The sight of J Sainsbury chief executive Mike Coupe singing "we're in the money" neatly sums up the dichotomy between those feeling the pinch from Brexit and those who aren't.
UK corporations have rarely been this flush. They reported record pretax profits in the first quarter, according to the Share Centre, a broker. Average revenue growth for members of the UK's benchmark FTSE 100 Index was 12.6 per cent last year, according to data compiled by Bloomberg - well ahead of comparable growth posted by peers in Japan, Germany, the US, and France. Chie executive pay, meanwhile, was up 25 per cent on average. All but one FTSE 100 CEO earned more than $1 million, whether their pay rose or fell.
This is not "despite" Brexit, but in large part because of it.
The pound's weakness, a by-product of sinking confidence in the economy after Brits voted in 2016 to leave the EU, has been a boon for companies based in the UK but which do a lot of business elsewhere.
Once you strip out the currency effect, many companies' performance looks less stellar. Caterer Compass' 15 per cent rise in sales in 2017 reduces to 4 per cent, industrial supplier Ashtead Group's 25 per cent rise becomes 10 per cent, and conglomerate Smiths Group's 22.5 per cent rise becomes a 3 per cent contraction.
About 30 percent of FTSE 100 companies' revenue comes from the US, according to Bloomberg estimates. It's even more, at 35 per cent, for the FTSE 250, although the data is patchier.
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All this serves to flatter performance, stock prices and, ultimately, make bonus targets easier to hit. Research by the CFA Institute shows earnings-per-share growth and total shareholder return are the most popular remuneration metrics for FTSE 350 firms and, while some companies make clear where currency effects are being excluded, others do not. UK pensions advisor PIRC says it has seen no firm adjust its executive remuneration targets to take sterling's weakness into account.
The rewards aren't being shared equally. The average Brit is faring less well. Again, not "despite" Brexit, but because of it.
The weak pound has raised the cost of imported goods - consumer price inflation climbed to 3.1 per cent in November 2017, the highest in five and a half years - while average pay has struggled to keep pace. There was zero growth in real wages in 2017, according to Office of National Statistics (ONS) figures.
And this came after a lost decade that saw UK real wages fall the most among OECD countries bar Greece. It's no surprise consumer confidence among Britons hit a four-year low in December. By April this year, retail sales had posted the sharpest decline since the British Retail Consortium began its survey in 1995. Brexit is no boon.
Some might say this is optically unfortunate, a blip that could be reversed at any time. These are exogenous factors, after all - shouldn't the smooth of currency moves be taken with the rough?
Perhaps, but the problem is that the truly economically damaging effects of the Brexit vote can’t be shrugged off. Pressure on the UK economy is likely to keep central bankers and politicians cautious; low interest rates and the extension of housing-market subsidies have kept first-time buyers off the property ladder and executives egregiously well-paid.
In the meantime, companies are being incentivized to invest elsewhere: the value of takeovers of UK companies by overseas buyers fell by a fifth in 2017 from the previous year.
That retreat is still producing money-making opportunities for those at the top: witness Walmart's decision to sell Asda to Sainsbury. The deal prompted Coupe to break out in song on UK television, but his staff and customers are wondering what the impact of lessened competition and fewer stores will be.
In this environment, investors and executives need to remember that not every Brexit trade is in the money.
Bloomberg
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.”
Bio:
Favourite Quote: Prophet Mohammad's quotes There is reward for kindness to every living thing and A good man treats women with honour
Favourite Hobby: Serving poor people
Favourite Book: The Alchemist by Paulo Coelho
Favourite food: Fish and vegetables
Favourite place to visit: London
Day 2, stumps
Pakistan 482
Australia 30/0 (13 ov)
Australia trail by 452 runs with 10 wickets remaining in the innings
Learn more about Qasr Al Hosn
In 2013, The National's History Project went beyond the walls to see what life was like living in Abu Dhabi's fabled fort:
The biog
Age: 32
Qualifications: Diploma in engineering from TSI Technical Institute, bachelor’s degree in accounting from Dubai’s Al Ghurair University, master’s degree in human resources from Abu Dhabi University, currently third years PHD in strategy of human resources.
Favourite mountain range: The Himalayas
Favourite experience: Two months trekking in Alaska
Need to know
The flights: Flydubai flies from Dubai to Kilimanjaro airport via Dar es Salaam from Dh1,619 return including taxes. The trip takes 8 hours.
The trek: Make sure that whatever tour company you select to climb Kilimanjaro, that it is a reputable one. The way to climb successfully would be with experienced guides and porters, from a company committed to quality, safety and an ethical approach to the mountain and its staff. Sonia Nazareth booked a VIP package through Safari Africa. The tour works out to $4,775 (Dh17,538) per person, based on a 4-person booking scheme, for 9 nights on the mountain (including one night before and after the trek at Arusha). The price includes all meals, a head guide, an assistant guide for every 2 trekkers, porters to carry the luggage, a cook and kitchen staff, a dining and mess tent, a sleeping tent set up for 2 persons, a chemical toilet and park entrance fees. The tiny ration of heated water provided for our bath in our makeshift private bathroom stall was the greatest luxury. A standard package, also based on a 4-person booking, works out to $3,050 (Dh11,202) per person.
When to go: You can climb Kili at any time of year, but the best months to ascend are January-February and September-October. Also good are July and August, if you’re tolerant of the colder weather that winter brings.
Do not underestimate the importance of kit. Even if you’re travelling at a relatively pleasant time, be geared up for the cold and the rain.
Herc's Adventures
Developer: Big Ape Productions
Publisher: LucasArts
Console: PlayStation 1 & 5, Sega Saturn
Rating: 4/5
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
Our legal columnist
Name: Yousef Al Bahar
Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994
Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
How tumultuous protests grew
- A fuel tax protest by French drivers appealed to wider anti-government sentiment
- Unlike previous French demonstrations there was no trade union or organised movement involved
- Demonstrators responded to online petitions and flooded squares to block traffic
- At its height there were almost 300,000 on the streets in support
- Named after the high visibility jackets that drivers must keep in cars
- Clashes soon turned violent as thousands fought with police at cordons
- An estimated two dozen people lost eyes and many others were admitted to hospital
Groom and Two Brides
Director: Elie Semaan
Starring: Abdullah Boushehri, Laila Abdallah, Lulwa Almulla
Rating: 3/5
Silent Hill f
Publisher: Konami
Platforms: PlayStation 5, Xbox Series X/S, PC
Rating: 4.5/5
