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1996-2011
Bahrain..............BD 1.0
Kuwait............... KD 1.0
Oman................ RO 1.0
Qatar.................. QR 10
Saudi Arabia.......SR 10
UAE.................. DHS 10
PLUS:
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!$GB Sept 2011.indd 1 8/29/11 10:48:52 AM
the day-date
EVERY ROLEX IS MADE FOR GREATNESS. THE DAY-DATE, INTRODUCED
IN 1956, WAS THE FIRST WATCH TO DISPLAY THE DATE, AS WELL AS THE
DAY I N I TS ENTI RETY. A POWERFUL EXPRESSI ON OF ELEGANCE AND
STYLE, ITS CLASSIC DESIGN QUICKLY BECAME A FAVOURITE AMONG
WORLD LEADERS. THE DAY-DATE I S PRESENTED HERE I N PLATI NUM.
the day-date
EVERY ROLEX IS MADE FOR GREATNESS. THE DAY-DATE, INTRODUCED
IN 1956, WAS THE FIRST WATCH TO DISPLAY THE DATE, AS WELL AS THE
DAY I N I TS ENTI RETY. A POWERFUL EXPRESSI ON OF ELEGANCE AND
STYLE, ITS CLASSIC DESIGN QUICKLY BECAME A FAVOURITE AMONG
WORLD LEADERS. THE DAY-DATE I S PRESENTED HERE I N PLATI NUM.
Mar i ne Royal e Aut omat i c Al ar m 5847BR
Patrick OBrian, Blue at the Mizzen, 1999
They were both indeed
Breguet watches,
wonderfully accurate,
wonderfully resistant ().
www. br eguet . com
Br eguet Bout i ques Dubai Mal l , Dubai ( UAE ) , +971 4 339 87 56 Mal l of t he Emi r at es, Dubai ( UAE ) +971 4 395 1 8 62
POB5-GulfBusi_412x270.indd 1-2 24.08.11 15:32
Mar i ne Royal e Aut omat i c Al ar m 5847BR
Patrick OBrian, Blue at the Mizzen, 1999
They were both indeed
Breguet watches,
wonderfully accurate,
wonderfully resistant ().
www. br eguet . com
Br eguet Bout i ques Dubai Mal l , Dubai ( UAE ) , +971 4 339 87 56 Mal l of t he Emi r at es, Dubai ( UAE ) +971 4 395 1 8 62
POB5-GulfBusi_412x270.indd 1-2 24.08.11 15:32
RALPHLAUREN.COM
THE DUBAI MALL, GROUND FLOOR
GULF BUSINESS UAE 412x270_Purple_DUO_FA11 SEPT .indd 1-2 17/08/11 10:37
RALPHLAUREN.COM
THE DUBAI MALL, GROUND FLOOR
GULF BUSINESS UAE 412x270_Purple_DUO_FA11 SEPT .indd 1-2 17/08/11 10:37
CULF BUSlNLSS&0
=CPD<KF
K?<9FFD
OA1AR AlRWAYS CLO AKBAR AL BAKLR ON RLCORD
PLANL ORDLRS, MlDDLL LAS1 UNRLS1 AND '1HA1'
PUBLlC 1RANSA1LAN1lC SPA1.
UNCOVERED
1HL RLClON'S 1OP WLAL1H MANACLRS
SPLAK 1O >LC=9LJ@E<JJABOU1 1HLlR
HOPLS AND FLARS FOR 1HL PRlVA1L
BANKlNC LXPLOSlON.
>::KF;8P
(+ REGIONAL NEWS, PEOPLE, NUMBERS AND EVENTS
FG@E@FEJ
)+ MATEIN KHALID
Defensive investment strategies.
)- DR TOMMY WEIR
Whats your leadership brand?
)/ EUGENE A. LUDWIG
Balancing act for banks.
*( SHARIF EL KILANY
The Gulf tax revolution.
** MOHAMMED QASIM
Why dont we save our money?
:FEK<EKJ
'0%)'((
p\Xij
1 9 9 6 - 2 0 1 1
(+
:FM<I;<J@>E1 1ARAK PARLKH
:FM<IJKFIP
+*
9-13 Contents.indd 9 8/24/11 5:06:17 PM
('&J<GK<D9<I)'((
9I@<=@E>
*+ ECONOMY
GCC inches at Euro and US debt crisis.
*- MARKETS
Gulf IPO pipeline shrinks again.
*0 COMMODITIES
The gold price is set for a dizzying ascent.
+' ENERGY
Masdar Capital seeks to invest internationally.
=<8KLI<J
,- OILS FRAUGHT JOURNEY
The Arab Spring and global economic slowdown spell
an uncertain fate for crude.
-) ISLAMIC VERSUS CONVENTIONAL BANKS
The sectors ght for customers amid a challenging climate.
-/ THE LONG ROAD FOR ETFS
Political uncertainty and low liquidity impede growth
of exchange-traded funds.
.) FAKING IT
Rife counterfeit goods are stiing regional creativity
and business prots.
./ POWER STRUGGLE
Domestic oil subsidies will harm the regions
economic strength in the long run.
/) BAHRAINS MARITIME AMBITIONS
The islands shipping industry is batting off political turmoil.
-)
:FEK<EKJ
,-
.)
./
9-13 Contents.indd 10 8/24/11 5:06:22 PM
BAE11-03-013_LO_GulfBusiness_206x270_e_ZS.indd 1 18.07.11 15:38
C
M
Y
CM
MY
CY
CMY
K
KFH Excellence Eng (GB).pdf 1 8/10/11 11:16 AM
CULF BUSlNLSS&(*
:FEK<EKJ
;FNEK@D<
0' TRAVEL
Let your hair down on Greek island, Mykonos.
0* CARS
Reviewed: Volkswagen Touareg.
0, PLACES TO BE
Fairmont Al Babr, Abu Dhabi.
;8K8:ILE:?
/- STATS
Regional mergers, acquisitions and bond issuances.
I<>LC8IJ
0- GULF BUSINESS PREFERRED HOTELS
A selection of the regions top rooms.
0. EVENTS
The Gulfs top business conferences.
0/ IN YOUR SHOES
Christian Porta, CEO of Chivas Brothers.
0,
0'
<;@KFI$@E$:?@<=
Obaid Humaid Al 1ayer
>IFLG<;@KFI8E;D8E8>@E>G8IKE<I
lan Fairservice
>IFLGJ<E@FI<;@KFI
Cina Johnson
J<E@FI<;@KFI
Cuido Duken
<;@KFI
Alicia Buller Xc`Z`X7dfk`mXk\%X\
:?@<=JL9$<;@KFI
lain SmiLh `X`ej7dfk`mXk\%X\
<;@KFI@8C:FFI;@E8KFI9LJ@E<JJ
Hilda D'Souza _`c[X7dfk`mXk\%X\
8IK;@I<:KFI
1arak Parekh kXiXb7dfk`mXk\%X\
;<J@>E<I
Charlie Banalo Z_Xic`\7dfk`mXk\%X\
ALE@FI;<J@>E<I
Roui Francisco ifd7dfk`mXk\%X\
G?FKF>I8G?<IJ
Farooq Salik, Naveed Ahmed, Vikram Cawde
:FEKI@9LKFIJ
Darren SLubinq, Dania Saadi, Ryan Harrison,
Sara Hamdan, PeLer ShawSmiLh, Mark ALkinson
J<E@FIGIF;L:K@FED8E8><I S Sunil Kumar
GIF;L:K@FED8E8><I C Sudhakar
><E<I8CD8E8><I>IFLGJ8C<J
AnLhony Milne Xek_fep7dfk`mXk\%X\
J<E@FI8;M<IK@J<D<EKD8E8><I
Abraham Koshy XYiX_Xd7dfk`mXk\%X\
8;M<IK@J<D<EKD8E8><I
A|ay MaLhews XaXp7dfk`mXk\%X\
;<GLKP8;M<IK@J<D<EKD8E8><I
Melroy Noronha d\cifp7dfk`mXk\%X\
><E<I8CD8E8><I89L;?89@
Joe MarriLL af\7dfk`mXk\%X\
J<E@FI8;M<IK@J<D<EKD8E8><I 89L;?89@
Darryl Wiley [Xiipc7dfk`mXk\%X\
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Hamdan Bawazir _Xd[Xe7dfk`mXk\%X\
PrinLed by LmiraLes PrinLinq Press, Dubai
?<8;F==@:<: PO Box 233, Dubai, UAL
1el: +97 ^ 282 ^060, Fax: +97 ^ 282 ^^36,
dfk`mXk\7dfk`mXk\%X\
;L98@D<;@8:@KP1 Ollice 508,
5Lh Floor, Buildinq 8, Dubai, UAL,
1el: +97 ^ 390 3550, Fax: +97 ^ 390 ^8^5
89L;?89@1 PO Box ^3072, UAL,
1el: +97 2 677 2005, Fax: +97 2 677 02^,
dfk`mXk\$X[_7dfk`mXk\%X\
CFE;FE1Acre House, /5 William Road,
London NW 3LR, UK, dfk`mXk\lb7dfk`mXk\%X\
<;@KFI@8CJPE;@:8K@FE;<K8@CJ
1el: + 97 ^ 282^060, ^Y7dfk`mXk\%X\
9-13 Contents.indd 13 8/24/11 5:06:25 PM
(+&SLP1LMBLR 20
>::KF;8P
RLClONAL NLWS, PLOPLL, NUMBLRS AND LVLN1S
BLN8@K
H8K8I
98?I8@E
$85.9 bn
QAR1.4 bn
372.5%
12%
1he record oil earninqs lorecasL lor KuwaiL in 20,
up lrom around $6.7 billion in 200, alLer a surqe in
crude prices.
Hallyear prolLs lor 20 aL OaLar's biqqesL Lelecom
operaLor OLel, a 6.7 per cenL increase compared Lo
Lhe lrsL six monLhs ol 200.
1he percenLaqe LhaL Lhe CovernmenL ol Bahrain's laLesL
monLhly lslamic bonds, or Sukuk, was oversubscribed,
accordinq Lo arranqer CenLral Bank ol Bahrain.
1he rise in OaLar's hoLel occupancy in 200 compared
Lo Lhe year belore as business Lravellers ouLnumbered
LourisLs, lqures lrom Lhe OaLar SLaLisLics AuLhoriLy
showed.
L8<lejZXk_\[Yp
\Zfefd`Zjkfidj
1he UAL has shruqqed oll Lhe impacL ol Lhe recenL qlobal economic
Lurmoil and posLed some ol Lhe besL lnancial sLaLisLics in Lhe CCC.
LaLesL lqures show Lhe number ol companies qoinq public in Lhe
UAL in 20 ouLpaced Saudi Arabia, which dominaLed markeLs lasL
year. ProlLs aL UAL lrms and Lourism numbers also rebounded,
seLLinq Lhe counLry up lor a sLronq end Lo Lhe year.
Accordinq Lo consulLanLs PwC, Lhe LmiraLes secured Lhree ouL ol Lhe
lour iniLial public ollerinqs (lPO) in Lhe lrsL hall ol 20, represenLinq
7^ per cenL ol Lhe LoLal capiLal raised. 1he number ol lPOs in Lhe CCC
dropped by 50 per cenL lrom eiqhL in Lhe lrsL hall ol 200.
CCC counLries have sLruqqled Lo cope wiLh Lhe lallouL lrom
mounLinq poliLical Lensions in Lhe Middle LasL and qloomy economic
daLa ouL ol Lurope and Lhe US. YeL Lhe UAL has en|oyed a 'sale haven'
sLaLus as visiLors and invesLors shun resLive parLs ol Lhe reqion.
1he counLry's corporaLe prolLs saw a robusL recovery, |umpinq
22 per cenL in Lhe second quarLer compared Lo 200. ProlLs
sLrenqLhened Lo $2.^ billion in O2 aqainsL $.9 billion lasL year,
research lrom Lhe KuwaiL Financial CenLre showed.
Visa cardholders spenL $3. billion lasL year in Lhe UAL, a 20.3 per
cenL |ump lrom 2009. Visa said Lhe UAL can expecL some ol Lhe
world's "sLronqesL inbound Lourism qrowLh" over Lhe nexL lve years.
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14-22 GCC Today.indd 14 8/24/11 4:37:18 PM
CULF BUSlNLSS&(,
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FD8E
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23%
OR21 m
477
7.3%
1he drop in Saudi's lood imporLs in Lhe lrsL hall ol 200 alLer sLockpilinq
qrain. 1he kinqdom is Lhe world's larqesL imporLer ol barley.
1he pro|ecLed secondhall prolL ol
Omani lender Bank Dholar compared
wiLh OR5.6 million in Lhe same period in
200, a rise despiLe a $68 million lawsuiL
by rival Oman lnLernaLional Bank.
1he number ol LmiraLis Lo reqisLer Lo run lor hall Lhe
seaLs in Lhe ^0 member Federal NaLional Council, Lhe
UAL's secondever elecLion.
1he rise in UAL liqhLs in July aqainsL Lhe same monLh
in 200, accordinq Lo sLaLisLics lrom Lhe Ceneral Civil
AviaLion AuLhoriLy.
14-22 GCC Today.indd 15 8/24/11 4:37:28 PM
(-&SLP1LMBLR 20
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Bahrain CDP Ialls
on unrest
UAE domestic airline
takes oII
Kuwait tops CCC
investment in Dubai
bo|ro|r's ecoror|c outut
1roe1 l.4 er cert 1ur|r
t|e rort|s of o||t|co| urrest,
overrrert hures s|oW. !|e
courtr]'s C| fe|| fror t|e
hro| uorter of |ost ]eor to
t|e hrst t|ree rort|s of c0ll,
occor1|r to 1oto fror t|e
Certro| lrforrot|cs Oror|sot|or.
lt |s t|e courtr]'s hrst uorter|]
cortroct|or s|rce t|e |o|o|
hrorc|o| cr|s|s ||t |r |ote c008.
KuWo|t|s ore t|e ||est |u]ers
of u|o| reo| estote, ro||r u
reor|] o0 er cert of urc|oses
fror CCC |rvestors, occor1|r to
1eve|oer A|AC |roert|es. Over
t|e |ost s|i rort|s rore KuWo|t
c|t|ers |ou|t roert] |r t|e
er|rote t|or or] ot|er Cu|f stote
ofter |rvestor corh1erce |r t|e
UA| eo|e1.
On the Radar Saudi building contracts up 156 per cent
Saudi Arabia more than doubled construction contracts in the first half of 2011 as it continued to
struggle with soaring housing demand. The kingdom, the largest real estate market in the GCC,
awarded SR84.2 billion worth of building mandates in the first six months, up from SR33 billion
last year, a 156 per cent rise, according to Jeddah-based bank NCB.
Despite vast spending pledges from the government, Saudi lacks adequate housing supply and
a developed mortgage market. Demand from the countrys fast-growing population has fuelled
property prices in recent years and aggravated inflation.
King Abdullah Bin Abdul Aziz vowed recently to spend 30 per cent of the Saudis annual
economic output (about $130 billion) on mass housing, job creation and other measures.
A new lslamic invesLmenL bank openinq nexL year in Bahrain
is planninq Lo raise $00 billion in iLs lirsL 0 years Lo lund
pro|ecLs in Muslim counLries.
1he lender, scheduled Lo beqin operaLions in January,
is expecLed Lo challenqe Lhe Lop underwriLers in Lhe lslamic
bond, or Sukuk, markeL.
1he bank will sLarL wiLh $0 billion ol capiLal and help
provide linancinq lor proliLable venLures amonq Lhe
57 member naLions ol Lhe OrqanisaLion ol Lhe lslamic
Conlerence, accordinq Lo a Bloomberq reporL.
1he lack ol insLiLuLions wiLhin Lhe $ Lrillion lslamic linance
indusLry capable ol handlinq larqe deals spurred Malaysia
Lo announce a licence lor Asia's lirsL ShariacomplianL
'meqa' bank.
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!|e UA|'s hrst 1orest|c
osserers o|r||re |s set to
|ourc| |r eor|] c0lc. |osterr
|iress, o r|vote coror],
so|1 |t W||| correrce
oerot|ors out of |ujo|ro|
lrterrot|oro| A|rort or1 offer
reu|or serv|ces |rs|1e t|e
courtr]. A| Hojjor Av|ot|or,
ore of t|e ortrers |r |osterr
|iress, |s |r to||s to ro|se
;1.S r||||or to fur1 t|e |eos|r
of o|rcroft.
(''9E98?I8@E@JC8D@:
D<>8$98EB@EK?<NFIBJ
Clarication
In last month's issue, it
was stated that Eng. Issa M.
Al Mohannadi, CEC oI Catar's
Mshreib Properties, was in
London Ior a Iundraising
roadshow. >lc]9lj`e\jj
would like to clariIy that
Mohannadi was in London
as a speaker at MEED Catar
InIrastructure Pro|ects
20!! at the invitation oI the
organisers and his visit was
not related to Iundraising
Ior Msheireb in any way.
14-22 GCC Today.indd 16 8/24/11 4:37:31 PM
(/&SLP1LMBLR 20
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:FEKI8:KKFD<<K
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How to rule
the world like...
Oman has found 75,000 local job seekers work in the public and private sectors,
according to a government minister.
Almost 56,000 Omanis have started work and efforts are underway to complete
the recruitment of the remaining 19,000, said Minister of Manpower Sheik
Abdullah Bin Nasser Al Bakri. More than 32,000 have found placements in the
private sector, while the public sector provided work to about 23,000 people.
Earlier this year, the Arab Gulf state witnessed demonstrations by Omani
nationals demanding more job opportunities.
UAL enerqy lirm Dana Cas has picked lour inLernaLional bankinq qianLs Lo arranqe
iLs planned lisLinq on Lhe London SLock Lxchanqe.
1he company has mandaLed Bank ol America Merrill Lynch, CiLi, DeuLsche Bank
and JP Morqan, accordinq Lo 1homson lFR A sLable SepLember on qlobal markeLs
could see a lisLinq come in OcLober or November, analysLs said.
Dana, Lhe Cull's only lisLed naLural qas company, said in April iL would seek a
London lisLinq Lo qain a wider invesLor base and boosL iLs sLock value.
J<C=$J8:I@=@:<
Runninq Lhe world's larqesL sLeelmaker hasn'L
qone Lo MiLLal's head. ln 2009, he Look Lhe
commendable sLep ol cuLLinq his pay by 2 per
cenL as company proliLs slumped.
K@D@E>@J<M<IPK?@E>
1he MiLLal lamily Look a sLake in Lhe now
Premier Leaque new boys Oueens Park
Ranqers in December 2007, Lhree monLhs
alLer billionaire LcclesLone and Flavio
BriaLore bouqhL Lhe Leam lor $.7 million.
JK@:BKFN?8KPFLBEFN
MiLLal sLarLed in Lhe lamily sLeel business in
lndia in Lhe 970s and branched ouL on his
own in Lhe same indusLry in 99^. He's now
worLh upwards ol $3 billion.
<P<=FI898I>8@E
1owards Lhe sLarL ol his career he iniLially
bouqhL up sLeel mills on Lhe cheap in
LasLern Lurope. He earned $. billion lor
sellinq his inLeresL in a Kazakh relinery in
December 200.
:I<8K<PFLIFNE;<D8E;
He's enhancinq demand lor luxury eco
properLies in Lhe UK by buyinq Lhe 3^0
acre counLry esLaLe Alderbrook Park
ouLside London and buildinq a qreen
lriendly mansion lor $^0 million.
I8@J<<EKI<GI<E<LIJ
MiLLal's dauqhLer Vanisha acquired a sLake
in Roc CapiLal ManaqemenL. Meanwhile,
dauqhLerinlaw Meqha owns Cerman
lashion house Lscada.
Oman nds 75,000 jobs after protests
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CLO ol ArcelorMiLLal
C8BJ?D@D@KK8C
Doha Cables has been awarded a OR1.8
billion riyal ($494 million) contract by
Qatar General Electricity & Water Corp
(Kahramaa), as the country tries to meet
rapidly growing power demand. Doha
Cables is to double its production
capacity from a current 40,000
tonnes of copper annually to
fulfill the contract to supply
low and medium voltage
power cables. Kahramaa
forecasts demand for
power in Qatar will
almost double to 8
gigawatts by 2013.
14-22 GCC Today.indd 18 8/24/11 4:37:35 PM
CULF BUSlNLSS&(0
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Saudis $20bn chemical plant plans unveiled
Saudi Aramco and Dow Chemical have outlined plans to build
one of the worlds largest chemicals plants and float the $20
billion joint venture ahead of its planned start-up in 2015.
The partners will spend around $12 billion building the plant,
located at Jubail on Saudi Arabias Persian Gulf coast.
It will produce high-margin chemicals and plastics for fast-
growing Asian and Middle East markets, with another $8 billion
earmarked for third-party investors and contingencies.
Andrew Liveris, Dows chairman and chief executive, said in an
interview that the complex would boost the sales contribution of
emerging markets from 28 per cent to the mid-30s and continue
its diversification from lower-margin commodity products.
Dow and Saudi Aramco expect to split annual earnings of $1
billion from sales of $10 billion after their ownership is reduced
to around 40 per cent each following a stock market listing in
Saudi slated for 2013 or 2014.
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On the Radar
Dubai will hosL iLs lirsL FuLure CiLies
conlerence and exhibiLion Lhis monLh,
Lakinq place lrom 27 29 SepLember,
colocaLed wiLhin Lhe emiraLe's
CiLyscape Clobal evenL. JoinLly
orqanised by Lhe Dubai MunicipaliLy
and Lhe LnvironmenLal CenLer lor
Arab 1owns, Lhe lorum aims Lo uniLe
public and privaLe secLor sLakeholders
in acLive discussion Lo Lackle Lhe
challenqes urban leaders lace in
implemenLinq susLainable urban qrowLh.
"1oday we live in a lasL chanqinq world wiLh even lasLer chanqinq Lechnoloqy. 1his evenL
will hiqhliqhL besL pracLices we need Lo implemenL Lhe besL luLure ciLies qlobally," said Lnq.
Mohamed Al Noori, direcLor ol Lhe LnvironmenLal CenLer lor Arab 1owns. "FuLure CiLies will
help ensure LhaL qovernmenLs and inhabiLanLs share Lhe same vision lor buildinq qreen,
ellicienL and susLainable places Lo live."
Hiqhlevel speakers lrom Lhe UniLed NaLions, Lhe lnLerqovernmenLal Panel lor ClimaLe
Chanqe, Birminqham CiLy Council, Lhe Sao Paulo CiLy Council, Dubai LxporLs and Lhe Arab
Urban DevelopmenL lnsLiLuLe have already been conlirmed lor FuLure CiLies, which will Lake
place aL Lhe Dubai lnLernaLional LxhibiLion CenLre.
Sponsored by >lc]9lj`e\jj maqazine, Lhe conlerence aims Lo supporL ciLy planners as
Lhey conlronL mass ciLy miqraLion and work Lo creaLe an inlrasLrucLure Lo supporL vasL
populaLion qrowLh, while also beinq sensiLive Lo Lhe preservaLion ol culLural heriLaqe and
exisLinq sLrucLures.
HL Hussain Nasser LooLah, Lhe direcLor qeneral ol Dubai MunicipaliLy, will be presenLinq
an overview ol Lhe luLure vision lor Dubai and iLs developmenL sLraLeqy aL Lhe evenL.
"1here is a real need lor lorums where ciLies lrom around Lhe world can come LoqeLher Lo
discuss sLraLeqies and deLermine besL pracLice qoinq lorward. Dubai MunicipaliLy and Lhe
LnvironmenLal CenLer lor Arab 1owns are proud ol Lhe siqnilicanL sLeps we have Laken Lo
launch qreen policies," he said. "While qreaL advances have been made in 'qreeninq Dubai'
in Lhe lasL lew years, Lhere is sLill much more Lo be done."
=LKLI<:@K@<J<M<EKKFJG8IB<EM@IFED<EK8C;<98K<
EVENT focus
1aqa buoyed by UK
producLion
JXl[`fg\ejb`\jjk`cc
fek_\kXYc\
!|e Ur|vers|t] of bo|ro|r |os
1|sr|sse1 c00 stu1erts, oco1er|cs
or1 ot|er er|o]ees for |rc|1erts
correcte1 to t|e recert urrest.
Accor1|r to ||ro||r
|o|orre1 Joro||, t|e ur|vers|t]'s
res|1ert, t|e 1|sr|sso|s o|so
|rc|u1e o1r|r|strot|ve stoff or1
secur|t] uor1s. He to|1 stote
reWs oerc] bNA t|ot t|e 1oroe
couse1 |] reretfu| |rc|1erts' ot
t|e ur|vers|t] or |orc| l1 toto||e1
;7c8,000. So for lc0 stu1erts
|ove |eer soc|e1, W|t| orot|er
l0 ocu|tte1 W|||e orot|er oS
stu1erts refuse1 to |e uest|ore1.
A|u |o|| Not|oro| |rer] Co.,
|etter |roWr os !oo, soW |ts
secor1uorter ret roht rore
t|or 1ou||e to ;ll7 r||||or os
o|| or1 os reverues soore1 or
|||er erer] r|ces or1 or
|rcreose |r |ts UK o|| ro1uct|or.
!oo so|1 ro1uct|or fror |ts UK
Nort| Seo oerot|ors reW c er
cert corore1 W|t| t|e sore
er|o1 |ost ]eor ofter |rrov|r
efhc|erc] or1 overcor|r Woter
|rject|or |ssues.
Sou1| Aro||o's Cerero| Aut|or|t]
of C|v|| Av|ot|or (CACA) |s st|||
stu1]|r o |or t|ot Wou|1 o||oW
Cu|f o|r||re coror|es to oerote
1orest|c h||ts |r t|e ||r1or,
or ofhc|o| so|1. !|e out|or|t]
|osr't rejecte1 t|e |or, W||c|
|s st||| ur1er cors|1erot|or |] o||
|rvo|ve1 ort|es |r t|e ||r1or,
K|o|e1 o|K|o||or], o CACA
so|esror so|1.
He 1|1r't sec|f] W|er t|e
out|or|t] W||| reoc| o 1ec|s|or
or t|e rooso|, W||c| Wou|1
|rrove 1orest|c o|r trorsort
serv|ces |r t|e Aro| Wor|1's
|orest ecoror].
9X_iX`ei\j)''lei\jk
jkl[\ekjXe[jkX]]
14-22 GCC Today.indd 19 8/24/11 4:37:39 PM
)'&SLP1LMBLR 20
UAL exporLs rose 59
per cenL yearonyear
in April boosLinq Lhe
nonoil Lrade size Lo Dhs
68.9 billion, a 7 per cenL
increase, on Lhe back ol
sLronq indusLrial ouLpuL
and compeLiLiveness ol
exporLs in inLernaLional
markeLs.
UAL exporLs reached
Dhs0.3 billion in Lhe
monLh and reexporLs
recorded an increase ol
^ per cenL yearonyear Lo Dhs5.8 billion. lmporLs rose
per cenL year on year Lo Dhs ^2.9 billion. However, Lrade
plunqed 2 per cenL when compared monLhLomonLh, as
Lhe counLry's Lrade reached Dhs87.220 billion in March.
Accordinq Lo Lhe Federal CusLoms AuLhoriLy (FCA) qrowLh
in nonoil loreiqn Lrade durinq Lhe lirsL quarLer "conlirmed
Lhe naLional economy's course ol recovery and resLoraLion
ol Lhe preworld linancial crisis qrowLh raLes. 1he rise in
exporLs and reexporLs rellecL Lhe posiLive Lrends in Lerms
ol producLiviLy, and hiqher compeLiLiveness lor naLional
producLs in qlobal markeLs," said Lhe FCA.
UAE M0NTHLY EXP0RTS
T0UCH DHS6B.9 B!LL!0N
GCC and the world
$363bn
JK8KJ
1HL ADDl1lONAL CON1RlBU1lON 1HA1 CCC
WOMLN COULD HAVL 1O 1HL LCONOMY BY
WORKlNC FROM HOML (CASS BUSlNLSS SCHOOL).
Saudi sins $373m pcIymers
deaI with Cerman hrm
Saudi Arabia's Sahara
PeLrochemicals Company
has sLruck a deal wiLh
Cerman lirm Lvonik
Company Lo build a $373
million polymers planL.
Sahara, which in July
announced iL had doubled
iLs secondquarLer proliLs,
said one ol iLs subsidiaries,
Saudi Acrylic Acid
Company, had siqned a
shareholdinq aqreemenL
wiLh Lvonik. 1he
superabsorbenL polymers
planL will be consLrucLed in
Jubail lndusLrial CiLy wiLh
Sahara Lakinq 75 per cenL
owned and Lvonik a 25 per
cenL sLake. 1he pro|ecL is
slaLed Lo sLarL producLion
in Lhe Lhird quarLer ol 203.
The UAE Central Bank has
re-affirmed its commitment
to maintain its currencys
peg to the US dollar, despite
a backdrop of rising global
economic uncertainty that has
caused the greenback to fall
against other major currencies.
On the issue of the
exchange rate policy, the Board
of Directors affirmed that the
peg of the dirham to the US
dollar is continuing without
change, the central bank said
in a statement.
The move follows news
that Bahrains central bank
would stick with the dollar
peg, despite the US currencys
recent woes and a historic
downgrade of US debt by
ratings firm Standard & Poors.
UAE sticks with dollar despite trouble
0atar $2.2bn steeI prcjects
sheIved
OaLari sLeelLolerLiliser conqlomeraLe lndusLries OaLar, or
lO, has puL on hold Lwo planned sLeel planLs in Lhe indusLrial
ciLy ol Mesaieed, worLh OR8. billion, due Lo problems securinq
naLural qas lor Lhe pro|ecLs, Lhe company said.
"1he markeL should also be aware LhaL lollowinq exLensive
discussions wiLh OaLar PeLroleum, iL has been aqreed Lo puL
Lhe OaLar SLeel Phase 2 and 3 pro|ecLs on hold due Lo naLural
qas allocaLion resLricLions," lO said in a Lradinq updaLe. "lL is
our inLenLion Lo revisiL Lhe pro|ecLs when sullicienL naLural
qas allocaLions have been secured," Lhe Dohabased
conqlomeraLe added.
1he news is a blow lor lO's expansion plans aL a Lime ol
surqinq domesLic demand lor Lhe meLal in OaLar.
N?8KK?<:<EKI8C98EB?<I<@J
;F@E>@J<==<:K@M<CP>IFN@E>LG%
9I<E;8EDFCFE<P#Ylj`e\jj[\m\cfgd\ekf]]`Z\iXk;lYX`$
YXj\[Dfe[`Xc#i\jgfe[`e^kfi\gfikjk_Xkk_\L8<:\ekiXc9Xeb`j
[\c\^Xk`e^gfn\ijfm\iYifb\iX^\c`Z\eZ\jkfj\Zfe[Xipi\^lcXkfij%
SOAPBOX
C
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1
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l
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14-22 GCC Today.indd 20 8/24/11 4:37:42 PM
intelligent
Automatic Doors.
Superior Operators. Undeniable Intelligent. Swiss Quality.
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Ins MidEast_206x270mm_oR_8_11_4.indd 1 23.08.11 11:19
))&SLP1LMBLR 20
CCC T0DAY
Oman's economy qrew by a laster 5.3 per cent in the lirst
three months ol this year thanks to robust oil prices, linance
ministry data showed. lnllation edqed down in June lrom a
twoyear hiqh to lour per cent, touchinq the lower end ol the
central bank's lorecast.
1he small nonOPLC oil producer, which laced several
public protests this year demandinq more |obs and an end to
corruption, posted qrowth ol .8 per cent in nominal terms
yearonyear in the last quarter ol 200.
FdXe>;GlgXj`e]cXk`fe[ifgj
Xd`[gifk\jkj
Drydocks World, a unit of Dubai World, said a proposed $2.2
billion loan deal with lenders expected to be completed by the
end of April may not be reached this year. Discussions [with
banks] are still ongoing and it has not been completed yet,
said Khamis Juma Buamim, chairman of Drydocks World. I
cant confirm if we will reach a restructuring agreement this
year, he added, when asked if he was confident an agreement
would be struck before the loan comes due in November.
Dubai Worlds shipbuilding unit is restructuring a $2.2 billion
facility taken in October 2008. The loan comprises a $1.7 billion
three-year loan and a five-year $500 million loan. The Dubai-
based ship and rig builder said earlier this year that it expected
to complete the restructuring by April 30 and had agreed on the
headline terms with banks.
Drydocks $2.2bn hits
further delays
30
J<:FE;JKFD8B<J<EJ<F=%%%
K?<>CF98C<:FEFDP
Hcw sericus is the US
dcwnrade in ycur cpinicn?
It was expected and people
will continue to invest in
treasuries whether or not its
rating is AAA, AA or AA+.
Dont forget that when
Japan lost its AAA years
ago, some market operators
were puzzled too. The US
is the richest economy and
the most indebted one.
What is certain is that other
countries will lose this gold
label within the next two years.

