Page 1

MARCH 2018

Investing in the Gulf’s evolution Mohamed Abdellatif

Senior Executive Officer UBP Middle East

Dubai Technology and Media Free Zone Authority


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Contents ISSUE 45 | MARCH 2018

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EDITOR'S LETTER Greetings all,

W

elcome to the 45th issue of WEALTH Arabia. As you will notice, the magazine is slightly heavier than before. While we hope this doesn’t throw you off balance, rest assured that there’s a good reason for this—WEALTH Arabia is now 80 pages, a 60 per cent increase from our historical length. Why? Because we want to give you, our loyal readers, more. More investment analysis. More lifestyle content. And more space to enjoy those things, helping WEALTH to become more visual than it was able to be. There are great things in here—a look at the history of Emirati fashion, warnings of a bubble, and perhaps the world’s best investment market in 2018. Where will you begin? That’s up to you, but I’m sure that you will enjoy our many interesting voices we’ve given a platform in this one. Beyond that, there’s still much to explore. I hope you enjoy it. Till next time,

William Mullally

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OPINION How far can the bull run?

6

NEWS & ANALYSIS The latest analysis from the investment world

8

COVER STORY Mohamed Abdellatif, Senior Executive Officer, UBP Middle East

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28

INVESTMENT

18 Why you should remain confident in Japan in 2018 24 Ibdar Bank 28 Bubble trouble 34 MENA’s growing VC industry 38 It’s time to renew your interest in solar

4


PRIVATE BANKING How private banks are utilising blockchain

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42

REAL ESTATE Chinese investment to boost UAE property market

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STYLE Emirati Haute Couture

48

CHAIRMAN

Saleh Al Akrabi CHIEF EXECUTIVE OFFICER

TONY LONG tony.long@cpifinancial.net Tel: +971 4 391 4681

MOTORING Off-road in Wadi Bih with the Porsche Cayenne 2018

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TRAVEL Oberoi Al Zorah

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DESIGN Let it be

SALES DIRECTOR

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OMER HUSSAIN omer@cpifinancial.net Tel: +971 4 391 5419 EDITOR - WEALTH ARABIA

WILLIAM MULLALLY william@cpifinancial.net Tel: +971 4 391 3718

EDITORS

MATT AMLÔT matt@cpifinancial.net Tel: +971 4 391 3716

EVENTS Art Dubai

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WEB EDITOR

JESSICA COMBES jessica@cpifinancial.net Tel: +971 4 364 2024

PRODUCTS The wrist review

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CONTRIBUTORS

DAISUKE NOMOTO PHILIP DOWSETT MARTIN HAUPTS

GOOD TALK Matthias Mende

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EDITORIAL

editorial@cpifinancial.net

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FINANCE & DATA EXECUTIVE

HR & OFFICE MANAGER

ADMINISTRATION & SUBSCRIPTIONS

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WEALTH WARNING! Remember, if you wish to act on any of the information you read in WEALTH ARABIA, consider taking independent advice first. WEALTH ARABIA is written for a general audience and the information contained herein may not be appropriate for your personal circumstances. Don’t miss your copy of WEALTH ARABIA. Subscribe now, full details at: www.wealtharabia.net and on Twitter @wealtharabia.

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PUBLISHED BY CPI FINANCIAL FZ LLC REGISTERED AT DUBAI MEDIA CITY, DUBAI, U.A.E.

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5


OPINION

How far can the bull run? A

t the beginning of February, investors got the first signal that this equity trend upwards will not last forever. A quick sell off set off a momentary panic across markets, as it always does, before things went back to normal. Many said that this was just a blip on the scale—a quick drop that, in the larger context, is nothing compared to recent gains. This is almost certainly true. Equities have continually trended upwards, and no one can deny it has been very kind to investor's portfolios. The question, as always, is when the next correction will come. No matter what, when things are trending upwards and upwards, there are some who, following their heart, want to scream that things will never trend back downwards, who dismiss negativity, who continue to buy and buy as things go up and up. History repeats itself—and nothing trends upwards at this rate forever. The question for 2018 is, how bad could it get? Will we see a simple correction, a slower year than we had in 2017 with overall growth, or are we in a bubble that is set to pop? Industry professionals seem split. "Sentiment is so overextended that investors can only be disappointed. Many indicators are elevated, often to an unprecedented degree, which increases the likelihood of a larger setback should macro data disappoint,” said Peter Garnry, Head of Equity Strategy, Saxo Bank.

6

Investors expectations remain too high—which could cause problems down the line. “Investors are expecting almost 20 per cent growth in earnings before interest, taxes, depreciation, and amortisation in the S&P 500 this year, something that has not been realised since 1991. Hopes are understandably high given the end we saw to 2017, but the low implied volatility should not cause investors to doze off, quite the opposite. A policy mistake in China or the US is still possible and inflation, whether it under-or-overshoots, will be the most important trigger in global markets for 2018,” Garnry continued. Speaking on the early February correction, Credit Suisse’s Group CIO Michael Strobaek was more optimistic. “Equity markets were somewhat overbought going into 2018, and were due for a healthy correction, which we think this one was.” According to Strobaek, the bull will continue to run. “We still consider the equity bull market to be intact and to have the potential to go further.” How much further? Well, not as much as you may hope to hear. “The bull market is not going to be as good as what we saw in 2017, and it will be associated with high levels of volatility, as short rates and now yields have left their bottoms and are moving higher.”

William Mullally


D16965_PME_Cayenne E3_WEALTH Arabia-IBC_AD-1-210x280-English.indd 1

12/11/17 10:36 AM


NEWS & ANALYSIS

D

8

ubai’s affordable housing market has seen strong investment in the past few years. Will the high yields continue?

T

he US dollar has not been as strong in the early trading of 2018 as it has been the last year, much to the chagrin of investors. Will the USD maintain its soft slide, or will it bounce back?

B

attery metals were one of the most popular commodity investments of 2017, but that heat cooled off in the first quarter of 2018. Is this downward trend set to continue?

Investor buyers continue being drawn to the affordable segment due to the current high yields and easier payment plans while a few developers see robust off-plan transaction volumes as an encouraging sign and continue bringing more stock to the market. Given that affordable segment’s supply pipeline is looming with substantial off-plan deliveries in the run-up to 2020, the high yields expected by many investors post hand-over, are unlikely to be sustained."

What has been most puzzling to many clients is the foreign exchange side, in particular the weakness of the USD. The USD has not been able to rally, despite solid economic data and higher yields. Why is that? First of all, it is perfectly normal for the USD to stay soft in an environment like this, also compared to similar phases in history. The USD tends to become really strong going in ‘crisis times,’ but we are clearly not in such a phase right now. Hence, the USD can likely stay soft, and this is one of the reasons why we have begun to systematically hedge our US equity exposure in mandates."

Rising battery production, car manufacturers trying to secure long-term supplies and some speculative hoarding caused temporary tightness in physical supplies. In consequence, lithium and namely cobalt prices multiplied over the past years. However, we believe that lithium and cobalt are set to follow the well-known commodity cycle with high prices triggering a supply response. With regards to investing in the future mobility, we still believe that tech suppliers provide more attractive risk-reward than the battery segment."

David Godchaux CEO, Core Savills

Michael Strobaek Group Chief Investment Officer, Credit Suisse

Norbert Ruecker Head of Commodity Research, Julius Baer


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COVER STORY

H

ow long has UBP been present in the Middle East? UBP has looked after clients from the Middle East over a long period and has had a physical presence in the region for more than 10 years. Starting with a representative office and just five staff, we have expanded through our established Dubai base where a team of over 30 now takes care of clients from across the Gulf Co-operation Council (GCC) area. In addition, we also reach out to individual investors and families across the Eastern Mediterranean recognising the strong and enduring links between the Gulf states and their near neighbours. With personal service at the heart of what we do, we make it our business to meet regularly with clients to share our expertise and help them both to protect and grow their wealth. What sets UBP apart from its competitors in the region? Our family ownership represents a fundamental difference between us and our competitors. Being owned by the same family from the bank’s beginnings sets the tone for everything we do. When we talk about 'family values' at UBP, that actually means something and profoundly shapes the way we do business. I would sum up our core principles as being based around an absolute commitment to the highest quality of client service. Our objective is always to build, deepen and strengthen relationships for the long term. That means taking all the time necessary to understand clients’ priorities for the protection and growth of their wealth. Every individual and family has distinct needs making it essential always to dig just a little bit deeper to explore what these are and how they can shape an effective investment strategy. Time and effort has to go into making a detailed assessment of client attitudes towards risk as well as identifying an asset allocation approach designed to match and then deliver on their specific expectations.

10

Investing in the Gulf ’s evolution Mohamed Abdellatif, Senior Executive Officer, Head of UBP Middle East, Union Bancaire Privée (Middle East) Ltd, speaks to WEALTH Arabia about its commitment to the region


COVER STORY

Mohamed Abdellatif, Senior Executive Officer, Head of UBP Middle East, Union Bancaire Privée (Middle East) Ltd. wealtharabia.net

11


COVER STORY

To what extent does family ownership actually make a difference at UBP? One of the biggest positive factors is that we can draw advantage from our bank’s flat structure with its strictly-limited level of bureaucracy. This allows us to take a pragmatic approach and be agile and responsive to our clients. Senior bankers have the freedom to make their informed decisions promptly so delivering an exemplary level of service. With no external shareholders to satisfy, we are much more able to 'take a view' and then to hold it with conviction. In addition, we are ready and able to bring fresh products to market in a timely and efficient way. With increasingly complicated investor needs, we place great emphasis on being proactive and not reactive. As part of this approach, we have our own wide range of funds and also have the capacity to launch new funds rapidly so that our clients can have the benefit of capturing and exploiting evolving themes and ideas. In today’s low interest rate environment, we understand just how important high yield is to so many of the clients we serve from Dubai. Of course, we always work to balance this requirement with an appropriate level of risk.

Clients need to have the means of understanding whether risks relate to the broader market or to illiquidity. That is what drives the ultimate investment decision and we have the resources in place to support an informed view. Mohamed Abdellatif

12

We recognise that there is a serious and growing demand for investment products where clients can see a clear, physical asset underpinning the returns which they demand. That is why our Direct Investment Group (DIG) has turned out to be especially popular. It focuses on the provision of investment opportunities which would normally be the preserve of institutional investors in areas ranging from real estate (including retail, public housing and student accommodation) to commercial aviation, new technology, commodities and renewables. By making real assets a part of a client’s portfolio, DIG makes it possible to widen the scope of asset allocation beyond the more traditional investments. What are the bank’s key offerings to clients? Our Advisory Service has grown significantly and has done so in response to clear client demand for a direct involvement in the decisions which help to shape their wealth as they manage it for current and future generations. We have made a serious commitment to the advisory side of our business and have four dedicated advisors based here in Dubai. It is important to have such investment specialists available for clients on the ground. Drawing on our extensive research and convictionbased views, a pivotal part of their role is to gain a complete understanding of what motivates the client and the factors which shape their investment objectives. We follow a comprehensive procedure to assess attitudes towards risk and then match this against our broad suite of products. It’s a highly individual way of doing business and the advice offered is always specific to the client and never 'off the shelf'. As part of our broad expertise and comprehensive range of investments, we have a particular expertise in the Fixed Income space which is of particular value to clients in our region. In understanding Fixed Income, we follow a top-down, Macro-driven view supported by the resources of an expert team. Applying

our coherent ideas and a disciplined approach has led to serious growth in AuM across the Fixed Income space. We also offer clients our depth of knowledge in equity research through a highly selective approach to determine our recommended list of equities which can be matched to an individual client or translated into our in-house fund offering. Furthermore, for clients who do not wish to have an active involvement in the


COVER STORY

Mohamed Abdellatif

management of their investments, we offer a dedicated Discretionary Service run out of Switzerland. A team of experts makes the balanced asset allocations on behalf of clients while always keeping their risk outlook firmly in mind. How would you describe the landscape for private banking in Dubai and the wider economy across the region? How has it changed in recent years?

A simple glance outwards and upwards at the skyline quickly tells you how much Dubai has changed in recent years. The pace of development is incredible and it is a dynamic place to be. Compared with 30 years ago, the transformation seems total. However, I believe that there is still much more to come and UBP wants to play an active role in this fast-developing landscape. We are here for the long term and intend to grow our business and add value to an expanding

client base. It is clearly a competitive environment with many private banks setting up in the region and actively seeking to build their businesses. At UBP, we are determined to draw on our history, heritage and expertise to present compelling reasons for people to choose us. We do not underestimate the challenge but have confidence in our ability to deliver consistency of performance as we take care of our clients’ wealth. wealtharabia.net

13


COVER STORY

Mohamed Abdellatif

In today’s low interest rate environment, we understand just how important high yield is to so many of the clients we serve from Dubai. Of course, we always work to balance this requirement with an appropriate level of risk. Mohamed Abdellatif

14


COVER STORY

Inward investment across the region tells its own story but there are also signs of broader changes taking place. The rapid growth in tourism is just one factor while the real estate sector shares this upward trajectory. There appears to be scope for additional investment from emerging markets and this is a development which we monitor with close attention. Add this to early indications of reform in the region and it is an interesting mix with the potential to provide investment opportunities within the region itself. For this region, reform and liberalisation seem set to be more of an evolution than a rapid transformation. How have the needs of HNWI and UHNWI individuals evolved in the region? Clients have become increasingly more sophisticated in our market. Given that they trust us to advise on and manage the wealth that they have created or inherited, they are right to demand a higher level of service from us. Although it is now ten years since the global financial crisis, many investors still carry the scars from that traumatic period. They are acutely aware of risk and expect complete transparency around the investment products and services that we present to them. Our culture at UBP has always been one of keeping clients closely informed as they weigh up their investment options. It is simply not satisfactory to 'bury' risk within microscopic terms and conditions; clients correctly demand openness. Many are still prepared to live with a higher level of risk but need to know explicitly just what that risk is. There has been something of a move among UHNWI towards seeking high yield and we are well-placed to meet this. What are the main challenges that the private banking sector faces across the GCC? The competitive environment in this region makes it essential to keep ahead of other providers through a differentiated product and service offering. We also have to anticipate and respond to a changing and often complex regulatory

UBP KEY FIGURES As at 31.12.1017

ASSETS UNDER MANAGEMENT

CHF

125.3

BN

BALANCE SHEET TOTAL

CHF

32

CHF

220

BN

NET PROFIT

MN

HEADCOUNT

1,697 TIER 1 RATIO

27.5

%

SHAREHOLDER'S EQUITY

CHF

2.2

MN

Source: UBP

wealtharabia.net

15


COVER STORY

environment with MiFID II and the Common Reporting Standard taking effect. At UBP, compliance is never a tick box activity; it is an essential part of the responsibility that goes with managing clients’ money. Can you tell me just a little about the steps taken by UBP to evaluate and respond to individual client’s circumstances? You have to start off by recognising that no two clients are the same. In addition, many clients already have considerable experience of other private banks and are in no sense 'new to the game'. Some arrive at our door with clear perceptions of the sort of products and services they want while others are actively seeking our detailed help, assistance and ideas. Our role is to set out our convictions, listen and learn from our clients and only then outline how we can apply solutions to each individual set of circumstances. In addition, we must be frank with our advice and perform a role that may involve clear guidance that a client may not expect. There have been instances where it has been necessary to prompt the client to think about the extent of the risk present in their investment portfolios. What investments are your clients most interested in? The search for yield does tend to dominate investment meetings with clients. It is an area where we have the expertise but also one where it is necessary to ask «what kind of yield?». We know only too well that chasing the highest yield can often end badly. As we do with our Direct Investment Group, we have to set out the risks in a transparent way. Clients need to have the means of understanding whether risks relate to the broader market or to illiquidity. That is what drives the ultimate investment decision and we have the resources in place to support an informed view. Over time, however, we are finding growing interest in both our advisory and discretionary offerings as well as in our family office services. 16

How do you perceive the investment outlook for 2018? On the whole, we are optimistic about the prospects for 2018 as we enter a period of synchronised global growth. We see the potential for continued economic and earnings recovery and the lack of any recessionary indicators supports this conviction view. As central banks ease back on and move to withdraw quantitative easing, markets can only move on their own merits as the artificial stimulus begins to recede. We see positive opportunities in the emerging market space but also recognise the need for careful selectivity in different asset classes where some valuations show signs of reaching a peak. Equity investment decisions will need the application of serious selectivity to ensure that investors do not overpay. It will be worthwhile paying close attention to the earnings season to check if actual results match market expectations. This backdrop tends to make us favour a non-US approach to equities and we have identified particular scope for Japanese corporates. In the fixed income universe, we have a preference for corporate credit over government debt. Do you see scope for further expansion in the region? How will you go about attracting the talent you need and what factors make senior bankers consider a career with UBP? As this region grows in economic importance we see huge potential to expand our business. That means having the right people in our team, namely those best-placed to support our clients as effectively as possible. We follow a highly-selective approach in recruiting our bankers with many, in fact, coming to us because they can see the rewards associated with working for UBP. A number of recruits identify with our core value of client service and our clear investment conviction. In addition, we make our own targeted efforts to strengthen our group of specialists by recruiting those


COVER STORY

likely to help our business to continue its expansion. What have been the main lessons you have learned about how to take care of HNWIs and UHNWIs in your years of private banking? Our clients expect both service and performance and we have to deliver that on a consistent basis. That means keeping up the levels of client engagement and being on hand to offer help and support. At its heart, it is a relationship and that needs effort to make it work and to make sure it lasts. By being judicious with the advice offered and looking at the facts and conviction which support that advice you can ensure that the client feels you are on their side. Matching that level of personal involvement with close attention to suitability and client risk profiles creates a backdrop of trust— the foundation for a successful private banking relationship.

Mohamed Abdellatif

How does UBP differentiate itself from all the other Swiss private banks operating in the GCC? Family ownership really matters at Mohamed Abdellatif UBP and governs the way our bank operates. We are not restrained by share price performance and can confidently concentrate on our clients and meeting their needs. We have the freedom and the capacity to innovate so that our private banking services are relevant and beneficial for the clients we seek to serve. In addition to the individual service we provide on a day-to-day basis, our Tier 1 ratio of 27.5 per cent as at end 2017 is a key measure of our strength and represents the sustainable growth strategy which we have pursued over many years. Although not a listed company, we do still publish our full results which underline our stability and highlight the extent to which we are committed to managing a significant level of private client and institutional investment. We want to build client relationships that last over generations and have a real commitment to growing our client base in the GCC. wealtharabia.net

17


INVESTMENT

Why you should remain confident in Japan in 2018 Daisuke Nomoto, Head of Japanese equities, Columbia Threadneedle Investments, expects a normalisation of price setting strategy to help buoy both revenues and profits, while tax cuts to help to maintain Japanese business confidence, which is already close to the highest levels since the late 1980s.

E

arlier this year, we further raised our allocations to Japanese stocks, with nearterm catalysts including: increased strength in bottom-up corporate earnings; evidence of ongoing corporate reform driving better shareholder returns; firm economic expectations; receding political risks, with Prime Minister Abe having secured a strong victory at the recent snap elections; and high operational leverage of Japan Inc to synchronous global economic improvements.’ There are myriad reasons for our confidence in Japan’s economy.

18

CORPORATE GOVERNANCE REFORM Topics of discussion with Japanese corporate management have shifted materially over the last decade towards long-term corporate strategy, principal-agency relationships, etc. This positive development has derived from the introduction of corporate governance reform two years ago, and has gradually helped increase the return on equity (ROE) for Japanese companies. We believe that better corporate governance will continue to help unleash the value that has been hidden within Japanese equities.

Two of the major objectives of the corporate governance incentives are: 1) to eliminate conflicts of interest that exist between management and shareholders, and; 2) to ensure that a company’s assets are used effectively in the best interests of stakeholders. There is a positive correlation between the level of improved corporate governance and ROE in Japanese companies. Figure 1 indicates that the average ROE of Japanese companies was substantially lower than in the US and Europe in 2011, but the gap had narrowed noticeably by 2017. Japan’s Financial Services Agency proposed a ‘Stewardship Code’, which


INVESTMENT

endeavours to promote sustainable growth in the corporate sector in addition to achieving fair investment returns for clients and beneficiaries. We are thus witnessing Japanese companies significantly raising dividends and initiating share buybacks. With total cash sitting on corporate Japan’s balance sheet amounting to a record high of more than JPY 250 trillion ($2.3 trillion), it is likely that Japanese companies will continue to raise dividends, increase mergers and acquisitions (M&A), and complete further share repurchases to mitigate the drag of excessive cash balances on ROE.

Returning excess cash to shareholders or putting cash to work for investments is a reasonable management decision since cash balances earn a zero - or sometimes negative - return, after inflation. We believe that investors will reward companies that generate sustainable free cash flow, earn returns significantly above their cost of capital and regularly conduct shareholderfriendly capital management (such as increasing dividends, buying back shares, and pursuing accretive M&As). Additionally, Japan’s Government Pension Investment Fund (GPIF), the world’s largest public pension fund

with assets under management of approximately $1.2 trillion, has been starting to focus on Environmental, Social & Governance (ESG) oriented investments. Given the size of the fund and its influence in the investment community, GPIF’s stance towards ESG will force Japanese companies to be increasingly aware of improving corporate governance as well as their social/environment behaviours Corporate governance reform is not a single-year event, but an irreversible structural move, which should continue to be welcomed by equity investors. wealtharabia.net

19


INVESTMENT

PRODUCTIVITY Productivity is a far more critical concept for the Japanese economy and its corporate sector than simply high growth. Abe drove labour reforms forward with a goal of encouraging women and retired workers to return to work, increasing the rate of labour force participation. The government’s various efforts are starting to bear fruit: some 1.5 million Japanese women have been added to the workforce over the last four years and the female labour participation has risen to 68 per cent, up eight percentage points in the last 15 years, having caught up with the US, according to OECD data. Also, the total number of employed has increased by more than 2.4 million over the last four years. Deregulation of Japan’s labour structure is underway with the goal of increasing salaries and providing better career opportunities for nonfulltime workers. As part of Abe’s structural reforms, the government introduced the concept of ‘equal pay for equal work’, called ‘HatarakikataKaikaku’ with the aim of improving labour productivity. According to McKinsey’s report titled The Future of Japan: Reigniting Productivity Growth, if Japan succeeds in doubling its rate of productivity, it could boost GDP growth to about three per cent and increase GDP by up to 30 per cent by 2025. Note that the Japanese government’s goal is to increase GDP to JPY 600 trillion (currently JPY 546 trillion), or to $5.5 trillion, by 2020. MAINTAINING COMPETITIVENESS A belief among some is that Japanese companies are simply not competitive. This argument stems primarily from two assumptions: 1) that Japanese companies are not producing valueadded products/services, and; 2) that Japanese companies are not pricing products/services appropriately (i.e. selling value-add at significant discounts). With regard to the first point, the Atlas of Economic Complexity 20

Daisuke Nomoto, Head of Japanese equities, Columbia Threadneedle Investments

Index measures the extent of critical knowledge incorporated in an economy, implying the relative uniqueness of the products that are marketed to overseas trading. On this measure, Japan has been rated as the world’s most complex economy every single year since the start of this data collection in 1995, which suggests that Japanese companies have continued to bring value-added products to market. On pricing, there is huge room for improvement. The ‘irrational behaviour’ of excessive price discounts among Japanese companies was to some extent exacerbated by deflation, which plagued Japan for more than a decade, and also by excessively

competitive market dynamics (too many competitors in the same industry). Although inflation has not reached the two per cent level targeted by the Bank of Japan yet, at least we can say that Japan was able to defeat deflation. Also, data compiled by Nomura shows increasing M&A activity from 2010 to 2016, indicating industry consolidation has been taking place gradually but surely. Demographics come into play here as well. Given the ageing society, an increasing number of small business owners are starting to think about retirement. Japan’s small/medium enterprises account for about 99 per cent of its


INVESTMENT

Return on equity 15% 12% 9% 6% 3% 0%

Japan (Topix 500)

Europe (Bloomberg Europe 500) 2011

U.S. (S&P 500)

Now

Source: Bloomberg, 9/30/2017.

Japan's GDP breaking out on the upside 600 550 500 450 400 350 300

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

2014

2017

Japan GDP Source: Bloomberg, Economic and Social Research Institute Japan.

Jobs-to-Application ratio at its highest in two decades

12/01/89 09/01/90 06/01/91 03/01/92 12/01/92 09/01/93 06/01/94 03/01/95 12/01/95 09/01/96 06/01/97 03/01/98 12/01/98 09/01/99 06/01/00 03/01/01 12/01/01 09/01/02 06/01/03 03/01/04 12/01/04 09/01/05 06/01/06 03/01/07 12/01/07 09/01/08 06/01/09 03/01/10 12/01/10 09/01/11 06/01/12 03/01/13 12/01/13 09/01/14 06/01/15 03/01/16 12/01/16 09/01/17

Source: Ministry of Health, Labour and Welfare, Japan.

Labour force YoY growth the longest run since 90s 3.0% 2.0% 1.0% 0.0% -1.0%

1017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

-3.0%

1991

-2.0% 1990

total number of companies, employ 70 per cent of the workforce, and have seen the average age of their presidents climb each year. These businesses will continue to come up for sale, fuelling industry consolidation, and eventually increasing pricing power. It can be said that Japan’s elevated economic complexity over decades has been supported by high levels of patents and R&D. We believe that through its continued investments in future technologies, Japan should be able to maintain its leading technological edge across such industries as robotics, automation, games, specialty materials, and precision equipment.

1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0

Source: Ministry of Internal Affairs and Communications.

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SPOTLIGHT ON INFLATION Japan’s GDP has expanded for seven consecutive quarters, which is the best run in sixteen years. Japan’s nominal GDP is making a new high of JPY 549 trillion, the highest level in 20 years. In 2015, the Japanese government set a target to increase nominal GDP by 20 per cent to JPY 600 trillion, which is 8.5 per cent shy of its goal, as of Q3 2017. We think that GDP is on a sustained growth track supported by both structural reforms such as labour and tax reforms, coupled with the Bank of Japan’s (BoJ) accommodative monetary policy It is true that inflation hasn’t risen to the 25 per cent level which the BoJ has long targeted, but our onthe-ground research suggests that the Japanese economy is no longer deflationary, with food, taxi fares, office rent, delivery service and restaurants all seeing rising prices. Japan’s CPI has increased steadily over the past year, reaching +0.9 per cent YoY in November 2017. In determining whether the economy has made an exit from deflation, the Japanese government has focused on four main indicators as shown in the four graphs below: 1) CPI, 2) GDP deflator, 3) unit labour costs, and 4) the output gap. All of these indicators are about to move into positive territory at the same time, the precondition for the official determination of the end of deflation. Until there are sustained positive readings from the four indicators at the same time for a few quarters, the accommodative monetary policy is expected to continue. Given the changing inflationary environment, Japanese companies have started to review their strategies for selling products and services with proper pricing and not to cut prices simply to gain market share. This ‘normal’ pricing behaviour hasn’t been seen for quite a long time due to the entrenched deflationary mindset. This normalisation of price setting strategy should help buoy both revenues and profits, and further improve the margins of Japanese companies. 22

OECD female labour force participation rate (15-64) 75 70 65 60 55

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Japan labour force participation rate

Japan labour force participation rate

Source: OECD.

Japan immigration rising even higher to 2.47m in 2017, or 1.96% of pupulation 2.3 2.1 1.9 1.7 1.5 1.3 1.1 0.9 0.7

1980

2015: Immigration were 1.8% of population

1980: Immigration were 0.7% of population

1985

1990

1995

2000

2005

2010

2015

Source: Cornerstone Macro.

Attention is now being paid to wage inflation. We have seen some wage hikes in the lower income segment, but overall wage growth still looks anaemic. The word on Japan’s Main Street is that companies have excessive profits but retain it as an internal reserve rather than pay out to employees. Investors believe that companies do not pay out excess cash to shareholders, even though corporate Japan keeps more than JPY 200 trillion of cash ($1.8 trillion) on the balance sheet, with negative interest on a real basis. This is about to change. As we will discuss later, Japan’s labour market is at its tightest historically, so that wage pressures should impact wage growth sooner rather than later. Japanese Prime Minister (PM) Shinzō Abe has promised to reward companies that raise wages more than three per cent. Taking into account PM Abe’s

indicated expectations of a three per cent wage hike and public opinion, Keidanren (Japan Business Federation) will present specific policies for wages, and encourage debate between management and labour within individual companies. Decisions on wage increases will be left to each company, but Keidanren will ask them to adopt a forward-looking approach to wage increases for the sake of the virtuous economic cycle and the reinvigoration of consumer activity. STRENGTH OF THE LABOUR FORCE Japan is enjoying its longest run of labour force growth since the late 1990s, as the labour market continues to tighten. The job-to-applicant ratio suggests that there are 1.6 jobs available per job seeker in Japan—the tightest labour market we have ever seen. A key Abenomics success is getting more women into the


INVESTMENT

workforce to lift household income. The government’s various efforts are starting to bear fruit—some 1.5 million Japanese women have been added to the workforce over the last four years, raising the female labour participation rate (15-64) to 68 per cent, up eight percentage points in the last 15 years, catching up with the US (according to OECD data). Also, the number of foreign workers has been rising, hitting the one million mark in 2016 for the first time ever. What’s interesting to us is the consistent increase in the number of foreign residents. It is true that PM Abe claims that the Japanese government is against any radical immigration policies, and it remains a controversial agenda in the homogeneous Japanese society. However, stealth immigration seems to be underway, driven by the need to bolster the labour force. Immigrants as a percentage of total population is still much lower than in other countries, but its sustained uptrend reminds us of our history lessons—the ‘Convention of Kanagawa’ in 1854 (a treaty between Japan and the US) forced Japan to put an end to its national isolation that had existed since 1616. TAX CUT BOON Since the Abe administration came into office, the government has been lowering the effective corporate tax rate to make Japan more attractive for businesses. The overall effective corporate tax rate in Japan has fallen from 37 per cent in 2012 to 29.74 per cent effective April 2018. Additionally, Japan approved new tax measures to cut corporate taxes further to 25 per cent for companies that raise

wages by three per cent, and to as low as 20 per cent for those that invest in new technologies. The Japanese government is also examining the idea of slashing fixed-asset taxes to help small- and midsize companies boost productivity. We believe that these conditional tax cuts should be positive for the economy and the corporate sector, as they will contribute to improving competitiveness and productivity. We think that these tax cuts should help to maintain Japanese business confidence for the time being, which is already close to the highest levels since the late 1980s. NO MONETARY TIGHTENING Given the positive macro backdrop, some people are starting to think about probability of BoJ’s policy shift. Our view is that BoJ is likely to shift the target in its YCC policy (Yield Curve Control), allowing the Japanese Bovernment Bond (JGB) yield curve to somewhat steepen if growth continues to be strong and inflation is sustained. When BoJ Governor Haruhiko Kuroda made a speech in Switzerland last November, he mentioned that most corporate and household financing is based on short- to medium-term interest rates, but longer-term interest rates are likely to be more relevant for society’s financial infrastructure functions such as insurance and pensions. He explicitly mentioned the ‘reversal rate’. Academic research suggests that there may be a point where further interest rate declines are likely to do more harm than good to the economy. Nobody knows where that level is, but the fact that he referred to

We believe that these conditional tax cuts should be positive for the economy and the corporate sector, as they will contribute to improving competitiveness and productivity. We think that these tax cuts should help to maintain Japanese business confidence for the time being, which is already close to the highest levels since the late 1980s. Daisuke Nomoto

it suggests that BOJ is perhaps thinking that low shorter-term rates are more effective in stimulating the economy than low longer-term rates. In fact, after years of massive asset purchases, BoJ’s data indicated total assets on its balance sheet slightly shrank from the end of November to December 2017, the first month-to-month decline since the initiation of QQE (Quantitative Qualitative Easing) as a part of Abenomics. This move would help the JGB yield curve steepen, which would benefit Japanese banks, insurance companies and pension funds. The probability of tweaking the YCC policy is rising. We should bear in mind that shifting the target and letting the long end of the curve rise would not be a tightening move. Even though Japan appears to have turned the corner on deflation, we believe that BoJ will persist with powerful monetary easing to nurture positive inflation developments. Continuing accommodative monetary policy should be friendly to the equity market, and should help Japanese business confidence, which is close to the highest levels since the late 1980s, remain elevated. As we discussed earlier, corporate governance reforms are beginning to change Japanese companies’ mindsets into becoming more shareholder friendly —increasing returns on equity and returning excess cash to shareholders. Better corporate governance in Japan is still a work in progress, but companies are clearly making good progress. We are witnessing many technologies and inventions emerging in Japan, supported by its researchoriented corporate culture. There are multiple ways for Japanese companies to enhance their competitive advantage and increase operating productivity. McKinsey’s Future of Japan report claims that simply by adopting global best practises, deploying next-generation technologies, and organising for discipline and performance, Japanese companies can achieve at least 50 per cent of their productivity goal by applying practises that are already in use elsewhere around the world. wealtharabia.net

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Investing ethically across the globe Ayman Sejiny, CEO, Ibdar Bank, speaks to WEALTH Arabia about his organisation

PHOTO CREDIT: Shutterstock/Leonid Andronov

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T

ell me about Ibdar Bank. Ibdar Bank is a fully licensed Islamic Wholesale Bank, active in the ethics driven debt and capital market providing Islamic Bond issuance, wealth management, alternative investments and other investment banking services. The Bank’s roots stem back to 1981 and today Ibdar Bank is in the top tier of Bahrain’s Islamic Wholesale Banks. Ibdar understands itself as the top Islamic challenger bank focusing on the Global Islamic Digital Economy (GIDE) providing sector expertise and a proven track record in Real Estate, Aviation, Trade & Manufacturing and FinTech. The Bank’s shareholder base includes blue chip financial institutions from Kuwait, Bahrain, Saudi and the UAE. What is the bank’s investment philosophy? To deliver income generating investments. We believe that investors must be provided with a myriad of opportunities that cater to a diverse risk appetite including low, medium and high risk investment opportunities across a wide range of sectors. Our investment strategy is guided by the United Nation’s Six Principles of Responsible Investment, which are voluntary and aspirational. They offer a menu of possible actions for incorporating environmental, social and

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Ayman Sejiny, CEO, Ibdar Bank

corporate governance (ESG) issues into investment practises across asset classes, and as such the bank strives to undertake investments that add sustainable social and economic value to the markets and communities in which we invest. What does Ibdar provide for its investors? Ibdar Bank provides its investors global income generating investment opportunities in aviation, real estate, Sukuk and investment funds. The bank is also expanding its services to include an array of investment advisory services. How is Ibdar enhancing its offerings? The bank sources high yielding investment opportunities. In real estate, our focus is in the UK and US markets, these opportunities are usually found in smaller cities rather than the capitals. In aviation, developing countries are providing a wealth of high yielding investments. Ibdar is also currently growing its investor relations team, allowing the bank to be even closer to its customers to understand their requirements so that Ibdar can deliver the products 26

they are seeking. Our wealth management advisory services will include Awqaf, Family Office, asset allocation and sourcing and valuation. Where does Ibdar Bank focus its investment portfolio? The bank is focusing on fee income producing services and investment opportunities that are less capital intensive. Issuance of DCM (Debt Capital Market) products and advisory on ECM (Equity Capital Market) opportunities. Our current portfolio is focused on prime global real estate and aviation. Ibdar’s real estate team has been extensively involved in allocating unique investment opportunities within the international real estate market, with a special focus on the UK, US and MENA region in order to provide our investors with safer, better and more profitable opportunities. In 2017, the bank, in collaboration with leading US property and asset managers, acquired the headquarters of Amazon Robotics, in Boston, US. In 2016, the bank identified and invested in a $78 million multi family housing property in Montgomery

County Maryland, US, a $29.5 million Joint Venture (JV) to develop a prime Purpose-built Student Accommodation (PBSA) project in Southampton, UK, and in the development of a GBP 148 million scheme that will offer 458 residential apartments in Manchester, UK. In addition to its extensive experience in real estate, Ibdar is recognised as a major player in the aviation sector, having successfully executed $277 million of aviation transactions since the establishment of the bank’s aviation platform in 2014. Amongst these transactions include the award-winning deal with multinational aerospace and transportation company Bombardier, where Ibdar pioneered the first ever Shari’ah-compliant transaction in Africa’s aviation sector’s history. We are also focusing on Sukuk and more capital market instruments. In terms of our investment footprint, we are looking to further expand our portfolio in the UK and the US and are currently exploring the European markets. What is the focus of the bank as we move into 2018? Ibdar will reach out to investors across the globe. Technological advances have completely changed the relationship customers have with their banks and this does not only apply to retail banking only. Ibdar is exploring fintech opportunities through the Central Bank of Bahrain, which has established one of the first sandboxes in the region, allowing the financial sector to test new tools and services. Fintech will provide the bank with access to new investors and allow us to serve them better. The bank is currently working on building the capability in order to sell its products through fintech rather than face to face to facilitate global reach and attract international investors. Ibdar Bank is working towards becoming the world’s first fully-digitised Islamic Investment bank that will cater to the needs of the Global Islamic Digitised Economy (GIDE).


CONTEMPORARY: Ab-Anbar, Tehran · Addis Fine Art, Addis Ababa / London · Agial Art Gallery, Beirut · Aicon Gallery, New York · Artside Gallery, Seoul · Artwin Gallery, Moscow · Aspan Gallery, Almaty · Piero Atchugarry Gallery, Pueblo Garzón · ATHR, Jeddah · Ayyam Gallery, Dubai / Beirut · bäckerstrasse4, Vienna · Galería Elba Benítez, Madrid · Marianne Boesky Gallery, New York / Aspen · Galleri Brandstrup, Oslo · Martin Browne Contemporary, Sydney · Canvas Gallery, Karachi · Carbon 12, Dubai · Galleria Continua, San Gimignano / Beijing / Les Moulins / La Habana · Custot Gallery, Dubai · Dastan’s Basement, Tehran · Elmarsa, Tunis / Dubai · Espacio Valverde, Madrid · Experimenter, Kolkata · Gallery Isabelle van den Eynde, Dubai · Galerie Imane Farès, Paris · Selma Feriani Gallery, Tunis / London · Saskia Fernando Gallery, Colombo · GALERIST, Istanbul · Gallery 1957, Accra · Gazelli Art House, Baku / London · Green Art Gallery, Dubai · Grosvenor Gallery, London · Gypsum Gallery, Cairo · Hafez, Jeddah · Leila Heller Gallery, New York / Dubai · Kristin Hjellegjerde Gallery, London · i8 Gallery, Reykjavik · Ikkan Art Gallery, Singapore · INDA Gallery, Budapest · Kalfayan Galleries, Athens / Thessaloniki · Khak Gallery, Tehran / Dubai · Galerie Dorothea van der Koelen, Mainz / Venice · Galerie Krinzinger, Vienna · Lawrie Shabibi, Dubai · Galerie Lelong & Co., Paris / New York · John Martin Gallery, London · Meem Gallery, Dubai · Victoria Miro, London/ Venice · Galerie Mitterrand, Paris · Mohsen Gallery, Tehran · Galleria Franco Noero, Turin · Gallery Wendi Norris, San Francisco · Officine dell’Immagine, Milan · Gallery One, Ramallah · Ota Fine Arts, Tokyo / Singapore / Shanghai · Pace Art + Technology, Menlo Park · Giorgio Persano, Turin · Plutschow Gallery, Zurich · Galerie Polaris, Paris · Project ArtBeat, Tbilisi · Katharina Maria Raab, Berlin · Revolver Galería, Lima / Buenos Aires · Rosenfeld Porcini, London · Sanat Gallery, Karachi · SANATORIUM, Istanbul · Sfeir-Semler Gallery, Hamburg / Beirut · Sophia Contemporary, London · Galerie Michael Sturm, Stuttgart · TAFETA, London · Galerie Tanit, Munich / Beirut · TEMPLON, Paris / Brussels · The Third Line, Dubai · Vermelho, Sao Paulo · VOICE Gallery, Marrakech · x-ist, Istanbul · Zawyeh Gallery, Ramallah · Zidoun-Bossuyt Gallery, Luxembourg · Zilberman Gallery, Istanbul / Berlin MODERN: Agial Art Gallery, Beirut · Akara Art, Mumbai · Albareh Art Gallery, Manama · Aria Gallery, Tehran · Le Violon Bleu, Tunis · DAG, New Delhi / Mumbai / New York · Elmarsa, Tunis / Dubai · Grosvenor Gallery, London · Hafez Gallery, Jeddah · Karim Francis Gallery, Cairo · Mark Hachem, New York / Paris / Beirut · Gallery One, Ramallah · Perve Galeria, Lisbon · Sanchit Art, New Delhi · Ubuntu Art Gallery, Cairo · Wadi Finan Art Gallery, Amman RESIDENTS: 1x1 Art Gallery, Dubai [Poonam Jain] · Erti Gallery, Tbilisi [Tato Akhalkatsishvili] · Mariane Ibrahim Gallery, Seattle [Zohra Opoku] · Galerie Kornfeld, Berlin [Farshad Farzankia] · Lakum Artspace, Riyadh [Faris Alosaimi] · The Mine, Dubai [Yasuaki Onishi] · Öktem&Aykut, Istanbul [Jennifer İpekel] · Orbital Dago, Bandung [Iabadiou Piko] · ROBERTO PARADISE, San Juan [José Lerma] · The Rooster Gallery, Vilnius [Kristina Alisauskaite] · Tyburn Gallery, London [Victor Ehikhamenor]


INVESTMENT

Bubble trouble Steen Jakobsen, Chief Investment Officer, Saxo Bank has a candid conversation with WEALTH Arabia about how investors should be approaching their portfolio this quarter

PHOTO CREDIT: Shutterstock/kosaras_balazs

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I

s the global economy in a bubble? If so, how do investors navigate that? First of all, we need to start discussing whether you can see a bubble or not. Mathematically it’s pretty simple—when things go super exponential, it’s a bubble. We don’t know when the bubble is going to burst, that’s not the exercise of Q1, it’s to tell people that everything is a bubble, except for agriculture, emerging markets as a relative value, and mining. Everything else— real estate, cryptocurrencies, and equities—everything is in a bubble. All of those businesses are driven by a huge dependency on debt issuance. We have $253 trillion worth of debt in the world today and we have no growth to show for it. The US Government is promising four to five per cent growth, which is never going to happen due to low productivity.

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30

In the world right now there is an island called the stock market and assets. On this island, there is a party—the people there are beautiful, they are slim, they’re listening to good music, the sun is always shining. This island has no ferries to the mainland— the real economy. The problem is that we can stay on this island for a long time and ignore the people on the mainland, but the island is too small—once in a while you need to get provisions from the mainland. That provision has been debt but now there is no more debt to be issued. Now we’re going to have to build a bridge from the island to the mainland. It’s a bubble. You can’t value anything when you have zero interest rates and infinite debt creation. As long as that exists, you have no bridge. What is the bridge? It’s the price of money, and the speed at which we issue the debt. The US Federal Reserve drives the price of money, but the first central bank in the world to tighten monetary policy is China. China’s PMI at this point in time is very bad, and we actually think China will slow down the rest of the world dramatically.

How to spot a bubble?

What is the current situation between China and the US, in your view, and how does that effect the situation you just described? In geopolitical terms, we are already in a trade war. China’s export will go down to the US relatively, and will be rebalanced to other places such as India and the rest of Asia. There is a big recalibration of all trade flows, including dollar flows, in the world going on. Singapore’s Prime Minister said it best: traditionally you were able to navigate both sides of the rising China and economic power of the US. However, inside the next few years, he said, a lot of countries are going to have to decide whether they are with China or with the US. That is what’s going on. The inability to reform, to renew the constant inequality and disposable income disparities, points to the fact

Global asset bubbles over the last four decades

% of GDP

5.0

US Credit Impulse (YoY change)

0.0 -5.0 -10.0 -15.0 % of GDP

10.0 7.5 5.0 2.5 0.0 -2.5 -5.0 -7.5

China Credit Impulse (YoY change)

% of GDP India Credit Impulse (YoY change)

2009

2010

2011

2012

2013

2014

7 5 3 1 -1 -3 -5 2015

2016

2017

Source: Macrobond, Saxo Bank Research & Strategy

12

1700

All series indexed to 1 at start

1500

Bitcoin (RHS)

Tech heavy Nasdaq index (LHS)

10

1300 1100

8

6

900

MSCI Asian shares (ex Japan) (LHS)

Japanese Nikkei share index (LHS)

700

Gold (LHS)

4

500

US house prices (LHS)

300

2 100 -100

0 80

82

84 86

88

90

92

94

Source: Thomson Reuters, Bloomberg, AMP Capital

96 98

00

02

04

06

08 10

12

14

16

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Are there any markets you find attractive to investors? The only powerful play right now is Japan. It’s really gotten through such a crisis that there are cheap valuations relatively speaking. There are pockets of value that haven’t gone up in the latest cycle of debt, such as commodities, agriculture, and mining. Are we better or worse equipped to weather another economic crisis than we were 10 years ago? We’re worse equipped. Everything is highly leveraged. What people think is that we were saved by lower interest rates. We weren’t. The global economy was saved by China doing the biggest fiscal expansion ever in the history of mankind. Six months before the low in 2009, China was expanding the credit impulse massively, printing money, getting the public sector back online.

MSCI ACWI Index

Number of straight months with gains/losses

15 10 5 0 -5

WILL THE CRYPTOCURRENCY 1988 1991 1994 1997 2000 2003 MANIA CONTINUE?

-10

2006

2009

2012

2015

Source: Bloomberg and Saxo Bank

Percentage of total market capitalisation (Dominance) PERCENTAGE OF TOTAL MARKET CAPITALISATION (DOMINANCE) Zoom 1d 7d 1m 3m 1y YTD ALL

From Jan 12, 2017

To Jan 12, 2018 Friday, Jan 12, 2018, 11:47:00 UTC Bitcoin: 33.45% Ethereum: 16.90% Bitcoin Cash: 6.14% Litecoin: 1.85% Ripple: 11.20% Others: 24.14%

80% Percentage of Total Market Cap

that we are not getting solutions, we are getting scapegoats. The US’s current scapegoat is China which masks that the US is not productive. The tax law is nothing but amnesty for people politically to do the right thing—all the companies that should be talked about in monopoly conversations are making a show of taking money home to be good citizens. All of this is spin on spin on spin. The ferry to the mainland, to extend my metaphor, could be potentially high interest rates, the credit impulse, the change to credit, is negative. China has a credit impulse into the magnitude of minus 10 per cent. The last time we had this magnitude was right before the 20082009 crisis. China is 40 per cent directly and indirectly of the credit impulse or growth impulse of the rest of the world. Meanwhile, everyone looks west to the Federal Reserve, wanting to see whether they will do three or four rate hikes. Meanwhile, the Central Bank of China has already tightened monetary policy, President Xi Jinping has consolidated his power base, convinced they will be number one in the world.

70% 60% 50% 40% 30% 20% 10% 0%

Feb '17 Mar '17 Apr '17 May'17 Jun'17

Jul'17

Aug'17 Sep'17 Oct'17 Nov '17 Dec '17 Jan '18 SOURCE: COINMARKETCAP.COM

Source: coinmarketcap.com

ETHEREUM SEEMS TO BE ONE OF THE CRYPTO ASSETS WITH REAL-WORLD UTILITY THAT GOES BEYOND ITS CRYPTOCURRENCY FUNCTION

The illusion is that the monetary policy helped, but monetary policy, every expert will tell you, is not proven to work. Everybody agrees that you cannot JACOB POUNCEY, CRYPTO ANALYST tell if quantitative easing (QE) works, Jacob Pouncey first joined Saxo in 2017 as their go-to crypto guy. He has followed the but everyone also agrees that you have cryptocurrency and blockchain space since 2013 . Jacob focuses on delivering in-depth crypto to doof more QE ifandthere’s another market analysis . He has a deep understanding the technology fundamentals that drivecrisis. the Crypto Asset space . That’s what we’re left with! Central Jacob tends to focus on medium and long-term indicators for market analysis . banks know they can’t prove that QE works. It cannot work, because credit 29 can support a market but it cannot Q12018 evolve it. You need to allow the business cycle to take place and let bankrupt By #SAXOSTRATS companies go bankrupt. Instead what we’ve done over the last 10 years is to let all the businesses that shouldn’t

China is

40% directly and indirectly of the credit impulse or growth impulse of the rest of the world

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be competing compete with all the businesses that can compete. You’ve crowded off productivity and innovation to keep businesses alive. It’s been about keeping jobs rather than creating jobs. All throughout many industries, it’s been about keeping and maintaining instead of creating. Leaders are worrying about maintaining the GDP per capita and the status quo of the current political systems. What are your thoughts on cryptocurrencies? Is now the time to invest? Cryptocurrencies are competing technologies. Only one will win. In my opinion, the cryptocurrency that will win has not been invented yet. What we’re seeing from South Korea, and what we’re seeing from national authorities from across the globe in the crypto space, is that to survive you need to be KYC (know your customer) compliant and every transaction needs to be public. Zero of the established cryptoworld are able to do that. Secondly, no government will ever allow a competing currency to evolve. I think there will be a globally competing cryptocurrency, but I think it will be issued by someone such as the IMF or the World Bank, and it will be used with blockchain to control a global tax on corporations and a global tax on citizens, as it will allow you to reverse engineer every transaction that goes through on the ledger. Ironically, cryptocurrencies and blockchain will be used by governments to seize even more control over society. How should investors be balancing their portfolio at this point in time? Investors need to be proactive, and realise that we are in a bubble. You need to realise that there is a 50 per cent probability of a recession, and that’s important because the only time that you really lose money is in a recession with long-term assets. Recessions take away between 25 per cent and 50 per cent of your capital if you do nothing. I call this capital 32

It’s a bubble. You can’t value anything when you have zero interest rates and infinite debt creation. As long as that exists, you have no bridge. Steen Jakobsen

Steen Jakobsen, Chief Investment Officer, Saxo Bank

preservation mode. You’ve had a very good run, sometimes you need to be humble and realise how lucky you’ve been. My active strategy for wealth individuals is to do capital preservation—simply take your portfolio back to a balanced portfolio. I would go 25 per cent cash, which, if you’re dollar-based now, actually pays you two per cent. I would have 25 per cent in equities, with 50 per cent of that in emerging markets with an expected return of five per cent each. I would have mining in there as well, and on the commodities side I would have some gold, as always, silver, industrial metals for 50 per cent of that and the other 50 per cent in agriculture. I would then keep a fixed income portfolio tilted 50 per cent towards the US and 50 per cent in emerging markets. Some of the positive news in the world is South Africa, where you’re getting paid eight to nine per cent, the currency is cheap, and you can afford to make

a play in that. Going into a 25-2525-25 portfolio allows you to have cash if it goes down, a carry through the fixed income component and cheap commodities. As an allocator, you only need to figure out the relative risk of assets, which, admittedly is not easy. An investor needs to rank the assets in their portfolio and say, what is the expected turn on equity? If you rank them in expected returns, you’re going to ask would you rather wager on something that has zero per cent upside or something that’s cheap and has a carry, such as mining where cash flow is improving and commodity prices are coming back up. In fixed income, look at the carry relative to the risk. With the South African rand for example, you have five to six per cent risk, but you’re getting paid eight per cent for it. If you’re in there long enough, you should be fine. It’s all about capital preservation, in my opinion.


INVESTMENT

MENA’s growing VC industry

PHOTO CREDIT: Shutterstock/Andrey_Popov

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Philip Dowsett, Funds Partner at Morgan Lewis, sheds light on Dubai and MENA’s growing venture capital tech investment landscape

I

n terms of the international stage, for a while it’s been all eyes on Dubai and its prevalence in relation to its standing as jurisdiction of choice for operating in or out of the Middle East. By virtue of this prevalence, Dubai has arguably, and by default, found itself as the Middle East and North Africa (MENA) region’s jurisdiction of choice for the start-up and venture capital (VC) industry. MARKET SHARES AND INITIATIVES Now, notwithstanding this somewhat serendipitous facet of Dubai’s growth and stature as a hub of business in MENA, over the last few years Dubai has promulgated many efforts to cement this status and ensure it remains the VC centre of the Middle East. According to a recent report, the UAE leads the MENA region as home to 42 per cent of its start-ups, followed by Egypt at 12 per cent, Lebanon at nine per cent and Jordan at eight per cent. However, a number of other MENA countries are launching similar initiatives to try and capture a portion of this fledging market and attempting to knock Dubai of its mantle. For example, in the last year, Saudi Arabia has launched ambitious plans in the country’s 2030 Vision plan to depart from the notion of being an oildependent economy, and encouraging female participation in the workforce, as well as its recent $3.5 billion investment into a leading US tech company. Oman has also initiated ambitious plans, with various investments arms of the country launching the country’s first equity-based venture capital firm, Innovation Development Oman Holding that has an initial capital of $129 million. Additionally, the Oman Investment Fund launched its own

$200 million Oman Technology Fund. Qatar has equally initiated its efforts with The Qatar Development Bank having launched a $365 million SME Equity Fund to provide capital to innovative start-ups and entrepreneurs, as a part of the country’s overall economic diversification. ON A GLOBAL STAGE Taking a step back, the VC industry in itself is an established industry and market in the West. VC investment in the United States last year totalled around $58.6 billion and Europe had $16 billion, while MENA only stands at around $800 million. The MENA region is therefore playing a challenging game of catch-up. This is however carried out against the backdrop the MENA VC industry which is still in its infancy. It has arguably become an industry in itself over the last decade and its progress and achievements within that period are nonetheless notable.

One of the challenges as a start-up in the MENA region is the lack of transparency over financing terms and investment criteria as well as the difficulty in obtaining information on potential suitors for investment, as compared to a considerably greater flow of information in the western world. Philip Dowsett

The rise of VC in the Middle East has primarily been led by a select band of protagonists that have each, and in certain cases, all, been involved in financing rounds for the most highprofile start-ups in the MENA region. This roster includes Wamda Capital, STC Ventures/Iris Capital, Middle East Venture Partners (MEVP), and Beco—which now has numerous other investors vying for a piece of this VC action in the MENA. It’s fair to say however, that this interest has, and in the large part remains to be, from MENA-based investors. The lure of investing in MENA start-ups has not quite yet gained the mainstream interest from across the various ponds. That said, there has recently been an increased interest from foreign investors into MENA-based start-ups, including Series A and B investments in Fetchr which attracted considerable interest from Silicon Valley VC firms (recently closing a $41 million Series B round). A Series A investment by Russian VC, Addventure, was also made in Service Market (formerly known as movesouq). On top of that a majority European-based investment was made in Sprii (formerly MiniExchange). And of course, the recent high profile buy-out of Souq by Amazon. CHALLENGES Given the potential that the nature of many tech-based start-ups means that locality and operational bases are flexible compared to traditional asset-based business, and the attractive tax-free opportunity that basing an operation in a MENA country may afford, one may question why the MENA region has not attracted more start-ups. This is potentially multi-fold: 1. Operations in MENA are not without their hurdles. Although of course operating across state-lines in the US and across Europe comes with managing different laws and regulation, there are numerous synergies and similarities. However, in MENA operating across the wealtharabia.net

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INVESTMENT

region often involves grappling with laws and regulations that are generally more simplistic in their nature and often which have not modernised to address technology business, resulting in ambiguities and uncertainty around operations. This is often coupled with complex issues relating to foreign ownership (which differs in each country), as well as varying demographics. 2. The ownership issue. A number of Gulf Cooperation Council (GCC) countries require local ownership, and this can be a struggle for foreign investors to get to grips with. On the positive side, several countries have free zones affording 100 per cent foreign ownership which circumvents this concern, but, depending on the nature of the business, sometimes an onshore presence in the same country is required which then requires local ownership (and structuring appropriately to protect the assets). 3. We need a unicorn (or two). In the same way proof of concept is often vital in a start-up, MENA needs headline grabbing deals and exits to legitimise its standing. And with the Souq exit and the recent $100 million investment by STC in Careem creating a paper unicorn, this is getting there. 4. The cost issue. Setting up in the GCC can be notably more expensive than doing so in Europe and the United States. However, there more costefficient options such as establishing in Egypt, Jordan or Lebanon where it is cheaper to set-up and have start-up culture. Although, it is not uncommon for these start-ups to look to relocate their HQs to Dubai when finances start to permit. 5. Geopolitics and negative press. Unfortunately, one thing holding back investment in MENA (on many fronts), are negative headlines. These have—in the past—had the tendency to overshadow the many successes, growth, and increased stability throughout much of the MENA region. 36

Philip Dowsett, Funds Partner at Morgan Lewis

UAE is home to

42% of MENA’s start-ups,

followed by Egypt at

12% Lebanon at 9% and Jordan at 8%

Source: Morgan Lewis

MENA is not Silicon Valley. One of the further challenges as a startup in the MENA region is the lack of transparency over financing terms and investment criteria, as well as the difficulty in obtaining information on potential suitors for investment, as compared to a considerably greater flow of information in the western world. Part of this is due to the limited number of deals which means that benchmarking terms are more difficult. There is also no real access to the same reports or insight into financing terms that can be at the hands of start-ups in the US and Europe. The MENA Private Equity Association has sought to redress this and provide more visibility on structures, terms and investors, and

despite movement, information and comparatives are still difficult to obtain. Consequently, VC investors are potentially in a stronger negotiating position in the MENA region than outside of MENA, and the luxury of term-sheet shopping as a start-up in MENA is generally rare, and arguably the investors hold most of the cards and know how to play them. POTENTIAL On the positive side, notwithstanding the infancy of VC in the MENA, many of the principals working for the leading VC firms in the region are sophisticated and seasoned. Plus, as the VC industry in the MENA region matures, these individuals and firms have endeavoured to adopt best international practises and proper documentation to ensure that— even if by size—MENA is catching up and that it can compete from a sophistication perspective. Ultimately, notwithstanding its infancy, the VC industry in MENA is quickly becoming an industry in its own right and is a key focus for many of the jurisdictions looking to move away from the legacy dependency on oil and create alternative means of wealth and income. Concerted efforts have been made by a number of the MENA governments to foster entrepreneurial spirit and accommodate start-ups—from the launch of incubators and accelerators, to accommodating 100 per cent foreign ownership structures and tax-free regimes. With proven increasing interest from non-MENA VC firms into the region’s start-ups and on the back of the Souq acquisition and Careem, the paper-Unicorn, more eyes from the international stage are on the MENA VC industry. Based on the last few years and the determined, albeit ambitious, plans of various governments, the MENA region is seemingly positioning itself well capturing its own share of the global VC market. It will be increasingly interesting to see if anyone can topple, or at least start to unbalance, Dubai off its current pedestal as the home of MENA VC.


AMEX_PlatinumRevite-SAFARI_Ad_WealthArabia-2017-21x28cm+bleed copy.pdf

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INVESTMENT

IT’S TIME TO RENEW YOUR INTEREST IN SOLAR Martin Haupts, CEO of Phanes Group, writes exclusively for WEALTH Arabia about potential investments into renewable energy

A

n investment in solar is a palpable one. Global agendas seldom align in the way the renewable sector has caused them to in recent years: sustainable energy and reducing our carbon footprint are topics that are discussed by politicians and environmentalists alike. This will only have a positive effect on economies and societies across the world. Rising populations, remote communities, and fast-growing economies will all benefit from increased solar investment in the next decade. Even in spite of the United States’ potential renewable energies policy u-turn, the country doubled its solar capacity in 2016, growing nationwide solar jobs to 260,000. Its sudden change of course in 2017 fueled the conversation further among other willing nations.

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INVESTMENT

PHOTO CREDIT: Shutterstock/only_kim

wealtharabia.net

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INVESTMENT

In the Arab world, for example, the outlook is considerably bright— Middle Eastern nations are embarking on an ambitious journey to develop a sustainable, clean energy supply system. In an oil-dominated region, the turning of the tide from finite fossil fuels to clean energy is encouraging for governments, investors, and the public. With an estimated 692 million MENA residents by 2050, the strain on national resources will become increasingly evident. Middle Eastern nations have understood the need for diversified economies, and diversified, sustainable energy supplies. Another market that is in dire need of increased investment is one that offers all of the benefits to participating parties. Sub Saharan Africa has a surging energy demand. Currently, there are 600 million citizens without access to power. Of those that do, many suffer from power outages and steep prices. Fortunately, addressing this issue is high on international agendas. Conversation is growing year-on-year, whether it’s at global renewable events, in trade publications, or in African government boardrooms. The African continent is contributing significantly to the conversation, and it could not be at a better time. We are operating in an era where the benefits of PV investment outweigh the risks and challenges, even in Africa. This is thanks to those that have a profound understanding of the local market, political environment, and the structuring of assets and solar plants to the highest international standards. The range and appetite of institutional and private investors to dedicate their funds to PV in today’s markets further demonstrates this. Green banks, sovereign wealth funds, pension funds, and others are turning towards PV solar for mid- and long-term investments. The potential of PV solar as an asset class is especially attractive for investors who are looking for long-term, stable returns. Innovative funding patterns such as crowd funding platforms are gathering momentum in the renewable sector. Compared to other renewable resources, like wind, 40

Martin Haupts, CEO of Phanes Group

PV is much less volatile—even in less sun-abundant regions. Hence, the potential of investment into PV in Sub Saharan Africa, one of the regions with the highest irradiation, is undisputable. SOLAR OUTPERFORMING ITS ENERGIES SIBLINGS Solar projects continue to become more investible with each passing year, in parallel to better advancements in technology. According to a report published by EY, the annual rate of return on investment in the renewable

sector is between 6.6 and 10.1 per cent. In Africa, these figures are still comfortably above 10 per cent, reaching the mid-teens. In fact, in the last four years, renewables, and particularly solar, have significantly outperformed other traditional energy stocks. These figures have taken solar into the mainstream, with more than $750 billion worth of investment resulting in 200GW of solar energy production in the last few years alone. Another core reason for this interest is the adaptability, variability and scalability of the asset


INVESTMENT

With a technology like PV solar we are not only providing energy for the grid but also helping to build up necessary infrastructure that can run independently. Martin Haupts

class. Experienced solar developers can create bankable solar projects in almost any environment, including those that are detached from national grids or in remote rural areas. Currently, PV solar represents less than one per cent of investors’ assets. But EY predicts solar will account for more than 30 per cent of all generating capacity by 2040—a stat not achievable without a positive upward trend in PV investment around the world. From a political and policy perspective, the renewable energy

market continues to shine as a serious alternative to other fuels. The highest calibre example is probably BP, which just purchased a 43 per cent, $200 miilion stake in Lighthouse. Not only is Lighthouse Europe’s largest solar developer, showing how seriously BP considers the sector, but it also marks a dramatic solar u-turn from the petroleum company that withdrew from solar just six years ago. Also, Total’s recent acquisition of a major stake in the French IPP Eren underscores this trend. So why are these types of companies emptying their pockets for a slice of the solar cake? One of the factors is of course the benefits it provides for economic growth, domestic industry growth, and growth in socially challenged communities in new markets around the world, especially Sub Saharan Africa. The region has a worrying undersupply of energy infrastructure, which is becoming an increasing obstacle for socio-economic growth. The African Union forecasts a collective growth figure that would see GDP multiple six times between 2010 and 2040, according to an article published by Reuters. For that to become achievable, it would need to increase its terawatt hours from 590 to more than 3,100 across that time. This is where an attractive investment opportunity lies. Appropriate risk mitigation is a crucial factor in any investment decision —the same applies for investment into PV solar in new markets. Although the need for energy on the continent is obvious, investments are still often considered a bold move.

The key to this is the bankability of each PV project. Fortunately, today, Power Purchase Agreements (PPAs) are more defined, and the regulations between government authorities, developers, and investors are much stronger if the countries’ governments are implementing frameworks according to international standards. This is lowering the risk factor for investors, which is resulting in significantly better project options for markets like Sub Saharan Africa. Surprisingly, since access to affordable energy is one of the key factors for economic growth, the default rates in Africa are impressively low—contrary to common belief. Unfortunately, in spite all this obvious opportunity and progress in the region, the infrastructure is still not being leveraged—even though the solar capacity for Africa is estimated at 1100 gigawatts. This gap is something we recognised some years ago, when we started focusing on the Sub Saharan African region. It is also crucial for the private sector to come in and help in closing the energy gap since many citizens live in remote areas with no access to the national grid. With a technology like PV solar we are not only providing energy for the grid but also helping to build up necessary infrastructure that can run independently. This very outlook stands as a blueprint for how we built our team, with a strong specialised background in structured finance, as well as industry experts across not just development and execution, but also legal matters, which allows us to thoroughly assess the most attractive, stable investment opportunities within a short turnaround time. What we will continue doing is electrifying (not only) the African continent while shining a bright light on the diverse investment opportunities that exist. These are needed not only for a change from fossil to renewable sources of energy, but also to help underdeveloped economies. The PV solar industry itself opens up a new and exciting industry to global and local investors looking to add new pages to their investment portfolio. wealtharabia.net

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PRIVATE BANKING

How private banks are utilising blockchain WEALTH Arabia speaks to Dr Veronica Lange, Head Group CTO Innovation Switzerland, Executive Director, UBS, about how the institution is taking advantage of this transformative technology

H

ow is UBS using blockchain? Blockchain technology could be the biggest disruption in computing and finance since the internet. As a leading financial organisation, it is our duty to understand the technology and its implications and to share the knowledge and benefits with clients, the financial industry and the wider society. For this reason, in March 2015, UBS started a pathfinding journey to explore, harness and share the potential of blockchain. Based at the UBS Innovation Lab in London’s Level39, the UBS Crypto Pathfinder programme’s eight person core team, comprises technology, business, and finance experts. The team collaborates with UBS colleagues from all the business divisions around the world, with many of the over 200 technology start-ups based at Level 39 as well as outside partners. Open innovation and partnerships are key methodologies in achieving the programme’s objectives as we strongly believe that no bank can win this alone. We need to collaborate to gain the benefits of this revolution. We are working with partner banks and industry consortia, financial intermediaries and regulators in order to gain the longterm benefits for our clients and the whole market. The main goal of the programme is to develop, enable and promote open standards for blockchain technology, and ultimately to shape better financial services. To stay ahead of the curve, our Crypto 2.0 Pathfinder programme is conducting business analysis and experiments to apply the technology to

42

Dr Veronica Lange

real use cases that span across investment banking, wealth management corporate banking and retail. Where can blockchain be used to greatest effect? The research and experiments we have conducted so far allowed us to identify the fundamental enablers of the future blockchain architecture—crypto cash and digital identity—which we are now extensively exploring across our use cases. Crypto cash would determine settlement finality on blockchain as every crypto coin would be backed by real money or securities, while digital identity would allow for blockchain applications compliant to KYC and AML regulations. We are focusing our effort around these pillars as we strongly believe that further developments in this space could represent a turning point in the advancement and adoption of blockchain technology. How will blockchain change financial services? Will it make many jobs obsolete in the industry? If so, what percentage?

We approach innovation pro-actively. Concretely, this means we are concentrating on enhancing our client experience, product excellence and operational efficiency. The first two elements are focused on generating additional revenue. While the third element is more about cost savings at first glance, it can in turn also benefit our clients through better services at a lower price point. Can you give me some examples of applications you are currently working on? Either in the field of blockchain or in digitisation or artificial intelligence? Let me give you two examples on blockchain: The Innovation Lab team in collaboration with UBS Trade Finance SMEs and IBM initiated Project Batavia, an innovative approach to international trade , utilising blockchain’s distributed ledger technology, which could simplify and accelerate the process of trade by holistically combining trade finance and all ancillary services, logistics, inspection, insurance, payments, FX and financing, in one single tool. Recently we also announced MADRec: This is a regtech solution, focusing initially on MiFID II data quality, which allows participants to connect to a private Ethereum network to solve the data quality issue on legal entity identifiers. Using distributed ledger enables reference data upload and verification between banks and other financial institutions. If all participants of the project submit their reference data to the blockchain network, the smart contract can effectively compare data from different banks and highlight discrepancies. Artificial intelligence will affect the entire value chain of a typical wealth Manager. From front office activities like customer services and producing investment strategies to middle and back office tasks like identifying fraud and cyber risk, delivering legal and compliance assessments, managing IT infrastructure or employees – everything that is a process can and will be automated.


‘I AM NOT A ROBOT’ March 21-23, 2018 | Art Dubai, Madinat Jumeirah

It’s said that automation, more than any other factor, will fundamentally alter our lives. This brings about the ambient fear of automation. Where does this all leave the fate of the human? And what exactly are the machines saying about us behind our backs? Bringing together artists, curators, novelists, futurists, architects and technologists, the 2018 Global Art Forum, focuses on the power, paranoia and potentials of automation.

Art Dubai’s Global Art Forum is presented by the Dubai Culture and Arts Authority (Dubai Culture) and supported by Dubai Design District (d3).

“Legend,” originally uploaded to Google Street View by Arthur Star. (Kyle Williams via Google Maps)

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REAL ESTATE

Chinese F investment to boost UAE real estate market

or centuries, the legendary Silk Road from the ancient Chinese capital of Xi’An provided a two-way link with bustling trading centres as far away as Rome and Malacca. Despite intermittent stoppages of this vibrant trade route, fast forward to the 21st century, China has become the world’s largest exporter, with goods and services totalling $2.2 trillion in 2016.

With the UAE the hub of China’s Belt and Road Initiative, Chinese investment will be a boon to the sector, according to Knight Frank

PHOTO CREDIT: Shutterstock/pisaphotography

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BRI The Belt and Road Initiative (BRI) was launched by China in 2013, with an aim to revive the great Silk Road as well as provide a new platform for multilateral cooperation to create new trade routes, economic links and business networks. Six economic corridors have been identified from China to Central and South Asia, the Middle East and Europe (the Silk Road Economic Belt) and, along a maritime route, from Southeast Asia, Oceania to the Middle East, Africa, and Europe (the 21st Century Maritime Silk Road). Spanning across 69 countries and encompassing around 60 per cent of the world’s population and 40 per cent of global GDP, the blueprint is also a collection of interlinking trade deals and infrastructure projects, set to be


REAL ESTATE

In the first six months of 2017, Chinese investors registered as the fourth most active real estate investors in Dubai, up from sixth in the same period a year earlier. Knight Frank

mutually beneficial to BRI countries and China. As one of BRI’s goals is to further stimulate Chinese economic growth, expanding demand overseas will be crucial as the project will open new markets for Chinese goods and services, shoring up the country’s economy against any potential slowdown in domestic demand as well as the potential rise of protectionism in other countries. A significant number of participating BRI countries are undergoing rapid modernisation and urbanisation leading to soaring demand for roads, railways, ports, airports, pipelines, and technology infrastructure. In addition to infrastructure investment, the increased connectivity of some of the less developed markets will lead to increased commercial opportunities, helping integrate these nations with the wider, global economy. Funding for this vast initiative is coming through number of routes, including multilateral sources such as the China-led Asia Infrastructure Investment Bank (AIIB), the Silk Road Fund, in addition to allocations from the large stateowned banks. Ratings agency, Fitch, has estimated there to be $900 billion of infrastructure project finance pledged to the initiative.

UAE’s GDP growth is expected to gain momentum in 2017 at

+2.7% and +3.3% in 2018 running up to Expo 2020

$900 billion of infrastructure

project finance has been pledged to the Belt and Road Initiative Source: Knight Frank

wealtharabia.net

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REAL ESTATE

CHINA AND THE MIDDLE EAST Middle Eastern countries, particularly the Gulf Cooperation Council (GCC) countries, over recent decades have had strong trade links to China, particularly as one of the main providers of commodities and natural resources to China, along with its critical access to Africa and Europe. The GCC member nations are eager to transform their economies to reduce over-dependency on oil and gas. This provides fresh prospects for Chinese investors, especially in the real estate, high-tech and energy sectors. Over this period the UAE has become the favoured destination of Chinese capital. However, China and the United Arab Emirates’ (UAE) partnership is not a new story, with Beijing and Abu Dhabi first establishing a formal diplomatic partnership in 1984. In recent years, China and the UAE have continued to strengthen their bilateral relations, these efforts have resulted in China becoming one of the UAE’s major trading partners. With further integration planned, we expect the relationship to flourish further in the future. Over 4,200 firms have set up base in the UAE, a gateway to access not only the Gulf countries but also Africa. A focal point for Chinese investment has been the UAE’s most populous emirate—Dubai. The signing of a MoU at Dubai Week in China is a case in point with countries looking to enhance trade and investment cooperation. General trade levels between Dubai and China now surpass those that Dubai has with India, USA, Saudi Arabia and Switzerland. The Dubai International Financial Centre (DIFC) has played a central role in this success story; the offering of independent regulators and judicial systems has already attracted many of China leading financial firms, especially with an agreement signed with the Shanghai High People’s Court to foster further closer cooperation and reinforce commercial links for more secure trade. 46

BELT AND ROAD IN NUMBERS

69

countries

60%

of the world's population

40%

of the worlds GDP

$900 billion of investments projected

RISE OF CHINESE INVOLVEMENT

60%

increase in Chinese tourists in Dubai in Q1 2017

4th

most active real estate investors in H1 2017

4,200

Chinese firms have set up base in the UAE 7

REAL ESTATE PROSPECTS (Dubai)

Retail Office

Hospitality Industrial

Residential

REAL ESTATE PROSPECTS (Abu Dhabi)

Retail Office

Hospitality Industrial

Source: Knight Frank

Residential

Increased trade has also paved the way for an increase in tourism and real estate investment. The number of Chinese tourists increased by 60 per cent in the year to Q1 2017, ranking them as the fourth largest nationality to visit Dubai, up from eighth in the same period a year earlier. In the first six months of 2017, Chinese investors registered as the fourth most active real estate investors in Dubai, up from sixth in the same period a year earlier. China’s Cosco Shipping Ports will invest $400 million in building a container terminal in Abu Dhabi as the emirate aims to expand trade with the world’s second largest economy. Dragon City in Dubai, developed by Nakheel, has more than 3,000 shops managed by 1,700 Chinese traders and receives 65,000 visitors daily. Dragon Mart in Dubai is the largest trading centre of Chinese products outside of China. The ties between China and the UAE are expected to grow further in the coming years as Dubai strengthens its position as a global hub for trade, travel and investment ahead of the Dubai Expo 2020, creating more opportunities for Chinese businesses to use Dubai as a platform for growth and expansion. These factors provide a strong platform for the BRI to succeed. Lower oil prices, higher interest rates and a strong dollar have underpinned the slowdown in GDP growth over the last two years. As the economy adjusts to the new norm in oil prices and diversifies to cut its reliance on crude oil revenues (2030 Dubai Industrial Strategy), the UAE’s GDP growth is expected to gain momentum in 2017 (+2.7 per cent) and 2018 (+3.3 per cent) in the run up to Expo 2020. We have started to see market sentiment in real estate stabilise in the first half of 2017 and start to turn positive at the back end of 2017.


MELBOURNE

|

DUBAI

|

LOS ANGELES

|

SHANGHAI

|

KABUL

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PA R A G O N P R E M I E R I N V E S T M E N T S P T Y L T D | A U S T R A L I A N F I N A N C I A L S E R V I C E S L I C E N S E E 4 8 3 1 1 8 | A B N 2 7 6 0 8 5 1 1 5 9 3


STYLE

EMIRATI HAUTI COUTURE Dr Reem El Mutwalli’s Sultani collection is a window into the high fashion of Emirati culture, from 1968 to the present

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Filling two needs with one deed, as individual expression of wealth and beauty are secured guardedly  on one self... Dr Reem El Mutwalli

El Mutwalli’s daughter Mae Noaf in a heavy gold embroidered yoke and front panel, with turquoise blue, gold and purple vertical stripes. Photographed by Issa Saleh Al Kindy

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S

ince its foundation in 1971, the UAE has gone through massive changes, fast becoming a place the world looks to as a representative of the future today. While much has changed in the country, the UAE’s national dress remains iconic and distinctive, a symbol of the country’s history and values. Dr Reem El Mutwalli is one of the key voices keeping that tradition alive. Since she moved to the UAE at the age of five when her father was invited from Iraq by HH Sheikh Zayed Bin Sultan Al Nahyan, she has been fascinated by Emirati culture, spending much of her adult life dedicated to its study. National dress is of particular interest to El Mutwalli, and something she feels needs to be properly documented and preserved. “With the UAE being a young country, and everything happening so fast in this day and age, textiles and dress are made of a unique material. They don’t last—to preserve them is very difficult. People, in general, in societies, change their clothing, throw them away, and get a new one. Consumerism in general has also created a cycle where people really don’t keep their clothes—they’re almost disposable,” says El Mutwalli. “For me, preserving the dress of a this culture feels like a capsule of history of this area, which is very much needed. With oil, exposure to the world, and the onset of the technological lifestyle and this global village life we are living, so much can be lost very quickly. To document it, collect it, and have it available for future generations is a very important step,” says El Mutwalli.

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Dr Reem Mutwalli outside her home in Dubai, UAE. Photographed by Issa Saleh Al Kindy

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White lace yoke, with block colours of red, yellow, cerise and green with purple over gold and purple striped sleeves and underskirt, with white and purple spotted pantaloons visible. El Mutwalli’s daughter Mae Noaf Photographed by Issa Saleh Al Kindy

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The contrast of layered textures as they challenge the tactile senses to transcend the typical and celebrate timeless beauty… Dr Reem El Mutwalli

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Mutwalli grew up at a pivotal time, able to see the country grow from its foundations to what it is today. This allowed her to see fashion develop, and to collect key examples as time went on. “I was lucky that I was in the right place at the right time,” says El Mutwalli. “I grew up in this area. As I grew up, I lived among the people here, I experienced their way of life, and I wore these costumes as I grew up. I collected them. I have pieces that date back to 1968. My collection is around 95 outfits, but the articles of clothing add up to much more, to around 180 pieces, form 1968 up to today. I’ve collected them through wearing many of them, being gifted some of them, sourcing others. People knew that I was researching this, and they started presenting me with pieces, which was very lucky. Eventually, as I was working on it, I learned how to make them myself.” Mutwalli’s fascination in fashion goes beyond just appreciation of the artifacts. In her mind, clothing is indicative of so much more than style— it is evocative of an entire culture. “You learn so much about the history of the people, their economic situation, their political issues, and much more from their dress. You’re looking at the life of somebody. In learning about dress, you learn about people. You learn, that women, living in an enclosed society, could still express themselves and put a stamp on society through their dress. That was very liberating to me.” El Mutwalli even began designing her own dresses. “Many of the dresses that I have come from the ruling family of Al Nahyan. So many members of the family asked me, as I was researching, why I wasn’t designing them as well, as they wanted something contemporary that still embraced their history. I then started designing them, and started doing two exhibits a year, on contemporary reinterpretations of traditional dress. I did this when HH Sheikh Zayed passed away. When that happened, I felt that it was a turning point.” 54

El Mutwalli attributes the preservation of the UAE’s national dress to Sheikh Zayed himself, who was a key figure in encouraging women to continue wearing it over the years. “Everything related to traditional dress, to me, was associated with him. He was instrumental in encouraging women to continue to wear it. It may not be functional enough for us to wear it every day, but because he only received women in their traditional dress, it encouraged people to continue to wear it,” says El Mutwalli. UAE national dress is a lot more complex, varied and colourful than many outsiders might know. “From an expat point of view, automatically their minds go to the black abaya and hijab. The UAE dress is, however, composed of many elements that a lot of people do not know. The Abaya is only an outer garment. When she is inside, it is invigorating, colourful, and bright. It was very important, with the changes happening in society, that al this information was put into paper and pen and preserved,” says El Mutwalli. El Mutwalli has put on countless exhibitions of her collection of 95 outfits, called ‘the Sultani collection’. She has also written numerous books, including 2017’s Sultani: Traditions Renewed, Changes in UAE Women’s Traditional Dress during the reign of Sheikh Zayed Bin Sultan Al Nahyan (1966-2004), written with the younger generations, and generations to come, in mind. “Today’s generation hardly knows much about the traditional clothing that their parents used, even though what’s unique here is that we still have people alive that used to wear this clothing. When you look at other societies, usually, when you talk about traditional costumes, no one wears them anymore, and you’re taking your information from second hand material such as books, records or diaries. In the UAE, the change has happened so fast that within one generation, there have been many evolutions of these articles of dress. You can take the information first hand, and document it,” says El Mutwalli.


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Dr Reem Mutwalli in her home in Dubai, UAE. Photographed by Issa Saleh Al Kindy wealtharabia.net wealtharabia.net

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“I want to make sure that history is documented, and documented in the correct manner. To be able to have it documented and available for future generations is most important. Whether they are inspired by it or they forget about it will come later on—but I want them to have a reference point. I am not advocating that women should be dressed in this clothing, or to advocate one form of dress or the other. Societies evolve and things change, it’s only normal,” says El Mutwalli. Recently, El Mutwalli and Omani photographer Issa Saleh Al Kindy produced series of photos based around notable pieces in her collection. These limited-edition prints are entitled The Sofa Series: Sultani, and were modelled by El Mutwalli’s daughter Mae Noaf in the family’s home.

Photographed by Issa Saleh Al Kindy

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A visual Homage to the memory of an icon I was lucky to have known in person... Dr Reem El Mutwalli


STYLE

Joyful visual therapy as it vibrates through the richness & warmth of colour... Dr Reem El Mutwalli

A light blue with image of Sheikh Zayed El Mutwalli’s daughter Mae Noaf Photographed by Issa Saleh Al Kindy

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MOTORING

Off-road in Wadi Bih with the Porsche Cayenne 2018 WEALTH Arabia put the 2018 Porsche Cayenne to the test, taking it from Wadi Wurayah in Fujairah, UAE to Wadi Bih in Oman—and it excelled

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or drivers across the Middle East, there are two types of cars that are most desired. For day to day use, racing down long stretches of secluded highway, cruising along the waterside and parking outside a five-star resort, there is the sports car. For weekends, there is the SUV, built to withstand the demands of the mountains and the desert, to go further than the modern luxuries that the cities and suburbs provide, to explore the further potential for adventure in our picturesque backyard. The Porsche Cayenne 2018 marries the two better than possibly any car has before.


MOTORING

The Porsche Cayenne 2018 S on the beaches of Fujairah, UAE. wealtharabia.net

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MOTORING

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MOTORING

The new Cayenne handles corners in Wadi Wurayah with WEALTH Arabia editor William Mullally.

When the Cayenne first debuted in 2002, many were sceptical. Why? The automotive world usually likes when companies excel at one thing to stick to it, and while Porsche has made some of the world’s finest sports cars since the Porsche 550 was winning races back in the mid1950s, it wasn’t until 2002 that they ventured into the crowded sport utility vehicle space. Why not stick to what they do best? The answer they provided was clear—they can still do what we do best in an SUV, and can, in fact, bring what makes their sports cars so superlative to a much more rugged terrain. With the 2018 Cayenne, Porsche does not have to aim to fix something broken—far from it. The last two iterations of the Porsche Cayenne, launched in 2002 and 2010, reliably outsold every other model of Porsche, including the 911, Cayman, Boxter and Macan, from the years 2003 to 2015. In fact, 2016 was the first year that another Porsche model outsold the Cayenne, with the Macan overtaking the Cayenne in sales for the first time, selling over 4,000 more. The Macan is, of course, itself a development of the Cayenne, in many ways. At first glance, you wouldn’t guess the 2018 Porsche Cayenne was rebuilt from the ground up. Look closer, and it’s clear that the design changes are indeed bold, streamlining the car, increasing its length, lowering its height, a refined design that make it the most beautiful Cayenne yet. The bonnet is more pronounced, with a different headlight contour, both still unmistakably Porsche. The side windows are narrower, the rear wing has been redesign, and the rear end is wider with wider alloy wheels, giving it a feel closer to a 911 than the previous models were able to achieve. wealtharabia.net

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MOTORING

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MOTORING

Inside, the changes have made the cabin more spacious, with a larger luggage compartment, built for a car that many Gulf drivers will be taking for long weekends of camping off in the desert or elsewhere. The Porsche Advanced Cockpit, as they call it, has made the controls much more intuitive than in older models, making the driving experience much more seamless. The centre console’s new touch display is 12.3 inches, including Porsche Communication Management (PCM), which allows drivers to configure six different individual profiles that store interior settings, light specifications, driving programmes

and assistance systems, making it easier to share among family members. The Porsche Cayenne is built to look great, but it is built more to perform. To test this, WEALTH Arabia took the latest model across two Gulf countries, starting in the UAE emirate of Fujairah and ending in Oman. When our drive began, with the Hajar mountains surrounding us on either side, we were able to see how the Cayenne drives on well-developed roads. We’ve driven many Porsches before, and each one has given one of the best on-road experiences we’ve had, with a smooth, responsive drive equal to any. For day to day use, the

Rebuilt from the ground up to handle extreme conditions better than ever before. wealtharabia.net

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MOTORING

Cayenne 2018 could easily become the keys you reach for most frequently in your collection, as it provides all that Middle Eastern drivers are looking for in developed areas. How would it perform in the offroad? That is what we went to find out. We chose the off-road trails of Wadi Bih, a hilly valley with the gorgeous Hajar Mountains that rise on either side. Trying all models of the new Cayenne line, including the S and the Turbo, the car took whatever we threw at it, uphill or downhill, rocks or sand, more than capably, delivering the best off-road experience we’ve had. Part of that was due to the 2018 Cayenne’s pre-programmed drive and chassis modes, which can be activated through the aforementioned PCM. With each, drivers can change from the default onroad programmee to settings specifically designed for mud, gravel, sand and rocks. This optimally conditions the engine and chassis systems, including the new Tiptronic

Inside the redesigned Porsche Advanced Cockpit.

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S, the Porsche Traction Management all-wheel drive system and PSM stabilisation programme, built to give the smoothest drive possible. In addition, depending on how the car has been fitted, air suspension, a PASM damper system and PDCC rolling-motion compensation and rear axle steering. Even without these settings, the 2018 Cayenne is built to handle these conditions better than before. The chassis is more lightweight, designed to give balance between Porsche’s sports car performance and comfort, weighing 65 kilograms less. All chassis systems, except for the active PASM damper system, are new, including an adaptive three-chamber air suspension, and electric roll stabilisation, as well as 4D chassis control that dynamically connects all these systems. These systems made the drive both smooth and fascinating to watch go to work, as the Cayenne automatically adjusted during steep descents, making


MOTORING

WEALTH Arabia editor William Mullally is bad at posing.

The Porsche Cayenne 2018 off-road in Wadi Bih, Oman.

the drive both smoother and safer, giving one peace of mind while off road. The car’s engine is also more responsive, sporting an eight-speed Tiptronic S gearbox, which aids performance in lower gears. The Cayenne S is powered by a 2.9-litre, biturbo-charged V6 engine with 440 horsepower, an increase of 20 from the 2010 model. It reaches 100 km/h in 5.2 seconds (4.9 seconds with the optional Sport Chrono Package) and boasts a top speed of 265 km/h. The Turbo’s eight-cylinder engine has 550 horsepower, an increase of 30 from the last Turbo. Back in Fujairah, we took the car through Wadi Wurayah, and through all conditions, it performed at top levels. The 2018 Porsche Cayenne is the perhaps best balance drivers in the region can find between a city driving and for off-road adventures, each with comfort and high-level performance. Prices start from AED 300,000 in the UAE, but may vary across the region. When you get yours—take it further than you may have tried. Trust us, it will be an experience you won’t forget. wealtharabia.net

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TRAVEL

A different world, 25 minutes away The Oberoi Al Zorah in Ajman is one of the UAE’s best kept secrets, WEALTH Arabia discovers

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TRAVEL

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or the readers of WEALTH Arabia based in the United Arab Emirates, travel is a part of life. But is it always the best way to truly unwind? When you only have a few days free, for instance, it’s hard for a restful getaway to be truly restful, with jetlag and logistics hampering your relaxation. What we at WEALTH Arabia often dream about is the ability to snap our fingers and wake up on a secluded beach, transported to a different reality entirely.

The view from one of the Oberoi Al Zorah's villas. wealtharabia.net

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TRAVEL

The Oberoi Al Zorah offers just that experience. Nestled in the Al Zorah development in Ajman, UAE, the luxury resort is only 25 minutes from Dubai International Airport, but gives you the feeling that you are in a different land altogether. Al Zorah is one of the UAE’s best kept secrets, a 5.4 million square meter luxury and lifestyle destination built near Ajman’s gorgeous natural mangroves and lagoons on a natural penninsula. The Oberoi Al Zorah is still brand new, but is already a fully-refined five star luxury resort, offering pristine beaches on which to finally finish that novel that’s been sitting on your bedside table. When WEALTH Arabia arrived, we were warmly greeted by the gracious and accommodating staff and brought to a spacious, impeccably designed room, built comfortably for two. The design is chic and modern while still feeling comfortably timeless and as simple as true luxury can be, allowing us to focus on the gorgeous beaches that can be seen from our private terrace. Villas have even more of the above, in addition to their own temperature controlled pools. Walking around each day, the most striking thing about the stay was that it felt as if we were the only ones there, while the hotel was still close to capacity. The property is so spacious and well-designed that it feels as if you have it all to yourself, never focusing on hustle and bustle and instead having calming walks around the property with a friend or loved one.

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TRAVEL

Ajman Oberoi Main Facade

If sitting on a beach for a few days isn’t your thing, rest assured, there is still excitement to be found. We were driven down in one of the hotel’s private Audis by an on-hand driver to the watersports area, where we were set for wakeboarding lessons. We were nervous about this at first—we imagined ourselves continually falling face first into the water while an angry instructor barked orders—but the experience was the complete reverse. The instructors were clear and patient, and within moments we were racing around the property by controlled zipline.

Later, we took to kayaks to explore Al Zorah’s gorgeous mangroves and lagoons. Our instructor told us that 100 years ago, travelers described arriving in Ajman and seeing the mangroves, and it’s not hard, in looking at them, to see that they are an ancient feature of the peninsula. The country’s largest mangroves, they are home to a stunning amount of wildlife, including 450 species of birds, the star of which are the giant herds of pink flamingos—just don’t approach them too loudly. WEALTH Arabia's editor exploring the Al Zorah mangroves.

Back at the hotel, there are two restaurants. Vinesse and Aquario. Vinesse is located on a faux-glass island near the pool, and offers allday fine dining. Aquario, located on the beach, is the seafood restaurant that only serves responsibly sourced seafood, both local and international on a beautiful wooden deck. Vinesse is good, but, trust us, Aquario is the gem—truly one of the best seafood restaurants in the whole of the UAE. If you love seafood, Aquario should be your main choice for each lunch or evening—it’s that good. Between meals, we spent time in the property’s library, which was, like too many libraries these days, underutilized by the rest of the hotel’s guests. We brought a copy of one of our favorite board games and ordered tea in perhaps our favorite space on the property—be sure to have a tea in here one afternoon. The next time we have some time free and need a tranquil getaway without the headache of a plane ride— The Oberoi Al Zorah is our pick. Make it yours, as well. wealtharabia.net

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DESIGN

Let it be Architect and Designer Roberto Palomba sits down with WEALTH Arabia in Dubai at Poltrona Frau’s new showroom—on his own sofa

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oberto Palomba and WEALTH Arabia are sitting on his latest piece, a stunning sofa called ‘Let It Be’, and we are sitting on it wrong. “Sorry, this pillow is not in the right position,” Roberto Palomba says to us, quickly getting up, pulling us forward, and rearranging the pillow to the position that he intended people to sit on his sofa. Though strange at first, we’re glad that he does—it’s much more comfortable afterwards.

Poltrona Frau's Let It Be sofa, designed by Ludovica + Roberto Palomba.

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“Sorry, I need to touch things,” he says. Roberto Palomba is not often talked about as an individual. His design credits, as both an architect and a furniture designer, are almost always joint with his partner Ludovica, and the two have had considerable success, producing pieces for a laundry list of high-end Italian brands that literally run from A to Z, in this case Antolini and Zucchetti. When we sit together in Dubai, he’s there as one of the key designers in perhaps Italy’s top furniture brand Poltrona Frau, founded in 1914. While we sit on the Let It Be sofa, he continually runs his hands over the leather as we speak. “I’m always attracted to what I can touch,” Palomba says, when I ask why he keeps doing this. “Touching is my favourite sense. I’m curious. My mother said that when I was very young, I was a disaster. I was touching everything! Even dangerous things. You can even touch a skyscraper, but it doesn’t give you a very good emotion.”


DESIGN

It is that sense that led to his success in this field, he says. “Touching is discovering small things, even in the biggest items. This sense gave me a strong focus on quality—with details,” says Palomba. While he is apart form his partner Ludovica, that does not mean he is trying to take the lion’s share of the credit for himself. In fact, whenever he brings up a design, even dating back to his first piece, he never says ‘I did this’—everything he does is presented as a joint venture. “The first piece we designed were glass vases for the Murano brand in Venice. Venice has a strong tradition of blowing glass. This was 25 years ago—I was 29 at the time. Time is running too quickly!” Through his more than two decades as an architect and designer, he does not feel he has changed. “I am still the same designer that I was. I’m not afraid of the past. I have to confess that I’m not looking for what I’m doing in the future. You have to work harder when you’re young

than when you’re old, though I am still working very hard. It means a lot to me that my stuff sells very well, it means that people still appreciate, love, and need what you are designing. I’m developing a little bit, but not so much. I still keep my design very emotional. I’m not scared of research. I don’t want to have only one aesthetic, I prefer to investigate values. I’m fine with my past, and my present, and, hopefully, I will be with my future,” says Palomba. What does he consider his masterpiece? We ask. “My daughter. She’s exactly what I mean when I say contemporary. She’s open-minded. She travels the world. She’s super curious. She’s also boring sometimes—she thinks that I’m a bank. I tell her that it doesn’t work like that. If I’m a bank, you have to put something in before you take something out! She’s crazy. When I design, she is my muse. I try to design for her, for her friends, and for this generation. I think that’s a good strategy to have,” he says. Before we must ask the question again, he quickly adds, “I don’t have

favourite pieces from my design. I love more or less everything I’ve done.” While Palomba was initially sceptical whether the Let It Be sofa fit with the Poltrona Frau brand, it has become a bestseller. “It was the same idea since the beginning. First of all, we wanted a contemporary piece in the frau collection—that was a big challenge. Frau is the mother of quality, heritage, and high-end design. Our concept was to design a contemporary piece for contemporary life. We designed this sofa thinking that it would support the life of how people live now. It’s very lounge-y, soft, and welcoming, with accessories all around. What was crazy was to design a structure built for life, that looked simple, but hid a lot of very complex design work. It’s based on how people lived in Roman times. When you had friends, people didn’t sit, they lay down. It was a very relaxed, joyful way to live. We designed this piece with the idea that people would lie down, sit together, and cuddle. It wasn’t very formal.

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DESIGN

Roberto Palomba with his partner Ludovica, photographed by Carlo Ciraudo and Max Majola.

We chose the right materials, a very simple shape, and then decorated it with precious details such as handstitching. It was a very complicated design to manage,” says Palomba. He cannot take credit for the quality of the leather, however—that’s all Poltrona Frau. “The materials came from the Poltrona Frau collection. They develop incredible materials for their collection. When you touch this leather, no other 72

brand has a feel like that. When you combine the right mood, with the right fabric, with the right colours, it’s truly fantastic.” The approach he and his partner take is very much like that of a fashion designer, he says. “We have an idea, then we sketch, we develop the model in the studio, and now with 3D modelling machines we’re able to create an idea of what we want, then we can share it with

the brand, we work on the prototype, we spend a lot of time together with the brand to make sure that every stitch and every detail has been controlled by us. Every detail has to be produced, so you can’t start until every detail has been selected before you can actually make the piece, as everything has to work together,” says Palomba. When starting a new piece, he doesn’t think about specific influences consciously, in fact, according to him, he couldn’t if he tried. “I was a good student when I was at school, but, at the same time, I think because I’m old and probably demented, I forgot a lot. I have a lot of influences, but I’ve forgotten who they are. I embrace the past, but I don’t have a good memory. What stays does so because it went deep and worked inside of me. I don’t have to be very conscious,” says Palomba. First and foremost, with any piece, including the Let It Be sofa, it has to be made in service of a larger space. No piece of furniture is perfect for a space on its own—it must act as a complement to the rest of one’s personal collection. “I’m not interested in icons. I prefer what’s iconic. I love iconic interiors, not just iconic objects. I believe that life is a system of connections. If you just isolate one thing, it’s taking a fish out of the water. It will die. It will dry. You can’t take beauty of the forest by removing one plant and putting it in a vase. Frankly, speaking, I’m against museums. I hate museums. We can build museums, as they often have fantastic architecture, but let’s put nothing inside—that’s my idea. Or—let’s make paintings and sculptures for that museum. Otherwise, you’re killing this stuff.” “When you design pieces to be put together, they have a connection with one another. They are alive. When you take them out, you put them in a museum under perfect lighting, it’s like taking a fantastic woman and putting her in a glass box. It’s dead, then. It’s not about life. I design for life. I work for life,” says Palomba.


SUMMIT

28.11.18 JW MARRIOTT MARQUIS DUBAI

For more information, email us at events@cpifinancial.net or call us on +971 4 365 4538


ART DUBAI

Casablanca Mohammed Melehi, Untitled, 1976. Cellulose paint on panel. 100 x 95 cm. Courtesy private collection

Cairo Abdelhadi El-Gazzar, The Family, circa 1953. Oil on canvas. 60 x 46 cm. Courtesy Yasser Hashem collection, Cairo

Khartoum Ibrahim El-Salahi, No Shade but His Shade, 1968. Oil on canvas. 77 x 77 cm. Courtesy the artist

A vision of Art Dubai 2018

For the 12th edition of the fair, Art Dubai will once again unite the region with the world, championing regional art and providing collectors and investors a place to interact

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leading international art fair, Art Dubai is. For its 12th edition Art Dubai presents a unique lineup of 105 galleries from 48 countries, reaffirming the fair’s position as a place of discovery with galleries from new markets rarely seen on the international stage exhibiting alongside leading galleries from established art centre, continuing its tradition as the preeminent place to interact with contemporary art from the Middle East, North Africa and South Asia. It will also showcase the largest edition of Art Dubai Modern, the world’s only platform that exhibits museum-quality Modern works from the MENASA region, alongside the annual Modern Symposium of talks on the lives and legacies of artists operating in these regions in the 20th century.

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Myriam Ben Sala Courtesy Deborah Farnault

For the first time, Art Dubai 2018 will also inaugerate a new gallery section, entitled Residents, that welcomes spaces whose artists will complete a residency in the UAE with work created during this period exhibited at the fair. Beyond the gallery halls, the fair once again hosts an extensive collateral programme.

Tunisian-born and Paris-based writer and curator Myriam Ben Salah was named the new curator for the 2018 edition of the The Abraaj Group Art Prize, which will, as always, be a part of the fair. Ben Salah has been responsible for coordinating special projects and public programmes at the Palais de Tokyo in Paris and is Editor-in-Chief of the international edition of Kaleidoscope Magazine. Each year, The Abraaj Group awards $100,000 to a winning artist to develop a new commission, and $10,000 each to three shortlisted artists to support the development of their artistic practise. The work of the winning artist is unveiled at each edition of Art Dubai, and complemented by an exhibition of works by the three shortlisted artists. The Khaleeji artist collective GCC, who met in the VIP lounge at Art Dubai in 2013, have been commissioned to


ART DUBAI

Baghdad Shakir Hassan Al Said, Untitled, 1957. Oil on canvas. 100 x 80 cm. Courtesy Alia and Hussain Ali Harba collection, Iraq/Italy. Photo credit: Edoardo Garis

Riyadh Adbulrahman Alsoliman, Prayers Leave the Mosque, 1981. Oil on canvas. 101.2 x 75.8 cm. Courtesy of the artist.

produce the 2018 edition of The Room, Art Dubai’s interactive dining experience which is created by different artists each year at the fair. Titled ‘GOOD MORNING GCC’ this year’s edition of The Room will recreate a live TV show on site, using the tropes of daytime talk shows commonly featured on TV stations across the Arab world as an anchor for the programming, which will include daily segments such as fashion, cooking and health. The overall experience of the set will develop over the duration of the fair with daily performances, and visitors being able to interact with the props, furniture and scenography. Art Dubai has also begun a partnership with Misk Art Institute, which will materialise in a variety of ways and in different sections across the fair. These will include an exclusive partnership with the Misk Art Institute for Art Dubai’s Modern section, including dedicated sessions in Art Dubai’s Modern Symposium; a non-selling exhibition celebrating Modern art from the region entitled ‘That Feverish Leap into the Fierceness of Life,’ curated by Dr. Till Fellrath and Dr. Sam Bardaouil; as well as an exclusive preview screening of Reframe Saudi, a Virtual Reality film on contemporary art in Saudi Arabia. Founded in 2017, the Misk Art Institute

Hiromi Tango, Hiromi Hotel, Peformance Hiromi Tango, Imaginarium at Singapore Art Museum, Installation, 2017. Photography Sarah Malone. 2017. Courtesy the Artist and Sullivan+Strumpf, Sydney Courtesy the Artist and Sullivan+Strumpf, Sydney

was established to encourage artistic production in Saudi Arabia, seeking to establish strong connections with the Kingdom’s artistic past through documenting and recording cultural histories from Saudi Arabia and the wider region, while enabling cultural diplomacy and exchange, and being an artist-centred cultural innovator. The fair will also feature the sixth edition of the Sheikha Manal Little Artists Programme, which will feature Japanese-Australian Artist Hiromi Tango as the lead artist. The programme offers an educational opportunity for UAE-based children and teenagers, and encouraging them to excel in the arts. The artist’s project for this year’s edition is titled ‘Healing Garden’ and will feature an interactive installation that invites children to participate in creating a nurturing environment based on local plants and flowers. For art collectors and investors, Art Dubai will once again feature Art Salon, an engaging platform that provides MENASA-based collectors and patrons of the arts the opportunity to meet and interact with other like-minded individuals through uniquely personal and inspirational events, tours and talks. Gatherings usually take place in an intimate setting and feature special regional and international guests. The aim is to facilitate connections between individuals, groups and communities, generating innovative ways to shape the future of art in the region and creating new opportunities for artists to embrace.

Hiromi Tango, 'Fluorescence' Installation View, 2015. Courtesy the Artist and Sullivan+Strumpf, Sydney

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PRODUCTS

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Louis Moinet Year of Zayed chronograph 76

t has been 100 years since the birth of HH Shiekh Zayed bin Sultan Al Nahyan, the founder and undisputed leader of the United Arab Emirates from its creation on 2 December 1971. To celebrate this, 2018 has been declared the Year of Zayed, with celebrations going on all year across the country. Louis Moinet, one of Switzerland’s top watchmaking brands, has made one of its most beautiful chronographs yet to commemorate the occasion, taking three years to finish the piece. The design is based on the legendary Sheikh Zayed Grand Mosque, commissioned by the Sheikh himself. It is the largest Mosque in the United Arab Emirates, with a capacity of 40,000 in with a space of 22,000 square metres, and is the largest manmade marble structure ever to have been built. That beauty has been distilled onto a mother-of-pearl dial, hand-painted by a miniature artist, embossed with thirty baguette-cut diamonds. The case is also set with 68 baguette-cut Top Wesselton VVS diamonds.

Price: $2.12 miilion


PRODUCTS

The 2018 Pink Gold T Audemars Piguet Royal Oak Offshore Self-Winding Chronograph

he Audemars Piguet Royal Oak Offshore line debuted in 1993, and some attribute this to the rise of large-bodied lxuury sports watches. Though the line has expanded to include many sizes, the 2018 celebrate the essence of of the orginal design. The pink-on-grey selfwinding chronograph is 42mm in diameter, with an 18-carat pink gold case, balanced by either hand stitched grey alligator or a rose gold bracelet and complementary dial. The grey ruthenium-toned dial features the line‘s signature MĂŠga Tapisserie pattern, ivory-toned counters, pink gold-toned Arabic numerals with beige luminescent coating, pink gold Royal Oak hands with beige luminescent coating and a grey ruthenium-toned inner bezel. What powers the selfwinding chronograph? Why, the natural movements of the wrist, of course.

Price: $60,000

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GOOD TALK

Sitting down with a cryptopreneur Matthias ‘Sheikh’ Mende, a cryptocurrency miner and advisor, shares with WEALTH Arabia some of his favourite things What’s your favourite suit?    My favourite suit is a dark blue one. It was custom-tailored by Max Girombelli himself. The brand name is Duca Sartoria and it is based in New York.  Jay Z's got suits, George Bush's got suits. Matthias was lucky to get few too. What’s your favourite car?    The Maybach Exelero. There is only one in the world and my German buddy Frank Rickert owns it. A test drive with it infected me for rest of my life.

Matthias ‘Sheikh’ Mende

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ell us about yourself. I am a natural-born entrepreneur. I started making my first money by selling Kinder Surprise figures on jumble sale for 3x to 100x profit margins from the age of 9. There was no ebay or internet at that time. I’ve lived in Dubai since 2007. I twice lost everything and had to restart. Now, I’m running a digital agency called MEMMOS, helping brands and top-notch famous restaurants and nightclubs to improve their branding, online presence and increasing their traffic for higher ROI. I own two portals for fashion and nightlife. Cryptocurrencies and bitcoin are my main priority and focus right now.  It was never so easy to make money. I’m also advising some ICOs and consulting some mining operations.

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What’s your favourite watch?    Honestly, I am not a watch believer at all. I like simple watches from Swatch.  What’s your preferred travel destination?   The United States, because its always adventurous and fun people to meet there. For relaxing and switching off, I like Thailand.  What do you consider the best restaurant in the world?    The imagination of my mother’s food always makes my mouth melt over and over  What’s my favourite restaurant? Recently I tried Peruvian food and found it quite epic. So Waka at the Oberoi Dubai it is. What’s your personal life philosophy?    Since I came from nothing, I love 50 Cent’s one:  Get Rich or Die Tryin'. What are your hobbies outside of work?       I love traveling and exploring new

countries. But insofar as hobbies outside work, I would say playing soccer and doing deep research about life, the universe. I also love entertaining conversations with big-minded people about deep subjects. What’s your proudest memory?     The happiness of my mother. Once at primary school I hand-crafted a small sculpture out of clay for Mother’s Day at the age of 10. Her pride was so big that she cried. It actually made me proud about myself the first time in my life. What purchase do you most regret? I do not regret. Every temporary regret made me gain in the long run.  You have to spend $20 million on something frivolous tomorrow. What do you spend it on?  I would invest half of it for a good cause in the world.  For the other 10, I would build the most mind-blowing and incredible camp Burning Man has ever seen. Who’s the most famous person in your phone book?     Huda Kattan. Who would play you in a movie of your life, and why? Surely Leonardo DiCaprio. Because he is just a smart super-sympathetic guy who acts awesome under any circumstance in every situation. What’s your favourite photo you’ve posted on Instagram?


What makes What makes a number 1 What makes a number 1 financial a numbercentre? 1 financial centre? financial centre?

1,853 active registered companies. 1,853 active registered companies. 22,338 professionals in DIFC. 1,853 active registered companies. 22,338 professionals in FinTech DIFC. hub. #1 financial centre and 22,338 professionals in FinTech DIFC. hub. #1 financial centre and #1 financial centre and FinTech hub. To learn more visit difc.ae/number1 To learn more visit difc.ae/number1 To learn more visit difc.ae/number1

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MEET YOUR RELATIONSHIP MANAGER; MEET YOUR GOALS. Your Mashreq Gold Relationship Manager is there to realise your financial ambitions. So, what can we make possible for you? WEALTH – investments in stocks and bonds, managed with vast experience RETIREMENT – a selection of plans to help grow your capital and returns EDUCATION – long-term regular savings plans to realise young potential PROTECTION – a wide range of insurance and investment solutions

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Wealth Arabia #45 - March 2018  
Wealth Arabia #45 - March 2018