A woman withdraws money from an ATM at a fortified local branch of the Banque du Liban et D'Outre Mer (BLOM) in the Lebanese capital Beirut on May 14. Patrick Baz / AFP
A woman withdraws money from an ATM at a fortified local branch of the Banque du Liban et D'Outre Mer (BLOM) in the Lebanese capital Beirut on May 14. Patrick Baz / AFP
A woman withdraws money from an ATM at a fortified local branch of the Banque du Liban et D'Outre Mer (BLOM) in the Lebanese capital Beirut on May 14. Patrick Baz / AFP
Several factors influence people’s financial decisions, with their emotional state playing a significant role. Behavioural economics offers us insights into what informs economic transactions. Almost always, these are related to how a person feels.
Fear is a natural and defining human emotion that is aggravated during times of socioeconomic challenges, such as those triggered by the pandemic. Fear is an instinctive and natural response to external influences.
The economy has been structured to build this fear of the unknown in people. For the most part, fear ensures the continuity of life and the survival of humanity. It encourages us to remain cautious and shield ourselves from potential losses or missteps.
The insurance and takaful sector, for instance, allows people to make low-risk investments to overcome this uncertainty and enjoy a sense of security against major losses.
A heightened degree of fear could, however, potentially cause harm, especially in the long run. Extreme feelings of concern or fear can be an obstacle in humanity’s progress and its pursuit of growth. Disruptive and innovative technologies and practices often trigger emotions such as fear and uncertainty.
A woman photographs a vandalised ATM machine in the Lebanese capital Beirut, January 15. Anwar Amro / AFP
For example, open banking services are a relatively new tool that encourage financial inclusion through disrupting the status quo in the banking and finance industries. Open banking requires financial institutions and tech companies to work hand in hand in order to facilitate transactions between financiers and customers via digital channels.
However, legalising these transactions and increasing people’s awareness about them is a relatively slow process. Customers have a number of security concerns with regard to money laundering and cyberattacks, and such fears could ultimately limit the potential and utilisation of open banking transactions.
UAE investors prefer to preserve their wealth in cash, according to a survey by global wealth manager UBS. Ryan Carter / The National
Modern technologies, such as the 5G networks that hold the potential to eliminate bureaucracy in government as well as other sectors, can increase efficiency and accelerate accomplishments, but they often spark concerns over their impact on cyber security, the environment and public health.
As a rule, we find such concerns increase in challenging times. However, we need to remember that this is a good opportunity for us to learn to be more flexible and align our systems to create a modern, responsive legal framework as opposed to one mired in legacy issues.
In the present scenario, central banks should take the responsibility for the legitimate feelings of fear in the community
The ability of any country’s legislative system to identify the pros and cons and anticipate likely scenarios of misuse of new practices is a strong factor in leveraging the power of innovation.
Central banks play a vital role in the success of a country’s financial transactions as they are responsible for legislation and for legalising systems and processes. It is time that these institutions take into consideration innovative approaches that can help alleviate the impact of the current circumstances. Some examples include online financial transactions that allow a third party to mediate between a financier and a customer, high speed communication technologies and large data storage capabilities.
We must remember that a variety of decades-old practices – such as traditional banking infrastructures that require in-person transactions – are likely to become obsolete in a few years.
In the absence of established practices, and by introducing new channels and technologies without a suitable legislative system to protect rights and guarantee accountability can lead to disastrous consequences.
In the present scenario, central banks should take the responsibility for the legitimate feelings of fear in the community, and realise that it is the adaptability and resilience of a country to cope with change that ensures the financial and economic success of its markets.
They must also ensure these changes go together with large-scale public awareness campaigns to educate stakeholders and address their concerns over new frameworks, how they bring value to society and how to make optimal use of them.
Fear and uncertainty are widespread during these times. But with careful planning, constant innovation and investment in the right resources we can steer our economies into the recovery phase and come out stronger.
Mohammed Alardhi is executive chairman of Investcorp, chairman of Bank Sohar and was longest-serving Omani head of the Royal Air Force of Oman
Family: I have three siblings, one older brother (age 25) and two younger sisters, 20 and 13
Favourite book: Asking for my favourite book has to be one of the hardest questions. However a current favourite would be Sidewalk by Mitchell Duneier
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What do you love eating or cooking: I’m constantly in the kitchen. Ever since I changed the way I eat I enjoy choosing and creating what goes into my body. However, nothing can top home cooked food from my parents.
