Last year, a period of unrest in which three governments were overthrown in North Africa, was not kind to stock market investors.
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But even though the UAE experienced none of the turmoil that occurred elsewhere, including in the Gulf, and the Emirates even briefly appeared as a shelter from the storm, Dubai's main stock market nevertheless fell to its lowest level since 2004.
Investment banks have withdrawn equity sales and research teams from the UAE as part of tens of thousands of job cuts worldwide, while about half of the Emirates' brokerages closed as trading dwindled.
The dire performance of local markets should be a call to action for the Government if it wishes to retain the UAE's position as the region's financial centre, says Fathi Ben Grira, the chief executive of Mena Corp, an Abu Dhabi brokerage.
"Performances have been disappointing, it's obvious to say," he says. "Now we've reached the level where the local stock market will be seen on the international stage as a penny stock market."
The Dubai Financial Market General Index ended the year down 18.8 per cent at 1,353.39. The Abu Dhabi Securities Exchange General Index fell 12.6 per cent to 2,402.28, its lowest level since 2009.
Underscoring the misery for traders, last month the UAE and Qatar failed again to secure an upgrade to "emerging market" status from the index compiler MSCI.
But turbulence on world markets hammered investments worldwide, with a stand-off over borrowing limits and a ratings downgrade for the US roiling markets during the summer. Meanwhile, the euro zone's debt crisis dragged on into its third year.
The UAE's markets, despite ending the year lower, performed better than many European indexes.
As a new trading year begins, we ask some of the UAE's investors and brokerages where bright spots could break through the gloom.
Eric Swats, the head of asset management at Rasmala Investment Bank
Top picks for this year Our focus from a top-down perspective is on the companies domiciled in those countries where there's clear and demonstrable economic growth.
What investors should avoid We see little of interest in Kuwait and in the Emirates. Egypt still is very much clouded by the political uncertainty and macroeconomic risks. We'd be reluctant to change those macro bets.
What investors should be watching out for this year The Government of Dubai has a lot of refinancing taking place this year. That's really where some of the downside risks lie. As we pass some of those headwinds, we'll see some upward interest or pressure on the equity markets.
What to expect from the euro-zone crisis There will be an indirect impact from some of the European banks not participating in the project finance and syndicated loan markets, which are important for the GCC.
Top regional or global picks Saudi Arabia and Qatar. These remain our top two markets.
Talal Touqan, the head of research at Al Ramz Securities
Top picks for this year Fundamentally, most companies are doing just fine. High-income generating stocks. Dividends are the most foreseeable component of income for next year. Three quarters have already been announced, and most companies that pay dividends will pay dividends again.
What investors should avoid Investment companies and finance companies that are directly related to the stock market. Telecoms and insurance companies are also facing tough competition
What investors should be watching out for this year Geopolitical risks for the whole region. I'm most concerned with what's happening with Iran.
What to expect from the euro-zone crisis The impact is more on sentiment rather than economic growth.
Top regional or global picks I'd keep my eye on Qatar.
Fathi Ben Grira, the chief executive of Mena Corp, an Abu Dhabi brokerage
Top picks for this year I'd look at private-equity funds. It might be right to invest in private companies to anticipate the next cycle of initial public offerings.
What investors should avoid We'll see a slowdown for the Qatar market. They'll have a problem with foreign ownership. The domestic companies are doing well, but they're doing well on local projects.
What investors should be watching out for this year Increases in foreign ownership limits. It'll attract investment from fund managers in Europe. They're not looking to European stocks now.
What to expect from the euro-zone crisis When investors take decisions to invest or not, they look at the London Stock Exchange or the CAC 40. Normally this shouldn't happen at all, but we'll have a problem in refinancing companies on the international markets.
Top regional or global picks Central Asia. Elsewhere, it should be more cherry-picking companies with strong fundamentals within Europe or the US.
Fadi Al Said, the head of investments at ING Investment Management
Top picks for this year We see the same companies we held in 2011. It's all a function of how the real estate and banking sector will do in 2012.
What investors should avoid The market will be still cautious on Egypt. It could be a very strong year or a very negative year. It all depends on the political outcome and how things will move forward after that.
What investors should be watching out for this year A turnaround in profitability for the banking sector and real estate. We're not taking the call that real estate could move higher, but we know that it's stabilised and the downside is limited.
