UAE to achieve positive growth this year



The UAE will achieve positive growth this year despite the effects of the global recession, Sultan al Mansouri, the Minister of Economy, has forecast. GDP would slow to 0.5 per cent or 1 per cent this year as a result of falling crude revenues, he said. Mr al Mansouri's forecast is broadly more optimistic than revised projections from the IMF and a leading international bank released in the past week.

"My view has been for flattish growth to a slight contraction this year but the minister may have new data we have not yet seen," said Dr Giyas Gokkent, the chief economist and head of research of the asset management group at the National Bank of Abu Dhabi. Mr al Mansouri's comments were reported by the Arabic newspaper Al Khaleej. A strengthening in oil prices over recent months prompted the IMF to last week upgrade its GDP forecast for the UAE to a contraction of 0.2 per cent, instead of the 0.6 per cent contraction it had forecast in May.

Standard Chartered said earlier this week the economy would contract 0.5 per cent after previously predicting an expansion by the same percentage. Crude prices have risen to about US$70 a barrel from a five-year low of $32.40 a barrel in December. Sultan al Suwaidi, the Governor of the Central Bank, said earlier this week in Istanbul that the UAE would see economic recovery in the middle of next year. He previously said the economy might shrink or grow slightly this year.

The IMF said the UAE would return to positive growth next year, with the economy likely to expand by 2.4 per cent. Economic growth in the country reached 7.4 per cent last year. The worst international recession in 60 years has put the brakes on economic growth in most countries across the globe this year, with oil-reliant GCC states also suffering as a result of a decline in crude prices from record highs of $147 in July last year.

Lower housing costs would help bring average inflation in the UAE down to 3 per cent this year, Mr al Mansouri was also reported as saying. Consumer prices edged up 0.48 per cent in August compared with July, according to the latest inflation figures from the Ministry of Economy. Inflation averaged 2.56 per cent in the first eight months of this year, compared with 12.3 per cent last year as the country experienced soaring prices for food and property.

tarnold@thenational.ae

COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
Jigra
Director: Vasan Bala
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Rated: 3.5/5

Tales of Yusuf Tadros

Adel Esmat (translated by Mandy McClure)

Hoopoe

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8 traditional Jamaican dishes to try at Kingston 21

  1. Trench Town Rock: Jamaican-style curry goat served in a pastry basket with a carrot and potato garnish
  2. Rock Steady Jerk Chicken: chicken marinated for 24 hours and slow-cooked on the grill
  3. Mento Oxtail: flavoured oxtail stewed for five hours with herbs
  4. Ackee and salt fish: the national dish of Jamaica makes for a hearty breakfast
  5. Jamaican porridge: another breakfast favourite, can be made with peanut, cornmeal, banana and plantain
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  7. Hellshire Pon di Beach: Fresh fish with pickles
  8. Out of Many: traditional sweet potato pudding
How Tesla’s price correction has hit fund managers

Investing in disruptive technology can be a bumpy ride, as investors in Tesla were reminded on Friday, when its stock dropped 7.5 per cent in early trading to $575.

It recovered slightly but still ended the week 15 per cent lower and is down a third from its all-time high of $883 on January 26. The electric car maker’s market cap fell from $834 billion to about $567bn in that time, a drop of an astonishing $267bn, and a blow for those who bought Tesla stock late.

The collapse also hit fund managers that have gone big on Tesla, notably the UK-based Scottish Mortgage Investment Trust and Cathie Wood’s ARK Innovation ETF.

Tesla is the top holding in both funds, making up a hefty 10 per cent of total assets under management. Both funds have fallen by a quarter in the past month.

Matt Weller, global head of market research at GAIN Capital, recently warned that Tesla founder Elon Musk had “flown a bit too close to the sun”, after getting carried away by investing $1.5bn of the company’s money in Bitcoin.

He also predicted Tesla’s sales could struggle as traditional auto manufacturers ramp up electric car production, destroying its first mover advantage.

AJ Bell’s Russ Mould warns that many investors buy tech stocks when earnings forecasts are rising, almost regardless of valuation. “When it works, it really works. But when it goes wrong, elevated valuations leave little or no downside protection.”

A Tesla correction was probably baked in after last year’s astonishing share price surge, and many investors will see this as an opportunity to load up at a reduced price.

Dramatic swings are to be expected when investing in disruptive technology, as Ms Wood at ARK makes clear.

Every week, she sends subscribers a commentary listing “stocks in our strategies that have appreciated or dropped more than 15 per cent in a day” during the week.

Her latest commentary, issued on Friday, showed seven stocks displaying extreme volatility, led by ExOne, a leader in binder jetting 3D printing technology. It jumped 24 per cent, boosted by news that fellow 3D printing specialist Stratasys had beaten fourth-quarter revenues and earnings expectations, seen as good news for the sector.

By contrast, computational drug and material discovery company Schrödinger fell 27 per cent after quarterly and full-year results showed its core software sales and drug development pipeline slowing.

Despite that setback, Ms Wood remains positive, arguing that its “medicinal chemistry platform offers a powerful and unique view into chemical space”.

In her weekly video view, she remains bullish, stating that: “We are on the right side of change, and disruptive innovation is going to deliver exponential growth trajectories for many of our companies, in fact, most of them.”

Ms Wood remains committed to Tesla as she expects global electric car sales to compound at an average annual rate of 82 per cent for the next five years.

She said these are so “enormous that some people find them unbelievable”, and argues that this scepticism, especially among institutional investors, “festers” and creates a great opportunity for ARK.

Only you can decide whether you are a believer or a festering sceptic. If it’s the former, then buckle up.

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