Matteo Legler, the chief operating officer at ADS Securities, left, and Claus Nouveau-Nikolajsen, the head of Global Markets, speak during an interview in Abu Dhabi. Fatima Al Marzooqi / The National
Matteo Legler, the chief operating officer at ADS Securities, left, and Claus Nouveau-Nikolajsen, the head of Global Markets, speak during an interview in Abu Dhabi. Fatima Al Marzooqi / The National

Broker has big ideas but only time will tell



"We're doing the same as Goldman Sachs did 40 years ago, when everything was so much simpler," says Matteo Legler, the chief operating officer of ADS Securities.

As a mission statement, it is impressively ambitious and long-term.

The Abu Dhabi brokerage, best known hitherto in its relatively short corporate history for its business in foreign exchange and commodities trading, is branching out.

Its strategic diversification is at an early stage and a decidedly "soft launch", according to Mr Legler's colleague, Claus Nouveau-Nikolajsen, the head of global markets for ADS. But it aims to crystallise the advantages Abu Dhabi enjoys over other financial centres: time-zone location; access to capital; and higher yields. The two men are speaking at the HQ of ADS, in what they call the "trading majlis".

Mr Legler points out the window to the Ferrari dealership just over the road. "If trading is successful, you can head straight over there and make your choice," he jokes.

Ferraris might be the reward but the instrument ADS has chosen to get there, at least as the first plank of its diversification away from pure forex and commodities, is the booming market in fixed-interest investment in the region.

The move into bonds and other forms of debt has been one of the defining characteristics of the post-crisis era in Arabian Gulf markets and ADS is ready to take advantage of the trend.

"Equities have been out of favour since the crisis, they have been simply too volatile; with a global environment of low interest rates, and the fact that European banks are moving away from traditional loans, fixed-interest business is increasingly attractive," says Mr Legler.

In the past couple of years, ADS has carved out a name for itself in foreign exchange, bullion and commodities trading, on behalf of clients including global and regional hedge funds, central banks, asset managers, banks and other financial institutions as well as qualified professional traders.

It has been a lucrative market, with ADS well capitalised and attracting a high-quality team of traders and advisers, many lured away from the troubled European financial industry. Swiss-born Mr Legler joined ADS after stints in asset management in Switzerland and equity brokerage in the UAE; Mr Nouveau-Nikolajsen, from Denmark, advised high net-worth individuals and family offices at Deutsche Bank and Merrill Lynch.

ADS was recently voted the regional "brokerage of the year" by Banker Middle East magazine, in a year characterised by the closure of many brokerage operations in other financial centres. The clients remain largely the same, perhaps with an increasing emphasis on big investing institutions, but the offering will be rather different.

"There is a strong demand for GCC paper [bonds] in the global market and it is an opportunity we can capitalise on," says Mr Nouveau-Nikolajsen.

In the UAE alone, the past year has seen successful debt issues from the Dubai Government, the utility Dewa, Abu Dhabi's Mubadala Development, as well as private firms such as the Dubai conglomerate Majid Al Futtaim. Mubadala is a strategic investment company owned by the Abu Dhabi Government. But, at least as regards emerging markets, the Middle East trails international asset managers' allocation tables. Compared with Latin America, which has 45 per cent of the allocation, the region has only between 5 to 7 per cent of global allocations.

"There are issues of liquidity. We need more issuers to come out in bigger sizes in order to get the secondary market going properly," says Mr Legler. Nonetheless, the UAE has led the way in the bonds market. Some 55 per cent of new issues were from Abu Dhabi and Dubai, he estimates, with a further big chunk, about 27 per cent, from Qatar. Many new issues, some 43 per cent, have come from quasi-sovereign entities, followed by sovereign issuers and financials with about 25 per cent each. By far the smallest part, and the area which ADS is keen to exploit as a growth market, is the corporate sector, with just 7 per cent of issues.

"For these people, the cost of bank funding is too high and equities are too volatile, corporate debt has to be the way of the future," says Mr Legler.

The question is a matter of debate in UAE financial circles. Al Habtoor Group, a Dubai construction and leisure conglomerate, is planning a US$1.6 billion (Dh5.87bn) equity offering next year.

"I wouldn't want to talk about Al Habtoor but both bonds and equity offers are possible, one doesn't exclude the other," says Mr Legler.

The market will be in both conventional and Sharia-compliant issues (sukuks), ADS believes, with investors from some parts of Asia and the Middle East more convinced of the attractions of sukuks than those from America and Europe.

It's am ambitious strategy but if it comes off, it could mark the creation of a genuine independent UAE alternative to the big global investment banks, perhaps a Goldman of the Gulf.

We'll know in 40 years or so.

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
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UAE currency: the story behind the money in your pockets
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Director: S Sashikanth

Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan

Star rating: 2/5

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Directed by: Ashwiny Iyer Tiwari
Starring: Kriti Sanon, Ayushmann Khurrana, Rajkummar Rao
Three and a half stars

Key facilities
  • Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
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The smuggler

Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple. 
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.

Khouli conviction

Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.

For sale

A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.

- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico

- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000

- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950

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So what is Spicy Chickenjoy?

Just as McDonald’s has the Big Mac, Jollibee has Spicy Chickenjoy – a piece of fried chicken that’s crispy and spicy on the outside and comes with a side of spaghetti, all covered in tomato sauce and topped with sausage slices and ground beef. It sounds like a recipe that a child would come up with, but perhaps that’s the point – a flavourbomb combination of cheap comfort foods. Chickenjoy is Jollibee’s best-selling product in every country in which it has a presence.