#47 - October 2018 by CPI Financial

WEALTH ARABIA

ISSUE 47 | NOVEMBER 2018

NOVEMBER 2018

Martin Blessing, Co-President of UBS Global Wealth Management

When opportunity meets with preparation Martin Blessing, Co-President of UBS Global Wealth Management

When opportunity meets with preparation

A CPI Financial publication

Dubai Technology and Media Free Zone Authority

Second Citizenship? MEET with us for a FREE consultation today

Burlington Tower, Business Bay, Dubai, U.A.E. • www.csglobalpartners.ae • +971 (0) 422 61704 LONDON • ZURICH • HONG KONG • BEIJING • DUBAI • NEW DELHI • WINDHOEK • ST KITTS & NEVIS • SINGAPORE

Contents ISSUE 47 | NOVEMBER 2018

EDITOR'S LETTER Greetings all,

elcome to the 47th issue of WEALTH Arabia. Some of you will be reading this at the WEALTH Arabia Summit. In which case, I hope you are enjoying the pointed advice and insight that our fantastic speaker line up has to offer this year, and I hope that I’ve personally stopped talking long enough for you to ask a question or two. There’s a lot of things in these pages that I’m excited to share with you. I’ve had some tremendous conversations with some of the biggest names in the world of investment, and had the chance to sit down with global celebrities such as Heather Mills and Nazwazuddin Siddiqi, star of some of the best Bollywood productions in the past few years. Turn to page Page 77 to see where he likes to travel—and it may not be where you think. Beyond that, there’s still much to explore. I hope you enjoy it. Till next time.

OPINION Is this the end of crypto?

NEWS & ANALYSIS The latest analysis from the investment world

COVER STORY Martin Blessing, Co-President, UBS Wealth Management

INVESTMENT Why this is the most miserable bull market we’ve ever had Saudi Arabia remains a good investment for 2019 and beyond Access to Islamic investment for everyone How Lombard Odier got into the Islamic investment space The way into AI The case for responsible investing in the GCC

24 28

34 38 42

William Mullally

wealtharabia.net

Contents 50 P.O. Box 502491, Dubai Media City, UAE Tel: +971 4 391 4681 Fax: +971 4 390 9576

WEALTH MANAGEMENT GCC wealth management must evolve

wealtharabia.net

FOOD Investing early in the veganism boom Tokyo’s turn to tradition

CHAIRMAN

50 54

MOTORING A whole new track

Saleh Al Akrabi CHIEF EXECUTIVE OFFICER

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

EDITOR - WEALTH ARABIA

PRODUCTS An IMAX in your home Time for a change The world’s most coveted watches Elevating high-end skin care with old wisdom

62 66 70 72

STAR TALK Reconnecting with your roots

EVENTS The WEALTH Arabia Summit 2018

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

DANIEL BATEMAN daniel@cpifinancial.net Tel: +971 4 375 2526

NABILAH ANNUAR AKASH AMBALE nabilah.annuar@cpifinancial.net akash.ambale@cpifinancial.net Tel: +971 4 391 3726 Tel: +971 4 433 5320 ISLA MACFARLANE NEEMA SAJNANI isla@cpifinancial.net neema.sajnani@cpifinancial.net Tel: +44 7875 429476 Tel: +971 4 391 3717 ADVERTISING

EDITORIAL

sales@cpifinancial.net

editorial@cpifinancial.net WEB EDITOR

EDITORIAL ASSISTANT

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

BUSINESS DEVELOPMENT MANAGERS

EDITORS

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

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

BUENAVENTURA JALUAG, JR. jun@cpifinancial.net Tel: +971 4 391 3719 EVENTS MANAGER

NATALIA KAILA natalia.kaila@cpifinancial.net Tel: +971 4 365 4538

SENIOR DESIGNER

FLORANTE MAGSAKAY florante@cpifinancial.net Tel: +971 4 391 3724

EVENTS MARKETING MANAGER

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

DIGITAL MANAGER

SIYAMUDEEN PAINAYIL siya@cpifinancial.net Tel: +971 4 391 3722 FINANCE & DATA MANAGER

FINANCE & DATA EXECUTIVE

HR & OFFICE MANAGER

ADMINISTRATION & SUBSCRIPTIONS

SHAIS MEMON, ACCA, CMA Shais.memon@cpifinancial.net Tel: +971 4 391 3727 RIZZA INFANTE rizza@cpifinancial.net Tel: +971 4 391 4682

KHALED TAHA khaled.taha@cpifinancial.net Tel: +971 4 433 5322

CAROL BASA carol@cpifinancial.net Tel: +971 4 391 3709

enquiries@cpifinancial.net WEALTH ARABIA ISSUE 47 | NOVEMBER 2018

NOVEMBER 2018

When opportunity meets with preparation Martin Blessing, Co-President of UBS Global Wealth Management A CPI Financial publication

When opportunity meets with preparation Martin Blessing, Co-President of UBS Global Wealth Management

Dubai Technology and Media Free Zone Authority

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

©2018 CPI Financial. All rights reserved. No part of this publication may be reproduced or used in any form of advertising without prior permission in writing from the editor. Printed by United Printing & Publishing - Abu Dhabi, UAE

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

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

CALL FOR AN APPOINTMENT: 800-4-GOLD (4653) OR SMS “WEALTH” TO 4250 MASHREQGOLD.COM/WEALTH

Terms and Conditions apply.

OPINION

Does the crypto story end here?

William Mullally

hen we began planning the WEALTH Arabia Summit 2018, it was last December, right after our second edition, and the focus was where everyone’s focus was at the end of last year—on cryptocurrency. Cryptocurrency was the investment story of 2017, and with bitcoin hitting $20,000 last December, every conversation had around it was either a mad frenzy to buy, a smug satisfaction for those that had, and a yearning from the rest of us that we hadn’t bought when we had the chance to make our quick millions. Soon, everyone, even the slowest dinosaurs, were talking about cryptocurrency, but just as many of the stragglers were really getting their crypto infrastructure in gear and their experts in place, the conversation started to turn. At the beginning of this year, I made the decision to remove cryptocurrency as a major focus for this year’s Summit, as I saw things headed in a different direction. As of the end of October, bitcoin is currently at around $6,200. Even if you hadn’t checked that in a while— we all stopped checking it daily a long time ago—you knew it wasn’t anything

to race after just by the tone of the conversation. By that, I mean, the end of the conversation—the last time that I had someone ask me for my advice on crypto was now more than six months ago. In a recent sit down with Steen Jakobsen, the CIO and Chief Economist of Saxo Bank, we barely talked about cryptocurrency, a marked change from the last time we got coffee. “A year ago, people were still looking at cryptocurrency but I think they’ve given up on that, so the opportunities have all but disappeared in that space,” was all he said. One of the constant truisms of the investment world is that, by the time we’re all talking about something, it’s probably already true late. This was true for cryptocurrency’s first boom, but we’re still far ahead on its second. I’ve written before that crypto still needed to find its ‘google’—bitcoin was doomed from the start. But don’t give up on cryptocurrency just yet. The next time that a new cryptocurrency pops up, fixing the issues that bitcoin had, signaling the next generation of ICOs, don’t dismiss it so easily. Just because so many were burned earlier this year doesn’t mean that the story ends here.

NEWS & ANALYSIS

hile oil prices have risen at last, economists believe the GCC should continue on the path it took when oil first dropped.

The temptation to return to the historical old model of oil funded, government-led growth and thus to move away from the challenging structural reform ambitions of recent years, is proving difficult to resist. Whilst the recent announcement of government stimulus in most GCC countries creates a much needed boost to real GDP growth, it does however deepen the region’s vulnerability to potential future oil price declines (we are structurally bearish on oil prices in the long-term primarily owing to the transformative impact that the shale revolution continues to have). Also, it would risk entrenching the already dominant position of the state, further delaying the emergence of the private sector as a driver of economic growth."

Ehsan Khoman Head of MENA Research and Strategy, MUFG

ransactions on the Nasdaq Dubai Murabahah Platform for Islamic financing have exceeded a total of $100 billion, reflecting its popularity with corporate and individual users.

By combining international capital markets expertise with the standards of Shari’ah, our Murabahah platform gives financial institutions and their customers the confidence that all aspects of their Islamic financing needs are met. We are working with Nasdaq Dubai to expand the Murabahah platform and further enhance its efficiency."

Salah Mohammed Amin Chief Executive Officer, Emirates Islamic

ith Bolsonaro’s election in Brazil expected, investor reaction has likely already been priced in.

In terms of market impact, we expect a moderately positive reaction in the coming days, as the outcome was highly anticipated. Investors had grown confident about a Bolsonaro presidency after the first election round in early October, and Brazilian assets have rallied strongly since then. Hard-currency corporate bonds re-turned +3.3 per cent in October, outperforming the emerging market corporates index (-0.3 per cent). After the rally, credit spreads are back below the average since 2010. We expect them to hover around current levels in the short term, with moves in the medium and long term dependent upon the prospects for pension reform under the new administration."

Alejandro Hardziej Fixed Income Analyst, Julius Baer

wealtharabia.net

COVER STORY

Martin Blessing

COVER STORY

When opportunity meets with preparation By Martin Blessing, Co-President of UBS Global Wealth Management

s we enter a more volatile period in financial markets, investors and wealth managers alike will need to work harder to earn returns. The evidence I see suggests that many investors are far from ready. Financial markets have been kind to investors in recent years. Supported by persistent growth in the United States, Europeâ&#x20AC;&#x2122;s recovery from its political and monetary crises, and Chinaâ&#x20AC;&#x2122;s robust expansion, alongside massive support from central banks around the world, the global stock market (MSCI AllCountry World Index) has delivered returns of more than 10.7 per cent p.a. since the beginning of 2013.

And what has been kind to investors has been kind to the wealth management industry. Our potential client base has grown: the number of high net worth individuals globally has grown by 38 per cent since the end of 2012, according to Capgemini. And assets under management have expanded: at UBS Global Wealth Management from around CHF 1.6 trillion to more than CHF 2.3 trillion between end 2012 and end of June 2018. But we cannot reasonably expect such strong tailwinds to persist. The economic cycle is maturing, with unemployment now at cyclical lows in the US, Japan, and the UK. Central wealtharabia.net

COVER STORY

Since 31/12/2008, based on MSCI total return indices, local currency Global Total return 11% Volatility 13% Volatility adjusted total return* 11% Years to double wealth** 7 Maximum drawdown -24% # days of >3% declines 10

US 14% 16% 11% 7 -27% 28

China Switzerland Germany 8% 7% 9% 22% 16% 20% 5% 6% 6% 14 11 12 -42% -29% -32% 46 18 46

* Return assuming equal volatility to MSCI AC World ** Based on volatility adjusted return Source: Bloomberg, MSCI, UBS, as of October 2018

banks are unwinding extraordinary monetary policy support; by the end of this year they will, in aggregate, be withdrawing liquidity from the global economy for the first time in a decade. And protectionism, and various other geopolitical threats, pose a risk to global growth. Concerns about a combination of these factors have already contributed to the return of volatility in 2018. We should prepare for this to continue, but many investors are not ready. A combination of our human inclination to favour the familiar, our shortterm fears and occasional greed, and an underappreciation of personal circumstance, can leave unprepared investors hostages to fortune. For private individuals and families, the consistent and disciplined implementation of three proven approaches are key to protecting and growing wealth, today and over generationsâ&#x20AC;&#x201D;thinking globally, thinking long-term, and recognising individuality. First, thinking globally. The theoretical and empirical underpinnings for this are clear. Looking at data since the beginning of 2009, global stocks have delivered comparable or better returns, with lower volatility, smaller drawdowns, and less significant daily drops than all other major markets, see table. Over that period, it would have taken an investor in Swiss, Chinese, or German 14

markets over ten years to double their wealth vs. just over seven for a globally diversified investor with the same level of risk. Yet many individuals still exhibit home bias. For instance, despite the potential loss of performance and higher risk, 54 per cent of our Swiss clients who are active investors, still hold more than half of their assets in Swiss companies (UBS Global Wealth Management data). There is, in many cases, little reason for this beyond familiarity. Firms like my own need to make it easier for clients to invest portfolios globally, and work harder to show how this improves returns and reduces risk. Second, thinking long-term. At a time of uncertainty over the economic cycle it can be tempting for investors to try and time the market. Yet with average returns in the final year of a bull market at 22 per cent, and in the first year of a bull market at 40 per cent, (UBS Global Wealth Management, Chief Investment Office research) getting out of the market and back in again at the right time is near impossible. Regularly rebalancing in a disciplined manner toward a target strategic asset allocation is likely to prove more effective than market timing for most private investors. And short-termism doesnâ&#x20AC;&#x2122;t just bring with it the cost of mistiming.

UK 9% 16% 7% 10 -24% 18

Brazil 10% 22% 6% 12 -38% 47

Russia 8% 33% 3% 22 -66% 124

Japan 9% 20% 6% 13 -29% 47

COVER STORY

Martin Blessing, Co-President of UBS Global Wealth Management wealtharabia.net

COVER STORY

A combination of our human inclination to favour the familiar, our short-term fears and occasional greed, and an underappreciation of personal circumstance, can leave unprepared investors hostages to fortune.

COVER STORY

Regularly rebalancing in a disciplined manner toward a target strategic asset allocation is likely to prove more effective than market timing for most private investors. And short-termism doesn’t just bring with it the cost of mistiming.

