The new headquarters of the Abu Dhabi Securities Exchange (ADX) is nearing completion on Sowwah Island, and a recent visit to the site showed the structure would almost certainly make it on to any list of the capital's most visually arresting structures.
Although it is still encased in scaffolding, the four-storey glass structure is suspended more than 25 metres above ground, supported by four granite columns, and will eventually be surrounded by water features that architects say will give the building the appearance of floating.
All told, it boasts more than 21,367 square metres office space, including a trading floor of almost 1,000 sq metres.
It seems fair to wonder what the exchange plans to do with all that space, given the dwindling activity in local markets of late.
On most days in recent months, the number of traders at the ADX in its current Hamdan Street location could fit in a decent-size living room.
The delivery of the new headquarters, tentatively scheduled for May, with trading at the site to begin by August, makes the possibility of a national stock exchange all the more intriguing. ADX's Hamdan Street headquarters is not nearly big enough to house a national bourse, but the new one could probably do so easily.
The timing is certainly auspicious.
The markets story of the past few months has been the shrinking trading volumes and the resulting lack of public offerings. Local markets have long depended on a mix of retail investors and outside fund managers, and both categories have retreated to the sidelines.
Last week, the Securities and Commodities Authority (SCA) seemed to verify that the possibility of a merger of UAE markets was gaining momentum when it released a statement saying its Advisory Board backed the idea and even went as far as to say markets would "witness significant growth" once a merger went through. But within hours, the agency withdrew the statement, citing an error in translation from Arabic into English.
That very well may have been an honest mistake, but it was accepted by many analysts and investors as confirmation that the wheels were in motion for a tie-up.
This is widely seen within the investment community as good news and critical to a rebound for local bourses.
In markets, scale matters. Investors like to put their money in places where they can get in and out of positions quickly and efficiently. With only a handful of stocks in the UAE attracting serious volumes each day, that is increasingly a problem here. As analysts and even officials with the UAE's three bourses have pointed out, the country's publicly listed companies are more likely to attract international attention if they are grouped on a single platform.
By putting the three exchanges together, the UAE would create the second-largest bourse in the Arab world behind the Saudi Tadawul. Also significant is that a unified exchange would be a much more compelling candidate for an upgrade to an emerging market by the influential index provider MSCI. That would then attract even more volume.
The talks about a merger are reportedly going on at the governmental level, which means their substance remains something of a mystery. But most observers believe the sticking points are partly logistical and partly political.
The logistics involve the mechanics of how a unified exchange would work. There would be significant technological challenges to integrate all of the stocks into a single trading platform, but Borse Dubai already owns a big chunk of NASDAQ OMX, the stock-exchange operator that created the technology powering many exchanges around the world. It should not be an insurmountable issue. Regulations that are acceptable to the companies making up the exchange would also have to be agreed on.
The political questions are more delicate. The most controversial, at least among outsiders tracking the issue, is where to base a combined exchange. The Dubai International Financial Centre offers the biggest concentration of investment firms in the country, but Abu Dhabi's new exchange offices show that the capital has ambitions of its own.
There are those who will say, what does it matter? Most stock trades are conducted electronically these days, anyway, so the location of the trading floor is irrelevant.
This is only partly true. The heads of most financial firms will tell you that traders and brokers are most effective when they are continuously sharing information with their peers.
The guy trading from poolside is rarely going to match the knowledge of the guy with a large network of contacts he is able to speak to in person every day.
So maintaining a central location for brokerage offices and a trading floor for retail investors is important, but there is no reason there cannot be one in each emirate.
What is far more important is that foreign investors can evaluate UAE stocks on a common platform, and buy and sell them under a single regulatory structure. To outside investors, those practical effects would be the true achievements of a merger.
Most investors will never set foot in the new ADX offices, no matter how stunning. But it is worth remembering that they would be even more beautiful if they were teeming with busy traders and brokers.
breagan@thenational.ae
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Tonight's Chat on The National
Tonight's Chat is a series of online conversations on The National. The series features a diverse range of celebrities, politicians and business leaders from around the Arab world.
