UAE spending power on luxury products strong

Dubai: Consumers in the UAE are among the biggest buyers of luxury items in the world, with retailers bringing items that cost several thousand dirhams to the local market.

“Dubai is a healthy market for high-end products. There is demand for high-end fashion, shoes and accessories. It is competing with cities like New York and Paris,” said Khodor Ebrahim, the representative of Alberto Moretti for the Middle East, and managing director of Nuray, a fashion dealership.

Alberto Moretti is bringing its 24-carat velvet gold shoes to Dubai Mall’s Level Shoe District between October and November of this year.

“The velvet of the pump and loafer is covered [with] a gold leaf,” explains Ebrahim. Consumers with a big wallet can purchase a pair for Dh19,500.

Ebrahim expects the shoes to be saleable, as is the case with the Alberto Moretti shoes covered with Swarovski crystals that were sold for Dh11,500 a pair between April and June this year.

People are busy shopping at Dubai Mall

“It was sold above expectations. When we ordered it, we were not sure if it will sell or not. But in the first month, we sold 18 to 20 pieces,” Ibrahim said.

The main buyers of the shoes were UAE nationals and Russian tourists, he said, adding that he expects the same for the gold shoes.

For now, 16 pieces of the gold shoes have been ordered, but, Ebrahim said, more will come if the demand continues, he said.

The demand for luxury items in the UAE has improved since the economic downturn of 2008, according to Ibrahim.

“When the crisis hit, there was a drop in the buying of luxury items, especially from the locals. But now, especially in the last two years, it is getting better,” he said.


Vintage watches

Tariq Malik, co-founder and managing partner of Momentum in DIFC (Dubai International Financial Centre), a luxury vintage watch dealer, said, when his store opened in 2011 he had a stock of 60 watches, and almost two years later, he sells 280 watches.

“Our business is growing. We have increased our stock and the level of clients,” Malik said.

In 2011, Momentum’s vintage watches were sold for up to Dh25,000 a piece, and now their prices can reach a quarter of a million dirhams, according to Malik.

Malik said that his customers approach his store asking for watches that are not easily found locally, and Momentum sources them.

“They see the value of the watches. They see them as an investment because the peak [for the price] has not been reached,” Malik said.

He estimates that consumers in the UAE spend 20 to 30 per cent of their monthly salary on luxury items. “People are spending on luxury items — expats and UAE nationals,” he said.

The majority of the UAE luxury spending this year will be focused on designer ready-to-wear items, expected to reach $1 billion, while the second most favourite among consumers are luxury jewellery and timepieces — sales of which are forecast to amount to $524 million, according to Euromonitor International.

The UAE’s luxury segment, expected to reach $2 billion this year, will be valued at $2.7 billion by 2017.

Time Warner suspends CBS blackout plans

New York: Time Warner Cable agreed on Tuesday to keep the CBS network on the air in New York and other cities after initially announcing a blackout when the two sides failed to reach an agreement on fees.

Negotiations between CBS and Time Warner Cable continued after midnight in New York, according to a spokeswoman for the cable operator. Time Warner said it had relented “at the request of CBS.” “There’s progress being made and hopefully we don’t go dark,” CBS CEO Leslie Moonves told reporters on Monday in Los Angeles.

Leslie Moonves, president and CEO for CBS Corporation, said progress was being made in talks with Time Warner Cable over fee hikes, in Beverly Hills, California.

“We still believe our content is worth a lot of money.” CBS, which is the No 1 rated US broadcast network with shows such as ‘The Big Bang Theory’ and ‘N.C.I.S.’, has never had a wide-scale blackout, it said.

A blackout would have blocked an estimated 3.5 million Time Warner cable subscribers in cities such as New York, Los Angeles and Dallas from seeing shows like ‘Under the Dome’ and ‘Big Brother’. It would not affect CBS affiliate stations owned by other companies.

Initially, in a statement issued just after midnight, Time Warner said it would remove CBS and the company’s cable channels, including the premium service Showtime. The action came after weeks of often contentious negotiations over increases in fees that CBS receives from cable and satellite operators.

‘Unfair demands’

“We offered to pay reasonable increases, but CBS’ demands are out of line and unfair,” Time Warner said in its initial statement. “They want Time Warner Cable to pay more than others pay for the same programming.”

The threat of blackouts have become increasingly common as networks, which provide programming, square off against cable and satellite TV operators that pay retransmission fees to transmit programs into living rooms around the country.

Last summer, satellite operator DirecTV’s 20 million customers were unable to receive Viacom’s cable networks, including Nickelodeon and MTV, for 10 days after those companies failed to strike a new deal.

CBS’ contract with Time Warner Cable expired in June, but the two sides have already extended the deadline twice. The two sides were agreeing hourly extensions as talks continue.

Public support

While the companies negotiated, they both ran TV commercials aimed at getting the public on their side.

Time Warner Cable’s spot accused CBS of giving New York a “black eye”, while CBS urged viewers to “say no to Time Warner Cable,” and gave them Time Warner Cable’s phone number.