Hcw wiII the US dcwnrade affect the CuIf eccncmy?
The Gulf is directly affected by hydrocarbon
revenues, where two factors are key: the currency in
which those revenues are generated; and the level
of demand for the Gulfs oil and gas, most of which
flows to East Asia. The demand side of the equation
remains firm with a strong outlook going forward.
In the near term, oil is likely to remain denominated
in dollars and it is unlikely that the negative equity
market and consumer sentiment reaction to the US
downgrade will cause a permanent decrease in
Asian demand for oil, so the impact of the US
downgrade on Gulf economies will be indirect
and muted at best.
What is the IikeIihccd cf a IcbaI dcubIe dip?
Recent macro data suggest significant slow-down
on both sides of Atlantic, Japanisation of Western
economies is the most likely outcome. As for
emerging countries, theyve been quite immune so
far and we need to have more data in order to get
a firmer direction but recent decrease in recent PMI
figure for India/Brazil is pointing to the same disease
to a much lesser extent.
Hcw has the Arab Sprin affected investcr sentiment
tcwards the reicn?
The Arab spring has led to additional political
uncertainty in the region and will likely fuel a lower
growth rate linked to a drop in tourism amongst
other factors. It is temporary and it will not last
forever. The real concern for bond investors has been
the collapse of Dubai World. This has a memory
effect for the bulk of investors.
PH!L!PPE BERTHEL0T
Head ol credit
manaqement at Natixis
Asset Manaqement
14-22 GCC Today.indd 22 8/24/11 4:37:43 PM
AED 85,000 for full programme inclusive of an international feld trip to Milan, Paris, Shanghai or Hong Kong
Available as 1 year full-time or 2 years part-time
Middlesex University London degree, completed here in Dubai
5 NEW specialisations to choose from
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Evening classes in Dubai Knowledge Village
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The feld trip was an extremely enriching
experience, especially with the choice of Milan
the fashion capital of the world. We would
not normally be exposed to this industry under
normal circumstances and in keeping in line
with the Middlesex Universitys tradition of
being so distinctively different, this was
another resounding success for all concerned.
It was perfect academically enriching trip and
such a bonus for all of us students
Youhan Doctor
MBA Student, Final Year
The Middlesex MBA student @ the Milan Trip
)+&SLP1LMBLR 20
FG@E@FE
COMMENT
As Wall SLreeL woes hiL Lhe Cull markeLs, invesLors are advised
Lo qo bearish and Lap delensive, innovaLive secLors.
Matein Khalid is fund manager in a
royal investment ofce and a writer
in nance and geopolitics.
K?<;8IBE<JJ9<=FI<;8NE
i
T IS IRONIC THAT THE CURRENT EMERGING
markets trauma emanated from the US and the EU, unlike the Mexican,
Russian and Asian currency meltdowns in the 1990s. The $30 fall in
Brent crude oil, the spike in volatility and the plunge in stock market
indices in unison is a classic index of risk aversion. The August trauma
on the MENA stock market indices suggests another bear market. Yet I
doubt this scenario will happen.
One, the US has entered a soft patch, not a double dip recession
while Asian growth is still robust, if decelerating. This means that oil
demand will continue to rise, (albeit at a slower pace), not contract.
This is totally unlike the case in September 2008, when the failure of
Lehman Brothers triggered the worst, synchronised global recession
since the Great Depression. Two, Libyan oil exports have now ceased
and geopolitical supply shocks will anchor the oil market. Three,
the most crucible variable is Saudi oil policy. The Saudis ignored the
OPEC quota system at the last Vienna conclave and unilaterally raised
production to almost 10 million barrels a day (MBD) in June. Yet the
financial mayhem in the Eurozone now means the possibility of an oil
glut, a prospect anathema to the kingdoms planners, whose budget
breakeven price rose to $90 after the governments $130 billion social
welfare spending programme. A U-turn in Saudi oil policy will put
a floor under the free fall in oil prices, possibly in the $75-85 range.
This, in turn, will indicate a cyclical bottom in GCC stock indices and
MENA sukuk.
' ' ' ' '
' '
' ' '
' ' ' '' '
' ''

During times of financial stress, high beta bank,
property developer, contracting and oil service
shares should be sold as they have the highest
correlation to global markets and Wall Street risk
aversion metrics. Saudi petrochemicals or Qatari
LNG companies, for instance, are natural high beta
shares whose values will be gutted by a fall in
commodities prices. It is also best to avoid illiquid
markets, such as Bahrain and Oman, when the
grizzlies rule the roost.
Dubais DFM index is too heavily weighed to
Emaar and the banks, thus vulnerable to global bear
runs. This means investors should take advantage
of share bargains in defensive, high dividend growth
sectors. This means Saudi telecoms and the most
innovative, high speed data centric, high growth
Saudi telecom is Mobily, the second Saudi mobile
phone operator after the incumbent STC. Mobily
is still in growth mode, with 29 per cent annual
increases in net income in its latest earnings report.
Saudi Arabia is the largest, most exciting broadband
market in the Middle East. As Mobily offers a three
Saudi Riyal (SR) per share dividend, I see no reason
why its shares cannot trade as high as 58 60 SR
since its footprint, business model broadband focus
and 25 per cent growth should easily command
a higher multiple. Any fall in Mobily share price
to the 40-42 range in case Wall Street contagion
deteriorates could make an attractive entry point for
GCC investors.
GCC and MENA debt/sukuk are not a safe
haven during times of high risk aversion and a
fall in crude oil prices. Yet deflation risk in the US
will force the Federal Reserve to extend its epic
monetary easing policy until 2011. Low dollar
rates will anchor GCC credit spreads, which will
widen as oil prices fall, new issues go into the ice
age and fund managers scramble to raise cash. It
was extremely prudent for Dubai to compete its
corporate restructuring to avoid facing possible
rollover risk as debt funding markets in MENA
seize up, as in 2009. High budget breakeven oil
prices will also make Gulf sukuk yields rise as Brent
oil prices fall. It makes no sense to bottom fish for
value amid a global financial crisis. It is always
darkest before dawn.
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24 Column Matein.indd 24 8/24/11 4:36:55 PM
)+&SLP1LMBLR 20
FG@E@FE
COMMENT
As Wall SLreeL woes hiL Lhe Cull markeLs, invesLors are advised
Lo qo bearish and Lap delensive, innovaLive secLors.
Matein Khalid is fund manager in a
royal investment ofce and a writer
in nance and geopolitics.
K?<;8IBE<JJ9<=FI<;8NE
i
T IS IRONIC THAT THE CURRENT EMERGING
markets trauma emanated from the US and the EU, unlike the Mexican,
Russian and Asian currency meltdowns in the 1990s. The $30 fall in
Brent crude oil, the spike in volatility and the plunge in stock market
indices in unison is a classic index of risk aversion. The August trauma
on the MENA stock market indices suggests another bear market. Yet I
doubt this scenario will happen.
One, the US has entered a soft patch, not a double dip recession
while Asian growth is still robust, if decelerating. This means that oil
demand will continue to rise, (albeit at a slower pace), not contract.
This is totally unlike the case in September 2008, when the failure of
Lehman Brothers triggered the worst, synchronised global recession
since the Great Depression. Two, Libyan oil exports have now ceased
and geopolitical supply shocks will anchor the oil market. Three,
the most crucible variable is Saudi oil policy. The Saudis ignored the
OPEC quota system at the last Vienna conclave and unilaterally raised
production to almost 10 million barrels a day (MBD) in June. Yet the
financial mayhem in the Eurozone now means the possibility of an oil
glut, a prospect anathema to the kingdoms planners, whose budget
breakeven price rose to $90 after the governments $130 billion social
welfare spending programme. A U-turn in Saudi oil policy will put
a floor under the free fall in oil prices, possibly in the $75-85 range.
This, in turn, will indicate a cyclical bottom in GCC stock indices and
MENA sukuk.
' ' ' ' '
' '
' ' '
' ' ' '' '
' ''

During times of financial stress, high beta bank,
property developer, contracting and oil service
shares should be sold as they have the highest
correlation to global markets and Wall Street risk
aversion metrics. Saudi petrochemicals or Qatari
LNG companies, for instance, are natural high beta
shares whose values will be gutted by a fall in
commodities prices. It is also best to avoid illiquid
markets, such as Bahrain and Oman, when the
grizzlies rule the roost.
Dubais DFM index is too heavily weighed to
Emaar and the banks, thus vulnerable to global bear
runs. This means investors should take advantage
of share bargains in defensive, high dividend growth
sectors. This means Saudi telecoms and the most
innovative, high speed data centric, high growth
Saudi telecom is Mobily, the second Saudi mobile
phone operator after the incumbent STC. Mobily
is still in growth mode, with 29 per cent annual
increases in net income in its latest earnings report.
Saudi Arabia is the largest, most exciting broadband
market in the Middle East. As Mobily offers a three
Saudi Riyal (SR) per share dividend, I see no reason
why its shares cannot trade as high as 58 60 SR
since its footprint, business model broadband focus
and 25 per cent growth should easily command
a higher multiple. Any fall in Mobily share price
to the 40-42 range in case Wall Street contagion
deteriorates could make an attractive entry point for
GCC investors.
GCC and MENA debt/sukuk are not a safe
haven during times of high risk aversion and a
fall in crude oil prices. Yet deflation risk in the US
will force the Federal Reserve to extend its epic
monetary easing policy until 2011. Low dollar
rates will anchor GCC credit spreads, which will
widen as oil prices fall, new issues go into the ice
age and fund managers scramble to raise cash. It
was extremely prudent for Dubai to compete its
corporate restructuring to avoid facing possible
rollover risk as debt funding markets in MENA
seize up, as in 2009. High budget breakeven oil
prices will also make Gulf sukuk yields rise as Brent
oil prices fall. It makes no sense to bottom fish for
value amid a global financial crisis. It is always
darkest before dawn.
l
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24 Column Matein.indd 24 8/24/11 4:36:55 PM
01216 Gulf Business FP 8/18/11 1:02 PM Page 2
Composite
C M Y CM MY CY CMY K
)-&SLP1LMBLR 20
FG@E@FE
COMMENT
Biq brand companies are led by leaders wiLh a sLronq personal
brand. 1herelore manaqinq your own repuLaLion is key.
N?8KJPFLIC<8;<IJ?@G9I8E;6
s
HOULD A LEADER BE CONCERNED ABOUT
his or her personal brand as a leader?
This question often evokes polar opposite responses. Some argue
intensely that a leader, especially a CEO, should only be concerned
with the corporations brand. Others argue that it is imperative that
leaders spend time building their own brand believing that leaders
dont belong to any company for life, and that their main affiliation
isnt to any particular job.
Before we continue to explore the answer, lets agree to a common
understanding on what is meant by leadership brand. It is the
packaging of the asset that relates to a leaders personification, creating
an indelible impression. Leaders should not be solely defined by their
job title or confined by a job description. In 1997, Tom Peters was
among the first to argue that leaders should be concerned with and
build their personal brand. It is important to highlight that a leaders
brand is not self-promotion; it is the positioning of the leader and his/
her career.
' ' '
' '
' '
' ' '
' '''

'
''
To get an expert insight on personal branding,
I turned to Phenomena ME, which specialises in
personal and corporate branding. They quickly
pointed out that a leaders brand couldnt be
separated from the leader for the simple reason
that a leader is a person. They also added that
corporations should leverage the personal brand
of their leaders to build the corporate brand. Jeff
Immelt of GE, Howard Schultz of Starbucks and
Michael Eisner, former CEO of Disney, are company
brand ambassadors who also built their own
personal brand. That short list is representative
of the reality that nearly all of the Fortune 500
leaders are brands in and of themselves.
As a business leader you know that the branding
of your business is important and the same priority
should be true for yourself. So, it appears that it is
acceptable for leaders to build their personal brand
while they are representing their companys brand.
The problem arises when leaders work to build
their personal brand at the expense of, or avoidance
of, the corporate brand.
So, starting today, realise that you are a brand
and that you can benefit by a positioning strategy
to advance your own brand. You will need to think
like a brand manager and answer this question:
What is it that you do that makes you different?
This will help you to figure out how to distinguish
yourself from all the other very smart people
walking around who are similar to you.
Maybe we should refer to building a personal
brand as managing your reputation the opinion
that others have based upon your identity. A
reputation separated from experience is fraud, so a
personal brand needs to be built on reality. You no
longer live in a time when reputation is constrained
by organisational walls. In the decade of social
media, as a leader you should take an active role
in managing your reputation. Just as with the
corporate world, people make buying decisions
based upon reputation, as a leader they choose to
follow you based upon your brand reputation.
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Dr Tommy Weir, advisor on
fast-growth and emerging
market leadership, and
author of The CEO Shift
26 Column Weir.indd 26 8/24/11 4:37:46 PM
C
M
Y
CM
MY
CY
CMY
K
Wellness ad Gulfbusiness.ai 1 8/14/11 2:33 PM
)/&SLP1LMBLR 20
FG@E@FE
COMMENT
1he new approach and chanqinq posLure ol requlaLors will
allecL reqional banks' qrowLh plans.
898C8E:@E>8:K=FI98EBJ
r
ECENT DIRECTIVES OF TWO CENTRAL BANKS,
in the UAE and Qatar, created ripples in the regional banking sector.
Especially noteworthy was the forceful and immediate way they were
announced. They were not part of a gradual seeding of regulatory
change that is more common for central banks in the region and
worldwide. These directives - Qatars directive to ban Islamic windows
in conventional banks and the UAEs decision to limit the size and fees
of personal loans and to ban unsolicited telemarketing - underscore the
changing behaviour of regulators, who are keen to be seen as proactive.
This new regulatory posture will prompt regional banks to realign
their operations periodically to be consistent with regulators
expectations. GCC banks in particular have emerged stronger after the
crisis, with capital levels that meet or exceed the higher regulatory
minimums. They will need to manage carefully as they balance the
challenges of meeting customer expectations with their desire to
diversify into new geographies, including other regional markets such
as Turkey. Any expansion will be best executed if carefully planned
with adequate strategic and regulatory due diligence, as evolving
regulation can create cause for consolidation in the banking industry.
The case for banking consolidation exists in the GCC, though it is
not quite as strong as the number of banks per country may suggest.
In the UAE for example, 56 banks serve a population of around eight
million. That is around 147,500 customers per bank, many of whom
are wealthy. The UAE has one of the highest per-capita incomes in
the world, leading to super-wealthy customers, and many banks have
@EJK<8;F=9<@E>FM<I$98EB<;#K?<
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CFNI8K@FF=98EBJKFGFGLC8K@FE%
just one branch in the country, effectively limiting
their reach. Most of the expansion plans of banks,
especially foreign banks, are subject to regulatory
directives. Instead of being over-banked, the region
is actually under-banked in many geographic areas,
such as in Saudi Arabia, which has a relatively low
ratio of banks to population and area.
Another regulatory imperative is the long-term
strategy to comply with Basel III requirements,
a strong set of mechanisms to mitigate risk in
the banking sector. Basel III aims to improve the
banking sectors ability to absorb shocks arising
from financial and economic stress. Financial
institutions would be perceived as being safer,
their cost of capital would decrease, and they
would be able to issue debt at a lower cost.
Though the regions regulatory model has been
effective through the crisis, it would be enhanced
by Basel III, as it gives teeth to regulation in case
of non-compliance. On the other hand, banks could
become less profitable and face constraints on their
ability to pay dividends, deploy capital, and pursue
rapid expansion.
Regional banks will need better capital planning
and increased profit retention, yet taking these
steps may impact credit growth and limit maturity
transformations. Disguising long-term loans as
medium-term or similar window dressing will
not work, as improved disclosure will be a key to
improving capital acquisition capabilities.
Bank executives would do well to be cautious
for now in adopting aggressive programmes aimed
at expansion and customer acquisitions. The
launch of new services and increasing employee
numbers might well be best put on hold or at least
slowed until an effective strategy to tackle the new
regulations is put in place. Banks that excel in
balancing the requirements of external regulation
with an internal desire for expansion will be better
poised to take advantage of the new normal.
Keeping in mind their own operating environments
and the changing posture of regulators, banks need
to determine how to arrive at the proper balance.
l
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Eugene A. Ludwig,
founder and chief executive of
Promontory Financial Group
28 Column Promontory.indd 28 8/24/11 4:39:51 PM
)/&SLP1LMBLR 20
FG@E@FE
COMMENT
1he new approach and chanqinq posLure ol requlaLors will
allecL reqional banks' qrowLh plans.
898C8E:@E>8:K=FI98EBJ
r
ECENT DIRECTIVES OF TWO CENTRAL BANKS,
in the UAE and Qatar, created ripples in the regional banking sector.
Especially noteworthy was the forceful and immediate way they were
announced. They were not part of a gradual seeding of regulatory
change that is more common for central banks in the region and
worldwide. These directives - Qatars directive to ban Islamic windows
in conventional banks and the UAEs decision to limit the size and fees
of personal loans and to ban unsolicited telemarketing - underscore the
changing behaviour of regulators, who are keen to be seen as proactive.
This new regulatory posture will prompt regional banks to realign
their operations periodically to be consistent with regulators
expectations. GCC banks in particular have emerged stronger after the
crisis, with capital levels that meet or exceed the higher regulatory
minimums. They will need to manage carefully as they balance the
challenges of meeting customer expectations with their desire to
diversify into new geographies, including other regional markets such
as Turkey. Any expansion will be best executed if carefully planned
with adequate strategic and regulatory due diligence, as evolving
regulation can create cause for consolidation in the banking industry.
The case for banking consolidation exists in the GCC, though it is
not quite as strong as the number of banks per country may suggest.
In the UAE for example, 56 banks serve a population of around eight
million. That is around 147,500 customers per bank, many of whom
are wealthy. The UAE has one of the highest per-capita incomes in
the world, leading to super-wealthy customers, and many banks have
@EJK<8;F=9<@E>FM<I$98EB<;#K?<
I<>@FE@J8:KL8CCPLE;<I$98EB<;@E
D8EP><F>I8G?@:8I<8J#JL:?8J@E
J8L;@8I89@8#N?@:??8J8I<C8K@M<CP
CFNI8K@FF=98EBJKFGFGLC8K@FE%
just one branch in the country, effectively limiting
their reach. Most of the expansion plans of banks,
especially foreign banks, are subject to regulatory
directives. Instead of being over-banked, the region
is actually under-banked in many geographic areas,
such as in Saudi Arabia, which has a relatively low
ratio of banks to population and area.
Another regulatory imperative is the long-term
strategy to comply with Basel III requirements,
a strong set of mechanisms to mitigate risk in
the banking sector. Basel III aims to improve the
banking sectors ability to absorb shocks arising
from financial and economic stress. Financial
institutions would be perceived as being safer,
their cost of capital would decrease, and they
would be able to issue debt at a lower cost.
Though the regions regulatory model has been
effective through the crisis, it would be enhanced
by Basel III, as it gives teeth to regulation in case
of non-compliance. On the other hand, banks could
become less profitable and face constraints on their
ability to pay dividends, deploy capital, and pursue
rapid expansion.
Regional banks will need better capital planning
and increased profit retention, yet taking these
steps may impact credit growth and limit maturity
transformations. Disguising long-term loans as
medium-term or similar window dressing will
not work, as improved disclosure will be a key to
improving capital acquisition capabilities.
Bank executives would do well to be cautious
for now in adopting aggressive programmes aimed
at expansion and customer acquisitions. The
launch of new services and increasing employee
numbers might well be best put on hold or at least
slowed until an effective strategy to tackle the new
regulations is put in place. Banks that excel in
balancing the requirements of external regulation
with an internal desire for expansion will be better
poised to take advantage of the new normal.
Keeping in mind their own operating environments
and the changing posture of regulators, banks need
to determine how to arrive at the proper balance.
l
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Eugene A. Ludwig,
founder and chief executive of
Promontory Financial Group
28 Column Promontory.indd 28 8/24/11 4:39:51 PM
G_Business Passport Local Arab 270x206-E.indd 1 6/19/11 5:55 PM
CULF BUSlNLSS&*(
FG@E@FE
COMMENT
Companies in Lhe reqion musL qrapple wiLh Lax modernisaLion and
more requlaLions as Lhe year proqresses.
K?<>LC=K8OI<MFCLK@FE
t
HE TAX LANDSCAPE OF THE MIDDLE EAST
is changing dramatically, both for local and foreign companies. Many
countries in the region are adopting new transfer pricing principles and
withholding tax regimes. The member states of the Gulf Cooperation
Council (GCC) have decided to introduce value added tax (VAT) in their
countries in the near future, a true indirect tax revolution. The number
of tax treaties of Middle Eastern states with countries in the rest of the
world is rapidly increasing. Countries such as Iraq, Kuwait, Oman and
Qatar have slashed corporate tax rates, while significant reductions
also took place in Egypt and Saudi Arabia. At the same time, in many
countries the tax base has been broadened, exemptions have been
curtailed and tax deductible expenses narrowed.
With the modernisation of their tax regimes, Middle East governments
are trying to make their countries more attractive to foreign investors.
Foreign direct investment (FDI) is seen by many authorities as a
cornerstone of development, hence the recent relaxation of restrictions
on FDI in the Middle East.
The desire for diversification is also present in the realm of taxes.
Many governments whose revenues are heavily dependent on the
energy sector want to increase the relative importance of more normal
tax revenues, including indirect taxes, such as VAT.
By and large, the modernisation of tax measures should be
welcomed, as they bring tax laws and regulations more in line with
mainstream international practices. For example, the OECD-favoured
arms length principle for transfer pricing is now enshrined in

