The inclusion of the UAE, Qatar and – expected soon – Saudi Arabia in the FTSE Russell and MSCI Emerging Market indices is expected to bring many benefits.
Institutional funds that track the index will include GCC stocks in their portfolios, adding liquidity, new investors and a truly international investor base. These new investors bring higher standards to the region, greater transparency and demand for world-class disclosure levels.
Regional companies will benefit from greater international interest, while regional investors will benefit from rising standards, and the GCC would gain the recognition it deserves for its strongest companies. But now a new mood is being seen in the investment community. Informed market participants are questioning the logic and make-up of emerging market indices.
The Financial Times recently called the MSCI Emerging Markets Index “a triumph of marketing over judgement”. The 24 countries that make up the index hide vast discrepancies: large countries (Brazil, China, Russia) are bundled with small (Chile, Hungary, Qatar). Commodity exporters (UAE, Malaysia) sit alongside commodity importers (South Korea, Taiwan). And it is not only macroeconomics that are being questioned. The risk factors in these countries are widely different.
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Read more:
Saudi Arabia added to watchlist for emerging market status by MSCI
Saudis expect entry to MSCI index by 2019
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For Mexico, the greatest risk is its future relations with the United States. For South Korea, its neighbour to the north provides the greatest risk. How are these correlated? And should they be? These questions must also be set against the current debate over the merits of active versus passive investment strategies. After years of rebalancing away from active managers towards index benchmarks and tracker funds, in today’s low-yield world, the attractions of active fund managers are returning to favour. These and other factors are informing the debate around the future of emerging market indices, to the extent that voices in the investment world are seriously questioning whether they should even exist.
The world is so different from the 1980’s when emerging market indices first appeared, that they no longer reflect reality, nor do they serve the interests of investors. So where does this leave the GCC? And if the days of the emerging market index are numbered, what should companies do to protect themselves from any outflow of capital?
Fortunately, this would not be a sudden change. There is $1.6 trillion following the MSCI index, and that will take time to unwind. Furthermore, the reasons for the creation of the indices remain true: fast growing countries with young populations, well-managed capital markets and stable systems of government are a good bet for sustainable future growth. But change will come, and far-sighted GCC companies can take steps to position themselves for a new era. Benchmark indices will not disappear – but they are expected to change.
So what will the new measures and standards for inclusion be? In other words, what is the investor of the future going to look for? Many factors will drive the future of investing, including technology (artificial intelligence, the internet of things, fintech); global trade (commodities cycle, China’s return to growth, slowing developed markets); and climate change. These global themes are likely to be more of a driving force for investment allocation than emerging or frontier market status.
One term that will be heard more and more is Environmental, Social and Governance (ESG) benchmarks. This is the classification of companies judged by their environmental activities, corporate governance, social impact and other factors that measure a company’s record in these “softer” areas, rather than purely its financial performance. GCC companies can be sure that ESG will be a growing factor in investor decisions, and they can take immediate steps to focus on these factors in their operations. Whatever the future holds, one trend is rapidly becoming apparent: the term Emerging Market is no longer adequate to determine allocation strategies for sophisticated investors. Regional firms would be wise not to rely on it.
Oliver Schutzmann is founder and chief executive of Iridium Investor Relations, an advisory and technology firm
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Need to know
The flights: Flydubai flies from Dubai to Kilimanjaro airport via Dar es Salaam from Dh1,619 return including taxes. The trip takes 8 hours.
The trek: Make sure that whatever tour company you select to climb Kilimanjaro, that it is a reputable one. The way to climb successfully would be with experienced guides and porters, from a company committed to quality, safety and an ethical approach to the mountain and its staff. Sonia Nazareth booked a VIP package through Safari Africa. The tour works out to $4,775 (Dh17,538) per person, based on a 4-person booking scheme, for 9 nights on the mountain (including one night before and after the trek at Arusha). The price includes all meals, a head guide, an assistant guide for every 2 trekkers, porters to carry the luggage, a cook and kitchen staff, a dining and mess tent, a sleeping tent set up for 2 persons, a chemical toilet and park entrance fees. The tiny ration of heated water provided for our bath in our makeshift private bathroom stall was the greatest luxury. A standard package, also based on a 4-person booking, works out to $3,050 (Dh11,202) per person.