Private investors have unique advantages over institutional investors, such as the ability to hold illiquid assets in exchange for extra return, but these are forgone if investors trade in and out. Our analysis shows that mutual fund investors’ buy-andsell decisions imply average annual underperformance of 0.9 per cent per annum, relative to those investors that stayed invested, over the past decade. We also see that self-directed—or do it yourself—investors find it hard to make impartial, emotionless decisions. Over the past five years, when comparing portfolios of similar risk in our Swiss booking centre, just 14 per cent of our clients with self-directed portfolios materially outperformed those who delegated responsibility for their portfolios while 51 per cent materially underperformed. In the long run, those investors who overtrade, and those wealth managers that encourage portfolio churn simply to generate fees, will underperform those that take a more strategic, longer-term approach. Third, recognising individuality. No two clients are the same. Individuals and families have different attitudes to risk, different ambitions, different constraints, different values, and different personal situations. These each need to be deeply understood, and be accounted for in portfolios.

And this isn’t just about meeting regulatory requirements, or satisfying wishes. It is an integral part of effective wealth management. Investors who are comfortable with the behaviour and composition of their portfolio, and who can see how their portfolio aligns with their personal goals and values, are more likely to retain the necessary patience to earn long-term returns, and less likely to panic sell during periods of higher volatility, crystallising losses or forgoing potential gains. Advisors and investors that fully understand the unique circumstances surrounding every investment decision are, ultimately, in a far better position to provide advice and make decisions that are truly in the best interests of the client. This is particularly important in a time of market volatility when shorttermism and emotions risk dominating decision making. It is clear to me that the road ahead will look quite different from the road behind. But I do not believe that values and disciplines needed to protect and grow wealth today and over generations have changed. Thinking and investing globally, taking a long-term view, and accounting for individual goals and needs remain the keys to success, both for investors, and for the wealth managers that support them. Martin Blessing is Co-President of UBS Global Wealth Management wealtharabia.net

INVESTMENT

PHOTO CREDIT: Bloomberg

INVESTMENT

Why this is the most miserable bull market we’ve ever had William Davies, Global head of Equities, Columbia Threadneedle Investments, writes about the struggle for investors in climbing the ‘wall of worry’ in the current landscape

e are nine years into the equities bull market, in what has been a remarkable period for investors. In early March 2018, the S&P 500 Index had nearly quadrupled from its financial crisis low in March 2009, and is 66 per cent up on its October 2007 pre-crash high point. It has been quite a decade—but it hasn’t been enjoyable. The market correction of February was the latest in a near-decadelong series of warnings that have seen investors climb a wall of worry throughout that period—but in a way it was welcome: complacency around markets is unwanted. The reaction to the global financial crisis was marked by an extended period of caution. A deep recession led to severe weakness in financial companies’ balance sheets, so there were ongoing concerns over the fragility of banks. Interest rates were pared right back, and in November 2008 the US Federal Reserve announced a $600 billion quantitative easing programme; the UK’s own GBP 50 billion programme began in April 2009. wealtharabia.net

INVESTMENT

The severity of the crisis demanded more than that, however, and those countries ended up respectively buying $4.5 trillion and GBP 435 billion of government bonds. A European QE programme announced in 2015 has since amounted to around EUR 2.3 trillion, while Japan has bought up JPY 521 trillion ($4.95 trillion) in assets. In the wake of this economies steadily recovered—and it was steady: there was never an extraordinarily strong period of growth, rather consistent nominal growth of around three to four per cent in the US. There were persistent economic fears and it always felt as though we were about to come off the rails: will the world dip into another recession, are the banks stable, will Greece bring the eurozone down, how low will oil prices go, is China going to have to devalue, will earnings fail to grow? There were periods when the US, Europe, China and emerging markets struggled. Geopolitically it was a tumultuous period—with among other things fears of a eurozone collapse— culminating in the Brexit divorce, President Trump’s victory, ongoing political tensions between the US and North Korea, and a swath of European elections. There was always something to worry about. Then came 2017. Unusually, European growth didn’t disappoint at the start of the year. At the same time, investors became less worried about the renminbi and the threat of devaluation—indeed, it went up in value and Chinese economic growth was strong and apparently more sustainable. All of this this had a knock-on effect on emerging markets, which were also helped by the slightly weaker dollar. Meanwhile, geopolitical tensions remained but never quite developed in expected ways: Brexit rumbled along, Trump oversaw 15 straight months of market rises, elections in France and the Netherlands passed without too much incident, and although the Italian election returned a hung parliament, the chances of Italy leaving the eurozone are subsiding. 20

There were even conciliatory signs between North Korea and the US. With all this going on, the most surprising thing for investors was that the worst didn’t in fact happen. All in all, it was firming up into a constructive environment for equities. At the start of 2018 any lingering concerns seemed to evaporate. January was a very strong month—globally, equities rose seven per cent or so in a matter of weeks—maintaining the

theme of synchronous global growth over the latter part of the previous year. But if anything the outlook was being upgraded: the US economy was strong, Trump signed off on a $1.5 trillion tax cut and was agreeing a massive increase to federal spending. Unemployment continued to fall: in the US it was at a 16-year low of 4.1 per cent, in the UK it was at a four-decade low of 4.3 per cent, and in Europe as a whole it was at a nine-year low.

INVESTMENT

with unions weaker than they were in the 1970s and 1980s. Meanwhile, inflation has been kept down as technological innovation disrupts traditional business models and increases competition forcing providers to cap prices. As we look forward, that is what the markets are grappling with, and a pertinent question is will inflation start to rise further than previously thought? While some of the above factors could turn and lead to an uptick in inflation (in the US in particular), our central case is that wages will stay low, around two to three per cent, and inflation will rise slightly but not exceed 2-2.5 per cent in the US over the coming years. Yields will consequently rise, but not to levels seen pre-1990s. Consequently, there will be a persistent nervousness in markets that this isn’t the case, and that’s what we as investors must be aware of. Thus, the worry is still there, and so there is an element of nervousness about bond yields and the resulting impact on the valuation of equities. It seems likely, however, that a “lower for longer” forecast remains plausible.

Trade tensions have ramped up in recent months, causing concern for regional investors.

PHOTO CREDIT: Shutterstock/eamesBot

Such an environment is usually the beginning of the end of the cycle: low unemployment and accelerating growth leading through to capacity constraints, and capacity constraints bringing rising wages which in turn fuel concerns that stronger inflationary pressures will come to bear. The likelihood increases that more and faster interest rate rises could be required. When January saw year-on-year wage inflation in the US tick up to

2.9 per cent, the biggest rise since 2009, the reaction was swift: bond yields jumped, equity indices tumbled around the world. Suddenly there was something to worry about again… and thank goodness. A central thesis is that numerous structural factors have kept wages low, from disruptive technologies exploding the gig economy to changing global demographics. There may also be less bargaining power on behalf of workers,

DISRUPTIVE GEOPOLITICS The QE measures put in place from 2009 still need to be undone in many regions, and this, alongside geopolitical issues—including a potential reversal of globalisation, which has benefitted economies and markets for the past few decades—will be a worrying theme for markets. Market fragility has been less of a problem for the US, and its decision to begin to unwind QE has yet to prove disruptive, but policies pushed through by Trump could provide a headache. The fiscal stimulus and tax reforms, while good for the market in the short term, could stoke inflation. Coupled with Trump’s push for tariffs, and the subsequent threat of a trade war—which elicited threats of counter measures from China and elsewhere—the US could be looking at rising inflation coupled with a slowing global economy. wealtharabia.net

INVESTMENT

Japan has seen improved corporate governance, with companies increasingly run for the shareholder, which is a real positive. The market is not expensive and the yen has strengthened, though unlike the US it still must deal with reversing its QE programme. It took Europe much longer to put a QE programme in place, and it has yet to fully commit to withdrawing the stimulus. Looking at the EU in aggregate you could make a case for stability, but fears persist in individual countries: Spain, Italy and, of course, Greece. Any one of those countries could prompt big problems for the eurozone. Germany’s coalition is at least a positive. Brexit, of course, looms over Europe and the UK, and it’s simply not clear how the situation will be resolved. At one end of the spectrum we have a hard Brexit; at the other end a customs union with the spectre of Jeremy Corbyn as prime minister—and almost any scenario in between. Where we end up is anyone’s guess.

Steady growth - equities from December 2006 to February 2018 250 200 150 100 50 0

Dec-06

Dec-08

Dec-10

Dec-12

Dec-14

Dec-16

Source: MSCI ACWI/Columbia Threadneedle Investments, as at 9 April 2018.

Early 2018 correction - equities from April 2017 to February 2018 125 120 115 110 105 100 95 90

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-17

Oct-17

Nov-17

Dec-17

Jan-18

Feb-18

Source: MSCI ACWI/Columbia Threadneedle Investments, as at 9 April 2018.

UK inflation since the 1940s - and a generation of low inflation since the 1970s 30 25 20 15 10 5 0 -5

Sep-48

Jul-58

May-68

Mar-78

Source: Columbia Threadneedle Investments, as at 9 April 2018.

Jan-88

Nov-97

Sep-07

Jul-17

CONCLUSION As we move forward we see things as being broadly well placed for a further period of “lower for longer” growth, but with the caveat that has existed since the economic turmoil of 2009: ongoing uncertainty and worry. Globalisation, or free trade at least, has been good for economies, it’s been good within Europe, and it’s been good for emerging markets—but rowing back on it now is the biggest concern facing markets. Strong leaders in countries such as Russia, China and Saudi Arabia (and, some may argue, the US) are adopting an increasingly dictatorial stance. The choices these and other governments are making—on tariffs, trade wars and Brexit—also revolve around reversing globalisation, reducing the amount of free trade. This will not be of benefit to markets, and so the wall of worry continues to loom over us.

INVESTMENT

Saudi Arabia's Future Investment Initiative conference in October 2018. PHOTO CREDIT: Javier Blas/Bloomberg

INVESTMENT

Saudi Arabia remains a good investment for 2019 and beyond Steen Jakobsen, Chief Economist and CIO, Saxo Bank, speaks exclusively to WEALTH Arabia about how investors should approach Saudi Arabia, South Africa, Brazil, China and the US in the near future wealtharabia.net

INVESTMENT

hat is investor sentiment on Saudi Arabia at the moment? The petroleum fund is still going to increase its Saudi exposure to the benchmarking, which is upcoming. The JP Morgan Bond Index is coming. I’m on the record last time we spoke saying that I think it’s deeply interesting that you can have a dollardenominated linked economy with debt issuance which trades at 140-150 basis points above US, and probably with better collateral in terms of oil. The positive thing is all the domestic factors—the inclusions. The VAT creates a credible revenue increase. What’s less transparent and less obvious to me is dealing with the stateowned enterprises doesn’t seem to be a priority, and doesn’t seem to be in the top three in terms of the hand-over to the private sector. I’ve repeated that over the past 10 years. The visa situation has some changes in the UAE with a 10-year investor visa, but five to ten years doesn’t go far enough. If you want me to be productive in the GCC, I’d assume you’d want me to be here for the rest of my life, right? Why time limit my investment? If I’m doing something wrong you can always cancel the visa. I don’t understand the rationale. The paperwork, the access to market competition is still the downside, but the net-flow in terms of foreign direct investment I don’t think is changing. For all that goes on in Saudi Arabia, I think at the end of the day, the MSCI inclusion and the JP Morgan Bond Index are the biggest story for investors. You have to really argue hard why you’d underweight something that has a yield carry of 130 to 150 basis points over. A fund manager is going to say that they are not in the game of politics, they do what the benchmark tells them. I think this region could really regain some of its traction, but it should not be based on oil, it should be based on oil generating enough proceeds to invest in the future of 26

Steen Jakobsen, Chief Economist and CIO, Saxo Bank

the world, to be more productive. We need a productivity focus, as that’s what drives the world, in my opinion. And Saudi Arabia is pushing in that direction, with their investments in AI and other future tech. Does the Bolsonaro election in Brazil make that market more interesting to investors? A lot of people say there’s 20 to 30 per cent upside, but I would rather be buying South Africa and China than buying into a populist president in a country, which doesn’t have a great record of actually implementing a lot of the rhetoric that they promise. Will there be a relief rally? Absolutely, but he’s a populist. Populists have the problem of when they go into the actual parliament and need to do the dirty job, it’s very difficult for them. In my experience, presidents who have less of an agenda are more efficient in getting an agenda done. This sounds counter intuitive, but if you start a negotiation by dictating everything you want it’s very unlikely that you will get it. If you start with a blank sheet and discuss what’s best for Brazil, which will be a different story.

We had similar sense of joy when Timur came in and it was supposed to be a big change as well. What’s the best way to enter South Africa? The currency is extremely liquid, though volatile, so that would be an easy one. But if you look at the listing on the Johannesburg Stock Exchange, there is a huge amount of global stock. You can buy Naspers, you can get all of its African business for free. The banks are dirt cheap—they’re down 30 to 40 per cent from their peak. If you read the newspapers in South Africa, it’s very negative, but local politics have already become a power-sharing base. There’s an election coming next year, with a president and leading candidate in Ramaphosa who is trying to do market reform being a Marxist, which in political theory could be argued is the right person to get that enacted, though it will create turmoil. The nervousness is about land reform, his talk which is trying to keep things stable until the election, but what he’s actually doing at the government level is nothing but impressive.

INVESTMENT

As an emerging market investor, you have to look at the strength of the constitution, and there are fewer countries with a stronger constitution than South Africa, so your day in court will come if you have an investment in South Africa that goes bad. There’s quite high confidence there. First I will wait for the currency to do some of the work for me, but I’m very tempted to buy direct equity exposure.

