The federal stock market regulator is mulling a plan to halve the period allowed for public companies to report earnings.
The Securities and Commodities Authority is considering reducing the grace period that corporates will have to disclose their annual financial results to 45 calendar days from 90 days after the end of the financial period. Quarterly results would have to be disclosed within 30 days instead of 45 days.
“The current grace period was set according to international best practices,” said Abdullah al Turifi, the SCA chief executive, during a session of the Federal National Council. “But we are considering shortening the time period.”
If approved, the new reporting regime would put the UAE closer to regulations in Saudi Arabia, where companies must provide the authority and shareholders with annual financial statements within 40 trading days and interim results within 15 trading days after the end of the financial period.
“This is good for the companies and the investors in terms of transparency,” said Nabil Farhat, a partner at Al Fajer Securities in Abu Dhabi. “The longer companies take to report the result, the more rumours arise and people speculate on the stock.”
Plunging oil prices has ushered in a period of volatility across regional markets. Dubai shares had a particularly rocky ride last month with the Dubai Financial Market losing more than 7 per cent on consecutive trading sessions before rising 13 per cent four days later.
“From the perspective of transparency, the information has to be shared at the same time for everybody,” said Tariq Qaqish, the head of asset management at Al Mal Capital in Dubai.“If you have a longer period, you would expect to see more info leaking out that will drive more volatility in the stock price and disadvantaging investors that are lacking that information.”
Companies with weak earnings or with other negative corporate news to report that could drag their share price down sometimes delay the release of their earnings.
In November, the DFM said it suspended trading on four dual-listed companies – Almadina for Finance and Investment Company, Hits Telecom Holding, National Industries Group Holding, and International Financial Advisors – after the firms “missed the deadline to disclose the financial statements as per the UAE SCA and DFM requirements”.
The DFM “also submitted a detailed report to (SCA) including the disclosure dates and its observations on the disclosures,” the exchange reported.
The UAE markets regulator has clamped down on trading irregularities, enforced penalties and rooted out excessive margin lending since shares began to tumble in October amid lower oil prices.
Last month SCA said that it banned four investors from trading after they committed violations. It did not name the violators in its statement.
The UAE and its exchanges were upgraded from frontier to emerging markets status in June 2013 and incorporated into MSCI’s Emerging Markets Index one year later. The move has ushered in a new focus on corporate governance standards and reporting rules as the country’s markets are opened up to more institutional investors from around the world.
“When institutional investors see the regulators are becoming strict but at the same time flexible, it’s going to be a positive outcome, because we are still in a developing stage,” said Mr Qaqish.
halsayegh@thenational.ae
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MATCH INFO
CAF Champions League semi-finals first-leg fixtures
Tuesday:
Primeiro Agosto (ANG) v Esperance (TUN) (8pm UAE)
Al Ahly (EGY) v Entente Setif (ALG) (11PM)
Second legs:
October 23
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Fixtures and results:
Wed, Aug 29:
- Malaysia bt Hong Kong by 3 wickets
- Oman bt Nepal by 7 wickets
- UAE bt Singapore by 215 runs
Thu, Aug 30: UAE v Nepal; Hong Kong v Singapore; Malaysia v Oman
Sat, Sep 1: UAE v Hong Kong; Oman v Singapore; Malaysia v Nepal
Sun, Sep 2: Hong Kong v Oman; Malaysia v UAE; Nepal v Singapore
Tue, Sep 4: Malaysia v Singapore; UAE v Oman; Nepal v Hong Kong
Thu, Sep 6: Final
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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.”
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