Markets

Global stocks fall on US bailout uncertainty

World stock markets fall amid fears that a US financial rescue plan world do little to stem economic slowdown.

World stock markets fell today amid widening fears that a US plan to rescue financial companies from bad mortgage debt would do little to prevent a world economic slowdown. By afternoon in Europe, the UK's FTSE 100 had dived 2.65 per cent to 5,097.72, Germany's DAX tumbled 1.01 per cent to 6,045.96, and France's CAC-40 slid two per cent to 4,139.19. In Dublin, the financials-heavy Irish Stock Exchange plummeted eight per cent to 3,659, a nearly 12-year low.

The biggest fallers were Anglo-Irish Bank, down 17 per cent, and Bank of Ireland, down 14 per cent. Ireland's stock market has lost more than 60 per cent of its value and its bellwether bank stocks have lost roughly two-thirds of their market capitalisation over the past 12 months. In Asia, Hong Kong shares led the region's declines, with the blue-chip Hang Seng index losing 3.9 per cent to 18,872.85 points after two sessions of solid gains. In China, the benchmark Shanghai Composite Index declined 1.56 per cent to 2,201.51. Benchmarks in Australia and Singapore also were down sharply.

Investors were skittish after the Dow Jones tumbled 372.75 points, or 3.27 per cent, to 11,015.69, as Wall Street grew nervous about the government's plan to prop up the financial sector by buying hundreds of billions of dollars in banks' bad debts. Worries that the US$700 billion (Dh2.57 trillion) plan wouldn't be enough to forestall a recession in the US - a vital export market for Asia - weighed on the region's investors, analysts said. "Even if it does get approved, will this stabilise the financial markets? Will this be able to prevent the economy from further deteriorating? Investors aren't sure. We could face more tough times ahead," said Ernie Hon, an analyst from IDEA Securities in Hong Kong.

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, the architects of the $700bn bailout, were expected to face tough questions at a hearing later today from lawmakers about the eye-popping cost, how the rescue would work and how taxpayers would be affected. * AP

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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.”

UAE currency: the story behind the money in your pockets
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Daily cash awards of $1,000 dollars will sweeten the Madrasa e-learning project by tempting more pupils to an education portal to deepen their understanding of math and sciences.

School children are required to watch an educational video each day and answer a question related to it. They then enter into a raffle draw for the $1,000 prize.

“We are targeting everyone who wants to learn. This will be $1,000 for 1,000 days so there will be a winner every day for 1,000 days,” said Sara Al Nuaimi, project manager of the Madrasa e-learning platform that was launched on Tuesday by the Vice President and Ruler of Dubai, to reach Arab pupils from kindergarten to grade 12 with educational videos.  

“The objective of the Madrasa is to become the number one reference for all Arab students in the world. The 5,000 videos we have online is just the beginning, we have big ambitions. Today in the Arab world there are 50 million students. We want to reach everyone who is willing to learn.”

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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