We need a productivity focus, as that’s what drives the world, in my opinion. And Saudi Arabia is pushing in that direction, with their investments in AI and other future tech. Steen Jakobsen

What thoughts do you have on the US market at the moment for investors? For Saxo’s research what we’ve really been trying to tell clients is how out priced the US stock market was relative to the rest of the world. The whole narrative around stock markets has only changed after the US market came down, because if you exclude it, we’ve been in a negative market all year. We’ve found it kind of odd that the world has been so focused on the US stock market, particularly because we believe we can explain the US stock market. The repatriation and the tax discount that was made this year made US corporations close to $4 trillion to on-shore US markets, and of that they used $1 trillion to buy back their own stocks reducing the float. If the market doesn’t go up then, it’s never going to go up. It’s a unique story. In terms of the underlying economics, we focus on the four horsemen: the quantity of money, which is collapsing, the price of money, which is going up led by the Federal Reserve, The price of energy, which is up massively, and productivity which is also negative. The four components are all negative. Sometimes this negative is met with fiscal expansion and tax cuts, but as you know that’s already the case in the US and has been spent. We think there’s a cyclical change in growth from the US towards Asia, which will support emerging markets and make the dollar somewhat weaker. There is hope at the end of the rainbow, but the first catalyst will be another three to five per cent down on the stock market, forcing the hands of the Fed.

So you think the US market is still overvalued? I can put it mathematically. At the start of October, it was three points in standard deviation expensive, and at the end of October it’s still 2.1 standard deviation expensive to the rest of the world. There’s still quite some room. The number one advice we’ve been giving clients is, if you have US exposure, please, at a bare minimum, reduce that exposure to the US and replace it with MSCI and emerging markets, in particular China and India. In portfolio construction, you can reduce your volatility for the same amount of risk. If you believe that the buy-back programme, which I do, has been the prominent source of outperformance, then next year, when that disappears, you’re losing a lot of momentum that was there in 2018. Investors will have worse conditioning, less credit cake to eat from, and even the velocity of money is decreasing still. Is China the right place for investors to look in Q4? China is dirt-cheap for investors. Whether it’s a value trap is the real story. The way I like to phrase it is that, I’m certain that the US has peaked both in growth and performance. What the perfect timing is to enter emerging markets is another story, as you have to time the strength of the dollar with the credit transmission in China to make it work. The hole in China is much bigger than reported. In order for this to work, they need to fill up the hole to get to a positive number, but what we’re clearly seeing is a ramp up in non-commercial lending, so clearly China wants to do that. I will look at that in Q1 or Q2 next year for entering emerging markets. Additionally, I like gold in this environment and all scenarios point to the strength of gold. A year ago, people were still looking at cryptocurrency but I think they’ve given up on that, so the opportunities have all but disappeared in that space. wealtharabia.net

INVESTMENT

Access to Islamic investment for everyone Junaid Wahedna, CEO and Founder, Wahed Invest, which is poised for an official launch in the UAE and Saudi Arabia, talks about his plan to make Shari’ah-compliant retail investment accessible across the world

o you believe that Islamic financial institutions have underserviced retail investors? They don’t bother with retail. It’s all high net worth and institutional. With people under a million dollars, it’s hard to go anywhere and get wealth management. For that, when we first started off, we looked at the product universe where people could invest. We wanted people to have a diversified portfolio. For retail clients with no access to Sukuk, no access to globally diversified ETFs, there was nothing out there. What we’ve had to do is select funds and ETFs from a very small pool and over time, to make it efficient, we have to start pushing out our own index funds. We are a passive investor—we don’t stock pick, and don’t want to be active investors. We have done this exclusively for our US clients with the S&P Shari’ah Index, with a minimum invest of $100 dollars, which gives exposure that outperforms any of the mutual funds when you take their fees into account.

INVESTMENT

wealtharabia.net

INVESTMENT

We’re quite proud of that in terms of product innovation, because we see in the market that Islamic finance institutions try to compete with each other, but we’re trying to compete with conventional institutions. It’s a whole different world. There’s a huge inefficiency gap. The reason for that is that we see a big part of our market use conventional finance. Even practicing Muslims don’t care if it’s Islamic or not Islamic, because they don’t see the actual difference—it doesn’t make sense to them. As long as we can compete with conventional finance, and offer an ethical and Islamic product, we feel the market is ten times as big as people actually think it is. That’s what we’re trying to do. Not every Islamic investment market is immature. Malaysia, for example Malaysia is more mature in terms of everything. They have their own ETFs—they have everything—but it’s also localised. Right now we’re taking over the dollar-denominated clients, so anyone who wants to invest with us, all of our portfolios are dollar driven. Malaysia has its own local markets, similar to Indonesia or India. The GCC is still happy with the dollar, Africa is happy with the dollar, and America is happy with the dollar. The dollar market is more than big enough, but when we go east, we’re going to have to start thinking at the other currencies. When we do that, the good news is there are enough products out there in Malaysia. How did Wahed Invest begin for you? I grew up in Dubai, but I went to the US for my Masters at Columbia University studying industrial engineering and operations research with a specialisation in stochastic math, which is all financial optimisation. I worked in Wall Street Investment Banking for a bit, and set Wahed up three years ago state-side. It took around a year to get all the licensing and compliance infrastructure set up, 30

but we are SEC regulated, which is a big deal. We launched there a little over a year ago, and it did a lot better than we thought it did. In the first three months, we crossed 1000 wealth management clients. That’s a huge number just from word of mouth. That’s three times the growth rate of the leading conventional roboadvisors in their first year. We realised that retail Muslims have no way to invest. These guys keep their money in cash or real estate— otherwise there’s absolutely nothing. So we come out there saying, you don’t need to be a multimillionaire, if you have $100, you can try it out. So we had many trying it out with $100, seeing that it works, and then investing more money. The vast majority started enabling recurring deposits, which is not a normal thing for mutual funds. For us, you have clients who have $1000 dollars a month deposited, which is very good for us in terms of AUM predictability. What issues did you face in making an Islamic investment proposition valuable? We ran into the obvious infrastructure issue of, how do we trade Islamic finance securities? How do we get exposure to all of the markets and make an actually diversified portfolio? The biggest issue we had was, how do we trade Sukuk? Sukuk is usually traded over the counter in $100,000 blocks, illiquid. Eventually we figured that out and manually negotiated with the funds to be able to access at fractions with no entry, no exit, and cut the price. The next problem was fractional trading. If you want exposure to everything you’ll need a minimum balance of $10,000, so we had to build infrastructure in house to be able to fractionalise ourselves. As soon as we learned how to fractionalise securities, as there’s only a handful of people in the world that can do this, it really changed the game, because then we could say that our minimum is $100.

Malaysia is more mature in terms of everything. They have their own ETFs—they have everything—but it’s also localised. Right now we’re taking over the dollardenominated clients, so anyone who wants to invest with us, all of our portfolios are dollar driven. Junaid Wahedna, CEO and Founder, Wahed Invest

INVESTMENT

We took on institutional investors to go east. The UK was the next obvious market—it’s a mature regulator with passporting rights throughout Europe and ten times the number of Muslims compared to the US. It was significantly easier than the US, and we’re seeing that market is unbelievable big. We’re also seeing that it’s a much higher funding rate in the US. There’s no substitute products— there’s no one else doing retail Islamic finance. For us, it’s all online. In America we have people from all 50 states. For the UK, the Government is very supportive. They’ve assisted us and are always there for support, so we feel very comfortable. One concern we have now is Brexit, as we set up in the UK to cater to all of Europe. We’re hoping some sort of deal will be struck, and most likely it will, as with finance you can’t just stop, but that is in the back of our mind.

What markets are your next priority? Because of our mandate to cover the world, we have an office in Dubai to figure out how to cater to the GCC region, and we have an office in India to cater to 200 million Muslims who are ignored by Islamic finance. We have an office in Malaysia and we are registering now, which should be done by the end of the year. We’re also registering in Australia, and are thinking about Turkey as well. Our next main priority is the UAE and Saudi Arabia. We have a large number of preregistered clients all over the world. By pushing out in the UAE, we get to learn a lot about a very diverse client base in terms of behavioral economics of how people think, what they think about the product, and more. So far, the response has been great. We’re trying to figure out what the best legal way to do it is to make sure that everyone is happy.

In case anyone is not familiar, what is roboadvisory? Roboadvisory is automated wealth management, often for people who are ignored by the wealth management divisions of banks, or people who do not have the time for physical contact with a financial advisor, who want full transparency and access 24/7. The best thing about passive investment is that it outperforms active managers, statistically speaking. In simple terms, it’s wealth management for everyone in the world. What are the challenges of making it Islamic in particular? It’s very different to Islamic finance because Islamic finance is a very broad term. Most of that refers to the lending institutions. When you think of Islamic finance, you think of Islamic banks. We don’t do anything with lending. As an investment platform, we have people who already have money investing in certain

Junaid Wahedna

wealtharabia.net

INVESTMENT

companies. We have to ensure that these companies and securities that we are investing in are Shari’ah-compliant. For that, we have a three person Shari’ah board run according to AAOIFI standards who make sure there is nothing inpermissable. No excessive debt, no firearms or other non-Halal industries. In addition, at the end of the year, we publish a purification report that shows every single security you’ve had exposure to, and how much of the income was derived from impermissible means, because, whether you like it or not, people don’t like to admit it, but every company has issues with staying Shari’ah-compliant. Even for AAOIFI standard, there’s a threshold. We allow them to know how much has approached that threshold, and then let the clients decide what to do with that amount of the funds. I think people have really appreciated our complete transparency, because it lets them know how vigilantly we look at our investments. It’s not just investments—the company itself is run in a Shari’ahcompliant manner. So every contract goes through the Shari’ah board, all the marketing material, everything. It’s a full Shari’ah-compliant institution. What is important to your clients—is it about returns, or Shari’ah-compliance? Considering that we launched in the US, at first, it was all about trust, as the community has been burned in the past. Everyone, without exceptions, would deposit the minimum $100, withdraw it to see it hit their bank account, and then they decided to trust it. Then, all the questions became, what is Islamic investing, how are you different to conventional players, and what makes you special. We run surveys, and we found that the vast majority of people don’t trust Islamic finance institutions. A big part of our education is saying that Islamic finance is broad, and that we do not lend. The clients then often, once they understand we are not an Islamic bank, decide they can trust us. It’s very unfortunate that it is like that, 32

The clients then often, once they understand we are not an Islamic bank, decide they can trust us. It’s very unfortunate that it is like that, but that is where we are. We see that a lot of people don’t trust Islamic finance institutions. Junaid Wahedna, CEO and Founder, Wahed Invest

but that is where we are. We see that a lot of people don’t trust Islamic finance institutions. From there, it’s about teaching the benefits of a diversified portfolio, what it means to be Shari’ah compliant in investing, and the roboadvisory element. We launched this project for the common man, but the majority of our clients are very educated and young. These are young people starting off their journey who don’t want to go to a wealth manager. They are tomorrow’s millionaires, which is av very valuable segment.

In the UK, it’s a whole different world. Trust is also a huge deal, as the UK Muslim community has been burned by scams in the past. We have to push the fact that we are regulated, stable, and have credibility. Then we find that the market is very Islamic-oriented. Our marketing thus is tailor-made to a more religious audience, explaining the Islamic elements in detail. A lot of our clients are first time investors, who just keep their money in cash. But what they don’t realise is that their money is being used for loans. Once we explain that, they are more incentivised to move their money into investment, where it benefits the Islamic economy. Islamic banks don’t have products to push to retail investors. They don’t know how to fractionalise. They don’t have exposure to all that we do. We have built an international ecosystem so that we can give access and exposure to retail investors. There are more than enough people focusing only on HNWIs and Institutional clients. We want to give people a safe, efficient way to give people a place to keep their money, so efficient that it rivals Deutsche Bank and JP Morgan. Our product value is very strong. How many high net worth clients do you have now? The vast majority of our clients in the US are high net worth clients, but we do not limit ourselves to high net worth clients. The high net worth clients pick us for their liquid exposure because they don’t want to go to the manager who charges them exorbitant fees when there’s a passive, simple, transparent solution for them. Although it’s open to anyone, the vast majority of our clientele are high income. How many preregistrations do you have in the Middle East? We have around 50,000 of them last time I checked, which is a crazy number. We should be able to sign up 100 clients a day in these countries, which is also a crazy number for wealth managers or even banks.

INVESTMENT

Wahed Invest to be the region's next unicorn? Wahed Invest, on a valuation of $100 million, raised an additional $8 million in Q2 this year from existing investors to accelerate development of a global savings solution and international expansion. The digital investment company received this funding from existing investors, Boston based Cue Ball Capital, and BECO Capital, a Middle Eastern VC known for backing the GCC’s leading startups, bringing its total funding to over $15 million since inception. “Wahed Invest is fast outpacing traditional incumbents and driving innovation in a sector that lags behind. We are very bullish on the vision and strategy that Wahed Invest is pursuing both in the UAE, the wider region and globally, and look forward to supporting Wahed Invest as they pioneer the industry through technology,” said Amir Farha, co-founder and Managing Partner at BECO Capital. The move was met warmly by the industry. "I'm delighted at the progress and speed at which Wahed Invest is expanding. Wahed Invest, represents in my opinion, the quintessential Islamic markets opportunity; an addressable audience of 1.5 billion, 62 pe cent of which is under the age of 30 and a rapidly rising middle class, who demand convenient, on-demand digital tools for financial services that are aligned with their values, but at the same time contemporary in functionality and use. With Wahed Invests’ current growth trajectory and expansion plans; over the next few years, they could possibly be the next unicorn in the Shari'ah-compliant robo-advisory and fintech space”, said Dr Sayd Farook, Vice Chair of the Board of Trustees, Responsible Finance and Investment Foundation (RFI).

