Markets

UAE and Saudi markets close lower on a slow day

The Dubai Financial Market General Index ended a second consecutive day of subdued trading 0.6 per cent lower at 3,531.79, with no traded share changing value by more than 0.2 per cent for the day.

John Everington

December 19, 2016

Shares in the UAE and Saudi Arabia closed lower on Monday in thin holiday trade, while Qatar’s headline index rose on better-than-expected budget forecasts for 2017.

European bourses were mixed on Monday afternoon, after the dollar weakened as traders booked profits from the currency’s recent bull run. The Euro Stoxx 50 was down by about 0.1 per cent in the late afternoon, as futures markets pointed towards a higher open for US stocks.

Oil prices strengthened on Monday, after a planned production rise by Libya failed to materialise. Brent crude futures were up two cents at $55.23 a barrel in the late afternoon.

The Dubai Financial Market General Index ended a second consecutive day of subdued trading 0.6 per cent lower at 3,531.79, with no traded share changing value by more than 0.2 per cent for the day.

Emaar Properties, DIB and Emirates NBD all ended lower, cancelling out gains by Damac properties and Du.

Volumes were higher in the capital, thanks to an uptick in trade in Methaq Takaful and Eshraq Properties.

The Abu Dhabi Securities Exchange General Index ended the day down by 0.4 per cent at 4,479.27, dragged lower by big names including Etisalat and ADCB.

FGB and Rakbank were the pick of a handful of gainers, both closing up by 0.1 per cent.

In Saudi Arabia, the Tadawul ended 0.8 per cent lower at 7,076.88, weighed down by Sabic and NCB.

Shares in Qatar led gains across the Arabian Gulf after the government predicted a smaller deficit in its budget forecasts for 2017.

The Qatar Exchange, which reopened on Monday after Sunday’s National Day holiday, ended the day up 0.5 per cent at 10,272.37, led by Industries Qatar and Qatari Investors Group.

jeverington@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.”