China will become an increasingly dominant business partner for the GCC in the next decade, a trend likely to speed up as economies in the West stall.
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The announcement yesterday of the Chinese premier Wen Jiabao's visit to Abu Dhabi for the World Future Energy Summit next year is the latest sign of the closer links between the two.
"The Silk Road is re-emerging," said Alessandro Magnoli Bocchi, the chief economist of Kuwait China Investment Company (KCIC). "The links are moving from oil to non-oil trade and investment."
China is expected to push ahead of India to become the region's biggest trading partner by 2020, according to the Economist Intelligence Unit.
The GCC already supplies about half of China's energy imports and more than a third of its crude oil needs. But the world's second-biggest economy and the GCC are already building business links in other areas.
Saudi Arabia overtook South Korea to become the largest petrochemical exporter to the Chinese textile industry in 2009.
China Railway Construction Corporation, a Chinese contractor, helped to build the US$1.8 billion (Dh6.6bn) railway in Saudi Arabia to transport pilgrim traffic during Haj.Several Chinese banks including Industrial and Commercial Bank of China, the country's largest, are setting up in Gulf states, helping to encourage greater trade and investment flows.
But GCC investment links have yet to develop at the same pace with China or the rest of Asia.
In the five years before the financial crisis of 2008, only 11 per cent of the Gulf's outward investment was directed to Asia, according to a recent KCIC report.
Instead, as much as 75 per cent of GCC savings are invested in the advanced economies of the US and Europe. Investors have considered such markets as safe destinations for their money, while fixed exchange rates to the US dollar have ensured predictability in the value of their oil revenues.
But stagnation in those economies and faster growth in Asia should encourage them to switch their investment focus eastwards, says KCIC. The structural deficits and low growth in the US and UK will in the long run dampen the returns of those investments, it said.
"There's a massive amount of money still being allocated to the West and with low GDP growth and deficits they will only provide low returns," said Francisco Quintana, an economist at KCIC and the author of the report. KCIC says the GCC should invest an additional 10 per cent or $600bn in Asia over the next decade to take advantage of higher returns.
Asia's share of the world's GDP will rise from 25 to 35 per cent by 2020, while the share of the US, Europe and Japan will decline from 48 to 38 per cent, according to KCIC.
"Enormous opportunities will arise for local and foreign companies catering to new Asian consumers in need of infrastructure, health care, education, consumer goods, financial services and leisure activities.
"These opportunities will materialise as the global macroeconomic uncertainty is left behind and fundamentals start playing again, and GCC investors can be part of it via portfolio rebalancing," the report said.
tarnold@thenational.ae
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Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
Overview
What: The Arab Women’s Sports Tournament is a biennial multisport event exclusively for Arab women athletes.
When: From Sunday, February 2, to Wednesday, February 12.
Where: At 13 different centres across Sharjah.
Disciplines: Athletics, archery, basketball, fencing, Karate, table tennis, shooting (rifle and pistol), show jumping and volleyball.
Participating countries: Algeria, Bahrain, Comoros, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Palestine, Saudi Arabia, Sudan, Syria, Tunisia, Qatar and UAE.
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COMPANY PROFILE
Company name: BorrowMe (BorrowMe.com)
Date started: August 2021
Founder: Nour Sabri
Based: Dubai, UAE
Sector: E-commerce / Marketplace
Size: Two employees
Funding stage: Seed investment
Initial investment: $200,000
Investors: Amr Manaa (director, PwC Middle East)
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.”
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The team
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The National Archives, Abu Dhabi
Founded over 50 years ago, the National Archives collects valuable historical material relating to the UAE, and is the oldest and richest archive relating to the Arabian Gulf.
Much of the material can be viewed on line at the Arabian Gulf Digital Archive - https://www.agda.ae/en
Company Profile
Founders: Tamara Hachem and Yazid Erman
Based: Dubai
Launched: September 2019
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Investors: Oman Technology Fund, angel investor and grants from Sharjah's Sheraa and Ma'an Abu Dhabi
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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
SM Town Live is on Friday, April 6 at Autism Rocks Arena, Dubai. Tickets are Dh375 at www.platinumlist.net
Company profile: buybackbazaar.com
Name: buybackbazaar.com
Started: January 2018
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Sector: FinTech, micro finance
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Secret Nation: The Hidden Armenians of Turkey
Avedis Hadjian, (IB Tauris)
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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
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Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
Brief scoreline:
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