Amir Farha

Wahed Invest is fast outpacing traditional incumbents and driving innovation in a sector that lags behind. We are very bullish on the vision and strategy that Wahed Invest is pursuing both in the UAE, the wider region and globally, and look forward to supporting Wahed Invest as they pioneer the industry through technology. Amir Farha, co-founder and Managing Partner at BECO Capital.

wealtharabia.net

INVESTMENT

Geneva, where Lombard Odier is based and was founded in 1796.

How Lombard Odier got into the Islamic investment space WEALTH Arabia sits down with Arnaud Leclercq, Limited Partner at Lombard Odier Group about the launch of a certified Shariâ&#x20AC;&#x2122;ah-compliant mandate aimed at GCC individual investors

INVESTMENT

PHOTO CREDIT: Shutterstock/S-F

ombard Odier has launched a full suite of Shari’ah-compliant investment solutions, the first in its 222-year history. The exclusive discretionary mandate has been officially certified as Shari’ah compliant by the eminent Shari’ah Supervisory Board of Amanie Advisors, who issued a Fatwa in February. “As an independently owned, family bank with a long-standing legacy, the new offering follows a tradition of social responsibility including a focus on developing sustainable and responsible investment solutions. With the goal of preserving the assets and values of clients at its core, the Shari’ah offering builds upon Lombard Odier’s legacy of 50 years in the Middle East,” said a statement from the bank. Arnaud Leclercq, Limited Partner at Lombard Odier Group, came to Dubai for the launch, coinciding with the Holy Month of Ramadan. Leclercq stated that the while the offering began as a bespoke creation for one client six years ago, it has grown from a $10 million to in the hundreds

of millions, primarily for investors in the Middle East. Lombard Odier’s Islamic investments have averaged 4-5 per cent returns since 2012. The investments are a mix between Sukuk and equities. Equities are chosen using a combination of MSCI’s Islamic Index and Lombard Odier’s in-house experts and economists who 'cherry-pick' stocks according to their overall investment strategies, Leclercq told WEALTH Arabia. The goal is to reach $1 billion in total Islamic investment the next 3 to 5 years, Leclercq said. The clients that are currently being serviced with these solutions are primarily from the UAE, Saudi Arabia, and Kuwait, CPI Financial was told. Lombard Odier plans to increase its presence in the Middle East alongside the growth of its Shari’ahcompliant investment solutions, with an office in Abu Dhabi for the coming year currently in the planning stages, and a partnership with a Saudi firm currently in the works, Leclercq told CPI Financial.

“Given Lombard Odier’s history in the region, the Shari’ah-compliant offerings display our commitment to growth in the UAE, which is among the strongest markets for Islamic finance. As Islamic finance continues to gain momentum exponentially, the link between Shari’ah-compliant investments and the promotion of social responsibility becomes increasingly clear. We find this to be the case especially in the UAE, where the strong emphasis on philanthropy, innovation and sustainability leading up to Vision 2021 fosters the growth of Islamic finance,” said Christophe Lalandre, Managing Director at Lombard Odier’s Representative Office in Dubai. Lombard Odier has had a presence in the Middle East for 50 years, has a representative office in Dubai, and manages roughly $280 billion in assets. The move follows Lombard Odier’s announcement that it will be offering Shari’ah-compliant investment solutions, with a specific aim at customers in the UAE, Saudi Arabia, and the GCC region. wealtharabia.net

INVESTMENT

Read WEALTH Arabia’s exclusive conversation with Arnaud Leclercq to hear the full story behind Lombard Odier’s Shari’ah-compliant offering below: Did you have to alter the offering to get the Fatwa issued? First, our approach, based on the demand of one client specifically and then a few others, was to cherry-pick some Shari’ah-compliant products. It was easy to select Sukuk, but we also had to select equities. We chose the MSCI Islamic Index methodology, which is, according to our analysis, more stringent than a few others. That’s why we selected this methodology. Then we said, that’s not enough—we need to have some thematic funds as well. We put in strong analysis and work, because there are many Islamic funds, but they don’t always have the quality of research and investment methodology. It’s not just about picking an Islamic fund—it’s about picking something that’s quality that will deliver performance to the clients. We selected the Saudi-based SEDCO Capital funds, which were also Shari’ah compliant, and were, according to our analysis, some of the best in specific thematics. Some other clients are open to Islamic structured products. A few banks do make Shari’ah-compliant structured products, though not all clients accept them, but we have to offer it. We selected the banks who do the best in this regard. If you take all these blocks of investments, each of them has its own methodology to be Shari’ah compliant. That was what we offered in 2012, which was ok for our clients as each product was compliant. The mandate itself, had to be made compliant—the structure, methodology, and our name attached to it. That is why we have been through all of that. We have worked with our board of scholars to reach this result and say that the whole product is compliant. That is why they were ready to give us a fatwa to say that the portfolio was compliant. It was really from a to z. Everything, from marketing tools, to the product itself, to the methodology has to be perfect. 36

Arnaud Leclercq, Limited Partner at Lombard Odier Group

What’s your strategy in selecting those equities? We use our research teams. That’s what we do. We have $280 billion assets in management. We apply the same criteria to these isalmic products. This criteria starts with our team of economists, who determine the trends in the world, in currencies, by markets, by regions, and by sectors. We have a very strong team in

Switzerland, new york and London, who decide, for example, whether we should overweight emerging markets, underweight the euro, etc. From that, we derive from all of our investment strategy where to invest. What we do now is we have additional layers. All our strategy of asset allocation is done by Lombard Odier, and in addition to that, we add an additional filter of Islamic investment.

INVESTMENT

Do you see that growth mainly coming from new clients or existing clients? Would you like to add conventional investors to the Islamic space? The first step is ultra high net-worth individuals and family offices are aware that this solution exists and how it’s unique. Yesterday in Abu Dhabi I met with a client who was largely a conventional investor who, when I told him about the offering, he said, “Interesting. I also have some of my wealth in Islamic investments, but it is not really managed—it is just some Sukuk, rather than proper asset allocation. This would be interesting if I could do both. That’s just one example. It could be a new share of wallet from existing clients and new clients as well. There are clients that know the brand Lombard Odier, are eager to bank with us, and don’t know that we have this Islamic offering, and now they can. There are also charities and family offices who are interested, and these are new segments that we haven’t worked with. Usually we worked with families and longstanding UNHWIs who we built solutions for. But having tested the waters with the subject before announcing too much, people are really intrigued that Lombard Odier is doing this, and have said things such as, ‘you have a Fatwa? Wow. That’s serious! Let’s talk.’ That’s the first reaction we have gotten.

Lombard Odier plans to increase its presence in the Middle East alongside the growth of its Shari’ahcompliant investment solutions, with an office in Abu Dhabi for the coming year currently in the planning stages, and a partnership with a Saudi firm currently in the works Arnaud Leclercq

How have your Islamic investments performed compared to your conventional investments? It’s very difficult to say as it is essential bespoke today. Some clients ask for 20 per cent Sukuk, and others ask for 70 per cent Sukuk. Sukuk have essentially underperformed the last two years, and last year we made 18.4 per cent on our Shari’ah-compliant equities. There is not an absolute performance, and that’s the beauty of it—we assemble these for the clients to the client’s demand. As you’ve had six years to observe how clients are behaving in their Islamic investments, have you seen clients moving more assets from Sukuk into the equities? I don’t think it’s a trend. I think people expert a certain performance, and they know that having only Sukuk will not help them reach those expectations. That is why they are more openminded and want more equities in this regards. Every case is different. For one client, for example, who has a $70 million invested, and for him, performance is not important. He said that he wants positive performance, as long as I’ve achieved the 2.5 per cent Zakat—the preserve the capital and contribute as he should as a good Muslim. For others, they would like to be closer to five per cent. It depends. Do your conventional investors look to Shari’ah-compliant investment as another way towards sustainable or ethical investment, which Lombard Odier is expressly committed towards? Today, it’s usually Muslims going in this direction. Others go for similar principles of fairness and ethicality, but to be Shari’ah compliant, it’s not just about principles, it’s about process. It’s a regulation—you’re compliant or you’re not. For sustainable investment, it’s a philosophy. You want to have an impact, but it’s not the same legal process. In sustainable investment, there’s a broad choice, with many of the same beliefs and desire to do good.

What do you have planned in terms of Saudi partnership? We have strong partnerships in Asia already with local banks in countries such as Thailand and Philippines. We just signed a deal with Mandiri, the largest bank in Indonesia. We are now exploring possibilities in the GCC, including in Saudi Arabia. It’s not done yet. How close are you to signing a deal with a Saudi institution? Are you talking to many institutions? No, today we are talking with one party specifically. We hope that by the end of 2018 we will do it. They are great people, actually, and it’s such a pleasure to work with them. We have the same way of working, the same philosophy, and so far so good. They are a Saudi institution with presence elsewhere as well. The model we’ve applied in Asia is what we’re trying to apply in the region. In those deals, the assets of the clients remain in the country so it’s not about transferring assets to Switzerland. We bring international asset management to the local partner and it has to stay in the country. It’s a very unique model, very special, and very successful. You don’t plan on marketing your Islamic offerings to clients in Southeast Asia? Not yet, no. We’re a strong bank, but we cannot be everywhere. We have had questions about it from our parnets there, but we’ve told them, step by step. My focus now is on the GCC, as we have strong connections here. We want to make it work. I’d prefer to be sustainable rather than make a big noise everywhere at once. You want to hit $1 billion assets managed in your Islamic investment. What’s the time frame for that? In a few year’s time. There are very large assets available. There will for sure be interest in our franchise, and we know that already, but how much we represent, it’s difficult to assess. That’s the beauty and the difficulty—it’s new, and unique. W e don’t know how much we can get because no one has done it, but it’s very well received. wealtharabia.net

INVESTMENT

The way into AI Philippe Henry, Global Head of Cross Asset Solutions, Union Bancaire Privée (UBP) tells WEALTH Arabia that the best way for investors to tap artificial intelligence is through data

PHOTO CREDIT: Shutterstock/MikeDotta

hat feedback are you receiving from investors you are currently meeting in the region regarding protection strategies? We organised a similar road show here on hedging solutions at the beginning of this year, and it’s interesting to notice how much stronger the interest from investors now is. This is certainly related to the wake-up call we had in February/March, when global equity markets hit a succession of air pockets. Before that, and for the past five to six years, portfolio risk management was clearly not a priority in investors’ approach, as risk-on assets were carrying positively and smoothly. The situation is now starting to change, with investors remaining constructive; however, adding a line of defence to their portfolios is now moving to the top of their list of priorities. This is a trend we are seeing not only in this region, but also in Asia and Europe. What is UBP’s approach to protection strategies? How do you implement them? A key driver when designing a protection strategy is about striking the right balance between minimising the cost of holding a hedge while maximising its ability to react when stress arises.

Based on our experience of running live mandates, we believe that one size does not fit all, i.e. a single hedging strategy may struggle to capture the majority of the sequences occurring during a sell-off. This is why we have been running two complementary strategies since 2012. The first strategy is designed to protect against standard market corrections and answers the question of minimising the cost of holding the hedge; the second strategy is designed to protect against more extreme markets corrections, and answers the question of the reactivity of the hedge. A robust, final implementation would then consist of combining both sub-strategies and adding this blend as an overlay to the existing long equities portfolio. Are you focusing essentially on DM equities? What about EM equities? Let me give you a brief overview of the ingredients we are using for both sub-strategies. The first strategy uses listed equity futures and listed options that we systematically roll. The second strategy uses listed volatility futures, for example, VIX futures. There is ample liquidity in these listed instruments when it comes to US or European equities, hence our ability to deliver solutions for both individual markets and sizeable portfolios. wealtharabia.net

INVESTMENT

Away from protection strategies, do you see other topics raising interest with the clients you are meeting? Our team is also focusing on investment themes. Here, we want to think thematically, i.e. identify megatrends that carry significant longterm growth opportunities for investors; however, access to these may currently be suboptimal. Megatrends are those powerful and disruptive forces that are increasingly reshaping how certain industries have been traditionally run. With this in mind, the artificial intelligence (AI) theme represents an attractive avenue for us to explore. Indeed, we believe that AI is one of those structural shifts with irreversible consequences for the global economy and society. However, there are currently only a few investment vehicles offering a liquid exposure to it, and most of the time the AI allocation will be diluted by other themes, such as robotics. This is why we decided to offer simple access to AI that would be pure while remaining liquid and cost-efficient.

Philippe Henry, Global Head of Cross Asset Solutions, Union Bancaire Privée (UBP)

When looking at EM equities, there’s a lack of instruments for the second sub-strategy, i.e. there is basically no equivalent of VIX for, let’s say, China or Brazil. Hence we would be able for certain EM regions to implement the first sub-strategy but not the second one, and, as a result, a hedging strategy on EM equities could be delivered but it would remain only partial in terms of construction. However, when looking at an EM investor’s generic portfolio, the bulk of the allocation to listed equities will be made up of US equities and to a lesser extent European equities. Hence our current toolkit may well represent a credible solution for the majority of an investor’s listed equities bucket. 40

What is the investment process? The first thing to do was to analyse and explain in simple terms the greater ‘AI trade’. When you decide to look beyond buzzwords like 'machine learning' or 'natural language processing' that may add confusion to the discussion, you quickly realise that the key driver of AI development is data. Simply put, data are to AI what food is to humans: the quantity and the quality of the data you feed your machine will determine how 'intelligent' it will be.

