WEALTH 54

WEALTH ARABIA

MARCH 2020

ISSUE 54 | MARCH 2020

Trend-based investment for the long term Ali Janoudi, Head of Middle East and Africa, UBS Global Wealth Management

Trend-based investment for the long term

Ali Janoudi, Head of Middle East and Africa, UBS Global Wealth Management

A CPI Financial publication

Dubai Technology and Media Free Zone Authority

Contents ISSUE 54 | MARCH 2020

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EDITOR'S LETTER

Greetings all,

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elcome to the 54th issue of WEALTH Arabia.

It's so great to be back with you again. As Coronavirus, now more affectionately known as COVID-19, has dominated the investment conversation, we have focused on it heavily in this issue.

Flip throughout our issue to find a lot of expert analysis on how investors should be staying on top of 2020's biggest surprise.

In the back part of the magazine, there are two recent conversations that have really captured my attention.

First, a look at how the Islamic coin collecting world is perhaps undervalued currently, and primed for a rise. Then, a conversation with the legendary wildlife photographer Frans Lanting that we had during his trip to Sharjah about his life's work, and how he has seen the effects that the climate crisis is having on the environment firsthand. I am sure you will find it a fascinating and rousing read.

Till next time,

William Mullally

NEWS & ANALYSIS The latest analysis from the investment world

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OPINION Increasing linkages amongst financial communities

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INVESTMENT How COVID-19 will affect investment in 2020 Japan is a strong bet down the road

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WEALTH MANAGEMENT How GCC women are changing wealth management in the region

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COVER STORY Trend-based investment for the long term

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Contents TECHNOLOGY Cultivating a machine-learning culture

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P.O. Box 502491, Dubai Media City, UAE Tel: +971 4 391 4681 Fax: +971 4 390 9576

REAL ESTATE Succession planning for investment in the United Kingdom

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CHAIRMAN

SALEH AL AKRABI

INVESTMENT BANKING True to its DNA

CHIEF EXECUTIVE OFFICER

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ART Islamic coin collecting could be the next big thing A call to action

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NIGEL RODRIGUES nigel.rodrigues@cpifinancial.net Tel: +971 4 391 3722

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EVENTS CPI Financial's 2020 events calendar

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CHIEF OPERATING OFFICER

SHERIF R. ELHUSSEINI sherif@cpifinancial.net Tel: +971 4 391 5419

EDITOR - WEALTH ARABIA

NAP ESTAMPADOR nap.estampador@cpifinancial.net Tel: +971 4 433 5320

NEWS EDITOR

GROUP BUSINESS DEVELOPMENT MANAGER

KUDA MUZORIWA kuda.muzoriwa@cpifinancial.net Tel: +971 4 391 3729 EDITORIAL

editorial@cpifinancial.net

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COMMERCIAL DIRECTOR

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

ANDREW COVER andrew.cover@cpifinancial.net Tel: +971 4 391 3717 ADVERTISING

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CHIEF DESIGNER

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DEOGENES E. ABEJUELA JR deo.abejuela@cpifinancial.net Tel: +971 4 391 3722 EVENTS MARKETING MANAGER

CRIS BALATBAT cris.balatbat@cpifinancial.net Tel: +971 4 391 3725

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CONFERENCE PRODUCER

HITESHWAR BHAKHRI hitesh.bhakhri@cpifinancial.net Tel: +971 4 433 5322 FINANCE & DATA MANAGER

ZANEER MOHAMED zaneer.mohamedj@cpifinancial.net Tel: +971 4 391 3727

ADMIN EXECUTIVE

MARILYN BIDUYA marilyn@cpifinancial.net Tel: +971 4 391 4682

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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.

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NEWS & ANALYSIS

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Patrick Lang, Head of Equity Strategy Research, Julius Baer

Fears about the rapid spread of the coronavirus has caused one of the sharpest equity corrections of the last 120 years.

We continue to argue that investors overreact to a possibly sharp but only temporary economic crisis, which will most likely be soon followed by a V-shaped recovery. Rising concerns at the fast spread of the coronavirus has triggered one of the heaviest sell-offs in the S&P 500 since the Great Depression of the 1930s, partly driven by passive index funds and algorithmic trading. Investors fear the economic costs of the quarantine measures, and some large Wall Street banks warn that profits of US companies may stagnate this year.

While the outbreak of the virus will cause economic damage, we continue to argue that the costs will be manageable, short-term and cushioned by monetary and fiscal policy."

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John Hardy, Head of FX Strategy, Saxo Bank

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hough markets have been in panic mode since fears around COVID-19 have risen, experts still expect a V-shaped recovery.

f recovery is L-shaped, however, experts believe that investors can make certain moves that would protect their wealth.

As market pessimism goes into full swing, increase long exposure to sectors and instruments that will benefit from even more extreme stimulus efforts that will eventually trigger a comeback – in prices if less so in real GDP. Atop the list is short the US dollar – versus riskier currencies in DM to begin with but increasingly against hard assets as well. Recall that one of the steepest equity market rallies in history came in 1932-33 as FDR finally shook up the market with devaluation of the USD against gold. Increase allocation to silver (dual use as industrial/precious metal). Only rotate into long commodity sensitive FX and (RUB, BRL, CLP, for example), and commodity-sensitivity equities very slowly and only once supply is drying up more quickly than demand as operations are shuttered in for example, oil and industrial metals mining stocks.”

NEWSOPINION & ANALYSIS

Increasing connections amongst financial communities

William Mullally

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n the pages of WEALTH Arabia, I always try to put as much focus as I can on long-term thinking.

After all, it is long-term thinking that has made investment valuable for society, and short-term thinking and basic greed that has been the cause of most of society’s worst moments over the last 100 years and more, and continues to be a threat to the global economy.

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But as the world has turned more towards sustainability, with that comes a better understanding of the long-term, and vice versa. Financial decisions are increasingly being made with society and the environment in mind, in every facet of the financial world. But as different areas grow, there are still opportunities for collaboration.

The Islamic finance community, for instance, has in its roots a consciousness towards helping society, and to do as little harm as possible. With that comes almost all of the same goals as the sustainability movement. And while it is excellent that these goals are being worked towards in different communities, the Islamic finance community and the broader global sustainability movement, and the large financial groups that are driving it forward, have more opportunity to continue to work together.

Some have already begun that linkage. In a recent conversation with Soumaya Hissoussi of Lombard Odier, I was struck when she described the conversations she’s had with those in the Islamic finance community as they moved further into it with their own Islamic investment offering.

“Shari’ah compliance is more of a legal framework. It has to follow certain rules. Sustainability is more of a philosophy and investment conviction. What we seek to do is to have a positive impact on society and the environment. Shari’ah shares those beliefs and values. They really do go in the same direction. If I take Lombard

Odier, it’s a family business with longstanding legacy values built around sustainability, independence and its role in society. Our offering is about building on this more than two-century legacy,” she told me.

“When we had our first Shari’ah board with Amanie Advisors and the scholars, we explained to them where we come from and we gave examples of who we are and our corporate DNA. We mentioned specific examples, such as the actions of one of our firm’s early partners back in the nineteenth century.

When Europeans first started to invest in the US as an ‘emerging market’, he advised clients against investing in companies reliant on slavery. The scholars, when they were listening to that, told us, ‘actually, you are Shari’ah, as your history and actions show’. They were quite impressed, and they saw us as an example of what companies should do. It’s not just about offering a product that’s Shari’ah-compliant, it’s about having values that reflect the Shari’ah values throughout the organisation.”

While it is wonderful to recognise shared values, there is more that can be done. I encourage more in the investment world, both individual investors as well as institutions, to reach out to the Islamic finance community in whatever ways it can.

Islamic finance and the sustainable movement were made for each other in so many ways. Increased global collaboration is the best way forward towards a more sustainable future.

COVER STORY

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COVER STORY

Trend-based investment for the long term Ali Janoudi, Head of Middle East and Africa at UBS Global Wealth Management, on why investors can still focus on the long-term with their investments, even in an uncertain, changing and ever-volatile climate

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nvesting with a view to the long ter m brings both challenge and opportunity. Political and economic trends are constantly changing which can make long-term investing today seem even more ambitious than normal. The world economy is undergoing significant structural adjustments—what the World Economic Forum has labeled “The Fourth Industrial Revolution”.

Robotics, artificial intelligence, and the digital economy have already had a significant impact on our lives and will continue to influence almost every aspect of it in the years ahead.

Environmental developments have an impact on millions of people and are increasingly visibly affecting large parts of our economies and investment decisions. With this much structural change ahead, can one safely make an investment plan for the long term?

A t U B S, we wo u l d s ay ye s.

Successful wealth managers and investors would generally agree that a long-term strategy has a greater chance of growing in value as long as a diversified investment strategy is based on trends that are both persistent and inevitable.Ali Janoudi

Our own Middle East clients choose the foundations on which to build this long-term framework by looking for exposure to a broad range of assets and geographies in order to capitalise on the unique opportunities of growth trends not just in the markets they know well, but across the globe. This is an important factor as the economy reacts to events as diverse and unpredictable as volatile oil prices, the spread of corona virus, geopolitical tensions, or uncertain elections outcomes even if on the other side of the world.

What trends do we think Middle East investors can focus their attention on in this world of change? Let's start with climate. Younger generations in particular demand investments that align not only with their financial expectations but also their personal values or concerns. Climate change is one of these concerns. Our Chief Investment Office shared in their Year Ahead publication for 2020 that, "rising temperatures, extreme weather events, and concerns about air quality con­tributed to a sense of environmental crisis. In the decade ahead we believe this sense of urgency is likely to spur action."

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COVER STORY

Ali Janoudi, Head of Middle East and Africa at UBS Global Wealth Management

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COVER STORY

Personally, I am very excited about our business and the markets in which both my teams and I are working in. Recent decisions within our Global Wealth management division have placed authority and decision making closer to where our clients are. — Ali Janoudi

How do we recommend investors to react? We advise them to take into account a whole range of developments.

From a shift in consumer behaviour toward more sustainable products, rising political influence of green parties and a range of technological advances that might help clean energy to become more competitive with fossil fuels. These are developments that can no longer be ignored. The implications, particularly for regions whose economies are still dependent on natural resources, are obvious.

Fortunately, where others see predominantly a threat to portfolios, as a leading bank in sustainable investing, we see a huge opportunity. Sustainable investing is an investment philosophy that seeks to achieve competitive portfolio risk/ return characteristics compared with a traditional approach, while at the same time having a positive impact on the environment and society, or aligning investors' portfolios with their goals and values – exactly as demanded by our younger clients. Already, globally, financial products with an environmental, social and governance (ESG) approach represent around 11 percent of investments on average and this will only grow.

For a global bank like UBS, sustainable finance can take various angles. First, the product offering needs to respond to a changing demand by clients.

Secondly, there are growing expectations from internal and external stakeholders to include sustainability considerations into the investment process and risk management.