The loss of advertising dollars would be somewhat less painful for CBS during the summer, when networks air mostly reruns and audience numbers drop. But if a blackout persisted into August, CBS could lose audiences in the some of the nation’s largest markets for its reliably popular National Football League games.

“If there was a time for this dispute to occur, it would be in the late summer,” said Morningstar analyst Michael Corty.

Time Warner Cable reminded subscribers in New York that they sign up to receive CBS from media mogul Barry Diller’s Aereo TV service, which streams over the air broadcast signals to a tablet or computer for $8 (Dh29.4) a month. Aereo pays CBS no fees.

IMF appoves $2.3b aid for Greece!!!!!!

Washington: The International Monetary Fund on Monday approved a further €1.7 billion ($2.3 billion) in funds for Greece’s bailout program after completing the fourth review of the cash-strapped euro zone state.

Greece last week adopted the last piece of legislation its international lenders required to release the next batch of rescue loans, after two months of wrangling over unpopular measures to overhaul the economy. The total funds from the IMF, the European Commission and the European Central Bank comprise €5.8 billion.

The IMF also confirmed lenders would modify Greece’s September target for how much money it needs to get from privatising state firms, after Athens struggled to sell natural gas distributor DEPA in June.

The European Union announced the move earlier on Monday, saying Greece would now need to make only €1.6 billion from privatisations, down from €2.6 billion. But Athens will now have to recoup that money in 2014 to ensure it stays on course to lower its debt.

“Urgent steps need to be taken to address concerns about the structure and governance of the privatization program and to improve its effectiveness,” IMF Managing Director Christine Lagarde said in an updated statement on Monday.

Greece’s reform record has been patchy ever since its EU/IMF bailout started in mid-2010, leading to frequent delays in the disbursement of rescue funds.

Opposition to the bailout has also intensified as Greece goes through its sixth year of recession and unemployment hovers at a record rate of 27 per cent.

The IMF’s board waived several requirements Greece had to meet by the end of June, since data was not yet available. This includes targets for overall government debt, government domestic arrears and the general government balance.

Lagarde commended Greece for cutting budgets and external imbalances, but said Athens has not done enough on broader reforms to its tax collection and public sector, which are necessary to ensure its economy returns to growth.

“Given the slow progress in public administration reforms, efforts should focus on ensuring exit of unqualified personnel to create room to hire new staff with the relevant skills,” Lagarde said.

Subject to implementation of further reforms, Athens stands to receive another 1 billion euros from international lenders in October. Greece’s rescue, approved in March 2012, will total €173 billion over four years, the IMF said. It is meant to help Athens recover from a sovereign debt crisis and return to markets, and protect the country from a possible exit from the Eurozone.

De Beers Millennium collection attractive diamond ring at Sotheby's. pre-tax profits of $1.9bn (£1.2bn) for the first half of this year

Anglo American profits hit by Chinese slowdown

MiningAnglo American has seen profits hit by slowing Chinese demand for its coal, iron ore and precious metals, although losses were tempered by consumers' seemingly unshakeable faith in diamonds.

 De Beers Millennium collection diamond ring at Sotheby's. Photograph: Peter Macdiarmid/Getty Images
The group reported pre-tax profits of $1.9bn (£1.2bn) for the first half of this year, down 34% on the same time last year, in the first set of earnings data under new chief executive Mark Cutifani, since he took over the troubled mining group in April.

The group blamed its performance on "continuing weak global economic growth" and burgeoning supply of coal and iron ore that is pushing down commodity prices. In particular, Chinese demand for Anglo American's iron ore has dropped off, as the Chinese authorities cut steel production in an attempt to shift the focus of their economy from factories to consumers. "In China activity is slowing," the mining group said. "Over the next few years, China's economic growth rate should run well below the average rate of the last decade, which will be a drag on growth in other emerging economies."

Anglo American noted signs of life in the economies of US and Europe, but raised doubts about the durability of Japan's upturn under "Abenomics", its radical policy of monetary stimulus.

But the uncertain economic outlook shows no sign of dampening consumers' desire for diamonds. De Beers, now majority controlled by Anglo American, reported strong sales growth in its jewellery business in Asia and Europe. This year the jeweller opened two shops: in Kuala Lumpur, in Malaysia, and Baku, seat of Azerbaijan's government. Anglo American took a controlling stake in De Beers last August, which helped lift underlying profits in its diamond business to $571m, more than double last year's $249m. Total diamond production rose 6% to 14.3m carats as a result of better grades of the precious stone from the Debswana mine in Botswana.

Cutifani, an Australian miner, is the chairman of De Beers, and is investors' great hope for turning round Anglo American, which has been scarred by violent labour unrest in South Africa, as well as falling behind rivals Rio Tinto and BHP Billiton. On Friday, he announced an overhaul of the business by scaling back its 10 units into six. Tony O'Neill has been poached from AngloGold Ashanti, to become Anglo American's technical director, leaving the management committee at 12: eleven men and one woman.