Tonight’s Chat host Ricardo Karam is a renowned author and broadcaster with a decades-long career in TV. He has previously interviewed Bill Gates, Carlos Ghosn, Andre Agassi and the late Zaha Hadid, among others. Karam is also the founder of Takreem.
Intellectually curious and thought-provoking, Tonight’s Chat moves the conversation forward.
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The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part one: how cars came to the UAE
KILLING OF QASSEM SULEIMANI
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
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%3Cp%3E%3Cstrong%3EDirector%3C%2Fstrong%3E%3A%20Quentin%20Tarantino%3Cbr%3E%3Cstrong%3EStars%3C%2Fstrong%3E%3A%20Uma%20Thurman%2C%20David%20Carradine%20and%20Michael%20Madsen%3Cbr%3E%3Cstrong%3ERating%3C%2Fstrong%3E%3A%204.5%2F5%3C%2Fp%3E%0A
Other workplace saving schemes
- The UAE government announced a retirement savings plan for private and free zone sector employees in 2023.
- Dubai’s savings retirement scheme for foreign employees working in the emirate’s government and public sector came into effect in 2022.
- National Bonds unveiled a Golden Pension Scheme in 2022 to help private-sector foreign employees with their financial planning.
- In April 2021, Hayah Insurance unveiled a workplace savings plan to help UAE employees save for their retirement.
- Lunate, an Abu Dhabi-based investment manager, has launched a fund that will allow UAE private companies to offer employees investment returns on end-of-service benefits.
Brief scores:
Toss: Northern Warriors, elected to field first
Bengal Tigers 130-1 (10 ov)
Roy 60 not out, Rutherford 47 not out
Northern Warriors 94-7 (10 ov)
Simmons 44; Yamin 4-4
Coffee: black death or elixir of life?
It is among the greatest health debates of our time; splashed across newspapers with contradicting headlines - is coffee good for you or not?
Depending on what you read, it is either a cancer-causing, sleep-depriving, stomach ulcer-inducing black death or the secret to long life, cutting the chance of stroke, diabetes and cancer.
The latest research - a study of 8,412 people across the UK who each underwent an MRI heart scan - is intended to put to bed (caffeine allowing) conflicting reports of the pros and cons of consumption.
The study, funded by the British Heart Foundation, contradicted previous findings that it stiffens arteries, putting pressure on the heart and increasing the likelihood of a heart attack or stroke, leading to warnings to cut down.
Numerous studies have recognised the benefits of coffee in cutting oral and esophageal cancer, the risk of a stroke and cirrhosis of the liver.
The benefits are often linked to biologically active compounds including caffeine, flavonoids, lignans, and other polyphenols, which benefit the body. These and othetr coffee compounds regulate genes involved in DNA repair, have anti-inflammatory properties and are associated with lower risk of insulin resistance, which is linked to type-2 diabetes.
But as doctors warn, too much of anything is inadvisable. The British Heart Foundation found the heaviest coffee drinkers in the study were most likely to be men who smoked and drank alcohol regularly.
Excessive amounts of coffee also unsettle the stomach causing or contributing to stomach ulcers. It also stains the teeth over time, hampers absorption of minerals and vitamins like zinc and iron.
It also raises blood pressure, which is largely problematic for people with existing conditions.
So the heaviest drinkers of the black stuff - some in the study had up to 25 cups per day - may want to rein it in.
Rory Reynolds
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.”
A State of Passion
Directors: Carol Mansour and Muna Khalidi
Stars: Dr Ghassan Abu-Sittah
Rating: 4/5
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
LA LIGA FIXTURES
Thursday (All UAE kick-off times)
Sevilla v Real Betis (midnight)
Friday
Granada v Real Betis (9.30pm)
Valencia v Levante (midnight)
Saturday
Espanyol v Alaves (4pm)
Celta Vigo v Villarreal (7pm)
Leganes v Real Valladolid (9.30pm)
Mallorca v Barcelona (midnight)
Sunday
Atletic Bilbao v Atletico Madrid (4pm)
Real Madrid v Eibar (9.30pm)
Real Sociedad v Osasuna (midnight)