There is ample liquidity in these listed instruments when it comes to US or European equities, hence our ability to deliver solutions for both individual markets and sizeable portfolios.

INVESTMENT

Are there other themes you are exploring? The ‘smart data’ theme is another one where we see value for private investors but there is still very limited access to it. In a sense, it’s an extension of what we discussed earlier, as its final objective is to create investment strategies using AI. So, for example, instead of selecting stocks based on traditional fundamental factors like earnings growth, you could select stocks based on AI techniques that would, for example, create a sentiment index based on website activities.

Coming back to our initial discussion on protection strategies, do you see parallel avenues to yours that investors are exploring to reach similar objectives? How have they been evolving recently? If you step back for a minute, you realise that our objective with hedging strategies is essentially to introduce some asymmetry to traditional portfolios, i.e. be able to come up with an overall solution that would allow a majority of the upside to be captured but that would also only be impacted by a minority of the downside. From that prospective, there are indeed other tools that can help generate this type of asymmetry, and structured products are

one of them. Flows on the structured products side have continued to be sustained and are growing; however, depending on the region, there has been a slight shift in terms of product design. While the focus in recent years has essentially been on the hunt for yield with a certain tolerance for capital being put at risk, there has recently been increasing interest in structures with a high level of capital protection that still provide exposure to any upside should markets continue to rally. That may reflect the fact that we are gradually shifting from a zero-interest-rate world actively supported by central banks to a phase that is still constructive but which is approaching the end of a cycle.

Philippe Henry joined UBP in July 2017. Before that, he ran the global structuring team at Deutsche Bank in London, covering structured products and systematic strategies for private clients. Previously he was head of financial engineering for Europe at Morgan Stanley, where his work covered both private and institutional investors in equity and hybrid investments. He started his career at Société Générale in Paris before moving to Barclays Capital in London, where he ran the pricing and new product development team for Europe. Philippe is a graduate of the French engineering school École Spéciale des Travaux Publics and holds a postgraduate diploma in finance from HEC Paris.

Artificial intelligence revenue by region, world markets: 2015-2014

$12,000 $10,000 $10,000 ($ Millions)

Looking at today’s status of the data ecosystem is quite instructive. 90 per cent of the data currently available have only been generated over the past two years, and that quantity is projected to double every two years, meaning we are in a truly exponential growth phase. However, when looking at the quality of these data, you realise that only 20 per cent is currently being structured—in other words made usable—and, more interestingly, only one per cent of it is being analysed. To us, this vast untapped resource represents the key hidden value to be monetised in the AI trade, i.e. the entire process of transforming data from “volume” to “value”. As data is sometimes described as “the world’s new oil”, our portfolio invests in companies involved in the “refining” process of the data: companies that will store data, structure it and ultimately analyse it. Providing private investors with quick and easy access to the theme was essential, therefore we wrapped the strategy as an open-ended certificate that offers daily liquidity and an ISIN code. We started promoting the strategy in Switzerland first, positioning the certificate as a long-term satellite investment in a typical equity allocation. Interest from private investors there has been strong, and we believe that, going forward, we may have traction in the region based on the meetings we are currently having.

$8,000 $6,000

North America Western Europe Eastern Europe Asia Pacific Latin America Middle East Africa

$4,000 $2,000 $-

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Source: Tractica

wealtharabia.net

INVESTMENT

PHOTO CREDIT: Shutterstock/Jenson

INVESTMENT

The case for responsible investing in the GCC John Benfield, Head of Wealth, Mercer for India, Middle East, Africa, Turkey writes for WEALTH Arabia on the benefits of ESG for HNWI investors

wealtharabia.net

INVESTMENT

imes are changing. The globe is moving towards an ethical, long-term sustainable way of investing. Forward-looking governments are increasingly emphasising the role of financial markets in fostering a sustainable development. Countries such as Japan and Australia are doing everything they can to promote responsible investing. At Mercer, we define Responsible Investment as the integration of environmental, social and corporate governance (ESG) factors into investment management processes and ownership practices in the belief that these factors can have material impact on financial performance. Meanwhile, in the GCC region, with efforts to diversify the economy, governments are gaining awareness around the importance of responsible investing. The GCC makes up four of the six Sovereign Wealth Funds (SWF) which founded the One Planet SWF Working Group in December 2017 at the occasion of the One Planet Summit in Paris. Within the UAE itself, numerous initiatives such as The Green Economy for Sustainable Development and Green Agenda are propelling the country into the future of responsible investing. In keeping with the diversification strategy, these initiatives support Vision 2030 by aligning with the nation’s economic growth ambitions and environmental sustainability goals. Abu Dhabi is contributing to the agenda in a big way through various developments, such as Masdar City, a multi-billion dollar ‘green economy’ project. Meanwhile, Dubai set up an energy and environment park called Enpark, a Free Zone for clean energy and environmental technology companies. As the business case for responsible investing gets stronger in the GCC, there is a growing demand for incorporating ESG factors or sustainability themes into investment decisions and processes. Institutions are factoring the benefits of responsible investing, not only to their investments, but also to their reputation and bottom line.

Sustainable investing offers attractive opportunities to tap into the growth potential of companies providing solutions to various challenges of resource scarcity, demographic changes, and changes in the evolving policy responses to a range of environmental and social issues. University of Science and Technology, Taiwan) and Cheng (Professor at the National Chung Hsing University, Taiwan) found that socially responsible firms perform better in terms of credit ratings and have lower credit risk. With companies operating against the setting of public concerns around environmental and social issues, incorporating ESG considerations is now also considered best practice. Employees increasingly want to work for and investors want to invest into a company, that makes a positive environmental impact. Global initiatives and bodies such as the CFA Institute have highlighted the financial and reputational risks of not taking ESG considerations into account.

While the GCC is beginning to understand the benefits of applying ESG, some in the region have not been too far from its concept. Sharia-compliant investing has been around for the last two decades. Both frameworks apply a negative screening approach and seek investments which provide sustainable returns. As the UAE is now focusing on diversifying its investments, it can highly benefit from creating a responsible investing market and culture where strategy and processes go hand-in-hand as important steps for successful integration. When seeking sustainable growth, an additional layer of insight and oversight is extremely crucial to mitigate emerging risks, like climate change. To that end, implementing ESG assessments will help set clear KPIs and identify where and how projects generate value and mitigate risks associated with them. For example, Mercer applies an Investment Framework for Sustainable Growth with its clients, which distinguishes between the financial implications (risks) associated with environmental, social and corporate governance factors and the growth opportunities in industries most directly affected by sustainability issues. Measuring impact and mitigating risks has become increasingly important and represents a strong investment governance process. The benefits to adopting ESG are numerous. While the GCC has started with implementation of ESG principles, more work still needs to be done in making sure governments are fully engaged with stakeholders including investors, and strategies are aligned across the region. Regulatory pressures to meet global standards of ESG integration will only increase in the coming years. Instead of hiding from it, it is time for companies, investors and governments to come together and define a way of working that moves the GCC forward in terms of responsible investing and sustainable growth.

WEALTH MANAGEMENT

PHOTO CREDIT: Shutterstock/nullplus

GCC wealth G management must evolve To keep up with the region’s evolving HNWIs, wealth managers must change with them, writes Mathieu Vasseux, Partner and Head of FS (MEA) and Jose Luis Juanus, Associate, Oliver Wyman

CC asset managers are faced with major global disruptions of evolving investors’ needs, rising share of passive funds, greater regulatory scrutiny. Despite these challenges, GCC wealth wanagement industry continues to outperform global asset management industry with sustained seven per cent annual growth rates in assets under management (AuM) compared to five per cent globally. GCC wealth managers also face a set of unique challenges. Firstly, servicing the high proportion of HNWI and UHNWI in the region with large volumes of holdings overseas. Secondly, meeting the regionspecific product demands. The ability of wealth managers to turn these challenges into opportunities will be key to continue delivering growth. We see regional leaders transforming to better service HNWI & UHNWI and strengthening the product offering to cater for clients’ appetite.

WEALTH MANAGEMENT

The rapid urban transformation observed in many GCC cities is partially a result of the appetite for Real estate investment in the region. Investors have traditionally focused on direct real estate investment; however, real estate investment products are becoming increasingly important in investors’ portfolios.

TRANSFORMING TO BETTER SERVICE GCC HNWI & UHNWIS Regional wealth managers have a more concentrated and differentiated client base. 20per cent of AuM are held by HNWI in the GCC compared to 1012 per cent globally. GCC HNWI have a differentiated set of needs. Firstly, HNWI hold larger portions of their wealth overseas. Secondly, we see UHNWI increasingly creating or growing their own in-house asset management capabilities / family offices. Wealth managers in the Gulf are transforming their businesses setting-up subsidiaries abroad in key jurisdictions, establishing partnerships with global manufacturers and further deepening in their regional product specialization to better serve demands of HNWI. MEA HNWI are estimated to hold 54 per cent of their wealth overseas compared to 16 per cent globally, UHNWI are estimated to hold an even larger share of their wealth abroad— between 60 and 70 per cent. Only Latin America and Eastern Europe have similarly high overseas allocations, 51 per cent and 44 per cent respectively. Large allocations overseas in the region are driven by investors’ diversification and confidentiality objectives. This diversification push is underpinned by investor desire for access to deeper markets, broader product offerings and diversifying their exposure away their home country, decorrelating their investments and their primary source of income. While

developing rapidly, regional financial markets are yet to match depth and breadth of global centers. NYSE and LSE, as an example, market capitalisations are 46 and eight times the market capitalisation of Tadawul, the largest exchange in Middle East. Wealth Managers also have narrower product suites compared to global leaders. While leading GCC Wealth managers offer around 50 different investment products, international leaders have much larger product suites. Leading wealth managers typically offer 1500-2000 products in their core offering across a wide array of asset classes.

Mathieu Vasseux

International diversification is also sought by local HNWI for wealth confidentiality purposes vis-à-vis peers, regulators and government. Overseas investments represent a significant challenge for GCC asset managers. We see regional wealth managers extending their footprint, opening offices in Switzerland, UK or Luxemburg, and establishing distribution partnerships to capture overseas flows. Succeeding in international expansion is challenging. Offices overseas typically lack the necessary scale to be able to sustain a fully-fledged international offering that can compete with global industry leaders so diversification benefit is limited. Similarly, international branches do not meet the confidentiality requirements of regional HNWI as they remain with their parent entity and relationship is not always trusted to be fully armlength. Partnering with leading global names to white-label and commercialise products has been a cost-effective solution adopted by some local firms to expand their product offering. Only around a third of current investment products offered by regional wealth managers corresponds to international strategies. Partnerships provide access to an endless product catalogue of international investment products allowing managers to meet diversification objectives of their clients. Some partnerships have proven successful for the low and mid segments of the HNWI spectrum. Well-structured partnerships can be a win-win solution that allow local players to capture distribution fees and increase customer satisfaction through an enhanced offering. But establishing a successful integrated delivery partnership which is seamless for client is a significant challenge. Moreover, GCC asset managers are concerned about exposing their clients to potential global competitors and the risk of cannibalization of their client base. GCC UHNWI are also growing their own Family Offices and setting or transferring these to English Law wealtharabia.net

WEALTH MANAGEMENT

jurisdictions (such as DIFC, UK), which further complicates coverage for GCC asset managers. Furthermore, Family Offices are increasingly trying to insource activities traditionally performed wealth managers, making coverage and client management more complex. To retain UHNWI clients, successful Asset Managers need to continuously prove that they deliver value through increased depth of analysis, superior service and product breadth which is very difficult to replicate inhouse. Similarly, a unique demand for a high-touch distribution model means the need for localized Relationship Managers with high intensity and flexibility remains critical. STRENGTHENING PRODUCT OFFERING TO CATER FOR CLIENTS’ APPETITE Wealth managers in the GCC have been traditionally equity focused due shallow regional fixed income markets and the importance of Shari’ah compliance. As an example, in Saudi Arabia, 58 per cent of public funds and currently open private funds are equityfocused compared to eight per cent focused on fixed income. Evolving client demands are pushing asset managers to enrich their product offering, with the introduction of white-labelled international products one emerging example. Demand for alternative investments, especially Real estate investment, continues to rise among GCC investors, and leaders have had to adapt to satisfy client demands. The rapid urban transformation observed in many GCC cities is partially a result of the appetite for Real estate investment in the region. Investors have traditionally focused on direct real estate investment; however, real estate investment products are becoming increasingly important in investors’ portfolios. The offer of Real Estate Funds and Real Estate Investment Trusts (REITs) has flourished over the last few years in line with client demands. As an example, 12 out of 61 DFSA-registered funds are Real Estate focused. Similarly, since the introduction 48

Proportion of wealth heald overseas by HNWI 2017 Global

16%

Middle East &

54%

Africa

51%

Latin America

44%

Eastern Europe

23%

APAC

21%

Western Europe 4%

Japan North America

HNW wealth is measured across households with financial assets greater or equal to $$ 1 million. Source: Oliver Wyman Wealth Management model

Number of investment products for a selection of wealth managers

Market capitalisation of selected international exchanges and regional exchanges

1,788

23,967

NYSE 11,272

Nasdaq -US 1,678 1,486 1,449 1,113 316 Top 5 GCC 33-51 Wealth Manager

Japan Exch.

