To many in the UK, Dubai is best known as a tourism and entertainment hub, perhaps a good bet for some winter sun. Its role as a leading global trading centre is less well known. However, it is the latter aspect of Dubai which is, we think, both the most important and interesting part of its story.
Global ports operator “DP World” epitomises this element of Dubai. Having begun with one asset in Dubai in 1972, the company today operates 78 terminals across 40 countries. In 2016, it handled 64 million TEU (twenty-foot equivalent units), the ubiquitous, work-horse containers of global trade.
We like this company, not least for its core role in Dubai, and its strong global diversification. Its long end bonds have this year performed particularly strongly. However, for the general observer, it is DP World’s experience of and take on global trade that is most interesting.
Yesterday, the company reported its first half results, and the read-across is solid. Firstly, consolidated volumes of TEU were up by +4.7% YoY on a like for like basis. Secondly, performance in the company’s three major regions was healthy. In the Middle East, Europe, and Africa, volumes increased +4.2% YoY, driven by the UAE and the UK. In Asia Pacific and the Indian Subcontinent, volumes increased a respectable +2.9% YoY. Finally, in Australia and the Americas, volumes gained +13.5% YoY, driven by the latter region.
This sound performance is, importantly, expected to be maintained in the second half of the year. This augurs well for both emerging and developed economies, and also serves to highlight, once again, Dubai’s under-appreciated role as a key link in global trade.