Markets

Online broker ActivTrades sees new Dubai office as a game changer

ActivTrades’ office in the Dubai International Financial Centre (DIFC), the company’s fourth globally, will cater to the Middle East as well as the wider Asian markets.

Dania Saadi

March 01, 2017

London-based broker ActivTrades is looking to substantially build on its client base this year after opening an office in Dubai, as regional investors look to diversify their portfolios in the wake of low oil prices, a company official said on Wednesday.

ActivTrades’ office in the Dubai International Financial Centre (DIFC), the company’s fourth globally, will cater to the Middle East as well as the wider Asian markets, according to Georges Batrouni, the company’s Middle East manager.

The company said its clientele increased by 60 per cent last year from 2015.

“The office being in Dubai, we are expecting it to be a game changer,” said Mr Batrouni.

Opening an office in Dubai is beneficial because it is regulated by the Dubai Financial Services Authority, the DIFC’s regulator. ActivTrades began operating in the region in 2012, serving clients from London.

About 80 to 90 per cent of its clients are retail investors and 25 per cent of the total are clients from the UAE, including locals and expatriates. Saudi Arabia is the second-biggest client source.

ActivTrades offers its products and services on its own platform and the Meta traders platforms, with access to trading currencies, commodities and contract for difference (CFDs), which are products that give clients exposure to indexes and shares.

Clients in the region tend to like trading in oil, gold and currencies.

Its business has benefited from oil price rout as investors have sought to diversify their portfolios.

“We heard a lot about a slowdown in the region due to lower oil prices. This did not reflect at all on our activity,” said Mr Batrouni. “On the contrary, for example, if local shares here are not doing very well, traders will look to European or American shares to diversify.”

dalsaadi@thenational.ae

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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.”