'
'
'
''
legislation in Egypt, Oman, Qatar and Saudi Arabia
and recognised in practice by other countries in
the region.
That said, the positive effect of the often radical
fiscal changes will depend to a very large extent
on the way governments and companies prepare
and execute their implementation. First of all, it
is clear that the introduction of many new laws
and rules constitutes a significant challenge for
national fiscal authorities. It is encouraging to see
that various tax agencies in the region are taking
up the challenge by modernising themselves.
They are contracting experienced staff, training
existing personnel, increasing e-communication
with taxpayers and basing the selection of audit
targets on a risk-based analysis. Tax agencies could
also standardise and simplify their procedures
and clarify the way they intend to implement the
new rules. For taxpayers, especially multinational
companies, it is of paramount importance that
they know how tax authorities will interpret new
treaties, laws or regulations.
Companies doing business in the Middle
East should also adapt to the new tax realities.
In general, the tax changes are positive for
multinational enterprises as they will allow for
better alignment of their tax accounting in the
Middle East with their tax accounting in the
rest of the world. At the same time, it is clear
that companies must make a significant effort to
maximise the benefits and minimise the risks of
the profound changes.
Companies should ensure their documentation
in support of transfer pricing decisions is robust,
as this is likely to be an area of focus as tax
authorities increase their reviews of company
accounts, decisions and documentation. Even
with the best intentions on both sides, conflicting
interpretations and viewpoints are inevitable in a
situation of rapid and profound changes. Companies
should, therefore, prepare and adapt now.
l
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Sherif El Kilany, MENA
tax leader, Ernst & Young
31 E&Y.indd 31 8/24/11 3:32:14 PM
CULF BUSlNLSS&**
FG@E@FE
COMMENT
UAL ciLizens and residenLs have a willinqness Lo save,
buL lack undersLandinq in how Lo qo abouL iL.
J8M@E>KI<E;J
l
AST YEAR, AS PART OF OUR COMMITMENT
a savings culture in the region, we launched the groundbreaking
National Bonds Savings Index. The study was a first-of-its kind in
the UAE, and provided an insight into the savings habits of UAE
residents. The results showed a worrying lack of interest in savings
or understanding of their importance.
We recently announced the results of the second wave, the 2011
National Bonds Savings Index, which revealed that nine out of 10
UAE residents are not confident in their current savings, and almost
half of the population saved much less than they had planned to last
year. Furthermore, 71 per cent of respondents said that they do not
save regularly. Around one tenth of those surveyed declared not
made any attempts to save at all. Of the latter, three quarters blamed
rising expenses, liabilities and loans for their inability to save.
The Index amalgamates responses in three key areas (respondents
perception of their savings potential, the savings environment around
them, and their own financial stability in the near future) into base
values that can be used as a frame of reference to measure changes
-+G<I:<EKF=G<FGC<8;D@KK<;K?8K
K?<8DFLEKK?<PJ8M<@JLJL8CCPC<JJ
K?8E8=@=K?F=K?<@I@E:FD<#N?@C<
8DFE>L8<E8K@FE8CJ8E;8I89<OG8KJ
JG<:@=@:8CCP#+'G<I:<EK:C8@DKFJ8M<
C<JJK?8E8K<EK?F=K?<@I@E:FD<%
in savings sentiments. The 2011 National Bonds
Savings Index indicates an increase in savings
potential, and a decrease across all other
components among UAE residents compared
to 2010, with UAE Nationals and Western Expats
experiencing a drop in their savings sentiments.
Of the different nationality groups, Asian expats
and Arab expats showed an increase in their
savings sentiments over the past year.
Of those who do save, 64 per cent admitted
that the amount is usually less than a fifth of
their income, while among UAE nationals and
Arab ex-pats specifically, 40 per cent claim to
save less than a tenth of their income. Overall
the trends show that Westerners and Asians save
bigger amounts than other segments of the society.
Worryingly, respondents declared that they are
spending more money than last year on everyday
expenditures such as groceries, transportation,
household items and utilities. Different emirates
showed different patterns: Sharjah residents claim
they are spending more money on necessities
such as groceries, household items and childrens
education, while Abu Dhabi residents blame
increased expenditure on transportation, rents,
eating out and buying luxury items.
Overall, we have seen that while there
is a willingness to save, there is a lack of
understanding of how to save. These results
are worrying for our economy, and as a result,
National Bonds has pledged to launch a
nationwide financial education roadshow aiming at
educating the community on how to manage their
spending and plan their savings. The road show
should begin in the fourth quarter of this year.
This is not just about consumer attitude change.
The change in thinking needs to begin with the
corporations that employ people up to the banks
and financial institutions that advise them. We will
look forward to everyones support in our drive.
l
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Mohammed Qasim Al Ali, CEO,
National Bonds Corporation.
33 Column Al Ali.indd 33 8/24/11 4:42:21 PM
C
M
Y
CM
MY
CY
CMY
K
ajman free zone - gb.pdf 8/16/11 9:15:37 AM
CULF BUSlNLSS&**
FG@E@FE
COMMENT
UAL ciLizens and residenLs have a willinqness Lo save,
buL lack undersLandinq in how Lo qo abouL iL.
J8M@E>KI<E;J
l
AST YEAR, AS PART OF OUR COMMITMENT
a savings culture in the region, we launched the groundbreaking
National Bonds Savings Index. The study was a first-of-its kind in
the UAE, and provided an insight into the savings habits of UAE
residents. The results showed a worrying lack of interest in savings
or understanding of their importance.
We recently announced the results of the second wave, the 2011
National Bonds Savings Index, which revealed that nine out of 10
UAE residents are not confident in their current savings, and almost
half of the population saved much less than they had planned to last
year. Furthermore, 71 per cent of respondents said that they do not
save regularly. Around one tenth of those surveyed declared not
made any attempts to save at all. Of the latter, three quarters blamed
rising expenses, liabilities and loans for their inability to save.
The Index amalgamates responses in three key areas (respondents
perception of their savings potential, the savings environment around
them, and their own financial stability in the near future) into base
values that can be used as a frame of reference to measure changes
-+G<I:<EKF=G<FGC<8;D@KK<;K?8K
K?<8DFLEKK?<PJ8M<@JLJL8CCPC<JJ
K?8E8=@=K?F=K?<@I@E:FD<#N?@C<
8DFE>L8<E8K@FE8CJ8E;8I89<OG8KJ
JG<:@=@:8CCP#+'G<I:<EK:C8@DKFJ8M<
C<JJK?8E8K<EK?F=K?<@I@E:FD<%
in savings sentiments. The 2011 National Bonds
Savings Index indicates an increase in savings
potential, and a decrease across all other
components among UAE residents compared
to 2010, with UAE Nationals and Western Expats
experiencing a drop in their savings sentiments.
Of the different nationality groups, Asian expats
and Arab expats showed an increase in their
savings sentiments over the past year.
Of those who do save, 64 per cent admitted
that the amount is usually less than a fifth of
their income, while among UAE nationals and
Arab ex-pats specifically, 40 per cent claim to
save less than a tenth of their income. Overall
the trends show that Westerners and Asians save
bigger amounts than other segments of the society.
Worryingly, respondents declared that they are
spending more money than last year on everyday
expenditures such as groceries, transportation,
household items and utilities. Different emirates
showed different patterns: Sharjah residents claim
they are spending more money on necessities
such as groceries, household items and childrens
education, while Abu Dhabi residents blame
increased expenditure on transportation, rents,
eating out and buying luxury items.
Overall, we have seen that while there
is a willingness to save, there is a lack of
understanding of how to save. These results
are worrying for our economy, and as a result,
National Bonds has pledged to launch a
nationwide financial education roadshow aiming at
educating the community on how to manage their
spending and plan their savings. The road show
should begin in the fourth quarter of this year.
This is not just about consumer attitude change.
The change in thinking needs to begin with the
corporations that employ people up to the banks
and financial institutions that advise them. We will
look forward to everyones support in our drive.
l
L
L
U
S
1
R
A
1
l
O
N
:

R
O
U
l

F
R
A
N
C
l
S
C
O
Mohammed Qasim Al Ali, CEO,
National Bonds Corporation.
33 Column Al Ali.indd 33 8/24/11 4:42:21 PM
*+&J<GK<D9<I)'((
CCC FLINCHE5 AT U5 AND EUPC CPI5I5
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The region's deepest insecurities have
once again been exposed by another
crisis to emerge Irom the U5 and
Eurozone economies.
K<OK9PIP8E?8II@JFE
Greenspan said the Gulfs near-record
inflation rates could be eased significantly
by dropping the dollar peg. Rampant real
estate prices and subsequently soaring
housing and rental costs had led to
untenable levels of inflation in the run up
to the financial crisis.
Today, inflation is much lower,
partly due to the massive oversupply
in residential and commercial property,
but there are signs that problems could
spring back, with Saudi Arabia facing
the biggest threat, according to analysts.
Saudi residential property prices rose 60
per cent during the first half of the year,
and with the vast investment pledges
by various governments and handouts,
inflation could escalate quickly, a report
T
HE LATEST DEBT crisis in the West
has led to the painful realisation that
the Gulf must re-open the investigation
into the controversial dollar peg and its
dependency on oil. GCC governments
had hoped the case file on the two
biggest economic taboos had been
closed. But in light of the US dollar
downgrade in early August, regional
central banks have faced renewed
pressure to drop their dollar pegs.
Plus there are fresh concerns that the
peg restricts the Gulfs ability to fight
inflation by forcing it to shadow US
monetary policy.
With the US Federal Reserve cutting
rates to ward off a recession, regional
policymakers may find it difficult
to control inflation with the cost of
borrowing at historic lows. Gulf central
bankers faced a similar set of problems
during the 2008 recession. Plus, with
another serious slowdown looming, there
are fears that a repeat drop in global
energy demand could cut the oil income
for crude producers in the region.
DOLLAR DEJA VU
In 2008, former Fed Chairman Alan @
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34-35 Briefing Gulf flinches.indd 34 8/24/11 3:32:41 PM
>LC=9LJ@E<JJ&*,
<:FEFDP9I@<=@E>
by CB Richard Ellis said recently.
US President Barack Obama has made
it clear that US interest rates will remain
low until 2013, given the fragile nature
of the economy. As a result, Saudi faces
short term pressure on inflation,
according to Mohamad Hawa, head of
Mena equity strategy and financials
research at Credit Suisse Investment
Banking. Although he added: Medium-
to long-term, the construction of 500,000
new homes as announced by the King
should ease this pressure, as delivery will
start in a few years.
Dollar weakness can potentially stoke
GCC inflation by also pushing up costs
of importing goods to the region. But
central bank chiefs in the region have
in recent weeks spoken in favour of
retaining the peg.
We are pegged to the dollar and
will keep it. We dont see the dollar
collapse, Mohamed Al Tamimi, the
deputy executive director of the UAE
Central Bank Treasury Department, was
quoted as saying in a report by Reuters.
Meanwhile, policymakers in Riyadh
have argued that floating the Saudi riyal
would not be appropriate for an economy
that relies on oil exports.
EURO CONTAGION
Outside the fiscal woes in the US, there
are growing concerns about the extent
of the threat posed by Eurozone debt
problems. Given that GCC states are
intimately connected to Europe, there
is expected to be short-term economic
and market turbulence. GCC stocks have
remained depressed, partly over fears
of a contagion from Europe as finance
chiefs spent August attempting to stop
Italy becoming the next victim of the
sovereign debt troubles.
Long term though, economists are
>@M<EK?8K>::
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warning that a widespread debt disaster
could jeopardise trade and investment
between the GCC and the Eurozone.
GCC-based sovereign wealth funds and
private investors, which are net exporters
of capital to countries like the UK and
Germany, face the risk of sustaining
substantial losses across their portfolios.
Latest figures show the 17-nation bloc
grew by just 0.2 per cent on a quarterly
basis with analysts expressing concern
over sluggish GDP growth in Germany,
which had been driving Europes
economic recovery.
The silver lining in all this for Gulf
states could be that amid the economic
turmoil government around the world
will likely ditch their search for
alternative sources of energy, leaving the
door open for strong future oil demand.
Shrikanth S, Frost & Sullivans industry
analyst for banking and financial
services, said Europe may witness a
marginal decline in demand for energy
due to the uncertainty in the region. If
the financial troubles of Europe spread,
the continuation of the concessions given
to the renewable energy will be debated
and might also be withdrawn. That could
be a positive for the Gulf States.
OIL DEMAND
Yet, a collapse in global energy demand
and a low oil price can never be positive
for the Gulf. Most worryingly, financial
analysts are heavily downgrading
economic growth for the US, the worlds
largest oil consumer.
Deutsche Bank revised its forecasts
for US 2011Q4 GDP growth from 4.3
per cent to three per cent. Meanwhile,
Barclays Capital reduced its demand
forecast for oil for both 2011 and 2012.
Oil cartel Opec and the International
Energy Agency have also trimmed their
estimates. In general, there is concensus
that given the general outlook of the
macro-economy, the state of oil demand
does not seem particularly healthy.
But some believe that oil prices would
have to fall dramatically to threaten the
budgets of GCC oil exporters. Credit
Suisses Mohamad Hawa said prices
have to drop up to 30 per cent before
governments fear the risk of lower
public spending.
Either way, the current uncertainty
may be forcing Gulf governments to do
some soul searching, particularly over
their dependence on oil. It hits to the
heart of the diversification efforts in
the last decade, which some say need
to be accelerated.
That oil is traded in dollars will be
a compelling reason to keep the peg to
the greenback. Compared to 2008, GCC
states are in better shape, with healthier
budgets thanks to a year of high oil
prices, plus banks with stronger, more
liquid balance sheets. But its yet to be
seen how much more gloomy economic
news the region can expect out of Europe
and US later this year.
34-35 Briefing Gulf flinches.indd 35 8/24/11 3:32:41 PM
*-&J<GK<D9<I)'((
CULF IPC I55UE5 5HPINK
;8DGD8IB<KJ
Low liquidity and weak condence
continue to dampen the CulI's IPC
pipeline. 5tringent local market guidelines
must be relaxed to improve cashhow.
K<OK9P;8E@8J88;@
I
N 2005, A gold rush of initial public
offerings (IPOs) was in the works.
Abu Dhabi-based Aabar Petroleum
Investments Cos 55 per cent flotation
of shares was 800 times oversubscribed,
while about half of Saudi Arabias
population applied for shares in Bank Al
Bilad that same year.
A year later, Qatari Islamic lender
Masraf al-Rayan booked a sports stadium
to receive IPO applications, but the venue
was unable to contain the subscribers
who queued outside the facility, creating
traffic jams and prompting intervention
from police to contain the crowds.
Six years on, the IPO landscape is
sparse. IPOs in the Middle East in the
second quarter of this year raised $487
million, compared with $590.6 million in
a year-earlier period, according to Ernst &
Young. Offerings in the first quarter of this
year fell 95 per cent to a five-year low of
$21.7 million, the firm said.
The outlook for the regions IPO
market is dim, given the low liquidity
and valuations, regional political
unrest, and the global stock market
turmoil spurred by the US credit
downgrade and the snowballing
sovereign debt crisis in Europe.
In Saudi Arabia, United Wire Factories
Co closed its IPO in August, preceded
by Saudi Integrated Telecommunications
Cos offering in May, while in the UAE,
property developer Eshraq Properties,
and two insurance firms Insurance
House and National Takaful Co sold
shares. However, several IPOS have
since been cancelled or postponed.
In the next two years, IPOs will be
at the same low level of 2009/2010,
said Imad Ghandour, executive director
at investment firm Gulf Capital and
a co-founder of the non-profit MENA
Private Equity Association. IPOs
require confidence in the political
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36-37 Briefing IPO.indd 36 8/24/11 5:09:23 PM
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environment and the financial markets,
which are down with what is happening
in the US and Europe.
Saudi Arabia, which hosts the
regions largest and most liquid stock
exchange, is expected to provide IPO
opportunities, with companies such as
Hail Cement Co set to sell shares this
month. Offerings have been announced
in Oman and the three mobile operators
in Iraq are expected to go public. The
other large regional IPO market in Egypt
has faltered with the onset of political
upheaval in January, and the mayhem
gripping Syria also put a cap on IPOs
that increased in 2010 after the equity
market was launched in 2009. Most
of the offerings this year have been
relatively small and the market is still
waiting for a big IPO such as the much-
anticipated share sale of Qatar Airways.
Even regional companies that sought
to list abroad this year before the
global stock meltdown in August
scrapped plans due to the regional
unrest. Topaz Energy and Marine, the
oil services unit of Omans Renaissance
Services pulled the plug on its $500
million London listing and privately
held Kuwait Energy Co. (KEC) also
deferred plans for a London offering.
We are seeing an increasing trend in
local companies seeking international
listings to be able to access international
capital, Steve Drake, head of PwC
Capital Markets Middle East said in
an April report. The deferral of both
Topaz and KEC are clear evidence of the
difficulties regional companies are facing
in attracting international capital.
Companies looking for better valuations
have in the past listed in international
markets such as Dubai-based port
operator DP World, but the jury is still out
on whether such moves add value.
Our companies are so small in
terms of market cap compared to
the large international companies in
the international markets, they will
not show in the price screens, said
Mohammed Yasin, chief investment
officer of financial services company
CAPM Investment. Their true value
and real investor interest will be based
on their value in their local market.
Analysts blame the mismatch between
the price the sellers want and the buyers
are willing to pay for the lackluster IPO
activity, which is pushing small and
medium sized enterprises (SMEs) to
turn to private sales for capital.
To assist SMEs in accessing the
financial markets, the UAE and Qatar
have announced plans to introduce a
secondary market for small-cap listings,
where requirements are less stringent,
however, analysts are not convinced
these initiatives will achieve results
given the need to change company laws
and listing regulations.
I dont think these announcements
will materialise or reach their ultimate
objectives, said Ghandour. Even if
you go to a small company exchange
like (London Stock Exchanges) AIM,
liquidity is a problem.
Regulators in the Gulf impose listing
requirements that are discouraging
investors from subscribing to IPOs and
more companies from going public.
Foreign investors are banned from
partaking in IPOs in most exchanges
and the fact the Gulf countries have yet
to join the MSCI Emerging Market Index
dampens international interest in public
offerings. In the UAE, companies have
to list 55 per cent of their shares, unless
they plan to join NASDAQ Dubai, which
has a minimum of 25 per cent float size.
Gulf companies going public also
struggle between selling shares at
par value or through a book building
process. Gulf regulators have long
propounded the par value approach,
setting a fixed price to shares to spread
the wealth to citizens and protect retail
investors, who are the majority.
The best solution is to have a mix
and match of both methods, by splitting
the offer into proportionate allocation
which is suitable for retail investors at
par, and have book-building process
allocation suitable for institutional
investors which will be at least at par or
more if there is real extra demand, said
Yasin. This way you give institutional
investors the quantity they are looking
for and protect the retail investors at the
same time.
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36-37 Briefing IPO.indd 37 8/24/11 5:09:25 PM
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As the global economy reels Irom Iresh Euro and U5
woes, the gold price is set Ior a dizzying ascent.
K<OK9P8C@:@89LCC<I
B
Y LATE AUGUST the price of gold had
climbed to a record $1890 an ounce
as the Euro and US debt crises spurred
demand for bullion. Now in its eleventh
year of a bull market, experts expect the
gold price to rise to $2050 by the end of
year, upwards to a high of $5000 within
18 months.
Local brokers have been inundated
with trade in 2011, with some institutions
claiming business has spiked as much as
25 per cent in the last six months.
According to Sajith Kumar, director
and CEO at DMCCs JRG International
Brokerage, the gold price will continue its
sideways-upward trend for another two
years. There has been increased demand
for exchange-traded funds (ETFs) and gold
coins are doing very well. We expect the
gold price to increase to $2050 by year end
as demand rises. There is increased retail
sales and demand from China and India,
as well as from global institutions and
treasuries. Clients are staying away from
equities and bonds, he said.
Dubai Multi Commodities Centre
(DMCC) chairman Ahmed Bin
Sulayem has said he plans to move the
organisations Shariah-compliant gold ETFs
from NASDAQ Dubais stock exchange to
its flagship bourse, the Dubai Gold and
Commodities Exchange, before year-end
with the aim of increasing trade volumes.
Since the beginning of the year, gold
has climbed by more than 30 per cent.
If Germany decides to bail out struggling
EU countries including Greece, Ireland,
Spain and Italy and back Euro bonds,
this will spike inflation and thus ramp up
the gold price. Equally, if Germany decides
to not to back the bonds, the affected Euro
economies will weaken further sparking
market panic and another flight to bullion.
This autumn, gold will be a win-win
scenario and its bubble is unlikely to burst
for some time yet.
You have a money printer at the US
Fed and the Euro zone is now joining in by
buying Spanish and Italian bonds. Gold is
at the start of an exponential rise. Inflation
is coming, watch out. All the bailouts
and money printing will have inevitable,
unintended consequences, said Peter
Cooper, founder of the Arabian Money
investment newsletter. A surprise slump
in the gold price could come if there was
a big crash in financial markets, like the
autumn of 2008. That would be because
of a mass panic that led to the liquidation
of all assets, including gold, but it would
bounce back quickly.
Cooper added that is it always
psychologically hard to buy gold at
a new all-time high but this sentiment
has led to so many missed buying
opportunities over recent years that we all
ought to have learnt our lesson by now.
Gary Dugan, chief investment officer
at Emirates NBD, the UAEs largest bank,
has similarly high projections for the gold
price. On pure fundamentals we believe
that individuals and central banks hold less
gold than they desire and that they will be
ongoing buyers for many months to come.
The main driver of a spike in the price
would probably be further problems in the
Euro zone, he said.
The CIO also believes that a new
recession has not necessarily been
averted, which could yet spike the gold
price. The chance of a recession in the
US or Europe is as high as 30 per cent. We
believe that many investors do not have
enough gold in their portfolios. Our advice
would be for most investors to hold seven
to eight per cent of their wealth in gold.
Gold is for today.
o|d cou|d c||b to $5000
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39 Briefing Gold Rush.indd 39 8/24/11 3:33:55 PM
DUNLOP UAE GULF BUSINESS.ai 1 8/10/11 4:09 PM
>LC=9LJ@E<JJ&*0
:FDDF;@K@<J9I@<=@E>
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As the global economy reels Irom Iresh Euro and U5
woes, the gold price is set Ior a dizzying ascent.
K<OK9P8C@:@89LCC<I
B
Y LATE AUGUST the price of gold had
climbed to a record $1890 an ounce
as the Euro and US debt crises spurred
demand for bullion. Now in its eleventh
year of a bull market, experts expect the
gold price to rise to $2050 by the end of
year, upwards to a high of $5000 within
18 months.
Local brokers have been inundated
with trade in 2011, with some institutions
claiming business has spiked as much as
25 per cent in the last six months.
According to Sajith Kumar, director
and CEO at DMCCs JRG International
Brokerage, the gold price will continue its
sideways-upward trend for another two
years. There has been increased demand
for exchange-traded funds (ETFs) and gold
coins are doing very well. We expect the
gold price to increase to $2050 by year end
as demand rises. There is increased retail
sales and demand from China and India,
as well as from global institutions and
treasuries. Clients are staying away from
equities and bonds, he said.
Dubai Multi Commodities Centre
(DMCC) chairman Ahmed Bin
Sulayem has said he plans to move the
organisations Shariah-compliant gold ETFs
from NASDAQ Dubais stock exchange to
its flagship bourse, the Dubai Gold and
Commodities Exchange, before year-end
with the aim of increasing trade volumes.
Since the beginning of the year, gold
has climbed by more than 30 per cent.
If Germany decides to bail out struggling
EU countries including Greece, Ireland,
Spain and Italy and back Euro bonds,
this will spike inflation and thus ramp up
the gold price. Equally, if Germany decides
to not to back the bonds, the affected Euro
economies will weaken further sparking
market panic and another flight to bullion.
This autumn, gold will be a win-win
scenario and its bubble is unlikely to burst
for some time yet.
You have a money printer at the US
Fed and the Euro zone is now joining in by
buying Spanish and Italian bonds. Gold is
at the start of an exponential rise. Inflation
is coming, watch out. All the bailouts
and money printing will have inevitable,
unintended consequences, said Peter
Cooper, founder of the Arabian Money
investment newsletter. A surprise slump
in the gold price could come if there was
a big crash in financial markets, like the
autumn of 2008. That would be because
of a mass panic that led to the liquidation
of all assets, including gold, but it would
bounce back quickly.
Cooper added that is it always
psychologically hard to buy gold at
a new all-time high but this sentiment
has led to so many missed buying
opportunities over recent years that we all
ought to have learnt our lesson by now.
Gary Dugan, chief investment officer
at Emirates NBD, the UAEs largest bank,
has similarly high projections for the gold
price. On pure fundamentals we believe
that individuals and central banks hold less
gold than they desire and that they will be
ongoing buyers for many months to come.
The main driver of a spike in the price
would probably be further problems in the
Euro zone, he said.
The CIO also believes that a new
recession has not necessarily been
averted, which could yet spike the gold
price. The chance of a recession in the
US or Europe is as high as 30 per cent. We
believe that many investors do not have
enough gold in their portfolios. Our advice
would be for most investors to hold seven
to eight per cent of their wealth in gold.
Gold is for today.
o|d cou|d c||b to $5000
ar ource W|tb|r I8 ortbs.
>FC;@J8KK?<JK8IK
F=8E<OGFE<EK@8C
I@J<%@E=C8K@FE@J
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8CCK?<98@CFLKJ
8E;DFE<PGI@EK@E>
N@CC?8M<@E<M@K89C<#
LE@EK<E;<;
:FEJ<HL<E:<J%
39 Briefing Gold Rush.indd 39 8/24/11 3:33:55 PM
+'&J<GK<D9<I)'((
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With green companies thin on the
ground regionally, UAE clean energy
company Masdar is Iocusing on Iunding
U5 and Chinese rms.
K<OK9P;8E@8J88;@
M
ASDAR CAPITAL, THE venture
capital arm of Abu Dhabi
government-owned green energy firm
Masdar, is bullish about snapping up
stakes in renewables and clean tech
energy companies in order to fully invest
a $290 million fund by 2014, but this
region is providing few opportunities.
Masdar, which has about $540 million
of assets under management, is keen on
investing in companies in North America,
Europe and Asia as part of Abu Dhabis
plan to position itself as hub for green
energy. Masdar, a unit of Abu Dhabi
government investment firm Mubadala,
was set up in 2006 with a mandate to
develop and invest in the renewables and
clean-tech energy sector in a bid to meet
Abu Dhabis target to generate seven per
cent of its power from clean energy by
2020. This plan includes the building of
Masdar City, a residential and commercial
complex designed to be zero-emissions
and zero-waste upon completion.
We see a trend where investment
opportunities are getting stronger, there
are better management teams and better
use of capital, said Alex OCinneide of
Masdar Capital.
Masdar Capital, which has fully
deployed its first $250 million fund
launched in 2006 in partnership with
Credit Suisse, has only made two
investments in its second fund, which
was closed at $290 million in partnership
with Deutsche Bank and could be fully
invested by 2014: California-based glass
processing firm eCullet ($38 million)
and Chinese wind energy firm, UPC
Renewables ($25 million). It expects to
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40-41 Briefing Masdar.indd 40 8/24/11 4:54:04 PM
>LC=9LJ@E<JJ&+(
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invest around 35 per cent of the fund
each in North America and Europe, with
the rest going to other regions.
The countries which have some of the
most interesting products and technologies
are still Western Europe and North
America, but one of the biggest markets
to avail of is China, said OCinneide.
I can see products and services being
developed in Europe and North America
and used in operation in China. I also see
a trend where a lot of the products and
services that are being developed move
out to Asia to be actually scaled up into
manufacturing and commercialisation.
China came in first place in clean
energy investment in 2010, followed
by Germany and the US, according
to a report by non-profit organisation
The Pew Charitable Trusts, released
in March this year. China, the worlds
leading producer of wind turbines and
solar modules, surpassed the US as the
country with the most installed clean
energy capacity in 2009.
Globally, clean energy investments
increased 30 per cent to a record of
$243 billion in 2010 from a year earlier,
while venture capital and private equity
investments in the sector in G-20
countries increased 26 per cent to $8.1
billion in 2010 from a year earlier, the
report showed. Governments worldwide
are earmarking more funds for the
sector as part of economic recovery
and stimulus packages created to
combat the recession. The Fukushima
nuclear disaster in Japan is an added
catalyst to the industry as countries
such as Germany start switching off
their nuclear plants and look for other
sources of power.
In the UAE, the economic ministry
has forecast that private sector
investment opportunities in the
alternative and sustainable energy
industry will reach $100 billion by 2020.
Currently, Masdar Capitals portfolio
includes only one UAE company, Abu
Dhabi based solar developer Enviromena
Power Systems, in which Masdar owns a
significant stake, said OCinneide.
We receive proposals from companies
based in the region, but the volume of
those proposals is much less than we
get in North America, said OCinneide.
We imagine going forward that the
overwhelming majority of our investments
will still be internationally focused. We
have a very developed venture capital
and private equity market in North
America and Europe with a history of
funding technological companies for
the next level of development.
Greater government funding in
renewables would help Masdar and
its partners scout for more investment
opportunities in the region.
Regionally, more investors are
shifting toward venture capital and
funds with a specific focus on industries
such as energy and power, which are
considered resilient non-cyclical sectors
with room for growth, the non-profit
MENA Private Equity Association said
in its 2010 report.
Private equity and venture capital
funds raised in the Middle East and
North Africa rose 18 per cent to $1.3
billion in 2010 from a year earlier, but
is still shy of the $6.5 billion record
reached in 2008, the association said.
The lackluster fund-raising environment
prompted Masdar Capital to close its
second fund at $290 million, below
the initial ticket size announcement of
around $500 million.
We decided to close the fund
and focus on investing that rather
than spend time on fund raising,
said OCinneide.
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40-41 Briefing Masdar.indd 41 8/24/11 4:54:05 PM
Dubai Representative Of ce supervised by the UAE Central Bank
The Fairmont, 25th Floor Sheikh Zayed Road P.O. Box 212240 Dubai, UAE
Telephone +971 4 509 0111 Facsimile +971 4 509 0222
Its clients.
Being a partnership and having
no shareholders to satisfy,
Lombard Odier can afford to take
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Its what weve been doing since 1796.
The next 200 years
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LO_GulfBusinessE110825Indep212x276.indd 1 26.08.11 08:22
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43-55 Private Banking.indd 43 8/24/11 3:41:39 PM
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EDITORs letter
PrivaLe bankers have seL Lheir siqhLs on Lhe reqion's qrowinq cash pile.
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i
TS OFFICIAL: PRIVATE BANKERS HAVE
flooded the region. This year, as an editor, I have received 1,000 per
cent more calls on this sector than at any other stage in my career.
As the US and Euro debt crisis deepens, the notion that the Middle
East and Asia offers growth and richer harbours is only intensifying.
When the US Dodd-Frank bill clamped down on Wall Street banks
and leveraged debt instruments, financial big-hitters from UBS to JP
Morgan and Merill Lynch set their sights on building global wealth
management franchises. With these firms still smarting from the sting
of billion dollar losses associated with financial derivatives and sub-
prime mortgages, fee-generating business represented a more robust
way to salve the balance sheets.
Naturally, the most coveted prize for a private banker is the Ultra
High Net Worth individual (UHNW). This is banking terminology
for richer than most. The region is home to 400,000 of these uber-
clients; and this formidable figure is growing by the day. The Boston
Consulting Group reported that this group of millionaires controlled a
total $2 trillion assets in the region in 2010. It is even more significant
that this figure will rise to $6.7 trillion by 2015.
Consistently high oil prices and above average economic growth have
bestowed the Gulf populace with some of the largest personal nest
'
' ' '
''' '
' ' ' '
' '
~ '
' ' ' ' '