We see a gradual shift in the way investors think about the companies they invest in. Increasingly, investors demand

a new kind of transparency for their investments, one which comes from material investment information, derived from a set of criteria, most commonly referred to as ESG practices. At the recent Future Sustainability Summit 2020 in Abu Dhabi, both the UAE and Saudi emphasised the need to transform from fossil fuels towards renewables and other energy sources. Movement like this creates a great opportunity for investors in the region.

In fact, according to a recent UBS Investor Watch survey, over 70 per cent of investors expect their investments to have positive environmental and social impact, again with climate change as one of their top priorities.

The conclusion is clear. The financial industry must take a more active role. We have to offer solutions to clients who increasingly see investments as a means to work towards the 17 UN Sustainable Development Goals (SDG).

Opportunity can be found in unexpected places. For example, it might not be obvious that waste reduction is an investment theme. Our CIO have just launched the Future of Waste report that helps investors find opportunities and identify the companies that are most proactive in tackling waste— for food alone, we waste $1 trillion each year.

Enlightening CIO reports are only part of our SDG story. UBS has bold ambitions to drive change that matters, together with our clients and regulators and we have been ahead of the curve on this topic for many years now. In fact we launched the first 100 per cent sustainable multi-asset portfolio for private clients, which includes innovative SDG-related impact investments in equities and bonds. The portfolio just surpassed $10 billion in invested assets.

We also have the UBS Climate Aware strategy, with over $3 billion in assets under management and is underpinned by our Asset Management division's active corporate engagement program that is helping to drive positive change toward a low-carbon economy.

We believe that working with a wealth manager that walks the talk is key to portfolio success.

Philanthropy and sustainability are already becoming key differentiators between wealth managers and they are

"For a global bank like UBS, sustainable finance can take various angles," writes Janoudi.

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COVER STORY

topics we address with full enthusiasm through our products and advice but also through our Optimus Foundation, a thoroughly unique offering in our industry. The foundation works with our clients to co-create ideas and solutions towards social impact and systemic change, whilst also putting in its own funds in to support programmes. Our efforts are appreciated and recognised; so much so, we have won more peer industry awards this year. From a personal point of view, being able to work for a bank that is so closely aligned to my own philanthropic values and activities, and having the opportunity to be an active board member for programmes like UBS Global Visionaries, is a career high.

Opportunities don't stop here. The world is changing at a rapid pace and UBS has identified game-changing mega trends, including growing population and urbanisation, and has promising longer-term investment themes derived from them. These additional trends will dominate the years ahead, opening a window of opportunity for investors with a longer-term horizon. At UBS we have developed a whole series of thematic investment ideas based on long term structural developments. Let me share a couple that we believe are relevant to Middle East investors: Technology: Technological change is likely to be extremely disruptive in the coming years. There are many innovations being driven from within the Middle East itself. In many ways the economics of technology is not about the technology itself, but about the changes technology brings to society.

"Enabling technology" will change or enhance what people can do. Changes in communication, computer power and robotics are all enabling technology.

Technology will make existing tasks more efficient. Technology will create new or widened economic opportunities such as: E-commerce: The e-commerce industry is very diverse and investments in the topic are attracting a high-level of attention worldwide. Emerging markets, in particular, offer very good growth opportunities. By our Chief Investment Office's estimates, is set to 14

average 15 to 20 percent annual growth in the decade ahead. This advance will be fuelled by artificial intelligence, and other technologies like augmented and virtual reality. Greater person­alisation and more efficient delivery systems will result in enhanced user experi­ences such as simulation and visualisation.

F i n t e c h : D r i v e n by r a p i d urbanisation, strong demand from millennials and favorable regulations, we believe the global fintech industry is at an inflection point and set to drive a major digital transformation in the financial services industry. In fact we expect global fintech revenues to grow from $120 billion in 2017 to $265 billion in 2025, implying an annual growth rate about three times faster than the broader financial sector's.

Healthtech: Healthcare is still one of the least digitised of the major global indus­tries, but there are growing signs that healthcare providers, insurers, and even drug companies now recognise the potential for digital tech­nology to improve efficiency and help check the relentless growth of healthcare spending around the world. OECD countries alone spent $6.5 trillion on healthcare in 2016. Healthtech aims to make healthcare more efficient by improving outcomes while saving costs. One study identified up to $300 billion in potential savings in the US alone by integrating machine learning tools into population health forecasting.

Te c h n o l o g y i s n o t o n l y a n investment theme; digitalisation will also dominate the decade ahead in wealth management and investment has to be constant. It is a crucial element for serving clients and advisors as we seek to achieve greater personalisation

and a very tailored experience based on each client's feedback. This does not mean that technology can replace the client advisor; discussions about succession planning and values make it clear why humans will always be needed. We see investing in technology as a way for our client advisors to deepen the relationships they have with our clients.

Urbanisation: Growth in infrastructure investments will outpace broader GDP growth in emerging markets over the next decade. We also think emerging markets will become the key driver of global infrastructure g rowth, especially as developed markets' share of global spending is forecast to fall from one-half to onethird over the next 10 years. Rising urban migration and the continued expansion of megacities in emerging markets are driving growth in demand for infrastructure investment, in fact emerging markets are forecast to account for almost two-thirds of global infrastructure spending by 2025.

In many countries, inadequate urban and nationwide infrastructure is holding back economic growth. Pressure to improve and upgrade infrastructure is also coming from another direction: emerging markets are increasingly competing against one another in a more open global trade environment, forcing investments in trade and transport networks to raise their export competitiveness and productivity. In our view, this is a key reason why overall infrastructure investment continues to grow in emerging markets despite recent pressure on government finances from weaker currencies and falling oil and commodity revenues.

Rising temperatures, extreme weather events, and concerns about air quality con­tributed to a sense of environmental crisis.

In the decade ahead we believe this sense of urgency is likely to spur action.

— Ali Janoudi, Head of Middle East and Africa at UBS Global Wealth Management

COVER STORY

Janoudi meets with colleagues.

Personally, I am very excited about our business and the markets in which both my teams and I are working in. Recent decisions within our Global Wealth management division have placed authority and decision making closer to where our clients are. For us this means that the Middle East and Africa is now a business unit, and enables us to continue to increase our proximity and speed of execution.

We have a clear commitment to the Middle East, having been present in the region for over 60 years. We maintain a physical presence on the ground in Dubai as our regional hub, along with Riyadh, Bahrain and Beirut. All give access to our full service of integrated wealth management, asset management, and investment banking capabilities. This includes advice on mergers and acquisitions, which is often crucial for our wealthier clients and local entrepreneurs, as well as more focus on our financing offerings. We currently have over 200 team members worldwide dedicated

to the Middle East region, as well as 80 people on the ground. In addition our Global Family Office caters for the most sophisticated client needs. Whilst we have doubled the size of the team over the last couple of years, we consider the Middle East as such an important growth region that we are planning on increasing the team even further over the course of 2020.

Many of our Middle East clients have been banking with us for decades, and in some instances we are advising third generation clients on how to position their portfolios, protect their wealth and even plan for the fourth generation.

Taking the long-term view does not just apply to investment portfolios— acquiring the deep knowledge, trust and reputation that we have over these many years in the Middle East puts us in a position to know how to work with global trends within the local context.

I have been working in the Middle East for over 30 years and I would like

to use one simple image to summarise our ambitions in this part of the world.

I talk about this vision every time I meet with my team and it is that I would like for UBS to be the first point of contact for all of our clients' financial needs: from short term trading opportunities with their personal wealth, to M&A advice for their businesses, to succession planning involving the next generations. In other words, I would like us to be the first number our clients have on speed dial on their personal mobile phones.

It is an ambitious target we have set ourselves. But I believe that only by being as close to our clients as this metaphor suggests can we claim to be the trusted advisors they deserve in order to truly deliver on a long-term investment plan.

We will work very hard to offer our clients in the Middle East the best solutions and full access to the unrivalled offering our global bank can deliver tailored to local short, and long term, needs. cpifinancial.net

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INVESTMENT

How COVID19will affect investment in 2020 With fears of a global pandemic, COVID-19, also called Coronavirus, could shake both the world and the GCC economies

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INVESTMENT

(PHOTO CREDIT: Powerofflowers/iStock)

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here have been many threats of pandemic over the last 20 years, but as the world panics, thankfully none has truly developed into what it was feared to be. Coronavirus, now more popularly known as COVID-19, an infectious disease caused by SARS-CoV-2, started as a similar threat, but as it has begun to spread around the world from its origins in Wuhan, China, where it was first identified in December 2019, that threat has grown, and we have begun to see the world begin to move in response.

As of 25 February, the number of global cases increased to 80,239 according to the World Health Organization (WHO), with 2,700 reported deaths. Outside China, 2,439 cases have been reported, with 34 deaths in 33 countries. This is more than the SARS outbreak between 2002 and 2004, according to Mercer.

The real risk to China, and by extension to the world, is that the measures put in place to contain it cause a disproportionate negative economic and investment impact, says GlobalData, a leading data and analytics company.

“China’s response to the COVID-19 outbreak centered on Wuhan risks being worse than the impact of the original outbreak.

Obviously a disruption on the scale of the virus and its treatment is negative for the economy, local wealth and the plans of those aspiring to manage Chinese wealth,” said Andrew Haslip, Head of Financial Services Content for Asia-Pacific at GlobalData.

“Not necessarily top of mind for many has been the effect it will have on Chinese investment assets. A lot of big international and regional wealth managers have been hoping to cash in on rising affluence in Asia-Pacific and China in particular.”

Global Data has revised down its forecasts for 2020 retail investment growth in China. Equities take the biggest hit and bonds suffer the cpifinancial.net

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(PHOTO CREDIT: Goldcastle7/iStock)

INVESTMENT

A screening centre in China.

least in terms of the company’s neutral view of the COVID-19 impact. These revisions result in an expected growth rate of roughly 5.6 per cent for the Chinese retail investment market.

This might, however, be optimistic. This assumes the worst has already occurred, with further disruptive control measures not needed and existing measures relaxed as progress is made. Growth in retail investors’ asset values in the latter half of the year is also expected to be boosted by government stimulus, which the ruling party has proven adept at in past crises, said Global Data.

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However, should additional large-scale containment measures be required or maintained into the second quarter of 2020 there could easily be further economic damage, with an expected downward revision again to all asset classes and with equities contracting in value. This would see growth of just 2.6 per cent in 2020, by far the lowest increase China has seen in retail wealth since the marginal 0.9 per cent during the financial crisis of 2008, according to Global Data.

“Wealth managers with plans to expand in China will need to look through the weak numbers expected in 2020 and have faith in the longer-

term fundamentals of the Chinese wealth story,” said Haslip.

In Italy, quarantine measures have been taken in two affected regions, similar to the measures taken in the Hubei province, according to Mercer.