Samsung overtakes Apple as world's most profitable mobile phone maker

Apple has lost its status as the world's most profitable maker of mobile phones, with strong demand for Samsung's Galaxy handsets pushing the South Korean multinational into the financial lead for the first time.

The California company made an estimated $3.2bn (£2.1bn) profit from iPhone sales in the second quarter of the year, according to the research firm Strategy Analytics, a marked drop from $4.6bn a year ago and less than Samsung's estimated $5.2bn haul from both its basic models and smartphones in the same period.

While the high-priced iPhone was the engine that propelled Apple to become the world's most valuable company, its customers are no longer bent on owning the

latest model.

Healthy demand for the three-year-old iPhone 4, which is cheaper than the latest iPhone 5, has reduced the average selling price of its blockbuster device.

As smartphone ownership trickles down the income brackets in both western and emerging markets, Apple's margins have taken a hit. The company's latest financial results showed that the average selling price of an iPhone has fallen to $581, down from $613 in the first quarter.

The same trend has squeezed Samsung's handset profits, which are down from an estimated $5.6bn in the second quarter of 2012, but the strong performance of its flagship Galaxy S4 has, at least for now, put an end to Apple's four-year reign as the world's most profitable phone-maker.

"With strong volumes, high wholesale prices and tight cost controls, Samsung has finally succeeded in becoming the handset industry's largest and most profitable vendor," said Neil Mawston at Strategy Analytics.

"Apple is now under intense pressure to launch more iPhone models at cheaper price-points or with larger screens to fend off the surging competition and recapture lost profits in the second half of 2013."

Rather than producing new budget phones, Apple has relied on sales of its older models to reach more cost-conscious shoppers. But a change of strategy is rumoured: the chief executive, Tim Cook, is said to be considering a brand-new budget iPhone as part of a revamp of the company's product range planned for this autumn.

Across all brands around the world, the average price of a smartphone has plunged to $375 from $450 since the beginning of 2012, the research firm IDC estimates. With mobile phone networks cutting subsidies on handsets in the depressed economies of southern Europe, cheaper models by companies including LG and Sony are proving popular.

In China's fast-expanding smartphone market, homegrown brands including ZTE and Huawei are selling well.

The trend has helped Samsung widen its lead over Apple in the overall volume of handsets sold.

Apple's global smartphone market share has fallen from 17% to 14%, its lowest level for three years, while Samsung's edged up to 33%, Strategy Analytics' research shows. Samsung sold 76m smartphones in the quarter to June, more than twice Apple's 31m iPhones, and up from 49m in the same period a year ago. LG, ZTE and Huawei have all roughly doubled their worldwide shipments by unit.

Bank of England appoints Sir Jon Cunliffe as new deputy

The Bank of England has recruited one of the most influential figures during the 2008 banking crash to succeed Paul Tucker as head of the central bank's financial stability arm.

Sir Jon Culiffen, a career civil servant who worked closely with former chancellor Gordon Brown at the height of the financial crisis, will succeed Tucker as deputy governor. The 60-year-old is currently the UK's most senior diplomat in Brussels.

Bank of England governor Mark Carney said Cunliffe's experience during negotiations at G8 and G20 summits will prove invaluable as Threadneedle Street seeks to influence the implementation of European and international financial rules.

Cunliffe will also find himself at the centre of the highly charged debate over the regulation of the UK's high street banks and the City, where regulation from Brussels is having an increasing influence. He will be in charge of dealing with the banking sector, which has recently lobbied for the central bank to agree more relaxed lending rules, despite concerns that several financial institutions remain at risk from collapse.

Carney said: "I have been fortunate to have worked with Jon for over a decade on a wide variety of international issues at the G7, G20 and Financial Stability Board. He brings an important European and international perspective that will be vital in ensuring that the Bank of England can shape both the UK and international financial systems so that they effectively serve the needs of the real economy."

Bank of England watchers have expected a significant clear out of senior staff as Carney, who replaced Lord King as governor, attempts to update the institution and shed its fogey-ish image. Technically Cunliffe is appointed by the queen in a process overseen by the Treasury. Another deputy governor, Charlie Bean, will step down next year.

James Barty, head of financial policy at the Policy Exchange thinktank, was critical of the appointment. "After the imaginative appointment of Mark Carney it is disappointing that the government has appointed a career civil servant as deputy governor for financial stability at the Bank of England. The financial crisis demonstrated that knowledge of financial markets is vital for any central banker. This is a missed opportunity," Barty said.

Cunliffe, who will take up his post in October when Tucker quits to lecture at Harvard University, was not among the runners and riders upon whom speculation had focused once Tucker quit but is thought to be close to John Kingman, the senior Treasury official who sat on the interviewing panel.

His appointment immediately sparked speculation about the future of Andy Haldane, the outspoken and highly regarded executive director for financial stability – a role regarded as the deputy to Tucker. An advocate of the leverage ratio to rein in the risks of banks – a gauge which is unpopular with the industry – Haldane has expressed different views in public to the new governor Mark Carney.