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.”
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
A comparison of sending Dh20,000 from the UAE using two different routes at the same time - the first direct from a UAE bank to a bank in Germany, and the second from the same UAE bank via an online platform to Germany - found key differences in cost and speed. The transfers were both initiated on January 30.
Route 1: bank transfer
The UAE bank charged Dh152.25 for the Dh20,000 transfer. On top of that, their exchange rate margin added a difference of around Dh415, compared with the mid-market rate.
Total cost: Dh567.25 - around 2.9 per cent of the total amount
Total received: €4,670.30
Route 2: online platform
The UAE bank’s charge for sending Dh20,000 to a UK dirham-denominated account was Dh2.10. The exchange rate margin cost was Dh60, plus a Dh12 fee.
Total cost: Dh74.10, around 0.4 per cent of the transaction
Total received: €4,756
The UAE bank transfer was far quicker – around two to three working days, while the online platform took around four to five days, but was considerably cheaper. In the online platform transfer, the funds were also exposed to currency risk during the period it took for them to arrive.
The idea of pound parity now seems less far-fetched as the risk grows that Britain may split away from the European Union without a deal.
Rupert Harrison, a fund manager at BlackRock, sees the risk of it falling to trade level with the dollar on a no-deal Brexit. The view echoes Morgan Stanley’s recent forecast that the currency can plunge toward $1 (Dh3.67) on such an outcome. That isn’t the majority view yet – a Bloomberg survey this month estimated the pound will slide to $1.10 should the UK exit the bloc without an agreement.
New Prime Minister Boris Johnson has repeatedly said that Britain will leave the EU on the October 31 deadline with or without an agreement, fuelling concern the nation is headed for a disorderly departure and fanning pessimism toward the pound. Sterling has fallen more than 7 per cent in the past three months, the worst performance among major developed-market currencies.
“The pound is at a much lower level now but I still think a no-deal exit would lead to significant volatility and we could be testing parity on a really bad outcome,” said Mr Harrison, who manages more than $10 billion in assets at BlackRock. “We will see this game of chicken continue through August and that’s likely negative for sterling,” he said about the deadlocked Brexit talks.
The pound fell 0.8 per cent to $1.2033 on Friday, its weakest closing level since the 1980s, after a report on the second quarter showed the UK economy shrank for the first time in six years. The data means it is likely the Bank of England will cut interest rates, according to Mizuho Bank.
The BOE said in November that the currency could fall even below $1 in an analysis on possible worst-case Brexit scenarios. Options-based calculations showed around a 6.4 per cent chance of pound-dollar parity in the next one year, markedly higher than 0.2 per cent in early March when prospects of a no-deal outcome were seemingly off the table.
Bloomberg
Key Points
Protests against President Omar Al Bashir enter their sixth day
Reports of President Bashir's resignation and arrests of senior government officials
Cast: Loujain Adada, Zeina Khoury, Farhana Bodi, Ebraheem Al Samadi, Mona Kattan, and couples Safa & Fahad Siddiqui and DJ Bliss & Danya Mohammed
Rating: 1/5
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023 More than 3.5 million Indians reside in UAE Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
- make sure you have at least Dh15 on you Nol card, as there could be big queues for top-up machines
- enter the right cabin. The train may be too busy to move between carriages once you're on
- don't carry too much luggage and tuck it under a seat to make room for fellow passengers
Emergency phone numbers in the UAE
Estijaba – 8001717 – number to call to request coronavirus testing
Ministry of Health and Prevention – 80011111
Dubai Health Authority – 800342 – The number to book a free video or voice consultation with a doctor or connect to a local health centre
Emirates airline – 600555555
Etihad Airways – 600555666
Ambulance – 998
Knowledge and Human Development Authority – 8005432 ext. 4 for Covid-19 queries
How has net migration to UK changed?
The figure was broadly flat immediately before the Covid-19 pandemic, standing at 216,000 in the year to June 2018 and 224,000 in the year to June 2019.
It then dropped to an estimated 111,000 in the year to June 2020 when restrictions introduced during the pandemic limited travel and movement.
The total rose to 254,000 in the year to June 2021, followed by steep jumps to 634,000 in the year to June 2022 and 906,000 in the year to June 2023.
The latest available figure of 728,000 for the 12 months to June 2024 suggests levels are starting to decrease.