“The small towns that seemed to be the main sites of the Italian outbreaks have been locked down by the military. In Korea, the outbreak appears to have emerged from a megachurch and the affected city has put voluntary quarantine measures in place. Italy, Japan and Korea are all key manufacturing hubs and parts of the global supply chain, contributing to 1.7 per cent, four per cent,

INVESTMENT

and 1.6 per cent respectively to estimated global GDP, according to the International Monetary Fund,” said a recent report from Mercer.

There it also growing discomfort about the current outbreak in Iran, the scale of which has allegedly been hidden for weeks.

“The potential lack of cooperation and transparency from Iran increases the risk of the virus spreading across the Middle East, especially due to pilgrimage flows. As a result, future disruptions to regions of similar economic importance could well be random economic shocks to the global economy. In such cases, we expect heavy-handed measures such as lockdowns and travel restrictions, even if they come at a high economic cost,” said the report from Mercer. “The political cost of inaction would be far too high for most governments to contemplate.

Although good progress has been made on treatments, including vaccination, large scale manufacture and distribution are likely to take months.”

In China, the number of reported new cases is trending downward, and measures have slowed the spread of the virus outside of the Hubei province. On 25 February, just nine new cases were reported in other provinces of China, according to Mercer.

Some are warning that Coronavirus and heightening geopolitical and trade tensions can be expected to drive the world to the brink of a global recession this year. Investors must take action sooner rather than later to build and safeguard their wealth, some have warned.

“Investors have largely been caught off-guard by the serious and far-reaching economic consequence of the coronavirus. This, despite major multinational organisations already lowering their profit guidances, and many more likely to do so in coming weeks. Clearly, this will hit global supply chains, economies across the world and ultimately

government coffers too. However, it does seem that the world is waking up to the reality of the situation as the containment of coronavirus hasn’t yet materialised and confirmed cases soar in different countries. Until such time as governments pump liquidity into the markets and coronavirus cases peak, markets will be jittery triggering sell-offs,” said Nigel Green, founder and CEO of deVere Group.

“In addition, coronavirus has struck at a time when major economies, including Japan, Germany, India and Hong Kong are already facing a serious downturn.

Whilst I am confident that we’ll narrowly avoid a global recession in 2020, no-one can accurately predict

the future—as we have seen with coronavirus, which markets wrongly assumed would be limited to mainly China. Therefore, in the current volatile environment, investors— including myself—will be revising their portfolios and drip-feeding new money into the market to take advantage of the opportunities whilst reducing risk at the same time.”

Others in the investment community see this as more of a short-term threat to the global investment landscape.

“We continue to argue that the economic shortfall will be temporary and any correction on equity markets is a buying opportunity. We already argued in mid-January that global

Daily Infection Multiplier

Source: Kompa, Mercer. The daily infection multiplier is defined as the ration of total cases to date compared with the number when the outbreak was first reported (January 20, 2020), adjusted for the number of days since the outbreak.

Daily News Cases

Source: Kompa, Mercer

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equities as markets were ripe for a correction after an impressive rally, and that the coronavirus had started to become a serious shortterm threat to value chains, growth and equity markets. Back then, we were surprised how resilient equity markets reacted to the news, but it now seems that markets are reacting with a delay to the virus’ threat, due to the shock of its rapid spread through countries far away from the epicentre. It must be assumed that the virus and the associated quarantine measures will have a considerable impact on economic activities. However, we continue to argue that this is a temporary external shock and markets will treat it as a one-off. Therefore, we consider the correction as an entry point to equity markets. While we see some signs of panic in Europe, in the US the sell off on both the cash and derivative side seems to be taking place rather orderly. This may be a sign that there is further short-term downside, as the capitulation still needs to take place. With regard to the longer-term outlook, our view is that the current correction is healthy for equities and that the economic shortfall in Q1 and possibly Q2 extends the cycle,” said Patrik Lang, Head Equities & Global Equity Strategy, Julius Baer.

According to Mercer, the MSCI Emerging Markets Index implied earnings per share for the next year falling approximately two per cent over the month of February.

“Although this is a slight fall, it does follow a contraction in earnings in 2019 on the back of trade tensions and slowing global growth,” said Mercer.

According to Peter Garnry, Head of Equity Strategy, Saxo Bank, logistics stocks are one particular area that investors should be looking closely at.

“Logistics stocks have underperformed the global equity market since 17 January 2020 but overall the declines have not been severe enough to be called an all-out warning.

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New Coronavirus: The most expose GCC Sectors

Note: Based on 2018 numbers, except for UAE (Dubai 2019 numbers). *No official statistics, Using Dubai numbers, N.A.--Not available.

Source: S&P Global Rating Copyright © 2020 by sStandard & Poor's Financial Services LLC. All rights reserved.

Drilling deeper we observe the most stress among logistics stocks in China and Asia-Pacific (ex. China) and among industries we observe the worst declines in the marine shipping and transit services industries,” said Garnry.

“The coronavirus in China has still not peaked and mixed reports are coming out of China in relation to when production can be resumed in some regions of the country. Equities in general have been calm on the coronavirus outbreak with the real impact showing up in commodities such as crude oil which tells a tale of the world’s factory grinding to a halt.

Within equities the epicenter is in the logistics industry group which was down five per cent in mid-February compared to the official start date of the coronavirus’ impact on financial markets. However, news flow was on balance positive pulling back equities as investors were betting on the coronavirus being contained fast enough to leave little impact on the economy. We take a more cautious view and believe the coronavirus could get much worse globally,” Garnry continued.

Underneath the index value the data tells more stories about where the impact really is, according to Garnry. Across regions it’s clear that Asia-Pacific and China (a few

of the larger names are pulling the weighted return into positive) are the two regions that are suffering the most which is not a surprise.

“When we look at industries, we observe that marine shipping and transit services (basically passenger transport by rail) are hit the hardest.

So the global supply chain has seen a materially decline in activity also supported by the 83 per cent drop in the Baltic Dry Index since August 2019. While shipping and transit services are flashing some signs of warning here the declines are not catastrophic but we recommend investors to watch these industries for guidance. The overall market cap weighted equity indices are broadly reflecting technology companies which are not living in the same physical world as manufacturing companies,” said Garnry.

Garnry also noted that that the transportation sector has not been an attractive investment over a five year period delivering less than 9 per cent return while the global equity market has delivered 34 per cent per cent.

“In our technology-driven society our equity markets are no longer reflecting the underlying manufacturing economy but more a services and software economy,” said Garnry.

INVESTMENT

ECONOMIC IMPACT FOR THE GCC S&P Global Ratings expects recent developments could weigh on growth prospects in the GCC, already affected by low oil prices and geopolitical uncertainty. If the virus continues to spread, there is a risk that the economic impact could increase unpredictably, with credit implications not just for China but elsewhere. For the GCC, this could result in a drop in oil prices, economic growth, and real estate prices, alongside a change in government spending, which could put pressure on issuers we rate in the region. Under our base-case scenario, however, S&P expects the impact on our ratings to be limited for now.

“The rate of spread and timing of the peak of the new coronavirus is still uncertain. However, modeling by epidemiologists indicates a likely range for the peak of between lateFebruary and June. For the purpose of assessing the economic and credit implications of the outbreak, we assume the outbreak will be contained in March,” said Mohamed Damak, Global Head of Islamic Finance, S&P. Notwithstanding the spread of the virus, oil prices are expected to remain at $60 per barrel in 2020 and decline to $55 from 2021. Therefore, S&P expects the impact of the new coronavirus on GCC economies will be felt mainly in terms of export volumes. Exports could decline in view of an anticipated slowdown of economic growth in China, which in our base case we project at 5 per cent in 2020 compared with 6.1 per cent in 2019. OPEC's current production

quotas could also be extended beyond March, which could affect estimates of fiscal and current account receipts for GCC sovereigns, according to S&P. GCC countries send four per cent to forty five percent of their exported goods to China, with Oman being the most exposed (45.1 per cent) and the United Arab Emirates the least exposed (4.2 per cent) based on the latest available data from the U.N.'s Comtrade database (2018).

Sectors in the GCC's hospitality industry--such as airlines, hotels, and retail--could also feel the effects of lower tourism inflows since the new coronavirus outbreak. This is especially because it started just before the Chinese new year, when travel to and from China typically picks up, according to S&P. The Chinese government has introduced travel restrictions related to the virus, and some travelers are cancelling their trips to minimise the risk of infection.

The impact is compounded by the fact that Chinese tourists tend to spend more than the average: According to Nielsen, on-location spending by Chinese tourists is the fourth largest in the world at $3,064 per person. Reported data suggests that around 1.4 million Chinese tourists visited the GCC in 2018 and this figure could rise to 2.2 million in 2023, with the United Arab Emirates (UAE) as the main destination.

In addition, several airline companies have suspended flights to Chinese cities to reduce the risk of transmitting the virus. Emirates Airline has the highest number of weekly connections from the GCC

Although this is a slight fall, it does follow a contraction in earnings in 2019 on the back of trade tensions and slowing global growth.

— Mercer

to Chinese cities. Moreover, Chinese passengers accounted for 3.9 per cent of passengers passing through Dubai International Airport in 2018. Of the six GCC countries, the UAE appears to have the highest contribution from Chinese nationals to airline traffic, tourism, retail spending, and investments in real estate. Moreover, Dubai is set to host Expo 2020, which starts in October. Officials expect Expo 2020 to attract 25 million visitors over a six-month period, with more than 70 per cent coming from outside the UAE. If the effect of the new coronavirus continues to be felt beyond March, the number of visitors could be lower than expected, according to S&P. “We understand that, overall, few Chinese nationals own real estate in the GCC, suggesting that the new coronavirus will have a low direct effect on the market.

However, an indirect impact could stem from foreign nationals' (resident or nonresident) decision to delay or cancel plans to buy real estate due to uncertainty regarding the new coronavirus, its infection rate, and treatment options,” said Damak.

In terms of the banking industry, S&P expects the impact of the new coronavirus on banks to be low, and come indirectly through the overall impact on GCC economies, which we expect to be minimal under our basecase scenario. The banks we rate in GCC have little direct exposure to Chinese companies.

“However, should the outbreak put pressure on important sectors, such as real estate, the effects could surface in the next few months. This is particularly relevant for banks in the UAE and Dubai, but we do not currently anticipate any rating changes. For the insurance sector, we do not see any immediate impact on insurers' underwriting results in the region. However, stronger-thanexpected hits to GCC economies or extreme asset price volatility could hurt insurers' balance sheets,” said Damak. cpifinancial.net

21

INVESTMENT

Japan is a strong bet down the road Even with short-term COVID-19 concerns, Japan is well-built for strong growth, according to Daisuke Nomoto, Head of Japanese Equities, Columbia Threadneedle Investments

T

here are several reasons to be optimistic about Japanese equities. First, consider valuations.

Whether on price-to-book or priceto-earnings, Japanese stocks are among the cheapest in all developed equity markets. Take the priceto-book ratio of the MSCI Japan.