6,076

Euronext

4,462

LSE Group

4,3676

Tadawul 526 Qatar SE 150 ADX 133 Dubai Finan. Market 104 Bahrain Bourse 22 Muscat Sec.Mark. 19

LHS: Number of investment products offered by Wealth Managers including funds, SICAVs and other investment vehicles. Source: Morningstar, CMA, Wealth managers; RHS: Domestic market capitalization of selected international and regional exchanges

of REIT regulation in Saudi Arabia in late 2016, 15 REITs have been listed on Tadawul. Diversification, increased liquidity, access to professional property management and the opportunity to invest in large real estate developments are only some of the benefits that these products offer to investors. Wealth Managers are also designing tailored products to meet appetite of HNWI for international real estate. This can be challenging for regional wealth managers for two reasons: • Successful real estate investing requires a deep knowledge of local market • HNWI often demand access to iconic and prime properties. Providing these without on the ground presence in these markets is a challenge

and the scale does not always justify the investments for regional houses. Leaders are overcoming these challenges through partnerships with international real estate specialists. In these arrangements, regional wealth managers facilitate access to clients as well as structuring products to meet the needs of local investors e.g. sharia compliance. Clients are at the heart of the transformation observed in regional wealth managers. GCC investors are becoming increasingly demanding and sophisticated. The ability of wealth managers to adapt their businesses expanding their product offerings to meet client demands and providing a true edge will determine the future of the industry in the region.

Advertorial

Geoff Cook

Chief Executive, Jersey Finance Limited

Working with GCC investors and their global ambitions KUWAIT

BAHRAIN

With a strong and growing presence in the region, Jersey is increasingly providing a range of private wealth management services to GCC clients

QATAR

KINGDOM OF SAUDI ARABIA

For several decades Jersey has been building links with markets across the GCC, thanks to the forward thinking, efforts of Jersey’s regulator, government and finance industry, all of whom have visited the region for a number of years. Against a backdrop of shifting markets and a changing global political landscape, investors in the GCC continue to find genuine appeal in the expertise, substance and stability Jersey can offer as an international finance centre (IFC), as well as its range of tried-andtested wealth products.

UNITED ARAB EMIRATES

OMAN

This highlights how important it is for professionals with first-class experience in forward-thinking IFCs like Jersey, who are used to managing complex cross-border financial flows, to work with families and investors to bring clarity, build understanding and instil confidence. Consequently, firms in Jersey are seeing an uptick in the number of private wealth vehicles being re-domiciled to Jersey from less advanced jurisdictions, as investors seek a high-quality trusted solution.

The indications are that investors in the GCC are increasingly likely to need this sort of specialist cross-border support in the future too. According to the Boston Consulting Group, private wealth in the GCC is set to reach $12 trillion by 2021, growing at a rate of 8.1% - compared to the global average of 6% (‘Global Wealth 2017: Transforming the Client Experience’).

Whilst Jersey has earned a reputation for specialist private wealth work in markets across the GCC, it is also highly regarded for outbound commercial real estate investment, an increasingly attractive asset class for GCC investors, thanks to its stability and flexible structures for pooling capital and acquiring and selling such assets, focusing on the UK as well as Europe and the US.

Jersey is ready to support this trend, offering GCC investors a safe, neutral and certain platform and enabling them to create a certain future by carrying out their increasingly sophisticated wealth planning and investment strategies.

Additionally, GCC institutional investors, led by sovereign wealth funds (SWF), are looking more and more at opportunities in markets such as the UK, US and Europe and as a result, Jersey fund practitioners are seeing rising levels of capital from institutional investors. The world’s largest private equity fund structured through Jersey, has a GCC SWF as a primary investor.

The need for this specialist support was evidenced in a white paper, published by Jersey Finance in conjunction with Hubbis in 2017, which identified challenges HNW individuals in the GCC will face in the coming decades. In particular, it found that 55% of professionals working with family businesses in the GCC saw succession planning as the most critical issue for GCC families today. However, whilst HNWIs in the GCC clearly acknowledge the importance of succession planning there is still a reluctance to engage with third-party support and a tendency to default to deferring succession decisions – something that could prove costly in the long run. According to the research, there are real misconceptions around the issues and solutions available when it comes to wealth structuring. 56% of GCC-based advisors said that loss of control is the biggest misconception that GCC families have when it comes to wealth structuring, whilst 23% are concerned by the lack of transparency of structures. linkedin.com/company /jersey-finance

@jerseyfinance

Jersey’s forward-thinking proposition and expertise in alternative fund servicing, together with its ongoing seamless access to European markets and strong ties to the UK, lends itself well to this trend, with direct investment, co-investment, private equity and club investment deals all amongst the favoured investment strategies for GCC investors. For further information on Jersey’s world-leading IFC, contact either Cormac Sheedy or Richard Nunn, Jersey Finance Business Development Directors for the GCC: email: richard.nunn@jerseyfinance.je email: cormac.sheedy@jerseyfinance.je Tel: +971 (0) 4 319 9923

jerseyfinance.je

youtube.com/jerseyfinance

vimeo.com/user17505711

FOOD

Heather Mills

FOOD

t’s nearly impossible not to be inspired by Heather Mills. Born 12 January 1968 in the UK, she began as an entrepreneur at the age of 15, working heavily in refugee work. When she lost her leg in a road traffic accident, she became vegan as a health necessity during recovery, something that she has expanded into her own business, VBites. While her four gold medals in downhill racing and her title as the fastest disabled woman on the planet with her world record of 166.84 kph in speed skiing are astounding achievements that have raised her profile worldwide, it is perhaps her work in the field of veganism that will have the most profound affect on the world. Her vegan ethical food company VBites only exports to over 24 countries worldwide, but it generates global online sales and has over 104 meat-free, fishfree and dairy-free products in its range.

Investing early in the veganism boom Heather Mills, founder of VBites, has started a venture fund to invest in early stage vegan food start ups at a key point in the industry’s growth As veganism has steadily made its way into the mainstream, the veganism food industry is taking off with no end in sight to its growth—something that Heather Mills is very conscious of. “It’s dangerous now, because you’re seeing so much big money coming

in. These big figures are being thrown around, and investors are interested, so you’re seeing a lot more variety coming out. The bad thing is, they haven’t done the research and development necessary to make great products. When people try something and it’s a bad product, wealtharabia.net

FOOD

they’re not going to go back again. What I’d like to do is try to get the good products out there as there are another good ones out there that do make good ones,” says Mills. VBITES VENTURE FUND A year and a half ago, Mills began a venture fund to invest in companies that were headed on the same path as VBites, so that she could properly incubate and scale them while keeping them true to that vision. “I have a VBites venture fund because I have so many young, excitable millenials and their kids who come to me and say that they want to change the world. They don’t come up with any product we haven’t already done,” Mills says. While he is still in search of innovation, she feels that the venture fund is necessary. “We still have yet to find something that isn’t something we have already done, I hope that one’s coming around the corner. But they believe in what they do, and I don’t want them to be swallowed up by hedge funds and private equity firms,” Mills continues.

“I’ll fund them, take 25 or 30 per cent of the company, make sure they keep the company, and slide them into our distribution channel, and add it to the lines of things I’m presenting to supermarkets. We’ve created a plantbased valley in Newcastle where we’re doing incubation sectors,” says Mills. “When someone’s got a start up product, they make it in the kitchen, then in the garage, and then a small factory that they can’t scale up without accreditations, which are expensive. We’ve invested so they can have office space and manufacturing. We’ll be the plant-based Silicon Valley.” The first companies are finally ready for market. “We’ve got a protein powder launch, with another three being announced soon,” Mills says. ENVIRONMENTALISM AND PUBLIC HEALTH It is not enough for just the market to decide—forward-thinking governments need to encourage the growth of an industry that is a net positive for the environment and public health.

Heather Mills has worked to become a champion and world record holder in speed skiing.

“The companies that are trying to do good need to be helped and awareness needs to be put there. Sweden is a perfect example—we went into Sweden and Scandinavia is miles ahead of all of us. They have a vegan option in every school, tax credits for environmental companies. There’s motivation to create better business,” Mills says. “We don’t have that in the UK— we’re an ethical, environmental company. We win the awards every year. We don’t put out toxins, we don’t get any reduction in our business rates. There’s no incentive to companies to maximise going down that route. It does cost more money to be ethical, to be a plant-based only facility.” Mills understands that companies and investors need to chase profit and returns—she just wants them to understand that there is plenty of that in this industry. “We need more companies to see that it is big business. If they’re only thinking with their wallet, then whatever it takes to get them to switch over and to help start ups,” she says. HOW TO BECOME VEGAN On a consumer level, VBites strategy is to create products that can replace the foods that non-vegans eat on a daily basis. “What I like to do is replicate like for like. Kids want to feel that they can go to a McDonalds. We’re not going to make them become broccoli soup eaters overnight. We need to make fast food vegan places. I converted a fish food restaurant on the beach to a fast food VBites in 2009, and it was there for about four years and then we moved into the center, and then we had complaints that it wasn’t there any more. We ended up having to do delivery to the new owners of the location because the demand was still there,” Mills says. WHERE TO INVEST In terms of innovation, Mills believes that their fish was their biggest breakthrough, and that investors need to look more into algal oils as the future of the industry, as that is where she believes that there is still innovation yet to come.

FOOD

VBites will be expanding to the UAE in the coming months, says Mills.

“McDonalds had a fish fillet. We developed an algal oil out of a seaweed, so you had the taste of sea in it. There was a lot of work on the texture. We put it all over the UK and it sold out straight away—everyone wanted vegan fish, chips, and mushy peas,” says mills. From a nutrition standpoint, this is something that she had to learn the hard way. “The reason that I went into these 15 years ago is that I would get someone to be vegan, and then some of them would get really depressed. I thought, wow, I need to look into this more. I found that not everyone can convert from a short-chain fatty acid to a long-chain fatty acid on a plant-

The companies that are trying to do good need to be helped and awareness needs to be put there. Sweden is a perfect example—we went into Sweden and Scandinavia is miles ahead of all of us. They have a vegan option in every school, tax credits for environmental companies. There’s motivation to create better business.

based diet. I felt really responsible. I can tell them to give up meat and dairy, but I can’t tell them to give up fish until we come up with an alternative that has EPA and DHA nutrients. I searched the world, and then found the DSM Martek and another in Canada. Then we got ours through once the patent went off Martek, and I started to put that in the products, and it made a big difference. Omega 3 is vital,” Mills says. “The algae that we grow is where the innovation will come from. There are only three algaes in the world that can do what we need them to do, however, and it’s such big business that the sharks are coming in, getting

the algae, and fatten the cows with it. They’re so stupid with greed that instead of minimizing the need for cows, they’re looking at ways to fatten the cows and animals and get them to grow quickly. Instead they could feed people with the algal oil, but instead they go to the second or third source of those nutrients. I get offered a lot of money for our algal oil all the time, but if they are going to feed animals with it, I say no.” Mills, as an investor and an entrepreneur, is steadfast that this is no fad. VBites is set to launch across the UAE by the beginning of 2019. “This is not a trend. Once this arrives, that’s it.” wealtharabia.net

FOOD

PHOTO CREDIT: Bloomberg

FOOD

Tokyo’s turn to tradition One of the world’s great food cities has moved past fusion to rediscover its roots, says chef Katzuhiro Tamura

apanese food is deceptively simple. Especially at its highest levels, a dish can look to have barely any ingredients at all and still be a masterpiece that took the skill, care and ingenuity that few other cuisines demand. Katsuhiro Tamura, Head Chef, Kazahana in Tokyo shows his craft to WEALTH Arabia very carefully. “It’s all about the pairing of each ingredient. I have more than 10 kinds of soy sauce. I can explain it in a simple way—potato and ketchup match, so Japanese ingredients must be matched as well. We have the freshest seasonal vegetables, and we have to find the right soy sauce match for each ingredient,” Tamura says. Tamura began as a chef in the mid 1990s at a very young age—inspired by seeing Top Chef, of all things, before it was a sensation internationally. While now, still under the age of 40, he is one of the youngest head chefs in all of Japan, as it is, traditionally speaking, a job that often goes to the most experienced, he has still seen Japanese cuisine evolve. wealtharabia.net

FOOD

What Japanese should be is traditional—basic ideas, basic technique, and basic ingredients. But Japanese people have experienced a lot of international ideas, so I’ve been inspired by a lot of new things, and thought how I could develop that in concert with traditional ideas and recent Western trends and tastes. I am always trying to progressively improve Japanese cuisine, not only for the Japanese, but globally. “In the early 2000s, the trend in Japan was have more Western influence. The fusion style became very popular. That trend has been changing, however. Now things are back to more simplicity. It’s not only the idea of food, but also the people’s idea in general. At the moment, people’s minds are evolving, and are back to simplicity in life. That has affected our food,” says Tazehana. “Tokyo is especially evolving fast. I am in Tokyo because it is on the cutting edge of everything— including Japanese food. I have a lot of inspiration not only from visiting other restaurants but everywhere—art and music too. That kind of information I take, and I translate into cuisine,” says Tazehana. Each of the dishes he serves me, he explains, has been carefully conceived and constructed based on the season. “It all about how I can express the four seasons in Japan. This is not only with ingredients, but also in the cutlery and fine china that I use,” says Tazehana. While he does try to stay as traditional as possible, he realises that Tokyo is an international city full of tourists—something he caters to, rather than resists. “I want guests from all over the world to enjoy Japanese cuisine. That is why I include popular items on the menu such as sushi and sukiyaki with wagyu beef, which are prepared through the lens of my style.” 56

I want guests from all over the world to enjoy Japanese cuisine. That is why I include popular items on the menu such as sushi and sukiyaki with wagyu beef, which are prepared through the lens of my style.