eggs in the world. So, while the major global and
Swiss banks pencilled in the UAE and the Middle
East as part of their emerging markets expansion
strategy as far back as the 1990s, the race is now
on to woo the wealthy and clinch a slice of their
expanding investment portfolios. The turbulent
ecomonic climate also means the regions mega-
rich are in need of more sophisticated investment
advice than ever before.
One drawback for wealth managers amid the
current global economic crisis is the dampened
client confidence in financial instruments and
the renewed desire for investing in low risk
commodities and Western real estate. But the
opportunities in the local wealth market far
outweigh the challenges.
It is Dubai that has the potential to reap the
most benefits from the combination of the Arab
Spring and the US and Euro turmoil. The emirate
is currently capitalising on its status as a safe
haven and is consequently enjoying additional
capital inflows as spooked regional investors
shift their cash. Dubai must seize this moment to
uphold its cosmopolitan International Financial
Centre hub, build on its wealth management talent
pool and develop its overall banking infrastructure
with the aim of being a globally recognised
private banking capital the Gulf equivalent of
Switzerland or Singapore. That time is now.
In this month's private banking special report,
Gulf Business speaks to the some of the region's
top wealth managers about the challenges and
opportunities that lay ahead.
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Alicia Buller,
Editor, Gulf Business
43-55 Private Banking.indd 45 8/24/11 3:41:39 PM
Gulf-Business phone-Lady 270x206 E.indd 1 6/19/11 1:14 PM
+-,J<GK<D9<I)'((
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for private banking, said his clients were
pleasantly surprised that Dubai profited
from the geo-political problems in the
Middle East. In general, theres been
more trading, a rise in airline passengers
and a marked turnaround in the hotel
sector, all of which has helped us.
Deposits at the bank have remained
buoyant as wealth investors seek security
over riskier assets. Overall in the UAE,
deposits held by banks increased seven
per cent to $306 billion during the first
five months of the year, surpassing the
increase for the whole of the previous year,
according to data from the central bank.
Dugan said he had struggled to convince
private banking clients to diversify their
holdings though. The appetite for real
estate or private equity has waned. Weve
spent the last year trying to rebuild
confidence in our client base and tempt
them to go for something slightly riskier.
High yield bonds and corporate bonds
have become the mainstay for investors,
although the bank has seen a pick up in
appetite for commodities and
local equities in the second
quarter of the year.
There has also been
growing demand so
far this year for gold
certificates, a product
the bank launched in
late 2010.
Theres been a consistent
backing of gold, especially
gold certificates and the
delivery of gold. Its given
us a chance to take greater
market share, said Dugan.
Most clients we find are
underrepresented by gold in
their portfolios; they have on
average about one to two
per cent, but we recommend
seven to eight per cent of their
total worth. Gold prices have
remained high against the backdrop
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Emirates NBD has been perhaps the best
placed of the Gulf-based banking groups to
benefit from the recent political turmoil.
Dubais top bank has witnessed a
renewed optimism around the emirate
as a safe bet amid the uncertainty. Over
the last nine months, rich investors
have turned to the GCCs biggest bank
to protect their cash. Emirates NBDs
private banking business has helped
drive the groups positive first half
results, which saw profits rise 43 per
cent year-on-year to Dhs2.2 billion. The
UAE's biggest lender by assets reported
a net income of Dhs744 million in the
second quarter of the year, up 85 per
cent compared to Dhs403 million in the
same period last year.
Gary Dugan, chief investment officer
of instability in the Eurozone and US
economies.
It seems that persuading wealthy clients
to look beyond gold to more exotic and
high-yielding investments is the private
banks toughest challenge. Our typical
client is mostly conservative, with assets
in cash or near cash, with an average
of about $2 million to $3 million to
invest. But were almost back to levels of
confidence seen around the time of the
financial crisis, with major concern over
global events being reflected in clients
risk appetite, said Dugan.
The Emirates NBD Group has had
to tackle demons from the past, in
particular its exposure to major corporate
restructuring in Dubai and the real
estate sector. Indeed, Business Monitor
International has said that the UAEs
banking sector is set to underperform
its regional peers over the next 18
months as concerns about a weak
real estate market and Dubais debt
overhang will continue to weigh.
Meanwhile, the latest results also show
that impairment charges were high at
Dhs2.35 billion compared to Dhs1.74
billion in the first half of 2010. Dugans
private banking function will be critical
to convert the groundswell of confidence
currently supporting Dubais hopes
into sustainable revenues that can be
registered at a group level.
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In a business that maximises wealth,
Swiss-owned Bank Sarasin-Alpen has
been called on to play the role of wealth
protector in the last six months as clients
shy away from risk.
The bank, which is one of various units
in the region owned by Bank Sarasin
based in Basel, started Gulf operations in
2005 with the launch of its Dubai office.
It has since spread to Doha, Muscat,
Manama and most recently Abu Dhabi.
GCC clients are now more cautious
about taking bets with their money
after suffering heavy losses from the
financial crisis. There has been also been
heightened risk aversion so far in 2011 in
response to the Japanese tsunami, conflict
in North Africa and a US and European
debt crisis, said Rohit Walia, executive
vice chairman & CEO, Bank Sarasin-Alpen
Group, Middle East and India.
From a clients perspective, they are
now more aware of the risks associated
with the investments and have wealth
preservation at the back of their minds
even when they evaluate opportunities
for wealth creation. Before the crisis they
were more interested in building their
wealth but now they also want us to keep
their wealth safe and secure.
As the battle for Gulf wealth heated
up in recent years, Bank Sarasin-Alpens
approach has been to deploy experienced
boots on the ground to its GCC offices.
Most recently, it hired ex-EFG private
banker Neil Ashford as a managing
director and head of its Abu Dhabi office.
Part of the difficulty in building private
banking businesses in the region is that
simply having a physical presence doesn't
guarantee success. But, hiring bankers
that have a little black book with access
to the right people does. Much of the
wealth is centralised in family offices, and
having a strong and trusted relationship
with these firms is key to success. In that
sense, Ashford was one of a rare breed,
having more than 30 years of banking
experience spanning across private,
corporate and trust intermediary banking.
Analysts say that if private banks
manage to get a foothold with these
family offices, it gives them an
opportunity to leverage their relationship
to sell more sophisticated products and
services to key players in the region.
The fact that we are present in most
of the GCC countries ensures that we are
available to meet our clients when they
want to see us and move away from the
concept of suitcase banking, said Walia.
Bank Sarasin-Alpen has not been alone
in this strategy. In April, Deutsche Bank
unveiled Serene El Masri as its head
of private wealth management for the
Mena region, joining from BNP Paribas.
Mark Winzenried joined Lloyds TSB
Private Banking from Arab Bank while
Abu Dhabi Islamic Bank named Stuart
Crocker as head of private banking
from HSBC. In May, UBS hired Albert
Momdjian, previously head of investment
banking for MENA at Credit Agricole, for
a senior wealth management position.
Walia added: With the increasing
number of banks appearing in the
region, there is definitely a danger of
oversaturation. There are over 50 banks
in the UAE. In addition, the Dubai
International Financial Centre has a host
of other banks and financial institutions.
Meanwhile, despite housing three of the
densest millionaire populations in 2010
Qatar, Kuwait and the UAE, the Middle
East has become safe-obsessed. Less
risky investments such as fixed
income have, therefore,
grown in
popularity.
We have taken advantage of this for
clients, especially in high Indian
interest rates by bringing Indian debt
issues to them.
There is some optimism that the pick
up in investment and tourism in the
GCCs so-called safe havens like Dubai
could produce results in the medium term.
Although this [investment] has not yet
translated into better equity markets I
believe it will do so in the not too distant
future, added Walia.
43-55 Private Banking.indd 47 8/24/11 3:41:46 PM
>LC=9LJ@E<JJ,+0
GI@M8K<98EB@E>
Private banking is a notoriously male-
dominated profession, but rich female
investors have become one of the key
drivers for wealth management services
in the Middle East, according to Merrill
Lynch Wealth Management. This unit of
Bank of America has been operating an
office in Dubai since the 1970s, and has
witnessed serious demographic changes
taking hold in the region.
One of the most recent shifts is that
women are stepping up and demanding
investment solutions from private banks,
said Tamer Rashad, head of Middle East
at Merrill Lynch Wealth Management.
Historically, women have been
overlooked or undervalued as private
banking clients, despite controlling 22
per cent (or $500 billion) of the wealth
in the region, according to the Boston
Consulting Group. After falling sharply
in 2008, womens wealth grew by nearly
15 per cent in the Middle East in 2009
and Boston Consulting projects that the
amount of wealth controlled globally by
women will grow at an average annual
rate of eight per cent through until 2014.
Rashad said there had been an
increased interest from women in the
region for Merrill Lynchs products. He
said high GDP and savings had also
boosted demand in the industry, adding:
Clients are seeking more sophisticated
solutions around wealth management,
investment returns and transferring
wealth to the next generation.
Merrill Lynch Wealth Management first
opened a Middle East office in Beirut,
Lebanon, 49 years ago and now operates
in offices in Bahrain and Riyadh, as well
as Geneva, London and Monte Carlo. It
has an office in the Dubai International
Financial Centre and one outside the
business park.
In September 2008, Bank of America
announced its intentions to purchase
Merrill Lynch & Co., in an all-stock deal
worth approximately $50 billion. Merrill
Lynch was at the time within days of
collapse, and the acquisition effectively
saved Merrill from bankruptcy. Merrill
Lynch is now the largest and most
profitable wealth manager in the
world, according to Scorpio
Partnership's Annual Private
Banking Benchmark for 2010.
In recent months, Rashad
has overseen a hiring spree
intended to strengthen
the banks position in the
Middle East. Most recently,
Leila Alameddine joined as
market manager for Levant,
Shereen Ghobrial as regional
sales manager, Utku Balik as
business strategy and initiatives
execution manager, and Ahmed
Barakat as UAE market manager.
K8D<II8J?8;#?<8;F=D@;;C<<8JK8K
D<II@CCCPE:?N<8CK?D8E8><D<EK
Tamer Rashad relocated to Dubai from
New York in 2010, prior to which he
was head of global relationship capital
intelligence and a member of the office
of the president & chief operating officer
at Merrill Lynch.
Contrary to sentiment in other private
banks currently operating in the Gulf,
Rashad said there had actually been an
increase in risk appetite: More equity, less
cash and lower investment in local real
estate from clients. He added: Changes
taking place in the Middle East provide a
dynamic opportunity for the region. We
are witnessing a rapidly growing interest
from clients to expand the breadth of
their portfolios and increase exposure to
international investments.
Heavy investment in in-house research
facilities over the last decade has given
Merrill Lynch an edge over its competitors
to better understand the demands of
markets like the Middle East. The bank
has grown its research component and
now publishes one of the most recognised
research documents on private banking
activity, the Merrill Lynch Global Wealth
Management and Capgemini survey.
According to the latest survey in June,
at the end of 2010 the number of HNWIs
grew in Saudi Arabia and Bahrain but
declined marginally in the UAE.
The past few years have seen great
fluctuations in HNWIs wealth and
population, said Rashad In 2010, we
saw growth rates slow down from the
higher double-digit levels of 2009 when
many markets were quickly returning
from significant crisis-related losses.
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Unanimously the best bank in Lebanon.
www.banqueaudi.com
Awards 20.6x27.indd 1 8/16/11 2:54 PM
>LC=9LJ@E<JJ,+0
GI@M8K<98EB@E>
Private banking is a notoriously male-
dominated profession, but rich female
investors have become one of the key
drivers for wealth management services
in the Middle East, according to Merrill
Lynch Wealth Management. This unit of
Bank of America has been operating an
office in Dubai since the 1970s, and has
witnessed serious demographic changes
taking hold in the region.
One of the most recent shifts is that
women are stepping up and demanding
investment solutions from private banks,
said Tamer Rashad, head of Middle East
at Merrill Lynch Wealth Management.
Historically, women have been
overlooked or undervalued as private
banking clients, despite controlling 22
per cent (or $500 billion) of the wealth
in the region, according to the Boston
Consulting Group. After falling sharply
in 2008, womens wealth grew by nearly
15 per cent in the Middle East in 2009
and Boston Consulting projects that the
amount of wealth controlled globally by
women will grow at an average annual
rate of eight per cent through until 2014.
Rashad said there had been an
increased interest from women in the
region for Merrill Lynchs products. He
said high GDP and savings had also
boosted demand in the industry, adding:
Clients are seeking more sophisticated
solutions around wealth management,
investment returns and transferring
wealth to the next generation.
Merrill Lynch Wealth Management first
opened a Middle East office in Beirut,
Lebanon, 49 years ago and now operates
in offices in Bahrain and Riyadh, as well
as Geneva, London and Monte Carlo. It
has an office in the Dubai International
Financial Centre and one outside the
business park.
In September 2008, Bank of America
announced its intentions to purchase
Merrill Lynch & Co., in an all-stock deal
worth approximately $50 billion. Merrill
Lynch was at the time within days of
collapse, and the acquisition effectively
saved Merrill from bankruptcy. Merrill
Lynch is now the largest and most
profitable wealth manager in the
world, according to Scorpio
Partnership's Annual Private
Banking Benchmark for 2010.
In recent months, Rashad
has overseen a hiring spree
intended to strengthen
the banks position in the
Middle East. Most recently,
Leila Alameddine joined as
market manager for Levant,
Shereen Ghobrial as regional
sales manager, Utku Balik as
business strategy and initiatives
execution manager, and Ahmed
Barakat as UAE market manager.
K8D<II8J?8;#?<8;F=D@;;C<<8JK8K
D<II@CCCPE:?N<8CK?D8E8><D<EK
Tamer Rashad relocated to Dubai from
New York in 2010, prior to which he
was head of global relationship capital
intelligence and a member of the office
of the president & chief operating officer
at Merrill Lynch.
Contrary to sentiment in other private
banks currently operating in the Gulf,
Rashad said there had actually been an
increase in risk appetite: More equity, less
cash and lower investment in local real
estate from clients. He added: Changes
taking place in the Middle East provide a
dynamic opportunity for the region. We
are witnessing a rapidly growing interest
from clients to expand the breadth of
their portfolios and increase exposure to
international investments.
Heavy investment in in-house research
facilities over the last decade has given
Merrill Lynch an edge over its competitors
to better understand the demands of
markets like the Middle East. The bank
has grown its research component and
now publishes one of the most recognised
research documents on private banking
activity, the Merrill Lynch Global Wealth
Management and Capgemini survey.
According to the latest survey in June,
at the end of 2010 the number of HNWIs
grew in Saudi Arabia and Bahrain but
declined marginally in the UAE.
The past few years have seen great
fluctuations in HNWIs wealth and
population, said Rashad In 2010, we
saw growth rates slow down from the
higher double-digit levels of 2009 when
many markets were quickly returning
from significant crisis-related losses.
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43-55 Private Banking.indd 49 8/24/11 3:41:50 PM
INSPIRINGOPPORTUNITIES
www.medsecurities.com
AtMedsecurities,wearegearedtowardsthewealthpreservationofourcustomers.
Our drive to perform stimulates a consistent response to the changing market
environmentbydeliveringoptimalinvestmentsolutionstoourclients.Withvision
and thoroughness, our investment products and services offer innovation and
flexibilitytomeeteveryexpectation.
>LC=9LJ@E<JJ,,(
GI@M8K<98EB@E>
Although wealthy GCC investors remain
strong backers of local economies,
Geneva-based Lombard Odier has
witnessed a spike in money being sent
overseas. The Swiss private bank, which
services ultra high net worth clients
out of a representative office in Dubai,
manages $167 billion in global assets.
Increasingly, local investors are shifting
their wealth outside the Gulf region
and requesting sophisticated funds to
preserve their families net worth, said
Arnaud Leclercq, head of new markets
at the firm. A number of wealthy
individuals, in particular Emiratis and
Saudis who have been typically invested
only locally are deciding to reallocate
a portion of their wealth outside of the
Arab World, he said.
In the past, Saudis have held 90 per
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cent of their wealth locally, but Leclercq
said there had been a marked shift
recently, and this figure is now closer to
70 per cent. GCC investors have looked
to diversify their investments and spread
risk following prolonged turbulence in
local markets.
We have also seen an increased level
of interest from the very large and wealthy
families in setting up family funds outside
of the region, in the shape of a reserve
fund, very similar to how a sovereign
wealth fund functions. Investors have
also become increasingly savvy, and
they now are looking for banks that
can provide diversified booking centres
outside of the Gulf, in places such as
Geneva and Singapore, said Leclercq.
Lombard Odier has been a dominant
player in private banking since it was
established in 1796. Much of this brand
capital has contributed to its growth in
the Middle East.
The firm has had ties to the region since
the 1970s but only opened a representative
office in Dubai in 2007. It has, however,
been criticised for taking a less aggressive
stance than some of its competitors,
such as Credit Suisse and Julius Baer, in
targeting the regions wealthy individuals.
Less than 10 per cent of its managed assets
come from the Middle East a proportion
the bank is trying to raise to 20 per cent in
the next four years.
Out of its office in Dubai, it
is planning to continue
expansion into what it calls
new markets, which
include the rest of the
Middle East, Central
Asia, Russia and Turkey. To underline
the commitment to this planned
growth, Leclercq said he himself will be
relocating from Geneva to Dubai by the
end of 2011.
We have already begun to select a
number of senior bankers and specialists
to cover these areas, so there are clear
plans to expand not only in the local
market, but also to establish Dubai as
one of our three global hubs: Switzerland,
Singapore and now Dubai, he said.
There has been a flood of private
bankers to the region in recent years,
raising concerns that the market could
quickly become over-saturated. But
Leclercq is defiant: Lombard Odier works
in the UHNW segment We are one of the
worlds largest private banks involved in
this specific segment. Indeed, there are not
many banks if any that are as involved
on the local level as much as we are.
He did issue one word of caution in
the short-term: Over the period of the
last 18 months, we certainly have noticed
that a number of clients have decided to
reallocate their resources to areas other
than wealth management in the sense
of private banking. For example, they
are opting to reinvest in real estate in the
West, buy gold or simply holding cash all
rather than have their assets managed.
43-55 Private Banking.indd 51 8/24/11 3:41:52 PM
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Falcon Private Bank may be small and
nimble, but it is owned by Abu Dhabis
mighty Aabar Investments, a fact that
has allowed it to punch above its weight
in the Middle East.
Managing $13.5 billion in assets, the
Zurich-based wealth manager is dwarfed
by a lot of its Swiss competitors. But the
presence of Aabar, which bought the firm
in late 2008, provided instant credibility
and reassurance for potential Gulf clients.
This is a reality not lost on Falcon CEO
Eduardo Leemann, who said: Without
Aabar its very difficult to expand into
the region. Our owners are extremely
well-known and respected.
Aabar is regularly called upon to
identify the good guys and bad guys in
the Middle East, he said. This high level
local knowledge means that its almost
like operating in Falcons home market.
Its like having our Zurich clients just
round the corner. But the relationship
comes at a price for Falcon, which must
seek authorisation from Aabar on major
decisions, typically large credit facilities
above $25 million or certain high-risk
investments. A large capital deployment,
such as the acquisition of another bank
or buying a new IT system, would also
require Aabars sign-off.
Leemann added that the arrangement
doesnt extend to the Abu Dhabi company
sharing its GCC private banking contacts.
Still, Falcon expects its assets under
management to nearly double to $25
billion in five years as it taps the growing
wealth in Gulf and Asian markets. The
bank, formerly known as AIG Private
Bank, was bought from the crippled US
insurance giant AIG by Aabar in 2008 for
288 million Swiss francs (Dhs1.2 billion).
Falcon seeks to target individuals with
a minimum wealth of $5 million. In the
UAE, it currently manages $600 million
of assets, but Leemann said by the
end of 2011 this could hit $1 billion. It
opened a branch in Abu Dhabi in April,
joining its existing branches in Dubai,
Hong Kong, Singapore and Geneva.
Falcon has also applied for an investment
advisory licence with the UAE Central
Bank that is currently under processing.
Middle East investors go with
Falcon because they like to have local
investments booked somewhere else,
for instance Singapore or Zurich, said
Leemann. For them its about political
diversity and the diversification of risk.
They like Arab National Bank and First
Gulf, but they also like us.
He said there was a danger of the Gulf
getting overcrowded, especially with
rivals Julius Baer, UBS, JP Morgan and
Bank Sarasin expanding their operations,
but he added that the region was still
very attractive.
Leeman admits that Falcon, like other
banks in Switzerland, have suffered
recently because of currency fluctuations
between the Swiss franc, Euro and US
dollar. The bad news for banks like us
with a big portion of costs being booked
in Swiss francs, is you lose out on the
currency situation. The revenues are
in Euro and USD, but the currency has
changed against the Swiss franc of late,
so margins have been weakened. Then
add this to a dull market environment
and it makes people very risk-averse.
But he said that unlike its larger
competitors, Falcon has the benefit of
agility and can deploy capital to essential
markets like the Middle East. Compared
to the bigger players in private banking,
we can act much more quickly on the
ground in the region. Most of the big
hitting banks will see the MENA region
as just another region, where internal
capital allocations are competing with,
for example, regions like Africa and Asia.
When it comes to investment allocation,
MENA has to fit into this huge global
network, which means their money or
appetite may not necessarily be there.
We dont have this problem, he said.
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43-55 Private Banking.indd 52 8/24/11 3:41:53 PM
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Credit Suisse held $865 billion in global
private banking assets in 2010, up 11.56
per cent on the previous year, according
to the Scorpio Partnership Private
Banking benchmark study. However,
the Swiss financial services company,
like many global banks, has experienced
challenging times in 2011.
The firm is axing 2,000 jobs after
revenues slumped in the face of the
European debt crisis, with net income
falling by 52 per cent to SFr768m ($973.4
million) for the second quarter of this
year. The steady fall in the value of the
US dollar against the Swiss franc has also
hurt the Zurich-based bank.
Having set up its presence in the
region more than 40 years ago, Credit
Suisse has long known the potential of
Middle East investors and is well placed
to benefit from the growing wealth of
local UHNWs. Bruno Daher, co-CEO and
head of private banking for the region,
has his sights set on increasing the
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Middle Easts share of
the pie.
Private banking
has been very active
in the region for
a very long time;
the difference now
is that in light of
current challenges in
mature markets there
is renewed wealth
creation in China,
India, MENA and
emerging markets in
general. In all these
locations, wealth
management will
thrive, he says.
Credit Suisse has
always considered
MENA to be
among its priority
markets. UHNW
is a fast-growing segment, accounting
for about one third of our assets under
management in our wealth management
business globally.
Daher says that private banking is
not just about products, which have
now become commodities, but wealth
management is about relationships,
premium advice and client management.
Integrated offerings and cross-pollination
between investment banking, asset
management and private banking arms
also offer the client more value in todays
headwinds. Credit Suisse is currently
taking measures to forge stronger
relations between all of three of its
arms in the region.
But, along with the tools, you also
need the talent, says Daher: The
MENA region now has more talent than
ever before, making it a highly active,
successful market. We have hired and
trained people over the years which helps
to grow the talent pool. An ability to
attract and retain people is fundamental
to our long-term success.
Daher adds that its easier to recruit
in Dubai than the rest of the Gulf as
the emirate offers a practical hub for
bankers with easy flight connections,
quality schools, housing and medical
infrastructure.
Credit Suisse is taking action globally
to reduce its cost base, but these cuts
will not necessarily make their way to
the Middle East as Daher builds up his
team. We are taking action to adjust
our cost base and are seeking cost
efficiencies across the bank in order
to ensure attractive returns, he says.
We continue to be proactive about
monitoring the size of our business
relative to client opportunities and
market conditions. This involves
realigning resources to growth areas.
Daher believes the way to combat the
extreme levels of uncertainty from markets
is to stay close your customers because,
in todays climate, clients are becoming
increasingly jittery and, in some cases,
more knowledgeable, with increasingly
sophisticated financial requirements.
To maintain strong relationships, you
need to be able to partner clients with
experienced advisors who can help them
to achieve their aspirations. The markets
are complex. Clearly, we are facing
a challenging economic and market
environment and I believe that its going
to be a difficult year all round.
43-55 Private Banking.indd 53 8/24/11 3:41:53 PM
,+&J<GK<D9<I)'((
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Saudi Arabia is leading a dramatic rise
in demand for Islamic private banking
despite the regional turmoil, according to
the Middle Easts largest wealth manager
NCB Capital. The Riyadh-based bank,
which manages $14.9 billion in assets,
dominates regional Islamic finance due
to Saudis abundance of super-rich
Shariah investors.
Demand from wealthy Muslims
in the country has soared since the
recession, according to Jawdat al-Halabi,
CEO of NCB Capital, but surprisingly
has remained strong even through the
tumultuous first half of the year.
The financial crisis hit Islamic
banking, but not as hard as conventional
banking. This spurred interest from clients
for Shariah compliant investment. Since
the start of 2011, clients have looked for
value and growth and better returns than
theyve seen in the past. Whereas they
were previously sitting on the sidelines
post-crisis, they are now becoming more
demanding, said al-Halabi.
The firm offers conventional
banking services, but 95 per cent of
its asset management business is in
Islamic products.
High net worth individuals in
Saudi have been eagerly awaiting the
governments public spending package,
which is likely to stimulate widespread
economic activity.
The kingdom has over $92 billion
in Shariah financial assets and
is the largest Islamic banking
player in the world in terms
of fund volume. Global
Shariah compliant assets
are estimated to have
crossed $1 trillion
in 2010, growing at
a sustainable 15-30
per cent per annum.
Al-Halabi is confident
that despite fresh
competition from
international private
banks that have moved into Saudi, NCB
Capital will continue to strengthen.
International wealth management
players have small offices in Saudi and
dont put people on the ground. They
use it as a window to collect money and
Dubai as a hub through which to invest.
This limits their local Saudi knowledge.
Theres always been a high number
of players in Saudi. The 11 domestic
banks have always been into wealth
management. Although the
volume of participants is quite big, the
size of the market can sustain that.
He added that some international
institutions in the past have operated
as suitcase bankers in Saudi and
have done so without a licence,
which some say is illegal. Because
of recent regulations, which tightened
the rules around registration, more
bankers are formalising their presence
and becoming regulated businesses.
So the competition hasnt changed
43-55 Private Banking.indd 54 8/24/11 3:41:54 PM
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much, its just become more visible.
As demand for Shariah investment
spikes, NCB Capital is set to roll out a
12-month campaign of Islamic funds.
Al-Halabi is planning to launch four funds
over the coming year that will invest in
Saudi real estate, equities and small to
medium-sized businesses (SMEs).
The proposed SME fund will be
structured as an Islamic private equity
product, targeting wealthy family offices.
The bank is also in the final stages of a
tie-up with an international asset manager
to expand its global equity offering.
The bulk of our clients invest
nationally and regionally, said
Al-Halabi. Most of the Saudi investors
that want international exposure
separate their onshore and international
investment and so do it with
international banks. On the domestic
side, Saudi domiciled banks are better
than international players because of
their on-the-ground presence, closeness
to the clients and accessibility to the
market, he added.
NCB Capitals strength in Islamic fund
management is typified by its AlAhli
Saudi Riyal Trade Fund. With assets under
management at a record SAR16.5 Billion
($4.4 billion) and more than 17,000 clients
as of December 2010, it is the largest
Shariah-compliant fund in the world.
More broadly, the firm has grown its
assets under management by 23.46 per
cent since January 2010, adding SAR6.8
billion which represents 95 per cent of
the total market's growth last year and
today it has a 36 per cent share of Saudi
mutual funds.
Given the banks influence in the
Saudi market, its ambitious expansion
is likely to unsettle rival private banks
that attempt to increase their presence
in the Kingdom.
43-55 Private Banking.indd 55 8/24/11 3:41:55 PM
o sooner had warnings surfaced
about the price of oil reaching
unsafe levels this summer than the
global economy started panicking
about crude hitting the lows seen in 2008.
The volte-face, sparked by a
downgrade of US debt and a string of
gloomy economic forecasts, has left Gulf
governments drawing parallels with
the fallout from the credit crisis, which
severely damaged their petro-dollar
income. In 2008, oil plummeted from a
high of $147 a barrel to $36, fuelling the
worst recession in history. Analysts are
asking whether an oil-induced double-
dip recession is now on the cards.
Key energy exporters Saudi Arabia
and the UAE need oil prices above $85 a
barrel to meet their spending obligations,
according to the latest estimates. These
concerns seem a far cry from fears
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1979 Iranian revolution and subsequent
Iran-Iraq war. Worryingly, in each of these
cases the cost of oil relative to global
economic output has hit current levels.
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With a slump seemingly around the
corner, Gulf states will be looking at
factors that could support prices.
In the first instance they are not
expected to allow prices to plummet,
so they may reduce oil output sooner
than they did after the financial crisis in
2008. This could, of course, send world
economic growth into freefall, shattering
their main income and any hopes of
breaking even on their budgets and paying
for the planned infrastructure spend.
The loss of production due to the Arab
Spring chaos this year and demand from
emerging economies like China are two
expressed in the first half of 2011 about a
fresh oil price spike and its effect on the
worlds financial health.
Few would disagree that the S&P
downgrade of US debt to AA-plus in
August was a game-changer for GCC
oil exporting nations. The Organisation
of the Petroleum Exporting Countries
(Opec) and the International Energy
Agency (IEA) have since trimmed crude
demand for 2011, while also decreasing
next year's growth prediction.
Given this, if the past is any guide to
the future, analysts say sustained high oil
prices for the remainder of the year will
trigger a serious slowdown in the fragile
global economy.
This scenario emerged in 2008, but
also twice before, first in the oil shock
of 1973/74 after the Arab-Israeli conflict
choked oil flows; and again during the
,-&J<GK<D9<I)'((
56-60 Oil.indd 56 8/24/11 3:45:54 PM
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powerful narratives that could provide a
floor for prices.
Robeco, a Dutch asset management
firm, said recently that Chinas
unquenchable thirst for natural resources
and demand from developing markets
continues to outpace new sources of
supply, leading to escalating oil prices. A
natural resources fund manager with the
firm, Peter Csoregh, said that tensions
were likely to erupt as China vies with
the West for natural resources to support
its growth rate as the government tries
to stave off social unrest. Can China
double from here, can they triple from
here? Sure they can. Is there enough oil
or copper in the world to allow them to
do that? No, he told Reuters.
All the risk factors that could spur
the oil price again are lurking in the
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background, say analysts. Disruption to
production in volatile areas including
Libya, Iraq, Nigeria and Syria pose
perhaps the most immediate threat to
supply. And if the so-called killer of
production, US arch enemy Venezuelan
President Hugo Chavez, regains his
health in the long-term this will likely
provide further support for high oil.
Simon Wardell, an oil analyst at the
economic forecasting firm
IHS Global Insight,
said: The biggest
concern is the things
you cant predict, and
weve already seen
that this year with
developments in
the Middle East.
Unforeseen events
CULF BUSlNLSS&,.
56-60 Oil.indd 57 8/24/11 3:45:54 PM
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like these could have a huge impact.
Meanwhile, academics at Stanford
University in the US that study the
causes of previous price rises, in
July singled out speculation among
oil traders as a big factor. In a paper
entitled Investor Flows and the 2008
Boom/Bust in Oil Prices, Professor
Kenneth Singleton a highly respected
econometrician mounted a wide-
ranging assault on the belief among
policymakers that speculation does
not affect commodity prices. Singleton
argued that in their attempt to outplay
competitors, traders stoke the market
and push prices higher. His conclusions
undermine the long-held view that future
prices are determined solely by economic
fundamentals.
Charles Maxwell, a senior energy
analyst at brokerage firm Weeden & Co,
said speculators like hedge funds should
only be blamed to a point. After oil
reached $147 a number of institutions
examined the role of speculators in the
rise and came to the conclusion that it
was players like hedge funds driving it
to its highest point. But the facts dont
bear that out. We now know all about
the contracts hedge funds were involved
with; and the physical holding of oil
from $120 upwards was diminishing
all the time. So hedge funds were not
responsible. In general, speculators got
hurt last time so they are unlikely to be
as carefree this time round.
E<N;8E><IJ
The Middle East faces a more explosive
set of challenges in 2011 than it did
three years ago, with the potential for
revolutions to spread throughout the
region and a greater
dependence on economies
around the world as a result of increased
globalisation.
Geopolitics is much worse this time
round, said Richard Swann, managing
editor for Europe, Africa and Middle
East at energy analyst firm Platts, who
added that organisations like Opec and
IEA are diminishing forces in the future
price of oil. In June, the IEA announced
it would release 60 million barrels of oil
from its member governments reserves,
apparently in response to ongoing
disruption of oil supplies from Libya.
But any attempt to reduce prices in
the medium- or long-term failed, as
the price of Brent crude fell $5 on the
announcement but rallied since.
Today, following Augusts economic
developments, Opec faces the exact
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56-60 Oil.indd 59 8/24/11 3:45:55 PM
-',SLP1LMBLR 20
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have largely exceeded quotas in 2011 as
they sought to take advantage of higher
global crude prices earlier this year and
to make up for the lack of Libyan crude
due to the civil war in the country.
Abhay Bhargava, an energy and power
systems specialist at Frost & Sullivan
International, said Gulf governments that
are looking to support higher oil prices
for budgetary purposes could be playing
a dangerous game as elevated prices
could suffocate foreign investment into
the Gulf from oil consuming nations.
Gulf countries are dependent on other
economies around the world, as much as
they like to think theyre not. If you get
a price at $147 then Gulf governments
will have a lot more money to spend
and build up their economies. But at this
price its not sustainable and is rather
impractical. Other consuming nations
will suffer and the GCC will eventually
be on the receiving end, said Bhargava.
Unforeseen issues that could push
oil prices higher, such as a new wave
of unrest in the Middle East and a
repetition of an event like BPs oil spill
last year in the Gulf of Mexico, are by
their very nature hard to forecast. Yet,
expected weak economic growth in the
coming years has led many to believe
that the current global conditions seem
unlikely to support any immediate flare-
ups in crude. Amid this uncertainty,
governments in the Gulf will be treading
carefully from now on.
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opposite dilemma of keeping prices
buoyant. It can cut output to boost
prices, but reports last month suggested
that the cartel was not planning to
get together before the next scheduled
meeting in December.
Opec, provider of about 40 per cent
of the worlds crude, set its biggest-ever
supply cuts in late 2008 amid a collapse
in global demand. The decision capped
production at 24.845 million barrels a
day for all members except Iraq, which is
exempt from the quota system. Members
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Left to r|bt: 0PLC Pres|dert Abda||a L|Badr|, |Lf bead, Noe Var Pu|st, |LA Pres|dert, Nabuo Iara|a, KuWa|t| 0|| N|r|ster Sbe||b Abad a|Abdu||ab a|Sabab.
Abbay Bbarava, erery ard poWer systes
spec|a||st, frost & Su|||var |rterrat|ora|
56-60 Oil.indd 60 8/24/11 3:45:57 PM
STRATEGIC TALENT MANAGEMENT AND
TRANSFORMATION IN CORPORATE CULTURE
THE NEW FRONTIER OF GLOBAL COMPETITIVE ADVANTAGE.
SPONSORE D F E AT URE