When to go: You can climb Kili at any time of year, but the best months to ascend are January-February and September-October. Also good are July and August, if you’re tolerant of the colder weather that winter brings.
Do not underestimate the importance of kit. Even if you’re travelling at a relatively pleasant time, be geared up for the cold and the rain.
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
Volvo ES90 Specs
Engine: Electric single motor (96kW), twin motor (106kW) and twin motor performance (106kW)
Power: 333hp, 449hp, 680hp
Torque: 480Nm, 670Nm, 870Nm
On sale: Later in 2025 or early 2026, depending on region
Price: Exact regional pricing TBA
BULKWHIZ PROFILE
Date started: February 2017
Founders: Amira Rashad (CEO), Yusuf Saber (CTO), Mahmoud Sayedahmed (adviser), Reda Bouraoui (adviser)
Based: Dubai, UAE
Sector: E-commerce
Size: 50 employees
Funding: approximately $6m
Investors: Beco Capital, Enabling Future and Wain in the UAE; China's MSA Capital; 500 Startups; Faith Capital and Savour Ventures in Kuwait
Specs
Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
Power: 218hp (Cooper and Aceman), 313hp (Countryman)
Torque: 330Nm (Cooper and Aceman), 494Nm (Countryman)
On sale: Now
Price: From Dh158,000 (Cooper), Dh168,000 (Aceman), Dh190,000 (Countryman)
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
How to apply for a drone permit
- Individuals must register on UAE Drone app or website using their UAE Pass
- Add all their personal details, including name, nationality, passport number, Emiratis ID, email and phone number
- Upload the training certificate from a centre accredited by the GCAA
- Submit their request
What are the regulations?
- Fly it within visual line of sight
- Never over populated areas
- Ensure maximum flying height of 400 feet (122 metres) above ground level is not crossed
- Users must avoid flying over restricted areas listed on the UAE Drone app
- Only fly the drone during the day, and never at night
- Should have a live feed of the drone flight
- Drones must weigh 5 kg or less
Packages which the US Secret Service said contained possible explosive devices were sent to:
- Former first lady Hillary Clinton
- Former US president Barack Obama
- Philanthropist and businessman George Soros
- Former CIA director John Brennan at CNN's New York bureau
- Former Attorney General Eric Holder (delivered to former DNC chair Debbie Wasserman Schultz)
- California Congresswoman Maxine Waters (two devices)
2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, (Leon banned).
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
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More from Neighbourhood Watch:
The biog
Prefers vegetables and fish to meat and would choose salad over pizza
Walks daily as part of regular exercise routine
France is her favourite country to visit
Has written books and manuals on women’s education, first aid and health for the family
Family: Husband, three sons and a daughter
Fathiya Nadhari's instructions to her children was to give back to the country
The children worked as young volunteers in social, education and health campaigns
Her motto is to never stop working for the country
The Details
Article 15
Produced by: Carnival Cinemas, Zee Studios
Directed by: Anubhav Sinha
Starring: Ayushmann Khurrana, Kumud Mishra, Manoj Pahwa, Sayani Gupta, Zeeshan Ayyub
Our rating: 4/5
Hydrogen: Market potential
Hydrogen has an estimated $11 trillion market potential, according to Bank of America Securities and is expected to generate $2.5tn in direct revenues and $11tn of indirect infrastructure by 2050 as its production increases six-fold.
"We believe we are reaching the point of harnessing the element that comprises 90 per cent of the universe, effectively and economically,” the bank said in a recent report.
Falling costs of renewable energy and electrolysers used in green hydrogen production is one of the main catalysts for the increasingly bullish sentiment over the element.
The cost of electrolysers used in green hydrogen production has halved over the last five years and will fall to 60 to 90 per cent by the end of the decade, acceding to Haim Israel, equity strategist at Merrill Lynch. A global focus on decarbonisation and sustainability is also a big driver in its development.