Currently trading at only 1.2x, it is 50 per cent lower than the MSCI 22

Europe’s price-to-book ratio of 1.8x, and less than a half that of the MSCI USA’s figure of 3.4x.

Second, let’s take a look at Japan’s economy. Sure, the upturn in 2019 has been only modest. But there are signs that the global economy may have hit the bottom. Some cyclical data points such as Japan’s exports and machinery tool orders had sharply dropped since the beginning of

2018, but they look to be bottoming.

If the bottoming view proves correct, it may be helpful to remember that in 2016-2018, the MSCI Japan surged roughly 50 per cent in just 19 months as global growth prospects improved. Even mere stability would benefit the cyclically geared Japanese equity market.

Indeed, we think many investors pay too much attention to the negatives

(PHOTO CREDIT: fotoVoyager/iStock)

INVESTMENT

in Japan such as October’s hike in consumption tax from eight per cent to 10 per cent. We do not expect a significant negative impact on the economy this time, as there were some exemptions and subsidies from the government. In fact, we saw less evidence of pre-emptive purchases by consumers ahead of the hike than in the past. If the Japanese economy were to slump, it is highly likely that the

Japanese government would announce a fiscal stimulus package to fully support the economy.

POSITIVE FACTORS Some investors are also overly focused on Japan’s structural problems of high government debt to GDP and its rapidly ageing population, which acts as a drag on GDP growth as the labour force declines. As Japan’s labour force

is not growing, the government has provided some support for women to return to work (the female labour participation rate in Japan already exceeds that of the US) and Japan is now actively accepting highlyskilled foreign workers (the number of foreign workers has been almost doubled in a decade).

With rising IT investment and the government-led labour reforms, cpifinancial.net

23

INVESTMENT

Charts to keep an eye on in 2020

Charts to keep antoeye on inROE 2020 Japan: Substantial room increase by putting cash to work 16%

JAPAN: SUBSTANTIAL ROOM TO INCREASE ROE BY PUTTING CASH TO WORK 16% 12% Charts to keep an eye on in 2020 16%

JAPAN: SUBSTANTIAL ROOM TO INCREASE ROE BY PUTTING CASH TO WORK 12% 8% 16% 12% 8% 4% 12% 8% 4% 0% 8%

MSCI Japan

MSCI Europe Sep-19 2011

MSCI USA

MSCI Japan

MSCI Europe Sep-19 2011

MSCI USA

Source: Bloomber, 2019 MSCI Japan

MSCI Europe Sep-19 2011

MSCI USA

4% 0% 4% 0%

Source: Bloomberg, 2019.

0%

JAPAN: OUTSTANDING MSCI JapanFINANCIAL FLEXIBILITY MSCI Europe

MSCI USA

Sep-19

2011

60% 50% of2019.

Japanese companies in net cash* Source: Bloomberg,

Japan: 60% Outsanding financial flexibility 50%

50% of Japanese companies in net cash* FLEXIBILITY JAPAN: OUTSTANDING FINANCIAL 50% 40% 60% 50% of Japanese companies in net cash* 40% 30% 60% 50% 50% of Japanese companies in net cash* 30% 20% 50% 40% 20% 10% 40% 30% 10% 0% 30% 20%

Japan

Europe

USA

*Net cash: cash + short-term securities – total interest bearing debt (excluding financials)

0% 20% 10%

Japan

Europe

USA

Japan

Europe

USA

Source: Goldman Sachs, 2019. *Net cash: cash + short-term securities – total interest bearing debt (excluding financials)

10% 0%

*Net cash: cash + short-term securities – total interest bearing debt (excluding financials)

0%

Source: Goldman Sachs, 2019.

Japan

Europe

Source: Goldman Sachs, 2019 *Net cash: cash + short-term securities – total interest bearing debt (excluding financials)

labour productivity growth in Japan is now the highest among all developed economies. This should provide a welcome boost to Japan’s economic growth. Companies are looking to invest in areas such as IT and employee education to further drive productivity. We see sectors such as business services, outsourcing, IT and software benefiting. Also, as 5G wireless technology is starting to be rolled out across China, the US and Japan as a next generation infrastructure to support things like IoT and autonomous vehicles, we are investing in companies that will benefit from this roll out.

Next, we turn to tourism. The Japanese government has grand ambitions to significantly ramp 24

USA

up overseas visitors to Japan from current levels of approximately 30 million to 60 million a year by 2030.

This would provide a significant consumption boost and follows an already steep rise in tourism in Japan. By comparison, in 2011, there were just over 6 million visitors to Japan.

In 1964, Japan used the Olympics to showcase its pioneering high-speed train, the Shinkansen. This time it will showcase its many groundbreaking technological innovations, from robotics to autonomous driving, which can only help to focus the eyes of institutional and retail investors from around the globe on Japan.

The Tokyo Metropolitan Government estimates the economic effect will amount to JPY 32.3 trillion ($300 billion) and 1.94 million additional employees from 2013 through 2030. We do not expect there to be a significant post-Olympic hangover in Japan as the Japanese government has been careful not to over-invest. This is just one more reason why we believe 2020 will be a good year for Japanese equities.

Unrelated to the Olympics, Japan’s Integrated Resort Bill could make the nation the next great gambling market, and casino operators are jockeying their way to win concessions. For as much as a casino will cost, the opportunity to be one of three concessionaires is tremendous.

Fitch estimates that gambling revenue could be $10 billion annually, topping the $6.6 billion the entire Las Vegas Strip generates per year.

CORPORATE GOVERNANCE REFORM AS A GAME CHANGER Finally, we believe corporate governance reform is a game changer for both corporate management and investors. Overhauling corporate governance to harness the power of private enterprise is a key aspect of Japan’s growth strategy.

Letting corporate management focus

Corporate governance reform has materially changed the mindset of Japanese corporate management teams—they are now focusing more on profitability, capital efficiency and shareholders’ interests.

— Mercer

INVESTMENT

on return on equity (ROE), increasing external board membership and encouraging constructive communication with investors have been extremely beneficial. Corporate governance reform has materially changed the mindset of Japanese corporate management teams— they are now focusing more on profitability, capital efficiency and shareholders’ interests.

As a result, the average ROE has risen to about 10 per cent over the past five years,4 in line with European averages. But there is still low-hanging fruit for a further increase since Japanese companies have a tremendous amount of cash on hand. Approximately 50 per cent of Topix 500 Index non-financials have a net cash position, compared with only 20 per cent for the US and Europe. Looked at another way, cash as a percentage of the MSCI Japan Index’s market capitalisation is about 20 per cent, which is twice as high as the MSCI Emerging Market Index and four times the MSCI USA Index. Despite 10 consecutive years of increasing dividend payments and a roughly 50 per cent year-onyear rise in share buyback activities, corporate Japan’s financial leverage has fallen consistently for almost a decade.

All this data suggests that Japanese companies are highly likely to continue putting excess cash to work in the decade to come. The average ROE of Japanese companies has already doubled since “Abenomics” was initiated, but we believe there is further to go, which can only be positive for share prices. This will be particularly true over the longer term as the compounding effect of these reforms takes hold.

Signs of global economic growth improving, as well as relatively attractive valuations, bode well for Japanese equity markets. Added to this the continuing positive impact of corporate governance reforms should play a critical role for share price appreciation in 2020 and beyond.

JPY: Still an effective hedge Vasileios Gkionakis, Head of FX Strategy, Banque Lombard Odier & Cie SA

O

ur central scenario foresees virus-related disruptions as material, but transitory. JPY is also proving to be an efficient hedge—though to a lesser extent than gold.

USDJPY has risen by two per cent this year, a somewhat unintuitive performance given the market risks. However, the yen was holding up much better until last week when USDJPY rose by 1.7 per cent to 1.12. Some commentators attributed this recent JPY weakness to fears about a potential Japanese recession following the weak GDP data for Q4 as well as the spread of virus infections in Japan. We do not subscribe to these speculations. Historically, there is no correlation between negative Japanese GDP growth and USDJPY, while natural disasters have seen Japanese investors repatriate money into the country, putting upwards pressure on the JPY as Japan is a net creditor to the rest of the world.

We think the recent JPY weakness was mostly a result of an increase in fixed income-related outflows from Japan. So far this year, Japanese investors have bought a net amount of JPY 4.7 trillion ($42 billion) compared with an average net buying amounting to JPY 0.7 trillion over the same period since 2015. Some of these flows may be linked to the GPIF (Japan’s government pension fund), which is expected to soon release its new model portfolio allocation showing an increase in the target of foreign bond holdings. With rates abroad still a lot higher, especially in the US, a large chunk of these debt-related outflows are likely running with lower hedge ratios, thus having a softening impact on the JPY. While some of these outflows may have further to run, it seems that the biggest chunk has already been allocated, hence foreign bond buying is likely too slow. Furthermore, historically equity flows have been more important for the JPY than fixed income flows. In a riskoff environment, liquidation of existing foreign equity exposures could make the JPY stronger. Accordingly, we would not extrapolate the yen’s weakness from here—in fact, recent days have seen USDJPY returning to the below-111 area.

Putting everything together, historical empirical evidence suggests that JPY would remain an effective hedge currency against an intensification of the virus outbreak.

cpifinancial.net

25

(PHOTO CREDIT: SrdjanPav/iStock)

WEALTH MANAGEMENT

26

GCC women have traditionally held strong matriarchal roles, with some leading advisory roles in family businesses, which can provide GCC women with many opportunities in strategic wealth planning and management.

WEALTH MANAGEMENT

How GCC women are changing wealth management in the region

The rise of a new generation of affluent women have a greater focus on long-term planning and sustainability, infecting how they manage their wealth, according Amy Bryant, Deputy Chief Executive Officer at Jersey Finance cpifinancial.net

27

WEALTH MANAGEMENT

Amy Bryant, Deputy Chief Executive Officer, Jersey Finance

W

hat are your views on the sophistication of the wealth management landscape in the UAE and wider GCC? With an estimated $1 trillion of wealth set to transition between families and generations in the Middle East during the next decade, immense opportunities await High Net Worth Individual (HNWI) investors and wealth management companies in the region.

According to our proprietary research in 2018, there is a growing preference from HNWI clients to 28

professionalise the way succession planning is managed, within a more sophisticated wealth management landscape than a few decades ago.

The wealth management industry helps support the growing local and international investment ambitions of HNWIs and family businesses. Against this backdrop, international finance centres (IFCs) and jurisdictions with a long-standing tradition in wealth management that can demonstrate their dedication to transparency, strong regulation and quality, will lead the way in this fast-changing environment.

As the GCC is predominantly a family and very personal wealth market, wealth transition and succession planning are still the two topics that we focus on most in the region. According to Jersey Finance’s research, 92 per cent of wealth management professionals said that HNWI clients are poorly prepared and inadequately structured for the transition of wealth across generations.

