion project as part of the deal.
The new LNG deal delivers advantages for both nations as China secures fuel at an affordable rate, while Qatar finds buyers for the gas from its massive expansion project.
Brevan Howard Co-Founder Natsis Moves to UAE in Middle East Push
Key Takeaways
Brevan Howard Asset Management is expanding its operations in Abu Dhabi as the UAE becomes a major hub for hedge funds.
The investment firm has relocated two employees to Abu Dhabi and is looking to move more employees to the region as it plans to have around 100 people there eventually.
Abu Dhabi is attracting more international financial firms and hedge funds, with the recent addition of Ray Dalio's family office and plans to expand its financial district tenfold.
Abu Dhabi Scours for Global Banking Deal Armed With $1 Trillion
Key Takeaways
Abu Dhabi is exploring ambitious acquisitions in the international banking sector to become a global financial powerhouse.
Limited expansion opportunities in the UAE market are driving Abu Dhabi's financial institutions to look overseas for growth.
Despite facing regulatory delays and hurdles, Abu Dhabi's largest financial institutions remain committed to expanding internationally through strategic mergers and acquisitions.
Read more.
Covestro Rejects $12 Billion Takeover Proposal From Adnoc
Key Takeaways
Covestro has rejected an initial takeover proposal from Abu Dhabi National Oil Co. as too low.
Covestro could be open to discussing a deal if it were offered better terms.
Adnoc will assess Covestro’s response before deciding its next steps.
Qatar’s Wealth Fund to Buy Stake in NBA’s Washington Wizards
Key Takeaways
Qatar Investment Authority plans to acquire a 5% stake in Monumental Sports and Entertainment, which owns the Washington Wizards, the Washington Capitals, and the Washington Mystics franchises, according to a person familiar with the situation.
The move by Gulf sovereign wealth funds to buy into prestigious sports leagues has been criticized for "sports-washing" and faces significant scrutiny due to concerns over human rights violations and antitrust issues.
The increasing valuations of NBA teams have made it difficult for the world's richest people to buy franchises on their own, creating an opening for investment funds like sovereign wealth funds.
Abu Dhabi to Take 7% Stake in Chinese Electric Vehicle Maker Nio
Key Takeaways
Abu Dhabi's government is buying a 7% stake in Chinese electric carmaker Nio for $738.5 million, giving it a board seat and a capital infusion.
Nio has been contending with losses and uncertain demand in China's competitive EV market, leading to a worse-than-expected net loss in Q1 2021.
Nio CEO William Li responded by slashing prices on all models in China and delaying the goal to break even by year-end, but still aims to double sales to 250,000 electric vehicles this year.
Doha and Dubai Top List of World’s Most Competitive Job Markets
Key Takeaways
Doha, Dubai, and California's tech hubs have the most competitive job markets with the highest number of candidates per LinkedIn job posting in February.
Qatar's hosting of the World Cup and its tax policies make it an attractive place to work despite widespread criticism over its treatment of migrant workers.
San Jose and San Francisco in northern California have the highest number of applicants per LinkedIn job posting in the US, but the talent pool of tech employees has increased due to recent layoffs.
Turkey Lira Becoming a ‘Realistic Investment’ Once More, T. Rowe Says
Key Takeaways
Leonard Kwan, a money manager at T. Rowe Price Group Inc., is considering investing in Turkey's lira once again due to expectations of orthodox monetary policies being implemented.
The central bank of Turkey is expected to hike interest rates for the first time in over two years, but the extent of the hike is uncertain.
Kwan is inclined to invest in the lira once there is more evidence of policy orthodoxy and lira bonds will depend on the extent to which interest rate hikes are implemented and reflect inflation risks.