Food and soft drink costs fell in November. Mona Al Marzooqi / The National
Food and soft drink costs fell in November. Mona Al Marzooqi / The National

Business

UAE inflation falls for first time in six months

Clothing and textiles inflation recorded the biggest month-on-month decrease, falling by 1.6 per cent, data from the UAE's National Bureau of Statistics showed.

Adam Bouyamourn

December 28, 2014

UAE inflation slowed in November for the first time since April as food costs fell, data from the UAE’s National Bureau of Statistics showed yesterday.

Annualised inflation dipped from 3.11 per cent to 2.82 per cent – the first decrease for six months.

Clothing and textiles inflation recorded the biggest month-on-month decrease, falling by 1.6 per cent. Food and soft drink inflation fell by 1.43 per cent.

The prices of 500 staple food products would be frozen across 2015, the government announced at the end of November. Clothing and food account for about 20 per cent of the UAE’s consumer price inflation basket.

Housing costs rose at an annual rate of 4.35 per cent in November, up from 4.17 per cent in October, while furniture and household goods increased by 4.71 per cent – up from 4.57 per cent last month. Housing cost inflation has outstripped the national rate of inflation continuously this year.

It is the highest rate of increase since the 2009 real estate crash – but experts believe that the national statistics lag actual housing market trends by several months. A range of government measures, including restrictions on mortgages and off-plan sales, and increases in transaction fees were implemented this year in a bid to slow house price growth.

According to figures available from the real estate consultancies Cluttons and JLL, average Dubai freehold rents fell 0.4 per cent in the three months to September, while Abu Dhabi rents remained constant in the third quarter.

Abu Dhabi commercial rents rose by 6 per cent in the third quarter, while the outlook for Dubai commercial rents remained variable, with prime office space set to increase in price and outlying commercial properties set to charge lower rents.

Meanwhile, monthly figures from Dubai showed inflation in the emirate slowing to an annualised 4.15 per cent in November, down from 4.38 per cent the previous month. Abu Dhabi registered annualised price increases of 3.7 per cent in November.

UAE inflation is expected to average 2.5 per cent in 2014, according to a Reuters poll of economists in September, before increasing to 3 per cent in 2015. The IMF expects inflation of 2.2 per cent this year, and 2.5 per cent next year.

The average inflation rate in 2014 up to December was 2.3 per cent.

abouyamourn@thenational.ae

Uefa Nations League: How it Works

The Uefa Nations League, introduced last year, has reached its final stage, to be played over five days in northern Portugal. The format of its closing tournament is compact, spread over two semi-finals, with the first, Portugal versus Switzerland in Porto on Wednesday evening, and the second, England against the Netherlands, in Guimaraes, on Thursday.

The winners of each semi will then meet at Porto’s Dragao stadium on Sunday, with the losing semi-finalists contesting a third-place play-off in Guimaraes earlier that day.

Qualifying for the final stage was via League A of the inaugural Nations League, in which the top 12 European countries according to Uefa's co-efficient seeding system were divided into four groups, the teams playing each other twice between September and November. Portugal, who finished above Italy and Poland, successfully bid to host the finals.

Tomorrow 2021

The Kites

Romain Gary

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Launched: 2016

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Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.

 

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Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse

 

Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth

 

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COMPANY%20PROFILE
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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.”

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Name: Hassan Mohsen Elhais

Position: legal consultant with Al Rowaad Advocates and Legal Consultants.