Collapsing oil prices are scaring away foreign investors who still view the cost of the commodity as a key barometer, say industry insiders.
A London-based investments manager said there was a strong feeling among western investors that the oil price - which dipped below US$70 a barrel today - was significant. The head of equities investment, whose company manages more than £150 billion (Dh949.29bn) and has GCC investments, said: "There is a psychology among investors that the oil price does matter. This is because the economies are seen as based on the resource, and are viewed as indeed being entirely driven by it."
Global markets continued to slump today because of fears of a recession, in the process wiping out most of the gains made earlier this week. Asian markets continued the decline, with Japan's Nikkei market tumbling a huge 11.41 per cent, Singapore's losing 5.25 per cent of its value and Hong Kong's shedding 4.8 per cent.
Europe followed suit soon after, with the London FTSE closing 5.65 per cent down, Frankfurt's DAX down 5.67 per cent and the French CAC-40 shedding 6.68 per cent by closing time.
The GCC was no different, with the Dubai Financial Market down 6.53 per cent, and the Abu Dhabi Securities Market shedding 4.51 per cent. Doha and Muscat lost 3.64 and 6.05 per cent respectively, and Bahrain and Kuwait each shed more than one per cent. The Saudi Tadawul was closed for the weekend.
The UAE's two listed oil companies, Taqa and Dana - which are also involved in gas and energy generation - have not been performing well. Since June, around the time oil reached its peak price, Taqa's share price has fallen from Dh4.02 to Dh1.85.
Dana's price fall has been less spectacular - from Dh2.7 in January to today's price of Dh2.03.
While western perceptions are important, most GCC-based players believe that unless the price goes back to 1998 levels for the medium term - when it was $10 a barrel - the region will not be impacted.
Robert McMillen, the chairman of Mac Capital Partners, based in Dubai, said the foreign attention paid to oil prices was misguided.
"Many of the cash reserves are already in the bank account, so the major infrastructure projects will go ahead," he said. "The Government has the money already so why should they worry if daily revenues fall from, say, Dh1 billion to Dh800 million?"
Dr Nasser Saidi, the chief economist at the Dubai International Financial Centre, has said the UAE growth rate would decrease by up to 1.5 percentage points next year because of the international slowdown, but that emerging markets would still outperform developed ones. However, he maintained that the oil price link was weaker than it used to be.
"The link between oil prices and investment is no longer as strong as it was in the 1970s and 1980s, and budget break-even for GCC countries is $35 to $45 a barrel," Dr Saidi told Zawya Dow Jones.
Zia Hashmi, the regional general counsel at EFG Hermes in Dubai, said that with GCC growth expected to be slower in the coming years, increased corporate governance may be necessary to attract foreign capital.
He said that while foreign investors were always concerned about corporate governance - such as the detailed and timely issuing of annual reports before they arrived in the country - once they saw the rates of return and growth, most did not press for western standards to be implemented and simply relied on credit ratings agencies.
With slower growth now expected, though, Mr Hashmi said that more of a focus on governance, disclosure and transparency would come into play for investors.
He said the Government was showing clear signs of pushing governance, the most obvious target being property practices in Dubai, which had resulted in a number of executives being detained over allegations of corruption.
afoxwell@thenational.ae
THE SPECS
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Transmission: Constant Variable (CVT)
Power: 141bhp
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Price: Dh64,500
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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
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At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
Election pledges on migration
CDU: "Now is the time to control the German borders and enforce strict border rejections"
SPD: "Border closures and blanket rejections at internal borders contradict the spirit of a common area of freedom"
How to wear a kandura
Dos
- Wear the right fabric for the right season and occasion
- Always ask for the dress code if you don’t know
- Wear a white kandura, white ghutra / shemagh (headwear) and black shoes for work
- Wear 100 per cent cotton under the kandura as most fabrics are polyester
Don’ts
- Wear hamdania for work, always wear a ghutra and agal
- Buy a kandura only based on how it feels; ask questions about the fabric and understand what you are buying
SPECS
Toyota land Cruiser 2020 5.7L VXR
Engine: 5.7-litre V8
Transmission: eight-speed automatic
Power: 362hp
Torque: 530Nm
Price: Dh329,000 (base model 4.0L EXR Dh215,900)
Killing of Qassem Suleimani
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Anghami
Started: December 2011
Co-founders: Elie Habib, Eddy Maroun
Based: Beirut and Dubai
Sector: Entertainment
Size: 85 employees
Stage: Series C
Investors: MEVP, du, Mobily, MBC, Samena Capital
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
THE%20SPECS
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UAE currency: the story behind the money in your pockets
Game Changer
Director: Shankar
Stars: Ram Charan, Kiara Advani, Anjali, S J Suryah, Jayaram
Rating: 2/5
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
ANDROID%20VERSION%20NAMES%2C%20IN%20ORDER
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