Macroeconomic stability and the growth-oriented vision of the UAE's leadership are enhancing the country's appeal as an investment destination amid global economic uncertainty, panellists said at the Abu Dhabi Finance Week.
The development of the future economy and digitisation is at the top of the agenda of policymakers in the Emirates as well as in the broader region, which has the potential to nurture and grow multiple global super apps and become home to more unicorns, panellists said.
“Having a stable government helps a lot in how people view 'investability',” Todd Leland, president at Goldman Sachs International, told delegates in Abu Dhabi.
“You can have a debate about investability around the globe, [but] not all markets are as investable in 2023, as they were five years ago, or even 10 years ago.”
The economic and policy transformation that is taking place in Abu Dhabi, the UAE and the Middle East is another attraction for international investors, he said.
“I think the other thing is a transformation that's under way, if you look in particular in this region, and focus on Abu Dhabi for a second, the initiatives that are under way, the Vision 2030, the entrepreneurial nation programme, the SME programme … these are significant programmes that move an economy and move a market that people love to invest in,” Mr Leland said.
From a global lens, inflation, higher energy prices, geopolitical uncertainty and the rising interest rates are all posing headwinds, Mr Leland said.
The International Monetary Fund cut its global growth forecast for 2023 and warned of a cost-of-living crisis as the world's economy continues to be affected by the war in Ukraine, broadening inflation pressures and a slowdown in China.
The fund maintained its global economic estimate for this year at 3.2 per cent but downgraded next year’s forecast to 2.7 per cent — 0.2 percentage points lower than the July forecast.
Middle East and Central Asia economies are forecast to grow 5 per cent this year before decelerating to 3.6 per cent in 2023, after expanding 4.5 per cent in 2021, the fund said earlier this month.
Economies in the oil-rich bloc of GCC are projected to grow 6.9 per cent this year and their economic output is estimated to reach about $2 trillion in 2022, according to the World Bank.
The UAE economy, which bounced back strongly in 2021, is estimated to expand 5.4 per cent in 2022, according to the UAE Central Bank.
Emirates NBD, Dubai’s biggest lender, expects the economy to expand 7 per cent in 2022, setting up the country for its fastest annual expansion since 2011, when output grew by 6.9 per cent.
“We see a world of uncertainty”, but it is “really nice to be here in a place that's far more stable,” Mr Leland said.
“[Here] you see a region that is going to be significantly differentiated from some of those uncertainties around the world.”
Digitisation and the development of the FinTech sector as part of the UAE’s future economy agenda are top policy priorities for the UAE.
Both Abu Dhabi and Dubai have developed several programmes and regulations to further boost the FinTech sector and integrate the metaverse into the UAE's economy and society.
Over the past few years, the FinTech sector has evolved “substantially in the developed markets”. However, more recently, the pace of growth has picked up in emerging markets “more so in the Middle East, with UAE as the cradle, an accelerator” for FinTech growth, Dr Samer Haj-Yehia, chairman of Israel’s Bank Leumi told delegates.
“We have a number of factors that will keep this momentum going on. We have a stable economy, one of the few in the world that have double surplus in the government budget and the current account and over 5 per cent growth,” he said.
The push to innovation and digitisation, a fast developing start-up ecosystem and a young, mobile phone savvy population will also help the growth of the sector in the region.
“The Middle East, especially this part of the region, I consider it as a ‘blue ocean’ for investment, especially in the finance sphere,” Dr Haj-Yehia said.
“I think the Middle East is going to be the future of FinTech and I expect that super apps will come out of here and it's going to be a thriving economy, as well as a thriving banking system.”
The region has already seen unicorns emerging from the start-up ecosystem and there is potential for more in the UAE, be it banking as a service, buy now pay later or cybersecurity spaces.
“Together, you're going to have a number of unicorns coming up and the super apps for the region,” he said.
“So there is no reason why … not to have all of that scaled up throughout the entire region.”
The more serious side of specialty coffee
While the taste of beans and freshness of roast is paramount to the specialty coffee scene, so is sustainability and workers’ rights.
The bulk of genuine specialty coffee companies aim to improve on these elements in every stage of production via direct relationships with farmers. For instance, Mokha 1450 on Al Wasl Road strives to work predominantly with women-owned and -operated coffee organisations, including female farmers in the Sabree mountains of Yemen.
Because, as the boutique’s owner, Garfield Kerr, points out: “women represent over 90 per cent of the coffee value chain, but are woefully underrepresented in less than 10 per cent of ownership and management throughout the global coffee industry.”
One of the UAE’s largest suppliers of green (meaning not-yet-roasted) beans, Raw Coffee, is a founding member of the Partnership of Gender Equity, which aims to empower female coffee farmers and harvesters.
Also, globally, many companies have found the perfect way to recycle old coffee grounds: they create the perfect fertile soil in which to grow mushrooms.
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
How much sugar is in chocolate Easter eggs?
- The 169g Crunchie egg has 15.9g of sugar per 25g serving, working out at around 107g of sugar per egg
- The 190g Maltesers Teasers egg contains 58g of sugar per 100g for the egg and 19.6g of sugar in each of the two Teasers bars that come with it
- The 188g Smarties egg has 113g of sugar per egg and 22.8g in the tube of Smarties it contains
- The Milky Bar white chocolate Egg Hunt Pack contains eight eggs at 7.7g of sugar per egg
- The Cadbury Creme Egg contains 26g of sugar per 40g egg
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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.”