In July 2008, Drake and Scull
International (DSI) raised
Dh1.2 billion by offering 55 per
cent of the companys shares to the
public in an IPO that was 101 times
oversubscribed pulling Dh132 billion in
subscription. The shares were priced
at Dh1 each plus an offering cost of
Dh0.02 per share.
The process of oating a private
family-owned business into public
needs more than just going to the
capital market and raising funds
It is also about ensuring a smooth
transition to corporate culture and the
implementation of a strategic talent
management approach. It requires
a change in mindset, habits, culture
- corporate culture, which luckily is
picking up in the UAE and the region.
It also requires fundamental change
in attitude among corporate leaders
In the case of DSI, it was virtual
re-engineering of the company, its
systems, and processes and re-aligning
the human resources in line with the
requirements. In many ways, it was a
sea change. Cultural Transformation
begins with understanding the Cultural
Capital of your organization - the
connection between who you are and
what you stand for as an organization.
Purposeful culture change does not
happen without awareness, partnership,
and commitment. The bedrock of
the corporate culture transformation
is your employees alignment with
the companys vision, mission and
values. The success story of Drake
and Scull International is attributed
to the ability of the management to
preserve the heritage of the company
that dates back to more than 150
years. Over countless generations our
employees have acquired a treasure
trove of knowledge and experience
and stood the test of time by adapting
to the changing world and challenging
market dynamics. Our vision is to
become an international company
that promotes operational excellence
and we recognize that our people are
the catalyst for that change. Strategic
Talent Management is a critical element
of any organizations quest to maximize
possibility. Employees are after all, any
organizations most valuable asset and
you want to be sure that you are getting
the greatest return on your investment.
Implementation of succession planning
program is vital for your corporate
culture transformation especially when
evaluating the talent currently employed
in your organization, understanding
what each team members strengths
and weaknesses are, and developing a
training and development program to
prepare high potential team members
to assume greater responsibility and
provide leadership direction within
your organization. To cope with our
horizontal and vertical expansion and
to increase our competitive advantage
our talent managers are on constant
quest of building and measuring our
diverse workforce to ensure that they
can execute across various functions,
business units and geographies.
It is empirical to understand that
organizations dont transform People
do. The virtues of success in an
ever changing and globalized world
is acknowledging that successful
corporate transformation and talent
management are the new frontier of
global competitive advantage, because
they dene the inherent long-term
capability of an organization to build
and sustain high performance, attract
and retain talented people, and build
resilience and adaptive capacity.
Zeina Tabari, Chief Corporate Affairs Ofcer, Drake & Scull International
drake & scull.indd 41 8/25/11 2:53:51 PM
ln Lhe baLLle lor cusLomers durinq Lhe recession, convenLional and
Sharia'hcomplianL banks have sharpened Lheir qame. BoLh secLors
currenLly vie neckonneck in Lerms ol prolLabiliLy, buL Lhe winners will
be Lhose who can oller innovaLive producLs and hasslelree bankinq.
K<OK9P;8II<EJKL9@E>
ISLAMIC
CONVENTIONAL BANKING
-)&SLP1LMBLR 20
62-66 Islamic Banking.indd 62 8/24/11 5:00:13 PM
ln Lhe baLLle lor cusLomers durinq Lhe recession, convenLional and
Sharia'hcomplianL banks have sharpened Lheir qame. BoLh secLors
currenLly vie neckonneck in Lerms ol prolLabiliLy, buL Lhe winners will
be Lhose who can oller innovaLive producLs and hasslelree bankinq.
K<OK9P;8II<EJKL9@E>
ISLAMIC
CONVENTIONAL BANKING
-)&SLP1LMBLR 20
62-66 Islamic Banking.indd 62 8/24/11 5:00:13 PM
K
he last two years have been challenging for Islamic
and conventional banks alike, with the negative
impact of the regional and global financial crisis
affecting performance.
In the early period following the financial crisis,
Gulf Islamic financial institutions initially performed better than
their conventional rivals. However, over the last two years,
Islamic bank performance has closely mapped conventional
banks. In fact, the GCCs Islamic banking sector return in 2010
was the same as the return for conventional banks in the GCC
at 1.61 per cent.
But, although profitability has been similar, Gulf Islamic
banks have continued to grow at a faster rate than conventional
banks. Islamic banks have maintained their expansion by
continuing to launch new products and services, and customers
are still migrating from traditional banks to Shariah-compliant
institutions, although not at the rate seen some years ago. The
inflow of new Islamic financial entities entering markets has,
not surprisingly, slowed since the global credit crunch and this
has also reduced the overall growth in assets. As a result, the
organic growth has been quite impressive.
Before the crisis, Islamic bank profitability returns were
significantly superior to those of conventional banks. Prior to
2008, the Islamic banking sector in the GCC generated overall
returns around 50 per cent higher, with return on assets 3.6
per cent against conventional banks 2.4 per cent. This is due
in part to the relatively immaturity of the market but as the
market has matured, the gap has narrowed significantly with
overall margins now similar between both Islamic banks and
their conventional rivals.
@E:I<8J<;:FDG<K@K@FE
Competition has increased within the Islamic sector and
from conventional banks introducing more Islamic products
and services through dedicated windows. To boost their
market position, Islamic banks need to identify and target
the most valuable customer segments with differentiated
and higher-quality offerings. On the whole, and as with
conventional institutions in the Gulf, Islamic banks that
focus on retail banking have generally performed better
than those that target only corporate banking.
To be successful, Islamic banks require economies
of scale in order to drive down cost-income ratios. Cross-
border expansion, including mergers and acquisitions, is
one option for increasing scale. However, often differences
in the structure of products across countries add to the
challenges of cross-border expansion.
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62-66 Islamic Banking.indd 63 8/24/11 5:00:16 PM
^0
35
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2007 2008 2009 200
"A number ol lslamic
banks esLablished over
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The most successful Islamic banks
are developing products that address
customer needs, such as Islamic credit
cards and mortgages. Customers
increasingly expect products to perform
as well as those from conventional
banks and will not accept added
complexity as an excuse for higher
costs or lower performance. To mitigate
additional complexity, Islamic banks pay
greater attention to cost containment,
fast processing times, and low error
rates. Islamic banks need to manage
these core areas and understand
customer needs in order to compete
against conventional banks.
A number of Islamic banks
established over the past five years
have encountered tough conditions.
Growth and returns have so far not
matched original expectations due to
the extreme market conditions since
2008. These banks include UAEs Al
Hilal Bank and government-backed
Dubais Noor Islamic Bank. Despite the
challenging market, the smaller Islamic
banks, aided by their start-up capital
position, have done reasonably well,
but in niche markets and with niche
products. Institutions initially spoke of
regional and even global ambitions but
this has been postponed in the current
economic climate.
Other banks are now building their
operational base for further growth.
Dubai Islamic Bank (DIB), the largest
Islamic bank in the UAE, has focused on
diversification and growth, including the
expansion of its branch network
and growth in its overall customer base.
=L<CC@E><OG8EJ@FE
Growth has been achieved through
offering a comprehensive suite of
products and services that meet the
needs of its institutional and consumer
clientele. DIB now operates across the
UAE through an expanding network
of 68 branches serving over 1.2
million customers. The banks retail
business accounts for 50 per cent of all
revenues. Last year, DIB also increased
its stake in Tamweel, the UAE-based
Islamic home finance provider, to
approximately 58 per cent. DIB also
launched Emirates REIT, Dubais first
real estate investment trust. The bank
also expanded its offerings in consumer
banking, launching Al Islami Salam
Finance, a Shariah-compliant product
that offers liquidity through personal
financing, and introduced a range
of Takaful products. DIB is currently
embarking on a growth phase, believing
that opportunities will be created over
the next few years, and will continue
to focus on the opening of strategically
located branches while also increasing
its total customer base.
Some Gulf Islamic financial institutions
continue to look internationally for
opportunities. The Birmingham UK-based
loss-making Islamic Bank of Britain was
recently taken over by its main investor
Qatar International Islamic Bank (QIIB)
in a deal valuing it at 25.5 million.
The Gulfs largest Islamic bank, Al Rajhi
Banking Corporation of Saudi Arabia,
is expanding into Kuwait and Jordan. It
already has a sizeable banking operation
in Malaysia. Kuwait Finance House also
ASSET GROWTH GCC (%)
RETURN ON ASSETS GCC (%)
^0
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30
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KLY
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62-66 Islamic Banking.indd 64 8/24/11 5:00:16 PM
K?<CFNJ%%%%
A||ou_| |nsu|aeJ 'ron |e wors o' |e _|o|a| Hnanc|a|
cr|s|s Jue o |e|r 'unJ|n_ roH|es anJ avo|Jance o' Jea||n_
|n Je| raJ|n_ anJ nar|e secu|a|on. s|an|c |an|s are
a''eceJ |, |e oera|n_ env|ronnen as |e, are ar o' |e
w|Jer _|o|a| Hnanc|a| s,sen |e recen a|eover o' u|a|
ban| |, |e _overnnen |s an exan|e o' ||s As w|| |an|s
|o| conven|ona| anJ s|an|c across |e re_|on. u|a|
ban| |as sru__|eJ 'or |e |as 'ew ,ears Jue o a r|se |n |oan
Je'au|s anJ exosures o cororae Je| resrucur|n_s ||s
necess|aeJ a s|_n|Hcan |ncrease |n |oan |oss rov|s|ons 'or
noner'orn|n_ creJ| u|a| ban| recorJeJ |osses Jue o
|ar_e |na|rnen c|ar_es on s|an|c |oans anJ |nvesnens
|e _overnnen w||| |nec 'res| 'unJs |no u|a| ban| anJ
||s w||| |||e|, |eaJ o a a|eover |n |e 'uure once |e |a|ance
s|ee |s |nroveJ oss|||e su|ors |nc|uJe n|raes Nb. Noor
s|an|c ban| anJ An|a| |nance. anon_ o|ers
s|an|c |nvesnen |ouses were a|so no |nnune 'ron
|e Hnanc|a| cr|s|s |e ||_| roH|e nvesnen ar o' uwa|
Je'au|eJ on |s Su|u| a'er 'unJ|n_ Jr|eJ u anJ ||ou|J|, was
souee.eJ. anJ na_n|HeJ |, |e co||ase |n va|ue o' asses |
|e|J 'o||ow|n_ |e creJ| crunc| S|nce |s Je'au| |n 00'. ar
|as |een |nvo|veJ |n a con|ex resrucur|n_ ne_o|a|on w||
|s creJ|ors anJ |as now success'u||, a_reeJ a S.o |||||on
Je| resrucur|n_ ar |as sa|J |s resrucur|n_ wou|J sar
w|| W8 n||||on a|J ou Jur|n_ |e Hrs ,ear o sna||
|nvesors anJ nonHnanc|a| |ns|u|ons |xeJ a,nens w|||
|en |e naJe o rena|n|n_ |an|s anJ |nvesors over Hve
,ears. w|| Hna| rea,nen o' |e Je| Jue |, |e enJ o' June

0 |e conan, |as |eJ_eJ o rea, a|| |s Je|. n|rror|n_
a nun|er o' resrucur|n_s |n |e Cu|' w|ere conan|es
|ave no as|eJ |an|s o reJuce |e anoun o' none, |e,
owe |e Jea| acce|eraeJ a'er ar won roec|on unJer
uwa|'s |nanc|a| Sa||||, aw |e |aw |nc|uJes a cenra| |an|
_uaranee 'or u o |a|' o' a,nens env|sa_eJ |n |nvesnen
conan|es' resrucur|n_s
8E;K?<?@>?J
s|an|c |an|s are reco_n|s|n_ |e neeJ o rena|n |nnova|ve |n
orJer o conee anJ con|nue _row|n_ |e|r asse |ases anJ
w|n nar|e s|are 'ron conven|ona| |an|s |e UA's A| ||a|
ban| |s _a|n|n_ a reua|on 'or |nnova|ve Hnanc|n_ |e |an|
|as a||ocaeJ |s=.0 n||||on as ar o' a naor |s= |||||on
Jua| ranc|e s|an|c anJ conven|ona| Hnanc|n_ Jea| cover|n_
n|raes See| nJusr|es. |e UA's |ar_es see| nanu'acurer
|e ara|srucureJ |oan w||| ar|a||, 'unJ n|raes See|'s |an
exans|on roec anJ ar|, rea, |e see| roJucer's |so
|||||on nu||currenc, |r|J_e |oan 'ac|||, |e Jea| |||usraes A|
||a|'s a||||, o srucure Hex|||e S|ar|a'| con||an Hnanc|n_ as
| |nvo|veJ cas| swees. Je'erra|s anJ |nercreJ|or a_reenens
|e s|an|c ranc|e was c|oseJ |n on|, e|_| wee|s a_a|ns a
|ac|Jro o' vo|a||e see| r|ces anJ |_| ||ou|J|,. w|| nore |an
wo |nes oversu|scr||on on |e connerc|a| Je| anJ 'our
|nes on |e s|an|c 'ac|||, A| ||a| ban| |s owneJ |, |e A|u
|a|| nvesnen Counc|| anJ oeraes ' |ranc|es across |e
UA |s 'ocus|n_ on new ec|no|o_|es anJ sec|a| serv|ces o
_enerae _row| |n |e UA anJ |e _reaer CCC area
@JC8D@:98EB@E>
Ibe |oba| potert|a| of tbe |s|a|c bar||r
sector |s $4,000 b||||or.
has a growing international presence
with important banking activities in
Turkey, Malaysia and Bahrain.
The global potential of the Islamic
banking market is estimated at $4,000
billion while the current market is
estimated at only $700 billion. With
such potential remaining, its clear
why governments and investors
are still very optimistic about the
long-term prospects. Governments,
particularly in regions which were
not significantly affected by the credit
crunch and are still enjoying good rates
of economic growth, such as Asia, are
encouraging more Islamic banks to
start up. Improving economic growth,
new Islamic banking products, higher
infrastructure spending and continued
diversification from oil economies will
>LC=9LJ@E<JJ,-, >LC=9LJ@E<JJ,-,
98EB@E>
62-66 Islamic Banking.indd 65 8/24/11 5:00:19 PM
help to drive Islamic assets. Government
backing for the development and
promotion of Islamic banking, low
penetration and competition among
conventional banks make Islamic
banking attractive.
:?8CC<E><J8?<8;
There remain hurdles for the Islamic
banking industry. Institutions are
restricted by the lack of a viable Islamic
interbank market. While deposits may
be redeemed immediately, Islamic bank
assets are usually backed by real estate,
and are therefore illiquid. This forces
Islamic banks to hold more cash or
liquid assets than conventional peers
to pare illiquidity risks. In the past
few years, this has been a blessing for
Islamic banks as they boasted greater
internal liquidity and were not forced to
rely on wholesale markets.
Islamic banks have enjoyed increased
interest in their products because they
were insulated from the crisis somewhat,
due to absence from the traditional
interbank market and the avoidance of
problematic off-balance sheet assets and
sub-prime linked assets. The stipulation
by Islamic banks that you must own an
asset has also allowed them to avoid
derivative instruments entirely.
However, the fact that Islamic
bank assets are usually backed by
real estate also harmed the sector
amid the widespread collapse of the
GCC property market. Today, one of
the main challenges for Gulf Islamic
banks remains their wide exposure
to real estate. Many believe Islamic
banks not have the same flexibility
as conventional banks in managing
balance sheet risks.
The outlook for Islamic banks in the
GCC is, of course, closely correlated to
the economic environment. Although
asset growth has been subdued in
recent times, growth rates have been
in excess of the conventional banking
sector and this will continue for the
foreseeable future.
"1oday, one ol Lhe dX`eZ_Xcc\e^\j]fi
>lc]@jcXd`ZYXebji\dX`ejk_\`in`[\
\ogfjli\kfi\Xc\jkXk\. Many believe
lslamic banks noL have Lhe same lexibiliLy
as convenLional banks in manaqinq balance
sheeL risks."
|s|a|c bar|s are restr|cted by tbe
|ac| of a v|ab|e |rterbar| ar|et.
--&SLP1LMBLR 20
98EB@E>
62-66 Islamic Banking.indd 66 8/24/11 5:00:21 PM
With so many industry-leading thinkers at our afliates, theres no shortage of opinions on any investment
issue. We make the most of them, bringing together experts from rms like Loomis, Sayles & Company,
Aurora Investment Management, AlphaSimplex Group and Gateway Investment Advisers. Their ideas
frequently drive the markets, and we value their different perspectives and insights. Out of their exchange
of viewpoints come new investment strategies for our clients. Its a process we call Better thinking. Together.
And youll experience it when we work with you.
XCall us at +971 4 365 8066 or visit
ga.natixis.com to see how our intellectual
capital can sharpen your thinking.
True diversication
begins with a
difference of opinions.
Better thinking. Together.
This communication is provided in and from the Dubai International Financial Center (DIFC) by Natixis Global Associates Middle East. It is only available to persons who
have sufcient nancial experience and understanding to participate in nancial markets within the DIFC, and qualify as Professional Clients as dened by the Dubai
Financial Services Authority (DFSA). This communication should not be delivered to or relied on by any other type of person. Natixis Global Associates Middle East is the
trade name for Natixis Global Associates Middle East, a branch of Natixis Global Associates UK Limited, which is duly licensed and regulated by the DFSA. Registered
ofce: PO Box 118257, Ofce 603 - Level 6, Currency House Tower 2, DIFC, Dubai, United Arab Emirates. Natixis Global Associates Middle East is a business development unit
of Natixis Global Associates, the global distribution organization of Natixis Global Asset Management, the holding company of a diverse line-up of specialized investment
management and distribution entities worldwide, including the investment managers referenced herein. The investment management subsidiaries of Natixis Global Asset
Management mentioned in this communication conduct any investment management activities only in and from the countries in which they are licensed or authorized.
This communication is for information only and does not constitute an offer of nancial services, nor a recommendation or offer to purchase or sell shares in any nancial
instrument. Investors should consider the investment objectives, risks and expenses of any investment carefully before investing.
ADINT224-0811
2 YEARS IN A ROW
Best Asset Management
Banker Middle East 2011 Industry Awards
ADINT224-0811.indd 1 8/10/11 4:37 PM
-/&SLP1LMBLR 20
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The Gulf regions Exchange Trade Funds (ETFs),
index-based open-ended funds that are listed like
stocks on bourses, have failed to attract sufficient
liquidity, but regional investors are buying ETFs
globally to gain exposure to different asset classes
and markets.
The UAE and Saudi Arabia raced last year to
gain the title of the first Gulf state to list an ETF,
a move that was seen as a step towards wooing
foreign investors and increasing liquidity on the
stock exchange, where volumes and valuations have
dropped due to the economic slowdown.
The UAE won with the listing of the National
Bank of Abu Dhabis ETF on the Abu Dhabi
Securities Exchange in March last year. A few
weeks later, Saudi Arabias FALCOM Financial
Services launched an ETF for Saudi equities and
later listed a second ETF for Saudi petrochemical
stocks on the Saudi bourse, Tadawul.
Globally, assets of ETFs in the first half of this year
rose 41 per cent to $1.4 trillion from $1 trillion in
a year-earlier period, according to Blackrocks ETF
landscape report. Money manager Blackrock, which
sells ETFs through the iShares unit, has forecast that
assets under management for ETFs and Exchange
Traded Products, which are products similar to ETFs,
will grow by up to 30 per cent annually over the next
few years to reach $2 trillion by the beginning of 2012.
Assets of National Bank of Abu Dhabis ETF
reached $5.2 million in the first half of 2011, while
the two Saudi ETFs had $27.2 million in assets,
according to Blackrocks report.
The global stock market rout, however, is expected
to slash ETF assets and valuations and impact the
liquidity of regional and international lisitings.
For regional investors, buying ETFs is a cheap
PoliLical Lurmoil and low liquidiLy levels conLinue Lo impede
Lhe qrowLh ol reqional exchanqeLraded lunds. Local
bourses musL be developed il Lhe Cull is Lo compeLe wiLh
lellow emerqinq markeLs, Brazil and Russia.
THE LONG
ROAD FOR ETFS
68-71 ETFs.indd 68 8/24/11 3:46:49 PM
-/&SLP1LMBLR 20
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The Gulf regions Exchange Trade Funds (ETFs),
index-based open-ended funds that are listed like
stocks on bourses, have failed to attract sufficient
liquidity, but regional investors are buying ETFs
globally to gain exposure to different asset classes
and markets.
The UAE and Saudi Arabia raced last year to
gain the title of the first Gulf state to list an ETF,
a move that was seen as a step towards wooing
foreign investors and increasing liquidity on the
stock exchange, where volumes and valuations have
dropped due to the economic slowdown.
The UAE won with the listing of the National
Bank of Abu Dhabis ETF on the Abu Dhabi
Securities Exchange in March last year. A few
weeks later, Saudi Arabias FALCOM Financial
Services launched an ETF for Saudi equities and
later listed a second ETF for Saudi petrochemical
stocks on the Saudi bourse, Tadawul.
Globally, assets of ETFs in the first half of this year
rose 41 per cent to $1.4 trillion from $1 trillion in
a year-earlier period, according to Blackrocks ETF
landscape report. Money manager Blackrock, which
sells ETFs through the iShares unit, has forecast that
assets under management for ETFs and Exchange
Traded Products, which are products similar to ETFs,
will grow by up to 30 per cent annually over the next
few years to reach $2 trillion by the beginning of 2012.
Assets of National Bank of Abu Dhabis ETF
reached $5.2 million in the first half of 2011, while
the two Saudi ETFs had $27.2 million in assets,
according to Blackrocks report.
The global stock market rout, however, is expected
to slash ETF assets and valuations and impact the
liquidity of regional and international lisitings.
For regional investors, buying ETFs is a cheap
PoliLical Lurmoil and low liquidiLy levels conLinue Lo impede
Lhe qrowLh ol reqional exchanqeLraded lunds. Local
bourses musL be developed il Lhe Cull is Lo compeLe wiLh
lellow emerqinq markeLs, Brazil and Russia.
THE LONG
ROAD FOR ETFS
68-71 ETFs.indd 68 8/24/11 3:46:49 PM
>LC=9LJ@E<JJ&-0 >LC=9LJ@E<JJ&-0
68-71 ETFs.indd 69 8/24/11 3:46:51 PM
region this year, he added.
There is a greater potential for
commodity ETFs as a means of diversifying
away the investors portfolio from equities
and bonds and Gulf exposure, says
Franois de Vivis, financial services
manager at consultancy Bain & Co Middle
East. Gold and oil are the most common
products for diversification, he added.
While the global ETF industry is
growing, regional ETFs are lagging
behind due to the low liquidity
plaguing exchanges, novelty of the
products, regulatory hurdles, foreign
ownership limits and, most recently,
the negative investor sentiment due to
the political turmoil.
ETF provider Source has witnessed
rising interest in its Islamic ETFs for
gold, silver, palladium and platinum, says
Sameer Meralli, the chief executive officer
of Alchemy Capital Advisors, which has
a partnership with Source to distribute
ETFs in the Middle East, North Africa and
South Asia. Regional investors have a fast-
growing appetite for Sources agriculture,
oil and Russia ETFs, he says. Source
is owned by Goldman Sachs, Morgan
Stanley, Bank of America Merrill Lynch,
JP Morgan and Nomura.
Initially we saw demand come from
institutional asset managers, private
banks, family offices and a number of
sovereign clients, however, the breadth of
clients is growing across the region and
across segments as more investors turn to
ETFs as part of their portfolio allocation,
says Meralli.
Source, which has about $8.4 billion in
assets, has attracted more than $500
million in inflows from investors
in the Middle East since the
firm started distributing
the products in the
way to invest in booming markets such
as Brazil, because management fees tend
to be less than those of mutual funds.
ETFs can be bought and sold on an
exchange throughout the day, whereas
mutual funds are priced at the end of the
trading session.
Gulf investors are currently showing
interest in iShares emerging market
ETFs, particularly Brazil and Russia,
and Islamic-Sharia compliant products,
which are attracting Saudi investors and
Islamic insurance companies, says Robert
Broadwell, a director at iShares.
They [Gulf investors] probably have a
higher percentage in equity ETFs versus
fixed income and a higher preference for
the US equity sector, especially technology
and healthcare, says Broadwell.
Over the last six months, we have also
noticed investors in the region becoming
more selective in their emerging market
exposure. Consensus among private
banks is that Brazil and Russia are better
in terms of stock valuation, and are not
witnessing the same fears about inflation
witnessed in India and China.
Clobally, invesLor dem
and lor L1Fs has risen since
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ore
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panies
in rem
oLe reqions aL a low cosL.
1he SPDR S&P 500, launched in 993 by BosLonbased
m
oney m
anaqem
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68-71 ETFs.indd 70 8/24/11 3:46:51 PM