Additionally, when we consider succession, family businesses are at clear risk nowadays. Hawkamah Institute for Corporate Governance studies show that family businesses are

WEALTH MANAGEMENT

Women, perhaps, place greater emphasis on long-term planning, communication, dispute prevention, and on sustainable and equitable growth.

— Amy Bryant

often vulnerable at times of transition, with only 30 per cent of the family firms survive the transition to second generation and only 10 per cent make it to the third generation. To counter this risk, suitable strategies ought to be put in place and perhaps outdated structures revisited to ensure they are effective and compliant.

As such, we strongly believe that GCC HNWI clients need to match the complexity of compliance procedures with the right expertise in wealth transitioning. This is the area where Jersey Finance sees the greatest demand, as Jersey firms can provide guidance in both structures and products, services and the merits of structuring through a leading IFC. How do women HNWIs fit into the picture above?

A notable change worth mentioning in the GCC region, particularly in the Saudi Arabia, UAE and Kuwait, is the increased role of women in business as these countries diversify their work force to help improve national aspirations in relation to meeting localisation, specialism and business diversification targets.

Plus, governments in the GCC region are supportive of women’s growing role in C-level positions in the public and private sectors alike, as board members and as active economic contributors to society.

In addition, GCC women have traditionally held strong matriarchal roles, with some leading advisory roles in family businesses, which can provide GCC women with many opportunities in strategic wealth planning and management.

What issues were brought up at the Jersey Finance’s Women and Wealth Event Series last year?

Following our inaugural ladies only

educational event in 2018, we ran a series of events across the GCC (KSA, Kuwait & UAE) in October, focusing on women and wealth management.

The Gulf region is seeing continued growth of women’s key roles in the workforce, in engaging and managing wealth and in taking significant financial decisions at corporate level. A panel of industry experts offered their insights on several recent trends and the evolution of wealth management.

They provided case studies of successful structuring of complex assets for family businesses and personal estates.

The underlying messages were focused on the tremendous achievements of women in the GCC, and of encouragement for them to take a seat at the decision-taking table.

The unique dynamics of family-owned businesses are particularly important for successful succession planning, portfolio diversification or when a family member decides to change their investment strategy.

Only

30% of the family firms

survive the transition to second generation and only

10% make it to the third generation.

Source: Hawkamah

Women, as part of family businesses in the GCC, are highly impacted by incidents that affect the family structure or business strategy. Their concerns, therefore, tend to focus around succession planning, impact investment, voting rights, divorce and governance, to ensure the sustainable development of the business and private family wealth. They also seek to identify and consolidate their role within these evolving structures.

However, these issues are not exclusive to women, they are shared across genders and generations, but women’s approach to solving them may provide an insight into a perspective that may slightly differ from men’s. Women, perhaps, place greater emphasis on long-term planning, communication, dispute prevention, and on sustainable and equitable growth.

So, what distinguished these female-focused events from the rest, is that they provided women with the platform to voice their concerns in an organised space where advisors and audience members could relate to each other, in what GCC women called their own ‘majlis’ or ‘diwaniya’.

And the above-mentioned positive developments, along with the rise of a new generation of millennial women that are changing the way companies do business, brings about an unprecedented opportunity for the Emirati & GCC families to re-evaluate their wealth management strategies.

Where are the opportunities in this space?

Recent developments and advancements in the regulatory and legal architecture for wealth management show that family business succession and structuring is better placed in well-regulated, compliant jurisdictions. Planning is key to avoid risks, breakdown in family relationships, or outright failures.

We were privileged to host this series of events in inspiring and informing some of the leading GCC women to ask the right questions, seek advice and contribute their talents and knowledge to the success of their business and societies. cpifinancial.net

29

TECHNOLOGY

Cultivating a machine learning culture Firms should be sowing the seeds now to ensure staff are fluent in datadriven technologies, writes Naz Quadri, global head of machine learning and alternative data at Bloomberg

M

achine learning has vast potential for asset management firms.

Deploying systems that use data-driven technologies can streamline buy-side operational processes, unearth valuable insights and possibly improve portfolio strategies and performance. But only firms that embrace a machine learning culture— and are open to applying machine learning techniques creatively and broadly—have the best chance of reaping the benefits.

30

Asset management firms in the UAE are particularly well placed to integrate machine learning, given that the government has implemented several initiatives to help firms adopt AI and machine learning in their operations, including the establishment of the world’s first AI University, the Mohamed bin Zayed University of Artificial Intelligence. In fact, the UAE is the second highest investor in AI in the region, having invested $2.15 billion over the last ten years according to a June 2019 report by Microsoft.

THE DATA REVOLUTION LIGHTS THE SPARK Stepping back, the burgeoning data revolution and the proliferation of artificial intelligence (AI) continue to reshape industries and sectors, including asset management.

As a subset of AI, machine learning involves systems using data to learn, improve and construct analytical models with significantly less programming effort or even the ability to solve previously intractable problems.

As the amount of data has expanded

(PHOTO CREDIT: Just_Super/iStock

TECHNOLOGY

exponentially over the past two decades, so, too, has the capacity for data gathering, storage and processing.

Alongside this growth, evolving computing technology has empowered market participants to scale out collecting, storing, cleansing and analysing evergreater—as well as more diverse and granular—amounts of structured and unstructured data from increasingly varied sources at greater speed.

The mainstreaming of data science, coupled with computing advances in AI, have allowed asset managers to successfully scrutinise large and complex quantities of data for patterns. They hope to harness this technology in ways that boost returns, enhance strategies, lower costs and improve processes and operations.

START AT THE TOP How do asset management firms cultivate a machine learning culture?

They can begin through securing buy-in on the importance of machine learning from senior management.

Gaining leadership’s commitment makes it easier to establish and spread a more data-centric culture across the firm so that it becomes the core part of messaging, DNA and planning.

Furthermore, this machine learning culture thrives in environments that encourage cooperation, as well as data, technology and model sharing.

For example, teams covering different asset classes can share data techniques to solve similar but distinct problems or communicate valuable information more easily across silos.

Asset management firms that have a machine learning culture tend to be flexible, as well as particularly open to collaboration, new ideas and novel ways of thinking. They develop adaptable decision-making processes around the types of models they use. And they consider investments in machine learning applications at all levels of the firm, not just in the front office.

REGARD THE QUESTION AS A STRATEGIC ONE Organisations can approach the matter of developing a machine learning culture much as they would any kind of strategic planning, such as buying a new building or expanding into new asset classes. The firm can diagnose

Naz Quadri

The mainstreaming of data science, coupled with computing advances in AI, have allowed asset managers to successfully scrutinise large and complex quantities of data for patterns.

— Naz Quadri

the strategic imperative it’s trying to address and determine whether it can apply data-driven solutions. It then can determine how much capital to allocate to this effort.

To do this properly requires the right personnel. Asset managers can start by hiring a senior-level data or machine-learning expert with experience transforming firms in the financial industry who understands the organisation, its strategy and culture.

This expert should develop multiple options for a multi-phase plan to evolve the organisation in a way that is consistent with culture and objectives.

At the next stage, senior management can explore what it would mean to make staff “machine-enabled.” Future talent will require skillsets that are more data-proficient. As many across the financial services industry worry about automation and job loss, organisations should be sowing the seeds now to ensure staff is more fluent in data-driven technologies, whether they work in the front or middle office, at a fundamental or more quantitative firm.

Workforces will need to evolve as technology evolves. So, as part of a machine learning culture, firms should consider how to make sure their employees have the right skillset to move forward with the changes in the industry.

The data explosion holds promise for any firm that can process complex and disparate information sources quickly, efficiently and creatively. Asset managers who explore data-driven technologies’ potential fully put themselves in a strong position to stand apart from their competition, improve performance and attract new investors. cpifinancial.net

31

REAL ESTATE

Succession planning for investments in the United Kingdom Clementine Malim, Associate, International Residential Sales Middle East, Savills Middle East writes for WEALTH Arabia about Middle Eastern investment in London

S

uccession planning is complex, with many financial and legal implications. When it comes to wealth management, whether for families or businesses, it’s important to think beyond the day-to-day delivery of advisory services, and plan ahead in order to minimise disruption in the event of a death in the family or organisation.

32

Investment in real estate allows for a diversification of assets and a spread of the risk, with real estate having long been a major player for Middle East investors keen to have global assets as long-term investments.

London continues to be one of the most popular destinations for this capital investment. Savills has identified

that a GBP 5 million investment into prime central London real estate would effectively cost 40 per cent less today than five years ago (pre-tax), with approximately 20 per cent due to value softening and 20 per cent due to currency fluctuations.

The lack of prime space for developments in the city combined with the fact that average prime central

REAL ESTATE

(PHOTO CREDIT: oversnap/iStock

Buyers from the Middle East are not just looking at prices however, location, transport links and amenities remain as critical a deciding factor as ever, as the demand for developments such as King’s Road Park (with its two in-house cinemas, 25m swimming pool, gym, spa, and golf simulator) and Triptych Bankside (the cultural and transport hub near to Borough Market, Shakespeare’s Globe Theatre, the Tate Modern and The Shard) demonstrate.

Sustainability is also proving to have significant influence on the Middle Eastern investor.

Developments such as Grand Union, which is part of a canal-side regeneration project with 11 acres of public green spaces and waterside walks, and the iconic Battersea Power Station, are transforming the local landscape and creating thriving communities and truly sustainable neighbourhoods and work hubs.

As a multicultural city that thrives off diverse nationalities and foreign investment, these developers are embracing investors from the region, with no foreign buying taxes or penalties in the city, and a focus on

London prices are around 20 per cent lower than five years ago, and the current dollar-pound exchange rates, has served to drive demand further from Middle East investors with a view on the medium to long term fundamentals of the London market.

In the last three months, to the end of September 2019, the drop in prime housing prices in central London has been minimal, at only 0.3 per cent during this period. This is the lowest quarterly adjustment in the past four years and has only served to drive further demand as speculation grows that the market is bottoming out.

transparency and making security a priority in their developments, in order to provide peace of mind for those overseas.

When it comes to ascertaining the best structure of assets for investors in the region, there are a number of key elements to be taken into account, including the intention of the property purchase (owner-occupier, or investor), confidentiality requirements and succession planning, particularly in terms of Shari’ah.

In the UK, there are a number of residential taxes which may also be applicable, including Stamp Duty Land Tax (SDLT), Annual Tax on Enveloped Dwellings (ATED), ATEDrelated Capital Gains Tax (CGT), Non-Resident Capital Gains Tax (NRCGT), Corporation Tax (CT), Income Tax (IT) and Inheritance Tax (IHT), which is why mortgages, life insurances and wills need to be carefully structured, with ownership of property potentially spread across multiple family members, and advice should always be taken from real estate and law firms with experience in residential UK real estate.

Clementine Malim

Associate, International Residential Sales Middle East, Savills Middle East As Associate for International Residential Sales for Savills Middle East, Clementine is responsible for advising high net worth and ultra-high net worth individuals on residential purchases.