Tuna from Tokyo's most famous fish market.

A sushi roll prepared with the highest quality fish. PHOTO CREDIT: Bloomberg

MOTORING

Welcome to the Red Bull Ring, home of the Austrian Grand Prix. 58

MOTORING

A WHOLE NEW TRACK The Jeep Grand Cherokee Trackhawk may be the carmaker’s least off-roadready car to date, but it makes up for this fact with blistering on-road performance, writes Tom Paye

t’s been an intense two days in Central Austria. Jeep’s been holding its international launch of the all-new Wrangler, dozens of which have been flown in to take on the hard, undulating terrain surrounding the small town of Spielberg. The Wrangler makes for an impressive all-round update, but what really is excites is the promise of a drive in something much racier at the end of the two-day excursion. Buses of motoring journalists and influencers are herded away from the sleepy town, shooting east towards—well, Jeep won’t say. Miles pass in a haze of uninteresting countryside and dark grey clouds until, finally, signs of a destination come into view. Motorway turns into twisting, hillside road. Gaps in the trees provide glimpses of Tarmac. A lot of Tarmac. wealtharabia.net

MOTORING

Descending into a large valley, the trees open up completely to reveal an acres-large motorsport complex, nestled between the hills. Ribbons of asphalt dance around great, thousandseater stands; red-and-white run-offs vie with massive advertising billboards for attention as they pop against the greyness of the afternoon; and in the middle of this cacophony, towering over everything, sits a giant, copper bull. Welcome to the Red Bull Ring, home of the Austrian Grand Prix. Unfortunately, Jeep hasn’t managed to rent out the track for today’s uses, but it has nevertheless brought along something pretty special – the Grand Cherokee Trackhawk, one of the fastest, most powerful SUVs that money can buy. 60

The Trackhawk is a raving lunatic disguised as a sensible family runabout.

As an introduction, the Jeep Grand Cherokee Trackhawk is a madman. It’s a performance SUV unlike anything from the Fiat-Chrysler group (or indeed much else from any other carmaker). While the less-expensive Grand Cherokee SRT makes for an intriguing, and exciting, foray into performance SUV motoring, the

Trackhawk is a raving lunatic disguised as a sensible family runabout. Think of it as Christian Bale in American Psycho and you’re about there. The ‘standard’ Grand Cherokee SRT has to make do with 475 bhp from its 6.4-litre HEMI V8, but the Trackhawk packs a supercharged 6.2-litre HEMI V8 that generates 707 bhp and 645 lb-ft of torque. That’s enough for it to do 0-100 km/h in 3.7 seconds and the standing quarter-mile in 11.6 seconds. Along with adding a few-hundred horsepower to the SRT, the Trackhawk also features a new suspension and brake set-up. Stopping power comes courtesy of high-performance, six-piston Brembo brakes. They’re massive—twopiece rotors that are 15 inches across at

MOTORING

The Trackhawk packs a supercharged 6.2-litre HEMI V8 that generates 707 bhp and 645 lb-ft of torque.

the front. Suspension is from Bilstein and is made up of an adaptive damping system. Jeep has also fettled with the TorqueFlite eight-speed automatic transmission and the five-mode driveselect system, so you get maximum torque, power and traction—no matter the road conditions. Jeep hands over the keys and leaves instructions to follow a pre-planned route that’s been entered in the satellite navigation. The route doesn’t include any of the Red Bull Ring’s corners, but it does provide a decent mix of highspeed motorway, winding country road and half-busy town centre. Perfect, then, for a quick road test. Those motorways (with no speed cameras) provide ample opportunity to exploit the Grand Cherokee Trackhawk’s power. Unfortunately, it doesn’t feel as fast as its numbers

suggest. As is the case in the standard Grand Cherokee SRT, the driver is thumped in the stomach as the car surges with momentum, but it’s more of a forceful wave than a battering ram. The noise is a little disappointing, too. The standard SRT offers one of the best soundtracks known to man. But in this supercharged 6.2-litre, the dulcet rumblings of the V8 are rather drowned out by the shrieking of the supercharger. Some people like a supercharger whine, but common-sense calls for a meaty V8 sound over that any day. Still, it’s impossible to deny the effectiveness with which the Trackhawk builds speed. It may be getting on for 2.5 tonnes, but it simply devours any Tarmac that’s put in front of it. Stomp on the accelerator, and despite being cossetted in a comfortable family SUV, the world outside becomes a cacophony of blurred surroundings. It’s like being in a spaceship as it approaches warp speed. Through the corners, the Trackhawk feels a lot more able than its nonsupercharged sibling. There’s far less pitch and roll than should be expected from such a tall car, and grip is mightily impressive. Any driver would have to be on a track to really get close to the Trackhawk’s limits of grip. And those big Brembo brakes certainly do their jobs – immense G-force contorts the driver’s face when stomping down hard on the middle pedal and the comes down to normal road speeds. Despite all of this, the Trackhawk retains its abilities as a normal Grand Cherokee—the outer suit it wears goes more than skin deep. This car makes for a wonderful cruiser, providing an astonishingly quiet and refined experienced—even when the speedometer reaches licence-revoking levels. In town, the ride is good and the steering is light. It’s ironic that, on a launch designed to introduce the new face of the world’s best-known off-roader, Jeep includes a car that would fall to pieces tackling the terrain of the last few days. But for all its faults off-road, the Grand Cherokee Trackhawk counters with an argument for staying firmly planted on Tarmac. wealtharabia.net

PRODUCTS

AN IMAX IN YOUR HOME It’s a good thing they now deliver movie theatre popcorn in Dubai—IMAX Private Theatres might tempt you to stay home for good

MAX has become synonymous the world over with the best possible cinema-going experience, and nowhere in the world is that more apparent than in the Middle East. In Dubai alone, IMAX dominates, with some of the best screens and latest technologies that the world of film has to offer. It’s a shame you can’t bring that home with you. Or can you? With that in mind, IMAX has brought IMAX Private Theatre to the Gulf. “We were encouraged by our growth in theatrical business across the region, so it made sense to move into this market.. In the region, family time is very important to high net worth individuals, and because of the weather in the region, private time at home can be extra appealing. There are also a large number of families who own homes that can accommodate these theatres,” David Hanson, General Manager of IMAX Home Entertainment MENA. 62

PRODUCTS

Each IMAX Private Theatre is built to order, tailor made to each customer's specifications. wealtharabia.net

PRODUCTS

The IMAX Private Theatre projector.

Hanson explains to WEALTH Arabia that there will be three levels of products—Prestige, Palais, and the highest-end system, Platinum. “Our core product is Palais, which is a dual-projector passive 3D cinema solution which optimises itself using a microphone in the ceiling and an optimisation tool that allows us to do real-time monitoring of your vision and gives feedback to our centralised network operations centre, as well as having a variable seating size. It’s a modular solution around which you can build a shell in whatever space you have,” says Hanson. Which product you choose isn’t necessarily a testament to quality—it’s also about picking the best product for the space that you have available in your home. The difference in the product is to do with the power of the projectors, the size of the speakers, etc. Within a certain range of room sizes, we’re able to optimise the equipment and change the settings,” says Hanson. “We have the product differentiation because the depth of the room will decide whether your speakers are overpowered, underpowered and so forth.” As the Gulf loves customisation, each Private Theatre is made to suit the customer. “We try to take any space and get it to a place where it fits the template for our private theatre. Obviously, for our room, that dictates how much 64

construction goes into it. You’re trying to build a frame inside a space that allows you to put a private theatre in. If you have the ceiling height it’s not too difficult to put the soundproofing element around the wall, put the theatre shell etc. If you’re putting it on a yacht and it’s right next to an engine room, we’re going to have to put in a lot more work into soundproofing. It really varies job to job,” says Hanson. “A lot of our target customers have relationships with interior designers, and in which case we will put in the hardware solution, and we will provide consultancy with the design team to allow them to deliver their design vision with our technology without any loss of performance.” The concept of the IMAX Private Theatre, long before it was to be marketed to individuals for their homes, was born in Hollywood—for Hollywood. “The entire development of these private theatres have gone through multiple iterations, and the first iteration was studio executives in Hollywood wanting to have screening rooms put into their home that allowed them to view the content in the way that it was going to be seen in the theatres. The first generation of these theatres was essentially scaled down versions of the IMAX theatrical installation— which had its own challenges. It was not a scalable solution to go into the home, and the cost was prohibitive,” says Hanson.

Though they have updated the technology so that it fits in the home, it is still very much IMAX. “The DNA of those theaters has passed down all the way into this product which was designed to be scalable into many different sizes of homes. Our technology group has always had embedded in them people who were responsible for the theatrical DNA of IMAX, so it all carries all the way through. People can see that there is consistency with what they experience,” says Hanson. While consumers that go to the IMAX theatre at Mall of the Emirates will talk most specifically about the size, to IMAX, that is not what the experience is all about. “People who go to IMAX talk about the size of the experience. So how can I talk about consistent DNA when we’ve scaled down to room size?

PRODUCTS

A back row view of an IMAX Private Theatre.

While the perception is the size, our argument is around the intensity of the experience. It’s the depth of the 3D, the depth of the sound, the optimisation, the fact that there’s no interference in the sound. In some ways, scaling down the size of the room, because we control better where you’re seated in terms of the screen, it’s even more precise, centering the 3D to you in the room. All the sound is directed at you as well so you have a personal, intense experience,” says Hanson. Once you have the Private Theatre, it is up to you. You will not have to lug the IMAX projector film that once filled an entire room, rest assured. “Our model is all about flexibility— it’s a broad content solution. You have the inputs to put in whatever you want. Obviously the higher the resolution of the content your’e receiving the better your experience is going to be, but whether you’re playing FIFA on your PlaysStation 4, broadcast 4K or a 4K Ultra HD Blu Ray,” says Hanson. How much? Estimates start around $400,000, but, well, if you have to ask…

A lot of our target customers have relationships with interior designers, and in which case we will put in the hardware solution, and we will provide consultancy with the design team to allow them to deliver their design vision with our technology without any loss of performance.

A full-sized IMAX theatre, for which the brand has become renowned.

wealtharabia.net

PRODUCTS

PHOTO CREDIT: CPI Financial/William Mullally

PRODUCTS

TIME FOR A CHANGE The Panerai Luminor Due 3 Days Titanio 42mm is a watch more suited for an evening suit than your scuba gear

round the world, Panerai has long been an iconic brand with loyalists who believe in the timelessness of the time piece. The Panerai community is fiercely passionate—they love nothing more than discussing the brand and its products, and sharing that with each other whenever possible. In the UAE, many of the biggest watch collectors and watch communities were initially brought together by their love of Panerai.

When the Panerai brand was founded in Florence in 1860, the Panerai watch came into being in the world of the depths of the sea. To be precise, the depths of the Mediterranean, where in March 1936 the commandos of the Italian Navy first tested the prototype created by Panerai in response to the request to the General Staff to develop a special luminous underwater watch. The Royal Navy, as it was then called, evaluated the creations of many established producers, but the only example which satisfied all the rigorous requirements of the military authorities was the one which would become

Panerai’s first prototype. It was also, according to many, the first professional underwater model in the history of matchmaking: the Radiomir. In the years before the Radiomir was created, watches had already been made that were water resistant because they had a double case, that is, they were inserted in hermetically sealed case, or fitted in a case that could resist the pressure of water to a certain depth. But water resistance alone was not enough for the Italian military authorities, who required a watch which met several other requirements that were fundamental for the commandos who would operate underwater for long periods, frequently in critical conditions. When the Florentine watchmaker Panerai created the Radiomir, the company had already been a trusted supplier of the Navy for some time. In 1938, two years after the success of the prototype, it put into production the first ten examples for the men of the naval assault forces which were part of the Italian Navy’s Submarine Command. On their wrists, over of the waterproof suit of rubberised fabric, the commandos wore both a watch, the indispensible instrument for synchronizing all wartime operations, and other precision instruments developed by Panerai, such as the depth gauge and the compass. Equipped with only the most vital equipment, the divers of the Submarine Command carried out their operations riding slow-speed torpedoes—special underwater vessels which carried tow operators seated astride the vessel. On these human torpedoes, the commandos explored the depths of ports in the Mediterranean under extremely difficult conditions, in the darkness of the night in waters which were frozen and muddy. wealtharabia.net

PRODUCTS

They descended 40 metres below the surface of the sea and remained immersed for hours, depending on their instruments, which consequently had to be guaranteed to provide the maximum resistance, reliability, accuracy and legibility. These are Panerai’s origins, sure, but this is not the use of the watch for most people today. In fact, in our discussions with watch experts the world over, it is clear that watch tastes are changing. Though Panerai’s large faces have always been well received in the UAE, where size has often been the style, watch collectors the world over are getting more conservatives in their tastes, preferring less ostentatious watches that match better for an evening suit. Enter the Panerai Luminor Due 3 Days Titanio 42mm. Though it is, in every way, a classic Panerai, we were struck at first how well the Panerai style translates to this size. While previous Panerai we have had make their presence on your wrist known, and give 68

The movement has the fundamental functions—hours, minutes and the seconds counter at 9 o’clock—and it is 12 lignes (26.8 mm) in diameter with an overall thickness of 3.85 mm. one the feeling of removing leg weights once you’ve taken it off at the end of the evening, the Luminor Due is much more subtle, but just as pleasing. That comfort factor makes this a much easier watch to recommend to the discerning collector in 2018, especially a collector who is more likely to keep their most prized Patek Philippe in a temperature-controlled safe than wear it out except on the most special of occasions. Much like the early Panerai watches were made for doing, this one is made for wearing, and it wears beautifully. Though it may not be the watch recommended for deep-sea divers, there are plenty of other Panerai that fit the bill for that task. This one is made to

complement your best suit, or enliven and refine your jeans and t-shirt look. As far as what’s going on inside: The P.1000 is a new in-house handwound calibre with a power reserve of three days. The movement has the fundamental functions—hours, minutes and the seconds counter at 9 o’clock— and it is 12 lignes (26.8 mm) in diameter with an overall thickness of 3.85 mm. Consisting of 152 components and with 21 jewels, the P.1000 calibre is solid, strong and reliable, and it is immediately recognisable as a Panerai calibre from both the technical and aesthetic points of view. Watch tastes are changing, and Panerai is changing with them.

