Dubai's leading property companies all rose. Gabriela Maj / Bloomberg News
Dubai's leading property companies all rose. Gabriela Maj / Bloomberg News

Markets

Property keeps index black in UAE

Markets Update: Gains for property companies help Dubai's markets fend off market turbulence on world stock indexes.

Gregor Stuart Hunter

December 14, 2011

Property stocks rallied in Dubai, the only sector keeping markets in positive territory as renewed worries over the global economy weighed on local bourses yesterday.

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The Dubai Financial Market General Index rose 0.3 per cent to 1,393.02 while the Abu Dhabi Securities Exchange General Index slid 0.3 per cent to 2,448.70.

Markets in Europe made tentative gains after a fall in Asian trading in the early hours of the morning, following a lukewarm response by Fitch Ratings to European leaders' "gradualist" approach to resolving the euro-zone debt crisis. The ratings agency also cut global growth estimates.

The Nikkei 225 fell 1.1 per cent to 8,552.81 and the Hang Seng index lost 0.6 per cent to 18,447.17. After European markets opened, the Euro Stoxx 50 index rose 0.3 per cent to 2,277.29. But despite a slide elsewhere in the Gulf, Dubai companies such as Emaar Properties, Arabtec and Drake & Scull International (DSI) all rose, keeping the emirate's index in positive territory.

DSI shares hit their highest level since September after the company announced a contract for work on a petrochemicals plant in Egypt. Shares in the construction company rose 2.1 per cent to 85.4 fils each.

The increased pipeline of new projects earned the company a "buy" recommendation from Arqaam Capital.

"We believe the market has generally assigned prudent valuations to contractors exposed to Arab Spring-related challenges," analysts said in a research note. But markets had "failed to distinguish on the basis of order book quality, and to adequately reward exposure to Saudi Arabia, Kuwait and Qatar," the report added.

Elsewhere in the Gulf, markets in Qatar, Saudi Arabia and Oman fell while the Bahraini bourse was flat.

MATCH INFO

Uefa Champions League semi-final, second leg result:

Ajax 2-3 Tottenham

Tottenham advance on away goals rule after tie ends 3-3 on aggregate

Final: June 1, Madrid

UAE jiu-jitsu squad

Men: Hamad Nawad and Khalid Al Balushi (56kg), Omar Al Fadhli and Saeed Al Mazroui (62kg), Taleb Al Kirbi and Humaid Al Kaabi (69kg), Mohammed Al Qubaisi and Saud Al Hammadi (70kg), Khalfan Belhol and Mohammad Haitham Radhi (85kg), Faisal Al Ketbi and Zayed Al Kaabi (94kg)

Women: Wadima Al Yafei and Mahra Al Hanaei (49kg), Bashayer Al Matrooshi and Hessa Al Shamsi (62kg)

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.”

Director: Laxman Utekar

Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna

Rating: 1/5

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