A new poll has found that the UAE's financial services sector is expected to lag emerging-market rivals in job creation.
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Singapore is expected to lead the world in creating financial services jobs during the next 12 months, according to a poll of 297 bankers and hedge-fund staff in London conducted by Astbury Marsden, a recruitment company.
In the survey, conducted at the end of March, 37 per cent of respondents expected Singapore to create the largest number of jobs in financial services during the year, ahead of London, where 22 per cent thought the largest number of jobs would be created.
Asia fared well, with 19 per cent of respondents saying Shanghai would create the largest number of jobs and 17 per cent saying Hong Kong would be the jobs leader.
The UAE had a poor showing, with just 4 per cent of respondents saying the largest number of banking jobs would be created in the Emirates.
But Wall Street fared even worse, with 1 per cent saying New York would create the largest number of jobs.
A climate of banker bashing in the UK was driving more and more companies to Asia, said Mark Cameron, the chief operating officer of Astbury Marsden.
"Cities close to emerging markets are at the forefront of the global expansion in financial services," he said.
"It is clear that Singapore is winning business that used to be done in London."
However, in spite of "high GDP per capita and well-run government, the UAE is historically a challenging place for western financial services firms to do business", Mr Cameron said. "As such, there are comparatively better prospects presented in the emerging markets of the East."
A wave of job cuts has occurred in the UAE's financial services sector since the start of last month, with HSBC, Barclays Bank and Shuaa Capital reducing staff numbers in the country, even as other sectors resume hiring.
The Monster Employment Index showed that the number of positions in UAE finance and accounting advertised online fell 22 per cent in the six months between October and March, the biggest decrease among all occupations in the Emirates surveyed by the online recruitment website.
ghunter@thenational.ae
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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.”