Property

Dana Gas proves to be bright spark on a muted market

CLOSING BELL: Dana Gas saw its shares climb in afternoon trading, while the Dubai index dropped to its lowest level in more than three months

Farah Halime

December 26, 2010

Energy giant Dana Gas was one of the few gainers in trading today as Dubai's main index dropped the most in more than three months.

The mood across the rest of the market was muted as the Christmas holiday season continued and the Dubai Financial Market (DFM) General Index fell 0.7 per cent to 1,619.39 points.

Dana Gas, which was one of the most traded stocks on the Abu Dhabi exchange with more than 20.7 million shares changing hands, closed 1.1 per cent up to 72 fils.

It is one of several UAE-based companies that could benefit from plans by Iraq's new central government to recognise contracts for oil and gas production in Iraqi Kurdistan.

The company's gains buoyed the Abu Dhabi Securities Exchange and the capital's main index fell marginally by 0.07 per cent to 2,704.08 points.

Etisalat, the UAE's largest company by market capitalisation, was the top loser at the open but closed flat at Dh10.80.

Property heavyweights dragged on the market as RAK Properties retreated 2.2 per cent to 44 fils and Aldar Properties closed flat at Dh2.26.

In Dubai, Emaar Properties fell 1.4 per cent to Dh3.42, Arabtec slumped 1 per cent to Dh1.94 and Deyaar Development dropped 2 per cent to 29 fils.

Kuwait-based investment company, Hits Telecom, a small-cap on the DFM, added 5.6 per cent to Dh1.13 and was the most traded stock by volume today.

China's decision to increase interest rates for the second time since mid-October has yet to have a reaction on global markets, which were closed.

Markets were largely positive elsewhere in the region: Oman rose 0.5 per cent to 6,753.62 points, Qatar increased 1.2 per cent to 8737.39 points, Kuwait gained 0.3 per cent to 6906.00 but the Saudi Tadawul All-Share slipped 0.08 per cent to 6,603.84 points.

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How to protect yourself when air quality drops

Install an air filter in your home.

Close your windows and turn on the AC.

Shower or bath after being outside.

Wear a face mask.

Stay indoors when conditions are particularly poor.

If driving, turn your engine off when stationary.

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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.”