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possibility of listing ETFs on international
exchanges, but market conditions need
to improve to allow the launch of new
products, says Alan Durrant, the banks
group chief investment officer. The asset
class of ETFs in the UAE and Saudi are
equities and these havent been popular
asset classes over the last year, says
Durrant. Investors who were interested
in stock markets five years ago have lost
a lot of money and are very leveraged
and dont want to or can't put money
into stock markets because they have
been burned so badly. These are potential
investors that are lost.
Nonetheless, Durrant says the banks
ETFs has attracted investors from Europe
and Asia, as well as local retail and
institutional investors and expects the
outlook to improve as banks increase
lending and the UAEs economy
continues to grow.
The regional tension has already
impacted plans for ETFs in the region.
FALCOM had been in talks to list
ETFs in Oman, but the current market
conditions are not conducive, a company
spokesperson says. Certainly there
is a lot to add to the ETF product
line, however, it may not be an ideal
time, says the FALCOM spokesperson.
Investors want to see the global
instability settle down before they may
start taking new bets.
The iShares Gulf ETF, which includes
stocks from all Gulf states except Saudi
Arabia and is geared towards investors
mainly in Europe, has been impacted
by low trading volumes in the regions
markets due to the current unrest, says
iShares Broadwell.
An HSBC official said last year the
bank planned to launch Sharia-compliant
ETFs in the Gulf, and a Standard & Poors
official said it was in talks with regional
Gulf banks to create a new-exchange-
traded product based on its indices.
Neither of these plans has materialised.
Local investors buy ETFs abroad
because they have less knowledge on
companies, but it wouldnt make sense
for local investors to buy ETFs for
companies here, says Arqaams Bentaleb.
It would be better to do cross listing of
ETFs here rather than structure one from
scratch because it doesn't make sense to
reinvent the wheel.
Part of Alchemys mandate is looking
at the possibility of cross-listing Sources
products on exchanges in the Middle East,
North Africa and South Asia, but there are
no imminent plans, says Meralli.
One locally listed product that has the
potential for growth is the Dubai Gold
Securities, a Sharia-compliant exchange-
traded commodity that was developed
by Dubai Multi Commodities Centre and
the World Gold Council and is listed on
NASDAQ Dubai.
The Dubai Gold Securities provides
direct and easy access to gold and is not
a blended product. It should have more
room to develop, but then again liquidity
becomes an issue because it is traded in a
separate exchange not in a widely liquid
exchange, says Arqaams Bentaleb.
But attracting local and international
investors to locally listed commodity ETFs
that exist elsewhere may prove difficult.
If a products exists in the US, Europe
and Asia, it is hard to rationalise going to
new markets and new exchanges where
there arent other products listed, says
Deborah Fuhr, Blackrocks global head
of ETF research and implementation
strategy. You need to develop an
ecosystem to make ETFs work.
Even in the more developed markets
with some of the more successful, critical
mass ETF products you can clearly see
a relatively flat growth trend during the
initial launch followed by a steep incline
as investors begin to adopt the product,
says Meralli.
One problem facing locally listed
ETFs is the lack of sufficient authorised
participants or market makers, which are
firms that are ready to buy and sell stocks
regularly, guaranteeing liquidity.
If there isnt a local bank ready to
provide liquidity for the exchange for
market making, it is very hard for any
other investor to provide it, says Amine
Bentaleb, associate director at Dubai-
based investment bank Arqaam Capital,
which holds ETFs products in its hedge
fund. The only solution would be for
local investors to take the pain and
develop the market overall, sacrificing
one year short-term profit for a long-term
leading position and thats the sacrifice
that needs to happen at some point.
A potential upgrade of Qatar and the
UAE from frontier to emerging market
status by index compiler MSCI could
attract foreign investor interest in the
ETFs. But for a country like Saudi Arabia,
the Arab regions biggest stock market
and the most restrictive toward foreign
investors, the task is even more difficult
since it is not included on global indices.
The MSCI upgrade will help the
resource coverage and may help asset
managers that hold these specific stocks,
but this is not a panacea and people
will want to have exposure to the entire
basket, says iShares Broadwell.
Gulf ETFs have more chance of
attracting foreign cash because institutional
investors abroad are unlikely to be
attracted to a single country or sector.
Regional ETFs would make sense
because you will have more liquidity and
investors wouldnt have to capture liquidity
in each market, or deal with the settlement
nightmare that happens in each country in
the region, says Arqaams Bentaleb.
National Bank of Abu Dhabi has looked
at pan-Gulf ETFs and doesnt rule out the
"While Lhe qlobal L1F
indusLry is qrowinq, i\^`feXc
<K=jXi\cX^^`e^Y\_`e[
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mosL recenLly, Lhe neqaLive
invesLor senLimenL due Lo
Lhe poliLical Lurmoil."
68-71 ETFs.indd 71 8/24/11 3:46:51 PM
.)&SLP1LMBLR 20
As Lhe reqion drowns in lake qoods, lraudsLer qanqs are endanqerinq Lhe
local economy, creaLiviLy and saleLy.
K<OK9PD8IB8KB@EJFE
:FLEK<I=<@K
:LCKLI<
72-76 Fake goods.indd 72 8/24/11 4:43:12 PM
.)&SLP1LMBLR 20
As Lhe reqion drowns in lake qoods, lraudsLer qanqs are endanqerinq Lhe
local economy, creaLiviLy and saleLy.
K<OK9PD8IB8KB@EJFE
:FLEK<I=<@K
:LCKLI<
72-76 Fake goods.indd 72 8/24/11 4:43:12 PM
CULF BUSlNLSS&.*
:FLEK<I=<@K@E>
@ek_\D<E8i\^`fe#dfi\k_Xej`od`cc`fe]Xb\
[il^j_Xm\Y\\ej\`q\[% Middle LasLern counLries
where auLhoriLies have dismanLled counLerleiL medicine
manulacLurinq operaLions include LqypL, Jordan and OaLar."
E
o product is left untouched.
From household products, auto
parts, pharmaceuticals and
cosmetics to DVDs, software, mobile
phones and video games, counterfeiting
is big business.
There are no reliable figures to
estimate the size of the counterfeit trade
and loss to the economy, says Abdullah
Hasayen, chairman of Dubai-based
Brand Owners Protection Group. It has
been estimated by the World Customs
Organisation at seven per cent of global
trade, which translates to hundreds of
billions of dollars in losses every year.
Yasar Yaman, director global security
of pharmaceutical firm Pfizer EMEA,
concedes that it is impossible to assess
the true scope of the counterfeiting
problem. What we do know is that
those who counterfeit our medicines
are no longer small amateur operations
from their garage or basement, he says.
Today, they are members of organised
transnational criminal enterprises with
complex distribution networks. We
have seen links to narcotics traffickers,
firearms smugglers and terrorists.
Pfizer has witnessed a significant
increase in the number of countries
where counterfeit medicines have
breached the legitimate supply chains
from just seven in 2006 to 50 in March
2011. Six of those countries are in the
MENA region: Egypt, Jordan, Kuwait,
Libya, Saudi Arabia and the UAE.
These products are made in locations
that are unlicensed, unregulated, not
inspected and insanitary, he says. We
have seen life-saving medicines being
manufactured in rodent and pest infested
labs with mould growing on the walls,
peeling paint and dirty equipment.
We have also seen supposedly sterile
injectables filled with ordinary tap water
in filthy bathrooms.
Counterfeit medicines may contain
no active pharmaceutical ingredient
(API), too much API, or the wrong API.
Our labs have confirmed the presence of
pesticides, rat poison, brick dust, leaded
paint, cartridge ink and floor polish.
There have also been reports of heavy
metals, arsenic, anti-freeze and even
plaster and wallboard.
The firms anti-counterfeiting
programme has prevented more than
65 million dosages of counterfeit
Pfizer products from reaching patients
around the world since 2004. In the
MENA region, more than six million
fake drugs have been seized. Middle
Eastern countries where authorities
have dismantled counterfeit medicine
manufacturing operations include Egypt,
Jordan and Qatar.
Duba| custos d|rector Abed Butt| (R) d|sp|ays boxes of courterfe|t P|av|x p|||s.
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72-76 Fake goods.indd 73 8/24/11 4:43:15 PM
CULF BUSlNLSS&.,
:FLEK<I=<@K@E>
Another major issue in the region is
fake auto parts. Reports suggest that
these may be responsible for around half
of all road fatalities in Saudi Arabia.
Counterfeit brake pads have been
found to consist of a mixture of sawdust
and wood particles, reports Alexander
Liske, brand protection manager, Ford
Middle East. Should they be installed
on a vehicle, there is a high chance it
will catch fire. Likewise, counterfeit
windshields are mostly made from a one-
layer glass which, in case of an impact,
will shatter in particles of different and
uncontrolled sizes. Furthermore, with
increased technology development over
past years, counterfeit spare parts can
affect other components in the vehicle.
I<>@FE8C;8D8><
According to Scott Butler, CEO of the
Arabian Anti-Piracy Alliance, the high
level of counterfeiting in the region
also presents a major threat to the
development of intellectual property.
High piracy in the pan Arab region has
a huge economic impact by impairing
creativity. In the US, the copyright
industries provide 11 per cent of GDP
through companies such as Disney
or Pixar. The pan Arab region could
enjoy the same economic benefits from
creativity, but is impaired because of the
larger countries such as Saudi Arabia,
Egypt and those in the Levant that do
not adequately protect copyrights. These
same countries have over 90 per cent
piracy rates. We have yet to see a single
copyright offender imprisoned for a
single day, despite millions of pirate
CDs being seized and multiple offences
from the same parties.
This, continues Butler, affects
other parts of the region with a lower
incidence of counterfeiting, such as the
UAE. While the emirates have created
an environment for creativity through
free trade zones, high piracy rates
elsewhere are sapping market potential
for creative firms.
Take a look at the games being
sold in Virgin Megastore, he says.
|oba||y, arourd
25 per cert
of |tes are
courterfe|t.
8LJ<I8N8I<E<JJ
JLIM<P:8II@<;FLK9P?G
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@EK<I<JK@E>=@E;@E>JFEK?<
;@==<I<E:<@E8KK@KL;<J
9<KN<<E:FEJLD<IJ8E;
9LJ@E<JJ<J%
Fek_\Zfejld\ij`[\1
70 per cenL sLaLe LhaL healLh
concerns are enouqh ol a deLerrenL
5^ per cenL believe piraLed qoods
are a wasLe ol money
5^ per cenL leel counLerleiL
producLs oller inlerior perlormance
59 per cenL say LhaL such producLs
presenL Lhe risk ol damaqinq
personal properLy
Conversely, Lhe survey ol manaqers
wiLh purchasinq power show
LhaL more Lhan 50 per cenL have
purchased counLerleiLs, while more
Lhan 50 per cenL ol companies do
noL have an acLive policy aqainsL
counLerleiLinq.
R
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U
1
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S
72-76 Fake goods.indd 75 8/24/11 4:43:15 PM
CULF BUSlNLSS&.,
:FLEK<I=<@K@E>
Another major issue in the region is
fake auto parts. Reports suggest that
these may be responsible for around half
of all road fatalities in Saudi Arabia.
Counterfeit brake pads have been
found to consist of a mixture of sawdust
and wood particles, reports Alexander
Liske, brand protection manager, Ford
Middle East. Should they be installed
on a vehicle, there is a high chance it
will catch fire. Likewise, counterfeit
windshields are mostly made from a one-
layer glass which, in case of an impact,
will shatter in particles of different and
uncontrolled sizes. Furthermore, with
increased technology development over
past years, counterfeit spare parts can
affect other components in the vehicle.
I<>@FE8C;8D8><
According to Scott Butler, CEO of the
Arabian Anti-Piracy Alliance, the high
level of counterfeiting in the region
also presents a major threat to the
development of intellectual property.
High piracy in the pan Arab region has
a huge economic impact by impairing
creativity. In the US, the copyright
industries provide 11 per cent of GDP
through companies such as Disney
or Pixar. The pan Arab region could
enjoy the same economic benefits from
creativity, but is impaired because of the
larger countries such as Saudi Arabia,
Egypt and those in the Levant that do
not adequately protect copyrights. These
same countries have over 90 per cent
piracy rates. We have yet to see a single
copyright offender imprisoned for a
single day, despite millions of pirate
CDs being seized and multiple offences
from the same parties.
This, continues Butler, affects
other parts of the region with a lower
incidence of counterfeiting, such as the
UAE. While the emirates have created
an environment for creativity through
free trade zones, high piracy rates
elsewhere are sapping market potential
for creative firms.
Take a look at the games being
sold in Virgin Megastore, he says.
|oba||y, arourd
25 per cert
of |tes are
courterfe|t.
8LJ<I8N8I<E<JJ
JLIM<P:8II@<;FLK9P?G
D@;;C<<8JKJ?FNJJFD<
@EK<I<JK@E>=@E;@E>JFEK?<
;@==<I<E:<@E8KK@KL;<J
9<KN<<E:FEJLD<IJ8E;
9LJ@E<JJ<J%
Fek_\Zfejld\ij`[\1
70 per cenL sLaLe LhaL healLh
concerns are enouqh ol a deLerrenL
5^ per cenL believe piraLed qoods
are a wasLe ol money
5^ per cenL leel counLerleiL
producLs oller inlerior perlormance
59 per cenL say LhaL such producLs
presenL Lhe risk ol damaqinq
personal properLy
Conversely, Lhe survey ol manaqers
wiLh purchasinq power show
LhaL more Lhan 50 per cenL have
purchased counLerleiLs, while more
Lhan 50 per cenL ol companies do
noL have an acLive policy aqainsL
counLerleiLinq.
R
L
U
1
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R
S
72-76 Fake goods.indd 75 8/24/11 4:43:15 PM
.-&SLP1LMBLR 20
:FLEK<I=<@K@E>
fa|e ob||e pbores cost tbe |oba| ecoroy b||||ors of do||ars.
A Rep||ca ferrar| P4 fro B|r|rba.
;FL9C<K8B<J
Finally, counterfeit products are
becoming increasingly sophisticated
and harder to detect. We have seen
advanced imitations of the boxes and
even the security holograms we use to
identify original products, says Ernest
Azzam, laser and enterprise solutions
business manager at print cartridge
manufacturer HP Middle East. Over
the past four years HP, along with
local authorities, has seized more than
30 million counterfeit products and
components worldwide. In the UAE,
the latest seizure included more than
125,000 items worth $20 million.
Another lucrative market is counterfeit
educational books. Julian
Eynon, from publishing
firm Cambridge
University Press, says
the books are often very
difficult to distinguish from
legitimate product. With
high demand in the region to learn
English they also spell big business.
Its difficult to find reliable data, but
one distributor in Yemen says he is losing
70 to 80 per cent of the total market to
piracy, says Eynon. In Saudi Arabia
it may be as high as 30 to 40 per cent.
Its not such a big problem in the UAE,
There are little-to-no games being
produced specifically for the pan Arab
region because there is no market and
protection. The locally-created products
would be pirated.
As another industry observer concurs,
The most critical impediment in fighting
piracy in the Gulf is its largest market,
Saudi Arabia. The home entertainment
segment loses over 500 million Saudi
Riyals every year let alone the losses
to the retail, merchandising, advertising,
promotion, media and video games
industries. These potentially snowball
into billions of Riyals.
While the UAE consumes a relatively
low volume of pirated goods compared
to some of its neighbours, it serves as a
major transit hub. Its strategic location
and excellent shipping and logistics
facilities make this region very attractive
as a distribution hub, says Hasayen.
Counterfeiters also take advantage in
passing on illegal products from origin
to markets utilising free zone areas to
import, store and re-export to the rest of
the world. This could be harmful to the
regions reputation and to the legitimate
businesses operating here. It also affects
business attractiveness in terms of
offering solid protection for intellectual
property rights.
although we believe that many pirated
materials are produced in the emirates
certainly in Sharjah.
With no development costs for
counterfeiters, if suppliers can buy 5,000
copies of a book at a fraction of the cost
and sell them at the same retail price,
there are huge margins to be made.
In the UAE, the authorities are working
alongside brand owners and there
are many success stories. Seizures of
counterfeit goods by both HP and Pfizer
are cases in point. But, at the same
time, counterfeiters are becoming more
resourceful. In the Middle East, seizures
of pharmaceuticals decreased from more
than 2.7 million in 2009 to around 1.5
million in 2010, acknowledges Yaman.
Legitimate brands have won some major
battles, but the war is far from over.
=8B<:8IJ
As Alexander Liske, brand proLecLion
manaqer, Ford Middle LasL, poinLs ouL,
"While no ollcial numbers are available,
a carelul esLimaLe suqqesLs LhaL Lhe
annual value ol counLerleiL auLo parLs
in Lhe Middle LasL is around $50200
million. Accordinq Lo Lhe indusLry, share
ol counLerleiL spare parLs in Lhe reqion
is beLween 2.5 and ^0 per cenL."
1he mosL common counLerleiLs
are lasLmovinq parLs such as llLers,
spark pluqs, belLs, brake pads and
windshields. However, counLerleiLs
ol more sophisLicaLed componenLs
have been discovered, such as Lurbo
charqers, alLernaLors and even airbaqs.
R
L
U
1
L
R
S
72-76 Fake goods.indd 76 8/24/11 4:43:18 PM
.-&SLP1LMBLR 20
:FLEK<I=<@K@E>
fa|e ob||e pbores cost tbe |oba| ecoroy b||||ors of do||ars.
A Rep||ca ferrar| P4 fro B|r|rba.
;FL9C<K8B<J
Finally, counterfeit products are
becoming increasingly sophisticated
and harder to detect. We have seen
advanced imitations of the boxes and
even the security holograms we use to
identify original products, says Ernest
Azzam, laser and enterprise solutions
business manager at print cartridge
manufacturer HP Middle East. Over
the past four years HP, along with
local authorities, has seized more than
30 million counterfeit products and
components worldwide. In the UAE,
the latest seizure included more than
125,000 items worth $20 million.
Another lucrative market is counterfeit
educational books. Julian
Eynon, from publishing
firm Cambridge
University Press, says
the books are often very
difficult to distinguish from
legitimate product. With
high demand in the region to learn
English they also spell big business.
Its difficult to find reliable data, but
one distributor in Yemen says he is losing
70 to 80 per cent of the total market to
piracy, says Eynon. In Saudi Arabia
it may be as high as 30 to 40 per cent.
Its not such a big problem in the UAE,
There are little-to-no games being
produced specifically for the pan Arab
region because there is no market and
protection. The locally-created products
would be pirated.
As another industry observer concurs,
The most critical impediment in fighting
piracy in the Gulf is its largest market,
Saudi Arabia. The home entertainment
segment loses over 500 million Saudi
Riyals every year let alone the losses
to the retail, merchandising, advertising,
promotion, media and video games
industries. These potentially snowball
into billions of Riyals.
While the UAE consumes a relatively
low volume of pirated goods compared
to some of its neighbours, it serves as a
major transit hub. Its strategic location
and excellent shipping and logistics
facilities make this region very attractive
as a distribution hub, says Hasayen.
Counterfeiters also take advantage in
passing on illegal products from origin
to markets utilising free zone areas to
import, store and re-export to the rest of
the world. This could be harmful to the
regions reputation and to the legitimate
businesses operating here. It also affects
business attractiveness in terms of
offering solid protection for intellectual
property rights.
although we believe that many pirated
materials are produced in the emirates
certainly in Sharjah.
With no development costs for
counterfeiters, if suppliers can buy 5,000
copies of a book at a fraction of the cost
and sell them at the same retail price,
there are huge margins to be made.
In the UAE, the authorities are working
alongside brand owners and there
are many success stories. Seizures of
counterfeit goods by both HP and Pfizer
are cases in point. But, at the same
time, counterfeiters are becoming more
resourceful. In the Middle East, seizures
of pharmaceuticals decreased from more
than 2.7 million in 2009 to around 1.5
million in 2010, acknowledges Yaman.
Legitimate brands have won some major
battles, but the war is far from over.
=8B<:8IJ
As Alexander Liske, brand proLecLion
manaqer, Ford Middle LasL, poinLs ouL,
"While no ollcial numbers are available,
a carelul esLimaLe suqqesLs LhaL Lhe
annual value ol counLerleiL auLo parLs
in Lhe Middle LasL is around $50200
million. Accordinq Lo Lhe indusLry, share
ol counLerleiL spare parLs in Lhe reqion
is beLween 2.5 and ^0 per cenL."
1he mosL common counLerleiLs
are lasLmovinq parLs such as llLers,
spark pluqs, belLs, brake pads and
windshields. However, counLerleiLs
ol more sophisLicaLed componenLs
have been discovered, such as Lurbo
charqers, alLernaLors and even airbaqs.
R
L
U
1
L
R
S
72-76 Fake goods.indd 76 8/24/11 4:43:18 PM
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./&J<GK<D9<I)'((
78-81 Power Struggle.indd 78 8/24/11 5:01:50 PM
./&J<GK<D9<I)'((
78-81 Power Struggle.indd 78 8/24/11 5:01:50 PM
CULF BUSlNLSS&.0
<E<I>P
<
ver since the emergence
of the modern Middle
East oil exporters with
the price explosion of
1973, it was inevitable
that the regions rulers would seek to
dispense bounty cheap oil and gas for
domestic use in a manner that would
not hit anyones pocket. This policy,
though understandable, is set to catch
up with regional governments with
catastrophic consequences.
As the modern ruling elites of Gulf
states emerged in the latter part of
the last century, they needed a pact to
bolster their legitimacy and cement their
populations compliance. They did not
have to look far: by introducing steep
domestic discounts on hydrocarbon
products for the most part marketed
internationally, they could point to
significant reductions in the daily cost of
living for fellow nationals.
Since the late 1970s, subsidies for fuel
and electricity in the GCC supported
development growth, especially in
industry. They were seen as beneficial in
the short term, and growing populations
As domesLic power consumpLion rises and Lhe price
ol oil exporLs remains hiqh, qovernmenLsubsidised
peLrol and qas prices in Lhe Cull will cause serious
problems in Lhe mediumLerm.
K<OK9PG<K<IJ?8N$JD@K?
sought tariff breaks from the ruling elite
who benefitted from growing petroleum
incomes. Early on crude oil and power
generation feedstocks were inexpensive
commodities, so subsidies imposed
little strain on the Persian Gulf state
economies, wrote Mike Moore, director,
global oil and gas marketing at Colfax,
a Columbia, Maryland-based pump
manufacturer, earlier this year. Thats
all changed! he adds emphatically.
Subsidies take many forms, and in
developed economies, are often defined
as government payments to producers,
such as farmers, to protect or bolster a
market for a certain product. Normally,
for example, in developed markets,
agricultural or other types of producers
receive cash subsidies from the
government to prop up ailing production.
Subsidies can also be in kind, where a
good is sold at below production cost,
leaving the government to bear the costs
of the transaction.
The numbers were harmless in the
early days. International benchmark Brent
crude stood at $12.80 a barrel in 1976,
a trough breached with an average price l
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78-81 Power Struggle.indd 79 8/24/11 5:01:52 PM
of $12.72 in 1998. Local discounts were
not noticeably taxing in terms of lost
export revenues in the 1970s; today, the
opportunity costs are becoming startling.
Take petrol at the pump, a standard
measure of domestic Saudi consumption.
Recent data show Saudis pay $0.61 per
gallon. In Kuwait it costs $0.85; the
UAE $1.82. A gap then opens up; the
US pays $3.79; the UK $8.06 and Turkey
$9.99, said to be the world's highest,
according to Germanys GTZ. Observers
may wish to ponder the dynamics behind
Venezuelas equivalent pricing, of $0.09.
The gas industry is faring no better.
With Saudi Aramcos ascendancy as
one of the worlds largest oil companies
by revenues, the troubling issue of gas
was treated as an irritating side-show.
Though Saudi Arabias gas use has been
steadily increasing, the issue of pricing
has bedevilled investment in the industry
precisely at a time when gas is most
needed for industry and petrochemicals.
As the kingdom has thrown more
of its weight behind petrochemicals
manufacture, it has found that charging
$0.75/mmbtu for ethane feedstock does
not create the conditions for boosting
expenditures for new exploration
and production of associated, and in
particular, non-associated, gas fields.
In the GCC, reliable figures for gas
consumption do not exist. Flummoxed
global analysts explain that a succession
of power brokers in GCC countries -
usually royal family members - have
guarded gas feedstock allocations
to different actors to bolster their
power bases to steel and aluminium
plant owners, power generators,
petrochemicals complexes with no
central control over these allocations.
The entire process has become steeped
in double-talk and confusion.
The one GCC exception is Qatar,
the only Gulf state to possess gas
in quantities so abundant that it
CFN<JKIF8;KI8EJGFIKI<K8@CGI@:<J#LJ:<EKJ&C@KI<#EFM)'('
I8EB :FLEKIP >8JFC@E< ;@<J<C
VLNLZULLA 2.3 .
2 lRAN 9.7 .6
3 SAUDl 2 6.7
^ LlBYA 7 3
5 OA1AR 9 9
6 1URKMLNlS1AN 22 20
7 KUWAl1 23 2
8 OMAN 3 38
9 ALCLRlA 32 9
0 YLMLN 35 23
3 UAL ^7 7
^ LCYP1 ^8 32
AVLRACL WHOLLSALL PRlCL LX SUBSlDlLS/1AX 60 62
22 US 76 8^
23 lRAO 78 56
29 RUSSlAN FLDLRA1lON 8^ 72
^9 JORDAN 0^ 73
53 CHlNA 0^
56 LLBANON 3 77
60 lNDlA 5 82
63 SOU1H AFRlCA 9 ^
92 BRAZlL 58 ^
0^ lSRALL 85 87
2 UK 92 98
9 1URKLY 252 203
can meet anyones demands. But its
understandably self-interested strategy
means that it is unwilling to dispense
favours with no regard for economics.
So, while gas from the Dolphin pipeline
was priced at inception in 2007 in
political deals with the UAE and Oman
at no more than $1.50 per million British
thermal units (mmbtu), Qatar, via Shell
is charging the UAE $11/mmbtu for LNG
consignments, the same as it charges
for shipments to Japan. Desperate for
gas, and with Dolphin supply limited,
the UAE has no option but to accept the
international market price.
The effects of subsidies remain benign
today, but will cast a growing shadow
with the passage of time. Four key areas
are likely to become problematic in the
next 10-20 years: the increasing rate of
domestic consumption, the costly loss
of potential exports, an obvious lack of
efficiency with which energy is used in
the region, and the opportunity cost of
funds for new exploration and production.
A key feature of subsidised markets
is that the quantity supplied by definition
increases. In this case, the unwelcome
consequences are that domestic
demand is beginning to rise inexorably
and regional analysts are sounding the
alarm. HSBC said in a recent report
that Saudi Arabia is likely to burn
1.2m b/d of crude this year for electricity
generation, almost double 2010s figure.
Jadwa is forecasting domestic Saudi
oil consumption at 5.5m b/d in 2030,
leaving only 6m b/d for export.
One side effect of subsidies is the
mind-set that responsible energy use
is a problem facing the rest of the world,
but not the GCC, says one analyst.
/'&SLP1LMBLR 20
SOURCL: C1Z, HSBC
<E<I>P
78-81 Power Struggle.indd 80 8/24/11 5:01:54 PM
of $12.72 in 1998. Local discounts were
not noticeably taxing in terms of lost
export revenues in the 1970s; today, the
opportunity costs are becoming startling.
Take petrol at the pump, a standard
measure of domestic Saudi consumption.
Recent data show Saudis pay $0.61 per
gallon. In Kuwait it costs $0.85; the
UAE $1.82. A gap then opens up; the
US pays $3.79; the UK $8.06 and Turkey
$9.99, said to be the world's highest,
according to Germanys GTZ. Observers
may wish to ponder the dynamics behind
Venezuelas equivalent pricing, of $0.09.
The gas industry is faring no better.
With Saudi Aramcos ascendancy as
one of the worlds largest oil companies
by revenues, the troubling issue of gas
was treated as an irritating side-show.
Though Saudi Arabias gas use has been
steadily increasing, the issue of pricing
has bedevilled investment in the industry
precisely at a time when gas is most
needed for industry and petrochemicals.
As the kingdom has thrown more
of its weight behind petrochemicals
manufacture, it has found that charging
$0.75/mmbtu for ethane feedstock does
not create the conditions for boosting
expenditures for new exploration
and production of associated, and in
particular, non-associated, gas fields.
In the GCC, reliable figures for gas
consumption do not exist. Flummoxed
global analysts explain that a succession
of power brokers in GCC countries -
usually royal family members - have
guarded gas feedstock allocations
to different actors to bolster their
power bases to steel and aluminium
plant owners, power generators,
petrochemicals complexes with no
central control over these allocations.
The entire process has become steeped
in double-talk and confusion.
The one GCC exception is Qatar,
the only Gulf state to possess gas
in quantities so abundant that it
CFN<JKIF8;KI8EJGFIKI<K8@CGI@:<J#LJ:<EKJ&C@KI<#EFM)'('
I8EB :FLEKIP >8JFC@E< ;@<J<C
VLNLZULLA 2.3 .
2 lRAN 9.7 .6
3 SAUDl 2 6.7
^ LlBYA 7 3
5 OA1AR 9 9
6 1URKMLNlS1AN 22 20
7 KUWAl1 23 2
8 OMAN 3 38
9 ALCLRlA 32 9
0 YLMLN 35 23
3 UAL ^7 7
^ LCYP1 ^8 32
AVLRACL WHOLLSALL PRlCL LX SUBSlDlLS/1AX 60 62
22 US 76 8^
23 lRAO 78 56
29 RUSSlAN FLDLRA1lON 8^ 72
^9 JORDAN 0^ 73
53 CHlNA 0^
56 LLBANON 3 77
60 lNDlA 5 82
63 SOU1H AFRlCA 9 ^
92 BRAZlL 58 ^
0^ lSRALL 85 87
2 UK 92 98
9 1URKLY 252 203
can meet anyones demands. But its
understandably self-interested strategy
means that it is unwilling to dispense
favours with no regard for economics.
So, while gas from the Dolphin pipeline
was priced at inception in 2007 in
political deals with the UAE and Oman
at no more than $1.50 per million British
thermal units (mmbtu), Qatar, via Shell
is charging the UAE $11/mmbtu for LNG
consignments, the same as it charges
for shipments to Japan. Desperate for
gas, and with Dolphin supply limited,
the UAE has no option but to accept the
international market price.
The effects of subsidies remain benign
today, but will cast a growing shadow
with the passage of time. Four key areas
are likely to become problematic in the
next 10-20 years: the increasing rate of
domestic consumption, the costly loss
of potential exports, an obvious lack of
efficiency with which energy is used in
the region, and the opportunity cost of
funds for new exploration and production.
A key feature of subsidised markets
is that the quantity supplied by definition
increases. In this case, the unwelcome
consequences are that domestic
demand is beginning to rise inexorably
and regional analysts are sounding the
alarm. HSBC said in a recent report
that Saudi Arabia is likely to burn
1.2m b/d of crude this year for electricity
generation, almost double 2010s figure.
Jadwa is forecasting domestic Saudi
oil consumption at 5.5m b/d in 2030,
leaving only 6m b/d for export.
One side effect of subsidies is the
mind-set that responsible energy use
is a problem facing the rest of the world,
but not the GCC, says one analyst.
/'&SLP1LMBLR 20
SOURCL: C1Z, HSBC
<E<I>P
78-81 Power Struggle.indd 80 8/24/11 5:01:54 PM
"The effects cf subsidies remain benin tcday, but wiII cast a rcwin
shadcw with the passae cf time.Four key areas are likely Lo become
problemaLic: increasinq domesLic consumpLion, Lhe cosLly loss ol poLenLial
exporLs, Lhe lack ol ellciency wiLh which enerqy is used in Lhe reqion, and
Lhe opporLuniLy cosL ol lunds lor new exploraLion and producLion."
|ba|arce: Saud|s pay $0.6I
a a||or or averae, Wbereas
Aer|cars pay $3.I9 a a||or.
Perhaps the most shocking outcome of
GCC energy policy is a rarely cited ratio,
the amount of energy used to produce
$1,000 of GDP. According to Jadwa,
in 2009, it took the energy equivalent
of 1.3 b/d of oil to generate $1,000 of
GDP worldwide, 1.2 b/d in China, but
13.6 b/d in Saudi Arabia. Thats over
10 times as inefficient. In the GCC, the
usage of hydrocarbon inputs is the most
inefficient on earth.
Gas is the preferred fuel for power
generation throughout the GCC, given
the cleaner and cheaper processes
involved. Clearly, if Saudi Arabia
continues to charge such low rates for
electricity consumption, the ability of
the industry to fund new projects for
power generation will dwindle. Indeed, a
credit assessment of the Saudi Electricity
Company by Moodys in April noted that
the sector required investment of almost
$100 billion on power plants and the grid
to meet increasing electricity demand by
2020. The industrys ability to find such
funds is not a foregone conclusion.
To cap it all, it is clear that the Arab
Spring has not created the conditions
where the removal or diminution of
subsidies could be countenanced. Some
analysts say that Saudi Arabias rulers
are worried the whole powder keg could
explode with one false move. As one
analyst put it: We too believe that price
reforms are likely to be only gradual and
should mainly take the form of higher
electricity tariffs and higher hydrocarbon
feedstock prices for industrial users.
Various solutions to the problems
in Saudi Arabia, shared also by most
other GCC members are proposed. It is
clear that the drive to improve natural
gas exploration and production is
fundamental to an improvement in Gulf
energy policies. Although vast tracts of
Saudi Arabia remain unexplored,
a reassessment of gass importance, and
an improvement in the financial terms on
which IOCs are invited in would be
a good place to start. So gradual progress
on removal of subsidies is a must.
Jim Krane, writing in The Gulf
Intelligence last year, put forward three
policy alternatives, including raising
the price of electricity, making buildings
more energy efficient (mandatory
standards on new construction,
denser housing), and enacting green
appliance standards, such as banning
the sale of inefficient air conditioners,
dishwashers and washing machines.
Next time you fill up your car,
remember cheap petrols cost in other,
unseen, terms.
J<C<:K<;E8KLI8C>8JGI@:<J
:FLEKIP ;<C@M<IP GI@:<G<IDD9KL
ABU DHABl DOLPHlN PlPLLlNL .25
OMAN DOLPHlN PlPLLlNL .^^
DUBAl DOLPHlN PlPLLlNL .50
US HLNRY HUB NYMLX (FU1URLS) ^.00
USA LNC 5.5
SOU1H KORLA LNC 0.2
1AlWAN LNC 0.98
UAL (LNC) OA1ARCAS ^ (SHLLL) '.00
JAPAN LNC .50
CULF BUSlNLSS&/(
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SOURCL: LNC SHlPPlNC lNSlCH1 (DRLWRY), MARCH 20, BLOOMBLRC, LMARA1. 'APPROXlMA1L
CULF BUSlNLSS&/(
78-81 Power Struggle.indd 81 8/24/11 5:01:59 PM
82-85 Bahrain.indd 82 8/24/11 4:34:30 PM
82-85 Bahrain.indd 82 8/24/11 4:34:30 PM
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9
ahrain is a little place with
big ideas and, although the
political crisis has gripped this
tiny island nation since February 14, it
is determined to implement a long-term
economic strategy. Long recognised for
a good quality, educated workforce,
and well able to punch above its
weight due to a strategic location in
the upper Gulf, Bahrainis enjoy making
their way in the world. Becoming the
Middle Easts financial centre in the
wake of the Lebanese civil war that
broke out in 1976, Bahrain has retained
a formidable role as a regional financial
hub, especially in Islamic finance,
despite the emergence of Dubai.
But the world is changing and the
centres of power in the Gulf include not
only Dubai, but also Doha, Riyadh and
Abu Dhabi. Although Bahrain plays host
to over 400 banks and its construction
sector has contributed around 10 per
cent of GDP in recent years, new paths
to prosperity are being sought.
However, the Sunni-Shia crisis effects
on business appear minimal. Although
tourist businesses like cruise lines have
steered clear, and certain embassies
placed adverse travel advisories in
the first half, the sense is that on the
business side, it is business as usual.
It is very difficult to pinpoint
whether there have been any negative
effects because of the political situation,
because its been coupled with the
general global slowdown, says Ken
Howie, operations manager at Al
Jazeera Shipping, owner of a fleet of
150 tugs, barges and other equipment
for use in offshore projects.
[Earlier in the year], we had some
issues with international clients, who
couldnt travel to us, so we would
go to them. As for the people doing
business in Bahrain, especially in
shipping, my answer is that 100 per
cent no, the situation did not affect
us at all. Howie says that utilisation
of the companys fleet is up 15-20 per
cent this year as projects planned in
recent quarters go ahead on schedule.
Facinq inLense compeLiLion as a lnance hub lrom across Lhe Cull,
G\k\iJ_XnJd`k_ reporLs on how Bahrain is counLinq on iLs
Lhrivinq porLs indusLry Lo bolsLer iLs bliqhLed economy in 20.
BAHRAINS
MARITIME AMBITIONS
98?I8@E
CULF BUSlNLSS&/*
82-85 Bahrain.indd 83 8/24/11 4:34:34 PM
/+,J<GK<D9<I)'((
Gulf, where Saudi Arabia is expected
to be a major source of business, with
project cargo flowing into Jubail, where
15 petrochemicals plants are to be built.
Bureaucracy and red tape make access
to Dammam Port extremely difficult,
and turnaround times for boxes take
from 10-30 days, making the causeway
preferable for several operators. In
addition, Qatar, Saudi Arabia, Kuwait, Iran
and Iraq all beckon. In the medium- to
long-term, Iraq has enormous potential,
says Iain Rawlinson, chief commercial
officer, APM Terminals Bahrain. There is
great interest from carriers in developing
that market.
Official figures for
2010 put growth in
container throughput
at 31 per cent
compared to 2009.
In June 2010, KBSP
recorded the highest
volume of throughput
handled ever in
In 2005, in need of a major new
strategy to drive economic growth
forward, the government singled out
ports, shipping and logistics as a key
area in promoting growth and leveraging
the tiny kingdoms proximity to the east
coast of Saudi Arabia, via the King Fahd
Causeway which opened in 1986.
The need for new avenues of growth
was obvious. The government identifies
four key factors that will require
increased economic development in
Bahrain if it is to achieve its goal of a
29 per cent increase in the workforce
in the next 10 years. According to the
Bahrain Economic Quarterly, these
have been identified as having a major
impact on the success of the strategy: the
increased need for government spending
restraint in future years; the more modest
contribution expected from finance and
construction; a projected rapid growth of
the Bahraini workforce and the slower
increase in the number of low-wage
guest workers in the next decade.
Spurred on by the rise of port
development in the Arabian Gulf and
its environs, which has seen megaports
planned or underway in Jebel Ali and
Taweelah in the UAE, and Duqm and
Salalah in Oman, as well as a number
of smaller facilities, the GCC's smallest
country by land mass and population has
launched its own audacious ports and
shipping strategy designed to capture the
synergies of assisting in improving cargo
links to Iraq, Kuwait and eastern Saudi
Arabia. The existing facilities at Mina
Salman were out-dated and have largely
today been devoted to the presence
of the US navys Fifth Fleet, while the
facilities at Sitra are largely devoted to
Bahrain Petroleum Company.
The General Organisation of Sea
Ports was established in 2006 as part
of Bahrains Vision 2030 to regulate the
industry, and a new terminal facility,
Khalifa Bin Salman Port, with a capacity
of 1.1 million TEU, opened in April 2009
and placed under the management of
APM Terminals Bahrain, a unit of the
worlds fourth-largest terminal operator
and a joint venture between AP Moeller
Maersk and local company YB Kanoo.
The facility is located at a new, man-
made $360 million terminal at Hidd,
only 10 minutes drive from Bahrain
International Airport.
Officials at the KBSP facility say that
Bahrains move into port infrastructure
development is squarely aimed at
exploiting the opportunity for hubbing
container and other cargo to the upper
I<8C<JK8K<
|e consruc|on secor |as s|oweJ
Jown Jue o ba|ra|n's o|||ca| cr|s|s
ArounJ .000 'ree|o|J aarnens
were execeJ o cone on o |e
nar|e |eween 00o. one ouarer
o' |en |n 0. anJ oa| nor_a_e
|ssuance was execeJ o reac|
S' |||||on |n 0. nore |an w|ce
|e H_ure o' S880 n||||on 'or 00.
accorJ|n_ o |e Ox'orJ bus|ness
Crou's 00 reor on ba|ra|n
urra A| ba|ra|n. a con|ex o'
= ar|Hc|a| |s|anJs a |e |s|anJ's
sou|ernnos | |s |e |c| o' |e
Jeve|onens. a||ou_| re'erreJ
|us|ness aJJresses now |nc|uJe w|n
owers ba|ra|n Wor|J raJe Cenre.
w|| |s J|s|nc|ve w|nJ ur||nes.
con|eeJ |n 008 anJ |e ba|ra|n
|nanc|a| ar|our. a nannaJe |s|anJ
Jeve|onen |n |e |ear o' anana
owneJ |, Arca|a ban|
82-85 Bahrain.indd 84 8/24/11 4:34:40 PM
CULF BUSlNLSS,/,
J?@GG@E>
|e _overnnen |s ba|ra|n's |ar_es
en|o,er Over one ||rJ o' en|o,eJ
ba|ra|n|s are en|o,eJ |n |e _overnnen
anJ near|, =. er cen o' ba|ra|n| 'ena|e
en|o,ees wor| 'or |e _overnnen
conareJ o one ||rJ o' ba|ra|n| na|e
en|o,ees wo ||rJs o' ba|ra|n| na|es
are |n |e r|vae secor. esec|a||, rea||.
nanu'acur|n_ anJ consruc|on r|vae
secor wor|'orce _rew 'ron a|ou
00.000 |n 00 o us unJer o00.000
|n 00
ba|ra|n's o|| ouu Joes no ner| a
||ne |en |n b's Sa|s|ca| ev|ew o'
Wor|J ner_, 00. w|||e |s naura| _as
reserves sanJ a 00o er cen o' |e
_|o|a| oa|. anJ roJuc|on a 0= er
cen o' wor|J ouu |n 00' AccorJ|n_
o bACO. |e ba|ra|n eHner, reHnes
over o0.000 |arre|s o' cruJe ever, Ja,
'A|ou ones|x| o' ||s cruJe or|_|naes
'ron |e ba|ra|n |e|J, |e rena|nJer |s
uneJ 'ron SauJ| Ara||a |n |e||nes
exenJ|n_ |||oneres over |anJ
anJ a 'ur|er |||oneres unJer |e
sea |e'ore reac||n_ |e nor|wes o'
ba|ra|n." sa,s |e conan,'s we|s|e
<:FEFDP
F@C
Bahrain, with an increase of 67 per cent
as compared to June 2009. Gross crane
productivity stood at globally competitive
levels in 2010 at 35.6 crane moves per
hour, evidence of a monthly growth
rate of one per cent in the 12 months to
December 2010.
Rawlinson is noncommittal at this
stage about when expansion of the
terminal will take place. Expansion to 2.5
million TEU would require an additional
12 cranes on top of the existing four,
and is likely to happen in the next one
to three years. If the business comes, the
company will expand the quay wall from
1.8 km to 3 km, leading to an eventual
Ar o|| pup
operates at tbe
Babra|r Petro|eu
Copary (BAPC0)
rur o|| fe|d |r AWa||,
Babra|r.
capacity of five million TEU. Such
expansion does not, however, form part
of the current 25-year concession.
In addition to KBSP, Bahrain plays
host to the Gulfs oldest ship repair
company, Arab Shipbuilding and Repair
Yard (ASRY). The company is alive to
the competition now that the Qatari
government has opened a new yard at
Ras Laffan, and Oman threatens to do
the same in Duqm. Drydocks World
Dubai is also a major competitor.
Because minimal repairs have been
requested by regular customers given
the current economic slowdown, 2010
revenues were expected to approximate
2009 numbers.
The IMF has given Bahrain high
marks, both for its management of
the fallout from the global economic
crisis, and the policies used over the
past decade to develop the economy.
The economy of Bahrain has managed
the global crisis well, it said. High
initial levels of bank capital and sound
prudential norms established by the
Central Bank of Bahrain (CBB) ensured
the resilience of the financial system,
without recourse to the extensive direct
interventions seen in many countries.
While the other sectors of Bahrains
economy forge ahead, albeit at a slightly
slower pace for a few years due to
domestic and international factors,
Bahrain has an emergent shipping sector
that will stand it in good stead, even in
light of the local political situation.
"Ollcials aL Lhe KBSP laciliLy say LhaL
9X_iX`ejdfm\`ekfgfik`e]iXjkilZkli\
developmenL is squarely aimed aL \ogcf`k`e^
k_\fggfikle`kp]fi_lYY`e^ZfekX`e\iXe[
fk_\iZXi^fkfk_\lgg\i>lc]#where Saudi
Arabia is expecLed Lo be a ma|or source ol
business, wiLh pro|ecL carqo
lowinq inLo Jubail, where
5 peLrochemicals planLs
are Lo be builL."
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82-85 Bahrain.indd 85 8/24/11 4:34:45 PM
/-&SLP1LMBLR 20
DATA CRUNCH
TOP DEALS AND GCC ECONOMIC INDICATORS
TOP DEALS GULF BUSINESS
8

