Abu Dhabi stocks tumbled to a two-year low after UAE markets failed to win a key index upgrade that would have raised the international profile of locally listed companies.
Dubai's stock index also came within a whisker of its lowest intraday level since 2004 after the index compiler MSCI decided not to upgrade bourses in the UAE and Qatar to "emerging-market" status.
MSCI, which provides benchmark stock indexes used by funds managing about US$3 trillion (Dh11.02tn) globally, declined for the second time this year to upgrade the two countries' market designation.
Both are currently classed as "frontier markets", limiting the number of funds that can invest in either. MSCI's decision was "disappointing news" for the two countries, said Georges Elhedery, the head of global markets at HSBC Middle East.
"This continuing status means that international emerging-markets funds that track the MSCI Emerging Markets Index still can't access these two key markets," he said.
The Abu Dhabi Securities Exchange General Index lost 1.2 per cent to close at 2,413.24, its lowest level since March 2009.
The Dubai Financial Market General Index fell 1.2 per cent to 1,367.49, with the intraday decline at one point coming within 10 points of the lowest level reached all year. The index rallied later in the day.
Qatar's QE Index held up better, dipping only 0.1 per cent to 8,752.87.
MSCI said the UAE had failed to make the grade because of flaws in the delivery-versus-payment system, also known as DvP, which was introduced in June. Institutional investors had raised concerns - in relation to failed trades - about the possibility of forced sales of assets without the consent of owners.
Qatar stumbled because of rules limiting investment in some companies to Qatari nationals. The ownership rules were not changed after the review in June.
However, the index provider held out hope that the UAE would have more success at its next review, expected in June, saying that draft regulations for securities lending and borrowing may provide a solution.
The Securities and Commodities Authority began a consultation on the draft rules last month.
Implementing and testing new market rules will take time, but the process could potentially be completed in time for the review in June, said Remy Briand, the managing director and global head of index research at MSCI.
"It's totally in the hands of the various market participants and the regulators at this stage," he said.
Exchange officials were sanguine in light of MSCI's decision.
The review showed that the UAE's exchanges were on the right track, said Jeff Singer, the chief executive of Nasdaq Dubai.
"As MSCI has acknowledged, the UAE has made progress in improving its capital markets infrastructure," he said. "These achievements will be recognised by industry organisations in different ways and at different times. More important is the UAE's continuing focus on giving investors the framework they are looking for to participate in the markets with confidence."
The Qatar Exchange said MSCI's decision was "understandable"because the country had not changed its limits on foreign ownership since the review in June.
"The next review is in six months, and both markets have a clear view on what they need to address if they are going to enter the index," Mr Elhedery said.
Amid a prolonged slump during which a number of brokerages have closed, the value of trading on the Dubai Financial Market last month fell to 2.8 per cent of the peak recorded in November 2007. Mr Briand said the slump in liquidity would be examined at MSCI's next review.
In the hours preceding MSCI's announcement that it was withholding an upgrade, a sense of gloom was palpable among exchange officials and investors, who said the potential benefits of inclusion would be limited by the turbulence on global equity markets.
MSCI has declined to upgrade the UAE four times since 2009.
ghunter@thenational.ae
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UAE currency: the story behind the money in your pockets
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In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
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.”
The rules on fostering in the UAE
A foster couple or family must:
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- not be younger than 25 years old
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- 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
THE NEW BATCH'S FOCUS SECTORS
AiFlux – renewables, oil and gas
DevisionX – manufacturing
Event Gates – security and manufacturing
Farmdar – agriculture
Farmin – smart cities
Greener Crop – agriculture
Ipera.ai – space digitisation
Lune Technologies – fibre-optics
Monak – delivery
NutzenTech – environment
Nybl – machine learning
Occicor – shelf management
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Pivony – user-generated data
PowerDev – energy big data
Sav – finance
Searover – renewables
Swftbox – delivery
Trade Capital Partners – FinTech
Valorafutbol – sports and entertainment
Workfam – employee engagement
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1. Cecilie Hatteland (NOR) atop Alex - 31.46 seconds
2. Anna Gorbacheva (RUS) atop Curt 13 - 31.82 seconds
3. Georgia Tame (GBR) atop Cash Up - 32.81 seconds
4. Sheikha Latifa bint Ahmed Al Maktoum (UAE) atop Peanuts de Beaufour - 35.85 seconds
5. Miriam Schneider (GER) atop Benur du Romet - 37.53 seconds
6. Annika Sande (NOR) atop For Cash 2 - 31.42 seconds (4 penalties)
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Volvo ES90 Specs
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WRESTLING HIGHLIGHTS