She handles multiple investment property portfolios around the globe, in prime locations, such as New York, Paris, Berlin and London.

Originally from London and having received her education in Edinburgh, Clementine moved to Dubai in 2013. She brought with her over six years of experience both onshore and abroad, and has been pivotal in working with developers and in turn acquiring new business and forging sound relationships with her clients.

cpifinancial.net

33

INVESTMENT BANKING

Chiradeep Deb

34

INVESTMENT BANKING

True to its DNA Mashreq Bank's investment banking business succeeds based on a nimble and agile approach, quick decision-making and seamless execution, Chiradeep Deb, Managing Director and Global Head of Investment Banking, Mashreq Bank tells WEALTH Arabia

H

ow has Mashreq's investment banking evolved since it was first introduced?

Mashreq, one of the UAE’s best performing banks for over five decades, set-up a full-fledged Investment Banking (IB) platform in 2004. Our platform then allowed clients to access a complete suite of debt capital raising and equity advisory services. Apart from leading syndicated loans in global markets and M&A advisory, regional IPO related services were also part of our real time offerings.

To its credit, the investment-banking platform constantly came up with innovative propositions. We were the first ‘local bank’ to advise and underwrite the region’s very first $1 billion leverage buyout deal (LBO) in 2007.

The global financial crisis that followed had its own share of challenges for the financial world. Catering to the changing business environment, we at Mashreq adjusted our investment banking proposition, ensuring that we played to our strengths, leveraged our global footprint, consolidated our presence in existing markets, and offered unique business opportunities to local investors in new markets, and by doing so, connected Middle Eastern liquidity providers to borrowers and issuers in wider markets.

With every passing year, we are growing our international business at a much faster clip, as banks and client’ alike seek diversity in their risk profile

and investor base respectively. We do believe we are on the right track to build a sustainable business model.

Today, our investment banking revenues are diversified across the GCC region. We are expanding our services to the fast-growing Egyptian market, along with selectively exploring opportunities in Africa and the Indian sub-continent.

We are arguably today more global in our approach than any regional bank of our size.

W hat are the products and services offered?

Investment banking at Mashreq professes strategic level of engagement with key clients across industry verticals and geographies. Our full spectrum of products and services under the investment banking platform caters to the client’s requirements for capital across business cycles, whether it is raising general purpose debt through syndicated loans; accessing capital markets through a bond or planning a Sukuk; raising equity through a potential listing; or support in selling non-core assets; and restructuring existing debt profiles to meet corporate and shareholder objectives.

In a highly competitive market, eventually your client relationships and thought leadership are the only two ultimate ‘currencies’ that hold value.

Through our unique business model and solid business proposition, Mashreq has established strong

relationships with large corporate clients, financial institutions, sponsors in meeting their capital requirements in the most efficient manner.

What separates Mashreq investment banking from the competition?

A nimble and agile approach, quick decision-making and seamless execution have been a hallmark of our investment banking platform. For instance, some of the largest family reorganisations in the UAE that required swift investment banking solutions (structured as leveraged buy-outs) recently were solely lead and underwritten by Mashreq Bank. Our investment banking team responds with market judgment and ingenuity to the client’s need for capital and works towards developing and implementing tailored solutions based on market conditions.

While Mashreq corporate bank lends across the credit spectrum, from government-related entities to middle market companies, the sweet spot for Mashreq is its growing engagement with private sector businesses that operate in its core markets.

We specifically help clients to diversify their capital structure, introduce new liquidity providers from new markets, and work closely with them to set up a road-map for future financing, aligned with their shareholders’ objectives. In my opinion, these are the most rewarding and sustainable journeys we have on our side. cpifinancial.net

35

INVESTMENT ART BANKING

Our ability to structure nonrecourse facilities, underwrite and subsequently syndicate to a wider group of banks in a seamless manner is well acknowledged by acquisitive counter-parties. We explore efficient financing solutions around the working capital cycle of key clients and have the ability and track record to devise innovative structures that can ultimately be syndicated across market participants. Each year, we are engaged in capital-raising mandates that run into the tens of billions of dollars for borrowers and issuers across geographies. We strive to stay in sync with changing dynamics in the market place. We are a big proponent of ESGrelated requirements and are working with some key clients on potential green issuances in the DCM space.

In addition, Mashreq’s integrated corporate coverage model, on the relationship side, split by industry sectors, lends us deep-rooted industry knowledge and offers our clients seamless access to industry and geographic reach and expertise across all investment banking products.

What are the main challenges of investment banking in the current landscape?

In a benign interest rate environment, one would expect significant amount of deal flow, as is being witnessed in developed markets. However, new debt capital raising, if one takes away the sovereign GCC bond issuances over past 12 months, has been on a falling trajectory in the region. This is not surprising when the oil is hovering around the $55/60 per barrel. There is only so much that you can afford to fund the transformation in the region.

As we stepped into 2020, the outbreak of the coronavirus epidemic in January did rattle financial markets.

While the spreading disease has already affected some sectors, a great deal of uncertainty remains over the eventual impact on global growth.

On the demand side, we are dealing with lots of local liquidity chasing very few quality deals, at least in syndicated 36

loan markets, leading to rationalization on fee expectations. Syndicated deal volumes have reduced by 33 per cent y-o-y in 2019 in GCC and that too most of it is proactive recycling of old debt, forcing difficult discussions on new fee levels.

Structurally, the volumes in syndicated loan markets have been overtaken by DCM issuances, which in 2019 crossed $100 billion to hit an alltime high. While it is a step in the right direction from an issuer’s perspective, the DCM business remains fiercely competitive. There is not enough diversity in the issuer base, still a high proportion of repeat issuers and growth is more muted than anticipated.

Finally, I would say, some loopholes in corporate governance standards, with respect to some high-profile names in recent times, have undone the ability, at least in the short run, for new firms to tap equity markets outside the region. Given that local equity markets lack depth and new money in the form of private equity, funding is hard to come by. M&A activity is waning.

How is Mashreq overcoming these challenges and how has Mashreq’s investment banking performed?

True to our DNA, we went about reprioritising markets, identifying certain growth sectors, leveraging investor relationships and above all focusing on proactive client engagement to narrow down on opportunities.

In 2019, we generated more than 50 per cent of our investment banking revenues from outside the UAE as compared to the local market. Our approach was to focus on introducing untapped liquidity in the form of new banks and investors for local borrowers and at the same time highlighting bankable credit stories from other markets for regional institutions to leverage and tap into.

Mashreq ranked number four in 2019 among all GCC banks on syndicated loans book running league tables andn umber one on book running league tables for African FIs among GCC banks. (source: Bloomberg)

Our DCM practice has been focusing on first time primary issuers to help them access capital markets and diversify away from bank funding, while our advisory practice has been scouting for consolidation opportunities in addition to monetising non-core assets very efficiently within the sectors.

What are your thoughts on the investment landscape overall?

While oil-related rise saw a sharp deceleration in 2019 owing to production cuts, global economic slowdown, and geopolitical tensions, the non-oil sectors expanded at a rapid

(PHOTO CREDIT: Asia-Pacific Images Studio/iStock)

INVESTMENT BANKING

pace across the region, driven largely by heavy spending in transportation, energy, and logistics infrastructure. We are witnessing consolidation across various sectors in key GCC markets, whether it is hospitality, healthcare, or even banking, to name a few. The proportion of foreign capital in such exercises is albeit very limited.

The investment focus is more on achieving cost synergies rather than revenue growth and while that helps to weed out the inefficient players in the system and allows for more solid entities to grow, the objectives are more tactical and short-term. The region would do well to focus on strengthening

governance framework and disclosure norms for companies domiciled here, especially those that have access to foreign capital (debt or equity).

Furthermore, as some markets in the region, KSA for example, has shown the way, the local currency (LCY) debt capital markets have an important role to play in harnessing growth in certain sectors. They have the ability to provide long-term capital to local corporates and sit alongside other forms of conventional capital.

What are your plans for the rest of 2020? And beyond?

Our approach is to exponentially grow

our business in the mid to long term by balancing out existing markets, adding new revenue lines, focusing on investor outreach and adding new geographies.

The GCC markets would continue to be impacted by geo-political issues and trade wars however managing volatility shall remain an important consideration for every business. The long-term regional growth story will remain intact.

At Mashreq, we believe every such crisis presents multiple opportunities and instead of having a transactional mind-set, we work with our clients as long-term partners, advising them on the right thing to do! cpifinancial.net

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Islamic coin collecting could be the next big thing While coins in the West continue to skyrocket in value, Islamic coins only have a handful of high-level collectors. A new exhibition in Abu Dhabi is set to change that 38

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H.H. Sheikh Mansour Bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Presidential Affairs and Dr. Alain Baron, founder of Numismatica Genevensis

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n the ancient book De Vita Caesarum, published in Rome in the first century CE, the emperor Augustus, the adopted son of Julius Caesar, was described as presenting old and exotic coins to friends and members of the court during special occasions or festivals.

Indeed, coin collecting has been a hobby of the elite for thousands of years.

It wasn’t until the 14th century, however, that the contemporary culture around coin collecting and appreciation truly started, when people such as the poet Petrarch became aficionados, and even popes and emperors followed suit. As a result, it

was even known as the hobby of kings.

That saying has in the last few centuries switched, and as coin collecting cultures in the US and Europe grew, it has now been affectionately named the king of hobbies.

Though long just a hobby, coin collecting has become something more—an attractive alternative investment. Certain incredibly rare coins from the Western world, such as Queen Victoria’s 1839 five pound piece with artwork featuring “Una and the Lion”, has risen from GBP 17,000 as an average price to now roughly GBP 300,000, according to the FT. But while the Western coins have skyrocketed in price, Islamic coins, which have a rich history as well, are still undervalued—and ripe for an ascension in both cultural appreciation and monetary value.

“Interestingly enough, Islamic coins, they have not been popularised in a proper way, are still relatively cheap compared to other kinds of coins. That means that an individual with certain means could still build a fabulous coin collection with a total budget that is still a fraction of a price of a DaVinci,” Dr. Alain Baron, the founder of Numismatica Genevensis told WEALTH Arabia.

“They will certainly rise in value.

When things come in fashion, then everybody wants them, but with Islamic coins, we’re not at this stage yet. The Arab world is just discovering its patrimony now. It did not happen properly earlier. The upside would be substantial. US coins are worth $10 million, but you don’t have an Islamic coins worth that much—it doesn’t exist,” Dr. Baron continued.

One thing that could spur influence is the exhibition that Baron helped bring to the UAE, titled Coins of Islam: History Revealed held at the Sheikh Zayed Grand Mosque Centre in Abu Dhabi. The exhibition, inaugurated by His Highness Sheikh Mansour Bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Presidential Affairs and under the patronage of Her Highness Sheikha

Fatima Bint Mubarak, opened on 28 January and set to run until 28 April.

