The UAE’s credit profile reflects the country’s fiscal strength, its high per capita income and its political stability, according to Moody’s Investors Service.
In its annual credit analysis of the Arab world’s second-largest economy, the ratings agency said its stable outlook on the UAE's economy reflects its broadly balanced credit pressures. Its “baseline forecast assumes that nominal gross domestic product of the country will recover to pre-pandemic levels over the next three years”, the ratings agency said on Wednesday.
Moody's, which has an Aa2 rating on the country – its third-highest – said the UAE's economic strength is derived from its high income levels, resource endowment and competitiveness.
Its “moderately large size, abundant hydrocarbon reserves with low cost of extraction, vibrant non-oil economy and well-developed infrastructure”, are reflective of its economic strength, Moody’s credit analysts Thaddeus Best, Rafay Ahmad and David Rogovic, said.
“We have adjusted the UAE's [economic strength] score from the initial outcome of 'a2' [to 'aa3'] to reflect the country's exceptionally high wealth levels and its very large natural hydrocarbon endowment.”
This score is shared by Aaa-rated sovereigns such as the Netherlands or Sweden and it is one notch above that of its some oil-exporting peers in the GCC, they said.
At $63,590 in purchasing power parity terms, the UAE’s 2019 GDP per capita ranks as one of the highest among sovereigns rated by Moody’s.
“The country’s economy is also relatively large in nominal GDP terms – at $354 billion in 2020 – and ranks in the top quartile of the sovereigns we rate, pointing to above-average resilience to shocks,” Moody’s analysts said.
Moody's affirmed the UAE ratings earlier this month with a stable outlook on the back of the government's quick response to counter the Covid-19 pandemic, which it said did not materially affect its economy.
The UAE rolled out its mass Covid-19 inoculation programme last year, with almost 50 million tests conducted and in excess of 12 million vaccine doses administered since the pandemic began. With aggressive testing and a quick vaccination drive, the country has managed to reduce Covid-19 cases in the second wave, as opposed to parts of Europe, the Americas and India, where infection rates have risen.
The rapid rollout of the coronavirus vaccine in the UAE presents “upside” to Moody’s economic forecast, as “it could support a more rapid recovery in domestic tourism and provide a boost to the hospitality and retail sectors".
In a separate assessment, the ratings agency said Abu Dhabi’s credit profile – also Aa2 with a stable outlook – is reflective of the emirate’s balance sheet strength and its vast hydrocarbons reserves. Its fiscal strength remains resilient to shocks, it said.
"We expect Abu Dhabi’s fiscal strength will remain resilient to risks related to the pandemic," the analysts said.
Other simple ideas for sushi rice dishes
Cheat’s nigiri
This is easier to make than sushi rolls. With damp hands, form the cooled rice into small tablet shapes. Place slices of fresh, raw salmon, mackerel or trout (or smoked salmon) lightly touched with wasabi, then press, wasabi side-down, onto the rice. Serve with soy sauce and pickled ginger.
Easy omurice
This fusion dish combines Asian fried rice with a western omelette. To make, fry cooked and cooled sushi rice with chopped vegetables such as carrot and onion and lashings of sweet-tangy ketchup, then wrap in a soft egg omelette.
Deconstructed sushi salad platter
This makes a great, fuss-free sharing meal. Arrange sushi rice on a platter or board, then fill the space with all your favourite sushi ingredients (edamame beans, cooked prawns or tuna, tempura veggies, pickled ginger and chilli tofu), with a dressing or dipping sauce on the side.
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Real Betis v Sevilla, 10.45pm (UAE)
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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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