MQM pulls out of Pakistan's ruling coalition



ISLAMABAD // The second largest party in Pakistan's ruling coalition said Sunday it is quitting the government and joining the opposition, depriving the country's pro-US government of a parliamentary majority and threatening its future existence.

It was not immediately clear whether the Muttahida Qaumi Movement's move will prompt the downfall of Prime Minister Yousuf Raza Gilani's government. But it is almost certain to distract Pakistani officials at a time when the US is pushing Pakistan to step up cooperation in turning around the war in neighbouring Afghanistan, and a new government could be less friendly to US interests and less vocal in opposing the Taliban.

The MQM decided to withdraw from the ruling coalition because of the government's poor performance in addressing problems like rising inflation, as well as the corruption weighing down average Pakistanis, said MQM politician Haider Abbas Rizvi.

The move follows the party's decision last week to pull its ministers from the Cabinet.

"We are doing it for the sake of common men," said Mr Rizvi.

But some analysts have speculated that the MQM's behavior has been driven by self-interest rather than public good, leaving open the possibility that the government could still find a way to lure the party back by offering the right concessions. The MQM has historically been most focused on its level of control in the southern port city of Karachi.

"The government will continue to strive to keep the coalition intact and pursue national reconciliation," said Farahnaz Ispahani, a spokeswoman for Pakistani President Asif Ali Zardari. "We understand the MQM's political right to sit on the opposition benches, but we hope that they will review their decision."

Prime Minister Yousuf Raza Gilani expressed confidence that the ruling Pakistan People's Party could avert a crisis, telling reporters in the eastern city of Lahore that "the government will remain intact, it will not fall."

If the MQM goes through with its threat of shifting its 25 seats to the opposition, the ruling coalition will have fewer than the 172 seats needed for a majority in parliament.

Another coalition partner, the Jamiat Ulema Islam party, also withdrew from the Cabinet and threatened to shift its seven seats to the opposition in recent days if Zardari didn't sack the prime minister.

According to Pakistan's constitution, members representing 20 percent of the seats in parliament can sponsor a vote of no-confidence in the prime minister. If the measure is passed by a majority of parliament, the prime minister ceases to hold office.

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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