Flags of member states of the Organisation of Islamic Cooperation. OIC's International Islamic Trade Finance Corporation is providing $850m (Dh3.1 billion) in financial assistance to member countries to help them cope with the coronavirus pandemic. AFP
Flags of member states of the Organisation of Islamic Cooperation. OIC's International Islamic Trade Finance Corporation is providing $850m (Dh3.1 billion) in financial assistance to member countries Show more

Makkah talks are a chance to form a united front



In the face of mounting tensions between the US and Iran, with repercussions across the region, Saudi Arabia is hosting two emergency summits in Makkah on Thursday, one with Arab League leaders and the other with members of the Gulf Co-operation Council. A third meeting with members of the Organisation for Islamic Co-operation will follow on Friday. Top of the agenda will be Iran's destabilising behaviour, which threatens the whole region, from its ties with Hezbollah in Lebanon to its support of Houthi rebels in Yemen. Leaders will be discussing Tehran's latest bout of aggression, launched under the weight of punitive US sanctions and in retaliation for the US pullout from the nuclear deal. Houthi rebels attacked a Saudi pipeline and Iran-backed militias launched a rocket at Baghdad's Green Zone earlier this month. The sabotage of four tankers off the coast of Fujairah in the UAE – which US national security adviser John Bolton today blamed on Iranian naval mines – will also be among the chief concerns of the summits.

These meetings are an opportunity for the Arab world to stand united in the face of aggression. The nations convening in Makkah have strong historic and cultural bonds, even if they do not always concur on how to deal with threats. Iraq is expected to attend, despite its close ties with Iran. Qatar has been invited to the talks, even though the two-year boycott by the Arab quartet continues. Meanwhile, Hezbollah’s presence in the Lebanese government has prevented its leaders from taking a stand against Iran. The fragile stability of these two countries relies on maintaining good relations with both Washington and Tehran. But at a time when Iran is threatening to destabilise the whole region, a firm stance is needed to prevent further incursions. This is a time for Arab leaders to set aside their differences and express solidarity as those most affected by American-Iranian tensions.

But Arab countries must also be able to count on their western allies to provide support. In this regard, Mr Bolton’s current visit to Abu Dhabi sends a strong message. He reaffirmed that the US, the UAE and Saudi Arabia were “on the same page” about the threat of Iranian weapons and made a point of visiting the UAE capital to discuss the next steps. Diplomatic talks are essential to de-escalate the situation and Mr Trump has repeatedly said he would be ready to sit down at the negotiating table with Tehran – an offer that Iran has shown no interest in reciprocating.

The meetings in Makkah should not be treated as a mere photo opportunity. They can and should be used to reaffirm strong ties, decide a course of action and play a pivotal role in de-escalating a dangerous situation.

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The top two teams will qualify to play at the World T20 in the West Indies in November

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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.”

Charlotte Gainsbourg

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Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
 
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
 
Round 3: February 7-9, Dubai Autodrome – Dubai
 
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
 
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia