Dubai hits target in wealth management ambitions

The bright lights of Dubai are attracting some of the biggest names in global finance. (Shutterstock)
Updated 21 September 2018
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Dubai hits target in wealth management ambitions

  • Dubai is fast becoming a global center for wealth management, according to new figures from the emirate’s financial hub.
  • Fidelity International, the Bermuda-based investment management group, announced it too was to set up in the DIFC

The Dubai International Financial Center on Sunday announced it had passed a landmark of 200 firms in the fast-growing wealth and asset management sector that had chosen to be based in the center, a rise of 6 percent from the halfway point last year. Some 13 of the top 25 firms in the wealth management sector are included in that total.

The number of financial funds under management by DIFC entities has leapt by 240 percent in the same period, from 25 to the latest figure of 60, making it the largest funds domicile in the region, the DIFC said. 

Arif Amiri, chief executive of DIFC, said: “The wealth and asset management sector is a cornerstone of a thriving financial services industry, and as the DIFC has developed into a top global financial center, it has become one of our hallmarks. Major financial institutions see Dubai and the DIFC as a preferred platform to access investment opportunities and sources of investment across regional and global markets.

“To date, the center has seen consistent and significant growth in this field, reflecting the industry’s ongoing confidence in Dubai and the DIFC. We expect to see this growth continue as we introduce new regulations to our attractive legislative and business environment in line with our ambitious 2024 Strategy. Our flexible structures, which also benefit private wealth management and family trusts, continue to give us the edge,” he added.

The DIFC is committed to a ten-year strategy of trebling in size by 2024 in terms of the number of member firms and employees as well as the value of assets under management.

In the first half of 2018, the DIFC attracted three of the biggest names in global finance, Chinese firm Everbright Group and American giants State Street Global Advisers and Berkshire Hathaway Specialty Insurance.

 

 Last month, Fidelity International, the Bermuda-based investment management group, announced it too was to set up in the DIFC.

“These companies benefit from three types of fund structures, as well as tried-and-tested special-purpose companies and insurance special-purpose vehicles, used in structured financing transactions or related to entities of substance. The DIFC’s international-standard regulatory framework and flexible business environment are already paying dividends to global and regional companies within the Center’s community,” the center said.

In total, the DIFC reported a 17 percent rise in new financial institutions registering in the first half of the year, bringing the total to 2,003 with a combined workforce of nearly 23,000.

That period coincided with the decline of Abraaj Capital, the private equity fund manager that has been at the heart of the DIFC since it opened in 2004, but which was ultimately owned by a Cayman Islands holding company.

Financial and legal experts believe there will be no significant damage to Dubai from the Abraaj affair. Habib Al Mulla, one of the UAE’s leading corporate lawyers, told Arab News recently: “I don’t believe Dubai’s reputation has been damaged. The DIFC entity is not involved. There are various Abraaj entities which are subject of different jurisdictions.”

Nigel Sillitoe, chief executive of market research group Insight Discovery, which specializes in wealth and asset management sectors, said: “In the past quarter our company has received more requests than ever to support asset management companies within the DIFC.

“The recent woes at Abraaj did make us think that business might slow down but so far we haven’t seen any impact.” 

The center enacted two new laws in March: The trust law, which provides an appropriate environment for the operation of trusts in the DIFC, and the foundations law, a new regime to provide greater certainty and flexibility for private wealth management and charitable institutions.

FASTFACTS

FASTFACT

The DIFC reported a 17 percent rise in new financial institutions registering in the first half of the year, bringing the total to 2,003 with a combined workforce of nearly 23,000.


Saudi Arabia, four other Gulf states to enter key JP Morgan bond indexes

Updated 13 min 9 sec ago
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Saudi Arabia, four other Gulf states to enter key JP Morgan bond indexes

  • The indexes are key performance benchmarks for international investors in emerging market debt
  • Membership in them can help a country sell bonds and reduce its borrowing costs
DUBAI: Saudi Arabia and four other Gulf states will enter JP Morgan’s emerging market government bond indexes next year, a move likely to lure billions of dollars of new foreign investment into their debt, according to a JP Morgan statement sent to investors.
The indexes are key performance benchmarks for international investors in emerging market debt, so membership in them can help a country sell bonds and reduce its borrowing costs.
Sovereign and quasi-sovereign debt issuers from Saudi Arabia, Qatar, the United Arab Emirates, Bahrain and Kuwait will become eligible for the EMBI Global Diversified (EMBIGD), EMBI Global (EMBIG) and EURO-EMBIG indexes, according to the statement, which was seen by Reuters on Wednesday.
Their entry will be phased in between Jan. 31 and Sept. 30. Both conventional bonds and sukuk, or Islamic bonds, will be eligible for inclusion in indexes, but sukuk will need to have a credit rating from at least one of the three major rating agencies to be included.
JP Morgan’s decision follows a surge of debt issuance from the Gulf Arab region in the past few years, as low oil prices force most countries to fund part of their state spending in the international debt markets.
Saudi Arabia, Bahrain, Kuwait, Oman and Qatar have issued a quarter of all new debt sold by emerging market countries in each of the last three years.
The inclusion of Gulf Cooperation Council countries in the indexes will leave them representing around 11.2 percent of JP Morgan’s EMBI Global Diversified and EMBI Global series, the statement said.
“It is estimated that around $360 billion of assets under management are benchmarked against the EMBIG family, with the EMBIG diversified at around $300 billion,” said Zeina Rizk, director of fixed income asset management at Arqaam Capital in Dubai.
Rizk estimated this would translate into about $30 billion of inflows into the five countries’ debt.
“Those inflows are not going to come on day one, but the tailwind resulting from the inclusion headline, coupled with pegged currencies, strong oil prices, a relative immunity from trade wars and high credit quality, leads us to the view that the GCC has better value than the rest of emerging markets.”
The minimum size for inclusion in the indexes is $500 million, and during the inclusion process, instruments will need to have a maturity date beyond March 2022, the statement said.