What to expect from the euro-zone crisis The direct impact is cost of funding. It's more relevant to new issuers and debt refinancing. The more stress in the debt market, the harder and more expensive it will be to roll over debts.
Top regional or global picks The preferences will be UAE, Qatar and Saudi Arabia.
Mohieddine Kronfol, the chief investment officer for fixed income, and Joe Kawkabani, the chief investment officer for equities, Franklin Templeton Investments
Top picks for this year With interest rates at very low levels and central banks predisposed to additional quantitative easing, equity markets and risk assets could deliver positive gains.
What investors should avoid Considerable challenges remain ahead largely from confidence issues for both markets and economies [globally]. Policymakers have to engage and listen to different stakeholders and adopt measures that build confidence and promote sensible economic policies.
What investors should be watching out for this year Outside the GCC region, we anticipate that 2012 will be the year of political transitions after the Arab Spring. New parliaments and governments will likely be elected with a mandate to reduce poverty and create employment. This should have a positive impact on their respective economies.
What to expect from the euro-zone crisis The GCC continues positively, with easier access to funding than most areas, and a burgeoning private sector. Therefore, the GCC has seen less of an adverse impact due to the euro crisis.
Top regional or global picks We are constructive on the Mena region as we are anticipating that the region's growth [will] be positive and faster than the developed world. We favour Saudi Arabia and Qatar, given their political stability, their growth profile and the valuation in the markets.
ghunter@thenational.ae
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U19 World Cup in South Africa
Group A: India, Japan, New Zealand, Sri Lanka
Group B: Australia, England, Nigeria, West Indies
Group C: Bangladesh, Pakistan, Scotland, Zimbabwe
Group D: Afghanistan, Canada, South Africa, UAE
UAE fixtures
Saturday, January 18, v Canada
Wednesday, January 22, v Afghanistan
Saturday, January 25, v South Africa
UAE squad
Aryan Lakra (captain), Vriitya Aravind, Deshan Chethyia, Mohammed Farazuddin, Jonathan Figy, Osama Hassan, Karthik Meiyappan, Rishabh Mukherjee, Ali Naseer, Wasi Shah, Alishan Sharafu, Sanchit Sharma, Kai Smith, Akasha Tahir, Ansh Tandon
The Bio
Favourite vegetable: “I really like the taste of the beetroot, the potatoes and the eggplant we are producing.”
Holiday destination: “I like Paris very much, it’s a city very close to my heart.”
Book: “Das Kapital, by Karl Marx. I am not a communist, but there are a lot of lessons for the capitalist system, if you let it get out of control, and humanity.”
Musician: “I like very much Fairuz, the Lebanese singer, and the other is Umm Kulthum. Fairuz is for listening to in the morning, Umm Kulthum for the night.”
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.”
MATCH INFO
Uefa Champions League, last-16, second leg (first-leg scores in brackets):
PSG (2) v Manchester United (0)
Midnight (Thursday), BeIN Sports
Company Fact Box
Company name/date started: Abwaab Technologies / September 2019
Founders: Hamdi Tabbaa, co-founder and CEO. Hussein Alsarabi, co-founder and CTO
Based: Amman, Jordan
Sector: Education Technology
Size (employees/revenue): Total team size: 65. Full-time employees: 25. Revenue undisclosed
Stage: early-stage startup
Investors: Adam Tech Ventures, Endure Capital, Equitrust, the World Bank-backed Innovative Startups SMEs Fund, a London investment fund, a number of former and current executives from Uber and Netflix, among others.
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
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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
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3ECompany%20name%3A%3C%2Fstrong%3E%20Revibe%20%0D%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202022%0D%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Hamza%20Iraqui%20and%20Abdessamad%20Ben%20Zakour%20%0D%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20UAE%20%0D%3Cbr%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20Refurbished%20electronics%20%0D%3Cbr%3E%3Cstrong%3EFunds%20raised%20so%20far%3A%3C%2Fstrong%3E%20%2410m%20%0D%3Cbr%3E%3Cstrong%3EInvestors%3A%20%3C%2Fstrong%3EFlat6Labs%2C%20Resonance%20and%20various%20others%0D%3C%2Fp%3E%0A
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part one: how cars came to the UAE
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
Tuesday's fixtures
Kyrgyzstan v Qatar, 5.45pm
Ms Yang's top tips for parents new to the UAE
- Join parent networks
- Look beyond school fees
- Keep an open mind
