UAE to benefit from China’s One Belt, One Road programme



The UAE has come a long way from its origins as a pearling industry centre in the 19th and early 20th centuries. In just over four decades, our nation has taken a giant leap forward to become what it is today: an entrepreneurial success story with world-class infrastructure.

Within the big picture of this success story, Abu Dhabi has become the bedrock for industrialisation and trade, not only in the UAE, but across the region. If we zoom in even farther, within the emirate, our progress in the trade and maritime ports sectors – Khalifa Port has now established itself as the world’s second-fastest growing container port – as well as Khalifa Industrial Zone and the recently launched Khalifa Port Free Trade Zone, that collectively stand as living testimony to this.

In this context, few projects have attracted more attention or expectation from the trade industry than the proposed Belt and Road Initiative – also known as One Belt, One Road – launched four years ago by the Chinese president Xi Jinping. The scale of its infrastructure programme is a feast in itself. According to McKinsey, it could potentially cover 65 per cent of the world’s population, one-third of global GDP and a quarter of all the goods and services in the international economy.

The ambition of this initiative, going from the physical road (“the Belt”) to its 21st-century maritime and shipping leg (“the Road”), goes far beyond creating huge physical connections between East and West. As Mckinsey also says: “It aims to create the world’s largest platform for economic cooperation, including, trade and financing collaboration, and social and cultural cooperation”.

Coming on the heels of the Belt and Road Forum for International Cooperation, hosted by the Chinese government in May, there is new momentum as the Belt and Road enters a more detailed development and delivery stage. This momentum will benefit the already strong bilateral relationships between the UAE and China.

China is the UAE's second largest trading partner. As part of Beijing's drive to forge closer commercial and political ties with the Middle East, our countries established last year a US$10 billion joint investment fund, the UAE-China Joint Investment Fund, managed by Mubadala Capital's sovereign investment partnership team.
Last September, China's Cosco Shipping Ports announced the establishment of a dedicated container terminal at Khalifa Port.

The new terminal, currently under construction, will enhance the UAE and Abu Dhabi's role as a key logistics and trading hub and will also serve to further diversify the UAE's dynamic and growing economy.
The terminal is expected to almost double Khalifa Port's capacity in container transportation by adding 2.4 million TEU a year to Khalifa Port's existing capacity of 2.5 million.

As good news never comes alone, under the umbrella of the UAE-China Trade Fund, the emirate of Abu Dhabi, through Abu Dhabi Ports, and Jiangsu Province will mark another major milestone that will be announced soon, deepening trade links between the two countries and rapidly accelerating the potential of maritime trade as part of the Belt and Road Initiative.

Located just north-west of Shangai, the Jiangsu  province’s history and development has been closely linked to silk production. Since the times of the Silk Road, Jiangsu Province has been a commercial, political and cultural centre. Today, it is one of the wealthiest provinces in China with a GDP comparable to that of Switzerland, and is a hub for electronic equipment, chemicals and textiles.

Beyond any short-term commercial opportunities, the UAE’s and China’s long-tem economic agendas have common touch points. China is becoming a leader in renewable energy, while the UAE is actively diversifying its economy to prepare for the post-oil era.

Moving forward, the ambition is to focus less on fossil fuel and more on manufactured imports and high-tech joint ventures in sectors like financial services, real estate and renewable energy.

Both our countries have been blessed with a strong foundation for success. Although our stories differ, it is the same vision and dynamism, the same ambition to overcome obstacles, which brings us together.

Our ambition is to become a linchpin of the Belt and Road Initiative. From our side, Khalifa Port, Khalifa Port Free Trade Zone and Kizad are ready to take centre stage, creating access to new markets, bringing innovation and new products and services for the UAE, and delivering on the potential of our shipping, industrial and logistics industry.

Captain Mohamed Juma Al Shamisi is the chief execuive of Abu Dhabi Ports

COMPANY PROFILE

Company name: Almouneer
Started: 2017
Founders: Dr Noha Khater and Rania Kadry
Based: Egypt
Number of staff: 120
Investment: Bootstrapped, with support from Insead and Egyptian government, seed round of
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FFP EXPLAINED

What is Financial Fair Play?
Introduced in 2011 by Uefa, European football’s governing body, it demands that clubs live within their means. Chiefly, spend within their income and not make substantial losses.

What the rules dictate? 
The second phase of its implementation limits losses to €30 million (Dh136m) over three seasons. Extra expenditure is permitted for investment in sustainable areas (youth academies, stadium development, etc). Money provided by owners is not viewed as income. Revenue from “related parties” to those owners is assessed by Uefa's “financial control body” to be sure it is a fair value, or in line with market prices.

What are the penalties? 
There are a number of punishments, including fines, a loss of prize money or having to reduce squad size for European competition – as happened to PSG in 2014. There is even the threat of a competition ban, which could in theory lead to PSG’s suspension from the Uefa Champions League.

How to play the stock market recovery in 2021?

If you are looking to build your long-term wealth in 2021 and beyond, the stock market is still the best place to do it as equities powered on despite the pandemic.

Investing in individual stocks is not for everyone and most private investors should stick to mutual funds and ETFs, but there are some thrilling opportunities for those who understand the risks.

Peter Garnry, head of equity strategy at Saxo Bank, says the 20 best-performing US and European stocks have delivered an average return year-to-date of 148 per cent, measured in local currency terms.

Online marketplace Etsy was the best performer with a return of 330.6 per cent, followed by communications software company Sinch (315.4 per cent), online supermarket HelloFresh (232.8 per cent) and fuel cells specialist NEL (191.7 per cent).

Mr Garnry says digital companies benefited from the lockdown, while green energy firms flew as efforts to combat climate change were ramped up, helped in part by the European Union’s green deal. 

Electric car company Tesla would be on the list if it had been part of the S&P 500 Index, but it only joined on December 21. “Tesla has become one of the most valuable companies in the world this year as demand for electric vehicles has grown dramatically,” Mr Garnry says.

By contrast, the 20 worst-performing European stocks fell 54 per cent on average, with European banks hit by the economic fallout from the pandemic, while cruise liners and airline stocks suffered due to travel restrictions.

As demand for energy fell, the oil and gas industry had a tough year, too.

Mr Garnry says the biggest story this year was the “absolute crunch” in so-called value stocks, companies that trade at low valuations compared to their earnings and growth potential.

He says they are “heavily tilted towards financials, miners, energy, utilities and industrials, which have all been hit hard by the Covid-19 pandemic”. “The last year saw these cheap stocks become cheaper and expensive stocks have become more expensive.” 

This has triggered excited talk about the “great value rotation” but Mr Garnry remains sceptical. “We need to see a breakout of interest rates combined with higher inflation before we join the crowd.”

Always remember that past performance is not a guarantee of future returns. Last year’s winners often turn out to be this year’s losers, and vice-versa.


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