Kuwaiti candidate and former parliament speaker Marzouq Al Ghanem (C) celebrates with his supporters in Kuwait City following the announcment of his victory in the parliamentary election early on November 27, 2016. Yasser Al Zayyat/AFP
Kuwaiti candidate and former parliament speaker Marzouq Al Ghanem (C) celebrates with his supporters in Kuwait City following the announcment of his victory in the parliamentary election early on NoveShow more

Conservatives make strong showing in Kuwait parliamentary election



KUWAIT CITY // Conservative-dominated opposition groups and their allies secured nearly half of the Kuwaiti parliament’s seats, official election results showed on Sunday, raising fears of fresh political wrangling.

The opposition and its allies won 24 of the assembly’s 50 seats in Saturday’s snap election called after a dispute over the increase in petrol prices.

The Islamist, nationalist and liberal opposition contested the election after a four-year boycott in protest against the government’s amendment of the key voting system.

Around half of the opposition candidates who won seats are from a Muslim Brotherhood-linked group and Salafists.

Voters dealt a heavy blow to candidates from the outgoing parliament, with more than half of them failing to make it into the new assembly.

Two of three cabinet ministers also failed in their bid for re-election.

“Surprise,” read the main headline on the website of Al Qabas newspaper, adding that the election had resulted in a “62-per cent change” in the parliament.

One third of the members of the new parliament are relatively young and fresh on the political scene.

Only one woman was elected and the Shiite minority was reduced to six seats from nine in the previous house.

But despite the outcome, Emir Sheikh Sabah Al Ahmad Al Sabah is set to ask the incumbent prime minister or another leading figure from the ruling family to form a new cabinet.

“I think this composition will lead to confrontations between opposition MPs and the next government,” political analyst Mohammad Al Ajmi said.

“There are many issues that could spark disputes: economic measures, revoking of citizenships and others.”

In the past two years, the government revoked the citizenship of several leading opposition figures and their family members, citing various motives.

The emir called the election after dissolving the previous parliament due to a dispute over increasing petrol prices.

Hours after the results were issued, he congratulated the winners for the “trust” given to them by voters, wishing them success in “serving the homeland”.

Saturday’s election saw a turnout of about 70 per cent amid divisions over cuts in subsidies due to falling oil revenues.

Analyst Dahem Al Qahtani said the opposition had made an “impressive showing”.

“Kuwaiti voters have punished those who let them down ... and rejected the austerity measures,” he said.

For the government to prevent a standoff, it should make initiatives for cooperation with the opposition, Mr Al Qahtani added.

“If the government makes such initiatives, it may succeed in striking a needed political balance and avoid disputes,” he said.

“If not, confrontations could start from day one,” Mr Al Qahtani said.

Kuwait was rocked with a series of political crises between 2006 and 2013 when an entirely pro-government parliament was elected.

A majority of the elected MPs have openly said they would oppose any austerity measures by the government to boost non-oil income.

The government’s overwhelming control in the previous assembly has been reduced to a fragile majority.

The majority is because unelected cabinet ministers also become members of parliament.

Kuwait is the only Arab Gulf country to have an elected parliament with powers to hold ministers to account, even though senior members of the ruling family hold all top cabinet posts.

The set-up has led to repeated standoffs between MPs and the ruling family and Saturday’s vote was the seventh general election in a decade.

But the strength of the opposition allows them to grill ministers and possibly even vote them out of office.

The election came with Kuwait facing its most acute budget crisis in years. Oil income, which accounts for 95 per cent of government revenues, has nosedived by 60 per cent in the past two years.

The Opec member posted its first budget deficit of US$15 billion (Dh55bn) last year following 16 years of surpluses.

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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.

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“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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