The UAE Central Bank and the Hong Kong Monetary Authority have agreed to boost co-operation to allow financial institutions and corporations from the two jurisdictions to step up exchanges and strengthen business ties.
The regulators will work together to improve their financial infrastructure, financial market connectivity and virtual asset regulations and developments, the Central Bank said.
The two sides, which held discussions in Abu Dhabi on Monday, are setting up a working group with the support of banking sector stakeholders in both jurisdictions to monitor the progress of the agreed initiatives.
During the day-long conference in the UAE capital, they also arranged discussions between their respective innovation centres on joint FinTech development initiatives and knowledge-sharing projects.
“We look to build on our central banks’ existing and robust relations,” said Central Bank Governor Khaled Balama.
The two sides have discussed ways to boost collaboration across several “important areas”, including opportunities for growth in digitalisation and technological advancements, he said.
“We look forward to a long-standing engagement with the HKMA and the Hong Kong financial services sector more broadly, and we will continue collaborating with and exchanging knowledge.”
The discussions have provided a “platform” for banks and financial institutions, as well as major corporations in both Hong Kong and the UAE to strengthen business and financial ties, HKMA chief executive Eddie Yue said.
“Hong Kong and the UAE are two financial centres sharing many complementary strengths and mutual interests, and there is much room for market participants from these two places to work together and build up the connectivity.”
Following the meeting, central bankers joined senior executives from the UAE and Hong Kong banks at a seminar that discussed how businesses in the Emirates could take advantage of Hong Kong to gain access to Asia and mainland markets, as well as investment and capital markets opportunities in China's Greater Bay Area.
Executives from banks such as First Abu Dhabi Bank, Abu Dhabi Islamic Bank, Emirates NBD, the Industrial and Commercial Bank of China, Bank of China, HSBC and Standard Chartered also discussed more efficient cross-border payments and trade settlements using the Chinese yuan.
The Hong Kong opportunity is compelling and a gateway to China as it operates under a “two markets, one-system structure”, and the yuan can be used for international contracts, given the same structure, panelists said.
The Chinese currency is gaining importance in international trade as the yuan’s share of global trade settlements continues to grow.
The Standard Chartered Renminbi Globalisation Index (RGI), the UK bank’s proprietary measure of international yuan usage, rose 26.6 per cent in 2022, topping the 18.5 per cent growth recorded in 2021, the lender said in a recent research note.
The yuan's increasing popularity in the settlement of international trade deals signifies its growing importance in the global financial system.
In 2022, 42.1 trillion yuan ($6.1 trillion) worth of the country’s cross-border payments and receipts were settled in the Chinese currency, up 15 per cent from the previous year, marking the fifth straight annual increase, Chinese news website Caixin global reported, citing a February report by the People’s Bank of China.
The UAE, the Arab world’s second-largest economy, is home to two onshore financial centres – the Abu Dhabi Global Market and the Dubai International Financial Centre.
The Central Bank's efforts to explore new opportunities with regulators in Hong Kong, the world’s fourth-largest financial centre, can help the two financial hubs take advantage of their strengths.
“More importantly, given that China is also one of the largest trading partners in the Arab world, the collaboration will drive the UAE’s ambition to be a regional payment and treasury hub that serves neighbouring countries,” the Central Bank said.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Results
5.30pm: Maiden (TB) Dh82,500 (Turf) 1,400m; Winner: Mcmanaman, Sam Hitchcock (jockey), Doug Watson (trainer)
6.05pm: Handicap (TB) Dh87,500 (T) 1,400m; Winner: Bawaasil, Sam Hitchcott, Doug Watson
6.40pm: Handicap (TB) Dh105,000 (Dirt) 1,400m; Winner: Bochart, Fabrice Veron, Satish Seemar
7.15pm: Handicap (TB) Dh105,000 (T) 1,200m; Winner: Mutaraffa, Antonio Fresu, Musabah Al Muhairi
7.50pm: Longines Stakes – Conditions (TB) Dh120,00 (D) 1,900m; Winner: Rare Ninja, Royston Ffrench, Salem bin Ghadayer
8.25pm: Zabeel Trophy – Rated Conditions (TB) Dh120,000 (T) 1,600m; Winner: Alfareeq, Antonio Fresu, Musabah Al Muhairi
9pm: Handicap (TB) Dh105,000 (T) 2,410m; Winner: Good Tidings, Antonio Fresu, Musabah Al Muhairi
9.35pm: Handicap (TB) Dh92,500 (T) 2,000m; Winner: Zorion, Abdul Aziz Al Balushi, Helal Al Alawi
