EFG-Hermes, Egypt's largest listed investment bank, posted a 39 per cent dip in second-quarter profit yesterday as trading volumes on regional stock exchanges sagged and commission income dropped. The bank made 96.7 million Egyptian pounds (Dh61.3m) in the period compared with 176.4m pounds in the same period last year. EFG-Hermes has an extensive presence in the Middle East with offices in the UAE, Saudi Arabia and Kuwait and headquarters in Cairo. The bank is 18.5 per cent owned by Dubai Financial Group, a division of the Government-owned conglomerate Dubai Holding. The profit declines were due mainly to a drop in activity on stock exchanges across the Middle East. EFG-Hermes, which has brokerage, investment banking, asset management and research operations, said revenue from trading on the UAE's markets declined from 33 million pounds in the second quarter of last year to 11 million pounds in the same period this year.
The bank is one of the largest brokers on the UAE's stock markets, with a market share of about 19.6 per cent on the Abu Dhabi Securities Exchange (ADX) and 13.3 per cent on the Dubai Financial Market (DFM). "Both trading volumes and values continued to decline over the quarter," the company said in its earnings release. "Volumes traded declined 31.9 per cent and 29 per cent on the DFM and ADX, respectively, coupled with declines in indices of 20.7 per cent and 13.6 per cent, respectively, over the similar period, due to continued frailness of any economic or market recovery as credit growth remains constrained, private consumption remains weaker than [in] other GCC countries and the continued restructuring of corporates in the UAE." EFG said its investment banking business also suffered because of "adverse global market conditions", while overall performance was impacted by dampened investor sentiment and volatile regional markets.
Revenue from fees and commissions dropped by 10.6 per cent in the second quarter. The company's shares closed down 0.4 per cent yesterday at 27.52 pounds in Cairo. afitch@thenational.ae
How to protect yourself when air quality drops
Install an air filter in your home.
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Paatal Lok season two
Directors: Avinash Arun, Prosit Roy
Stars: Jaideep Ahlawat, Ishwak Singh, Lc Sekhose, Merenla Imsong
Rating: 4.5/5
Guide to intelligent investing
- Stay invested: Time in the market, not timing the market, is critical to long-term gains.
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The Sand Castle
Director: Matty Brown
Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
Rating: 2.5/5
The Specs
Price, base Dh379,000
Engine 2.9-litre, twin-turbo V6
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Power 503bhp
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BEETLEJUICE BEETLEJUICE
Starring: Winona Ryder, Michael Keaton, Jenny Ortega
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When is VAR used?
• Goals
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So what is Spicy Chickenjoy?
Just as McDonald’s has the Big Mac, Jollibee has Spicy Chickenjoy – a piece of fried chicken that’s crispy and spicy on the outside and comes with a side of spaghetti, all covered in tomato sauce and topped with sausage slices and ground beef. It sounds like a recipe that a child would come up with, but perhaps that’s the point – a flavourbomb combination of cheap comfort foods. Chickenjoy is Jollibee’s best-selling product in every country in which it has a presence.
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The specs
The specs
Engine: Dual 180kW and 300kW front and rear motors
Power: 480kW
Torque: 850Nm
Transmission: Single-speed automatic
Price: From Dh359,900 ($98,000)
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Flying
There is no simple way to get to Punta Arenas from the UAE, with flights from Dubai and Abu Dhabi requiring at least two connections to reach this part of Patagonia. Flights start from about Dh6,250.
Touring
Chile Nativo offers the amended Los Dientes trek with expert guides and porters who are met in Puerto Williams on Isla Navarino. The trip starts and ends in Punta Arenas and lasts for six days in total. Prices start from Dh8,795.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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