|rer|r |or|ets
|o]rerts Ho|1|rs
Co|ro |e1|co| !oWer
|o|orotor]
V|so Jor1or Cor1
Serv|ces Coror]
|e1|co|, ||orro &
b|otec|
|rer|r |or|ets |o]rerts Ho|1|rs (|||H), t|e UK |ose1 fur1 of Act|s |||, t|e UK |ose1
r|vote eu|t] f|rr, |os ocu|re1 V|so Jor1or Cor1 Serv|ces Coror] (VJCS), t|e Jor1or |ose1
A!| serv|ces rov|1er, for o cors|1erot|or of ;8 r||||or. !|e ocu|s|t|or ero||es |||H to
eior1 |ts |us|ress |r Afr|co or1 t|e ||11|e |ost. !|e trorsoct|or W||| o|so |e| VJCS to eior1
or1 to|e o1vortoe of t|e Jor1or's f|e1||r cre1|t cor1 ror|et.
Co|ro |e1|co| !oWer |o|orotor], t|e ||ste1 |]t|ose1 coror] eroe1 |r t|e rov|s|or,
roroerert or1 reorot|or of o1vorce1 re1|co| ot|o|o|co| oro|]s|s |o|orotor|es, os We||
os ||oo1, turor or1 |rrur|t] 1|seose treotrert certers, or1 o ortfo||o of A|rooj Co|to|
Ho|1|rs ||r|te1, t|e UA||ose1 r|vote eu|t] f|rr, |os ocu|re1 o rojor|t] sto|e |r b|o|o|,
t|e Jor1or |ose1 re1|co| reseorc| coror] t|ot 1eve|os vor|ous ere test|r tec|ro|o|es
or1 ret|o1s, for or ur1|sc|ose1 cors|1erot|or.
DEAL VALUE ($M) BIDDER TARGET DEAL DESCRIPTION
Notes: |ea|s are oaseo on tne eorany of taret, o|ooer or venoor oe|n |n tne H|oo|e fast, for tne er|oo oetween Ju|y |8, 20|| ano /uust |7, 20||. Baseo on announceo oea|s, |nc|uo|n
|aseo ano w|tnorawn o|os. wnere oea| va|ue |s not o|sc|oseo, tne oea| nas oeen entereo oaseo on turnover of taret exceeo|n $|0 m||||on. /ct|v|t|es exc|uoeo from tne tao|e |nc|uoe roerty
transact|ons ano restructur|ns wnere tne u|t|mate snareno|oers |nterests are not cnaneo. Source: Herermarket. /|| oo||ar ($) amounts |no|cateo aoove are |n US oo||ars.
CULF BUSlNLSS OUAR1LRLY M&A AC1lVl1Y
FROM 200^ 1O 7 AUCUS1 20
BREAKDOWN: TAKEOVER ACTIVITY BY SECTOR AND VOLUME
MlDDLL LAS1 ANNUAL M&A AC1lVl1Y
FROM 200^ 1O 7 AUCUS1 20
CULF BUSlNLSS AC1lVl1Y BY lNDUS1RY SLC1OR
YL 20 VALUL
CULF BUSlNLSS AC1lVl1Y BY lNDUS1RY
SLC1OR YL 20 VOLUML
Delence
0.8
Lnerqy, Mininq & ULiliLies
5.
Consumer
^.2
Business Services
^.9

Vo|ue
Vo|ure
N
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(
;
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c004 c00S c00c c00 c008 c007 c0l0 c0ll
0
S0
l00
lS0
c00
cS0
0
S,000
l0,000
lS,000
c0,000
cS,000
10,000
0
c0
40
c0
0
c004 c00S c00c c00 c008 c007 c0l0 c0ll
Ol Ol Ol Ol Ol Ol Ol Oc O1 Oc Oc Oc Oc Oc Oc O1 O1 O1 O1 O1 O1 O4 O4 Ol Oc O1 O4 O4 O4 O4 O4
c,000
4,000
c,000
8,000
l0,000
lc,000
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c004 c00S c00c c00 c008 c007 c0l0 c0ll
0
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l00
lS0
c00
cS0
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S,000
l0,000
lS,000
c0,000
cS,000
10,000
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c0
40
c0
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c004 c00S c00c c00 c008 c007 c0l0 c0ll
Ol Ol Ol Ol Ol Ol Ol Oc O1 Oc Oc Oc Oc Oc Oc O1 O1 O1 O1 O1 O1 O4 O4 Ol Oc O1 O4 O4 O4 O4 O4
c,000
4,000
c,000
8,000
l0,000
lc,000
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N
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c004 c00S c00c c00 c008 c007 c0l0 c0ll
0
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l00
lS0
c00
cS0
0
S,000
l0,000
lS,000
c0,000
cS,000
10,000
0
c0
40
c0
0
c004 c00S c00c c00 c008 c007 c0l0 c0ll
Ol Ol Ol Ol Ol Ol Ol Oc O1 Oc Oc Oc Oc Oc Oc O1 O1 O1 O1 O1 O1 O4 O4 Ol Oc O1 O4 O4 O4 O4 O4
c,000
4,000
c,000
8,000
l0,000
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lndusLrials
& Chemicals
^6.0
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8.2
Pharma, Medical
& BioLech
2.9
ConsLrucLion
.^
Leisure
.0
1M1
9.6
Financial Services
5.8
Delence
.3
Leisure
3.9
Lnerqy, Mininq
& ULiliLies
2.6
Vo|ue
Vo|ure
N
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l0,000
lS,000
c0,000
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c0
0
c004 c00S c00c c00 c008 c007 c0l0 c0ll
Ol Ol Ol Ol Ol Ol Ol Oc O1 Oc Oc Oc Oc Oc Oc O1 O1 O1 O1 O1 O1 O4 O4 Ol Oc O1 O4 O4 O4 O4 O4
c,000
4,000
c,000
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l0,000
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20.8
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3.9
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6.5
Pharma,
Medical &
BioLech
^.3
1ransporL
.3
1M1
0.^
Financial
Services
3.0
Business Services
3.0
Consumer
9.
86-87 & 89 DATA CRUNCH SEPTEMBER2011.indd 86 8/24/11 3:34:33 PM
/-&SLP1LMBLR 20
DATA CRUNCH
TOP DEALS AND GCC ECONOMIC INDICATORS
TOP DEALS GULF BUSINESS
8

|rer|r |or|ets
|o]rerts Ho|1|rs
Co|ro |e1|co| !oWer
|o|orotor]
V|so Jor1or Cor1
Serv|ces Coror]
|e1|co|, ||orro &
b|otec|
|rer|r |or|ets |o]rerts Ho|1|rs (|||H), t|e UK |ose1 fur1 of Act|s |||, t|e UK |ose1
r|vote eu|t] f|rr, |os ocu|re1 V|so Jor1or Cor1 Serv|ces Coror] (VJCS), t|e Jor1or |ose1
A!| serv|ces rov|1er, for o cors|1erot|or of ;8 r||||or. !|e ocu|s|t|or ero||es |||H to
eior1 |ts |us|ress |r Afr|co or1 t|e ||11|e |ost. !|e trorsoct|or W||| o|so |e| VJCS to eior1
or1 to|e o1vortoe of t|e Jor1or's f|e1||r cre1|t cor1 ror|et.
Co|ro |e1|co| !oWer |o|orotor], t|e ||ste1 |]t|ose1 coror] eroe1 |r t|e rov|s|or,
roroerert or1 reorot|or of o1vorce1 re1|co| ot|o|o|co| oro|]s|s |o|orotor|es, os We||
os ||oo1, turor or1 |rrur|t] 1|seose treotrert certers, or1 o ortfo||o of A|rooj Co|to|
Ho|1|rs ||r|te1, t|e UA||ose1 r|vote eu|t] f|rr, |os ocu|re1 o rojor|t] sto|e |r b|o|o|,
t|e Jor1or |ose1 re1|co| reseorc| coror] t|ot 1eve|os vor|ous ere test|r tec|ro|o|es
or1 ret|o1s, for or ur1|sc|ose1 cors|1erot|or.
DEAL VALUE ($M) BIDDER TARGET DEAL DESCRIPTION
Notes: |ea|s are oaseo on tne eorany of taret, o|ooer or venoor oe|n |n tne H|oo|e fast, for tne er|oo oetween Ju|y |8, 20|| ano /uust |7, 20||. Baseo on announceo oea|s, |nc|uo|n
|aseo ano w|tnorawn o|os. wnere oea| va|ue |s not o|sc|oseo, tne oea| nas oeen entereo oaseo on turnover of taret exceeo|n $|0 m||||on. /ct|v|t|es exc|uoeo from tne tao|e |nc|uoe roerty
transact|ons ano restructur|ns wnere tne u|t|mate snareno|oers |nterests are not cnaneo. Source: Herermarket. /|| oo||ar ($) amounts |no|cateo aoove are |n US oo||ars.
CULF BUSlNLSS OUAR1LRLY M&A AC1lVl1Y
FROM 200^ 1O 7 AUCUS1 20
BREAKDOWN: TAKEOVER ACTIVITY BY SECTOR AND VOLUME
MlDDLL LAS1 ANNUAL M&A AC1lVl1Y
FROM 200^ 1O 7 AUCUS1 20
CULF BUSlNLSS AC1lVl1Y BY lNDUS1RY SLC1OR
YL 20 VALUL
CULF BUSlNLSS AC1lVl1Y BY lNDUS1RY
SLC1OR YL 20 VOLUML
Delence
0.8
Lnerqy, Mininq & ULiliLies
5.
Consumer
^.2
Business Services
^.9