Not your copy? WEALTH Arabia is a controlled circulation magazine delivered directly to specific, named HNWI individuals across the GCC. Institutions may also arrange bulk purchase orders of the magazine and its supplements to circulate among internal and external stakeholders. If you wish to arrange regular bulk deliveries, please contact subscriptions@cpifinancial.net for terms. Annual individual subscription (4 issues/year) US$40

CPI Financial, PO Box 502491, 1209 Shatha Tower,

To subscribe, fill inDubai, the order Dubaisimply Media City, UAE. form and return it, with your cheque for US$40 to: CPI Financial, PO Box 502491, 1209 Shatha Tower, Dubai Media City, Dubai, UAE. NAME POSITION COMPANY ADDRESS LINE 1

ISSUE 45 | MARCH 2018

ADDRESS LINE 3

WEALTH ARABIA

ADDRESS LINE 2

PO BOX

MARCH 2018

Investing in the Gulf’s evolution

ZIP/POSTAL CODE

Mohamed Abdellatif Senior Executive Officer UBP Middle East

COUNTRY

A CPI Financial publication

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

Dubai Technology and Media Free Zone Authority

PRODUCTS

THE WORLD’S MOST COVETED WATCHES Sam Hines, Worldwide Head of Watches for Sotheby’s, walks WEALTH Arabia through some of the most coveted pieces ahead of their auction in Geneva on 13 November

Patek Philippe Retailed by Asprey: ref 2499 Yellow gold perpetual calendar chronograph wristwatch with moon phases Made in 1952 Estimate: $2,000,000–4,000,000 “This is a perpetual calendar chronograph, making it one of the most complicated watches for technique. The 2499 model was made in four different series. It started in 1950, ending production in 1986. This is from the first series which was made for about eight years, and there’s probably only 20 to 30 pieces in gold. This is the only one retailed by Aspreay, meaning it has the Aspreay signature on the dial.” “It also has English hallmarks for 1952, and it’s in basically new condition, which is very rare for a watch this old. The owner didn’t wear it—It sat in a safe all this time. This watch was first on the market in 2006, when it reached the staggering price of CHF 2.2 million. It has everything collectors are looking for—rarity, condition, and brand.”

PRODUCTS

Rolex ‘Pulsation’ Daytona, ref 6239 Stainless steel chronograph wristwatch with pulsation dial Circa 1967 Estimate: CHF $500,000–1,000,000

Rolex Gmt-master ‘pussy galore’, ref 6542 Stainless steel dual time wirstwatch with date, tropical dial and bakelite bezel Circa 1957 Estimate: $80,000–120,000

“What’s rare about it is that it’s fitted with a ‘pulsation’ dial, an additional scale. This was intended for doctors so that they could measure the rate of a patient’s pulse. Rolex seldom used it, and brand seldom used it, so it’s very rare to find today. The condition is superb, and it’s one of only three pieces with this type of dial. This is being consigned by the original owner, who bought the watch in the Bahamas on a cruise, paying only around $400 dollars for it at the time.”

“The watch should be a darker brown, but over the years it turned to a honey golden brown. This is known as a ‘tropical dial’. Patek Philippe would use the most expensive components for their watches, but Rolex, because the retail was cheaper, the component were not as durable or as resilient. Rolex did not mean this to happen, but because of oxidation and humidity, they have changed into a rich golden brown, making it work three or four times worth what it would be otherwise.”

Rolex ‘Paul Newman’ Daytona, ref 6263 Stainless steel chronograph wristwatch with Panda dial and bracelet Estimate: $300,000–600,000

“Collectors love the Daytona because it evolved over 55 years of production, and is the hottest watch at the moment, with celebrities wearing them. There was only one Paul Newman owned by Paul Newman, and it sold at auction two years ago for $18 million. The Paul Newman model itself, however, was a manual Daytona with an exotic dial, and it wasn’t very popular when it was in production. Rolex made two to three thousand, but people didn’t want them, so they didn’t make very many. Paul Newman himself wore one of the exotic Daytona’s in a movie, and the market exploded, nicknaming the watch the ‘Paul Newman’.” wealtharabia.net

PRODUCTS

ELEVATING HIGH-END SKIN CARE WITH OLD WISDOM How Aly Rahimtoola’s Herbal Essentials became Dubai’s best homegrown skin care brand

n the Middle East, a market that is perhaps the world’s top destination for luxury goods, skin care has never gotten the attention that it deserves. “In international Sephora stores, skin care usually makes up a third of the products available. In the Middle East, skin care is only 10 per cent. That tells you that consumers here are focused on fragrances and make up— they’re not really thinking about skin care,” says Herbal Essentials founder Aly Rahimtoola. 10 years ago, Rahimtoola noticed something. While the world was embracing natural products more than ever before, skincare was not yet getting the same treatment. In the past few years, Herbal Essentials has made its way into the home of most discerning skin care consumers in the Gulf, but it began as gut feeling from a man in the shipping industry. “I saw that there was a movement for holistic natural care, and I thought, that if we can blend in a natural, holistic approach to consumer beauty, then maybe it can become something special,” he says.

“If you ask 100 women in Dubai if they’d rather use naturally inspired skin care products, I would be most would say yes—that was the hunch that I had back then,” adds Rahimtoola. There was one problem. “I didn’t understand anything about skin care,” Rahimtoola admits. “I was a typical bloke that uses an aftershave balm after you shave—that’s it. If you

Aly Rahimtoola

wanted to be invested in something, you have to learn. I enrolled myself in a skin care class, and they looked at me like I was crazy. I sat there and learned about skin care. Ten years in, I still thirst to understand how things work,” he says. But while he had the idea set, he didn’t yet know where he would take it. That ended one day when he came across a man selling products not far from where he was born in Pakistan. “I met a very interesting gentleman at an exhibition who was from the Himalayas. I asked him what his products were, as they were unique looking, and he said these are all skincare products based on the principles of Ayurveda, a thousands of years old philosophy that takes lessons from the past. He gave me the example that a newborn baby has perfect skin. Because of external stresses—diet, stress, pollution and lifestyle—that’s when skin can get out of sync. Yoga is a form of meditation to restore equilibrium as part of Ayurveda. I asked him, do you have a brand? He said he had no money, he just wanted to share his products,” he says. wealtharabia.net

PRODUCTS

From there, Herbal Essentials was off. But while it began to find success, it still was not at the level that it would become. For that, it took a pep talk from one of the luxury world’s biggest voices. “I was at the stage where I needed to take it to the next level. I sent Nicki Kinnaird, founder of luxury beauty retailer Space NK, my products, and I got an email two months later asking if I was free for a cup of coffee in London. In the beauty industry this is like Warren Buffett saying are you free for a coffee in Omaha, Nebraska—you go!” Rahimtoola says. “She sat down and said, Ali, tell me about Herbal Essentials. Sell me your product, because if the founder of a brand can’t sell you their product, then maybe you should go back to your shipping career. I told her, and she said, that’s nice, but I’ll take that Estee Lauder product instead. I thought, I flew all the way here to have her reject me?” he says. But Kinnaird wasn’t done. “Then she said, can I sell your brand back to you? Like in Jerry McGuire she had me at hello,” he says. “She told me that Herbal Essentials is a skincare brand that believes that there is wisdom that has been lost through the ages. What we seek to do is travel the world, uncover that lost wisdom, and at the same time, understanding that the challenges of today are very different than they were long ago. People don’t have the same issues that they once did— so we fuse modern technologies, modern know-how with old world knowledge to create a beauty brand that is essentially beauty rediscovered,” Rahimtoola continues. Since that moment, Herbal Essentials has now elevated its game, and realised the full potential of what the Dubai-based brand could become. “We’ve recognised that there are certain natural ingredients that have great skin efficacy. For example, blackcurrant, ginseng, green tea, flaxseed. If you fuse that together with Himalayan spring water, which 74

is very good for the skin because it’s very alkaline, you create essentially an active compound. We’re working with French formulators to come up with a proprietary Himalayan active complex that we will put into all the products. We’re now coming up with innovation,” he says. “There’s nothing to stop this brand in three years from getting its figurative backpack, heading down to the Amazon, and coming up with some great beauty wisdom that was lost in the Amazon, and adapting that with modern technologies in France and creating a new natural product. We could technically have compounds from each part of the world that we update, bring in to the 21st century.” “Indiana Jones for skin care?” WEALTH Arabia asks. “Exactly!”

I was a typical bloke that uses an aftershave balm after you shave—that’s it. If you wanted to be invested in something, you have to learn. I enrolled myself in a skincare class, and they looked at me like I was crazy. I sat there and learned about skincare. Ten years in, I still thirst to understand how things work.

SUMMIT

Providing you with actionable investment advice 29.11.18

JW Marriott Marquis Hotel Dubai, United Arab Emirates

SUPPORTED BY

SPONSORS Gold Sponsor

Silver Sponsor

Bronze Sponsor

Lunch Sponsor

EXHIBITORS

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

STAR TALK

Reconnecting with your roots Bollywood superstar Nawazuddin Siddiqui speaks to WEALTH Arabia about where he travels between major films

awazuddin Siddiqui is currently one of Bollywood’s biggest stars but he came from humble beginnings. Born into a Muslim family in a small town called Budhana, in the Muzaffarnagar district of Uttar Pradesh, his father was a farmer. His grandfather on the other hand, was incredibly wealthy, owning hundreds of acres of land—perhaps he should have read WEALTH Arabia and learned how to preserve his wealth. “My background is farming— I’m a farmer, I was a farmer,” he tells WEALTH Arabia. He was born into a family of nine siblings—seven brothers and two sisters. Growing up, it was difficult for him to go to the cinema—the closest cinema was 45 kilomteres away. As a result, he only saw five movies growing up, reenacting the scenes in his head.

PHOTO CREDIT: Shutterstock/Denis Makarenko

When he moved to Mumbai, he worked as a watchmen in an office, before finally breaking into the business that has since readily embraced him. “I’m always attracted to complex characters,” he says. After filming Sacred Games, an international mega-hit and Netflix’s first Indian original programming, Siddiqui caught up with WEALTH Arabia about where he travels to detach from playing one of the most vicious gangsters of modern television. Where does he go? It turns out he goes back to his roots—his home village of Budhana. “I go to my village and meet my old friends. I do that. I want to detach what I have done, detach from the role that I take, so when I go, it’s a process of detachment. When I came to Bombay for one month or fifteen days, I feel like I’m another person right now. I feel like I can start another role.”

I go to my village and meet my old friends. I do that. I want to detach what I have done, detach from the role that I take, so when I go, it’s a process of detachment. wealtharabia.net

EVENTS

Join us for the WEALTH Arabia Summit 2018

The WEALTH Arabia Summit 2017

he third edition of the WEALTH Arabia Summit will once again have individual investors, key decision makers and experts in the wealth management industry gather for one full day of immersive discussion on the investment landscape and the new and emerging opportunities for high net-worth individuals, family offices and senior investment advisors in the Middle East. Whether you personally manage your investment portfolio, or have an advisor acting on your behalf, understanding the landscape and opportunities available to you, as the investor, is paramount to your success. The danger lies in what you don’t know can hurt you.

With our refreshed format that will include six keynote presentations, and three investment forums, we bring you over 40 industry experts and globally recognised speakers to discuss the hottest topics shaping the investment space today and looking to 2019. Key takeaways from the summit include understanding how macroeconomic trends will affect your 10 year outlook and shaping your 2019 portfolio accordingly, discovering eight of the biggest trades in global macro to help you align your investment portfolios moving forward, gaining insight into Saudi Arabia’s emerging status and what recent geopolitical events mean for the country as an emerging market, and identifying how to effectively plan for the next generation and the importance of planning at our Family Affairs Stream. This year will also include the first-ever WEALTH Arabia Women’s Investment Forum, from which you will learn from some of the leading women in the investment space on how to develop your portfolio in line with your priorities. Additionally, the Real Estate Investment Forum will give you the opportunity to explore the hottest trends in global real estate, evolving cross-border capital flow and addvalue strategies. Register your interest today for a chance to receive your invitation to the summit at www. WEALTHArabiaSummit.net, where you may also download the prospectus and agenda. We look forward to seeing you there!