The shares of Amazon ended 2017 with a rise of 52.8 per cent, taking its market value to US$571 billion and the fortune of Jeff Bezos, its founder and chairman, through the $100bn mark. That means he made $33bn, or over $600 million a week, in 2018 alone and now ranks number one on the Bloomberg index of the richest people on earth.
But, he is not yet the richest in history: Bill Gates holds that honour. Gates, still only 62, has a current net worth of $86.8bn , but his fortune would top $150bn if he hadn't given away almost 700 million Microsoft shares and $2.9bn of cash and other assets to charity since 1996.
Unlike both Gates and the world's third-richest man, Warren Buffett, Bezos has so far given relatively little of his fortune to charity - $500m (at current prices) – since 2002. But he is just starting out: in June last year he tweeted a request for ideas on how to help people and, no doubt, has been inundated since. He also said that he has been selling $1bn of his Amazon stock every year to fund his space business, Blue Origin, which I suppose will benefit human-kind at some point on its journey through space.
Bezos's fortune has come with such alarming speed that he did not have much time to adopt a new philanthropic career. In 2014, Amazon shares went through $400 level for the first time, $600 year later, then $1,000 and have opened 2018 at $1169.
Compare that to Buffett who hit some milestones of his own in the past year.
Almost exactly 55 years ago this week, Buffett bought his first shares in Berkshire Hathaway for $7.50 each. Those same shares are now above the $300,000-level, up 20 per cent over the year, and – if you really want to do the calculation – by four million per cent since he first bought them. Analysts reckon that President Trump’s proposed 20 per cent corporate tax rate will add about $27bn, or 9 per cent, to the book value of Berkshire.
In his typically quirky way, Buffett refuses to split the shares so they now officially rank as the most expensive publicly traded equity in the US -- and probably the world although I haven’t been able to measure that.
Buffett still owns 17 per cent of Berkshire stock, which is valued at $85bn. He originally owned 30 per cent, so he, like Gates, would top Bezos' fortune comfortably if he had been less philanthropic.
The Sage of Omaha, as he is known to his millions of admirers – more like disciples to their investment god – has made the price of his stock something of a fetish. For years, he has argued that splitting the shares would attract "the wrong kind of investor" who would see it as "a worthwhile reason to invest in the company". In fact, it has turned into a reason to do precisely the opposite and even Buffett himself regards the share price as an accomplishment by itself.
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“I can gear my life by the price of Berkshire,” he told his biographer Alice Shroeder in Snowball in 2008.
When he first began buying the shares, it was a struggling textile company; today it is a massive conglomerate that runs a railroad, power plants, trucking companies, car dealerships, real estate brokers, jewellery stores and much more.
Two years ago it bought the HJ Heinz company, one of the pillars of Pittsburgh for more than 150 years, and at the low point of the banking crisis in 2008, it saved the day by investing $5bn in Goldman Sachs’ stock – on which it has shown a huge profit since, even if that wasn’t the reason Buffett bought them at the time. If Goldman had gone down, then so would the whole banking system.
As always, he is setting a trend on Wall Street. High stock prices are increasingly regarded as a status symbol and share splits among companies in the S&P 500 have fallen sharply in recent years. In 2017 the Google parent Alphabet and an insurance company that is often compared to Berkshire, Markel Corporation, saw their share prices go through the $1,000 mark for the first time. Bezos’s Amazon has now joined that exclusive club too and it will be interesting to see if he follows the Buffett road.
For students of the world’s wealthiest people – and it is always an interesting exercise in identifying where the real economic power lies – the action is now in China.
The wealth of the property tycoon Hui Ka-yan soared by $32.7bn last year, almost as much as Bezos's, according to Forbes magazine, making the Evergrande chair China's richest man with a total net worth of almost $43bn. Pony Ma, founder of the tech giant Tencent, is number two with a net worth of $39bn, up 60 per cent in 2017; Alibaba's Jack Ma has held on to his number two place with a fortune of $38.6bn. Wang Jianlin, last year's richest Chinese, saw his fortune slashed from $33bn to $25bn, dropping him to fourth in the list.
It will be interesting to watch how they perform in 2018. But I would put my money on one of them at least taking Bezos's crown away within the next few years.
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.”
Du Football Champions
The fourth season of du Football Champions was launched at Gitex on Wednesday alongside the Middle East’s first sports-tech scouting platform.“du Talents”, which enables aspiring footballers to upload their profiles and highlights reels and communicate directly with coaches, is designed to extend the reach of the programme, which has already attracted more than 21,500 players in its first three years.
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Russia's Muslim Heartlands
Dominic Rubin, Oxford
Two-step truce
The UN-brokered ceasefire deal for Hodeidah will be implemented in two stages, with the first to be completed before the New Year begins, according to the Arab Coalition supporting the Yemeni government.
By midnight on December 31, the Houthi rebels will have to withdraw from the ports of Hodeidah, Ras Issa and Al Saqef, coalition officials told The National.
The second stage will be the complete withdrawal of all pro-government forces and rebels from Hodeidah city, to be completed by midnight on January 7.
The process is to be overseen by a Redeployment Co-ordination Committee (RCC) comprising UN monitors and representatives of the government and the rebels.
The agreement also calls the deployment of UN-supervised neutral forces in the city and the establishment of humanitarian corridors to ensure distribution of aid across the country.
TEACHERS' PAY - WHAT YOU NEED TO KNOW
Pay varies significantly depending on the school, its rating and the curriculum. Here's a rough guide as of January 2021:
- top end schools tend to pay Dh16,000-17,000 a month - plus a monthly housing allowance of up to Dh6,000. These tend to be British curriculum schools rated 'outstanding' or 'very good', followed by American schools
- average salary across curriculums and skill levels is about Dh10,000, recruiters say
- it is becoming more common for schools to provide accommodation, sometimes in an apartment block with other teachers, rather than hand teachers a cash housing allowance
- some strong performing schools have cut back on salaries since the pandemic began, sometimes offering Dh16,000 including the housing allowance, which reflects the slump in rental costs, and sheer demand for jobs
- maths and science teachers are most in demand and some schools will pay up to Dh3,000 more than other teachers in recognition of their technical skills
- at the other end of the market, teachers in some Indian schools, where fees are lower and competition among applicants is intense, can be paid as low as Dh3,000 per month
- in Indian schools, it has also become common for teachers to share residential accommodation, living in a block with colleagues
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Killing of Qassem Suleimani
Zayed Sustainability Prize
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Engine: 4.0-litre V8 twin-turbocharged and three electric motors
Power: Combined output 920hp
Torque: 730Nm at 4,000-7,000rpm
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On sale: Now, deliveries expected later in 2025
Price: expected to start at Dh1,432,000
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Engine: 6.75-litre twin-turbocharged V12 petrol engine
Power: 420kW
Torque: 780Nm
Transmission: 8-speed automatic
Price: From Dh1,350,000
On sale: Available for preorder now