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lS,000
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c004 c00S c00c c00 c008 c007 c0l0 c0ll
Ol Ol Ol Ol Ol Ol Ol Oc O1 Oc Oc Oc Oc Oc Oc O1 O1 O1 O1 O1 O1 O4 O4 Ol Oc O1 O4 O4 O4 O4 O4
c,000
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Ol Ol Ol Ol Ol Ol Ol Oc O1 Oc Oc Oc Oc Oc Oc O1 O1 O1 O1 O1 O1 O4 O4 Ol Oc O1 O4 O4 O4 O4 O4
c,000
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Ol Ol Ol Ol Ol Ol Ol Oc O1 Oc Oc Oc Oc Oc Oc O1 O1 O1 O1 O1 O1 O4 O4 Ol Oc O1 O4 O4 O4 O4 O4
c,000
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lndusLrials
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^6.0
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8.2
Pharma, Medical
& BioLech
2.9
ConsLrucLion
.^
Leisure
.0
1M1
9.6
Financial Services
5.8
Delence
.3
Leisure
3.9
Lnerqy, Mininq
& ULiliLies
2.6
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Vo|ure
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lS0
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l0,000
lS,000
c0,000
cS,000
10,000
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c0
0
c004 c00S c00c c00 c008 c007 c0l0 c0ll
Ol Ol Ol Ol Ol Ol Ol Oc O1 Oc Oc Oc Oc Oc Oc O1 O1 O1 O1 O1 O1 O4 O4 Ol Oc O1 O4 O4 O4 O4 O4
c,000
4,000
c,000
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l0,000
lc,000
l4,000
N
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20.8
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3.9
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6.5
Pharma,
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^.3
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.3
1M1
0.^
Financial
Services
3.0
Business Services
3.0
Consumer
9.
86-87 & 89 DATA CRUNCH SEPTEMBER2011.indd 86 8/24/11 3:34:33 PM
CULF BUSlNLSS&/.
TOTAL RETURN INDEX
HSBC/NASDAQ DUBAI MIDDLE EAST
SOVERIGNS
CORPORATES
BANKS
SUKUK
I550k 000P0N MkJ0kIJY 00kkN0Y MI0 PkI0 YIL0 M000Y5 5&P
A|u |o|| Covt S.S 4/8/c0l4 US ll0.44 l.41 Aoc AA
u|o| Covt c. l0/S/c0lS US l0S.18 S.c1 Nk Nk
u|o| Covt .S l0/S/c0c0 US l0.c1 c.cc Nk Nk
Ootor Covt 4 l/c0/c0lS US l0c.74 l.87 Aoc AA
bo|ro|r Covt S.S 1/1l/c0c0 US 7.c1 S.8S Nk bbb
|]t Covt S.S 4/c7/c0c0 US l0c.S S.1S bo1 bb
|orocco Covt 4.S l0/S/c0c0 |Uk 70.S0 S.8 Nk bbb
I550k 000P0N MkJ0kIJY 00kkN0Y MI0 PkI0 YIL0 M000Y5 5&P
!oo 4.S 7/lS/c0l4 US l0c.S0 c.S1 A1 Nk
A|1or l0.S S/c/c0l4 US l08.cS .18 b1 b
u|o| Ho|1|r |-1.S|s c/l/c0lc US 74.S lc.7 b1 Nk
|WA c.1S l0/cl/c0lc US l0S.cS S.c0 boc Nk
Ote| 1.1S l0/l4/c0lc US l0c.00 c.7S Ac A
Ootor| |or S /cl/c0c0 US l07.S 1.0 Aoc AA
SAblC 1 ll/c/c0lS US l0l.S0 c.cc Al A-
|urto|o|ot S c/10/c0lS US l00.S 4.8 Nk bbb
|b|S ll.cS ll/lS/c0lS US 7c.00 lc.48 Nk b-
Kl|CO 8.8S l0/l/c0lc US l07.S0 c.cc boo1 bbb
I550k 000P0N MkJ0kIJY 00kkN0Y MI0 PkI0 YIL0 M000Y5 5&P
ACb 4.S l0/8/c0l4 US l0S.c1 c.8S Al A
NbA 4.cS 1/cS/c0lS US l0c.00 c.47 Ao1 A-
|r|rotes Nb |-4S0|s 4/10/c0lc US l0c.cS l.S4 A1 Nk
HSbC bor| || 1 l0/cl/c0lS US l00.00 1.00 Al Nk
CbO S ll/l8/c0l4 US l0.S c.47 Al A
Sou1| br|t|s| 1 ll/lc/c0lS US l0l.S0 c.cc Nk A
bbK 4.S l0/c8/c0lS US 78.cS 4.7 booc Nk
I550k P.0.k* MkJ0kIJY 00kkN0Y MI0 PkI0 YIL0 M000Y5 5&P
!lC 4.747 l0/cl/c0l4 US l0.S c.17 Al AA
Alb 1.4S ll/4/c0lS US l0c.S 1.04 Ac Nk
u|o| Covt c.17c ll/1/c0l4 US l0S.cS 4.cl Nk Nk
l|C |-1.S|s c/l1/c0lc US 7c.00 ll.0S b1 b-
JA|/A |-l10|s ll/c/c0lc A| 7c.18 7.47 bc b
| Wor|1 c.cS /c/c0l US l01.S S.47 boo1 bb
|roor 8.S 8/1/c0lc US l01.S .S bl bb
kAK S.c17c l/c8/c0lc US l08.18 1.c0 Nk A
or A| Ar|or l0.S c/l8/c0lS US 74.00 lc.74 Nk bb
1he HSBC/NASDAO Dubai Middle LasL 1oLal ReLurn
lndex Lracks Lhe LoLal reLurn ol an emerqinq Middle
LasL sukuk/bond porLlolio. 1oLal reLurn Lakes inLo
accounL Lhe income lrom coupon paymenLs, in
addiLion Lo any appreciaLion/depreciaLion in Lhe
price ol Lhe securiLy.
MAIN REGIONAL BONDS: CURRENT PRICES
THE EXPERTS
VIEW
Many companies have hisLorically borrowed in
US dollars and Lhen converLed Lhis Lo dirhams
leavinq lirms wiLh a neqaLive currency risk. One
ol Lhe main reasons lor Lhis was Lhe relaLively
hiqh raLe ol Libor lundinq Lhe borrowinq raLes
creaLed lrom an averaqe ol 2 local bank raLes
which made Lhe dollar a more aLLracLive currency
Lo borrow in. However, Lhis has now chanqed lor
Lwo reasons.
FirsL, Lhe UAL CenLral Bank has souqhL Lo
encouraqe banks Lo move Libor down closer
Lo CenLral Bank CD raLes, second, Lhe crisis
has resulLed in lunds beinq repaLriaLed Lo 'sale
heavens such as Lhe UAL which has, Lhus,
improved liquidiLy levels and banks' willinqness
Lo lend. So, Lhese Lwo key evenLs have had Lhe
ellecL ol pushinq raLes down Libor Lhree
monLh money wenL down by 66bp over a live
monLh period and inLeresL in local currency
lundinq is up.
BuL whaL else would encouraqe local lundinq?
Lower raLes are clearly qoinq Lo make local
currency borrowinq more aLLracLive, buL so would
issuinq local sovereiqn debL in local currency as
opposed Lo Lhe US dollar. We believe LhaL Lhe
Federal qovernmenL is besL posiLioned Lo lead Lhe
way and sLarL issuinq DhsdenominaLed bonds.
1his would esLablish a benchmark lor
sovereiqn issuance, which people could use Lo
price lurLher corporaLe and insLiLuLional deals.
1his benchmark would be an imporLanL sLep in
sealinq Lhe inLernaLional imporLance ol local
currencies as a viable lundinq
alLernaLive Lo dollars.
GEORGES ELHEDERY,
Head of global markets,
MENA, HSBC
lssued by HSBC Bank Middle LasL LimiLed. RequlaLed byJersey Financial Services
Commission. All liqures quoLed are sourced lrom Bloomberq and HSBC and are
correcL aL Lhe Lime ol publicaLion. PasL perlormance is an noL an accuraLe quide Lo Lhe
luLure. 1his inlormaLion is qeneral and does noL Lake inLo accounL your circumsLances,
ob|ecLives or needs. You should consider Lhese maLLers and consulL your linancial
advisor prior Lo makinq any invesLmenL decisions. For prolessional assisLance, conLacL
HSBC on 800 ^0 ^^^3.
!5!
!50
!49
!48
!41
!46
!45
!44
!43
!42
!4!
!40
!39
!38
!31
May 20!! Juae 20!! Ju|y 20!! ku 20!!
In association with
86-87 & 89 DATA CRUNCH SEPTEMBER2011.indd 87 8/24/11 3:34:37 PM
CULF BUSlNLSS&/0
TOURISM AND RETAIL
SECTOR ANALYSIS
2005 (0hs m||||oas) 20!0 (0hs m||||oas)
Accorro1ot|or 7,l17.S l0,0S0.7
|rterto|rrert 7c 1c18.7
|icurs|ors 77S.S 4,l87
|oo1 l,81.8 S,c4c.8
S|o|r l,770.7 ,llc.8
!rove| W|t||r courtr] 814. l0,18c
Ot|er tour|sr eier1|ture 1,08.c l0,18c
!our|sr eier1|ture l7,Sl7.l 4c,1l1
UAE TOURISM
BOOMS
TOURISM EXPENDITURE
UAE LUXURY GOODS: CATEGORY PERFORMANCE
SOURCL: LuromoniLor lnLernaLional, www. euromoniLor.com
*er|o1|c 1|str||ut|or orourt
1ourisLs lrom all around Lhe world have
been llockinq Lo Lhe UAL, and Dubai
in parLicular, as Lhe counLry remains a
sale haven amid Lhe poliLical unresL in
Lhe reqion.
AlLhouqh Lhe UAL was neqaLively
allecLed by Lhe advenL ol Lhe qlobal
economic crisis, Lhe Lourism indusLry
remained larqely resilienL, wiLh Lhe
number ol LourisL arrivals reqisLerinq
posiLive qrowLh even in Lhe middle
ol Lhe crisis. 1ourism numbers
reqisLered healLhy qrowLh ol almosL
Lhree per cenL in 200 and six per
cenL in 20, accordinq Lo LuromoniLor
lnLernaLional research.
A larqe porLion ol LourisLs cominq
inLo Lhe UAL visiL Lhe everincreasinq
number ol shoppinq malls, wheLher
durinq Lhe shoppinq lesLivals or Lhe
midsummer sale. ReLailers are even
employinq sLall who are lluenL in
Chinese and Russian Lo cope wiLh Lhe
risinq demand. 1hese lacLors, combined
wiLh Lhe poliLical unresL in Lhe reqion,
have led Lhe UAL Lo become Lhe prime
desLinaLion lor shoppinq Lourism,
leavinq counLries like Lebanon and
LqypL in iLs wake.
1he UAL noL only beneliLs lrom Lhe
larqe number ol shoppinq malls and
huqe promoLional ollers aL cerLain
poinLs in Lhe year, buL has been
boosLed by Lhe lonqer openinq hours
qranLed Lo malls durinq Lhe monLh
ol Ramadan some malls were open
unLil midniqhL seven days a week. 1his
move incenLivised visiLors lrom
neiqhbourinq counLries such
as Saudi Arabia and OaLar
and pushed UAL Lourism
revenues even hiqher.
SANA TOUKAN
Research manager,
Euromonitor
1he UAL's overall impressive reLail qrowLh has been sLimulaLed by Lhe openinq ol larqe
luxury shoppinq malls prior Lo Lhe qlobal linancial crisis. WiLh more developmenLs in Lhe
pipeline, Lhe overall reLail markeL is lorecasL Lo qrow Lo $22 billion by 205.
Dubai has by lar Lhe mosL developed reLail landscape amonq Lhe emiraLes, and leads
noL only Lhe UAL buL Lhe resL ol Lhe CCC counLries in Lerms ol reLail space. 1he allluenL
consumers ol Lhe UAL and Lheir hiqh levels ol discreLionary spendinq are rellecLed in Lhe
imporLance ol channels locused on nonqrocery producLs. Desiqner cloLhinq and looLwear,
and personal luxury qoods are imporLanL areas ol reLailinq.
1he lasLesL value qrowLh caLeqories beLween 200 and 205 are lorecasL Lo be line wines/
champaqne and spiriLs, luxury |ewellery/Limepieces and luxury accessories. 1he UAL is seL
lor lonqLerm qrowLh, wiLh luxury qoods expecLed Lo qrow by |usL over 30 per cenL Lo reach
a value ol Dhs0.8 billion. 1oLal annual consumer expendiLure is expecLed Lo qrow by 52
per cenL in real Lerms beLween 2009 and 2020. 1he UAL is a relaLively maLure consumer
markeL, wiLh a larqe middle class secLor. 1herelore, Lhere is considerable poLenLial Lo markeL
luxury qoods aimed aL Lhe middle class. 1he number ol people belonqinq Lo social class A is
seL Lo increase Lo 505,200 in 2020, lrom 372,000 in 2009.
Desiqner cloLhinq and looLwear is seL Lo remain Lhe larqesL caLeqory in 205. 1he markeL is
expecLed Lo become increasinqly recepLive Lo WesLernsLyle lashion over Lhe nexL live years,
boLh lor men's and women's luxury producLs. Dubai will remain Lhe ma|or desLinaLion lor
luxury shoppinq, and in parLicular lor desiqner cloLhinq and looLwear brands, however, oLher
emiraLes will also sLarL Lo rise as poLenLial desLinaLions lor luxury shoppinq.
BY CATEGORY 2005 TO 2010
2005
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I
N MYKONOS, IT seems that food tastes better, people are better
looking, music is constant and there will always be traces of
sand on your clothes. A typical day is spent souvenir shopping or
playing volleyball on the beach long enough to perfect a tan and
work up an appetite. Nights are spent dancing until dawn. The
energy of Mykonos infects travellers long before they even arrive
on the Aegean island; whether on a boat or a flight, Greek and
foreign tourists will be wearing flip-flops and swimwear beneath
their clothes, pumping fists in the air to imaginary music.
There is something about the island that encourages everyone
to let loose. A shy dancer? On a diet? In Mykonos, you will find
BIG FAT GREEK HOLIDAY
yourself in line for a Nutella crepe at 3 am after dancing on tables
for most of the night. The group in front of you will be 18 year-
old Italian girls, those standing in line behind you will be a Greek
family with toddlers. The city throbs with life at night, seducing
you to uncover new sides of your own personality to keep up with
its pace.
Most of the action takes place in Mykonos Town, or Chora. Here,
some of the streets are so narrow you have to walk sideways, single
file, in order to squeeze through to the other side. Shops, cafes and
restaurants are all white, with blue doorframes and staircases, and
the majority remain open for business nearly until dawn. People
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Ibe food at Paroros restaurart |oo|s as ood
as |ts Wa|ters. Serv|r or||ra| creat|ors, sucb
as usse|s |r |rer sauce ard boeade sa|ad
dress|r, bours W||| fy by W|tbout rot|ce. 0tber
popu|ar seas|de restaurarts W|tb a s|||ar sty|e
|rc|ude So| Y Nar at Ka|o L|vad| beacb, Wb|cb |s
about 30 |rutes aWay fro toWr, ard K|||'s
Iaverra at Ay|os Sost|s beacb. K|||'s |s ore of tbe
best eater|es or tbe |s|ard, desp|te bav|r ro s|r,
te|epbore ruber, Webs|te or e|ectr|c|ty. |t just |s
a ||tt|e bard to frd.
C`kkc\M\e`Z\
L|tt|e Ver|ce |s a c|uster of bars ard trerdy cafes
over|oo||r tbe Water by tbe port. Ny|oros
Bar, See|| ard a||era|| p|ay popu|ar us|c
soet|es |x|r |r a ||tt|e ree| pop or Arab|c
drus ard tab|es are set so c|ose to tbe ede
tbat tbe ocear spray frequert|y reacbes up ard
sp|asbes your |es ard ars. Ibe coo|ress of tbe
Water, ofter accopar|ed by a breeze, |s a|Ways a
We|coe resp|te fro tbe beat.
and laughter spill out onto the alleys from
crowded cafes and bars.
There are a plethora of restaurants in the
Chora to choose from and the best meals
are often found at traditional eateries in
random alleyways the best way to find
them is to lose yourself in the streets. One
such Greek taverna, Chez Catrane, is an
upscale locale that is a favourite of Queen
Ranias, according to the owner. The
restaurant offers traditional Greek cuisine,
such as stuffed tomatoes, fresh fish in
olive oil, and spinach pie. Another popular
eatery is Pasta Fresca, located in one of
the busiest streets in the Chora, with a
display of homemade pasta set outside to
entice passersby.
The heart of town stretches all the way
to the old port, where the air is perfumed
with sea salt and the strip is studded
with seaside cafes. From here, Mykonoss
infamous windmills, built in the 16th
century, can be seen in the distant hillside,
standing tall and proud like soldiers
overlooking the city.
Mykonos is known as much for its
nightlife as it is for being a very windy city
there are 16 windmills that can be seen
from practically any location on the island.
Whether you are in a packed, narrow
alleyway or admiring the reflection of the
moon on the water at the open port, the
playful wind will find a way to lift up your
skirt and ruffle your hair.
During the day, a break from town is
achieved by spending time on one of the
islands many beaches. The beaches are
up to half an hour away from the heart
of the Chora, but worth the trip. Psarou
beach is one of the closest locations to
downtown, featuring one of the busiest
restaurants in Mykonos. Nammos
Restaurant overlooks the beach where
sun beds have cushions thicker than
mattresses. They are hardly used,
though, because the music pumping
from the restaurant has everyone
dancing in the sand, in the water, even
on the tables while lunch is being
served. A group of Argentinean men will
be partying on a table next to one where
a grandfather and his granddaughter
are dancing on chairs. They only stop
moving long enough to try the exquisite
prawn, cheese and meat dishes passed
around at the tables.
Panormos is a calmer beach
approximately 20 minutes away from
Chora. Here, soft lounge music takes a
backseat to the sound of ocean waves
and tennis balls hit back and forth by the
shore. There are no sun beds, but rather
big pillows set on the sand, warm from
the touch of the sun.
With so much activity, it is almost
seems pointless to sleep. Still, some
resorts, such as the five star Belvedere
overlooking the city and located steps
away from the Chora, are so lovely it
is tempting to spend most of your time
at the hotel pool and in your room.
Most of the other luxury resorts are
located at beaches, rather than Chora,
such as Mykonos Blu at Psarou beach.
July, August and early September are
the busiest times of year on the vibrant
island, so be sure to book weeks in
advance at hotels, beaches (for sun beds)
and restaurants. And dont forget your
dancing shoes. @
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90-91 Downtime-Big fat Greek.indd 91 8/24/11 3:35:23 PM
SHIP
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WORLD CLASS WOR L DWI DE
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STYLE PLUS SUBSTANCE
W
HETHER WE LIKE it or not,
SUVs have taken the world by
storm over the past decade, and the
roads of the UAE seem to have a higher
proportion of these oversized sedans than
many other countries.
One has to wonder just how many
of the UAE markets vast array of soft-
roaders ever roll off the tarmac, as SUVs
are often purchased more for their form
than their functionality.
From the exterior, this latest variant
of the Touareg looks elegant enough to
valet at even the most swanky five-star
establishment without fear of reproach,
while exuding a tougher, more physical
stance than its forebears.
This is reflected partly in the more
pronounced guards, along with the front-
ends letter-box grille, which is a new
trademark feature across Volkwagens
entire model line-up.
Inside, the Touareg also blends
opulence and functionality, combining
plush leather seats and interior accents of
thin walnut paneling with the more brash,
modern highlights of aluminium and soft-
touch rubber.
With a keyless ignition, thumbing the
start button awakens the V6 FSI direct-
injection engine that powers the vehicle,
K<OK9P>C<EE=I<<D8E
providing ample thrust and even a
reassuring rumble within the upper
rev-ranges.
Paired with the powerplant is an
eight-speed transmission, with cogs
seven and eight both being overdrive
gears. Providing quick, smooth up- and
down-shifting, there is minimal lag time
between depressing the accelerator and
feeling the power transferred to the drive-
train. Excellent at cruising speeds, the
Touareg also displays a rapid turn of pace
when pushed, with strong performance
for easy overtaking, getting you from A to
B smoothly and speedily.
Safety is also covered, with nine airbags
throughout the cabin, along with a raft
of technology. The console-mounted 6.5-
inch TFT display is linked to an intuitive,
high-spec GPS and a multi-directional
camera system. In addition, the Touareg
comes with adaptive cruise control and
lane assist, the latter sending a vibration
through the wheel and flashing a visual
alert should you begin to wander without
using an indicator.
Theres also a world-first technology
in the Touaregs high-beam headlights,
with a sensor that automatically shifts
their angle to avoid dazzling approaching
vehicles or slower traffic in front.
While I stuck mostly to paved surfaces
in the few days spent with the Touareg,
it did step onto the sandy stuff on a
number of occasions. Youre unlikely to
tackle Abu Dhabis Moreeb Dune in this
vehicle, but the extra ride height and
superb suspension come in very handy
for negotiating some of Dubais sneaky
off-road shortcuts.
The 2011 Touareg also has an off-road
driving program, activated by a button on
the centre console. This tunes the ABS,
electric differential lock and automatic
slip regulation, while also simultaneously
engaging the Hill Descent Assist and
adjusting the automatic gearshift points.
While such features are a welcome
addition for those who like the flexibility
of a vehicle with some all-terrain
capability, other features are less well-
suited to the UAE, particularly during the
summer months.
The panorama sunroof, stretching the
length of the roof, would be fantastic in
Europe and even okay during the UAE
winter, but it is somewhat redundant
when the temperatures reach 40+
degrees on most days.
Still, this barely detracts from the
winning package that is the 2011 Touareg,
and its yours for from Dhs 157,000.
DFKFI@E>;FNEK@D<
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93 Downtime-Volkswagen.indd 93 8/24/11 3:37:02 PM
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future cities.pdf 8/25/11 11:25:55 AM
>LC=9LJ@E<JJ&0,
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T
HE CANADIAN CHAINS second UAE
offering in Abu Dhabi is quite surprising
in a good way. Like its Dubai sister, it has
the smooth and streamlined luxury touch but,
equally, its strikingly contemporary. At a loss for
a generic description, the best way to describe
the hotel is art-deco modern with a boutique
feel. The huge central lobby is punctuated
by sky-lights, silver pillars, rope chairs and a
sweeping central staircase.
The hotel is mainly aimed at business
travellers but the rooms and facilities would
easily keep leisure guests entertained too.
Fairmont Al Babr is host to two celebrity
restaurants: Frankies from legendary Italian
jockey Frankie Dettori; and Marco Pierre Whites
Steakhouse and Grill this eatery is the celeb
chefs first outside of the UK and is also home to
one of the largest selections of wine in the city.
Fairmont Al Babr literally means gateway to
the sea and the well-sized guest rooms are true
to its word: the views from the floor-to-ceiling
windows offer an excellent vantage point to take
in views of the citys creek, as well as the hotels
Just scored ar |portart bus|ress
dea|? Ce|ebrate W|tb a |ass of
cbapare ard |per|a| cav|ar at Ibe
Ierrace |r tbe Par| Pyatt, Duba|. Lvery
fr|day ard Saturday at Ibe Ierrace,
uests erjoy tWo cop||ertary
|asses of Veuve C||cquot cbapare
W|tb every purcbase of a I00 t|r
of |per|a| Cav|ar for DbsI,990.
A|terrat|ve|y, d|rers car erjoy tbe
seafood p|atter for tWo tbat |rc|udes
f|re de C|a|re oysters, poacbed sbr|p
ard crab |es, a|| accopar|ed by
coc|ta|| sauce ard a|o||.
[lYX`%gXib%_pXkk%Zfd
et set for a creat|ve voyae W|tb
art|sts Arab|ta Raz|, Natb|as
arr|tscbr|, Aa|r Pab|b ard f|or|ar
Paffe| as tbey exp|ore tbe cr|ss
cross|r bourdar|es of corteporary
art ard |rvest|ate persora| ard
po||t|ca| |dert|ty. Ibe exb|b|t|or rurs
urt|| Septeber I5 at Carbor I2,
Warebouse D3I, A| Ser|ar Averue,
Duba|.
ZXiYfe()[lYX`%Zfd
A cut above your usua| cafcude||,
Austra||ar eatery Jores Ibe rocer
cob|res sty||sb ard cofortab|e
|rter|ors W|tb bearty food. Recert|y
opered |r Duba| oppos|te I|es
Square or Sbe||b Zayed Road, d|rers
are foc||r fro a|| corrers of tbe
c|ty to sap|e |ts ucbbyped cbeese
se|ect|or, co|ds cuts, ba|ery ard
caf eru.
afe\jk_\^ifZ\i%Zfd
Lscape to tbe desert for ar aroa
assae at tbe A| Naba Desert Resort
ard Spa. Ibe treatert be|rs W|tb
ar |rv|orat|r body brusb|r, ard
tber |t's or to a fu|| body rubdoWr
W|tb ert|e stretcb|r, us|r re|ax|r,
ba|arc|r or erer|s|r aroatberapy
o||s. Ibe assae |s pr|ced at Dbs3I0
ar bour, but |f you boo| |r advarce
you car ta|e advartae of A| Naba's
Suer |rdu|erce pac|ae (DbsI,200)
Wb|cb |rc|udes a 60|rute treatert,
use of tbe poo|, spa fac|||t|es ard |urcb.
Xc$dX_X%Zfd
Adverture P0 |s reat p|ace to ur|easb
your |rrer adrera||r jur||e |rdoors.
Pave a o at c||b|r |ts erorous
|rdoor c||b|r Wa||, Wa||top|a. |f tbat's
rot dar|r eroub for you, try |ts
susperded obstac|e course. Adverture
P0 |s |ocated |r I|es Square Na|| or
Duba|'s Sbe||b Zayed Road.
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sprawling outdoor swimming pool. In fact, with
the size of the pool and the hotels stretch of
sandy beach, its hard to believe this hotel is in
the centre of Abu Dhabi at all.
The complex has 369 rooms and around
27,000 square feet of conference space. The
guest rooms are the most pleasing part of the
hotel. Their organic-designed themes have a
fluid feel and the use of walnut wood, bamboo
and marble make guests feel immediately at
home. Theres also clever use of space as each
room hosts a massive bed, bath, a sofa, and a
top-notch surround-sound entertainment system.
Fancy a rain shower in a glass bathroom to
the sounds of Mozart or MTV? Well, you can
here. Theres also a desk with a full selection
of stationery if you manage to get some work
done amid the distraction of the rooms gadgets.
Wireless comes as standard.
The staff service, like the rooms, is slick
and polished but homely. Fairmont Al Babr is
a welcome addition to the emirates growing
selection of hotels.
fairmont.com/babalbahr
FAIRMONT AL BABR
(
)
*
+
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C
ITYSCAPE GLOBAL IS the regions showcase for real
estate developers to exhibit their properties to the
international client. The show attracts thousands of wealthy
real estate investors, developers, financiers, architects,
consultants and real estate professionals. Key benefits of
the annual event include: four internationally-acclaimed
conference programmes featuring over 100 speakers
covering key topics offering insights into global real estate
investment, development and design; networking and social
events to promote interaction with industry peers and
opportunities for securing deals and contracts. Complete
with a cocktail reception, gala dinner, awards and a golf
classic, the tenth edition is going all out to bolster regional
growth amid the property climate.
CITYSCAPE GLOBAL
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97 Calendar Sep2011.indd 97 8/24/11 3:38:09 PM
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HERE IS NOTHING quite like an afternoon of polo to
champion all things exquisite, and the Foundation Polo
Challenge, held in Santa Barbara, California, is no exception.
Celebs from Brit actor Billy Zane and US actresses Jennifer Love
Hewitt and Zoe Saldana were among the hundreds of glamorous
guests gathered at the Santa Barbara Polo & Racquet Club for its
centennial celebration and landmark tournament highlighted
by the field presence of the Foundation Team captain, the Duke
of Cambridge, who was watched by his immaculately attired
wife, Catherine Middleton.
The British polo teams sponsor was Royal Salute the
jewel in the crown of Chivas Brothers, owned by French
distillers Pernod-Ricard a premium brand which picked the
prestigious sporting event to unveil its latest luxury blend,
Tribute to Honour.
With only 21 hand-cast black porcelain flagons in existence
each adorned with 413 black and white diamonds and a price
tag of $200,000-a-pop, Tribute to Honour represents the ultimate
in extravagant dinner party refreshment. But, at that price, who
on earth is going to buy it?
CEO and Chairman of Chivas Brothers, Christian Porta,
believes the interest could well come from the Middle East.
Tribute to Honour represents the scarcest, most precious
product ever created by Royal Salute, and the Middle
East is a market that appreciates true luxury and superior
craftsmanship, the 49-year-old Frenchman said as we enjoyed
a dinner of sweetcorn lasagne with blistered tomatoes and
asparagus at the table next to Will and Kate.
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SIMPLY THE BEST
Christian says the level of respect for local roots is what
connects the Middle East consumer to this high-end brand,
which was originally created in 1953 as a tribute to Her Majesty
Queen Elizabeth II, on the occasion of her coronation. Royal
Salute has a unique heritage that is inspired by royalty and
continues to pay tribute to nobility with each new expression.
This is something that our customers in the Middle East value,
he explains.
The bejewelled bottle was certainly a centrepiece on this
sporting afternoon, with the couture-clad crowd pausing to
sample and pose for photographs at its side confirming its
status symbol appeal.
Mid-range and mediocre are the biggest victims in times of
recession, yet the aspirational and out of reach often act as a
sticking plaster for those holding onto any disposable income
in their possession. Christian characterises Royal Salutes
experience of the most recent global financial crisis as unfazed,
describing impressive 30 per cent growth in the unsteady six-
month period from December 2010 as robust and resilient.
I asked Christian if we should indeed be backing bottles
instead of bricks and mortar in these uncertain times, but he is
quick to remind me that it is probably a risky business to invest
in something you (or I) could be lured to consume with little
convincing. Its a luxurious experience that can be indulged
in regularly, or savoured for special occasions, he says with
a laugh. And with that, we raise a glass to glamour, and later
another as we watch Prince William power to victory on the
polo field.
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