The 300 coins that are a part of the collection intricately tell the story of the early days of Islam, as the preIslamic and Western coinage was gradually replaced with coins that were indicative of the values of the faith, such as removing individual figures, quoting the Holy Quran, displaying mosques, and more.

“The collection was built piece by piece from various collections from all over the planet, and always the best of the best. All the specimens in the collection are the finest quality, most important in terms of rarity, and there is basically no match in any museum,” said Dr. Baron.

Dr. Baron painstakingly built the collection over a 10-year period for an anonymous private collector, who intended the collection of Islamic coins not only as a personal feat but a way of educating the public, which is what the exhibition aims to do, Dr. Baron revealed to WEALTH Arabia. Dr. Baron approached the representatives of the Sheikh Zayed Grand Mosque Centre in Abu Dhabi, with whom he found a shared goal of education and promoting tolerance.

“We had talks with the Grand Mosque, and we were positively surprised that the Mosque had positive ideas about tolerance. This sends a very strong message, and we had a common ground we could work on,” said Dr. Baron.

"Islamic history and culture inspired this exhibition in line with the SZGMC's vision. Since its establishment, the Centre has become a leading cultural destination, serving as a beacon of intellect and reason through its various activities. By displaying historical artifacts, like these extraordinary coins, SZGMC aims to underline the rich history and cultural legacy of successive Islamic eras across centuries,” said HE Abdurrahman bin Mohammed Al Owais, Chairman of the Board of Trustees of Sheikh Zayed Grand Mosque Centre. cpifinancial.net

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"Ever since its establishment, Sheikh Zayed Grand Mosque Centre has worked towards supporting the UAEs efforts to establish rapprochement between cultures.

While also improving the quality standards of cultural tourism across the country and transform it into a leading global destination. Today as we witness another outstanding achievement at this grand edifice that is considered an important addition to the integrated system of services and facilities, SZGMC seeks to develop and provide millions of different religions and nationalities,” HE Al Owais continued.

Dr. Baron himself worked closely with key Abu Dhabi officials to make the exhibition happen.

“One of the world's most significant collections of Arab and Islamic coinage ever assembled, the exhibition will celebrate the splendors and achievements of the Islamic civilization across centuries and the unique perspective on that history afforded by its coins. It is our absolute honor to emphasize the SZGMC's mission as a centre of learning and knowledge and to highlight the unique and profound role that numismatics plays in our understanding of history and culture,” said Dr. Baron.

HE Noura Al Suwaidi, director of the General Federation of Women, is one key thought leader in the UAE who has praised the collection.

"Coins of Islam: History Revealed exhibition showcases one of the most unique collections of rare coinage ever assembled, which has been collected from all across the globe. Through the display of 300 coins, the exhibition traces the historical evolution of Islamic coinage by documenting the coin's date of minting and the historical background associated with its production, supported by rich factual information that conveys their cultural and historical value. Besides, it sheds light on Islam's long history of engaging with other cultures and faiths,” said HE Al Suwaidi.

Importantly, the collection has a strong dedication to promoting women by highlighting how important women were to the development of the region.

"One of the main features of the Islamic coinage exhibition is the dedication of an entire section to women, which documents the significant presence of strong and inspirational women in various cultures across the centuries. This section showcases a selection of coins

Fatimid Caliphate Al Muizz li-Din Allah AH 198- AD 953-975 Hammered coins were produced by placing a blank piece of metal - called a planchet or flan - of the correct weight between a lower and upper die, which was then hit to produce the required image on both sides. The lower (obverse) die, was usually counter sunk in a log or other sturdy surface while one of the minters held the upper (reverse) die while it was struck, either by himself or an assistant. Dies used for the manufacture of gold dinars were usually made of bronze and with a single pair of dies minters could produce up to 50,000 dinars.

Displayed in Section 3: Coins Across The Islamic Dynasties.

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engraved with images of incredible women who left their mark on history.

It also reflects the mission of HH Sheikha Fatima Bint Mubarak to support women's empowerment, as well as her immeasurable achievements that have played a significant role in the renaissance of the UAE,” said HE Suwaidi.

"The Mother of the Nation's deep insight implicates her interest in such exhibitions that represent the enduring history of our nation and enlighten society in general and women in particular about the

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A British coin collection, complete with rare coins of huge value.

rich heritage of Islamic culture, and the extent of progress it has achieved throughout history. One of the main features of the Islamic coinage exhibition is the dedication of an entire section to women, which documents the significant presence of strong and inspirational women in various cultures across the centuries.

This section showcases a selection of coins engraved with images of incredible women who left their mark on history. It also reflects the mission of HH Sheikha Fatima Bint Mubarak to support women's empowerment, as

well as her immeasurable achievements that have played a significant role in the renaissance of the UAE. The exhibition narrates the history of coins, based on the timeline of minting across various civilizations of the world. It also portrays the images of revered historical figures, as well as other imagery that depicts inhabitants and cultures and further highlights the commonalities and human connections between these cultures,” said HE Suwaidi.

The rise in popularity of coin collecting in the US around 30 years

ago, and was partially due in part to conventions and exhibitions such as this one, according to Dr. Baron.

This exhibition itself likely raises the value of Islamic coins as a potential alternative investment.

“It’s a gap of generations and interests, and I’m pretty sure that, with exhibitions like this, and publications, and the book that’s coming about this exhibition, interest will raise. Abu Dhabi is building museums. Saudi Arabia is building museums. There are big countries that are going to be buying back their patrimony like the cpifinancial.net

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Russians did 30 years ago, such as the Forbes eggs. The same thing will happen with Islamic coins. If you’re talking about investment in value, we’re at a low level that will increase substantially in my opinion in the next ten years to come,” says Dr. Baron.

Currently, there are only just a few high-level Islamic coin collectors in the world. The coins themselves are scattered mostly over Europe, where Islamic coin collecting was somewhat fashionable in previous centuries.

“Some of these coins were in collections for hundreds of years.

Some can be traced back one to two hundred years back in time. There are publications on Islamic coins in

Germany that date as early as the 16th century. There was a very bright intellectual community in Germany, as well as Italy and Scandanavia,” said Dr. Baron.

Interestingly, the biggest collectors of Islamic coins have not been from the Arab world.

“There were extraordinary experts from this part of the world that wrote books about Islamic coins at a time when there were zero publications in the Arab world about Islamic coins.

It was Europeans who drove this tradition,” said Dr. Baron.

Most collections were built from Western excavation in the Middle East, where many discoveries were then

taken to Europe and traded amongst collectors for hundreds of years.

“The English were digging in Egypt and so on. Excavations existed for hundreds of years and were mostly financed by the kings and queens of the European courts. The main idea was to get a more precise idea of history and civilizations. Leaders such as Elizabeth and Katherine the Great, great characters who contributed to history, financed excavations worldwide,” said Dr. Baron.

Broader interest in the region is only just beginning, according to Dr. Baron.

“This exhibition is going to position Abu Dhabi very strongly and influence other countries to do the

Filali Sharifs of Morocco, Moulay Hasan I (1873-1894), AR 10, 5 and NI ½ and 1 dirham patterns, Paris AH 1298 (1880/1).

Morocco has a remarkable Islamic tradition from the 7th century to the present day. Morocco has the richest Islamic architectural heritage in North Africa. These coins are from a unique set from the beginning of the Moroccan coinage that were presented to the King in 1873.

Displayed in Section 3: Coins Across The Islamic Dynasties

Abbasid Caliphate, Zubayda (AD 782-831), AR dirham, Jazirat alRaghistan AH 183 (AD 799/800).

From a set of post-reform Umayyad gold dinars dated AH 77-132 (AD 696/7-750). Damascus HIstory’s first purely Islamic coin, first minted between 77 AH (696-697 AD) by the Umayyad caliph Abd El Malik Al Marwan. The new dinars replaced all pictorial designs with Arabic inscriptions taken from the Quran.

Displayed in Section 2: Birth of Islamic Coinage.

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Living during and after the time of Imam Al-Shafe'i, Queen Zubaida was married to Haroon Al-Rasheed in 165 AH (781 AD) the fifth Abbasid Caliph who ruled for 23 years (786-809). Queen Zubaida was a devout Muslim and never missed a prayer. She was revered as a philanthropist and remains known for the system of wells she built for pilgrims making their way from Baghdad to Mecca. The exploits of her and her husband were immortalised in the book One Thousand and One Nights.

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same. There’s never been an exhibition of that magnitude anywhere in the Middle East. There have been smaller exhibitions in Europe. There was one in Geneva about 35 to 40 years ago, but it’s certainly the biggest Islamic collection ever put together in history,” said Dr. Baron.

What led Dr. Baron personally to build the collection was his personal passion to elevate the field of coin collecting both in the region and across the world.

“It’s a contribution that I owe to my field. I have a doctorate in Neumasmetics. I have done this all my life. I have a fairly successful auction company in Switzerland, but I have always been on the scientific side as well. I studied for almost ten years. I think that we need to bring our field on the map and make people understand that coins, for instance, are just as important as paintings and other fields of art, and they cover history more precisely and more strongly,” said Dr. Baron.

The passion that Dr. Baron feels started at a very young age, a passion he can trace back to one specific moment in his life, which is still to him as clear as day in his mind.

“I was five years old, and I was walking by a shop, and it was a Swiss coin dated 1886. I was very intrigued that such a thing could exist. I said that to my father, and he found that very sweet, and finally he bought it for me. That was my first coin which I still have. I keep it with me,” said Dr. Baron.

He has one rule, however. When he is building a coin collection for a special individual, he does not also do any collecting for himself.

“When you build the best collections in the world for individuals or governments, you can’t compete with the people that you are forming the collections for. I have fairly expensive taste. It would be a betrayal to the people who trusted me to get them the best in the world. I can’t give them the second best and keep the best for myself,” said Dr. Baron.

Abbasid Caliphate, al-Mahdi (AD 775-785) and al-Hadi (AD 785-786), set of AR dirhams of al-Yamamah (now part of al-Riyadh) struck between AH 165 and 170 (AD 781-787).

One of the earliest gold coins to be struck in Mecca.

Displayed in Section 3: Coins Across The Islamic Dynasties.

Ilkhans, Muhammad Khan (AD 1336-1338), AV dinar, al- Jazirah AH 737 (AD 1336/7).

The only coin in the world bearing the names of the prophet Mohamed and his Four caliphs on one side (Abu Baker, Umar, Othman, & Ali) and four great prophets from the pre-Islamic era on the other side (Noah, Abraham, Moses & Jesus) – a unique witness of religious tolerance and among the earliest evidence of Christian-Islamic dialogue.

Displayed in the Introductory section: Tolerance.

UAE, Abu Dhabi, Shaikh Zayed b. Sultan Al Nahyan (b. 1918, r. 1966-2004 CE), AV medal commemorating the Sheikh Zayed Grand Mosque. 40.47 g., 40 mm.

