Russian foreign minister Sergei Lavrov speaks at the Asean-US ministerial meeting during the South-East Asian bloc's 50th regional security forum in Manila, Philippines on August 6, 2017. Noel Celis / Reuters
Russian foreign minister Sergei Lavrov speaks at the Asean-US ministerial meeting during the South-East Asian bloc's 50th regional security forum in Manila, Philippines on August 6, 2017. Noel Celis /Show more

Russian foreign minister says US ready to continue dialogue



Russian foreign minister Sergei Lavrov said on Sunday he believed his US colleagues were ready to continue dialogue with Moscow on complex issues despite a breakdown in bilateral relations.

Mr Lavrov, who met the US secretary of state Rex Tillerson on the sidelines of an international gathering in Manila, said the first thing that Mr Tillerson asked about was Russia's retaliation to new US sanctions against Moscow.

"He was primarily interested … in details of those decisions that we grudgingly made in response to the law on anti-Russian sanctions," Mr Lavrov said.

Russian authorities on Wednesday took over a summer-house compound in Moscow leased by the US embassy, five days after the Kremlin ordered Washington to slash its diplomatic presence in Russia.

"We provided an explanation," Mr Lavrov said, referring to the decisions.

Mr Lavrov said he also cited president Vladimir Putin who, in an interview to Russian TV last week, explained Moscow's need to retaliate to the US sanctions over its role in the Ukrainian crisis that were recently expanded to punish Russia for meddling in the US presidential election.

The meeting between Mr Lavrov and Mr Tillerson was their first since US president Donald Trump reluctantly signed into law new sanctions that Russia said amounted to a full-scale trade war and ended hopes for better ties.

Mr Lavrov said he and Mr Tillerson spoke at length on a wide range of topics, from the nuclear issue on the Korean peninsula to co-ordination between Russia and the United States to withstand attacks.

"We felt the readiness of our US colleagues to continue dialogue. I think there's no alternative to that," he said.

The two sides agreed that Russian deputy foreign minister Sergei Ryabkov and US undersecretary Thomas Shannon would continue discussing complex issues on the bilateral agenda.

Mr Lavrov said Mr Tillerson told him the US special representative on Ukraine, Kurt Volker, would hold talks with a senior aide to Mr Putin, Vladimir Surkov, "in the nearest future".

Washington sent Mr Volker, a former US envoy to Nato, to Ukraine last month to assess the situation in the former Soviet republic, where a 2015 ceasefire between Kiev's forces and Russian-backed separatists in the eastern part of the country is regularly violated.

"We would be interested to see what impression the US special envoy has on the current state of affairs," Mr Lavrov said.

Washington cites the Ukraine conflict as a key obstacle to improved relations between Russia and the United States.

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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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