UAE, Abu Dhabi, Fatima bint Mubarak Al Ketbi (b. 1943), AV medal commemorating the founders of the Emirate (2005). 40.21 g., 40 mm.

Displayed in Section 6: Zayed and Civilization. cpifinancial.net

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Frans Lanting

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F

A CALL TO ACTION Frans Lanting, one of history’s great wildlife photographers, uses his work to bring awareness to the wonders of the animal kingdom. Now, as it sits in peril, he urges everyone to do what they can to save it

rans Lanting towers over the field of wildlife photography.

For decades, Lanting has travelled across the world, capturing life big and small, with artistry and skill that few have ever reached. Some consider him one of the greatest nature photographers of all time, and certainly of our time. His work in National Geographic is iconic, a touchtone for nature lovers and photographers alike.

Lanting is not comfortable talking about his legacy, and his fame. In speaking with WEALTH Arabia, he refuses to repeat any praise he’s ever been given, but can admit that people have told him that his work changed their lives.

“I was in Madagascar not long ago, and I ran into people who would cite certain specific photographs, and said that ‘that photo was the reason I became a tour guide, because it inspired me.’ That’s very gratifying. I met the children and grandchildren of people who had helped me, and they have now become activists on behalf of nature. There’s a continuity to it that is really fascinating. I guess, when you stay alive, and you stay engaged, you can look back on an interesting period,” Lanting tells WEALTH Arabia.

“As my work became more known, I changed from being a private person behind a camera to becoming a public figure. Now I’m in front of the camera a lot more than I used to be. I think it comes with the fact that people recognize certain things in my work that they want to connect with. I think I’m a spokesperson for the subjects that I think are important. I’m an advocate for the subjects that I cover.

I don’t just communicate through my photographs, but through my own voice, and the support we give certain causes. I believe in that. The privilege that I’ve had to cover so many things first hand I think translates into a sense of responsibility that I carry out through interviews like this one. [It allows me to] support organizations who are on the front line to protect natural resources and to bring out relationship with nature into a more sustainable territory.” cpifinancial.net

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Lanting does certainly not have an ego. He doesn’t even display his own work at his home.

“In our studio, we have a small production company in California. We work with the images, and we add new images to it constantly. In my home, we have very few of my images hanging on the walls because we work with them every day in the studio. At home I’m surrounded by art from all around the world by other artists,” says Lanting.

Lanting has had an interest in animals since before he became a photographer— and it was the camera that allowed him to reach out to them, he says.

“It gave me an outlet to spend time and express the fascination that I have for all things wild. Some people gravitate towards music, others gravitate towards sports, and I gravitate towards the world of nature.”

Lanting’s passion for his work has not wavered, not even for a moment, and extends beyond just the work that he is most known for.

(PHOTO CREDIT: Frans Lanting/FransLanting.com)

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“I never tire of looking at pictures. There’s still this excitement when I see an image appear on the computer screen that’s a reflection of an experience. As we’re talking, I’m downloading pictures from yesterday.

I use photography in a broad sense, yet I do not limit myself to just covering the natural world. I’m a social scientist by training, I’m an environmental economist and I’m just as fascinated by people as I am by animals.”

Lanting was of course not born a master photographer, and he grew up in a time much different from this one, where digital photography has become so omnipresent that more or less everyone considers themselves a photographer in some right.

“I learned things by trial and error, and through my own mistakes. When I started out, there weren’t a lot of role models. For people starting out today, there are so many resources online,” says Lanting.

Without a wealth of photographic influence, Lanting instead looked to classical art.

“I’ve been influenced by painters from the European traditions, nonEuropean traditions, by writers, by scientists, by popular media. I have a big appetite for influences of all kind,” says Lanting.

“No matter whether you’re a photographer or a painter, you still work with the same fundamentals of color, shape, form, composition and paintership in working out solution to these questions for many centuries.

Photography has only been around for 150 years. It’s really immaterial whether your subject is an animal, whether you’re focused on landscapes or you’re focused on people. You have to turn your subject into an interesting two-dimensional composition.”

Ultimately, however, what makes his work successful is not treating his frame as if it is a canvas, but in recognizing the life on the other side of his lens.

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(PHOTO CREDIT: Fabio Amicucci/iStock)

Greta Thunberg has become the global symbol of the environmental activism movement, which Lanting supports.

“The key to my work, and that of any photographer really, is that you need to open yourself up to your subject and develop a connection. Someone who specializes in photographing people will say that this is just as much a basis for good photography as it is for me. I work with animals, and I’ve worked with a lot of people too. Empathy that is rooted in understanding are key ingredients for a photographer,” says Lanting.

Lanting is perhaps the world’s premiere wildlife photographer at a time when wildlife itself is in peril.

The global climate catastrophe endangers life everywhere, and Lanting is keenly aware of the danger that poses to the subjects for which he is so passionate.

“That’s been the context for much of my work for three plus decades. I have worked on every continent, and I’ve seen first-hand how rapid the changes are ecologically. Whenever I have the chance to go back to places that I worked before, it’s really quite shocking to see the turnover,” says Lanting.

The famed writer Douglas Adams, writer of the Hitchhiker’s Guide to the Galaxy, wrote an underappreciated book called Last Chance to See, in which he went around the world to find animals that were endangered and nearing extinction. While Lanting doesn’t necessarily chase after endangered animals, the danger that climate change poses to the areas that he has visited has added an urgency for him to return more quickly to trace changes and losses.

“I’ve [returned] more systematically over the last few years. I’ve gone back to places like Madagascar, to South Georgia Island. Peru and Borneo are next on the list. The economic changes drive ecological changes, and that leads to fundamental reversals locally. In terms of the global processes like climate change, that leads to tremendous losses in wildlife populations. It’s quite alarming—it’s actually beyond alarming. It’s a crisis for our planet,” says Lanting. cpifinancial.net

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People are waking up to these dangers, and Lanting hopes the increased awareness will lead to action. Climate activists such as Greta Thunberg are doing a lot to raise awareness as well. Lanting admires the actions that Thunberg has taken, but has not had the chance to meet her yet, he tells us.

“It’s really just in the last five to ten years that there’s an interest and a concern for things that are now triggering all kinds of questions that people are asking. I hope it will have an effect,” says Lanting.

While Lanting is something of an adventurer, he would never make the animals he photographs out to be any great danger the same way that classic adventurers might. Still, there are some dangers.

“Big dangerous animals are not what they’re made out to be. I’m not afraid of hippos, elephants, or rhinos. You just have to know how to work with them, and respect them. The ones that are much more dangerous are the tiny ones that you can’t see. Microbes, mosquitos and malaria that transmit and so on.

I’ve had lots of tropical diseases, and fortunately I’ve overcome them all, so knock on wood! I’m a bit more careful now than I was in my 20s. There’s a certain wisdom and caution that comes with experience,” says Lanting.

Lanting in no way looks at the world as man versus beast, but rather focuses on the unity of all life.

“We did a project called “Life: A Journey Through Time” that expressed the unity of life and the diversification of life, from the big bang to the present. It was rooted in this growing scientific understanding that we are of course all connected, that our DNA reflects that. People like to cite the fact that 99 per cent of our DNA overlaps with that of chimpanzees or bonobos, but I find it more fundamentally interesting that we share 50 per cent of our DNA with lettuce. There’s a very deep evolutionary connection between us and everything else that is alive on this planet, but we are very busy dismantling the tree of life. We are 48

chopping off whole branches and we’re undermining the whole trunk and roots that sustain life on this planet, and that is fundamentally what we’re working with in terms of the connections and dismantling the diversity of life that ultimately is what supports us here,” says Lanting.

There can also be sadness in his work, as some of his photographs show how clearly things have changed for the worse.

“The monarch butterfly that flies into my hometown of Santa Cruz, California.

Those images that I made in the 1980s are now historical documents because the population has decreased by 98 per cent.

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(PHOTO CREDIT: Frans Lanting/FransLanting.com)

There used to be hundreds of thousands that would winter in Santa Cruz, and now you’d have a hard time finding 100.

That is really scary,” says Lanting.

Lanting urges everyone, including the readers of WEALTH Arabia, to get out and do what they can to slow the catastrophic forces that are decimating

our world, and protect the precious life and wonders that it holds.

“Connect with local causes. You need to think globally but act locally.

That begins with the way that you make changes with your own lifestyle when it comes to what you eat, how you transport yourself, the kind of energy

that you utilize. There’s a whole array of personal decisions that you can make, but I don’t think that it should end there.

I hope that people wake up and become engaged and support the organizations that can give continuity to make sure that businesses are held accountable for the decisions that they make,’ says Lanting. cpifinancial.net

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CPI Financial 2020 Events Calendar April 14

June 10

Banker Middle East Banking Technology Summit & Awards The Banking Technology Summit sheds light on the most critical developments in banking technology and innovation in the region. It is an exclusive gathering of C-level executives from banks, regulators and technology leaders to discuss ways of enhancing business .performance, foster innovation and maintain competitiveness

Islamic Business & Finance Awards The awards ceremony is the longest-established Islamic banking and finance awards programme honoring outstanding performance in Shari’ah-compliant finance. The gala dinner is attended by over 150 of the top Islamic bankers in the region, as well as global leaders in Islamic finance. It rewards excellence .and celebrates the achievements of the Islamic finance industry

The summit is followed by the inaugural Banking Technology Awards recognising the achievements of banks and technology .providers who are leaders at the forefront of digital transformation

September 9

October 14

Banker Middle East Retail Product Awards

Banker Middle East Industry Awards

The Retail Product Awards celebrate the most successful financial products and services. It provides a benchmark for the financial services sector and recognises the most innovative retail banking products, services and solutions while celebrating exemplary institutions across the region that have designed remarkable .financial solutions to better serve consumers

The Industry Awards is the most prestigious event in the banking calendar, attended by over 350 C-level executives and key decisionmakers across the Middle East. The annual awards programme benchmarks and promotes banking and financial excellence in the region, giving due recognition to outstanding institutions that .shape the market

November 4

November 25

Emerging Technologies in Finance

Regulations & Compliance

The summit will explore the power of emerging technologies that shape the financial industry, putting a spotlight on regulation and risk management measures that entails. Issues such as innovating new products for a more sophisticated customer base, increasing financial inclusion and preparing for future cybersecurity and digitisation challenges will all be .discussed at the event

WEALTH Arabia Summit The summit is the only platform in the region that specifically caters to high net-worth individuals (HNWIs) and their most trusted representatives in wealth management. The summit brings together HNWIs, family offices, senior investment executives, wealth managers and private bankers for actionable investment advice from the world’s most informed individuals. This is an invitation-only event offering an intimate environment for focused .discussion on key drivers shaping the future of investment

CPI Financial FZ LLC • PO Box 502491 Al Shatha Tower, Office 1209 Dubai Media City, Dubai, U.A.E. Tel: +971 (0) 4 391 4681 • Fax: +971 (0) 4 390 9576 www.cpifinancial.net